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Mr Speaker
As the House will be aware, we have started our proceedings an hour late today because of the leak of some water into the Chamber from an air conditioning unit to an office nearby—not the one to the Chamber. I have been assured that it is safe for us to sit in the Chamber. All of today’s business has protected time, so no debates have been curtailed as a result of the delayed sitting. I am grateful to Members for their patience, and to the House staff who have ensured that we are able to sit today; thank you everybody.
Oral Answers to Questions
(2 years, 5 months ago)
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Tom Randall (Gedling) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
Despite what has happened today, our spirits will not be dampened, and I am sure that the Chamber will be in full flow before we know it.
Universal credit claimants who received at least 1p during assessment periods that ended between 26 April and 25 May 2022 will be eligible for the first instalment of a cost of living payment worth £326. Latest statistics show that 4,800 households in Gedling were in receipt of universal credit in February 2022.
Tom Randall
Will my hon. Friend confirm when the more than 10,000 households in my Gedling constituency that are eligible for a cost of living payment should expect to receive that help from the Government?
David Rutley
The first instalment of the means-tested cost of living payment of £326 will be paid to eligible households from 14 July. I am pleased to remind colleagues that the payment is the first in a £15 billion package of measures to help households this year.
Marion Fellows (Motherwell and Wishaw) (SNP)
The Minister of State, Department for Work and Pensions (Chloe Smith)
We are absolutely delighted to see 1.3 million more disabled people in work than in 2017, smashing our commitment of 1 million lives changed by 2027 five years early. We remain committed to reducing the disability employment gap and, over the next three years, we will invest £1.3 billion in employment support for disabled people and people with health conditions.
Marion Fellows
The UK has the highest levels of in-work poverty this century, which, as the Minister will know, disproportionately impacts groups facing higher living costs, such as disabled people. In the middle of this Tory man-made cost of living crisis, will she ensure that the UK Government’s health and disability White Paper addresses the suitability of the current statutory sick pay system, increase the Access to Work fund and end the payment cap, as well as create statutory timescales for the implementation of reasonable adjustments?
Chloe Smith
As is the hon. Member’s wont, she introduces a series of serious points, which I look forward to continuing to discuss with her here and in other places. I can confirm that we shall be bringing forward our health and disability benefits assessment White Paper, and I very much look forward to discussing the full breadth of the contents with her. I can also confirm that our goal is to help as many disabled people as possible and as appropriate to start, to stay and to succeed in work, because that is one way of being more resilient to economic crises. That is in addition to our extensive cost of living support.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
The Government-commissioned National Centre for Social Research report confirms that many disabled people live in poverty. Ministers claim that work is a route out of poverty, yet the disability employment gap remains stubbornly at 28%. We have a bureaucratic Access to Work scheme, with an ineffective spending cap, which, ironically, is not available in all accessible formats. A mere £128 million is spent on it, compared with £64 billion on disability benefits. What does the Minister say to those disabled people who want to work, but who are faced with a system that, frankly, is not fit for purpose?
Chloe Smith
I think the hon. Member is wrong to say that the disability employment gap is static at 28%. It is moving in the right direction, which is important to acknowledge. While we have made progress, we need to be able to make more. It is important to recognise what has gone on, in that we have more disabled people in work and the disability employment gap is reducing. We need Access to Work to be a strong part of the solution. There is a great deal of work going on to transform Access to Work to make it even more effective in helping disabled people to start, stay and succeed in work. Those will all be continued priorities of this Government and this Department.
Martyn Day (Linlithgow and East Falkirk) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Mr Speaker, I hope to be a better Pensions Minister than the one from whom I have just inherited the job.
The United Kingdom Government have provided £37 billion-worth of support for those most in need, including pensioners. Some pensioners will receive in excess of £1,500 over and above the state pension, which is up this year.
Martyn Day
I thank the Minister for that answer, but pension credit figures show that an estimated £1.7 billion goes unclaimed. Not only are 850,000 families missing out on this essential support, but they are also ineligible for the £650 cost of living payment. Will the Minister consider extending the cut-off date for entitlement to that payment to next March? Will the Department finally look at a proper benefits take-up strategy such as the one we have in Scotland?
Guy Opperman
The hon. Member will be aware that, by reason of the pension credit awareness campaign from April and in particular the pension credit day of action on 15 June, the numbers for pension credit have massively increased—by well over 275% for that period. He will also be aware that there is a huge effort being made to ensure that pension credit take-up increases. I ask all hon. Members please to encourage their communities to apply. Finally, he will also be aware that pension credit is retrospective, so people have until 24 August to apply and still be entitled to the £650 cost of living payment that this Government will be making from Thursday.
Matt Rodda (Reading East) (Lab)
Following the resignation of the Prime Minister, there is a real risk that the House turns in on itself. I want to draw the Minister’s attention to the serious cost of living crisis facing families and pensioners in this country. Sadly, the Government broke their promise to keep the triple lock on the state pension at the very time that inflation was starting to rise. As a result, pensioners struggling to get by have each lost more than £500 this year. How can the Minister possibly justify letting down pensioners in this way?
Guy Opperman
I was the Minister who saw that the Labour party at the time did not object to our taking the actions we did in respect of the triple lock. The hon. Gentleman talks about a loss but, as he knows, the state pension was less than £100 in 2009, before the Government changed in 2010. He also knows that we have now virtually doubled the state pension and that there is in excess of £1,500 extra money going to pensioners this year, by reason of the winter fuel payment, the cost of living support for those who are most vulnerable, the council tax rebate worth £150 and the energy support fund, which arrives on or around 1 October.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The reality is that even before the Pensions Minister scrapped the triple lock, taking £500 out of the pockets of pensioners, the UK had pensioner poverty rates higher than small independent European countries. We now know that the Chancellor is reviewing the corporation tax rates, which were intended to raise £50 billion over the lifetime of this Parliament. How can he guarantee that the triple lock will not be sacrificed once more, trapping pensioners in poverty just to pay for Tory tax giveaways?
Guy Opperman
As the hon. Gentleman will be aware, the United Kingdom Government have provided £37 billion-worth of support—[Interruption.] Oh, we most definitely have. That takes the form of four different payments over the next six months and is a real support to the most vulnerable in our community. Without a shadow of a doubt, we will continue to support those most vulnerable.
Mr Philip Hollobone (Kettering) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
It was an honour and a privilege to visit my hon. Friend’s Kettering constituency. Although the figures on new pension credit claims cannot be broken down by constituency or region, the pension credit campaign has been highly successful, with more than 10,000 claims received across Great Britain during the week of the pension credit day of action on 15 June. That was an increase of 275% for the relevant period compared with 2021, which also saw an increase.
Mr Hollobone
I congratulate my hon. Friend on being the longest-serving Pensions Minister ever and thank him for visiting Kettering on Friday 1 July and supporting the Kettering Older People’s Fair. I urge him to use the fact that pension credit is a gateway benefit in encouraging people to take it up. Not only could it be worth £3,300 in itself, but it gives access to extra help with council tax, heating bills, NHS dental treatment and free TV licences.
Guy Opperman
As my hon. Friend knows, I am in day three of being the Pensions Minister—but the previous one was very good, I did hear. The practical reality is that pension credit is a difficult benefit to try to get out, because everybody has to apply. It is very much our role as Members of Parliament across all parties to ensure that we send out the message that, if anybody is in doubt, they should apply. That can apply to any particular member of our community because the circumstances differ in any particular way, but my hon. Friend is right that this benefit is a springboard to so much else, with £3,300 on average that people can apply for.
Mr Speaker
I am not quite sure of your connection with this question, as a Scottish MP, because obviously it is about Northamptonshire and England. There must be one, but I cannot see it. Are you sure there is a connection to the question? [Interruption.] It is limited to three areas—the responsibility is for those areas. I call James Sunderland.
James Sunderland (Bracknell) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
In May this year, we published “Fighting Fraud in the Welfare System”, which details our proposals for reducing fraud and error, including legislative change and closer working across Government.
James Sunderland
The claimant rate in Bracknell is way below the national average. My constituency enjoys high employment, but we still have lots of job vacancies. What steps is the Department therefore taking to ensure that the remaining claimants are helped into work?
David Rutley
With a record 1.3 million vacancies, our focus is not only on tackling fraud but on continuing to help people to get back into work and to progress in their careers. A multi-billion-pound plan for jobs will continue to help our constituents and people across the UK to find work and progress in employment.
Christian Matheson (City of Chester) (Lab)
With regard to DWP issues, one of the largest problems I see in my mailbag is people who go for assessed benefits, such as the personal independence payment, being turned down at the first stage, having to go to appeal and, in huge numbers, winning on appeal. Why are there so many errors in the assessment process?
David Rutley
I thank the hon. Member—another good Cheshire MP—for his question. We are working hard to make the right decisions first time, every time. All health professionals undertaking assessments on behalf of the Department must be registered practitioners who have also met requirements around training and competence. We are working hard to make sure that we can further improve the quality of those assessments with clinical coaching and monthly performance meetings.
Simon Fell (Barrow and Furness) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Department’s priority will be to retain, retrain and redeploy colleagues either within the Department for Work and Pensions or within other Government Departments in the area, and with no reduction in the overall services people receive.
Simon Fell
The plan to close Phoenix House in Barrow will result in more than 40 specialist jobs leaving the area. This matters because the people there are the only team in the country able to deal with the really complicated industrial disablement benefits that they process. Only recently, largely due to our industrial heritage in Barrow, we were confirmed as having the highest rate of mesothelioma in the UK. The team at Phoenix House help not just Barrow residents but people across the UK with such complex diseases. I have written at length to the Secretary of State about this, with detailed testimonies from charities, service users, staff members and third-party organisations that want to keep the centre open. Will my hon. Friend meet me to discuss how we can find a way to make this work?
Guy Opperman
My hon. Friend is a doughty campaigner for his constituency and for the wider area, and the jobs that he is concerned with, and I give him great credit for that. I am not the responsible Minister, and I know that that letter has only recently arrived into the Department, but I will ensure very definitely that the Minister in respect of this particular decision will meet him in the near weeks so that there can be a proper discussion in respect of the situation for impacted staff.
Andrew Jones (Harrogate and Knaresborough) (Con)
The Minister of State, Department for Work and Pensions (Chloe Smith)
As I said to the hon. Member for Motherwell and Wishaw (Marion Fellows) , we are absolutely committed to being able to continue to increase the number of disabled people in work. There is a range of Government initiatives to achieve this, including the Work and Health programme, the Intensive Personalised Employment Support programme, Access to Work, Disability Confident, and supporting partnerships with the health system.
Andrew Jones
My office is part of the Disability Confident scheme started by the Department. I strongly support the scheme because it encourages employers to think differently about disability, and to take action to improve how they recruit, retain and develop disabled people in their workplace. How will my hon. Friend work to promote that scheme, which is a valuable tool to close the employment gap that we have already talked about today?
Chloe Smith
First, I thank my hon. Friend and any other hon. and right hon. Members who are members of that scheme, because it is incredibly important that we do that from this place as we encourage employers of all shapes and sizes to be involved in the scheme. Secondly, we will continue to promote the scheme from the Department as widely as possible through a variety of communications. Thirdly, because our goal to continue to reduce the disability employment gap remains at the forefront, we want to grow commitment and action across and outside of Government. It has to be a shared ambition across society and that is well encapsulated in the Disability Confident scheme.
Mr Speaker
I call the Chair of the Select Committee, Sir Stephen Timms.
Sir Stephen Timms (East Ham) (Lab)
The Government’s response last November to the Select Committee’s report on the disability employment gap promised key improvements to Access to Work to make it easier for people to use. Can the Minister give us an update on progress with that? Specifically, the trial of Access to Work passports started last November, so that people can take their support from one job to another. Can the Minister tell us whether that will be extended to everybody on the scheme and when we can expect that to happen?
Chloe Smith
These are incredibly important details and aspects of the Access to Work scheme, and the right hon. Gentleman is correct that those improvements are in the pipeline. We have been able to pilot a number of different passports. I will write to him with details and I am also with his Committee next week, where I can provide the precise details of that. By way of example, a passport now in operation assists freelancers and people who work in contract form to be able to carry their requirements with them from job to job, so that it is easier for them to stay and succeed in work, which is the goal we are talking about. I also look forward to talking further with him about the digital improvements we want to make to the process, again to help people get that support earlier and faster, so that they can get the benefits of being in work.
Rob Butler (Aylesbury) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Julie Marson)
It is a privilege to be here, and I take this opportunity to pay tribute to the former Minister, my hon. Friend the Member for Mid Sussex (Mims Davies), for all her incredible work in this role. We want everyone to be able to find a job, to progress in work and to thrive in the labour market, whoever they are and wherever they live. On 26 January 2022, we launched the Way to Work campaign, moving more than 520,000 job-ready claimants into work by the end of June.
Rob Butler
I warmly congratulate the Minister on her appointment. Unemployment is at extremely low levels across the country, which is very welcome, but in my constituency of Aylesbury, we still have some small areas where some people struggle to find a job, despite there being vacancies nearby, often because they do not have the skills required to take those jobs. How can my hon. Friend’s Department help those who need new skills to get back into work?
Julie Marson
Thank you very much, Mr Speaker. My hon. Friend raises the important issue of skills. We empower work coaches to build individual, tailored support packages to help claimants into work and to progress into better work. The DWP has a range of programmes that work coaches can use to help claimants to gain new skills in areas of local labour market need. That includes sector-based work academy programmes and DWP Train and Progress.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I also welcome the Minister to her new job. Can I ask her to give someone a good kick on the kickstart scheme? It was the skill delivery mechanism for this Government, and it has quietly been put down in some back room. The fact of the matter is that this country needs more skills and this Government are not interested in skills and are not doing their job. Can she not get on with it, and get on with it now?
Julie Marson
I thank the hon. Gentleman for his question. Kickstart has delivered more than 163,000 starts, and I think that is hugely to be welcomed. One of the things that is so amazing to me in this role is to recognise the absolute impact on the individual people concerned of those 160,000 job starts. That is something we should welcome.
Mims Davies (Mid Sussex) (Con)
I congratulate the Secretary of State and her updated DWP team on their successes up and down the country. It is okay that it is my hon. Friend the Member for Hertford and Stortford who is at the Dispatch Box, rather than anyone else. Delivering help and opportunities up and down the country—true levelling up in action in jobcentres—has been the difference for the Way to Work campaign. Can I ask my hon. Friend, the new Minister, how she is looking to continue to progress for everybody, building on the success of getting half a million people into work through the Way to Work scheme?
Julie Marson
Again, I pay tribute to all the amazing work that my hon. Friend did in her role. She is right to talk about the way to work scheme. We are pleased that we have the DWP youth offer, which will continue to offer huge opportunities to people in that age group, and which extends to 16 and 17-year-olds. There are also a multitude of other valuable schemes, such as the 50-plus champions, the job entry targeted support scheme and in-work progression—a whole host of schemes—that we are working hard to deliver.
Dan Jarvis (Barnsley Central) (Lab)
I welcome the Minister to her new role. Does she share my concern at recent data showing up to 70,000 armed forces veterans in receipt of universal credit? Does she think that the 50 armed forces champions around the country, who are no doubt doing their absolute best, have the capacity to provide the support to those who have served our country so that they can weather the cost of living crisis?
Julie Marson
That is a vital area. Our veterans deserve our respect and every bit of help and assistance that they can receive. We are extending the veterans champions scheme; I will be looking at that in much more detail. This is day one, but I look forward to focusing on that and ensuring that I engage with the hon. Gentleman and others who are concerned about it.
Alison McGovern (Wirral South) (Lab)
I welcome the new Minister to her role. She joins the Government at a unique and special time. I also take the opportunity to pay tribute to the work done by the hon. Member for Mid Sussex (Mims Davies). I do not agree with her very much on employment, but I know how hard she worked and that many people in the Department will miss her greatly.
As the Minister is new, I will ask her an easy question—all I am looking for is a single number. By the time she leaves office, how many of the 1 million people who are estimated to have left the labour market will be back to work?
Julie Marson
It seems churlish, on day one, to mention the Labour party’s record on jobs. Every time it has left power, it has left more people unemployed than when it started.
Chris Stephens (Glasgow South West) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
Our £15 billion cost of living package includes a one-off £650 cost of living payment to low-income households in receipt of a means-tested benefit, a one-off £150 disability cost of living payment, and a £300 top-up to the winter fuel payment for pensioners. That is on top of a wider package of measures that takes the total Government help for households to £37 billion this year.
Chris Stephens
The Minister will be aware that during a recent Work and Pensions Committee meeting, the Secretary of State told me that she was not satisfied with the progress of bereavement benefits for cohabiting partners, and that she was meeting her officials the next day. When will the second remedial order be laid so that people who would qualify for that benefit can meet their living costs?
David Rutley
The hon. Member is a determined terrier on this issue, and understandably so. Important issues have been raised and it is vital that we get it right. We are carefully considering the issues and we will lay the order before the House as soon as we are able. In parallel, DWP officials are working at pace on implementation plans for the order, as I have discussed with him separately.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Tony Lloyd (Rochdale) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Government have announced a £37 billion package of support to help people with the cost of living. The full basic state pension is now £2,300 a year higher than in 2010 and is supported by many other measures.
Dr Huq
It is good to see the Minister back; there is nothing like organised labour to effect progress.
In reality the state pension has not managed to keep up with the multiple crises we face: we have the Ukraine crisis pushing up food and fuel prices on top of the existing cost of living crisis. Yet the Ministerial and other Pensions and Salaries Act 1991 dictates that last week’s non-returning Ministers, including an alleged groper, are set to net £423,000 in severance payments. Given the widespread public revulsion among our constituents feeling the pinch, including state pensioners, does the Minister not see that there is an argument for the non-exercise of that provision in this instance, because—
Mr Speaker
Order. I am not quite sure about the significance of this; the question is not that wide.
Guy Opperman
This matter will be dealt with by an urgent question that follows. I can confirm it definitely does not apply to me, and frankly I do not think it is an appropriate question for today.
Tony Lloyd
The Minister is not new to his job. In the order of 1 million pensioners who should be in receipt of pension credit are still not receiving it, and he will know that they lose out not simply on the credit but on all manner of other benefits. Will he show some urgency and compassion for those struggling with the cost of living increases?
Guy Opperman
I sincerely hope that the hon. Gentleman joined in on Pension Credit Day of Action on 15 June, because it is incumbent on all Members of Parliament to get behind the efforts of the Government, and successive Governments, to improve pension credit take-up. The fact of the matter is that this Government have done more to increase take-up and the number of claims than any previous Government. There is no doubt whatsoever that we should all get people to apply, with £,3,300-worth of benefits applying for those receiving pension credit.
Dame Nia Griffith (Llanelli) (Lab)
The Minister of State, Department for Work and Pensions (Chloe Smith)
We estimate that 600,000 people on employment and support allowance will be better off on UC, which is of course a modern, flexible benefit that includes targeted support for disability and which helps to simplify the benefits system, providing support in times of need and making work pay. I can add that the Department holds regular engagement sessions with external stakeholders, including of course disabled people and others in the health and disability sector, seeking their input into the process.
Dame Nia Griffith
In 2019 the then Secretary of State promised that the Department would pause the migration to UC after a pilot of 10,000 cases, would report back and would provide parliamentary scrutiny of legislation for the wider roll-out. Instead of breaking this promise, does the Minister accept that migration to UC will make thousands of people worse off in real terms just when inflation is going through the roof, and will she now pause the process?
Chloe Smith
The answer is no, and that is because, first, my right hon. Friend the Secretary of State updated the House through a written ministerial statement only recently in which she explained precisely the point about the prior piloting and exploratory work. Secondly, Parliament voted in 2012 to end legacy benefits and replace them with a single, modern benefit system, and on top of that, committed to providing transitional financial protection. That is the key point in this case: where a claimant may not already be better off—as we have said, in the majority of cases, they are—they are supported.
Ms Karen Buck (Westminster North) (Lab)
The truth is that many people migrating will be worse off because of the timing—in a period of high inflation. We know that the legacy benefit group to be transferred on to UC is on average much more vulnerable than those in the existing UC caseload; the great majority of legacy ESA clients are in the support group. Can the Minister tell us exactly how the migration process is going? Has it been tested at scale to ensure that it is safe for vulnerable clients?
Chloe Smith
As my right hon. and hon. Friends have laid out extensively to the House, the process being followed is one of initial discovery. After that, it will be possible to provide fuller answers to the House of Commons about how the broader process will work. The vast majority of claimants will either be better off or no worse off, and I want to lay on record one more time that 55% of people will see an increase in their award, 10% will see no change, and 35% will be protected transitionally.
Alex Cunningham (Stockton North) (Lab)
Stephanie Peacock (Barnsley East) (Lab)
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
It is not usual to project poverty levels in terms of statistics—[Interruption.] Does someone want to join in? [Interruption.] I just cannot hear. Somebody is talking. Projecting poverty levels is not something we normally do. However, the latest official statistics show that in 2021, some 8 million people were in poverty in absolute low-income before housing costs, which was a fall on the previous year. I am very conscious of the challenge of the cost of living right now, which is why we are providing a £15 billion support package targeted at the most in need, but I am proud of the fact that we are getting more and more people into work—over half a million in just the past five months. We know that for most people, the best way to get out of poverty is to get into work.
Alex Cunningham
Even using the Government’s preferred measure of absolute child poverty, the proportion of children living in absolute poverty rose in every north-east local authority area between 2014-15 and 2019-20, and continued to rise in the first year of the pandemic. In Stockton, that figure is up by 7.1 percentage points; in Hartlepool, it is up by 7.2; in Darlington, it is up by 7.9; in Redcar, it is up by 9.4; and in Middlesbrough, it is up by a colossal 13.9 percentage points. Those are not just numbers: they represent thousands of children. Can the Minister tell the House which of the Tory leadership candidates will be content to see children in places such as Stockton go hungry, and which of them will take action to ensure they do not?
Dr Coffey
I would be grateful if the hon. Gentleman would give me the specific source of his statistics, because I believe that statistically, child poverty has actually fallen, something of which Government Members are proud. Nevertheless, he will be pleased by the fact that people have opportunities and are getting into work. That is what we will continue to do, because we know that children in workless households are undoubtedly more likely to be in poverty. That is why we continue to focus on getting their parents into work.
Stephanie Peacock
One in three children in Barnsley are living in poverty. My constituent cares for his disabled eight-year-old son. He recently started a part-time job to supplement his income, but after working just two hours’ overtime, he had a whole month of carer’s allowance deducted. The Secretary of State has just said that the best route out of poverty is to get into work, so can she explain why those who receive carer’s allowance are penalised for doing just that?
Dr Coffey
I expect that the hon. Lady’s constituent is receiving the caring element of universal credit, rather than carer’s allowance specifically, which is a slightly separate approach. Universal credit is a dynamic benefit. It reflects the fact that when a person is working more, they receive less support from other taxpayers, and—just as happened at the beginning of the covid pandemic—when taxpayers are working less, they immediately started receiving more. That is the success of universal credit, and we will continue to encourage people to get into work.
Henry Smith (Crawley) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Some 35,000 people have been automatically enrolled into a workplace pension in the Crawley constituency since 2012. We thank the 1,690 employers who have declared compliance with their enrolment duties. Some 10.7 million people across the country are now saving into a workplace pension.
Henry Smith
I am grateful to receive those figures from the Minister, and I congratulate the Government on the record numbers of people auto-enrolled into workplace pensions, both in my Crawley constituency and across the country. Will he also pay tribute to some of the pension providers, such as B&CE, the People’s Pension, which is headquartered in Crawley?
Guy Opperman
I know the People’s Pension very well, and have met its staff many times. I have had the great privilege of coming to Crawley and meeting the team behind such a great organisation. It is a much-valued employer that is doing great work in making pensions accessible to the working population, both in Crawley and all across the country. That matters, because we used to have 26% of young people and 40% of women saving for a pension, and those figures are now well above 80% across the country.
Nick Fletcher (Don Valley) (Con)
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
Following the success of kickstart, which has seen over 163,000 jobs started by young people, with approximately 30,000 still on that scheme, the DWP youth offer remains in place to support those who still need help. That includes youth hubs, which bring together partner organisations and the DWP in local communities to provide employment and skills support.
Nick Fletcher
I have spoken with many young people since becoming an MP. They believe that waiting and fighting for their dream job is the right thing to do. Does the Secretary of State agree with me that our young people should take opportunities that arise which will get them earning while still applying for their dream job, as that will not jeopardise their chances but will, most probably, do exactly the opposite?
Dr Coffey
As ever, my hon. Friend talks common sense. It is really important that people realise that the heart of our Way to Work campaign is ABC—any job, better job, career. We know that having a job already allows people to build a lot of skills so they can progress, perhaps in the job of their dreams. Through support such as the DWP youth offer, work coaches will continue to help unemployed young people move into a range of roles. The skills and work experience that people can gain from a job will help them to progress.
Sir Robert Neill (Bromley and Chislehurst) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
We recognise that earnings can fluctuate for all self-employed people, including performers and creative workers, and that it takes time to establish a business. That is why we offer a 12-month start-up period, giving claimants time and support to grow their earnings and reach their agreed minimum income floor before it is applied.
Sir Robert Neill
I understand the objective of the minimum income floor, to get into sustainable employment, but perhaps the Minister does not appreciate that for people in the performing arts and creative sectors it is not just a short-term period for which they have unpredictable and fluctuating incomes. By the nature of theatre, music, performance and so on, shows are cancelled at short notice. In fact, established performers with viable careers still get hit disproportionately by the minimum income floor. Would it not be sensible to collect the data on a sector-by-sector basis, so that we do not have a one-size-fits-all approach but can tailor it to achieve the objective he wants, which is to reach the need of each specific sector?
David Rutley
Universal credit supports self-employed people and the Department ensures fairness by treating all sectors equally. I have already talked about the 12-month start-up period, which is designed to strike the right balance between supporting claimants to make a success of their business and protecting public funds.
Kerry McCarthy (Bristol East) (Lab)
The Minister of State, Department for Work and Pensions (Chloe Smith)
Six million people in receipt of an eligible disability benefit will receive a £150 disability cost of living payment, as well as the £400 energy bill discount. Many will also be eligible for the £650 cost of living payment for lower-income households, the first instalments of which are being paid this week.
Kerry McCarthy
I thank the Minister for that response, but at the time when the then Chancellor came up with that support package in May, Ofgem’s cap prediction was that a typical bill would rise to £2,800 in October. It now looks as though it could be something like £450 more than that, with yet another rise in January. What additional support will whoever the Chancellor is, or will be in a couple of weeks’ time, come up with to ensure people with disabilities can manage to pay their fuel bills?
Chloe Smith
The helpful thing I can add here is that disabled people can, of course, also benefit from the package previously announced in the spring statement, which continues in the format of the household support fund. Many millions of pounds have already been allocated to local authorities, which are best placed to direct help to those who need it most.
