House of Commons

Wednesday 10th January 2024 Commons Chamber

Wednesday 10 January 2024

The House met at half-past Eleven o’clock

Prayers

Wednesday 10th January 2024 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 10th January 2024 Commons Chamber

The Secretary of State was asked—

[Julie Marson (Hertford and Stortford) (Con)]

1. What recent discussions she has had with Cabinet colleagues on trends in the level of private investment in research and development in the last 12 months.

[Dr James Davies (Vale of Clwyd) (Con)]

13. What recent discussions she has had with Cabinet colleagues on trends in the level of private investment in research and development in the last 12 months.

[The Minister for Science, Research and Innovation (Andrew Griffith)]

This Government have a fantastic track record of mobilising private investment in research and innovation, alongside delivering the largest ever public spending, which will reach £20 billion a year next financial year. In November, the global investment summit saw commitments to invest almost £30 billion in the UK, including the decision by Flagship Pioneering, one of the world’s leading life science investors, to have its first international base in the UK.

[Julie Marson]

Hertford and Stortford lies at the heart of the innovation corridor, so private investment is very important to businesses in my constituency. Does the Minister have any assessment of the likely impact of the Mansion House reforms on that trend and the great track record of private investment?

[Andrew Griffith]

Like its Member of Parliament, Hertford and Stortford is indeed innovative. The Mansion House reforms, which in my previous role I helped the Chancellor to deliver, will unlock an estimated £50 billion of investment to scale up high-growth companies across the whole United Kingdom, including in my hon. Friend’s constituency. That sits alongside our £250 million initiative for long-term investment for technology and science—LIFTS—which will focus particularly on British pensioners investing in long-term growth opportunities in tech and the life sciences. When it comes to British innovation, this Government are all in, and I hope that in 2024 financial institutions will be too.

[Dr Davies]

In October, the Government announced the £60 million regional innovation fund to boost university support for regional economic growth. Wales was allocated £3.4 million through the Barnett formula. However, disappointingly, there is no evidence of that money having been spent on its intended purpose in Wales. What assistance can the Minister provide to encourage the Welsh Government to invest Wales’s proportion of the regional innovation fund in boosting the Welsh economy?

[Andrew Griffith]

As my hon. Friend said, the recently announced regional innovation fund is providing £60 million of funding across the United Kingdom to harness the strength of our universities. It is intensely disappointing that the Labour Government in Wales have not seen fit to spend that in the same way. Ultimately, that is a decision for the Labour Government, and I am sure that the electorate will hold them to account for that.

[Daniel Zeichner (Cambridge) (Lab)]

Private investment will need to ratchet up significantly if it is to offset the loss to the research sector that we are seeing as international student applications plummet as a result of Government policy. What are the Minister and his colleagues doing to offset that decline in resources?

[Andrew Griffith]

Once again, it is an enormous shame that the hon. Member for the wonderful cluster of Cambridgeshire is so keen to talk down the United Kingdom at every opportunity. This Government are mobilising more public funding for research and development than ever before, and mobilising private investment capital on the back of that—£2 for every £1 that the Government put in.

[Jim Shannon (Strangford) (DUP)]

Yesterday I was talking to a Minister in the Lobby, and he referred to how impressed he was by the Northern Ireland workforce. I am equally impressed, as the Member for Strangford. When it comes to research and development across the United Kingdom, what is Northern Ireland getting to help our workforce grow, to train our people and to make us an integral part of this United Kingdom of Great Britain and Northern Ireland?

[Andrew Griffith]

Having visited Northern Ireland, I am aware of just how innovative and highly skilled it is, and how much opportunity and headroom there is. It is very important to me, as the Minister for Science and Research, that Northern Ireland punches above its weight. I would be delighted to visit Northern Ireland to meet businesses, entrepreneurs and innovators there.

[James Wild (North West Norfolk) (Con)]

2. What steps her Department is taking to help ensure that vulnerable customers are supported when their phone lines are transitioned to the digital network.

[The Secretary of State for Science, Innovation and Technology (Michelle Donelan)]

On 14 December, I convened the UK’s leading telecom providers to discuss the next steps to protect vulnerable households when providers upgrade phone lines. As a result, telecom providers have now signed a charter, committing to concrete measures to protect vulnerable households. This is a positive step by industry to make sure that safety continues to be at the heart of the nationwide switchover.

[James Wild]

A concern about the new digital network for vulnerable people in North West Norfolk who rely on personal alarms in emergencies is loss of service in a power cut. Will my right hon. Friend ensure that those welcome new protections deliver robust back-up plans in such circumstances, and that they are clearly communicated to customers?

[Michelle Donelan]

I absolutely agree that the power resilience of our digital infrastructure is key to keeping people connected. As part of signing up to the voluntary charter, the main communication providers have promised to work towards providing more powerful back-up solutions that go beyond Ofcom’s minimum requirements. I have had multiple conversations with Ofcom on this matter. It is now consulting, with the aim of further strengthening the UK’s resilience on power cuts.