Rachel Hopkins (Luton South) (Lab)
The Secretary of State for Work and Pensions (Dr Thérèse Coffey)
At this moment, I am delighted to have a team who are making sure that the wheels of government keep turning. That is particularly true given that we are the biggest delivery Department in Whitehall, on which so many vulnerable people rely.
It is certainly my focus to deliver help for households. As the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Norwich North (Chloe Smith) pointed out, we will be sending out the first instalment of the £650 cost of living payments, starting from this Thursday.
We are also building on our successful Way to Work scheme, having smashed our ambition to get half a million people into a job in just five months, thanks to help from my hon. Friend the Member for Mid Sussex (Mims Davies). Dare I say, Mr Speaker, that that is way to go for Way to Work!
We are now putting more focus on those further from the labour market who are economically inactive or most at risk of inactivity, whether through the lifetime MOT offer or the £1.3 billion-worth of employment support for disabled people. That will help to grow the economy and ensure that more people are on the path to prosperity and prospects through work.
Rachel Hopkins
Many of my Luton South constituents are struggling to make ends meet. In fact, across the east of England, 50% of Citizens Advice debt clients are in a negative budget, with their monthly expenditure on essentials exceeding their income; that is up 12% from the same period in 2019. Does the Secretary of State still think that it is a good idea for the Government to raise taxes this year, when the UK is the only G7 country to do so?
Dr Coffey
The hon. Lady will be aware of the £37 billion package that is going to households, £15 billion of which is being deployed this year. People will already have received some elements of that through council tax support, and I have outlined the cost of living payment support. I could add to that the lifting of the national living wage to £9.50 an hour and the reduction in the taper rate to 55% for people who are working and on universal credit. We are targeting support at the most challenged low-income households, and we will continue to do that. Meanwhile, we will continue to try to do what we can to grow the economy to help households, so that we can tackle inflation overall.
Elliot Colburn (Carshalton and Wallington) (Con)
Dr Coffey
My hon. Friend continues to be a champion for his constituents. He will be aware of aspects of the Way to Work campaign that are different from how they were in the past. Far more job fairs are happening, bringing employers into jobcentres for interviews. That enables us to make quicker decisions, find out what is going wrong in the process and support people so that they can more quickly get the pay packet that they cherish.
Jonathan Ashworth (Leicester South) (Lab/Co-op)
As we have heard, it is expected that the energy price cap will rise by £450 more than was anticipated when the Government announced their cost of living package. A typical household will face energy bills of £3,250; that is more than a third of the value of the state pension. How on earth does the Secretary of State expect pensioners and families to cope this winter?
Dr Coffey
I think the right hon. Gentleman is referring to an external analyst’s prediction of what might happen with energy prices. Nevertheless, the Government have responded. We deliberately made sure that our cost of living payment package came out when Ofgem made its announcement, and that is why we tailored the cost of living payment support to help households. We will make sure that support for household energy costs goes to every single household in the country, in addition to our comprehensive package. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy leads on fuel poverty. I am conscious that in making decisions, he will consider the vulnerable the most, as all of us in the Government do.
Jonathan Ashworth
I appreciate that the Secretary of State may not be in her place come this October—who knows?—but she is currently in a Cabinet with a Chancellor and a Foreign Secretary, and she shares the Government Benches with a whole host of colleagues, who have made £30 billion to £40 billion-worth of unfunded tax cut commitments. Is not the truth that those tax cuts can be paid for only by further cuts to the state pension, further cuts to universal credit and further cuts to disability benefit, and that the reality is that the next Tory Prime Minister will make the cost of living crisis even worse?
Dr Coffey
Far from it; as has been shown yet again, this Conservative Government have stepped up to deal with the cost of living challenge, just as we did through covid, and we will continue to do so. That is why we will be spending £37 billion on this. As for support going forward, I am conscious that people who are running to be leader of the Conservative party and the future Prime Minister want, quite rightly, to make sure that we have an active, growing economy. I will leave them to be judged on their policies. I am the Secretary of State for Work and Pensions, and we are going ahead with the additional payments, starting this week. Many households will be looking forward to them, and I am pleased that we are able to deliver them.
Mrs Sheryll Murray (South East Cornwall) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Julie Marson)
As always, my hon. Friend is a fantastic advocate for her constituents in South East Cornwall. Jobcentres work with employers in all sectors to help them to connect with jobseekers who are looking for work, and to fill their vacancies. I encourage any employer to reach out to their local jobcentre. DWP staff recently held events alongside the National Farmers Union to promote jobs in agriculture and connect people to our sector-based work academy programmes.
Kirsty Blackman (Aberdeen North) (SNP)
The UK Government recently rejected the Work and Pensions Committee report’s recommendation to
“extend Child Benefit to all British children irrespective of their parents’ immigration status.”
People with no recourse to public funds do not qualify for the additional cost of living payments. Children are literally starving and suffering malnutrition because of this cruel policy. Does the Secretary of State believe that this is acceptable in the 21st century?
Dr Coffey
The hon. Lady refers to the fact that people without recourse to public funds are not eligible for benefits. When people arrive, I accept that they are not going to be eligible for child benefit. Any family in a state of difficulty can apply to the Home Office for a review of that status; it is for them to do so. At the same time, as I think we confirmed to the Select Committee when we discussed the matter at the hearing last week, it is for local councils to design the way they do the household support fund. It may be possible for people without recourse to public funds to apply to their local authority.
Sir Edward Leigh (Gainsborough) (Con)
Will the Secretary of State confirm that support for the welfare state depends on a kind of social contract where people realise that those who are pensioners or out of work should be helped because they have paid their taxes? How is support for the welfare state improved when 60,000 people a year are pouring across the channel, paying illegal smugglers—these are not the poorest of the poor—and being kept on social security, maybe for 10 years, without ever being deported? By the way, what does it cost?
Dr Coffey
I am conscious that through the help—the visa schemes—being put forward for Ukrainian citizens and for Afghan resettlement, there is access to public funds. My right hon. Friend will be aware that people who arrive in the country illegally are given a payment via the Home Office, I think, of a very small amount of money to pay for the day-to-day, but they are not eligible directly for benefits.
Ian Byrne (Liverpool, West Derby) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The hon. Gentleman will be aware that the state pension has almost doubled under the coalition and this Conservative Government. He will be aware that pensioner poverty is going down. He will be aware that the state pension is up on last year and the year before. He will also be aware that we are paying £1,500-worth of support. He should very much be aware of pension credit and should be making the case for it to all his constituents who can access the £3,300, on average, plus the household support fund. I am sure he is making the case to each and every one of his constituents.
Tony Lloyd (Rochdale) (Lab)
The Minister of State, Department for Work and Pensions (Chloe Smith)
The hon. Gentleman raises an important point that we take very seriously in the Department. We want to get the correct support to people as early as possible and in a way that engenders trust and the proper levels of support from our Department. He will, I am sure, be an avid reader in due course of the health and disability assessments White Paper, which will go into some of these points in greater detail, following on from the Green Paper, to which we had 4,500 consultation responses. However, I can assure him, and all other right hon. and hon. Members, that we want to be able to ensure that the right decisions are made in the first place, and considerable resources are being put into the Department for that purpose.
Wendy Chamberlain (North East Fife) (LD)
Last year there were 337,000 overpayments as a result of errors by the DWP, with the debt waived in only 10 cases. Claimants spend these funds in good faith, but are then required to make repayments that they simply cannot afford. Will the Minister agree to bring universal credit in line with legacy benefits by making no-fault debts non-repayable?
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
It is obviously important to ensure that we get our payments right, and we are working hard to do that, but it is also important to balance the needs of the taxpayer with those of benefit recipients. We do need to get that balance right.
Steve McCabe (Birmingham, Selly Oak) (Lab)
The Department’s annual report, released last week, has revealed that the estimate of the number of women who have been short-changed over their retirement pensions has risen by a further 103,000. That is not quite the rosy impression that the Select Committee was given when the Secretary of State and the permanent secretary appeared before it recently. Just how long will these women have to wait before they receive their legal entitlement, and can the Minister confirm that there will not have to be a further upward revision of these estimates?
Guy Opperman
It is unquestionably the case that this Government are trying to resolve matters that date back some 20 years. I might have wished that some of my predecessors who occupied the illustrious position of Pensions Minister, some of whom now sit on the Opposition Benches, had made a better job of monitoring these matters. We are fixing the problem. We have—definitely—more than 500 people working on it now, and, as I explained to the Select Committee, we will have upwards of 1,000, rising to 1,300, working on it on an ongoing basis; so it will be fixed in the very near future.
Anne McLaughlin (Glasgow North East) (SNP)
I know what the Government have said they are doing to increase the uptake of pension credit, and that is good; I do not want to hear it again, though. I also know that people can backdate their claims for pension credit, so anyone who makes a successful application by 24 August this year will receive the £650. However, I have been campaigning for the deadline to be extended to the end of the fiscal year, because I think that as we go into the winter, that is what will concentrate people’s minds when they have to make the very real choice between heating and eating. I am not asking the Minister to commit himself to doing this today, but will he commit himself to at least considering extending the deadline to 31 March next year?
Guy Opperman
The uptake of pension credit is clearly to be applauded, and I sincerely hope that the hon. Lady was behind the pension credit day of action and is behind the messages that we are all trying to put out. That is not all, however. On Thursday we will make the £326 cost of living payment, which will drop £1 million in payments every single working day, and there will be a further £324 payment in the autumn. We are also providing the energy support grant of £400, which will go to every individual in the country, as well as the £300 winter fuel payment, the council tax rebate, and various other household support grants. All those are available to individuals up and down the country, and will also support pensioners.
Mr Speaker
Order. If there are no further questions, I will suspend the sitting for two minutes.
Sitting suspended.
Ministers’ Severance Pay
(2 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Fleur Anderson (Putney) (Lab)
(Urgent Question): To ask the Chancellor of the Duchy of Lancaster if he will give a statement on severance pay for Ministers.
The Parliamentary Secretary, Cabinet Office (Mrs Heather Wheeler)
The severance pay for Ministers is established in legislation that was passed by Parliament in 1991 and that has been used by successive Administrations over several decades. The Ministerial and other Pensions and Salaries Act 1991 states that where a Minister of eligible age ceases to hold office and is not reappointed to a ministerial office within three weeks, they will be entitled to a severance payment of a quarter of their ministerial annual salary. The context of this legislative provision is the reality that ministerial office can end at very short notice indeed, that reshuffles are a fundamental part of the operation of Government and, by their nature, routinely remove Ministers from office, and that, unlike in other employment contexts, there are no periods of notice, no consultations and no redundancy arrangements. Section 4 of the Act therefore makes provision for severance payments.
This is a statutory entitlement, and it has existed and been implemented for several decades, by Governments of all stripes. Severance payments were made and accepted by outgoing Labour Ministers between the Blair and Brown years, as well as during the Administration in 2007, and by Liberal Democrat Ministers during the coalition. To ensure transparency, severance payments are published in the annual reports and accounts of Government Departments. As an example of the previous operation of this provision, the data published in 2010 indicated that severance payments made to Labour Ministers in that year amounted to £1 million. Finally, let me be clear that although this is a statutory entitlement, Ministers are able to waive such payments. This is not a matter for the Government; it is an entirely discretionary matter for the individuals concerned, and this is an approach that has been taken before.
Fleur Anderson
Thank you very much for granting this urgent question, Mr Speaker. I welcome the fact that there is a Minister to respond. In the middle of a cost of living crisis, and with families struggling to make ends meet and get to the end of each month, the British public will be rightly watching this distracted Government with disgust. They are too busy infighting to provide real solutions, and to add insult to injury, thousands of pounds of people’s hard-earned taxes will be handed out to former Ministers. By my reckoning, £250,000 of severance pay will be given to Ministers who have not been reinstated. Five former Secretaries of State will receive more that £16,000 each, including the former Secretary of State for Education, who was in post for 36 hours and is due to receive close to the annual starting salary for a teaching assistant.
This unprecedented wave of resignations and the avalanche of abdications make this a unique case. The vast majority were not sackings or forced resignations. The departures were caused entirely by a discredited Prime Minister clinging to office and a Conservative party unwilling to deal with it. Now our constituents are forced to foot the bill, paying for this Government’s chaos yet again. So I ask the Minister: what is the exact cost of these resignations to the taxpayer? Have any payments already been made to former Ministers? If so, how much and to whom? Will Ministers receive the severance in a one-off payment to their bank account? How do these payments represent good value for money to the public, and what arrangements are there to ensure that they can be waived, as she identified, and returned to the Treasury? Former Ministers need to look themselves in the mirror and decide if their constituents would wish them to accept this payment, and this whole Government must tell us if they can really defend this use of our money.
Mrs Wheeler
As I said earlier, and to answer the hon. Lady’s question, at this point no Ministers who resigned are entitled to receive a severance payment. We have a three-week window.
Michelle Donelan (Chippenham) (Con)
Does my hon. Friend agree that it is disingenuous of the Opposition to reference my alleged severance pay, as I made it clear almost immediately after resigning that I would not be taking such money?
Mrs Wheeler
Indeed, and I thank my right hon. Friend for confirming that she has already talked to the permanent secretary of the Cabinet Office and that she will not be receiving the payment.
Mr Speaker
We now come to the SNP spokesperson, Brendan O’Hara.
Brendan O’Hara (Argyll and Bute) (SNP)
Could there be a more fitting end to the tenure of one of the most discredited Prime Ministers in living memory than to have a slew of his former Ministers, motivated in the main by naked self-interest, finally abandoning the ship that everyone else could see was sinking months ago and, in the process, costing the public purse hundreds of thousands of pounds? It is quite astonishing, particularly when, for so many people across the United Kingdom, keeping body and soul together at this time of crisis is a daily challenge that will only get tougher.
I appreciate that the Minister has said that this payment is discretionary and that no one is forced to accept it, so will she join me in asking everyone in receipt of such a payment to refuse it, to return it or to donate it to charity? Will that be made public when it is done? Does she agree that this system, whereby a disgraced Prime Minister—one who is heading out the door, we think—can appoint Ministers knowing they will be entitled to severance pay in a few months’ time, is fundamentally broken and requires an immediate overhaul?
Mrs Wheeler
I am afraid I do not agree with the hon. Gentleman. It is quite clear that, within the three-week period, Ministers who have left can decide for themselves whether they should accept the money and make that decision clear to the permanent secretary so that no money leaves the Treasury before having to come back. I hope that is totally clear.
Selaine Saxby (North Devon) (Con)
Does my hon. Friend agree that it is outrageous that the Liberal Democrats put out an article last week stating that I, as a Parliamentary Private Secretary, was paid £22,375 for a job we all know is unpaid, and that I received £5,594 in severance pay? Does she also agree that this type of libellous statement, which the Liberal Democrats choose to put out about us, has earned them the nickname of “the Fib Dems”?
Mrs Wheeler
That is an astonishing thing for the Liberal Democrats to put out. It is a straight, flat lie that they should know very well should not be put out by any political party. When the hon. Member for North East Fife (Wendy Chamberlain) stands to ask a question, which is a perfectly reasonable thing for her to do, I sincerely hope she apologises and confirms that the Lib Dems will put out a clarification as large as the original piece.
Barry Gardiner (Brent North) (Lab)
I make it clear that I do not want to cast aspersions on any individual Minister.
This morning I visited the care workers of the St Monica Trust in Bristol. One worker told me that the average wage is between £16,000 and £17,000, and that the trust is asking them to take, in one case, a reduction of £6,000. The House will consider legislation later today that enables agency workers to undercut striking workers, in an atmosphere in which we are talking about levelling up. Does the Minister understand that these payments should not be made where a Minister resigns voluntarily? I understand it if a Prime Minister says, “Your services are dispensed with,” but to make any such severance payment following a voluntary resignation is really wrong.
Mrs Wheeler
I recall that, during the Blair and Brown years, the Labour party decided it did not need to change the legislation. The legislation is as it is, there is a three-week period, and I think that is completely fair.
Wendy Chamberlain (North East Fife) (LD)
First, I commit to responding directly to the hon. Member for North Devon (Selaine Saxby) and the Minister on what statements were put out.
This seems to be a situation entirely of the Conservatives’ making. We are potentially at risk of making a mockery of our system. Given that the Minister says it has been more than 30 years since this legislation was looked at, does she agree that now is the time to revisit it and that, at the very least, we should look at a minimum term of service before a Minister or Secretary of State is entitled either to waive or to receive a severance payment?
Mrs Wheeler
That is a fair question. The answer I would give the hon. Lady is that, obviously, the Liberal Democrat who resigned during the coalition did not think it was worth looking at either.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Does the hon. Lady think the public will consider any resigning Minister who is a Tory leadership candidate to be setting the right example by trousering this cash?
Mrs Wheeler
Fortunately, I am going to make absolutely no comment about the fact that we have many, many wonderful candidates to be our next leader who, frankly, will knock the Labour party into a cocked hat when they are elected.
Matt Western (Warwick and Leamington) (Lab)
I understand that approximately £400,000 will be paid out in severance payments. Will the Minister agree to publish a full list of the amounts being paid out to those individuals? Will she confirm that these moneys will be coming from Departments, such as the Department for Education, and will therefore have an impact on the budgets of much-pressed Departments and, for example, on schools or other institutions?
Mrs Wheeler
The hon. Gentleman asks a perfectly reasonable question. It is laid out in statute how the amounts and payments are made, and it is in the annual accounts of the Departments.
David Linden (Glasgow East) (SNP)
A supermarket worker from Shettleston would not get thousands of pounds in a severance payment. Why should Rishi Sunak, the richest man in Parliament, get a severance payment?
Mr Deputy Speaker (Mr Nigel Evans)
Order. Do not name Members by their names, please. You could say former Chancellor of the Exchequer—
Mrs Wheeler
Thank you, Mr Deputy Speaker. Absolutely, we do not use names, do we? I thank the hon. Gentleman for the question. It is very simple: this is a matter of statute law, it has been around since 1991, and all the different political parties have taken use of it. That is where we are.
Mr Deputy Speaker
Mr Brown, let’s see if you can do better than your colleague.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Thank you, Mr Deputy Speaker. When the new Education Minister gave a one-fingered salute to the crowd outside Downing Street, that was symptomatic of this Government, who have been putting two fingers up to the entire UK for the tenure of the former Prime Minister. Given that we have a zombie Government, with Ministers who are clearly in place on a temporary basis, does this Minister agree that they should not take severance payments when they rightfully get sacked when a new Tory leader comes in?
Mrs Wheeler
The hon. Gentleman is slightly off point regarding the Education Minister; I would like him to remember that the lady in question has had seven death threats against her, and the way the baying mob were reacting at the time was astonishing. As regards anything else, people will use the three-week window to decide whether they take the severance payment or not, and the law is the law.
Ms Marie Rimmer (St Helens South and Whiston) (Lab)
It is a sensitive time. People are going hungry, they are going to be cold, although they are not at the moment, and they have to deal with energy prices. Yes, we hear, “This is statute and that is it. It is up to the individual.” We were told this once before, and the individual can do something, but surely at this time, with all that is going on, when we are in a poor state as regards respect from our public, we should call on the relevant people to reflect the sensitive situation and to say en masse, “We do not want this. We will not accept it.” That would go a long way with the public.
Mrs Wheeler
I thank the hon. Lady, whom I know to be an unbelievably caring lady. It is important that comments and sentiments like that are expressed in this Chamber, as they make the House of Commons the sort of place that everybody in a living democracy wants to have. I will reflect on her views. I repeat, loudly, that there is a three-week window and individuals can reflect on the situation themselves, but I do thank her for the question.
Bill Presented
Parliamentary Elections (Optional Preferential Vote) Bill
Presentation and First Reading (Standing Order No. 57)
Paul Maynard, supported by John Stevenson, presented a Bill to introduce the optional preferential voting system for Parliamentary elections; and for connected purposes.
Bill read the first time; to be read a second time on Friday 9 September, and to be printed (Bill 138).
Energy (Oil and Gas) Profits Levy Bill: Business of the House
Ordered,
That the following provisions shall apply to the proceedings on the Energy (Oil and Gas) Profits Levy Bill:
Timetable
(1) (a) Proceedings on Second Reading and in Committee of the whole House, any proceedings on Consideration and proceedings on Third Reading shall be taken at today’s sitting in accordance with this Order.
(b) Proceedings on Second Reading shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings on the Motion for this Order.
(c) Proceedings in Committee of the whole House, any proceedings on Consideration and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion four hours after the commencement of proceedings on the Motion for this Order.
(d) This paragraph shall have effect notwithstanding the practice of the House as to the intervals between stages of a Bill brought in upon Ways and Means Resolutions.
Timing of proceedings and Questions to be put
(2) When the Bill has been read a second time, it shall, despite Standing Order No. 63 (Committal of bills not subject to a programme order), stand committed to a Committee of the whole House without any Question being put.
(3) (a) On the conclusion of proceedings in Committee of the whole House, the Chair shall report the Bill to the House without putting any Question.
(b) If the Bill is reported with amendments, the House shall proceed to consider the Bill as amended without any Question being put.
(4) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph (1), the Chair or Speaker shall forthwith put the following Questions in the same order as they would fall to be put if this Order did not apply:
(a) any Question already proposed from the chair;
(b) any Question necessary to bring to a decision a Question so proposed;
(c) the Question on any amendment, new Clause or new Schedule selected by the Chair or Speaker for separate decision;
(d) the Question on any amendment moved or Motion made by a Minister of the Crown;
(e) any other Question necessary for the disposal of the business to be concluded; and shall not put any other questions, other than the question on any motion described in paragraph (9)(a) of this Order.
(5) On a Motion made for a new Clause or a new Schedule, the Chair or Speaker shall put only the Question that the Clause or Schedule be added to the Bill.
(6) If two or more Questions would fall to be put under paragraph (4)(d) on successive amendments moved or Motions made by a Minister of the Crown, the Chair or Speaker shall instead put a single Question in relation to those amendments or Motions.
(7) If two or more Questions would fall to be put under paragraph (4)(e) in relation to successive provisions of the Bill, the Chair shall instead put a single Question in relation to those provisions, except that the Question shall be put separately on any Clause of or Schedule to the Bill which a Minister of the Crown has signified an intention to leave out.
Miscellaneous
(8) Standing Order No. 82 (Business Committee) shall not apply in relation to any proceedings to which this Order applies.
(9) (a) No Motion shall be made, except by a Minister of the Crown, to alter the order in which any proceedings on the Bill are taken, to recommit the Bill or to vary or supplement the provisions of this Order.
(b) No notice shall be required of such a Motion.
(c) Such a Motion may be considered forthwith without any Question being put; and any proceedings interrupted for that purpose shall be suspended accordingly.
(d) The Question on such a Motion shall be put forthwith; and any proceedings suspended under sub-paragraph (c) shall thereupon be resumed.
(e) Standing Order No. 15(1) (Exempted business) shall apply to proceedings on such a Motion.
(10) (a) No dilatory Motion shall be made in relation to proceedings to which this Order applies except by a Minister of the Crown.
(b) The Question on any such Motion shall be put forthwith.
(11) (a) The start of any debate under Standing Order No. 24 (Emergency debates) to be held at today’s sitting shall be postponed until the conclusion of any proceedings to which this Order applies.
(b) Standing Order No. 15(1) (Exempted business) shall apply in respect of any such debate.
(12) Proceedings to which this Order applies shall not be interrupted under any Standing Order relating to the sittings of the House.
(13) (a) Any private business which has been set down for consideration at a time falling after the commencement of proceedings on the Motion for this Order shall, instead of being considered as provided by Standing Orders or by any Order of the House, be considered at the conclusion of any proceedings to which this Order applies.
(b) Standing Order No. 15(1) (Exempted business) shall apply to the private business so far as necessary for the purpose of securing that the business may be considered for a period of three hours.—(Mr Simon Clarke.)
Energy (Oil and Gas) Profits Levy Bill
Monday 11th July 2022
(2 years, 5 months ago)
Commons ChamberRead Full debate Energy (Oil and Gas) Profits Levy Act 2022 View all Energy (Oil and Gas) Profits Levy Act 2022 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 11 July 2022 - (11 Jul 2022)
The Chief Secretary to the Treasury (Mr Simon Clarke)
I beg to move, That the Bill be now read a Second time.
People across the country are facing rising energy costs and an increase in the overall cost of living. Of the basket of goods and services that we use to measure inflation, a record proportion are seeing above average price increases. Indeed, the country is now experiencing the highest rate of inflation for 40 years, which is causing acute distress to the people of this country. In May the Government announced a series of measures to help the British people during this difficult time, in which we have seen oil and gas prices reach new highs; oil prices have nearly doubled since early last year and gas prices have more than doubled. This is a global phenomenon that is driven by factors out of any single Government’s control, in large part resulting from Russia’s illegal war.
With increased prices at the global level, profits from oil and gas extraction in the United Kingdom have also shot up. These are unexpected, extraordinary profits—above and beyond what forecasters could have expected the sector to earn. Because of these extraordinary profits, and to help fund more cost of living support for UK families, the Government are introducing an energy profits levy. The temporary levy is a new 25% surcharge on the extraordinary profits. When oil and gas prices return to historically more normal levels, it will be phased out.
Stephen Flynn (Aberdeen South) (SNP)
I would welcome some clarity from the Minister as to what his Government regard normal prices to be, because those involved in the industry will be watching on at this moment.
Mr Clarke
The answer is: prices of an order that we saw prior to Russia’s invasion of Ukraine and prior to some of the inflationary pressures resulting from the covid disruption—prices more akin to those seen in 2021. Indeed, we could also refer to factors that predate that, back to 2019. The system has clearly been in flux, but I would certainly not want to encourage the artificially low prices of 2020 to be seen as a baseline for these purposes.
Stephen Flynn
I thank the Minister for giving way again. Getting investment into the industry is one of the Government’s big arguments for the tax break incentives they are providing to the industry. How can that possibly happen when they do not even say what a normal price is?
Mr Clarke
I will set out more about our investment incentives in a moment. We are not going to tie ourselves to a specific price level, but will obviously look towards a return to more normative market conditions—not, as I said, the artificial lows of 2020—such as the pre-crisis situation in 2019 and some of the much healthier pattern of last year, prior to what Russia has done in Ukraine, which has obviously driven prices to new highs. That gives the House a sense, but we will obviously set out our thinking well in advance of repealing the levy.
I am firmly committed to our net zero strategy.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Will the Minister give way once more?
Mr Clarke
No, I will not; I am going to make some progress.
As set out in the energy security strategy, the North sea will still be a foundation of our energy security for years to come. Currently, about half our demand for gas is met through domestic supplies. In meeting net zero by 2050, we have to be realistic; we will still be using about a quarter of the gas that we use now. It is therefore necessary to incentivise investment in oil and gas, and to encourage companies to reinvest their profits to support the economy, jobs, and our energy and security, but it is possible to tax extraordinary profits fairly and to incentivise investment. That is why, within the energy profits levy, a new “super-deduction” style relief has been introduced to encourage firms to invest in oil and gas extraction in the UK. We expect that the energy profits levy, with its investment allowance, will lead to an overall increase in investment. Indeed, one oil and gas company has already said that the immediate investment allowance should spark further investment in the North sea. The new 80% investment allowance will mean that, overall, businesses will get a 91p tax saving for every £1 they invest, providing them with a clear incentive to do so. This nearly doubles the tax relief available and means that the more investment a firm makes, the less tax it will pay. Unlike Labour’s windfall tax in 1997, this levy both incentivises investment and raises more revenue.
The energy profits levy contains an investment allowance that doubles the overall investment relief for oil and gas companies, unlike Labour’s proposal of a few weeks ago. Our levy raises around £5 billion over the next 12 months against Labour’s estimate of around £2 billion for its proposals. Its windfall tax would raise less than £70 per household, not £600 as it claimed. In fact, the Opposition’s regressive VAT plans would give millionaires in mansions more off their bills than those in need. They are now caveating their windfall tax costings by stating that their £600 per household support will be supported by “other measures”. By that I presume they mean more public spending and a higher rate of taxation for hard-working people across this country. As usual with Labour, the sums sadly do not add up.
The new tax we are introducing today ensures that the extraordinary and unexpected profits from which oil and gas companies have benefited are taxed fairly and provide a significant investment incentive. This is a sensible considered move and one that will be warmly welcomed across the House.
Our plans mean that the oil and gas producers can claim the allowance when their spending on investment is actually incurred. This is unlike the allowance under the existing permanent tax regime for oil and gas companies, which can be claimed only once income is received from the field, subject to the investment, and, as some Members of the House will know, that can take several years.
I want to make it clear what the investment allowance will apply to. First, if capital or operating expenditure qualifies for supplementary charge allowance, it will qualify for the energy profits levy allowance. As the levy is targeted at the extraordinary profits from oil and gas upstream activities—that is the profits that came about owing to global price increases—it makes sense that any relief for investment must also be related to oil and gas upstream activities.
Secondly, such spending can be used to decarbonise the oil and gas production, for example through electrification. Therefore, any capital expenditure on electrification, as long as it relates to specific oil-related activities within the ringfence, will qualify for the allowance.
Stephen Flynn
I thank the Minister for giving way once again; he is being very generous. On that specific point, the Financial Secretary to the Treasury stated the same last week. It is good to have that clarification, but why is it not written into the text of the Bill?
Mr Clarke
I can provide that assurance from the Dispatch Box. Examples of electrical expenditure on plant and machinery will be things such as generators, which include wind turbines, transformers and wiring. I also remind the House that there are other tax and non-tax levers to support non-oil and gas investments, such as in renewables. Those levers include the super-deduction and our competitive research and development tax credit regime. Importantly, the returns on these investments are taxed at 19% rather than at 65% as for UK oil and gas profits.
We have been listening closely to feedback from industry. Late last month, my right hon. Friend the former Chancellor met industry stakeholders in Aberdeen to discuss the levy and to make sure that it works as the Government intend it to. As my right hon. Friend the Financial Secretary to the Treasury confirmed in a debate last week, the Government have changed the legislation, which is reflected in the Bill before us today.
Tax repayments that oil and gas companies receive for petroleum revenue tax related to losses generated by decommissioning expenditure will not be taxed under the levy. These are repayments that are typically taxed under the permanent tax regime. However, as wider decommissioning expenditure is also left out of the account for the levy, this change is both consistent and fair. I wish to reiterate my thanks to those in the industry with whom we have engaged on this matter, and to again reassure the House that, with this change, the Government still expect the levy to raise around £5 billion over the next year.
On how long the levy will be in place, it will take effect from 26 May this year and, when oil and gas prices return to historically more normal levels, it will be phased out. The sunset clause in the Bill ensures that the levy is not here to stay. There are very few taxes that have their expiry date set in law, so this provision demonstrates the Government’s commitment to keeping the levy temporary and gives oil and gas companies further reassurance as they seek to plan their investments.
Our permanent oil and gas tax regime is competitive globally against similar operating environments and is lower than that of Norway, the Netherlands or Denmark. However, it is both fiscally prudent and morally right that we have a temporary and targeted levy that applies to extraordinary profits in our oil and gas sector and reflects an extraordinary global context.
Through the Bill, the levy will raise some £5 billion of revenue over the next year so that we can help families with the cost of living through significant and targeted support to millions of the most vulnerable. These are extraordinary times and we are seeing extraordinary prices, and that requires extraordinary Government action.
I did not come in to politics to raise taxes, nor did this Government, but we are about delivering the action required to support families in their time of need. At the same time, the Government are clear that we want to see the oil and gas sector reinvest its profits to support our economy, jobs and energy security. For those reasons, I commend the Bill to the House.
James Murray (Ealing North) (Lab/Co-op)
I thank the Minister for setting out how North sea oil and gas producers will be affected by the measures the Bill seeks to introduce—even though he seemed unable to say the words “windfall tax” when referring to it at any point during his speech.
This Bill is long overdue. We are finally debating this legislation in Parliament, more than seven months after the shadow Chancellor first set out Labour’s plans for a windfall tax on oil and gas producers’ profits. In the seven months since Labour first called for a windfall tax, cost of living pressures for people have grown relentlessly, and in those seven months, oil producers’ profits have soared.
Since the start of this year, energy bills have spiralled by £700 for a typical household, inflation across the board has hit 9.1%, the highest in 40 years and, despite Tory smoke and mirrors with thresholds, average earners will still be paying £300 more in national insurance contributions by 2027.
Alan Brown
The hon. Gentleman is making the point that Labour has campaigned on this for seven months. At the same time, the SNP has been calling for a much wider profits levy to address excess profits of other companies. Why is Labour not looking at that? I will give an example: Tesco chair John Allan, as we know, called for the windfall tax on oil and gas, but Tesco trebled its profits from £636 million to more than £2 billion. Why not an excess profit levy on Tesco and others that have profited through the pandemic?
James Murray
I look forward to the hon. Gentleman supporting Labour’s amendments and new clauses to the Bill as we seek to cut some of the loopholes the Government have introduced, which I will turn to in a moment.
Let us not forget that, while cost of living pressures on people across the country have soared relentlessly, oil and gas producers’ profits have climbed too, with some tripling this year. A fair solution has been staring the Government in the face: levy a one-off windfall tax on North sea oil and gas producers’ 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 just such a tax, Conservative MPs opposed it outright. Leading that opposition the very next day was the then Education Secretary, the right hon. Member for Stratford-on-Avon (Nadhim Zahawi). He is now of course the Chancellor, so this is his Bill. At the time of our announcement, the now Chancellor, who was an oil industry executive before becoming an MP, came out firmly against the tax on the grounds that oil producers were “already struggling”. When she responds, I would be grateful if the Financial Secretary to the Treasury confirmed whether the Chancellor supports his own legislation today.
Back in January, of course, it was not only the now Chancellor who opposed the tax. The Business Secretary opposed it too, saying:
“I have never been a supporter of windfall taxes.”
The then Northern Ireland Secretary, the right hon. Member for Great Yarmouth (Brandon Lewis), said that he thought a windfall tax sounded attractive, but did not work. The Deputy Prime Minister claimed 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.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
This demonstrates the difference between Opposition Members and Conservative Members, in that we do not come lightly to the decision to increase taxes on successful British industries. Labour and the SNP would tax anything that moved; we take a long time to think through our plans carefully. That is why we are presenting this plan today, which is far removed from Labour’s plan. That would decapitate the oil and gas industry—which, by the way, Labour does not support—and we would have the taps turned off tomorrow.
James Murray
The hon. Member is right that Conservative Members have taken a long time to come round to this. They have taken seven months to come round to it—seven months in which the cost of living pressure on people across the country has risen relentlessly and in which oil producers have seen extraordinary profits. That delay has not been without cost.
Despite our common-sense plan for a windfall tax having wide support across the country for many months, with even oil bosses backing its logic, Conservative Ministers and their colleagues on the Back Benches simply refused to get on board—until 26 May, the day after the Sue Gray report was published. That was the day the Prime Minister and the former Chancellor suddenly changed their minds. It seemed clear that what had finally caused the Conservative leadership to change course and back a windfall tax was not the deafening calls from people across the country for help with their energy bills, nor the blatant unfairness of oil and gas producers’ profits soaring in the middle of a cost of living crisis; rather, it was the need for a different set of headlines in that week’s news. That is a grubby way to govern, and it is proof, if further proof were needed, that the Conservatives are not fit to lead our country.
Now, after months of refusing to act, Ministers are rushing this Bill through Parliament with just one day of debate and with a consultation period on the draft legislation of just seven days. As Tax Justice UK, working with the campaign group Uplift, has said, such a short period of just one week for consultation on the draft Bill is
“a breach of well-established legal principles of procedural fairness.”
As it points out, having a longer consultation period would not delay the levy taking effect, as the Bill names its start date as 26 May. It fears that the shorter consultation period the Government have chosen offers
“those with most resources—such as oil and gas producers—more opportunity to influence the shape of the legislation.”
Alan Brown
It is good that the hon. Gentleman mentioned Tax Justice UK. It is probably worth speaking to it about pandemic profits and a wider profits levy, because that it is what it advocated. Hopefully when he is discussing the oil and gas stuff with it, he will discuss a wider profit levy as well.
James Murray
I thank the hon. Gentleman for his intervention. We discuss many matters with Tax Justice UK, not least its response to the ridiculously short consultation period on the draft of the Bill that the Government are now seeking to rush through Parliament in a day.
Despite the fact that Ministers may be in a rush today, we know that their story until recently has been one of delay. Those months of delay in backing a windfall tax mean that the public finances have missed out on billions of pounds of tax revenue that could have gone towards further help for people struggling with the cost of living. But 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. On behalf of the people we represent across the country, we were relieved that some help with soaring energy bills was finally on its way. That help is set to include a payment of £400 to all domestic energy bill payers. We welcomed that promise of support announced alongside the windfall tax, and we were relieved that the Government had finally listened to what we and so many others had been saying as they agreed to drop the “buy now, pay later” compulsory loan scheme that had been promised before. But we were dismayed to learn that some of the people who need the help least will be getting that £400 payment several times over. Because this package has been cobbled together at the last minute, people who live in more than one home will get £400 for each of them, so a total of £200 million of public money will go towards people with multiple properties. That is not fair, it is not a good use of public money, and, as we see far too often, it is public money being casually wasted by this Government.
While that particular loophole may have been the result of carelessness or haste, the Bill contains another loophole that has been created by design—a brand-new tax break for oil and gas producers that will give money back to the same firms that were supposed to be paying their fair share through the windfall tax. This tax break means that oil and gas producers will receive an unprecedented level of subsidy for their spending on oil and gas-related activities. For every £100 an oil and gas producer invests in the North sea, they will receive £91.25 from the taxpayer. That compares with £25 that companies receive for investing in renewable energy—a figure that will fall to just £4.50 from April 2023.
Andrew Bowie
Although the hon. Gentleman is talking about how the Labour party likes to support working people, he is quite obviously abandoning all those working people who rely on the oil and gas industry for their employment, including the many thousands who live in my constituency. Given that he has had so many months to think about this, how many times have he and his shadow Cabinet colleagues actually met those in the oil industry to discuss this and see how it impacts on them?
James Murray
I and my hon. Friends have had discussions with them many times, and it is absolutely clear that even oil company bosses agree with the logic of a windfall tax, saying that it would not affect their investment plans.
James Murray
No, I am not going to give way. I have been generous in giving way, and I am going to make some progress now.
This is a subsidy that not even oil executives think is necessary. BP’s chief executive, who in November last year said that soaring global commodity prices had made his company a “cash machine”, told shareholders in May that the company’s £18 billion of investment plans were
“not somehow contingent on whether or not there is a windfall tax.”
Yet despite even oil executives questioning its worth, the Government are pushing ahead with this tax break. Our analysis has shown that this means a third or more of any revenue from the new levy could be handed straight back to oil and gas producers.
The truth is that this tax break means that money that is supposed to be helping people struggling with their home energy costs will instead go back to the very oil and gas producers that have been making record profits during the energy crisis. Furthermore, that money will subsidise projects that almost certainly would have happened anyway. There is no requirement in the Bill for investments claiming this tax relief to be additional to what was already planned.
I wonder whether the Financial Secretary to the Treasury wants to correct what she said in this Chamber on 6 June. That day, she said:
“The investment relief should not be available for investments that are deadweight. It should be for new investments.”—[Official Report, 6 June 2022; Vol. 715, c. 546.]
Yet there is nothing in the Bill to make sure the tax relief it introduces goes towards investments that are new. Above all, let us remember that we are currently holding the COP26 presidency and being trusted with a position of leadership in the world’s efforts to tackle the climate crisis. It is astonishing and appalling that, at this of all times, we are giving 20 times more in taxpayer incentives to oil and gas producers than will be offered to firms investing in renewable energy.
While this Bill has plenty to say about tax breaks for oil and gas producers making extraordinary profits, it is silent on the idea of a windfall tax on the electricity generation sector. We know the Government were planning to tax the sector’s profits, as it was widely briefed in late May that the former Chancellor had ordered Treasury officials to draw up plans for a windfall tax on electricity generators. The uncertainty created by this will-they-won’t-they hokey-cokey on taxing profits from electricity generation risks discouraging vital investment in our future energy security.
As the Government are well aware, the price of electricity generated from renewable sources is currently linked to the price of gas. The spike in gas prices we are facing has therefore pushed up electricity prices, despite the costs of generating electricity from renewable sources not having changed, yet there is nothing about the electricity generation sector in today’s Bill and no detail on any wider plans from the Government to delink electricity prices from the price of gas. All we were promised in the explanatory notes published with the draft Bill was a vague intention that
“the government will urgently evaluate the scale of these extraordinary profits and the appropriate steps to take.”
I therefore urge the Financial Secretary in her response to take this opportunity to say, once and for all, whether the Government will or will not be introducing additional taxes on this sector, and when the Government will bring forward urgent legislation to delink the price of electricity from the price of gas. We are not claiming that a solution to this is simple, but it is the job of Ministers, and a sign of leadership in government, to plan ahead and solve the challenging issues our country is facing.
The windfall tax is a way to offer immediate help to people now, but we need to be investing in the long term to keep energy bills down and make our economy more secure and more sustainable. That is why the Government should be adopting not just our plan for a windfall tax, but also our wider plan to improve energy security and keep energy bills lower in the future. Labour’s plan would see us accelerate home-grown renewables and new nuclear, double onshore wind capacity, reform our broken energy system and retrofit 19 million homes to save households an average of £400 a year on their bills. From the Government, however, all we have in front of us today is a Bill that gives a tax break for oil producers’ continued spending in the North sea. Once again, this Government lurch from crisis to crisis with no plan to fix our broken system and provide the security we need.
We are relieved that the Government are finally proceeding with the windfall tax, and we will be supporting this Bill today, but we will come back to the detail of it in Committee of the whole House. At that stage, we will urge Ministers to make right their delay in introducing the windfall tax and to drop the unnecessary tax break for oil producers that undermines the impact of this windfall tax and our country’s wider efforts to tackle the climate crisis.
The Conservatives’ approach to the windfall tax shows that they are not fit to govern. When we called for a windfall tax, they wasted months opposing it before finally changing course. Now they are undermining their own windfall tax with a new tax break for oil companies. When it comes to the long-term challenges we face, they simply do not have the plans we need for the future. That goes for the former Chancellor, the current Chancellor and all the Conservative leadership candidates as much as it does for the outgoing Prime Minister. Changing the person at the top of the Conservative party will not change anything. We need a change of Government, and that means we need a Labour Government.
Peter Aldous (Waveney) (Con)
This Bill is of particular interest to me, as not only is the cost of living crisis hitting hard in the Waveney constituency, but we need jobs based on the North sea to revitalise the local economy. I should also point out that I chair the British offshore oil and gas industry all-party parliamentary group, as the industry is a significant employer in the Lowestoft and Great Yarmouth area.
It is necessary to balance the need for short-term measures to support people through an unprecedented challenge, caused by covid and exacerbated by Russia’s brutal invasion of Ukraine, against our long-term priority of promoting investment in the UK continental shelf, which will not only revitalise coastal communities but help us achieve our net zero obligations. It is important to point out that the activities taking place on the UK continental shelf are not just the extraction of oil and gas, but those in emerging new lower carbon industries such as offshore wind, hydrogen production and carbon capture, utilisation and storage, all of which are inextricably linked. Any levy on the oil and gas sector, if poorly thought through and poorly drafted, could have a negative impact on investment in those emerging industries, which are so vital to our future.
There is concern that there is a lack of a coherent long-term energy strategy. This Bill, printed on 5 July, in many respects conflicts with the Energy Bill published the very next day. The latter Bill aims to boost the UK’s energy independence and security, attract private investment, reindustrialise the economy and create jobs through clean technologies. What is required is a seamless thread that runs through all aspects of energy policy, from our long-term strategy for producing energy to the need for a major step change in how we insulate our homes and our businesses, right through to the support for those who need it most at the current time. Those latter initiatives should build on policies already in place, such as the energy price cap, the warm home discount and the energy company obligation. We should also look to add to them with support such as the social tariff.
Underpinning this integrated approach should be how we ensure that we fully realise the great opportunity to create exciting, new jobs and how we can best provide people with the necessary skills. In mapping out the strategy with particular regard to this levy, the Government should have in mind the following considerations. The first is the vital importance of not inhibiting investment in decarbonised projects that will create jobs and help us meet our net zero obligations.
Secondly, the Government must have it in mind that investment in energy projects is global and footloose and, if we have an unstable fiscal regime, business will go elsewhere. Thirdly, they must ensure, and not undermine, the security of our energy supply. Fourthly, they should have regard to the negative impact on not just those high-profile oil and gas majors, but the supply chain companies located in many constituencies that are invariably highly innovative small and medium-sized enterprises and are the lifeblood of our local economies. Fifthly, notwithstanding that the Bill contains a sunset clause, there remains some uncertainty on the levy’s timeframe, which I hope the Minister will clarify.
Taking those considerations into account, the amendments and clarification that the Government have made are welcome. They include the exclusion of petroleum revenue tax rebates from the levy, reassurance that capital expenditure on electrification linked to oil and gas is included in the investment allowance, and the inclusion of the aforementioned sunset clause.
That said, more changes would be welcome to reduce the fiscal uncertainty, so I would be grateful if the Government considered the following suggestions. To support SMEs, they should introduce a small profit allowance to allow companies with small profits to be exempt from the levy. That would assist small companies that have been investing for many years. They accumulated significant losses when oil and gas prices were low and are now making only marginal profits.
There should also be support for decarbonisation schemes to ensure that projects such as the electrification of oil and gas production facilities benefit from the capital allowance. A regular review mechanism should be included to ensure that the levy is delivering on its aims and is not having any unintended consequences. There is also a need for regular ongoing dialogue with the industry and the sector’s investors.
I understand why the Bill is being introduced—we are in unprecedented and deeply troubling times—but I am mindful that unintended consequences could undermine much-needed inward investment into the UK, particularly along the North sea coast, which is vital to the regeneration of towns such as Lowestoft. I therefore urge the Government to do all they can to address those concerns, and I hope that the Minister will do that in her summing up.
Stephen Flynn (Aberdeen South) (SNP)
It would be remiss of me as MP for Aberdeen South not to reflect on the fact that last week marked 34 years since the Piper Alpha disaster. It is all well and good for Members to talk about the Bill, but it is important to reflect on the sacrifices that many people have made in the North sea, particularly my constituents and those of the hon. Members for Banff and Buchan (David Duguid) and for West Aberdeenshire and Kincardine (Andrew Bowie), who continue to work in inhospitable terrain daily. I also reflect on the ultimate sacrifice that was paid by so many people long ago; I am sure the Minister will join me in that in her summing up.
On a less serious note, it is funny that we are in the midst of a leadership contest where all we hear about is tax cuts—some have promised £200 billion of tax cuts—yet the Chief Secretary to the Treasury is in the unenviable position of coming to the Chamber to tell us that he will hike taxes to 65% on the oil and gas sector. The irony of that will not be lost on anyone present. Importantly, that tax hike is four times greater than the £1.2 billion that the Opposition pushed for in January, so I congratulate him on being the only Conservative at this moment who appears to want to hike taxes.
Seriousness is important in this debate, however, because we are talking about why the legislation is needed. All hon. Members present are aware of the severe challenges that people up and down the country are facing. Energy prices are absolutely skyrocketing and we have all seen the troubling news in the last couple of days that they are expected to go higher than even Ofgem anticipated. There is also the knock-on impact of inflation, which is away to hit double figures. Fuel costs are skyrocketing. Clothing costs are skyrocketing. Food costs are skyrocketing. Interest rates are going up. Whichever way people turn, irrespective of where they live on these isles, they are getting squeezed and hammered. And the situation is not going to get better: we know the UK under the leadership of the current United Kingdom Government has the slowest growth in the entire G20 outside of Russia and the true effects of Brexit continue to be felt.
So implementing a policy that puts money into people’s pockets is necessary and we of course support the principles of what the Government are seeking to do in that regard. It is worth reflecting on the fact that we are now at a point where the UK Treasury has coined some £400 billion from Scotland’s North sea oil and gas sector. Is it not a pity that we are returning to the well once again? We look enviously across the North sea at Norway, which has a sovereign wealth fund from its own oil and gas sector. It is a bigger basin there, but that fund sits at around $1 trillion. What a comparison to this Government. Not only are they going back to the Scottish well to try to put in place financial support for people, but they are at this crux, where they do not necessarily know what it is and where they are seeking to go, because the Bill was undoubtedly hastily written on the back of Sue Gray’s report, as the Minister acknowledged earlier, when he could not even tell us at what price the levy would be removed. He talks about a normal price for oil and gas. I do not know what a normal price is for oil and gas; I am the MP for Aberdeen South and I have no idea what a normal price for an oil and gas barrel should be, and I do not think any Members on the Government Benches do. That offers absolutely no certainty to industry, irrespective of what the Government seek to suggest.
Perhaps the most glaring omission from the Bill is the fact that the Government are going to offer tax incentives in relation to further exploration, but we will not have anything in the Bill on renewable technologies directly linked to the offshore industry. Those tax incentives are not going to be applied to the renewables industry itself. We were told that is outwith the scope of the Bill, but it is a great disappointment that the Government had an opportunity to seriously incentivise investment in renewables and chose not to do so.
We are of course talking about the wider picture at the present time and I reflected earlier on the UK Government’s desire to cut taxes, but we have not heard about climate change from any single Tory leadership candidate; what are their views on climate change? It is disappointing that there is no talk in relation to this Bill about the journey to net zero or the climate compatibility checks that I think we all across this Chamber, and indeed in industry, agree with.
It is clear, from looking at the situation at the moment, why the Bill is needed. The Government chose to introduce it when they did for reasons of political expediency, but we cannot allow the Bill to simply go through without attempting to improve it and I look forward to doing that at Committee stage.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I ask Members to respect the maiden speech conventions as I call and welcome Simon Lightwood.
Simon Lightwood (Wakefield) (Lab/Co-op)
Thank you, Mr Deputy Speaker. It is with great pleasure that I rise to make my maiden speech today. The people of Wakefield have placed their trust in me to restore their rightful voice in this place, and I hope I will reflect their affinity for no-nonsense straight talking in my contributions in this House. I will speak briefly on the Energy (Oil and Gas) Profits Levy Bill before begging Mr Deputy Speaker’s indulgence to speak about the wonderful constituency that I now proudly represent.
What took you so long? It has been seven months since the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), first set out Labour’s plans for a windfall tax on oil and gas giants—seven long months of dither and delay as Government Members attacked the common-sense, compassionate plan to help millions of people facing soaring energy bills and the choice between heating and eating. Why? Pride. The Government could not possibly embrace an idea proposed by the Labour party, so instead of focusing on the people crying out for help, they attacked and ridiculed the idea, while millions worried about how to make ends meet.
I have spent the past few months telling people that this was their chance to tell the Prime Minister he should go. I am delighted that the voters of Wakefield took my advice, but am slightly surprised that 53 Conservative Ministers did, too. We need a change in Government and a fresh start for Britain. Everywhere we look, we see things that are broken, but under this Government, nothing gets fixed. They are incapable of governing in the national interest, and should move aside and call a general election. Those, perhaps, are not the words expected of a Member still exhausted by the rigours of a by-election, but it is an important message to deliver when the Government show such a clear detachment from reality.
I was not born in Wakefield, but I was made in Wakefield. It opened my eyes to a world of opportunity, and I fell in love with the people and the place when I moved to West Bretton to study for my theatre acting degree at Bretton Hall College, which is nestled in the glorious grounds of the world-renowned Yorkshire Sculpture Park. The city also boasts the Hepworth gallery, which was designed by the British architect David Chipperfield and takes its name from the artist and sculptor Barbara Hepworth, who was born and educated in the city. Wakefield constituency includes Wakefield—the merrie city, as it is known—and a large rural area to the south-west. It also includes the towns of Horbury and Ossett, each with their proud history and unique identities.
Wakefield has a proud mining heritage, and I pay tribute to those who powered our nation and kept our lights on. At the National Coal Mining Museum, situated in Wakefield, people come from all over the country to learn about that important industry and its important place in our history. While we cherish our proud heritage, we also have our eyes set towards the future, as shown by the recent opening of CAPA College, which is inspiring, training and educating the next generation of performers, creatives, designers and technicians. I was also pleased to visit the construction site of Tileyard North a couple of weeks ago. That exciting 135,000 square feet creative industries hub, based at Rutland Mills, is transforming the site into the UK’s largest creative community outside London.
As is tradition, I would like to pay tribute to some of my predecessors, including Mary Creagh, who I watched from the Gallery delivering her maiden speech some 17 years ago. A tenacious campaigner and advocate for the people of Wakefield, she successfully introduced the Children’s Food Bill in 2005, which sought to introduce minimum nutritional standards for all school meals. She went on to hold various positions, including shadow Secretary of State for Environment, Food and Rural Affairs, and was pivotal in delivering the new Pinderfields Hospital.
I also pay tribute to David Hinchliffe, who represented Wakefield from 1987 to 2005. He was Chair of the Health Select Committee and, in 1988, became the founder and first secretary of the all-party parliamentary rugby league group—coincidentally, the first all-party parliamentary group I joined upon my election. Finally, I pay tribute to the right hon. Walter Harrison MP, who represented Wakefield from 1964 to 1983. He proudly served as a Government Whip from 1966 to 1970, and as Deputy Chief Whip from 1974 to 1979. I believe Walter remains the only half vote recorded in Hansard, having jammed his foot in the Lobby door just as it was about to close, after being delayed in a lift.
It will not have escaped the notice of Members that I have omitted my most recent predecessor, who left the people of Wakefield without a voice in Parliament, but what I would like to do is pay heartfelt tribute to all victims of sexual abuse for their bravery in pursuing justice. Their actions leave the world a safer place and send a message to those who perpetrate such heinous crimes that we, as a society, will not tolerate sexual violence and abuse. No matter what your status, you are not above the law.