[Tonia Antoniazzi (Gower) (Lab)]

Rural connectivity remains a huge problem in my constituency. As the Secretary of State said, the charter has been introduced. However, it was introduced over a year into the process, when things had already gone wrong. What is she going to do to rectify that?

[Michelle Donelan]

I would like to correct the hon. Member. The decision on the public switched telephone network was made by business, because of the problems with the existing copper lines and the fact that that, too, poses significant challenges. What we have done is take proactive steps by convening industry to ensure that they are going further than their existing commitments, and we have involved the regulator at every step.

[Eddie Hughes (Walsall North) (Con)]

3. What steps her Department is taking to improve rural connectivity.

[Mark Menzies (Fylde) (Con)]

4. What steps her Department is taking to improve rural connectivity.

[David Duguid (Banff and Buchan) (Con)]

9. What steps her Department is taking to improve rural connectivity.

[The Minister for Data and Digital Infrastructure (Julia Lopez)]

Great digital connectivity is now absolutely vital to people’s life chances and we do not want rural areas to be left behind. That is why we are putting £2 billion into gigabit, so that it is in every corner of the country. We are putting cash into satellites for the hardest to reach bits. We have a plan for mobile operators to get much more phone coverage. The best bit, of course, is that we have a new rural connectivity champion, in my hon. Friend the Member for Barrow and Furness (Simon Fell), to get the countryside connected.

[Eddie Hughes]

I am delighted to hear everything the Minister has to say, but what further advice can she give to a colleague keen to champion specific rural communities facing challenges with poor digital connectivity?

[Julia Lopez]

First, I want to reassure my hon. Friend that a lot of work is being done on gigabit and mobile reception for rural areas. There is a regional procurement under way that covers his constituency and a neighbouring one, but I also recommend that constituents elect great MPs who can hold me and Building Digital UK to account in the surgeries we hold in Parliament—they already have such an MP in him. He is clearly doing something right, because Walsall North has 92% gigabit-capable coverage, compared with a national average of 79%. All I would say to Tamworth is: take note.

[Mark Menzies]

My hon. Friend will be aware of the difficulty in securing a Project Gigabit contract for Lancashire. Once signed, a contract will help isolated premises and rural communities get a much-needed superfast connection. Last month, I spoke with BDUK about progress on the procurement process. What steps is she taking to ensure that timescales do not slip and that we can see installation under way for the second half of this year, as currently planned?

[Julia Lopez]

I thank my hon. Friend for holding me to account and I very much share his sense of urgency. His constituency has 86% gigabit-capable coverage, so it is above the average, but none the less I understand the frustration that people have when their premises are not covered. I reassure him that I raised this matter with BDUK yesterday. I want to get going as fast as possible. We expect that procurement to be sorted in the summer.

[David Duguid]

I welcome my hon. Friend back to her place. She will know what is coming, based on the multiple conversations that she and I, and various digital Ministers over the years, have had on the woeful delivery of rural broadband in Scotland, which is the responsibility of the Scottish Government. The Reaching 100% scheme was supposed to bring faster internet to 60,000 properties across the north and north-east by the end of 2021, but so far it has delivered only a little over 9,000, with over 50,000 still to go and zero R100 North contract delivery in the Banffshire and Buchan Coast constituency. Since my hon. Friend has returned to her post, what discussions has she had with the Scottish Government about dealing with the pause implemented on BDUK and Scottish Government—

[Mr Speaker]

Order. I call the Minister.

[Julia Lopez]

I appreciate my hon. Friend’s work in this area. He is a tremendous champion for his constituency. He will be aware that I spoke to the Scottish Government before I went on maternity leave. I asked for an update on that work yesterday when I spoke to BDUK. I understand that progress is being made. I am anxious to get that sorted because Scotland is missing out and falling behind other parts of the UK. That is not good enough and I want to help him to do everything he can to get this moving.

[Chris Elmore (Ogmore) (Lab)]

I have raised with the Minister over and over again the subject of the village of Bryncethin in my constituency, where three streets still do not have connectivity. BT Broadband has now come in to do the work, which it says it will complete in 2026. That is just not acceptable. Will the Minister point out to BT Broadband again that the position needs to be rectified quickly, and that the work on those three streets should not take two years?

[Julia Lopez]

As the hon. Gentleman will know, things are changing in Wales because the Welsh Government are starting to take some of the contracts in-house. That work is under way, but I am happy to look into that specific issue with Openreach on his behalf, because I appreciate the frustration felt by his constituents. Those Welsh Government contracts are being taken in-house because we think we will be better placed to deliver them.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

When it comes to rural connectivity, nothing can be more important than connectivity for the emergency services. Does the Minister agree that it is a disgrace that the emergency services network upgrade programme is seven years late and now has a budget of more than £11 billion, which is nearly 10 times its original budget?

[Julia Lopez]

The hon. Gentleman is right to highlight the vital importance of ensuring that the emergency services network is up and running and that it is robust, particularly in rural areas. I am not aware of the specific issues in his constituency—I am happy to look into them—but as far as I am aware, the programme is on track.

[Helen Morgan (North Shropshire) (LD)]

The shared rural network is key to improving mobile coverage in rural areas, but the maps showing the partial notspots certainly do not reflect the lived experience of my constituents. What will the Minister do to improve the data that companies use for deciding where to put their improved services?

[Julia Lopez]

That is an important issue, and we have raised it with Ofcom because we share the hon. Lady’s concern that the data is not good enough and is not being reflected in constituents’ actual experiences. I am very alive to this problem and want it to be put right.

[Sir Edward Leigh (Gainsborough) (Con)]

5. What steps her Department is taking to support innovation in the technology sector.

[The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Saqib Bhatti)]

The science and technology framework is our clear plan for supporting innovation through our five critical technologies that underpin the future of the UK economy. We have already committed significant investment to those technologies, including £2.5 billion for quantum, £2 billion for engineering biology and £1 billion for semiconductors. We are also driving innovation through initiatives such as regulatory sandboxes, focusing on future skills and establishing a new digital markets regime to promote more dynamic competition in digital markets.

[Sir Edward Leigh]

We have seen in recent years how much innovative technology can do to track down criminals, and we have seen, for instance, the use of drones in the war in Ukraine. What some of us cannot understand is why we and the French cannot use more of this innovative technology to track down the criminal gangs who are herding people on beaches and putting their lives at risk. Why can we not devote more resources to catching these people with new technology?

[Saqib Bhatti]

I thank my hon. and gallant Friend for his question. I can confirm that my colleagues in the Home Office are absolutely committed to breaking the business system of these callous and illegal criminal gangs. A key part of that is technological innovation, and a range of technologies are being used.

[Mr Speaker]

I call the shadow Secretary of State.

[Peter Kyle (Hove) (Lab)]

Businesses I speak to are excited about the innovation that artificial intelligence offers, but deeply frustrated by the Government’s uncertainty over regulation. The original White Paper was delayed for a whole year. When it finally landed, Ministers told Parliament that a response to the consultation would happen in 2023, but we are now in 2024. Will businesses have to wait for an election to be given the certainty they need, or will the Secretary of State and her ministerial team commit to publishing the response this month?

[Saqib Bhatti]

Businesses have made it clear that they want us to ensure that we understand the risks or AI, but also the balance between those risks and the opportunities that AI presents. We have already committed to publishing the response to the consultation in due course.

[Mr Speaker]

I call the SNP spokesperson.

[Carol Monaghan (Glasgow North West) (SNP)]

The proposed sale of the Rosalind Franklin Institute, a critical piece of national infrastructure, will be hugely damaging to innovation in biomedical science. I appreciate that the Science Minister will be meeting me later today to discuss the issue, but can the Minister explain how this sale sits with the UK Government’s plan to be a science superpower?

[Saqib Bhatti]

I hope that my colleague the Science Minister will be able to address the hon. Lady’s concerns at that meeting.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

6. What steps she is taking to increase access to AI skills training.

[The Secretary of State for Science, Innovation and Technology (Michelle Donelan)]

The Government have funded a broad package of AI skills initiatives through the education pipeline, to address the skills gap and to support citizens and businesses to take advantage of the wealth of opportunities that AI technologies provide. We have funded a new AI master’s conversion course and published draft guidance to help training providers develop business-relevant AI skills training.

[Mrs Lewell-Buck]

The defence AI strategy acknowledged an AI skills gap across the whole of defence and promised to work with industry to provide expertise in AI and develop a skills framework. That was two years ago. Where is it?

[Michelle Donelan]

The hon. Member does not quite grasp the magnitude of what we have done on this agenda. We have invested £290 million in it since 2018. We also recently published guidance to support businesses to adopt AI. We will continue to prioritise that area.

[Mr Speaker]

I call the Chair of the Science and Technology Committee.

[Greg Clark (Tunbridge Wells) (Con)]

Just before Christmas, the EU institutions declared that they had agreed to a new EU AI Act. What assessment has the Secretary of State made of that? How does her intended approach in the UK differ?

[Michelle Donelan]

I welcome my right hon. Friend’s work in this space. The EU has taken a slightly different tack from us. We want to foster innovation in AI, seize the opportunities for our public services and ensure that the jobs are located here in the UK. That is why we have our domestic track—we will produce a White Paper shortly—and also why we introduced an international track and convened the entire world for the first ever global AI safety summit. We are certainly leading in this area.

[Mr Speaker]

I call the shadow Minister.

[Matt Rodda (Reading East) (Lab)]

It is vital that Britain grasps the opportunity of AI to grow our economy and to modernise vital public services. That relies on having a supply of highly trained staff. However, the Government are failing in that. Their AI scholarship scheme is floundering, with Ministers finding only 21% of the funding they promised. Why has the Department failed? When will the Secretary of State authorise an urgent review of this vital policy area?