The reality of sexual violence and abuse in England is truly shocking: one in four women have been raped or sexually assaulted as an adult; one in 20 men have been raped or sexually assaulted as an adult; and one in six children have been sexually abused. Those are staggering statistics and represent an uncomfortable truth that must be heard—and, more importantly, urgent action must be taken. Our justice system is failing when only one in 100 rapes are reported to police and charged that same year. Sadly, most victims and survivors of rape do not report it to the police: five in six women and four in five men do not report it.
The biggest tribute we can pay to victims is our action, our perseverance and our commitment to demanding better, to doing more and to being honest with ourselves and admitting that when victims and survivors are forced to wait three years for their case to get to court something is badly wrong. We can and must do better. So, I pay tribute to all victims and survivors of sexual violence and abuse, and promise to always be straight-talking on this issue, and to ensure that the voices of victims and survivors are always heard.
Before taking my seat, I proudly worked for the national health service and witnessed the sheer exhaustion and the struggle that those on the frontline continue to face, and the frustration of those seeking to access NHS services stretched far beyond their limits. I worked with some real-life superheroes. As we move into a world where we live side by side with covid, I urge all colleagues to remember that for the NHS, the impact will be with us for many years to come. They deserve our respect, our patience and our gratitude for all they continue to do.
The people of Wakefield are weary of our politics and their trust has been eroded, but I promise to rebuild that trust every day and be their strong voice in Parliament, fighting every day for the betterment of my constituency.
Mr Deputy Speaker (Mr Nigel Evans)
Congratulations on your maiden speech. You will remember this day forever.
Wera Hobhouse (Bath) (LD)
I congratulate the hon. Member for Wakefield (Simon Lightwood) on an excellent speech. He told us about the wonderful heritage, arts and culture in his constituency. I went to Yorkshire Sculpture Park, a long time ago now, and it was absolutely beautiful. I encourage everybody to go. I hope he will not suffer the fate of one his predecessors and get his foot jammed in one of the Lobby doors. Maybe if he comes early for voting, he can avoid that fate.
We Liberal Democrats have been calling for a windfall tax since last year. It was my right hon. Friend the Member for Kingston and Surbiton (Ed Davey) who first suggested, last October, a windfall tax on the super profits of the oil and gas giants that were taking millions of pounds in profit while households were starting to struggle badly. For months the Government tried to resist a windfall tax, defending the indefensible. The Government have finally caved in, but too late for many. For example, my constituent wrote to me in January saying that he had to stay in bed because he could not heat his home. Our Liberal Democrat analysis shows that more than double the amount could have been raised if the Government’s levy was tougher now and had been implemented earlier. The equivalent of £200 is lost to each household because the Government are doing too little too late.
Imran Hussain (Bradford East) (Lab)
The hon. Lady is making an absolutely excellent and pertinent point. Does she agree that the Government have had ample opportunities, but voted no fewer than three times in this House against bringing a levy in earlier?
Wera Hobhouse
I could not agree more. The Government have dithered and delayed. They could do something about it and back our amendment, which would ensure that the new levy on oil and gas companies is backdated to last October. That would at least reflect the dither and delay and do something about it.
What should we make of the proposals to exempt those companies investing in new oil and gas exploration? There is nothing in the Bill to incentivise investment in renewables. That flies in the face of the Government’s commitment to get to net zero. In fact, it demonstrates once more how quickly they are prepared to U-turn on their promises, making it harder for struggling households to get on top of soaring energy bills now and in future and failing to take serious action on climate change. What is more, where is the programme to transform the pace of home insulation, which is lagging shockingly behind? Where are the planning laws to ensure that we build zero-carbon homes now rather than allowing developers to build homes that will require very costly retrofitting in a few years’ time?
We need bold and swift action to help families with the soaring cost of living and energy prices. The cheapest form of energy is onshore wind. When will the Government drop their effective ban on onshore wind and turbo-charge its revival? That would be the surest way to help struggling households to bring their energy bills down in the near future. The Government, however, can only fire-fight, and they have no vision and no real ambition.
Under Liberal Democrat plans, we would cut most emissions by 2030. That would be good not only for the climate, but for people’s pockets as we wean ourselves off global oil and gas markets as soon as possible. The Government have to come clean on the fact that even if gas and oil are produced in the UK, that will do nothing for household energy costs, because the price of oil and gas is fixed globally, not nationally.
On new green jobs, cleaner air, warmer homes and lowering living costs, the levy could have done so much more. We Liberal Democrats support the Bill but deplore the lack of a much greater ambition from the Government to rein in soaring energy costs and tackle the climate emergency.
Mr Deputy Speaker (Mr Nigel Evans)
I call the shadow Minister, Abena Oppong-Asare.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to respond on Second Reading on behalf of the official Opposition. I thank all hon. Members; this has been a good debate with many interesting contributions from across the Chamber. I particularly congratulate my hon. Friend the Member for Wakefield (Simon Lightwood) on his excellent maiden speech—isn’t it great to see Wakefield turn red again? I know that he will be a great champion for Wakefield and his constituents, and I look forward to hearing many more of his speeches. I also thank the hon. Members for Waveney (Peter Aldous), for Bath (Wera Hobhouse) and for Aberdeen South (Stephen Flynn), who made interesting speeches; it is good to hear them supporting Labour’s policy.
The message that we have heard loud and clear from hon. Members today is that the Tory cost of living crisis is far from over. In fact, the financial pressures that many people are facing grow larger and larger. Food, fuel and energy bills continue to rise and families across the country are already worrying about the winter that lies ahead, as we all see reflected in the emails that we get from our constituents across the country. As my hon. Friend the Member for Wakefield mentioned, in that context, we are finally considering this long-overdue Bill, seven months after my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, set out Labour’s plan for a windfall tax on oil and gas producers—I repeat: seven months.
As my hon. Friend the Member for Ealing North (James Murray) said, since Labour first called for the windfall tax on oil and gas producers, energy bills for typical households have risen by a shocking £700, inflation has rocketed to its highest level in 40 years, and, of course, people’s taxes have gone up as the Government have pressed ahead with the national insurance increase. In that period, oil and gas producers’ profits have soared. Indeed, we estimate that between Labour first calling for the windfall tax in January and the former Chancellor and soon-to-be former Prime Minister finally accepting our arguments at the end of May, nearly £2 billion of tax revenue could have been raised to help people with the cost of living crisis. In that time, Conservative MPs voted against our plans for a windfall tax not once, not twice, but three times. Ministers repeatedly claimed that such a plan would not work. Famously, the current Chancellor said that oil and gas producers were “already struggling”; I would be very interested to hear from the Chancellor whether he has changed his mind about that.
It is shameful that it took the Government so long to come to their senses and finally do the right thing. That is yet more evidence, if we needed it after last week, that this Government are on their last legs, out of touch, out of ideas and now truly out of time. With the windfall tax and with so many other issues, it is Labour that leads and the Conservative party that follows. We are relieved that the Government are finally legislating for a windfall tax, and we will not oppose the Bill today, but there are several areas of concern for us.
Several hon. Members have mentioned the Bill’s tax break for oil and gas producers. We simply do not think it right that the Bill will hand back money to the same companies that are supposed to be contributing their fair share to tackling the cost of living crisis. As my hon. Friend the Member for Ealing North said, for every £100 that an oil and gas company invests in the North sea, it will receive £91.25 from the taxpayer. How is that right? I compare that with the £25 that companies receive for investing for renewable energy, which is set to fall even further. A third or more of the revenue from the windfall tax will be handed straight back to oil and gas producers. How can it be right that we are subsidising oil and gas projects, which companies have said would happen anyway, to this level? It is an insult to families who are struggling and it makes a mockery of our climate commitments.
I turn to electricity generation and the excess profits in the electricity sector.
Stephen Flynn
The hon. Member is making a very passionate case. A similar question was asked earlier of her Front-Bench colleague, the hon. Member for Ealing North (James Murray), but I would be keen to know when shadow Ministers last met industry representatives in Aberdeen to discuss their views on the matter. I ask out of interest.
Abena Oppong-Asare
As the hon. Member knows, Labour has been consulting regularly with organisations and stakeholders about the matter. We are willing to meet anybody who would like to meet us. Our door is open.
We called for the windfall tax months ago and are glad to see that the Government are taking it forward, but I have to say that they have been all over the place on the issue. In May, it was suggested that the Chancellor had asked the Treasury to draw up plans for a windfall tax on excess profits by electricity generators. I really wish that the Government had been vocal on the issue when Labour raised it months ago. As hon. Members will know, the price of electricity is closely linked to the price of gas; electricity prices have therefore been pushed up, although the costs of generating electricity from renewable sources have not changed. That is leading to significant profits for the sector. It was reported that such a windfall tax could raise up to £10 billion, but the Bill says nothing about the electricity generation sector.
As the Government have gone quiet on wider plans to decouple electricity prices from the price of gas, I would be grateful if the Financial Secretary would shed some light today on the Government’s plans for the electricity generation sector. It is clear that the market needs urgent reform so that it delivers for consumers and businesses. I hope that she can tell us why the Government are delaying bringing forward an energy market reform Bill that will finally break the link between gas and electricity prices.
Hon. Members have mentioned the support announced alongside the windfall tax. Of course it is a relief to our constituents that the Government have finally brought forward payments to help with energy bills and have scrapped their proposed “buy now, pay later” scheme, but we think it simply wrong that owners of multiple properties will receive the £400 payment for each and every property that they own and live in. There are surely far better uses for the money than that, so I urge the Government to think again.
Although we will support it today because we have long argued for a windfall tax on oil and gas producers to help people with soaring energy bills, we know that the Bill will not be enough. It is simply not ambitious enough. We need a long-term plan to guarantee the UK’s energy security and bring down bills for families. We have called for an acceleration of home-grown renewables and new nuclear, a plan to double onshore wind capacity and reform our broken energy system, and a national mission to retrofit 19 million homes to save households an average of £400 a year on their bills.
Abena Oppong-Asare
I think that I have already been very generous.
Given the crisis facing the Conservative party, I do not have much confidence in them to deliver these essential priorities for Britain. While they spend the summer arguing among themselves, we on this side of the House will continue to provide the leadership that our country needs, just as we have with the windfall tax. We will stand up for families through the cost of living crisis, we will back British businesses and we will provide economic security for our country.
The Financial Secretary to the Treasury (Lucy Frazer)
It is a pleasure to close this important debate on behalf of the Government. We have talked today about the context of the Bill: the high oil and gas prices, and the extraordinary profits that are being received by the industry while working people struggle with the cost of living. We are introducing a temporary, targeted levy to fund cost of living support, at the same time as encouraging companies to invest.
Let me start by responding to some of the points made by the hon. Member for Ealing North (James Murray). He criticised our levy for not raising enough, but, as was pointed out by the hon. Member for Aberdeen South (Stephen Flynn), Labour’s proposal would have raised only £1.2 billion at the time when it was made, whereas our levy will raise £5 billion—more than the £4 billion called for by Greenpeace, more than the £3.7 billion called for by the Green party, and, as I have said, significantly more than the amount proposed by the Labour party.
The hon. Member for Ealing North criticised our scheme because it will encourage investment, while the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) said that we needed domestic energy security. We are ensuring that the important oil and gas sector will continue to invest so that we have that domestic energy security. The hon. Gentleman criticised us for not listening to industry, but I noted that neither of the Labour Front Benchers was able to say how or when they had engaged with industry. As Conservative Members know, last month the Chancellor held an industry roundtable which was attended by me and by the former Exchequer Secretary, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately).
Let me quote some of what has been said by representatives of the industry about our investment proposal. Orcadian Energy has said:
“We believe the immediate investment allowance, included in the Energy Profits Levy, has transformed the attractiveness of domestic oil and gas projects for companies extracting oil and gas in the UK and it should spark further investment in the North Sea.”
Cornerstone Resources has said that there has been
“more interest in partnering with us”
in the last few weeks. I could go on, but what we are trying to do is raise money to help with the cost of living, at the same time as encouraging industry to invest in a vital sector.
Let me now answer some of the questions put to us by the hon. Member for Ealing North. First, I can confirm that the Chancellor supports the Bill. I also want to respond to the point about consultation. The hon. Gentleman was, of course, encouraging us to do this a long time ago, but now he says that we should have consulted for longer and, therefore, introduced the measure later. We have sought to engage, and put the industry on notice, as much as possible regarding the announcement of the levy. Ministers in my Department have been in regular contact with the industry and we also undertook a short period of technical consultation on the legislation for the levy. Hon. Members will know that draft legislation was published on 21 June, with stakeholders able to provide technical feedback on it until 28 June.
The hon. Member for Ealing North asked what we were doing about the electricity generation sector. As the former Chancellor said at the time, that is something we are urgently looking at. The hon. Gentleman said that we should follow Labour’s plan. Well, let us remember what Labour’s plan is. Labour has put forward £100 billion-worth of spending proposals, of which only £10 billion-worth are fully funded.
I would like to mention the passionate and important speech from my hon. Friend the Member for Waveney (Peter Aldous). He rightly identified the need to balance short-term measures with long-term investment, and I hope that that is what we are doing. He raised the importance of renewables. As I have had the opportunity to discuss with him before, there are other tax levers and non-tax levers to support non-oil and gas investment, including the super deduction and the UK’s research and development tax credit scheme. There is also the contracts for difference scheme, which provides developers of low carbon electricity generation with direct protection from volatile wholesale prices, and the £1 billion carbon capture infrastructure fund.
My hon. Friend also asked about the timeframe. That is an important point, because this is a temporary measure. There is a sunset clause in the legislation. It is rare to include a sunset clause, but we have done so to underline that this is a temporary measure with a timeframe of 2025. He raised the importance of dialogue with the industry, and I reassure him that we have engaged fully with the industry and will continue to do so.
Alan Brown
On carbon capture infrastructure, the Minister is well aware that the Scottish cluster has been made a reserve and been let down yet again. Can she define what “reserve” means, because nobody seems to know? Does she expect one of the two selected projects to fail, at which point the reserve would step up, or is it a question of dangling a carrot in front of it? What does “reserve” really mean, and why do the Government not just make the Scottish cluster a track 1 cluster?
Lucy Frazer
The hon. Member makes an important point, because we value the investment and work that is going on in Scotland in the oil and gas sector and in renewables. He knows that, because I and Ministers from the Department for Business, Energy and Industrial Strategy have stood at this Dispatch Box and engaged with him regularly on this. He is right to identify that that cluster is in reserve, and I am sure these matters are being discussed with the relevant Ministers in BEIS.
I recognise the points that the hon. Member for Aberdeen South made about the sacrifices made by those who work in this sector. I am grateful to him for making those points, which I am happy to associate myself with. He asked what the normal price was, and I would like to refer him to the comments that the former Chancellor made when he was questioned on this by the Treasury Committee. He said:
“The last time this was done, a price target was published, which was $74 or $75 for Brent…If you look at average Brent price over the last five or 10 years, that will give you something like $60 or $70 for oil…so that gives you a sense.”
This is something we will be considering in due course.
Stephen Flynn
I was of course aware of the former Chancellor’s fluff in relation to this topic. Is the Minister confirming to the House and to the industry, which will be watching, that if the price of oil falls to around $60 or $70 a barrel, the levy will be no more?
Lucy Frazer
As I have just said in responding to the hon. Gentleman’s earlier point, the former Chancellor said that that “gives you a sense”, and I too am happy to relay that sense of where the prices would be, but we also have the long-stop date, which should give the industry some certainty as to when this will finally come to an end.
I welcome the hon. Member for Wakefield (Simon Lightwood) to this place. I was born and made in Leeds so I am very pleased to welcome a neighbour, in one sense of the word, and to hear him extol the virtues of Wakefield. He made a passionate speech about standing up for victims of sexual abuse and I welcome him to his place in the House of Commons.
The hon. Member for Bath (Wera Hobhouse) asked for bold and swift action, and that is what this Bill is about. Tonight this House has the opportunity to support the introduction of an energy profits levy on the extraordinary profits of UK oil and gas producers. It has the opportunity to support investment in the North sea through the levy’s investment allowance, and to support the automatic expiry of the levy in law, giving companies additional reassurance that the levy is temporary. This is a balanced approach that allows the Government to deliver support to families while encouraging investment and growth. For those reasons, I urge Members of this House to support the Bill.
Question put and agreed to.
Bill accordingly read a Second time.
Energy (Oil and Gas) Profits Levy Bill
Monday 11th July 2022
(2 years, 5 months ago)
Commons ChamberRead Full debate Energy (Oil and Gas) Profits Levy Act 2022 View all Energy (Oil and Gas) Profits Levy Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 11 July 2022 - (11 Jul 2022)
19:06 - The Committee divided: - Ayes: 41 / Noes: 298 - Question accordingly negatived.
19:19 - The Committee divided: - Ayes: 284 / Noes: 202 - Question accordingly agreed to.
19:31 - The Committee divided: - Ayes: 203 / Noes: 289 - Question accordingly negatived.
The Second Deputy Chairman of Ways and Means (Mr Nigel Evans)
With this it will be convenient to consider the following:
Amendment 9, in clause 2, page 2, line 42, at end insert
“, which may include electrification investment that decarbonises upstream oil and gas activities”.
This amendment would put on the face of the bill that electrification investment which decarbonises upstream oil and gas activities is eligible for relief.
Clause 2 stand part.
Clauses 3 to 11 stand part.
Amendment 1, in clause 12, page 9, line 32, after “levy” insert
“and the amount of tax relief on additional expenditure treated as incurred that the responsible company is claiming under section 2 of this Bill.
(2A) The data submitted by responsible companies under subsection (2) of this section must be published in aggregate on a quarterly basis.”
This amendment requires companies making a payment of the levy to also provide information to HMRC about the amount of extra tax relief they are claiming under section 2 of the Bill, and requires the total amounts of levy received and tax reliefs claimed every quarter to be published.
Clause 12 stand part.
Clauses 13 to 19 stand part.
That schedule 1 be the First schedule to the Bill.
That schedule 2 be the Second schedule to the Bill.
New clause 1—Assessment of revenue effects of a higher Energy Profits Levy—
‘The Chancellor of the Exchequer must, no later than 30 September 2022, lay before the House of Commons an assessment of the effects on—
(a) tax revenues, and
(b) oil and gas company profits
of the Energy Profits Levy being charged at 45%.’
This new clause would require the Government to publish an assessment of the effect on tax revenues and on oil and gas company profits of charging the Energy Profits Levy at 45% rather than 25%.
New clause 2—Review of the impact of tax relief on additional expenditure treated as incurred—
‘The Chancellor of the Exchequer must, by 26 August 2023, publish an assessment of the impact of the tax relief provided by this Act on the UK’s energy market, including the impact on—
(a) net zero obligations;
(b) energy security;
(c) renewable energy supplies; and
(d) fracking.’
This new clause requires an assessment, within three months of the end of the first year of the levy being in place, of what impact the Bill’s extra tax relief for investment expenditure by oil and gas companies would have on the UK’s net zero obligations and other aspects of the energy market.
New clause 3—Review of impact of earlier start date of the levy—
‘The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of how much the levy would have raised between 9 January 2022 and 25 May 2022 if it had been in place from 9 January 2022.’
This new clause requires an assessment, within three months of the Bill becoming law, of how much extra revenue would have been raised if the levy had been introduced on 9 January 2022 rather than 26 May 2022.
New clause 4—Review of the amount of tax relief on additional expenditure treated as incurred—
‘The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of—
(a) how much tax relief on additional expenditure treated as incurred under sections 2 to 7 of this Act will be claimed; and
(b) how much of the tax relief expected to be claimed is estimated to be in respect of investment that would have taken place if the tax relief had not been in place.’
This new clause would require the Government to assess the amount of tax relief for investment expenditure introduced by this Bill expected to be claimed by oil and gas companies, and to estimate how much of this is a deadweight cost.
New clause 5—Review of the impact of limiting the scope of the tax relief on additional expenditure treated as incurred—
‘The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of the impact of making ineligible for the tax relief on additional expenditure treated as incurred any investments that—
(a) do not align with the IEA’s net zero emission scenario for a 1.5 degree temperature increase;
(b) have been announced before 26 May 2022; or
(c) are incurred by companies that have engaged in share buy-backs in the three previous financial years.’
This new clause would assess the impact of limiting the scope of the tax relief introduced by this Bill to exclude investments on the basis of their impact on climate change, whether they had already been announced, and whether the company making the investment had engaged in share buy-backs in the last three years.
New clause 6—Environmental impact of exploration activity on which levy relief is claimed—
‘The Government must undertake an environmental impact assessment in relation to any claim for relief in respect of exploration activity, which must include an assessment of whether the exploration activity is consistent with the Government’s net zero commitments.’
This new clause would require the Government to assess against its net zero commitments any investment in oil and gas exploration activity against which levy relief is claimed.
New clause 7—Regular reviews in relation to oil and gas market—
‘The Government must publish a review of the oil and gas market by 26 November 2022 and every six months thereafter during the period of the levy, which must include an assessment of—
(a) whether there is a continued need for the levy, and
(b) whether the levy should be continued in order to promote further decarbonisation of upstream oil and gas activities.’
This new clause would require a six-monthly review by the Government of the oil and gas market to assess whether the levy is still needed and whether it should continue in order to promote decarbonisation of upstream oil and gas activities.
New clause 8—Assessment of revenue from a permanent levy rate of 30%—
‘The Government must within six months of Royal Assent lay before the House of Commons an assessment of the expected change in levy revenue if the levy is set at a permanent rate of 30% so that taxation on oil and gas company profits was permanently set at 70%.’
This new clause would require the Government to produce an assessment of the amount of revenue which would be generated if the level of taxation on oil and gas company profits was permanently raised to the global average of 70%.
New clause 9—Assessment of levy revenue if investment relief not permitted—
‘The Government must within six months of Royal Assent lay before the House of Commons an assessment of the revenue that the levy would yield if no relief was permitted in respect of investment expenditure.’
This new clause would require the Government to produce an assessment of how much revenue would be generated by the Energy Profits Levy if the investment allowance were removed.
New clause 10—Assessment of investment allowance on compliance with climate change targets—
‘The Government must within six months of Royal Assent lay before the House of Commons an assessment of the impact of the levy investment allowance on compliance with the requirements of the Climate Change Act and the global agreement to limit global heating to 1.5 degrees.’
This new clause would require the Government to produce an assessment of the impact of the investment allowance on achieving Net Zero by 2050 and limiting global temperature increase to 1.5 degrees.
Just to remind everyone: as I am sitting down here, I am the Chair of the Committee and not Mr Deputy Speaker, so it is “Mr Evans”, “Chair” or “Chairman”. Anything like that will do.
Lucy Frazer
Thank you very much, Mr Chair. I open this debate by reminding the Committee of the purpose of the energy profits levy. The levy is a temporary 25% surcharge on extraordinary profits being made by the oil and gas sector as a result of the substantial rise in energy prices precipitated by the Russian invasion of Ukraine. It will help to fund the cost of living package for UK families that we announced in May. It will raise around £5 billion over the next year and will apply to companies within the ringfenced corporation tax regime. Specifically, these are companies involved in the exploration for and extraction of oil and gas in the UK and on the UK continental shelf.
The Government have been clear that they want the oil and gas sector to reinvest its profits to support the economy, jobs and UK energy security. That is why the Bill includes the 80% investment allowance. This new super deduction-style relief is being introduced to encourage firms to invest in oil and gas extraction in the UK. In future years, if oil and gas prices return to historically more normal levels, the Government will phase out the levy. However, the first clause in the Bill specifies that the levy will automatically cease to apply after 31 December 2025. I want to highlight this to the House, as it demonstrates the Government’s commitment to keep the levy temporary. Very few taxes have their expiry date set in law. Before I address the clauses and schedules in the Bill in turn, I would like to say that I have noted the amendments and new clauses tabled by Opposition Members and I will respond to them later in the debate.
Clause 1 gives the Government the ability to collect the energy profits levy. It sets the 25% rate and the levy’s main scope. The clause sets out that the levy applies to accounting periods for when the measure is in effect. It also sets the adjustments to ringfence profits for the purposes of calculating taxable profits for the levy. The levy is a tax on profits that companies are realising from oil and gas activities during what is an exceptional period. It is only fair that the measure of profit on which the EPL is charged should not be reduced by the amount of decommissioning expenditure or losses incurred from previous years. Therefore, those adjustments, which include finance costs, decommissioning costs and historic losses, are left out of account. However, the repayment of petroleum levy revenue tax arising from decommissioning is also left out of accounts. As I mentioned on Second Reading, the Government have responded to feedback from the industry in making this change. Although such repayments remain taxed under the ringfenced corporation tax and supplementary charge, they are not taxed under the levy. Another adjustment to profits is the new 80% investment allowance, which is deductible against profits.
Alan Brown
The right hon. and learned Lady sent a letter to MPs saying that electrification will be covered in the offsetting, but does she agree that it should really be in the Bill? Ministers and Prime Ministers come and go, as we have seen, so the only way the industry can have full certainty and clarity is to have something in the Bill about electrification, which is the purpose of SNP amendment 9.
Lucy Frazer
I have read amendment 9 and will address it in due course. In response to the hon. Gentleman’s point, that will be included in guidance. I said it at the Dispatch Box last week, and my right hon. Friend the Chief Secretary to the Treasury has also said it at the Dispatch Box, so I think that point is quite clear.
Clause 5, on the meaning of “disqualifying purposes,” is an anti-avoidance provision to ensure that expenditure is not eligible for the investment allowance if it arises because of any tax avoidance arrangements. Clause 6 ensures that additional expenditure for the investment allowance is available only for new assets, including the acquisition of an interest in an oilfield. It prevents the allowance from being generated on assets that have already been taken into account for the purposes of the levy or that would have been had the levy been in force.
Clause 7 determines when investment expenditure is incurred. For capital expenditure, it is as per the rules set out in the existing capital allowances legislation; for operating and leasing expenditure, it is the date on which it is paid. The clause also makes it clear that expenditure incurred before 26 May 2022 or after 31 December 2025 is not to be treated as expenditure incurred in an accounting period to which the levy applies.
Clauses 8 and 9 define financing and decommissioning costs and are modelled on existing legislation. Clause 10 and schedule 1 set out the loss regime within the levy. This includes group relief and the losses that companies carry back or forward under the levy, such as carrying forward losses to a future qualifying period. Clause 11 applies general corporation tax principles to the levy, which is treated for administrative purposes as an amount of corporation tax. It also prescribes the framework within which the levy will operate.
Clause 12 introduces a requirement for companies making a levy repayment to provide information about that payment to HMRC, so that receipts from the levy can be monitored. Clause 13 provides for necessary adjustments to be made if alterations are made to a company’s ringfenced profits or losses. Clause 14 introduces schedule 2, which makes consequential amendments to enactments in the light of this Bill.