[Michelle Donelan]

Perhaps the hon. Member missed my answer to the previous question, so I will indulge him by repeating it. Since 2018, we have dedicated £290 million to AI skills. That does not sound like a Government who are failing on that agenda.

[Richard Foord (Tiverton and Honiton) (LD)]

7. Whether she is taking steps with Cabinet colleagues to help retain researchers from overseas who are working in the UK.

[Layla Moran (Oxford West and Abingdon) (LD)]

12. What steps she is taking with Cabinet colleagues to encourage overseas researchers and innovators to come to the UK.

[The Minister for Science, Research and Innovation (Andrew Griffith)]

I hope that the hon. Members and their party will join me in celebrating just what a fantastic place the UK is for international researchers to work and live. We have one of the strongest science bases, the world’s leading universities and research institutions, and the largest ever public research and development budget. With our association with Horizon from the beginning of the year, we are central to global research collaboration.

[Richard Foord]

This year, the Migration Advisory Committee will review the graduate immigration route. International research students who are currently doing PhDs in the UK are attracted to coming here because of the ability to stay on and work after completing their PhD. Will the Minister engage with the Home Office to confirm that research students who arrive in the UK this year will continue to be entitled to a period of post-study work?

[Andrew Griffith]

In keeping the UK an open and welcoming place to do international research, in order to deliver the Prime Minister’s vision of being a science superpower, my colleagues and I regularly meet Home Office colleagues. The facts belie the hon. Gentleman’s question: 41% of postgraduate research in the UK today is being conducted by researchers who have come from overseas.

[Layla Moran]

The Government’s recent spousal visa policy to increase the salary threshold is forcing academics and innovators to leave. I give the Minister the example of a British constituent of mine who is graduating from Oxford with a PhD, which is funded by UK Research and Innovation. His American wife, who is graduating from Bangor with a PhD, cannot live with him because the job he has been offered is paid well below the salary threshold. Why are the Government using taxpayers’ money to educate people to become highly qualified researchers if their immigration policy then forces them to leave?

[Andrew Griffith]

A fair immigration policy is absolutely part of an open Britain. It is right that those who come here from overseas and live cheek by jowl with those who clean their labs, drive their local buses and empty their bins do their fair share in contributing to the UK economy.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

Does my hon. Friend agree that one of the reasons—[Interruption.]

[Mr Speaker]

Order. When a Member is asking a question, other Members should wait or be seated.

[Sir Oliver Heald]

Does my hon. Friend agree that one of the great strengths of our rejoining Horizon and the other European programmes is that our expert researchers and top professors will lead research teams that attract researchers from across the world, including the EU? That is one way to retain researchers here.

[Andrew Griffith]

My right hon. and learned Friend makes an apposite point. I would ask all Members of this House to go back to their constituencies and talk to local firms, innovators, clusters and universities to make sure the UK punches above its weight in the Horizon programme.

[Cherilyn Mackrory (Truro and Falmouth) (Con)]

In my constituency, Phytome is a fantastic independent researcher of agro-pharmaceuticals. I invite the Minister to visit the firm one day. What more is he doing to ensure that we can attract the very best talent from around the world into life sciences, even in Cornwall.

[Andrew Griffith]

I would be delighted to visit the innovative firm in my hon. Friend’s constituency. She will know about the global talent visa, which has seen a 76% rise in visas issued over the last year alone, welcoming the world’s best scientists to Britain’s science and technology superpower.

[Peter Dowd (Bootle) (Lab)]

T1. If she will make a statement on her departmental responsibilities.

[The Secretary of State for Science, Innovation and Technology (Michelle Donelan)]

This year, my ministerial team and I will be laser-focused on delivery. We will back the science and tech businesses that are growing the economy, creating new jobs and improving lives across our country. We want to make sure that British people have the skills they need to take advantage of those jobs, and we also want to support innovative start-ups across our country to scale up here and stay in the UK. We want to use regulation as a tool for innovation, by designing a transparent set of rules that encourage our entrepreneurs to be bold, and we want to ensure that the British people truly feel the benefits.

[Peter Dowd]

In advance of the Budget, what discussions has the Minister had with the Treasury regarding crucial funding for the development and uptake of human-specific technologies, as opposed to using 3 million animals for experimentation and research in the UK?

[The Minister for Science, Research and Innovation (Andrew Griffith)]

The day cannot come quickly enough when we are able to end the practice of animal testing. That day is not now, but this Government are committed to doing everything we can to bring forward and support the development of replacement technologies. The hon. Gentleman has my commitment that we will do that at the right pace.

[David Duguid (Banff and Buchan) (Con)]

T4. Will the Minister join me in congratulating SaxaVord on gaining its spaceport licence from the Civil Aviation Authority? Does he agree that the site in Shetland will serve as a critical vertical launch site not just for the UK but for the rest of Europe and beyond, and as such is deserving of full UK Government support?

[Andrew Griffith]

Yes, I congratulate SaxaVord on achieving the necessary licences to pursue vertical launches from Scotland. I hope to see the success of that launch, as well as rocket boosters under the UK space programme in 2024.

[Mr Speaker]

I call the shadow Minister.

[Chris Evans (Islwyn) (Lab/Co-op)]

A recent study has shown that, through digitisation, the UK’s small businesses can generate £77.3 billion in additional revenue and create 885,000 new jobs in this country. However, around four in 10 small businesses do not see new technology as relevant to their company and do not see tech investment as offering good value for money, citing a lack of skills and knowledge. What is being done to ensure that small businesses are not left behind in the technological revolution?

[Michelle Donelan]

We work very closely with the Department for Business and Trade on this agenda, and we work with the Department for Education on skills in general. We have fantastic programmes such as Innovate UK, which is helping to support businesses with the uptake of artificial intelligence. We recently produced additional guidance, too.

[George Freeman (Mid Norfolk) (Con)]

I welcome my hon. Friend the Minister for Science, Research and Innovation to one of the great offices of state, and I thank the Secretary of State for supporting the science and technology superpower mission. Does she agree that, as the Prime Minister plans a rightly robust response to the Post Office saga, we need to learn important lessons about technology procurement to make sure that Whitehall never again repeats this appalling misjustice? [Interruption.]

[Michelle Donelan]

You will see from the loud cheer the popularity of the former Minister, Mr Speaker, and let me take the opportunity to thank him for his hard work and dedication to the science, innovation and technology agenda. He worked very hard on the science and technology framework, an important pillar of which, as he knows, is procurement, and I absolutely agree with the sentiments he echoed.

The Prime Minister was asked—

[Lee Anderson (Ashfield) (Con)]

Q1. If he will list his official engagements for Wednesday 10 January.

[The Prime Minister (Rishi Sunak)]

This morning, I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.

[Lee Anderson]

Happy new year to you, Mr Speaker. Now then, the Horizon Post Office scandal saw hundreds of innocent people sent to prison—people like a former constituent of mine who went to jail for three years. During this scandal, the leader of the Liberal Democrats was the Minister in charge of the Post Office. This is the same Liberal Democrat leader who in the past has called for the resignation of over 30 prominent people in this country who have made mistakes in their jobs. So does the Prime Minister agree that the leader of the Lib Dems should take his own advice and start by clearing his desk, clearing his diary and clearing off?

[The Prime Minister]

This is one of the greatest miscarriages of justice in our nation’s history. People who worked hard to serve their communities had their lives and reputations destroyed, through absolutely no fault of their own. The victims must get justice and compensation. Sir Wyn Williams’ inquiry is undertaking crucial work to expose what went wrong, and we have paid almost £150 million in compensation, to more than 2,500 victims. But today I can announce that we will introduce new primary legislation to make sure that those convicted as a result of the Horizon scandal are swiftly exonerated and compensated. We will also introduce a new up-front payment of £75,000 for the vital GLO—group litigation order—group of postmasters. May I also thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for all his hard work on this issue? He will set out more details to the House shortly. We will make sure that the truth comes to light, we right the wrongs of the past and the victims get the justice they deserve.

[Mr Speaker]

I call the Leader of the Opposition.

[Keir Starmer (Holborn and St Pancras) (Lab)]

I heard what the Prime Minister just said about the Post Office scandal. It is a huge injustice; people lost their lives, their liberty and their livelihood, and they have been waiting far too long for the truth, for justice and for compensation. So I am glad that the Prime Minister is putting forward a proposal. We will look at the details, and it is the job of all of us to make sure that it delivers the justice that is so needed.

Back in 2022, when Boris Johnson claimed he would send asylum seekers to Rwanda, one ambitious Tory MP had reservations. He agreed with Labour that it would not work, it was a waste of money and it was the latest in a long line of gimmicks. Does the Prime Minister know what happened to that MP?

[The Prime Minister]

What the right hon. and learned Gentleman refers to is a document that he has not seen and I have not seen, and that has been reported second hand in a bunch of media newspapers. What I can tell him is that I am absolutely clear that we need to stop the boats—that is what this Government and that MP are going to deliver.

[Keir Starmer]

I notice that the Prime Minister did not deny it. I am not surprised, with £400 million of taxpayer money down the drain, no one sent to Rwanda and small boats still coming. It is hardly a surprise that he wanted to scrap the scheme when he was trying to sneak in as Tory leader, but he has been caught red-handed opposing the very thing that he has now made his flagship policy. Which Member should we listen to: the one before us today or the one who used to believe in something?

[The Prime Minister]

I have always been crystal clear: you do need to have an effective deterrence to finally solve this problem. In fact, the National Crime Agency agrees that you need

“an effective removals and deterrence agreement.”

That is why, after becoming Prime Minister, I negotiated a new deal with Albania, thanks to which we have seen a 93% drop in illegal arrivals from Albania. That is how Australia stopped the boats. That is why Italy, Germany and Austria are all looking at similar schemes. He is the only one who is opposed to a proper deterrent, not because it does not work but because he does not actually believe in controlling migration. Every single time, he picks the people smugglers over the British people.