Clauses 15 to 17 set out the rules for apportioning profits for accounting periods that straddle the levy’s start or sunset dates. These rules identify which profits are chargeable to the levy by treating the periods before and after the start or end date as separate accounting periods. In particular, this requires companies to apportion their receipts, expenses, assets and liabilities on a just and reasonable basis. Clauses 18 and 19 simply set out the Bill’s legal interpretation and short title in the usual manner.
This Bill delivers the energy profits levy, a 25% surcharge on the oil and gas sector’s extraordinary profits. The levy will raise around £5 billion over the next year, and it will go towards supporting people via the cost of living measures we announced in May. The Bill also provides for the new 80% investment allowance, which means that businesses will overall get a 91p tax saving for every £1 they invest. Finally, the Bill provides certainty through a sunset provision. It will therefore give businesses further reassurance that the levy is indeed temporary.
James Murray
I will now address the detail of the Bill’s key clauses, as well as the amendments and new clauses tabled in my name and those of my hon. and right hon. Friends.
As I set out on Second Reading, this Bill is long overdue. The Government have finally agreed to introduce a windfall tax many months after they should have done. As I noted earlier, Ministers still cannot bring themselves to say “windfall tax” in relation to these measures, so we offer them amendment 8, which would rename the Bill, as one last chance to call this new tax what it is.
It has been six months since, on 9 January, the shadow Chancellor first set out Labour’s plans for a windfall tax on oil and gas producers’ profits to help to fund a cut to people’s home energy bills. Until their U-turn in late May, Ministers were falling over each other to attack our plans. In all the time they opposed our plans, people’s energy bills and oil producers’ profits both soared. Those months of opposing our plans left the public finances missing out on billions of pounds of tax revenue. Those extra funds could have given people further help with their energy bills. Today we are giving the Government the chance to right that wrong.
Clause 1 makes it clear that the windfall tax will apply from 26 May 2022. Our new clause 3 would require the Government to recognise how much extra tax revenue would be raised if the levy instead applied from 9 January. We urge all Conservative MPs to support our amendment and apply the windfall tax from 9 January, the day the shadow Chancellor first laid out Labour’s plans for a windfall tax, rather than leaving it to start only from 26 May, the day the former Chancellor finally changed his mind.
Those extra months would raise an extra £1.9 billion for the public finances, which we would then urge the Government to put toward removing VAT on domestic energy bills for the rest of this year. We have been urging the Government to scrap VAT on this year’s domestic energy bills since last autumn. We know that a VAT cut would provide immediate help to families now. Furthermore, taking VAT off energy bills would help to push inflation downwards from its current 40-year high. Funding for this should come from applying the windfall tax from January this year, when Labour first called for it, rather than only from May, when the Government finally came round.
Conservative leadership hopefuls have been talking a lot over the weekend about how keen they are on tax cuts, although they and their supporters have all failed to explain how any of those would be paid for. Today, we offer them a fully funded tax cut that will help people immediately with the cost of living. Today, we are asking them to follow our plan to cut VAT on home energy bills by applying the windfall tax on oil producers from the start of the year, as should always have been the case. The principle of backdating a windfall tax is not only well established—given that the very principle of windfall taxes is to tax unexpected profits that have occurred—but is included in this Bill, which backdates the levy in its first clause.
We know that oil producers such as BP and Shell reported bumper profits in the first quarter of 2022. As drafted, however, the Government’s Bill ignores those profits entirely, as their levy will not apply until well into the second quarter of this calendar year. I realise that the Financial Secretary has said that she will not support our new clause and that the current Chancellor, a former oil industry executive, is unlikely to change his mind after coming out so firmly against a windfall tax on oil and gas producers back in January, on the grounds that those producers were “already struggling.” But given the situation in the Conservative party, I wonder whether colleagues of the Minister may feel able to think more openly about how to vote. I wonder whether any of the other Conservative leadership candidates may like to support our plan for an immediate, fully funded tax cut to help people with the cost of living and tackle inflation. Later this evening, when we vote on new clause 3, we will find out what judgment they have made.
We would also like to know what judgment those people have made about the Government’s decision to undermine the levy by shamefully giving a third or more of any money raised straight back to the oil producers through the new tax break introduced by clauses 2 to 7. This new tax break offers oil and gas producers an unprecedented subsidy for their spending on oil-related activities. As we made clear on Second Reading, for every £100 an oil and gas producer invests in the North sea, they will receive £91.25 from the taxpayer. That is an astonishing 20 times the £4.50 that companies investing in renewable energy will receive from April next year.
Any argument by Ministers that this tax break is necessary to support investment in oil-related activities has been challenged by the bosses of the oil producers themselves. BP’s chief executive told shareholders just two months ago that the company’s £18 billion investment plans were
“not somehow contingent on whether or not there is a windfall tax”.
Yet despite even oil executives questioning its worth, the Government are pushing ahead with this tax break. Our analysis has shown that that means a third or more of any revenue from the new levy could be handed straight back to oil and gas producers. That money will subsidise projects that almost certainly would have happened anyway, as there is no requirement in the Bill for investment to be additional to what was already planned, and this move stands totally at odds with the paramount need to invest in renewable energy sources.
It is critically important and urgent for us to invest in renewable energy to strengthen our energy security while bringing down people’s bills and tackling the climate crisis. We have set out Labour’s plan to do just that. Alongside insulating 19 million homes over 10 years to cut people’s bills, we would strengthen our energy security and reduce our carbon emissions by doubling our onshore wind capacity, tripling solar power, backing tidal power and nuclear power, and further investing in hydrogen. Yet the Government are today introducing a tax break that seems to fly in the face of tackling the climate crisis.
That is why we have tabled new clause 2, which would force the Government to come clean about the impact of their unnecessary tax giveaway to oil producers on our country’s net zero obligations, energy security and renewable energy supplies. This new clause also asks the Government to spell out what impact their tax break will have on fracking, given the deeply concerning reports in the media that legal advice provided to the campaigning group Uplift suggests that fracking companies would also be eligible for this tax break, based on the way the Bill has been written. I urge the Government to accept new clause 2, to make it clear what impact the tax break in the Bill will have on fracking. If the Minister refuses to do that, will she at least come clean today and confirm or deny whether this tax break could lead to public money being channelled toward dangerous, unpopular and expensive fracking projects?
Craig Mackinlay (South Thanet) (Con)
I was asked on 26 May by one of the main newspapers what I thought about this proposal of a windfall tax, on the back of what Labour had proposed some time before. I gave this fairly high-octane statement:
“Whichever way you look at it, a 65% tax rate applied to an industry that we need to encourage to help us through our energy policy mess seems topsy-turvy.
Higher taxes can never mean lower prices.”
And this was the statement that caused some alarm and was widely reported:
“All in all, I’m disappointed, embarrassed and appalled that a Conservative Chancellor could come up with this tripe.”
With the change of Chancellor, I had hoped that we would have quietly disposed of the Bill and not progressed to Second Reading. It should sensibly have been scrapped, but although the former Chancellor has gone, the Chief Secretary to the Treasury, my right hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), is still here and presented the Bill this afternoon. I fully understand public disquiet about the supranormal profits that have been earned by the oil and gas industry over the period. The hon. Member for Ealing North (James Murray), who speaks from the Labour Front Bench, has made those points, which form the backbone of some of Labour’s new clauses.
The comments of various chief executives of the oil and gas industry—calling their profits “cash machines” and all that—were particularly unhelpful; they did not do themselves too many favours. Such companies lost similar amounts of money during covid, when, as we all recall, the gas and oil price completely collapsed. Owing to storage issues, there were a few days when oil was trading at a negative rate, which was rather bizarre; I wish I had had a few barrels to fill at the time.
We already did some rather strange things in years past. Under the Finance (No. 2) Act 2017, we restricted the carry-forward of losses. There is an allowance of £5 million, but the amount of profit that can be relieved with carried-forward losses is restricted to 50% on the rest. We have created a tax regime whereby we are happy to take the profits and tax them, but we are not willing appropriately to relieve the losses, and I am not sure that any of Labour’s new clauses would address that.
I have had discussions with various Front Benchers prior to today. Labour has objected to many parts of the Bill, because in its analysis of life—shadow Ministers have given quite a lot away— anything less than taking 100% of everything is a loss of tax. I am not sure that it was quite what the hon. Member for Ealing North intended to say, but he clearly suggested that that is Labour’s view of tax: it is necessary to take the lot, as anything less is a sort of tax give-back.
Geraint Davies (Swansea West) (Lab/Co-op)
The hon. Member may know that over the last few decades, the five biggest oil companies have made $2 trillion of profit, and the profit that they have been making is over the normal operational costs. What we have now, thanks to Putin’s war, is a massive price hike. That windfall profit is literally that—the companies have done nothing to earn it; they have simply stolen money from the pockets of people using transport and filling their cars. Is the hon. Member saying that that theft should simply be kept by the oil companies, which have done nothing other than exploit an illegal war? What sort of statement is that?
Craig Mackinlay
The hon. Gentleman has merely clarified what I have been trying to say; yes, of course there were supranormal profits on the back of Ukraine war and coming out of covid, when the entire planet was getting its factories back up and running and life was returning to normal. I had hoped I was making the clear point that there were substantial losses by similar companies in years past. Given the hon. Gentleman’s analysis, I assume that grain wholesalers would face a similar tax from Labour. Semiconductor manufacturers supplying their goods from South Korea would similarly, through artificial means, have earnt good profits at this time. It seems that the Labour party would definitely want to tax everybody on anything that it considered to be an inappropriate amount of profit, whatever that might be.
I have a number of objections to the levy. Labour’s new clauses 7 and 8 go some way to clarifying a little of what I am saying, although I will not support them tonight. Let me turn to the relevant North sea businesses that will be caught by the levy. Since 1 January 2002, we have had the ringfenced corporation tax at 30%—more than our current headline rate of corporation tax. The supplementary charge, which goes on top of that, has been up and down over the years. It commenced on 17 April 2002 and peaked during the coalition period—very relevantly, between 24 March 2011 and 31 December 2014 —at 32%. Of course, the then Department for Business, Innovation and Skills was held by the Liberal Democrats in the coalition, so that gives us a little insight as to what they think of tax: it is generally a high one.
We had a 62% tax during that period, but immediately prior to this legislation the supplementary charge had been down to 10%. We were bobbling along with massive profits and were taking 40% of the total to the Treasury. Whichever way I look at it, I see that as a goodly rate of tax. However, under clause 1, which has just been outlined by the Financial Secretary to the Treasury, my right hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), this new energy profits levy is 25%.
Let me be very clear about my objections: a 65% tax rate is excessive in any tax regime. We are asking the self-same companies to go all out—“Please go all out!”—for more oil and gas in the North sea at this time of energy crisis, energy insecurity and very high prices. Why have they not, thus far, explored those parts of the North sea that we are now asking them to explore? It is because they are more complicated, deeper and more hostile environments. The profits derived from those tougher locations—the higher hanging fruit, rather than the lower hanging fruits—will be less, as the costs are higher.
I am aware of what I perceive as the tax nudge, but I am afraid that it is a little bit like Baldrick’s cunning plan. We are trying to nudge companies—this is about the only good thing about the Bill—by saying, “You make the right investments to get more oil and gas out of the North sea that we desperately need, and we will give you a very substantial tax relief.” And that tax relief is substantial, at 91.25%. I am afraid that the Chief Secretary to the Treasury has let the cat out of the bag; if that is the Baldrick cunning plan, which I can see the benefit of, how can we have estimated £5 billion as the amount of tax to be raised? That cunning plan is not going to work fully; many companies will not take the option of relieving the variety of taxes that are now before them, they will not invest, and we will be taking £5 billion out of the industry.
We are not only asking the companies to undertake new investment in the North sea. We are asking them to undertake some rather fresh thinking and research, with unknown outcomes, on the net zero pathway. I know for a fact that BP is doing a lot of work in this field—its people have been in one of the dining rooms of this House—and good luck to it, but as has been highlighted by the Labour Front Benchers, there is nothing in the Bill that nudges such investment in the net zero field.
“Profit” is not a dirty word. Profits pay our salaries, every salary of every civil servant, and every single pension in this country; they are all on the back of profits. “Profit” is a good word—a word that makes the world turn. Another objection I have to the levy is that the self-same companies, which are earning good profits, are the backbone of many blue chip investments that can be found in practically every pension fund in the land, because they are good dividend payers. Millions of pensioners rely on those dividends—a long and usual flow that can be relied on year in, year out. By the Government taking the extra 25%, those dividend flows will have to be lessened. We cannot take another 25% out of a profit and expect the dividends to flow at the same rate.
Alan Brown
Is the hon. Member seriously saying that the companies that currently work in the North sea—companies that are environmentally responsible, take workers’ rights very seriously and look after their workers—might just move somewhere else in the world and give up on workers’ rights and the environment? That does not sound like responsible companies, yet that is what he seems to be saying they would do.
Craig Mackinlay
I am saying very clearly that big companies can make investments anywhere they please in the world, perhaps with tax regimes that are more suitable to them and where they are not being taxed at 65%. I would rather that they were investing here and staying here than going abroad to invest, with all the potential consequential impacts on the environment and employment. It seems that the hon. Gentleman agrees with me.
David Duguid (Banff and Buchan) (Con)
I rise in response to the hon. Member for Kilmarnock and Loudoun (Alan Brown). I declare an interest: I used to work for BP. I worked in the oil and gas industry for 25 years. I worked for BP in the North sea in this country, and in Angola, Venezuela and a range of different places. I worked for other companies in other countries as well. It is true that these companies have made their bread and butter in this country, and cut their teeth in the North sea, particularly from a safety point of view. The hon. Member for Aberdeen South (Stephen Flynn) mentioned Piper Alpha, which led to our having one of the highest regulatory regimes on the planet. It is not true to say that companies abandon that when they work elsewhere; it does make it a lot more difficult for them to work in those environments, but it does not stop them.
May I take the opportunity to totally agree with what my hon. Friend was saying before? This legislation, for all its flaws, compared with what Labour is proposing—
The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
Order. The hon. Member for Banff and Buchan (David Duguid) will resume his seat. We are getting interventions on interventions, because the interventions are perhaps a little long, and people are mistaking them for speeches. Please remember that interventions are supposed to be quite short.
Craig Mackinlay
Thank you, Dame Rosie, for clarifying that. I think that we will find that the hon. Member for Aberdeen South (Stephen Flynn) was being a touch facetious.
Caroline Lucas (Brighton, Pavilion) (Green)
Will the hon. Member give way?
Craig Mackinlay
I had not developed a point, but, please, make an intervention.
Caroline Lucas
I am grateful to the hon. Member for giving way—I am intervening on a previous point on which he was intervened on. Is he aware that the 65% tax that the Government are proposing is still below the global average? The figure in Angola is actually higher at 70%, so there is not any real logic to what he is saying. These oil companies are already operating in places where the tax is higher.
Craig Mackinlay
Let me take a couple of those points. The hon. Lady makes the point that tax rates on the oil and gas industry are higher elsewhere in the world. Well, that may be the case. I know that some will be fundamentally opposed to the whole concept of being energy secure in the UK. Gas, in my view, is part of an interim solution as we get on the path to net zero, but it is a fact of life. I do not have an awful lot of time for the output of the Climate Change Committee, but even it is saying very clearly that we will be using gas and oil up to 2050 and probably beyond. My view is that that gas and oil should be sourced in the UK. Hence my support for the nudge part of this legislation, which may encourage businesses to stay here and invest here.
I did not address properly the point from my hon. Friend the Member for Banff and Buchan (David Duguid). He makes the point that we have the most fantastic environmental standards not just in oil and gas technology, but in practically everything that we do in the manufacturing space in the UK. There will be very few regimes around this world that have such high standards. On the issue of methane venting, which we have not really addressed, I can be absolutely sure that, with a very robust and advanced regulatory regime, the advanced oil and gas companies of this country will be telling the truth and doing the right thing rather more than may be the case elsewhere, and I think we have to accept that as a fact of life.
Caroline Lucas
First, the hon. Member seems to think that just because gas is exploited in the UK, it will get used in the UK, yet he must know that it gets sold on global markets and therefore might get used anywhere. Secondly, he talks about our environmental standards being higher than others. He will know that we get most of our gas from Norway, where, actually, its carbon footprint is significantly less than it is here in the UK. His argument just does not stand up.
Craig Mackinlay
I am so delighted that the hon. Lady has expanded this debate. This is not somewhere that I wanted to go, Dame Rosie, but I think it is my duty to respond to the intervention. Surely it is obvious, no matter where on the spectrum on net zero we are—I am obviously on the rather more critical part of that spectrum—that we will be having gas in this country. We have a choice: do we import it halfway across the world on a liquefied natural gas ship, with the CO2 cost of chilling it, transporting it and regasifying it, or do we try to do that domestically?
Craig Mackinlay
If I may, Dame Rosie, I will address the hon. Lady’s questions. On international markets, I do not know any more about economics than this: if we add more capacity to any system, the price should drop. Even if her view of economics holds water and the price does not drop, which I think is the basis of what she is saying, would I prefer the pounds of gas revenue to be at least retained and spent in the UK, or do I want to export those pounds to Qatar? I do not think there is much choice, and the answer is obvious.
I will finish now, Dame Rosie—I am sorry for the time I have taken, but I am grateful for your indulgence. If we take up this type of proposal of penal taxes that can be changed within a month, we will lose in future deferred taxes the opportunity cost of investment. Big companies will say, “Do you know what? The UK is not a place for good investment. I think I will take my money elsewhere.” We may get £5 billion out of this tax as a windfall, but over time, in my view, we will lose more than £5 billion in the lost opportunity of businesses being attracted to the UK.
I have never believed, as has said in the House this afternoon, that the investment plans of the big oil and gas companies will be unaffected by this. I have been having discussions with them. There are already signs that they are scaling back their investment activities to the detriment of UK energy security, and I am afraid this Bill does not help with that all. If there is a Division on Third Reading, I will be voting against the Bill this evening.
Stephen Flynn
Repetition is of course a convention of this House, but I am not much for many of the conventions of this House, so I do not intend to say much more than I did earlier about the Bill in general. I will just reflect very briefly on the amendments in my name and the names of my hon. Friends.
Amendment 9 relates directly to the electrification of North sea assets. We have heard comforting words about that from two Ministers now. I am sure the Minister for Energy, Clean Growth and Climate Change, now sitting beside the Financial Secretary to the Treasury, would agree that it will be in guidance that the electrification of assets will be able to get the taxation incentives. We cannot escape the fact that Ministers come and go, as we have seen so clearly in this place over the course of recent times, but what industry needs in relation to this issue is certainty. The best way—the only way—to provide certainty on the electrification of grids is to put that on the face of the Bill.
I agree with the hon. Member for South Thanet (Craig Mackinlay) on one point he made: it is deeply disappointing that there is not additional scope for the wider renewable sector to get these incentives. If the Government were serious about combating climate change and reaching their net zero ambitions, they would have extended those incentives to that industry.
That takes me on to new clause 6, again in my name and those of my hon. Friends, which aptly relates to net zero. The Government have rightly promoted, and will continue to promote, climate compatibility checks. I think we all in this place agree about those. What we need to be clear about, however, is the implications of this Bill for reaching net zero. The easiest, indeed the obvious, way to do that is to ensure that those climate compatibility environmental checks take place in relation to any investments. I thought that would be a very straightforward thing for the Government to agree with, and I hope they will do so.
Finally, in relation to new clause 7, I have teased this argument out on a couple of occasions in exchanges with Ministers: we know there is going to be a sunset clause on this levy, to end it in a couple of years’ time. However, the phrase “normal oil and gas prices” keeps being used again and again. We heard inferences from the former Chancellor that somewhere around $60 to $70 a barrel was normal. I just did a very quick calculation of prices. Between 2015 and 2021 the price was $56 a barrel, but between 2010 and 2015 it was double that, at $101.4 a barrel. I again ask the Minister—[Interruption.] Indeed, oil and gas is a good argument for independence.
Stephen Flynn
I will not give way to the hon. Gentleman. That has nothing to do with this Committee stage, and I would hate to get diverted, as some others did earlier.
What we and the industry need to be clear about is what price the Government regard as normal. If we are to have serious legislation, we need serious answers to the most basic of questions.
Richard Burgon (Leeds East) (Lab)
I wish to speak in favour of my new clause 1, new clauses 8 to 10, which I have signed, and of course the amendments from the Labour Front Benchers.
Away from the drama among Government Members over who will be their next leader, the cost of living emergency out there is biting ever harder. Experts now warn that the energy price cap will surge by another 64% in October to more than £3,200 a year—up £2,000 in just a few months. Millions of people will be thrown even further into crisis. We urgently need further Government interventions to help them, and my new clause offers a way to do that.
In May, after political pressure from the Labour Benches, the Government were forced into imposing a windfall tax on the North sea oil and gas producers’ excess profits. Such a tax is certainly needed. The Government’s own figures suggest that North sea oil and gas companies will make pre-tax profits of £21.4 billion this year—a staggering increase from the £2.5 billion average over the past five years. We have gone from a £2.5 billion average to £21.4 billion this year.
Let us be clear: these excess profits are not the result of extra investment. They are not the result of innovation. They are an undeserved and unexpected windfall, mainly resulting from Russia’s horrific war on Ukraine. They are vast super-profits made on the backs of higher bills for ordinary people. We have a clear choice. Either we allow the oil and gas giants to hoard those excess profits, or we use the funds to help to bail out the vast majority of people hit hard by soaring energy bills.
My new clause 1 calls on the Government to look at setting the windfall tax at 45% on top of normal tax rates, not the current proposed 25%. The aim is to ensure that nearly all of the windfall—the undeserved, unmerited excess profit—goes to supporting families instead of boosting the profits of oil and gas giants.
The windfall tax as it stands will raise £5 billion. The higher windfall tax that my new clause addresses would raise another £4 billion in tax revenues this year alone, which could provide an extra £1,000 payment to the most vulnerable 4 million households. Surely that is more important than boosting oil and gas company profits. North sea oil and gas companies’ revenues have risen so much that even with this higher tax they would still make £3 billion in profits this year, which is above their recent average.
Christian Matheson (City of Chester) (Lab)
My hon. Friend has obviously given real thought to his proposals. Does he agree that the vast profits that the oil and gas companies make do not stay with those companies but go to their ultimate owners, the big City institutions which, in my view, the Conservative party represents these days?
Richard Burgon
That is an important point well made by my hon. Friend. That is what this is really about. It is a political choice that we are discussing.
On the Government’s major loophole that I referred to, which gives a 91p tax saving for every £1 invested by the oil and gas companies, we need to be clear that it is a subsidy to oil and gas giants. It takes money away from supporting families and encourages further fossil fuel production when we need to be ending all new oil and gas production to avoid climate catastrophe.
With another huge spike in energy prices now expected, much more needs to be done to help families. The Government should start by accepting my amendment and others that would see less going into profits for oil and gas firms, and more into bailing out people facing the biggest crisis in living memory.
Caroline Lucas
It is a pleasure to follow the hon. Member for Leeds East (Richard Burgon), whose new clause 1 I am happy to support. I rise to speak in favour of new clauses 8 to 10 tabled in my name.
First, new clause 8 would require the Government to produce an assessment of the revenue that would be generated if the level of taxation on oil and gas companies were permanently raised to the global average of 70%. That is 5% higher than the total level of taxation with the addition of the Government’s levy, but it would be permanent.
I know the new Chancellor may be disinclined to increase taxation on the oil and gas industry, given that he has benefited so handsomely from it in the past, previously earning £1.3 million from his executive position at Gulf Keystone Petroleum, including a whopping £285,000 settlement payment when he stepped down from that role in 2018 after becoming a Minister. However, it is important to understand that the level of taxation that this new clause proposes on oil and gas would simply bring the UK into line with countries such as Angola and Trinidad and is backed by 63% of the public. By way of comparison, it may be interesting to note that the UK’s North sea neighbour, Norway, has a taxation rate of 78%, and that does not seem to have done it any harm. I therefore hope that the Government will recognise that this is a very reasonable amendment that it should be easy for them to support.
The reason I am proposing a permanent taxation level is that 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 should be a badge of shame. Indeed, Norway’s tax take from a barrel of oil in 2019 was over 10 times the equivalent here in the UK. The amendment would simply require the Government to assess the impact of ending that shameful state of affairs. Greenpeace estimates that a tax at that level would generate an additional £13.4 billion for the Exchequer in comparison with the status quo—money that, in addition to providing immediate support to households to cope with the cost of living scandal, could be used to invest in much-needed energy efficiency, quite literally insulating households from escalating costs.
To date, the Government have spent £37 billion on short-term financial support. Although that support is of course very welcome, gas prices are likely to remain high for several years, and a more long-term approach is necessary, especially when the CEO of Ofgem is warning that the number of households in fuel poverty could reach 12 million in October when the energy price cap rises again. The think-tank E3G estimates that the average household with an energy performance certificate of D or lower will be paying what it calls an inefficiency penalty of £916 per year for adequate heating compared with households with an EPC of C or higher. Investment to kick-start a local-authority-led, street-by-street home insulation programme would save cash-strapped families money not just this year but every year. It would also rectify a glaring omission in the Government’s approach so far, with the Climate Change Committee saying clearly in its 2022 progress report to Parliament:
“Given soaring energy bills, there is a shocking gap in policy for better insulated homes.”
New clause 9 would require the Government to produce an assessment of how much revenue would be generated by the energy profits levy if the investment allowance were removed. I also support the Labour Front-Bench amendment that would simply delete the clause on the investment allowance, which is nothing less than a scandal. As the Chancellor and his team very well know, it will come at huge cost to the taxpayer. Analysis by the New Economics Foundation suggests that the investment allowance will 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 in the Bill.
Geraint Davies
I very much support what the hon. Lady is saying. Is she aware that in Germany for three months in succession people are being offered a €9 a month pass that can be used on all public transport, thereby shifting people on to public transport, reducing energy costs, encouraging environmental green investment, and stopping our addiction to fossil fuels? Does she think that a higher tax could help us to do that and put us on a more sustainable route to a green future?
Caroline Lucas
I am grateful to the hon. Gentleman for his intervention, particularly since it helpfully highlights a party policy of the Greens, who were, as he knows, in coalition Government in Germany. It has absolutely been their policy to introduce those kinds of incentives, and they are being massively taken up because they are incredibly popular.
I was talking about the investment allowance and just how egregious it is. The Institute for Fiscal Studies says that investing £100 in the North sea now will cost companies just £8.75, with the public picking up the remaining investment costs in the form of the forgone windfall tax. What is more, there is a chance that this new subsidy could lead to the development of otherwise economically unviable projects, becoming stranded assets of little or no economic value. Oil and gas companies are benefiting from that right now. For example, according to analysis by Rystad Energy, Shell, which recorded quarterly profits of over £7 billion earlier this year, will pay £210 million less in windfall tax for investment in the newly approved Jackdaw gas field.