[Keir Starmer]

We should smash the gangs, process the claims and end hotel use: that is our plan, but, unlike the Prime Minister, I believe in it. [Interruption.]

[Mr Speaker]

Order. I have got to hear the questions. I do not want interruptions. This is a very important topic and I take it seriously. I hope Members also wish to start taking it seriously.

[Keir Starmer]

Last year, the Prime Minister started the year saying he was Mr Steady. Then, at his conference, he was Mr Change. Now he has flipped back to Mr More-of-the-Same. It does not matter how many relaunches and flip-flops he does—he will always be Mr Nobody. Here is the tragedy of his leadership: he spends the whole time trying to convince people not to believe their own eyes, pretending that debt is falling, the economy is going gangbusters and the NHS is in great shape. When he finally finds something he was right about—the Rwanda gimmick—he cannot even take credit for it. When is he going to stop pretending that up is down and black is white, and admit that whether it is on the economy, immigration or the NHS, he has failed?

[The Prime Minister]

Well, let us just go through his checklist. He talked about the backlog: 112,000 decisions made last year, a higher number than in any year in these past two decades. He talked about hotels: the first 50 are being closed and there are more to come. He talked about the numbers: they were down by over a third last year, which is the first time that has happened. And then he talked about smashing the gangs. If he does care about smashing the gangs, why does he not own up to the fact that when it came to the Nationality and Borders Act 2022, he blocked, delayed and voted against the powers in that Act? That Act has allowed us to arrest hundreds and hundreds of people connected with that illegal trade, who have been sentenced to hundreds of years in prison. He opposed that because he chooses the criminal gangs over the British people every time. [Hon. Members: “More!]

[Mr Speaker]

Order. I don’t think we are having more.

[Keir Starmer]

We can all see what has happened here. Just like he knows that debt is not falling and taxes are going up, he knows the Rwanda gimmick will not work, but he cannot be honest about it because he is too scared of his own MPs. Does he not wish that he had stuck to his guns, rather than allow himself to be taken hostage by his own party?

[The Prime Minister]

We are debating this because we have taken a stand and we are delivering the toughest migration plan ever, to end the legal challenges and actually get flights off the ground. Let us be clear: he does not have a single practical idea about how to stop the boats, because he does not actually care about controlling migration. This is a person who described all immigration law as “racist”. He thinks limits on economic migration are “economic vandalism”. The issue did not feature once in his five missions and he did not mention it once in his conference speech. The truth is he is pro-free movement, he is anti-border control and he can never be trusted to stop the boats.

[Keir Starmer]

I think we should smash the gangs and I spent five years of my life doing exactly that. The Prime Minister’s party has lost control of the borders. While he is tending to the Tory party, the country is left without government—a collapse in dentistry, leaving people literally pulling out their own teeth; flood defences completely exposed; and hundreds of thousands of children still out of school. His Government appear blissfully uninterested in what is going on outside the walls of Westminster. Does he realise how ludicrous it looks when he spends his time boasting while Britain is breaking?

[The Prime Minister]

I am glad that the Leader of the Opposition has brought up our schools; there is nothing more important than ensuring that our children get a world-class education. That is why I am pleased that, in spite of Labour opposing every reform we have made, our children are now the best readers in the western world. But he is right that attendance is important. That is why we are investing millions of pounds more to provide support for absent pupils. We have launched a national campaign just this week. We have doubled the number of attendance hubs to support more than 1,000 at the most vulnerable schools. I am surprised to hear him raise that topic, because, from longer lockdowns to voting against our minimum service laws, his priority has always been keeping our children out of school. It is always the same with him: there is no plan. It is just peddling one thing to his union friends and another thing to the British people.

[Keir Starmer]

New year, new nonsense. Every week, the Prime Minister stands here and tells the country that they should be thanking him, not questioning him. If you point out that the view on the ground is very different to that from his private jet, he says that you are talking the country down. He just does not get it. He does not get what a cost of living crisis feels like. He does not know any schools where kids no longer turn up, and he does not understand what it is like to wait for a hospital appointment. Does the country not deserve so much better than a Prime Minister who simply does not get Britain?

[The Prime Minister]

Last week, we had yet another half-hour speech from the right hon. and learned Gentleman, and—what a surprise—it did not contain a single new idea. We have had four years of him as Labour leader and it is still all slogan and no plan. Just this weekend, we are delivering on our plan to cut people’s taxes; he does not have a plan. We have a plan to stop the boats; he does not have a plan. And we have a plan to get people off welfare and into work; he does not have a single idea. It is crystal clear: stick with us to deliver the long-term change that the country needs; do not go back to square one with him. [Hon. Members: “More!”]

[Chris Clarkson (Heywood and Middleton) (Con)]

rose—

[Hon. Members]

More!

[Mr Speaker]

Let the hon. Member ask the question before shouting for more.

[Chris Clarkson]

Q7. They just know that it is going to be fantastic, Mr Speaker. A happy new year to you anyway. It is almost spring, when a young man’s fancy turns to tax. In Scotland, the nationalists have decided to increase taxes on hard-working people. In Wales, businesses are being clobbered by a 5% increase on rates. Does my right hon. Friend agree that there is only one party in this Chamber that can be trusted to cut taxes for hard-working people across the country, and that is the Conservative party?

[The Prime Minister]

My hon. Friend is absolutely right. Just this weekend, we are cutting taxes for an average person in work by £450. In Wales, where Labour is in charge, the Welsh Government are raising them, with businesses there now seeing double the rate of business rates this year. It is the same in Scotland under the SNP. It is the new high-tax capital of the United Kingdom because of the SNP’s tax-hiking decisions. Mr Speaker, while we have a plan to cut your taxes, Labour and the SNP are going to raise them.

[Mr Speaker]

I call the leader of the SNP.

[Stephen Flynn (Aberdeen South) (SNP)]

The Horizon system was introduced by Tony Blair, the former Labour party leader and of course now a Knight of the Garter. The Horizon system was defended by the current leader of the Liberal Democrats, himself a Knight Bachelor. The Horizon system scandal was overseen by a former Conservative Prime Minister who now hides in the House of Lords as a baron. The reality is that sub-postmasters never stood a chance against the Westminster establishment, did they?

[The Prime Minister]

As I have said, this is actually one of the greatest miscarriages of justice in our country’s history. All our thoughts are with those who have worked so hard for their communities and have seen their lives and reputations destroyed. As the hon. Gentleman pointed out, this scandal has unfolded over decades, with multiple people clearly at fault. Since the High Court case in 2019, this Government have established a statutory inquiry led by Sir Wyn Williams to uncover what went wrong, established an independent advisory board and established three different compensation schemes paying out £150 million to more than 2,500 people, with now almost two thirds having received final compensation. But we must go further and faster, which is why we have made new announcements today.

[Stephen Flynn]

I do not think that the Prime Minister quite gets it. This is not just a plague on all their houses; it is a plague on this House itself, because injustice goes far beyond the sub-postmasters—just ask the Women Against State Pension Inequality Campaign, the victims of the Equitable Life scandal, the victims of the infected blood scandal, or the families of the victims of Grenfell or Hillsborough. The reality is that when the public come knocking on the doors of this Chamber seeking justice, the Government only ever answer when they have no options left. The Leader of the Opposition said last week that the public are right to be angry at Westminster. They are angry at Westminster because they know that this place never really changes, does it, Prime Minister?

[The Prime Minister]

I am sad that the hon. Gentleman is trying to politicise something that has happened over multiple decades, with multiple people at fault. The key thing is that after the 2019 High Court case the Government acted to establish an independent inquiry and independent compensation schemes, and as I said, we have paid out compensation to 2,500 people. Rather than trying to politicise it, we should be focusing on the people affected and making sure that they get the answers, justice and compensation that they deserve. That is what we are delivering.

[Caroline Ansell (Eastbourne) (Con)]

Q8. I made a promise to a grandad in my constituency, after he told me that he had not dared to speak up when his grandson came home saying, “Today, we were learning if we were in the wrong body.” Draft schools guidance to support gender-questioning children was published just before Christmas and is out to public consultation, but given that we have all seen many individuals very publicly cancelled—losing their jobs, reputation and relationships for simply supporting biological reality or championing fairness, women’s safety or child protection—how will honest and open engagement be managed through this very important and sensitive consultation process?

[The Prime Minister]

I thank my hon. Friend for her important question. She is right about the safety and wellbeing of children being paramount in our thoughts. That is at the heart of the guidance that we have published for consultation. Parents fundamentally must be involved in decisions about their children’s lives, and their involvement is a key part of the guidance. She is right that there is a consultation process. That is an opportunity for everyone to engage with the guidance. I also agree that those championing safety or talking about the importance of biological sex should absolutely have the freedom to express those views. She will see those views expressed in the guidance too.

[Stephen Farry (North Down) (Alliance)]

I thank the Prime Minister for the £3.3 billion financial package that is now available to any restored Northern Ireland Executive; however, we still need a discussion around the long-term financial framework before the next spending review. At present, Northern Ireland’s public services are in a huge crisis, especially health, with urgent public sector pay pressures that must be addressed. Last month, the Secretary of State said that the negotiations with the Democratic Unionist party over the Windsor framework had concluded. Does the Prime Minister recognise the real dangers of continued drift in Northern Ireland, and the urgent need for Northern Ireland to have a Government?

[The Prime Minister]

I thank the hon. Gentleman for his question. Our focus has always been on delivering for the people of Northern Ireland, who rightly expect and deserve their locally elected decision-makers to address the issues that matter to them. We have held talks with the DUP and believe that significant progress has been made, and that there is now a very good basis for the Executive to be restored. I thank him for his comments about the £3 billion financial package. With that, there is a real chance to restore the Executive, resolve pay for public sector workers rapidly, and get Northern Ireland and its public services moving again.