The investment allowance also significantly reduces the amount of revenue generated, which is why I can only assume that the Treasury believes that its levy will raise only £5 billion in its first 12 months, especially since oil and gas company profits are expected to reach £11.6 billion this year, with BP’s chief executive describing the company as a “cash machine”. Let us remember that, as other hon. Members have outlined, these profits are not earned; they are a consequence of high global gas prices fuelled by Russia’s illegal invasion and war in Ukraine, and must be urgently redistributed to provide vital support to struggling families. Will the Government now publish their full impact assessment? Will they accept this crucial amendment so that we can have clarity over the cost of their perverse proposal?
The subsidy in the Bill is unfortunately entirely consistent with the Government’s approach to subsidising the fossil fuel sector overall. While they refuse to acknowledge that tax reliefs are indeed subsidies and prefer to use the very narrow International Energy Agency definition of a subsidy, Ministers and colleagues will know well that there are much wider definitions in use, including that developed by the World Trade Organisation, which would very definitely include the investment allowance. If the Government go ahead with this subsidy, it will come on top of countless other tax reliefs from which the sector benefits, including those for exploration for new fields, for R&D, and for decommissioning. The latter, for decommissioning, has an especially egregious element in the form of decommissioning relief deeds that guarantee future tax reliefs for oil and gas companies at a given rate. Imagine any other sector being guaranteed tax reliefs in perpetuity with future Governments unable to make changes to that! Companies should pay decommissioning costs, with decommissioning plans required to ensure a just transition for workers. That is the only fair approach. The measures in the Bill will add to the decommissioning tax relief burden faced by the public purse going forward, to say nothing of the impact on fossil fuel extraction.
Geraint Davies
The hon. Lady will be interested to know that people in Swansea University are looking at using the energy from wind farms that is not used by the grid off-peak to create hydrogen that can be put in the gas pipes to dilute the gas to reduce the carbon footprint of everyday gas. Would it not be better to put the money into those sorts of green investments rather than digging more and more holes to destroy the planet?
Caroline Lucas
Again, I am grateful to the hon. Gentleman. Those are precisely the kinds of forward-looking policies that we need rather than the backward-looking, dinosaur policies that seem to think that digging out more and more fossil fuels is the way forward.
Christian Matheson
To make the same point that I made to my hon. Friend the Member for Leeds East (Richard Burgon), can I urge the hon. Lady to follow the money? For as long as these tax credits are given to the oil and gas companies, they are passed on to the people who control the Conservative party in the City—the big hedge fund investment billionaires who have massive incomes because of their ownership stakes in those companies.
Caroline Lucas
The hon. Gentleman puts it perfectly succinctly and I very much agree.
It has been estimated that existing decommissioning relief deeds could enable the extraction of the equivalent of 1.7 billion barrels of oil that otherwise would have remained unextracted, and that will only increase if we continue with the vicious cycle of handsomely subsidising fossil fuel companies to exploit oil and gas reserves. In response to the Glasgow Climate Pact’s call for parties to
“phase out inefficient fossil fuel subsidies”,
the Climate Change Committee said that the Treasury should initiate a review of the role of tax policy in delivering net zero, and was very clear that no fossil fuel subsidy should be considered efficient in the UK. Will the new Chancellor now commit to that review, listen to his own Climate Change Committee, and take its advice?
New clause 10 would require the Government to produce an assessment of the impact of the investment allowance on achieving net zero and on limiting the global temperature increase to 1.5°. It is frankly astounding that the Government need to be reminded yet again that the IEA has been clear that limiting global temperatures to 1.5° necessitates
“no new oil and gas fields approved for development”
as from last year. Yet according to the United Nations Environment Programme, the level of fossil fuel production planned and projected worldwide by Governments in 2030 is more than twice the levels consistent with that goal. The UK has given North sea oil and gas companies almost £14 billion in subsidies since signing the Paris agreement in 2015 alone. This Bill was an opportunity for the Government to change course, but instead they have chosen to double down and to play with fire by bringing forward a Bill that is plainly incompatible with a safe future.
It is patently obvious that the Government should amend the Bill to ensure that oil and gas profits are taxed properly, but I believe fundamentally that that should pave the way for a much wider overhaul of our tax system. We need a carbon tax, which, if implemented properly with a dividend to shield low-income households, could be pivotal in driving the change we need in order to decarbonise our economy fairly. That tax—it has long been Green party policy—would target the big polluters such as oil and gas companies. It is estimated that, starting at a rate of about £100 per tonne of CO2, it could generate up to £80 billion to fund the transformation necessary to achieve our climate goals. That is the kind of innovative policy we need right now to save ourselves from the climate emergency that is only growing deeper.
Lucy Frazer
Many of the points that have been raised in Committee were considered on Second Reading, but I would like to touch on a few of them and then deal with amendments.
The hon. Member for Ealing North (James Murray) asked how the new investment allowance works. On 6 June, I said I was very happy to look further at this point, and I can reassure him that the investment allowance within the levy will be generated on investment expenditure —that is, capital expenditure and some operating and leasing expenditure—incurred on or after 26 May. The legislation includes an anti-avoidance provision to prevent any recycling of existing assets from getting the allowance, and that is all very clearly set out in clause 6.
I want to deal with some of the points made by my hon. Friend the Member for South Thanet (Craig Mackinlay), because I understand his objections, and no Conservative wants to bring in a tax rise where it is not necessary. I have had the opportunity to talk to him on a number of occasions about these measures, and he will know that they are targeted and temporary. He says he fears for investment coming through, but of course that will be assessed by the OBR in due course. I am not sure whether he was in the Chamber earlier when I quoted some companies that have said that they will be investing and that this encourages investment, but I will mention a further one. Kistos has said that it is
“assessing opportunities in the UK that would enable us to take full advantage of the investment allowances implicit in the recently introduced UK Energy Profits Levy”.
I turn to the amendments. Amendment 1 would require companies to report on how much additional tax relief they are claiming as a result of the levy’s investment allowance, in addition to the existing requirement to report how much levy is payable. The amendment would also require that data to be published on a quarterly basis. Companies will already be reporting the information to HMRC that allows it to ensure appropriate compliance with the law, and figures on the amount of tax raised through the levy will also be published on a periodic basis in line with other taxes. As a result, this amendment should not be made to the Bill.
Amendment 9 would add clarification to the allowable purposes of expenditure under the levy’s investment allowance. I have already dealt with that point on Second Reading, and I confirm to the Committee that HMRC will clarify this in written guidance.
New clause 1 calls for an assessment of the impact on revenue and on oil and gas companies’ profits of a 45% levy rate. Similarly, new clause 8 calls for assessments of the revenue impact of a permanent 30% levy rate, which would bring the permanent headline rate of tax for oil and gas companies in ringfence corporation tax to 70%. However, it is not standard—I will be saying this in relation to a number of new clauses—for the Government to publish assessments of the fiscal and economic impacts of measures that they are not introducing, and it is not clear that doing so would be a beneficial use of public resources. Therefore, I recommend that the Committee rejects these new clauses.
Again, new clauses 3, 5 and 9 would require reviews or assessments of policies that the Government are not introducing. New clause 3 would require a review of the revenue that would have been raised had the levy taken place from early January. I set out on Second Reading why we did not bring forward this measure earlier, and I did so last week as well. We are not supporting these measures because, as I have said, it is not usual to bring forward public assessments of measures that we are not introducing.
New clauses 2, 6 and 10 would require reviews or assessments of the impact of the investment allowance on the energy market, climate change commitments and exploration activity. The Government oppose these amendments on the basis that the Treasury already carefully considers the impact of all measures on the energy market and our climate change commitments as a matter of course.
New clause 4 would require a review of the amount of investment allowance that will be claimed and how it relates to expenditure that would have happened were the investment allowance not in place. The first point to reiterate here is that the Government expect the combination of the 25% levy and the 80% investment allowance to lead to an overall increase in investment, and the OBR will take account of this policy in the next forecast. HMRC already publishes data on the costs of non-structural reliefs, which will include the investment allowance in due course, once data is available.
Finally, new clause 7 would require the Government to publish regular reviews of the oil and gas market, including assessments of the need for the levy and whether it should be continued to promote further decarbonisation of upstream oil and gas activities. That is also unnecessary, since the Government already monitor the UK oil and gas sector, and data is published on gov.uk on a monthly and quarterly basis.
For all the reasons I have set out, I urge Members to reject all the amendments and new clauses. I commend the clauses and schedules to the Committee.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Additional expenditure treated as incurred for purposes of section 1
Amendment proposed: 9, page 2, line 42, at end insert
“, which may include electrification investment that decarbonises upstream oil and gas activities”.—(Stephen Flynn.)
This amendment would put on the face of the bill that electrification investment which decarbonises upstream oil and gas activities is eligible for relief.
Question put, That the amendment be made.
Employment Agencies and Trade Unions
(2 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
21:13 - The House divided: - Ayes: 289 / Noes: 202 - Question accordingly agreed to.
21:27 - The House divided: - Ayes: 201 / Noes: 290 - Question accordingly negatived.
Madam Deputy Speaker (Dame Rosie Winterton)
The Business of the House (Today) motion just agreed to by the House provides for the two motions under item 4 on the Order Paper to be debated together. At the end of the debate, I will put the Question on the first motion. When that is decided, I will ask the Opposition to move the second motion formally, and I will then put the Question on it.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jane Hunt)
I beg to move,
That the draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022, which were laid before this House on 27 June, be approved.
Madam Deputy Speaker
With this we shall take the following motion:
That an humble Address be presented to Her Majesty, praying that the Liability of Trade Unions in Proceedings in Tort (Increase of Limits on Damages) Order 2022 (S.I., 2022, No. 699), dated 22 June 2022, a copy of which was laid before this House on 24 June 2022, be annulled.
Jane Hunt
The purpose of the first instrument is to lift the current ban on employers bringing in agency staff to help them cope with industrial action. The second instrument makes a long-overdue change to the maximum levels of damages the courts can award against trade unions that take unlawful industrial action.
I will start by examining why the Government are making these changes. Our trade union laws are designed to support an effective and collaborative approach to resolving industrial disputes. They rightly seek to balance the interests of trade unions and their members with those of employers and the wider public. While the Government continue to support the right to strike, it should always be the last resort. The rights of some workers to strike must be balanced against the rights of the wider public to get on with their daily lives. Strikes can, and do, cause significant disruption. That is particularly the case when they take place in important public services such as transport or education. It cannot be right that trade unions can, as we saw in the case of the recent rail strikes, seek to hold the country to ransom if their demands are not met.
Alec Shelbrooke (Elmet and Rothwell) (Con)
What assessment has my hon. Friend made of the availability of spare teachers, nurses and train drivers to fill the gaps during a strike?
Hywel Williams (Arfon) (PC)
I am grateful to the Minister for giving way so early on. How does she justify overturning the Trade Union (Wales) Act 2017, which bans the use of agency workers in devolved services, and therefore the intention to overturn the consequences of Welsh democracy?
Jane Hunt
I thank the hon. Member for his question. I will talk about that a little later; it is a reserved right.
Some trade unions appear to be looking to create maximum disruption in a bid to stay relevant, rather than constructively seeking agreement with employers and avoiding conflict. In the light of this, the Government have reviewed the current industrial relations framework and have come to the conclusion that change is needed.
The first change we are making is to remove the outdated blanket ban on employment businesses supplying agency workers to clients when they would be used to cover official industrial action. Employers can, of course, already hire short-term staff directly to cover industrial action, but this change would give them the ability to work with specialist employment businesses to identify and bring in staff. The change in no way restricts the ability of workers to go on strike. It will, however, give employers another tool they can use when trying to maintain the level of service they offer to the public.
Rachael Maskell (York Central) (Lab/Co-op)
I am grateful to the Minister for giving way. Has she considered the 100,000 vacancies we currently have in the NHS that we cannot fill? The staff who work for agencies are also unionised and will not cross a picket line, so how will she fulfil this legislation?
Jonathan Gullis (Stoke-on-Trent North) (Con)
To help the hon. Member for York Central (Rachael Maskell) with her intervention, as a former teacher and a former trade union representative, I am more than happy to go back into any classroom to help out when the disastrous “not education union” is threatening to bring down schools.
Jane Hunt
I thank my hon. Friend for his intervention, and for his expertise and knowledge in the field.
This is a permissive change that will not force employment businesses to supply agency staff to employers to cover strikes. Agency workers will still be able to decline any assignments they are offered and the right to strike is unaffected. This change is simply about giving both employers and employees more freedom and flexibility to decide what works best for them—a freedom that the current outdated regulations deny them.
Jane Hunt
I understand that the hon. Gentleman will be speaking later.
Employment businesses will still need to be satisfied that the workers they supply are suitably qualified and trained.
Alongside that change, we will increase the levels of damages that a court can award in the case of unlawful strike action. It has long been the case that employers can bring a claim for damages against a trade union that has organised unlawful strike action. The upper limits to the damages that can be awarded are set out in the Trade Union and Labour Relations (Consolidation) Act 1992, and are based on the size of the union that organises the unlawful strike action, but the damages regime has not been reviewed since 1982, so the limits are significantly out of date. As a result, the deterrent effect that Parliament intended has been significantly reduced. The Secretary of State is using powers granted to him under section 22 of the 1992 Act to increase the existing caps in line with inflation. In practical terms, that means that the maximum award of damages that could be made against a union will increase from £10,000 to £40,000 for the smallest unions and from £250,000 to £1 million for the largest.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Does the Minister think it is right that the cap on any fines issued by the Electoral Commission for fraud if it was found in the Conservative party is lower than what she is proposing for trade unions? Does she think it is right that fines are higher for trade unions than for preserving the democratic functioning of our country?
Jane Hunt
I thank the hon. Member for his question. I will, in fact, move on.
This is a proportionate change, because we are simply increasing the amounts to the level they would be at had they been regularly updated since 1982. We are increasing the limits in line with the retail prices index, which is a well understood measure of inflation and is the same measure for other employment legislation. By increasing the limits on damages in line with inflation, we are sending a clear message to trade unions that they must comply with the law when taking industrial action.
Strikes should only be as a last resort and should only ever be called as the result of a clear, positive and democratic decision of union members. The key point is that unions that continue to comply with our trade union law will be completely unaffected by this change. The changes we are making will ensure that our trade union and agency laws remain fit for purpose. We are giving businesses the freedom to manage their workforce and empowering workers by giving them more choices about the kind of assignments they can accept. We will continue to protect an individual’s right to strike where proper procedures are followed, while ensuring that trade unions are deterred from taking unlawful industrial action.
I beg to move that both instruments are considered by this House.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Just to give prior notice, there are many more speakers than have put down to speak, so I suspect a time limit will be imposed. Members should bear that in mind. I call Angela Rayner, shadow Secretary of State.
Angela Rayner (Ashton-under-Lyne) (Lab)
Thank you, Madam Deputy Speaker. I want to say from the outset that I was an agency worker and I continue to be a very proud trade unionist.
I also want to start by welcoming the Minister to her new position. And what a fitting debate for her to start with. Over the last week, dozens of Government Members found themselves forced to work in intolerable conditions, answering to a boss who only cared for himself and not their interests, so they withdrew their labour—and they achieved some change as a result. So, they do understand the right to strike; they just seek to deny that right to others. The Minister now finds herself, much like agency workers under the regulations she proposes, filling in at short notice as a desperate last resort, with no time to prepare, in an organisation reduced to chaos.
It just does not work. The shambles of this Government disproves their own theory. The regulations are not just utterly wrong in principle, but totally impractical. They promised no new policy while the Prime Minister clings to his desk by his fingernails, but it appears that they have made an exception in this case, ripping up decades of national consensus. The proposals are anti-business and anti-worker. They will risk public safety, rip up workers’ rights, and encourage the very worst practices. Above all, they will not prevent strikes; they will provoke them. It is hard not to believe that this is what the Government were after and their whole intention all along.
The proposals are simply “unworkable”—not my conclusion, but the conclusion of the body that represents agency worker businesses, the Recruitment and Employment Confederation. It is not hard to see why. We already face severe labour shortages, in part caused by the decisions of this Conservative Government. There simply are not the agency staff to cover industrial action. The right hon. Member for Elmet and Rothwell (Alec Shelbrooke) asked the Minister about the impact. The Government have their own impact assessment, which they rushed out this afternoon. It estimates that only 2% of working hours lost to strikes would be covered. I met the REC last week, and it was very concerned that the Minister’s predecessor was simply not listening. I believe that to be the case. This proposal is anti-business. It threatens good agency worker businesses’ reputations, their relations with their staff, and, as the Government’s own impact assessment found, will cost employers thousands of pounds in familiarisation costs.
But there is also a far more insidious side to the proposals. There is a risk to safety, both to workers themselves and the public. The proposals could see agency workers recruited on the hoof and squeezed in to cover highly skilled roles. Take the recent rail strikes, which the Minister mentioned in her opening speech. They saw skilled workers such as signallers, guards and maintenance staff walk out. In case the Minister did not know, it takes a year to train a signaller. Where are the temps who can operate 25,000 volts at control centres or signal 140 mph high-speed trains? How could the travelling public have any confidence in their safety? The public should absolutely not be put in a position where that could happen.
No one in this House can pretend that they are ignorant on this issue. We saw the consequences when P&O Ferries replaced its experienced workforce with agency crew earlier this year. That decision led to 31 separate safety failings. Vessels were suspended and a ship literally lost power in the middle of the Irish sea due to an inexperienced crew. At the time, the Secretary of State for Transport told the House:
“No British worker should be treated in this way… we will not allow this to happen again”.—[Official Report, 30 March 2022; Vol. 711, c. 840.]
The Prime Minister told us that
“we are taking legal action…against the company concerned”.—[Official Report, 23 March 2022; Vol. 711, c. 326.]
Lloyd Russell-Moyle
Is this not an exploiters’ charter that is deeply anti-British? This is from an anti-British party that has abandoned British workers, reducing their rights in work and allowing either agency workers from abroad to be brought in to undercut staff, as happened with P&O, or agency workers to be exploited when they are forced to cross picket lines. This is anti-British worker, is it not?
Angela Rayner
On the P&O workers, it seems to me like the company broke the law and the Government implied that they were going to do something about it. Perhaps the Minister can tell us how that legal action is getting on. Will the Prime Minister keep the promise that he made before he loses office? Can we assume not, judged by today, because the very practice they condemned, they now want to legalise and encourage? This is an absolute disgrace.
Grahame Morris
My right hon. Friend is making a terrific speech and I agree with what she is saying. She mentions P&O, and I certainly recall the Secretary of State making a statement to the House and being enraged by the actions of P&O. Why are the Government putting through the House a statutory instrument to change the terms and conditions and bring in agency workers? Why are we not having the employment Bill that was promised by the Secretary of State? Why is this being done in an underhanded fashion if it commands the support of the House and the country?
Angela Rayner
My hon. Friend makes an absolutely crucial point. The Government have been promising jam tomorrow for far too long, saying “employment Bill”, “employment Bill,” but guess what? No employment Bill. That is what it is like with this Government: it is all jam tomorrow and broken promises all the way.
There is another point to make. Under section 12 of the Employment Agencies Act 1973, the Government must consult before they change any regulation. However, with all the chaos of the past couple of weeks and days, they are trying to pass a consultation from 2015 that they never even completed. They also thought that it would be acceptable to sneak out an updated impact assessment on the day of the debate. This is government on the back of a fag packet, with no time and no opportunity for scrutiny. It is typical of what we have come to expect from this Government.
Hywel Williams
I pointed out to the Minister that the Government are determined to repeal the Trade Union (Wales) Act. She said she would refer to her position on that later in her speech but, unsurprisingly, she failed to do so. Will the shadow Minister commit a future Labour Westminster Government to reinstate our Senedd’s ability to implement a ban on agency staff in devolved services?
Angela Rayner
I thank the hon. Member for his point. I promise him that the Labour party will always support Welsh devolution and support the Wales Government in what they have been trying to achieve. Actually, as we have seen with the industrial action on the railway, we have avoided that in Wales, where we have a Welsh Labour Government, because Labour Members respect devolution. This Government want to break up the Union with their petty squabbles, sleaze and scandal.
Let me move on to the second motion. I congratulate the Minister’s new team on finding one of the lesser-known industrial regulations. It is funny that the Government are proposing to increase fourfold the damages that could be claimed under a measure that has not even been used. The Conservative party is wasting precious parliamentary time in a week when piles of legislation have had to be postponed due to there being no Minister to deal with them. This is an empty gesture or a threat. Whether the Minister and her party like it or not, everybody has the right to join a trade union in this country and to take strike action. This measure is either pointless or yet another attempt to undermine that right by the back door.
Jerome Mayhew (Broadland) (Con)
Does the right hon. Lady agree that it is not open for trade unionists to entertain illegal strike action in this country?
Angela Rayner
We have some of the strictest trade union legislation in Europe. Members have to go through strict balloting. This is the myth that Government Members do not get about trade unionists and industrial action: it is a last resort and it is often when all else has failed. It would be good if the Government got round the table and tried to deal with the disputes rather than stoke them up.
Let us take a step back to examine what this is really about: the Government are set on breaking the strikes that they are causing themselves. We saw it with the RMT strikes last month, when the Government did everything they could to avoid the negotiating table and find the resolution to bring the strikes to an end. Instead, this is a flagrant attempt to do something by a zombie Government that are out of answers, out of options and out of time. They are about a race to the bottom on standards. They are about further eroding British workers’ rights. They are about dividing the country they claim to lead. Undermining strike action will make it harder to find a resolution, resulting in more and longer strikes to the detriment of the public, businesses and workers. This will also empower bad bosses and we will see more cases like P&O Ferries.
We have not just determined that this is bad policy. It is also clear that it is deliberately harmful to workers and their employers, and it is an absolute fault of this Government. I should not be surprised by it. The Conservative party may be trying to get rid of their leader and may want to try and press the refresh button and get a better image, but this Government and that party have shown us time and time again who they are. This is a Government that have no answers to the cost of living crisis. This is a Government that have no answers to backlog Britain and the chaos that it is causing for ordinary working families. This is a Government that have no answers to the spiralling inflation that is on our backs. And this is a Government that have not only failed to prevent the chaos, but have indeed caused the chaos. The party opposite is in disarray and this is no longer good enough. It is the Labour party that is pro-worker and pro-business, and I urge the whole House to be the same.
Several hon. Members rose—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. A great many Members wish to speak and, as the House will be aware, we have limited time—we have just over an hour left. I hope that they will be courteous to their colleagues by taking five minutes or less each.
Jerome Mayhew (Broadland) (Con)
I rise to support both statutory instruments, but I will speak in support of only one: the liability of trade unions in proceedings in tort and the increase in the limit on damages. To set the context, we need to look at the rights and obligations under the law of tort—the common-law duty under tort—so that we can understand the rationale behind the measures. As many Members will know, for a liability under tort to become established, we first have to have a duty of care for one organisation or individual to another. There needs to be a breach of that duty and then evidence to demonstrate that the breach was causative of identified damages. That is a standard part of the law of tort and of our common law. It is worth making the point that it applies to all of us in all our relations with one another; it is not unique to the unions. The starting point is that every organisation is responsible in damages for a tortious breach of its duty of care.
I turn to the specific problem with trade unions and trade union-inspired strikes. Although the withdrawal of labour is a fundamental right, as the right hon. Member for Ashton-under-Lyne (Angela Rayner) made clear, it can lead to a huge number of breaches of tortious duty if a strike is illegal, because public sector work has an impact on so many other organisations. In previous legislation, the Government created an exemption for unions on legal strikes—the official protected industrial action clauses—but illegal strike action is not protected under the law, so the risk remains that trade unions are open to crippling damages being awarded against them. Why should they not be? If through their illegal actions they have caused identified losses to other individuals, why should they not be responsible for them?
Paula Barker (Liverpool, Wavertree) (Lab)
Could the hon. Member identify the last time that there was an illegal strike, please?
Jerome Mayhew
Since 1982, there has been effective legislation to dissuade that kind of act, but the effectiveness of that legislation has diminished over time to such a level that it is no longer worth applying. The damages cap is so low in real terms that it has become ineffective as a disincentive.
Barry Gardiner
Does the hon. Member understand that as the normal remedy is an injunction, what he proposes might, ironically, make injunctions against strikes more difficult for employers to obtain? One of the conditions for the grant of an interlocutory emergency injunction is that it must be shown that damages, if awarded at full trial, would not be an adequate remedy, so raising the level of that remedy makes it less likely that an employer could get an injunction. The hon. Member’s argument has therefore undermined itself.
Jerome Mayhew
I am grateful for that intervention, but I fundamentally disagree. As the hon. Member will know, when someone makes an interlocutory application for an injunction, they often have to give an undertaking in damages. The cap, which I have not yet come on to, will not be raised to a new level; the order merely restores what was put in place, which was the will of Parliament when the legislation was enacted back in 1982.
There is a very strong argument that an organisation that causes loss to another through its breach of a duty of care should be responsible for 100% of damages, but the Government have not taken that view. They have capped the liability in damages for trade unions, even when strikes are illegal. They have tried to balance the disincentive from strike action, for which I make no apology, with protection for trade unions from the full consequences of their actions, even though they might be illegal. The reason is that the Government are in favour of trade unions and do not want crippling damages being awarded against them. There is a balance of rights and obligations, which in my view is absolutely reasonable.
The cap was set by Parliament under the Employment Act 1982 at between £10,000 and £250,000, based on the size of the union and its ability to pay. It seems quite wrong, in 38 intervening years, for the caps not to have been increased by the rate of inflation or by any other amount. The rights of unions and the rights of damaged businesses and individuals have now, in my submission, become unbalanced. The legislation is no longer acting as proposed, and I think the Government are quite right to take action to rebalance it, as it originally required. I have looked up, on the Office for National Statistics website, the retail prices index figures for inflation between January 1982 and May 2022. The multiplier, to be entirely accurate, is 4.31963. The Government’s proposals, which use a multiplier of four, are actually less than the inflationary increase.
It is entirely right that the order restores the original intention of Parliament. The legal right to strike is wholly protected, and it is disingenuous for Opposition Members to suggest that the right to strike is being in any way affected. The order merely restores the balance of rights between the damages available to the victims—and they are victims—of tortious losses caused by illegal strike action and the protection of trade unions from crippling losses. That is right: it is an incentive to avoid illegal strikes, which I think is a good thing.
This is good government. I support the order; I only suggest that from now on, the limits should rise automatically with inflation to avoid having a repeat of this debate in 2060.
Chris Stephens (Glasgow South West) (SNP)
I refer to my entry in the Register of Members’ Financial Interests and to my membership of Unison Glasgow City; I am a proud trade union member. Like the right hon. Member for Ashton-under-Lyne (Angela Rayner), I must say that the irony has not escaped me that right hon. and hon. Members who secured workplace change last week by withdrawing their labour—bringing the country to a standstill, as the Minister put it—now wish to stop others from doing so. When I saw the regulations on the Order Paper, I asked myself whether they were for the trade unions or for the Tories. In Operation Save Big Dog last week, was consideration given to hiring agency Ministers? That was the level that we were at.
What is wrong with the employment agency regulations, of course, is that the Government have tried them before, during the passage of Trade Union Bill. Indeed, there were Government Members who suggested to the Government that they should not go down that road. Then and now, the reason not to is the evidence of the agencies themselves, which do not support this legislation. There has been no consultation.
The regulations interfere with devolution by trying to end the Trade Union (Wales) Act, as we have heard from a number of hon. Members. They interfere with Scotland’s legislative approach, which uses the fair work model; once again, we are seeing this Government running roughshod over devolution. They are also based on fanciful notions. The Minister did not use the phrase “trade union bosses”, but I have heard it used over the past couple of weeks. Trade unions are not the bosses; they are the representatives. It has been suggested by some hon. Members that the fact of disputes taking place is all the fault of the trade unions, not of the poor, downtrodden, six-figure-salary executives who are not engaging.
Chris Stephens
There is no such thing as a union baron. The hon. Gentleman is one of the hon. Members who withdrew their labour to sit on the cobblestones, but given his rhetoric tonight, it seems that he wishes to stop others doing so.
Another problem is the likely breach of international law. The use of agency workers to replace striking workers would violate trade unions members’ right to strike, which is safeguarded by International Labour Organisation convention No. 87, article 3; by the European social charter of 1961, article 6, paragraph 4; and by article 11 of the European convention on human rights. Indeed, the ILO committee on freedom of association has said:
“The hiring of workers to break a strike in a sector which cannot be regarded as an essential sector in the strict sense of the term…constitutes a serious violation of freedom of association.”
On 16 June, the Institute of Employment Rights published an article by the great Professor Keith Ewing, professor of public law at King’s College London. He discusses the convention and refers to the Government’s own agreement—the EU-UK trade and co-operation agreement, which is given effect in UK law via the European Union (Future Relationship) Act 2020. He suggests that the regulations’ revocation of regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 may be unlawful:
“It is at least arguable that these pre-existing powers are constrained by the 2020 Act, s 29 so that they cannot be used in a way that will violate the TCA and the obligations thereunder. If this argument is correct, the government is constrained by its own hand from legislating to revoke regulation 7 by secondary legislation.”
There will be a negative impact on agency workers. Allowing their deployment would put them in a horrible position. They would have to choose between crossing a picket line and turning down an assignment, with the prospect of being denied future work by the agency. Many agency workers, such as supply teachers and bank nurses, will be trade union members themselves. Under the UK’s weak employment laws, agency workers are not protected from suffering a detriment if they refuse an assignment because they do not wish to replace striking workers.
There will also be a negative impact on the agencies themselves. The removal of the ban on the supply of agency workers would mean that employment businesses were forced to become involved in industrial disputes not of their making. That is why agencies themselves oppose the proposals, as others have said. In a joint statement with the TUC, the Recruitment and Employment Confederation urged the Government to leave the current ban in place as a key element of a sustainable national employment relations framework. Part of the reason for that is the realisation by employers and trade unions that disputes come to an end, and there must then be a discussion about how to move forward from that dispute and how to rebuild industrial relations. Neil Carberry, the chief executive of the REC, said:
“The government’s proposal will not work. Agency staff have a choice of roles and are highly unlikely to choose to cross picket lines.”
There is a safety issue. The health and safety of agency workers and the potential impact on public safety is of serious concern to trade unions. Studies suggest that temporary agency workers are exposed to more hazards than others, and have higher rates of workplace injuries and ill health. A simple search of the Health and Safety Executive’s prosecutions over the last five years shows a litany of employer failures: a lack of training of agency workers, a lack of access to protective equipment, and a lack of supervision and monitoring of agency workers to ensure that they understand and are following risk assessments and safe systems of work. Sadly, those failures have resulted in fatal or life-changing injuries among agency workers. We also know from agency workers that their health and safety is often overlooked. When the work involves delivering a public service, that can present risks to the service user or endanger wider public safety.
The Health and Safety Executive and other safety bodies broadly agree that the components of a positive safety culture and successful health and safety management, leading to fewer incidents, include good communication, competence, training and induction, good team working, ability to raise concerns with no detriment, and good worker involvement. The hiring of agency workers to try to disrupt industrial action would not achieve that.
There are also concerns about public safety. Under section 3 of the Health and Safety at Work etc. Act 1974, employers taking on agency workers are responsible for their safety and the safety of the public. The agency placing the worker also has responsibility, and we suggest that failures in safety occur owing to the lack of communication and consultation between the two duty holders, with the safety of the agency worker falling through the gaps. That is borne out by reports from the Health and Safety Executive, which found that about half the recruitment agencies surveyed did not have measures in place to ensure that they were fulfilling their legal obligations.
This proposal is not practical. As was pointed out by Members earlier, there are currently 1.3 million vacancies in the UK , which is a record high. Data shows that the number of candidates available to fill roles has been falling at a record pace for months. In this tight labour market, agency workers are in high demand and can pick and choose the jobs that they take. Are they seriously going to take a job in which they have to cross a picket line in order to get a shift, rather than picking a different one? [Interruption.] Perhaps the hon. Member for Stoke-on-Trent North (Jonathan Gullis) would, but I have to say that he is a unique case.
Grahame Morris
Does the hon. Gentleman agree that many Conservative Members would prefer to turn the clock back to the days of the bond and indentured labour? My grandfather’s father was paid a modest sum as a bond to be an indentured labourer in the mines. It was illegal to go on strike, and if workers did go on strike for better terms and conditions, they were evicted from their homes. It is a disgrace that Conservative Members are trying to turn the clock back to those days.
Chris Stephens
Of course, it was Conservative Members’ party that introduced the Master and Servant Act 1823. I could say more about that, Madam Deputy Speaker, but I will not.
Chris Stephens
Well, it was about what implements could be used to discipline a worker. The hon. Gentleman may want to reflect on that, because the Whips might have done something to him last week when he was taking his industrial action.
What the hon. Member for Easington (Grahame Morris) said was correct. I do not think the Conservatives understand what happens in the workplace. That is the issue here. They think that agencies will replace the striking workers, but that is just not going to happen. An agency worker who can choose between crossing a picket line to get a shift and not crossing the picket line and getting a shift somewhere else will choose the latter option.
Rachael Maskell
The hon. Gentleman is making an excellent speech. It is also the case that employers in safety-critical industries will not want to hire agency workers because they know that the liability will sit with them when the injuries and the accidents occur. Those roles often feature in safety-critical areas. These workers are simply irreplaceable.
Chris Stephens
That is absolutely true. There is a suggestion that the rail industry could bust the current rail dispute by hiring agency workers. Where are the unemployed signalmen who are sitting at home saying, “I cannot wait for the railway workers to go on strike so I can get a shift”? Those people do not exist. This is completely wrongheaded, and utterly impractical. In the gig economy, so-called key workers fighting for better employment terms and pay seem to be expendable under a Tory Government who do not care. Where is the employment Bill that the Government have been promising us since 2015?
There is another point that I forgot to make at the beginning of my speech. Last week, after his resignation, the Prime Minister made a commitment not to introduce legislation that was not in the Government’s manifesto, and not to introduce controversial legislation. Well, by any measure, this is controversial legislation, and, crucially, it was not in the Conservative party manifesto, and therefore it should not be introduced.
I have a couple of questions for the Minister. What assessment has the Secretary of State made of the compatibility of the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022—which we are discussing today—with the Human Rights Act, the trade and co-operation agreement with the European Union, and the UK’s commitment to the International Labour Organisation’s fundamental conventions, including convention 87, article 3?
We have heard about the impact assessment, but what consultation have the Government had with the rail industry employers, rail industry unions and rail industry regulators, including the Rail Safety and Standards Board, about the risk assessment of the use of agency workers in safety-critical parts of the rail industry? What consultations have the Government had with devolved Administrations, local authorities, health boards and other public services? I am guessing that they have not had such consultations, because if they had, they would have been told that these proposals were not workable. And what consultation have the Government had with the employment agencies themselves? We have already heard that the agencies do not support this legislation.
We in the SNP will certainly be opposing this statutory instrument and supporting the Labour prayer. My friend on the Labour Front Bench, the right hon. Member for Ashton-under-Lyne, is a good Unison comrade and I have known her for 15 years. I know that the trade union is proud of her working here, as well as of other hon. Members.
It is madness to say that no impact assessment has been produced for this SI because no significant impact on the private, voluntary or public sectors is foreseen. Fining trade unions for pursuing strike action that is deemed unlawful is a deliberate Tory attack to undermine the ability of trade union members and working people to pursue their aims. Instead, the Transport Minister should be negotiating with the trade unions—sitting down with them and seeing if he can help to resolve this dispute. It is quite incredible how this Government do not understand working people or how modern trade-unionised workplaces operate. This statutory instrument that they are proposing should therefore be placed in the bin.
Madam Deputy Speaker (Dame Eleanor Laing)
I am going to impose a time limit of four minutes.
Mrs Natalie Elphicke (Dover) (Con)
It is well known to hon. and right hon. Members across the House that I am an enthusiastic supporter of the role of trade unions, and of marches and protests, particularly in my own constituency of Dover and Deal. I have been a member of a trade union over the last 20 years, and I have been involved in assessing collective bargaining arrangements with unions. I have marched with unions and I have stood alongside them, most recently in relation to the disgraceful, unacceptable behaviour of my Dover constituents P&O, against whom I have taken firm action. As a Member of Parliament, I have also helped with the negotiations between the unions and the P&O management through two previous restructures during the covid pandemic.
So I fully support the role of trade unions, where workers wish to be involved in them, and I think that sentiment is widely shared among Conservative Members. However, trade unions have a particular and special responsibility, and the rights that they and their members are afforded by law are not unfettered. It is the role of this place to assess where the balance of rights and responsibility lies, and today’s measures are about the responsibilities as well as the rights. Regrettably, the most recent train strike action seems to have been taken precipitately, not as the last resort. In my constituency, no trains at all ran on the strike days. That caused upset and also financial loss to others. It did not strike the right balance of fairness to people who were going to school to sit their exams, going to work or going to see loved ones.
Let me say clearly that I fully understand why those working on the railways are seeking pay rises, and I am pleased that the Government have announced the ending of the pay freeze, but in my area train prices are already too high. I have spoken about that in this place before. The railways are in need of urgent modernisation, and, as the Transport Secretary has set out many times, it is important that these conversations take place so that that can happen. The trains provide an essential service, and we must look at how to provide the basic, critical, essential services that people need to get around in their ordinary lives and work when industrial action is carried out, while also respecting the right of workers to take industrial action. We must not undermine workers’ rights, but we must take into account the needs of the public. That is at the heart of the measures being introduced today.
I conclude by underlining that the increased damages under the order are set to apply only where the unions act unlawfully. As we have heard today, it is good that those instances are few and far between. The order does not fetter the activities that I have described and supported, but it must be right to look at the fairness of the rights and responsibilities, particularly in the current situation where industrial action seems to be encouraged and strikes are not always the last resort. I do not want this country to be brought to its knees by unnecessary strike action. These measures will help to strengthen the responsibilities of everyone involved in resolving employment disputes, to enable them to do so in a responsible way.
Paula Barker (Liverpool, Wavertree) (Lab)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I am a proud member of the Unison and Unite trade unions.
Many Opposition Members will make well-reasoned and well-articulated arguments as to why the Government’s intention to break strikes with agency workers and to bankrupt trade unions violates international law and threatens safety-critical infrastructure in key sectors during periods of industrial unrest—not to mention its economic illiteracy. Those arguments will undoubtedly fall on the deaf ears of a governing party looking into its own spiral of moral depravity. For all their so-called love of liberal democracy, the Conservatives are now effectively seeking to remove the fundamental right of workers to withdraw their labour. As we enter this leadership election and the insufferable spectacle of hopefuls distancing themselves from the low-wage, high-tax, low-growth economy they have created with unrealistic, unfunded promises, I have no doubt that looking tough on trade unions will feature as part of the show for the Tory party faithful. They say we live in the 1970s, but it is they who live in their own warped reality of more than 40 years ago.
I remind the Conservatives that they are the ones who changed the rules with the Trade Union Act 2016, which brought in ballot thresholds set at what they thought were unrealistically high levels. Guess what? Trade unions are meeting them, so can we drop the phoney rhetoric that the likes of Mick Lynch and other trade union bosses are taking members on strike? It is the members of the RMT and other trade unions who take these decisions. They do not stand behind their trade union leaders; their leaders stand shoulder to shoulder with them.
Other unions will undoubtedly follow as working people attempt to claw back a fairer slice of the pie, rather than the crumbs they are being offered—like the Communication Workers Union workers in Crown post offices who are taking their third day of industrial action today. I support every worker taking a stand for their livelihood, their family, their dignity in the workplace and the prosperity of their communities. This Government fear that the action taken by the RMT and the CWU will encourage other working people to do the same. All this comes at a time when the Government’s boss mates are dipping the till by suppressing wages, paying out millions in dividends and giving themselves bonuses while millions of people cannot afford to eat, to heat their home or to put petrol in their car.
After so many decades of believing their own dogma, the Conservatives are running out of things to privatise, with Channel 4 and the Passport Office in their sights. Similarly with the trade unions, they have pushed the needle so far that the obvious next step is to break strikes using agency labour and to break international law—on which they have form. What next? Ban trade unions altogether, or simply legislate them out of existence? How far the Conservative party has descended into the throes of authoritarianism. We must oppose this with everything we have.
Alec Shelbrooke (Elmet and Rothwell) (Con)
The behaviour and the pay demands of the public sector at this time are unjust. Plenty of my constituents who work in the private sector will receive nowhere near those pay demands, and to threaten strike action to achieve them is an insult to my constituents whose livelihoods will be disrupted and whose taxes will probably have to be increased to pay for them.
However, the saying goes, “Act in haste, repent at leisure.” This agency worker measure was not in our manifesto, and it seems to have been done very quickly in reaction to what is going on in the public sector. Do not get me wrong; I think that action is wrong, but public sector employees represent a small proportion of employees in this country and the private sector has quite a few unscrupulous employers. If people lose their ability to have an effect when they withdraw their labour, I am afraid they will effectively lose the ability to withdraw their labour.
We cannot change the rules to require the service levels that the public demand while ignoring the considerably larger impact on private sector workers. Private sector employers might turn around and say, “I am sorry, but costs have gone up so high that I am cutting your wages back to minimum wage.” Their workers might withdraw their labour, to which the employer might say, “Fine, I will bring in agency workers.” That takes away all the rights of working people to make such decisions. Over history, and certainly many decades back, there have been plenty of examples of people working in terrible conditions, and being able to be part of a collective and to withdraw labour got those conditions improved. We are all gobby in this place—that is how we got here. We all feel it within us, and we all stand up and say something. Most people are not like that at all; they want someone to stand up and do it for them, and we then have negotiations and go to those levels.
I take issue with the right hon. Member for Ashton-under-Lyne (Angela Rayner), but I fully expected her speech to go down as it did. In many ways, we have invited it, but I do not believe the cost of living crisis is created by this Government; many issues in the world are creating a cost of living crisis. It is inflationary to try to chase those pressures, and this will have to be fair for the private sector. However, for the first time in my parliamentary career, I shall be voting against the Government tonight on the measure to bring in agency workers.
Grahame Morris (Easington) (Lab)
I, too, would like to draw Members’ attention to my entry in the Register of Members’ Financial Interests. I want to acknowledge the excellent contribution of the right hon. Member for Elmet and Rothwell (Alec Shelbrooke) and congratulate him on the conclusion he has arrived at. I am a proud trade unionist. I have worked ever since I left school, for 43 years, and I have always been a member of the appropriate trade union. I am involved with numerous parliamentary groups and trade union groups related to the justice unions, the Public and Commercial Services Union, the National Union of Journalists and the RMT. [Hon. Members: “Hear, hear.”] Thank you. I am also a member of Unite and have the honour of chairing its parliamentary group.
I suspect we are here because the Government have engineered strikes in the rail industry that could have been avoided. Sadly, the country was brought to a standstill, which was completely avoidable. The right hon. Member for Welwyn Hatfield (Grant Shapps), who wants to be Prime Minister, is the culprit; he is the roadblock to successful negotiations between rail operators and the trade unions. My advice is: lift the restrictions on the rail operators, let them negotiate fairly and freely, and a settlement can be secured.
I suspect the Government wanted strikes, however. First it was to distract from some of the shenanigans in Downing Street, and now they want to pitch worker against worker to cover for some of the economic failures of another prospective Prime Minister, the right hon. Member for Richmond (Yorks) (Rishi Sunak). The Government want to break strikes and force working people who are organised in trade unions to accept job losses, worse pay, worse pensions, and worse terms and conditions.
Enough is enough. People who work for a living refuse to be poor. It is not too long ago that Conservative Members were applauding public sector workers for their selfless contribution. Many in the transport sector and the national health service gave their lives to provide services and protect us during the pandemic, but memories seem to be short. So we will be organising, and I am firmly of the belief that we should not accept real-terms cuts in wages, whether in the private sector or the public sector.
Make no mistake: these statutory instruments come off the back of the recent RMT rail strikes, and the Government aim to sow political division. My colleagues on the Front Bench mentioned that employers and industry figures, including the Recruitment and Employment Confederation, oppose these changes. Let me just say for the record that the trade union co-ordinating group, a coalition of 11 national unions, not all of which are affiliated to the Labour party, has published a statement calling these proposals
“a shameless ideological assault on the millions of trade union members…in this country who are already suffering from the cost-of-living crisis.”
The Government’s plan is unworkable, but these SIs have not been designed to be workable. They have been designed to undermine strikes, irrespective of the damage they will do to working people, to their living standards, and to the economy and businesses in the meantime. The Government want untrained agency staff to take over safety-critical infrastructure as a means of breaking strikes. The public must be warned that if the Government cut corners to break strikes, safety standards will be compromised. The Minister said in her opening remarks—although she would not take my intervention—that this would not affect the safety of the public, but not too many months ago we saw P&O Ferries replace over 900 seafarers with agency crew, leading to the most appalling safety failures. Inexperienced seafarers who replaced experienced crews were involved in 31 separate incidents, including safety-critical failures such as not being able to operate lifeboats safely. In fact, one ferry was left adrift in the Irish sea after engine failure—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. The hon. Gentleman was speaking with such authority that I did not notice he had exceeded his four minutes. I am afraid I will have to stop him there. I call Craig Mackinlay.
Craig Mackinlay (South Thanet) (Con)
It is always a pleasure to follow many of the Members in this House, and the hon. Member for Easington (Grahame Morris) knows I have great regard for him. I am glad that he discussed issues of the here and now—the P&O issue united the House in opposition to the behaviour of that employer, and it certainly meant a lot for the community of my hon. Friend the Member for Dover (Mrs Elphicke) —but I was somewhat entertained when he started to go on about indentured labour. I thought we had gone back not to the 1970s, which is part of this debate, but to the 19th century. I found that quite entertaining.
There are two usual ways of getting new staff into businesses, and we are discussing whether they can cross a strike action. Currently, a normal employment business is the one that cannot provide. The other type of employment business—the employment agency model—can. I do not think that I would much know the difference, if I went inside an employment business or an employment agency. At the end of the day, it is the staff that the business wants.
Much has been said about whether this change is being made on the back of the recent strikes. Well, perhaps it is. I have had so many emails from people who could not get to work on that day. We in this House had great inconvenience, which I am afraid was not assisted by possibly the worst London Mayor we have ever seen. I have local residents who have suffered fines because they rarely drive in London; they had to face the ultra low emission zone charge, box junctions everywhere that they could not get out of because of the chaos on the roads, and the local traffic networks that had closed much of London in the first place. We are into fairness. Is that fair on people who are trying to get to work and who usually rely on trains—trains that have had £16 billion of taxpayers’ money over this period, and not one job lost? Is it fair on everybody who is just trying to do the right thing: to run their own business, get to a hospital appointment, get to the doctor, or get to their exams?
I have every regard for the trade unions, but they have intentionally used the cost of living crisis—I do not blame them; best of luck to them—to get more than most people would ever be able to get. Let us not go back to the 1970s wage-price spiral. The hon. Member for Easington said that people’s wages will go backwards. Well, they will go backwards every year if we end up with a wage-price spiral.
Alec Shelbrooke
As I said in my speech, some of the wage demands are inappropriate. To put them into context, given the way in which MPs’ salaries are set with the raise in the average public sector pay, if all these wage demands were to go through, we would get an £8,000 pay rise next year. How does my hon. Friend think the public would react to that?
Craig Mackinlay
I thought about such issues when I was drafting my speech. There would be absolute outrage from the public if we were to get such pay rises. I do not particularly want such a pay rise; I assure hon. Members of that. We must guard against a wage-price spiral. I support these regulations, because it is not unreasonable for people to be able to get to work.
The other industry that was going down this route was British Airways. BA workers have come to a settlement, which is very good. If BA had effectively closed down over this holiday period, what would that have meant for the employment of London? What would have happened to the tourists who spend a lot of money in London and other tourist areas around the country, including in my own coastal town? What would that strike at BA have done?
I am glad that the dispute has been settled, but it seems to me that unions are picking off certain industries in order to cause the maximum upset, with little regard for normal people trying to go about their normal business. I have every respect for what unions are trying to achieve. That is what they are for, and they have done marvellous work in the past. At this time, however, we need to pull together as a nation—I really wish that we could pull together as a nation.
I have heard from those on the Labour Front Bench. I have heard from my friend, the hon. Member for Glasgow South West (Chris Stephens), who raised the spectre of danger. He knows very well that these industries are so regulated and that the staff are so qualified that the reality of agency workers being able to carry out this work is pretty low, so he is raising a spectre of something that does not really exist.
I am supportive of these measures. I hope that they do not need to be used. I hope that we can get common sense, get people back to work and get some of these disputes settled.
John McDonnell (Hayes and Harlington) (Lab)
These two small pieces of legislation could have the most serious impact of any we will be considering in this Session. BA has been mentioned. That is in my constituency. Let me explain what happened. When we went into the covid crisis, the airport was shut down. Many workers were asked to remain in post to bring in essential supplies and, as we repatriated people back into this country, two of our immigration officers caught covid and died. Others continued to go into work. When hon. Members went out to applaud key workers on the doorsteps, we went out to applaud our workers at the airport who were putting their lives at risk.
We negotiated a deal. The union accepted that there would have to be some jobs reduced in the short term and wages reduced to ensure that the company survived. That was the negotiation. The assurance given was that, as we became fully operational again, wages would be reinstated. When we became nearly fully operational—at 80%—the company reneged on that commitment for a group of workers. Members can imagine how angry those workers were. They were not asking for a pay rise; they were asking for the 10% cut to be reinstated. That was all. We did the normal thing that we do at the airport: we went into negotiations and we settled the dispute, but there was a threat of industrial action. If that had happened, my whole community would have supported it.
If there had been any hint of bringing in agency workers, not only would that dispute not have been settled, it would have been bitter and long-winded. Members should not think that other workers in the airport, not implicated in that dispute, would have stood on their own. They would not have taken illegal action; it is easy for workers to find a grievance at the airport if they want to. They would have gone through the legal procedures and that airport would have been shut down. Do not tell me that agency staff can fill in for air traffic controllers, firefighters, baggage handlers who have security clearance—it takes months to get that security clearance—immigration officers and others.
This is a serious piece of legislation going through tonight, and it will exacerbate industrial relations across the whole of the country. I say to hon. Members from all parts of the House to be careful what they wish for, and to be careful what they legislate for. I am fearful about what this legislation could do. It is not just the public sector that is affected, but the private sector at Heathrow and elsewhere. Interestingly, with regard to the fines imposed, not a single example could be quoted of where the existing system was not working. In addition, unions are meticulous in the way they go forward on these matters, but where they are not, the injunction route for the employer has worked effectively. At the airport, we had one problem in the cabin crew dispute where the union was unsure who it was balloting, because halfway through some of the staff had been made redundant. An injunction came in, the union started again, the process was legitimised and the dispute took place, and we resolved the dispute through negotiation.
These measures will cause animosity and division, but if that is what this Government are all about, I say, “I think you’ve misjudged the public mood when it comes to support for trade unions in this country at the moment.”
Jonathan Gullis (Stoke-on-Trent North) (Con)
The hon. Member for Glasgow South West (Chris Stephens) talked about my alleged withdrawal of labour last week. The only withdrawal of labour that the people of Stoke-on-Trent North, Kidsgrove and Talke are seeing is 70 years of failed Labour Governments, failed Labour MPs and a failed Labour-run council. By not investing in high streets, investing in heritage, building the new homes we need or creating the new jobs, the Labour party once again shows it is out of touch and is forgetting the people of Stoke-on-Trent North, Kidsgrove and Talke.
I am fully supportive of the specific SI on trade unions. I welcome the Minister to her place and congratulate her on an excellent opening speech. I spent eight and a half years teaching in state secondary schools in inner London and inner Birmingham. I was also a trade union shop steward for the NASUWT in that time, and there was many a time when we came close to potentially having to ballot on strike action, but only as a last resort, after negotiations had failed, freedom of information requests had not been granted and there was a breakdown of morale in the school. It is the absolute last resort.
What we have seen from the RMT is a politicisation from the communists and Putin apologists who want to use this opportunity to bring this country to a halt and make sure, very clearly, that tourism to the great city of Stoke-on-Trent is destroyed, that people cannot get to work and earn a salary, and that those uni students who travel in by train to Staffordshire University cannot sit their summer exams.
Then we have the “not education union”. Hansard always corrects me when I say the “not education union”, but that is its name. I do not want to hear its official name, when it is obsessed with bringing these silly 120-point plans for when schools can reopen during covid—one of which was somehow about reforming the welfare state, which had nothing to do with education—and when it has the audacity to tell kids that it will potentially have teachers out on strike at the start of the new term, further damaging the education of children who have been affected by covid. The Labour party is silent about that. Labour does not have it in it to stand up to those trade union barons on their six-figure salaries, in most cases earning more than the Prime Minister of this country, because it simply wants to make sure those donations keep coming in to its party coffers and its constituencies as well.
This Government are trying to take action to ensure that if the service level is being lowered and agency workers want the opportunity, or wish to choose—it is a choice—to cross the picket line, they should have that right. It is deeply Conservative to allow people to choose. I know that the Labour party, or the socialists opposite, are obsessed with us having one set standard for all, but that is not what the people of Stoke-on-Trent North, Kidsgrove and Talke want.
The people of Stoke-on-Trent North, Kidsgrove and Talke want to see a party that is on their side, helping to get their schools open and ensuring that hospitals are running and public sector workers are working. They want to see the very best, world-class services. It is under this Government that they have already seen £56 million from the levelling-up fund, £31 billion from building back better, 500 brand new Home Office jobs, £29 million from the transforming cities fund and £17.6 million in the Kidsgrove town deal, which means that Kidsgrove sports centre, which Labour closed—they did not want to save it for £1 back in 2017—will be refurbished and reopened.
That is the record of this Government. That is why this Government want to make sure that areas such as Stoke-on-Trent North, Kidsgrove and Talke have people on their side. I welcome the Minister for all her fantastic work and I hope the socialists opposite will realise the error of their ways.
Beth Winter (Cynon Valley) (Lab)
I am not going to waste any of my time responding to the appalling and abhorrent comments by the hon. Member for Stoke-on-Trent North (Jonathan Gullis), which were also completely inaccurate and insulting.
I want to put on record my opposition to the regulations, and there are three main reasons. First, it is a flagrant attack on employment rights and a purposeful attempt to inflame industrial relations. The Government are only pursuing these measures to continue to impose their decade-long low pay agenda, holding down the pay of key workers below inflation. It is the Government’s low pay approach that is generating industrial action, and this is a draconian attempt to force people into poverty.
Mary Kelly Foy (City of Durham) (Lab)
Does my hon. Friend agree that the easiest and best way to stop strike action is to give workers decent pay and good, decent terms and conditions?
Beth Winter
I totally agree. That is what we do in Wales.
These measures are unsafe, putting workers and the public at risk. They have been rejected by the Trades Union Congress and the Recruitment and Employment Federation, which said:
“Bringing in less qualified agency staff to deliver important services will endanger public safety”.
I oppose the first of these instruments, in particular, because, as the hon. Member for Arfon (Hywel Williams) said, it conflicts with Welsh Government legislation—the Trade Union (Wales) Act 2017, passed in the Senedd. This Government have made it clear that they intend to legislate to remove that Act through primary legislation when parliamentary time allows. The First Minister of Wales has made it clear that the proposal by the UK Government to revoke the Act is unacceptable. He has said that it is “deeply disrespectful”—
“Not a word in advance, not a letter to say that this is what they intended to do”.
It is hard to believe that any UK Government with a grain of principle and care for the Union could behave in such a cavalier manner. If anyone is going to be responsible for the break-up of the Union, it is this Tory Government by riding roughshod over the devolution settlement. The general secretary of Wales TUC, Shav Taj, has said:
“We will fiercely oppose any attempt to attack workers’ rights and we look forward to a future where workers throughout the UK have the strongest employment rights in Europe, instead of the weakest”,
as it currently stands. This is the act of an out-of-touch Government unaware of their own unpopularity.
We also have to remember why this proposal has come about now. The Government are in a confrontation —they are actually stoking confrontation—with key workers who do not wish to have yet another of this Government’s annual real-terms pay cuts. In the RMT they have found a trade union that is willing to challenge them, and it has my full support, as do all the other unions that are being forced—forced—to consider industrial action, which is always a last resort.
In Wales, the Welsh Government are not in conflict with the RMT. In fact, no industrial action is being taken on Transport for Wales trains, which are publicly owned. The UK Government could have followed suit and taken Network Rail into public ownership, as happened in Wales during the pandemic. The UK Government have so much to learn from the Welsh Government, where a different approach is being taken. The Welsh Government’s approach includes passing legislation to work with trade unions in partnership—the Public Procurement and Social Partnership (Wales) Bill. That is the model that we need to see. The Government are giving a role in statute to businesses and trade unions, and employers and employees, in developing and supporting an atmosphere of co-operation and partnership instead of risk, division and confrontation.
What discussions has the Minister had with the First Minister and Counsel General in Wales on this matter? What discussions has he had with the TUC and trade unions in Wales? What do employer bodies in Wales, or in the rest of the UK, think about his proposals? What consultation has happened with them? What is the view of the new Welsh Secretary on these proposals? I am disappointed that he has not already committed to pausing any progress on overriding the Welsh Government and Welsh legislation while we have a caretaker Government. Is it the Government’s intention to bring forward primary legislation to revoke the Trade Union (Wales) Act 2017, and if so, when will it happen?
This is a Government doubling down on their cost of living crisis. People will not accept it and we will fight back.
Several hon. Members rose—
Madam Deputy Speaker (Dame Eleanor Laing)
I will have to reduce the time limit to three minutes.
Barry Gardiner (Brent North) (Lab)
The Government seem to think that most workers are unskilled or uncertified, but agency workers are simply not there with the relevant skills and certification to perform their work in a way that is safe. I began today at the St Monica Trust, at two sites just outside Bristol, to speak to workers there who have withdrawn their labour because of the appalling offer they have been given of being fired and rehired unless they accept lower wages and terms and conditions. They were earning, on average, between £16,000 and £17,000 a year—about what a Secretary of State’s severance pay is—and they made it clear to me that their main worry and their main reason for going on strike was not actually for their own sake. They were concerned for the welfare of the residents of the residential homes and the retirement village.
I want to ask the Minister tonight whether she will please report the St Monica Trust to the Health and Safety Executive and ensure that a positive inspection is carried out there, because the workers out on the picket line were very concerned about the safety of employing unskilled workers who do not understand the residents and are not able to care for them in the way that they have all the way through covid. They were there on Christmas day and all the time when relatives could not visit; they treated them as their family. The agency workers cannot do that.
I want to make a couple of other brief points. Agency workers are generally paid significantly more than permanent staff, and that reflects the intermittent nature of their work. However, the employer, by paying agency rates to strike breakers in a dispute, actually makes the union’s case for it, because it shows that the employer actually can pay higher rates for the job. How very foolish of them.
Finally, I want to ask whether the Minister might, in her summing up, explain whether the Secretary of State for Business, Energy and Industrial Strategy has replied to the letter written at the end of June by Hays, Adecco, Randstad and Manpower, in conjunction with the TUC, in which they said:
“We can only see these proposals inflaming strikes—not ending them”.
It seems to me that, when we have the employers of the agencies themselves saying that this is a bad thing to do, the Government should listen.
Ian Byrne (Liverpool, West Derby) (Lab)
I would like to put on record that I am proud member of Unite the union and the GMB. I start by paying tribute to all those in Liverpool, West Derby and indeed across the country who are facing real-terms cuts to their pay, attacks on their conditions and security of work, attacks on their pensions, redundancy and attacks on health and safety in the workplace, and are having to take industrial action as their absolute last resort. I stand in absolute solidarity with them.
While the workers worry about their families and their families worry about their futures, as they are forced to leave the industry they have dedicated their whole lives to and are forced into poverty and using food banks, we have the disgraceful spectacle of a morally bankrupt Government using this Parliament to attack fundamental workers’ rights—and this is in the middle of a cost of living crisis, when workers are fighting against real-terms cuts to a wage so that they can actually put a meal on the table.
Mick Whitley (Birkenhead) (Lab)
My hon. Friend is making a fantastic speech. Does he not think that to be a working person in Britain today, to have lived through a decade of stagnating wages, to have seen their pay collapse in real terms while prices soar and to know their own Government refuse to lift a finger forces people on low pay to take strike action to try to force—
Ian Byrne
Absolutely. I agree with everything my hon. Friend said.
This is a Government who furiously defend the class interests of those they represent in this place, and that is never the working class. The Trades Union Congress has pointed out that the action is a violation of trade union members’ right to strike, which is safeguarded by international law. Make no mistake, this is a risk to public safety, and standards will be lowered. Any consequences of these actions will lie at the foot of this Government.
The Government’s cynical regulations that we are debating tonight put agency workers, who they know have limited rights, in the position of having to turn down an assignment with the prospect that they will be denied future work by the agency if they do not want to cross a picket line. Many agency workers, such as supply teachers and bank nurses, will be trade union members themselves, and they have suffered terribly in this pandemic.
The regulations highlight the insecurity of the labour market, the erosion of workers’ rights and how flawed and immoral it all is. The pandemic shone a light on this immorality when workers with covid had to continue working because they had no sick pay. The employment model is broken for millions. We should be legislating and learning lessons from covid, and enhancing worker protections, including sick pay. Instead, tonight we are voting on a scab charter for bad employers from a Government who have picked their side.
Trade unions are the transformational vehicle for positive change—they have been for centuries and, despite the efforts of this wretched Government, will continue to be so for future generations. I will always be proud to stand shoulder to shoulder with them supporting workers in the struggle who refuse to be poor.
Tonight is yet another sad day for democracy in this place. I stand in absolute solidarity with all those trade unions and trade union members who are fighting so hard for our communities and the rights of workers everywhere. Their fight for economic and social justice has never been needed more.
Jane Hunt
I am grateful to the House for its consideration of the draft amendment regulations on agency workers, which will allow agency workers to cover strikes, and the order raising the upper limit for damages against trade unions that organise unlawful strike action. I will cover some of the things that were mentioned. The right hon. Member for Ashton-under-Lyne (Angela Rayner) and the hon. Member for Glasgow South West (Chris Stephens) talked about health and safety. The change does not affect broader health and safety issues, with which businesses will still have to comply. Similarly, the obligations on employment businesses to supply only suitably qualified workers remain in place.
Will the hon. Member for Brent North (Barry Gardiner) please write to me with some urgency with the details of the case to which he referred? The right hon. Member for Ashton-under-Lyne and others referred to P&O Ferries. The situation is different with P&O Ferries, where the company has admitted deliberately choosing to ignore statutory consultation requirements when firing staff with no notice. The hon. Member for Glasgow South West and others talked about the trade and co-operation agreement. We are confident that this change complies with relevant international legal obligations. In response to the hon. Members for Arfon (Hywel Williams) and for Cynon Valley (Beth Winter), let me say that the Government have been clear since 2017 that we intend to repeal the Trade Union (Wales) Act 2017, so the trade union legislation will equally apply across Great Britain.
In conclusion, the aim of our trade union laws is to support an effective and collaborative approach to resolving industrial disputes that balances the interests of trade unions and their members with the interests of employers and the wider public. The changes we are making will support that balance, and I therefore commend these instruments to the House.
Question put.
Business without Debate
Madam Deputy Speaker (Dame Eleanor Laing)
With the leave of the House, we shall take motions 5 to 7 together.
Motion made, and Question put forthwith (Standing Orders Nos. 118(6) and 18(1)(a),
Plant Health
That the draft Plant Health etc. (Miscellaneous Fees) (Amendment) (England) Regulations 2022, which were laid before this House on 6 June, be approved.
Regulatory Reform
That the draft Legislative Reform (Provision of Information etc. Relating to Disabilities) Order 2022, which was laid before this House on 12 May, be approved.
Police
That the draft Police Act 1996 (Amendment and Consequential Amendments) Regulations 2022, which were laid before this House on 9 June, be approved.—(Adam Holloway.)
Question agreed to.
Draft Mental Health Bill (Joint Committee)
(2 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Deputy Leader of the House of Commons (Mr Peter Bone)
I beg to move,
That this House concurs with the Lords Message of 5 July that it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on the draft Mental Health Bill (CP 699) presented to both Houses on 27 June.
That a Select Committee of six Members be appointed to join with a Committee appointed by the Lords to consider the draft Mental Health Bill.
That the Committee should report by 16 December 2022.
That the Committee shall have power—
(i) to send for persons, papers and records;
(ii) to sit notwithstanding any adjournment of the House;
(iii) to report from time to time;
(iv) to appoint specialist advisers; and
(v) to adjourn from place to place within the United Kingdom.
That the quorum of the Committee shall be two; and
That Rosena Allin-Khan, Marsha De Cordova, Jonathan Gullis, Dan Poulter, Ben Spencer and Sir Charles Walker be members of the Committee.
It is an unexpected pleasure, in my first outing as Deputy Leader of the House, to speak to this motion, which relates to prelegislative scrutiny.
The draft Mental Health Bill seeks to ensure that patients suffering from mental health conditions have greater control over their treatment and receive the dignity and respect that they deserve, as well as making it easier for people with learning disabilities and autism to be discharged from hospital. It is clearly an important Bill, so it is important that a Joint Committee be established to conduct prelegislative scrutiny. I hope that the whole House will support the motion to allow the Joint Committee to begin its important work.
Question put and agreed to.
Environmental Audit
Ordered,
That Sir Robert Goodwill be discharged from the Environmental Audit Committee and Chris Skidmore be added.—(Sir Bill Wiggin, on behalf of the Committee of Selection.)
North Street, Keighley: Green Space
(2 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Robbie Moore (Keighley) (Con)
May I extend my thanks to you, Madam Deputy Speaker, and to Mr Speaker for granting this urgent debate? It is truly urgent, because in just 10 days’ time, people in Keighley will be heading to the polls to vote in a public referendum to determine the fate of a key strategic site in the heart of Keighley.
I am, of course, talking about the much-loved green space that adjoins North Street and the top of Cavendish Street, right in the centre of Keighley. It is a unique site, and people in Keighley quite rightly care about its future. They want to have a say in how it looks, how it feels, how it interacts with the remainder of Keighley’s streetscape and, of course, how is utilised long into the future.
The unique site was once the home of Keighley College, before the college was demolished and rebuilt on a bigger and better site, presenting a rare opportunity for a newly created open site right in the heart of Keighley, ready to be used by all. It was sown with grass and was quickly adopted, by all across Keighley, by the name “the green space”. Hope was raised and a new open green space was created. A new green lung right in the heart of Keighley was formed, with the potential to go on to be landscaped as a fantastic town centre space, perhaps planted with trees, wild flowers, and a permanent grassed area for all in Keighley to enjoy—because place, and a sense of place, are important.
If you were to join me in Keighley, Madam Deputy Speaker—and you are very welcome to do so, as is the Minister—you would see some of the fantastic architecture that we have there. North Street, for instance, has some beautiful buildings. Some, of course, are in need of refurbishment, but nevertheless, those buildings are stunning. Cavendish Street is the same. While our high streets face some challenges, as many high streets do, our town centre has soul, and I believe that the green space—uniquely positioned in the centre of town, at the junction of North Street and Cavendish Street, opposite the fantastically imposing beauty of the Carnegie library, adjacent to the town hall and the Town Hall Square with our awe-inspiring cenotaph—makes the soul of our town all the better.
All this is at risk, however. Labour-run Bradford Council is determined to build on this key site, stripping away that hope of Keighley’s town centre streetscape being improved by a permanent green space in the centre of our town. As I said earlier, place and the sense of place are important, and, in my view, Bradford Council’s determination to build on the site, no matter what, only illustrates its lack of willingness to consider the negative impact that that will have on Keighley’s soul. But there is a bigger, underlying, and much more detrimental issue. We are governed by a local authority that is unprepared to listen—to listen to what the people in Keighley want.
I am proud to say that this Conservative Government announced that Keighley would receive £33.6 million as part of its towns fund deal. That included some seriously exciting projects for our town, including a new skills hub, a new manufacturing, engineering and future tech hub, and more money for town centre improvements, regeneration, and cultural offerings such as Keighley Creative—but also funding for many, many other projects.
I am also proud to say that as part of the Keighley towns fund deal, this Conservative Government have allocated money to help deliver a new health and wellbeing hub, to improve local healthcare services and address some of the health and wellbeing inequalities in our town. I am delighted to have been directly involved in helping to secure these funds, along with the great team which forms our Keighley towns fund board, an advisory body in which many are volunteers and give up their own time to help Keighley in a positive way.
We do need a new health and wellbeing hub: one needs only to speak to representatives of the many great organisations in Keighley that provide health and wellbeing services to realise and acknowledge that. However, throughout the towns fund application process, even during the many years before my time representing Keighley, Bradford Council has been determined to ensure that the green space is built on, no matter what.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
I congratulate my hon. Friend on securing this important debate. Yet again, he is demonstrating what a feisty campaigner he is for his constituents in Keighley and Ilkley. Although my constituency is, of course, some distance from Keighley, I do know the green space, and I understand the points that he is making. Does he agree that this is an example of the need for local authorities to listen and devolve decision making as close to the people as possible, so that they secure the best possible outcome that reflects the views of local residents?
Robbie Moore
I absolutely agree with my hon. Friend. If we want to place-make, and if local authorities are in the position to regenerate a town, it is absolutely crucial that they listen to what the local people and the town council want. In that way, we can make sure that when we are in a position to place-make and the local authority is being issued with Government funds, it will deliver on what local people want in the location where local people want to see it.
We are unfortunate because Bradford Council is fixated on ensuring that the green space is built on, no matter what. It has adopted the position that this is the only place in the whole of the centre of Keighley in which a new health and wellbeing hub can be located. That is despite the fact that Keighley has many other brownfield site options and many other empty buildings and vacant premises in the centre of our town, all of which, over many years—even prior to the existence of the towns fund—the Council has failed to properly explore. It has failed to carry out site analysis of other sites or openly consider other site options.
I very much want to see a new health and wellbeing hub built in Keighley. We need one, but we should not be railroaded into a corner and told by Bradford Council that building on the green space is the only option. This, in my mind, is a result of the council’s lack of preparation, lack of due diligence and lack of consideration of other sites for many years. This should not be an either/or choice. In Keighley, we should be able to have a new health and wellbeing hub and keep the green space on North Street green. In fact, it is surely far more beneficial for the health and wellbeing of Keighley to have both.
Local authorities have an important role in regeneration. If they function properly, with due thought and consideration for a town, they can have a real place in making sure that we develop and regenerate a town in the appropriate manner. They can help communities to grow and thrive, and they can deliver on the community’s priorities. But this involves listening to what the community wants, and I come back to the point that I made earlier. My issue is not with the identified need for a new health and wellbeing hub at all; it is simply about the location. Unfortunately, in this case, Bradford Council has failed properly to engage with Keighley. It has failed to consider just how much this green space—this unique space in the centre of Keighley—matters to the people of the town. The council’s lack of inquisitiveness, preparation and ability to engage with our community and listen to its voice is detrimental to the process of proper place-making.
This has not been without trying. Local campaigners such as Laura Kelly and our former Keighley town mayor, Councillor Julie Adams, have tried on many occasions to tell Bradford Council that residents in Keighley would like the green space to stay green. Likewise, the Keighley Central ward District Councillor Mohammad Nazam and Keighley West ward District Councillor Julie Glentworth, as well as Worth Valley Councillors Rebecca Poulsen, Chris Herd and Russell Brown, have tried to get Bradford Council to listen and to make their voices heard in Bradford’s City Hall, but no one in Bradford’s running administration would listen.
I have to say that Labour-run Bradford Council’s approach to debate on the green space has been shameful. All its Labour councillors in Keighley are failing to listen on this issue. Let us be clear: Labour is determined to build on this green space, no matter what. When the council’s political executive gathered to discuss building on the green space just over a month ago, Keighley town councillor and local campaigner Councillor Paul Cook turned up to a meeting at Bradford Council in good faith to put forward his views. He had a pre-registered slot to speak at the meeting, but he was silenced by the council and not given the time to speak properly on this matter. Place-making is about listening to what local communities want, not silencing them.
At the end of last month I, along with many other residents, attended a packed public meeting in Keighley’s civic centre. It was an opportunity kindly organised by Keighley Town Council to allow local people to raise their views. The mood of the room was strong and represented, I believe, the mood of the wider town, which is absolutely clear. We want to save our green space.
As a result, Keighley Town Council decided to hold a public vote on this very matter, triggered by Keighley resident Graham Mitchell. This public poll will take place in just 10 days’ time, and everyone in Keighley will have the chance to vote on Thursday 21 July between 4 pm and 9 pm. Everybody living in the town council parish area, which includes Riddlesden, East Morton, Beechcliffe, Utley, Ingrow, Long Lee and Thwaites Brow, Guard House, Braithwaite, Bracken Bank, Oakworth, Laycock and, of course, the wider Keighley area, will be able to vote in their regular polling station. Any constituent who is unsure of where this is can find out by searching wheredoivote.co.uk or by calling Bradford Council’s election office.
This really matters because people in Keighley will be asked three questions on the ballot paper, and the choice for all is very clear. The first question is, “Do you want a new health and wellbeing hub?” As I have said, we need a new health and wellbeing hub in the centre of Keighley, and I am therefore urging everyone to say yes.
Secondly, residents will be asked, “Do you want a new health and wellbeing hub on the vacant land at the corner of North Street and Cavendish Street?” This is, of course, the green space. There are other places in the centre of Keighley, which should be explored, where a new health and wellbeing hub could be located. Of course, I want to keep the green space green, and I am therefore urging all residents to answer no.
Finally, residents will be asked, “Should the vacant land at the corner of North Street and Cavendish Street be considered as a public open space?” This is our chance—the people of Keighley’s chance—to send Bradford Council a clear message to save this green space for many generations to enjoy into the future. To keep it green, I am urging all to vote yes.
This is an important moment for our town. Developments like the one proposed by Bradford Council are irreversible. If we lose our green space, this unique space in the centre of town, we will never get it back. I reiterate my call for as many people as possible to get involved and make their views known. I am urging people to vote yes, no, yes in the referendum. We must ensure this green space is protected for the future generations of Keighley, like the children at St Anne’s Primary School, which is located next to the green space, who kindly wrote to me saying that they want the green space to be kept green. If it is destroyed now, there will be no turning back.
This is not an either/or choice. I want to see a new health and wellbeing hub and I want to protect our green space, to protect and enhance the soul of our town. In just 10 days’ time, the people of Keighley will have a clear choice, and I urge them all to get out and vote on Thursday 21 July, to let their voice be heard. Let us keep it green.
The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Eddie Hughes)
I do not know where to begin. It seems unfortunate that the Opposition Benches and the Benches behind me are not full to hear that tour de force of a speech from my hon. Friend the Member for Keighley (Robbie Moore). I congratulate him on securing this debate but, my God, what a speech that was. Nobody could doubt that he is incredibly passionate about this cause and a strong campaigner on behalf of his constituents.
I also thank my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for his somewhat surprising intervention, given the very specific nature of the debate. It shows just how far my hon. Friend the Member for Keighley is prepared to reach out in his campaign.
So I would like to start by saying that the Government share my hon. Friend’s concern about making sure that communities in all parts of the country have access to vibrant green spaces in which people can relax, exercise and engage with the natural environment. Everyone here will testify to how essential their local parks and open spaces—
Eddie Hughes
Everyone here will testify to how essential their local parks and open spaces were at the height of the covid pandemic—they certainly were for me. They remain essential to everyone’s physical and mental wellbeing, and our quality of life, too. I am sure that my hon. Friend will appreciate that I cannot comment on specific cases, owing to the Secretary of State’s quasi-judicial role in the planning system. However, I can spend this time reassuring my hon. Friend on what we, as the Government, are doing to both discourage development on green spaces and encourage development elsewhere.
On open space, the national planning policy framework makes it crystal clear that access to high-quality open spaces and opportunities for sport and physical activity are important for the health and wellbeing of communities. On top of these benefits, they obviously add ecological value, making an important contribution to the green infrastructure of the community. That is especially pertinent when we talk about the legacy of COP26 and the need for housing and planning to play their part in helping us to tackle carbon emissions, improve air quality and win the race to net zero.
Planning policies should therefore be based on robust and up-to-date assessments of the need for open space, sport and recreation facilities. Plans should also make sure that councils are ready to seize opportunities for new provision of these spaces where they can. Finally, the framework is clear that open space should not be built on unless there is clear evidence that it is no longer required, or that equivalent or better provision is secured in a suitable location. Development is also permitted if it is for alternative sports and recreational provision, the benefits of which clearly outweigh the loss of the current or former use.
Similar to open space, local green space can have a positive effect on local communities and can be designated through local and neighbourhood plans, ensuring that green areas of particular importance are identified and protected. Designating land as local green space should be consistent with the local planning of sustainable development and should complement investment in sufficient homes, jobs and other essential services. These spaces must also be in reasonably close proximity to the community, be demonstrably special to a local community, and hold a particular significance—for example, because of their beauty, historic significance, recreational value or richness of wildlife. Policies for managing development within a local green space should be consistent with those for green belts, but I should add that this space may also be nominated by parishes and community organisations for listing as an asset of community value. What does that mean in practice? If somewhere is listed, the community will have an opportunity to bid for it if the owner wants to dispose of the land on the open market.
My hon. Friend will know that the Government strongly support the re-use of suitable brownfield land, especially to meet housing needs and to regenerate our high streets and town centres. That is one reason why we committed to making the most of brownfield land, in line with our policies in the NPPF. The framework sets out that planning policies and decisions should give substantial weight to the value of using brownfield land. To further support this brownfield-first approach, we have introduced a number of measures, including increasing housing need by 35% in our 20 most populated urban areas. We have also widened permitted development rules, making it easier for boarded-up shops and offices to be converted into new homes.
We have also mandated every local authority to publish a register of local brownfield land suitable for housing in their area. Although it is rightly for councils and their residents to plan where new homes should go, our plan is clear that local authorities must give substantial weight to the re-use of brownfield, and give it priority where practical and viable. In many cases, we encourage councils to consider building upwards, with higher densities in towns and cities. However, it goes without saying that brownfield sites vary greatly, and our default position is that local authorities are generally best placed to assess the suitability of each development.
Let me turn to green space and planning applications. As my hon. Friend will know, councils are required to undertake a formal period of public consultation prior to deciding on a planning application. Where relevant, considerations are raised by local residents, and they must obviously be taken into account by the local authority. Planning applications are determined in accordance with the development plan for the area, unless material considerations indicate otherwise. Each application is judged on its own individual merit; and of course, if a proposed development infringes on local green space, residents will be able to object and make their views known, just as they would with any other planning application.
I am sure that my hon. Friend will agree that all this underlines the need for the planning process to be more democratic and engaging. I am pleased to say that the reforms proposed in our Levelling-up and Regeneration Bill will help us to do exactly that. Under the reforms that we have set out, communities will retain the right to make representations on planning applications and local authorities will have a duty to consult with their communities on plans. Crucially, the Bill includes measures to digitise the planning system and transform the way that people can see and engage with what is being built in their area, including provision for green and open spaces.
Through the Bill, existing powers that determine when pre-application engagement is required with communities will also be made permanent. That will ensure that the voice of the community continues to be heard loud and clear. Our changes will also increase opportunities for community involvement through street votes, neighbourhood plans and design codes, so that high-quality green design and development is brought forward in a way that works best for local people. But we are not just reforming the planning system to ensure adequate green spaces for local communities; we are also giving councils the real investment they need to increase local provision of parks, woodland and play areas. That is evidenced in our towns fund, which is providing more than £3.6 billion to support locally-led job-creating projects that support growth and build pride in place.
As my hon. Friend will be aware, £33.2 million of the towns fund has been committed via the Keighley town deal to invest in capital projects designed to improve connectivity both to Keighley and within the area, to improve land use in and around the town, and to make the best use of the area’s rich economic and cultural assets. I understand that the proposed £2.4 million of public realm improvements include improving public spaces, such as new squares and parks for residents to enjoy, along with upgrades to walking and cycling links, and the regeneration of Low Street with significant tree planting. I am confident that, complemented by the £4.9 million community grant scheme, Keighley will become an even more attractive place in which people can live, work and play. It is an exemplar of how the Government are supporting councils to level up and increase the provision of green spaces in their communities. We want to get more growth-spurring, life-improving projects such as this off the ground in the coming weeks and months.
I thank my hon. Friend once again for his amazing, passionate speech, and for securing this incredibly important debate. I hope that my remarks have gone at least some way towards reassuring him that the Government are committed to protecting our vital green spaces. We will continue to take a brownfield-first approach to development that protects our existing green spaces while ensuring that we build greener, more sustainable neighbourhoods for the benefit of all.
Question put and agreed to.