[James Grundy (Leigh) (Con)]

Q9. The Atherleigh Way bypass in Leigh was first proposed over 60 years ago, but to this day remains unfinished. I recently met representatives of Wigan Council, Warrington Borough Council and St Helens Borough Council, as well as the Mayor of Greater Manchester, and I am pleased to say that an agreement in principle has been reached to bring forward proposals to complete the bypass. Will the Prime Minister also throw his support behind this vital project for my constituents in Leigh?

[The Prime Minister]

I commend my hon. Friend for all his work bringing local authorities and the mayor together to drive this important project forward. I know that the Rail Minister is meeting my hon. Friend to discuss this proposal and ensure that we can deliver things like this. As part of Network North, there will be significant new funding announced for local highway improvements. I would encourage my hon. Friend to work with stakeholders to progress this important scheme and ensure that they can bid for that funding when it becomes available.

[Alex Norris (Nottingham North) (Lab/Co-op)]

Q2. Can I ask the Prime Minister very simply, for the public record, whether he personally met Mr Akhil Tripathi in April last year prior to Mr Tripathi giving him £38,000 for the hire of a private jet?

[The Prime Minister]

All my declarations are made in the usual way according to the usual processes.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Q11.   The Prime Minister knows that I set up and chair the caucus of 35 Conservative Members of Parliament who have Britain’s longest river flowing through their constituencies—the River Severn. We have submitted a business case to the Chancellor for £500 million to finally tame the River Severn, and I know that his officials are currently looking at those proposals. To tame the River Severn would lead to a gross-value-added uplift in the west midlands of over £150 billion. The Prime Minister has seen this week the horrendous damage and misery caused in Shropshire and all the way along the River Severn by the river flooding yet again. We really need to see in the spring Budget further assistance for communities such as mine finally to deal with these annual floods.

[The Prime Minister]

I start by saying that my thoughts are with all those affected by the devastating impact of Storm Henk and the flooding that we have seen over the past week or two, including those in my hon. Friend’s constituency. Action is already being undertaken under our six-year, £5.2 billion investment programme to better protect land across the River Severn catchment area and elsewhere, but I know the Minister responsible for flooding met my hon. Friend, along with the Environment Agency, in his constituency just before Christmas to discuss the specific plans he mentions. I know the Chancellor has received and started reviewing them. I assure my hon. Friend that the Environment Agency is working closely with other partners to explore his plans in more detail.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

Q3. Since the outbreak of war in Gaza, over 23,000 Palestinians have been killed, including 10,000 children, and forced displacement is causing a humanitarian catastrophe. There is intensifying fighting between Hezbollah and Israel, a crisis in shipping security in the Red sea, and the engulfing of neighbouring countries into a regional conflict. De-escalation will occur only when hostilities cease in Gaza. The Foreign Secretary said yesterday that he was “worried” Israel may have broken international law, and the International Court of Justice is opening hearings in The Hague this week in relation to suspected breaches of obligations under the Geneva convention. Will the Prime Minister make public the legal advice that our Government requested and received on suspected breaches of international law by Israel and the implications for UK policy, including relevant arms exports?

[The Prime Minister]

We continue to call for international humanitarian law to be respected and for civilians to be protected. That is what our current legal assessment says is happening: that, as the Foreign Secretary outlined yesterday, Israel plans to act within international humanitarian law and has the ability to do so. But we are deeply concerned about the impact on the civilian population in Gaza. That is why we have trebled the amount of aid that we provide to the region, and just recently we sent our first maritime shipment of aid to Egypt. A UK military ship delivered over 80 tonnes of new blankets and life-saving medical equipment for Gaza, and we are working with Jordan to find more land routes. We will continue to do everything we can to support the vulnerable people who are being impacted by what is happening on the ground.

[Steve Tuckwell (Uxbridge and South Ruislip) (Con)]

Q13.   In my constituency, the new Hillingdon hospital has full planning permission and full funding and enabling works are well under way. Does the Prime Minister agree that this new state-of-the-art hospital will uplift the health benefits for the residents of Uxbridge and South Ruislip, and will he join me in visiting the project site at a time when his diary allows?

[The Prime Minister]

My hon. Friend has been a fantastic campaigner for the new Hillingdon hospital and I agree that it will provide fantastic care to him and his constituents. I am pleased that planning permission and funding have now been granted for the site and that work is progressing. I will look at my diary, but in the meantime I can tell him that my right hon. Friend the Health Secretary will be very happy to visit the project and see the significant progress for herself.

[Alistair Strathern (Mid Bedfordshire) (Lab)]

Q4. Last year, my constituents had to wait months for an election to be finally confirmed, with uncertainty repeatedly prolonged, seemingly out of self-interest. This year, I did not expect the Prime Minister to be turning to my predecessor of all people for strategic inspiration but, if we are going to be waiting, I hope we can work together for a group in my constituency who really deserve support. Will the Prime Minister meet some fantastic kinship carers in Mid Bedfordshire to talk through how we can progress the strategy to make it go further and faster and, crucially, why Bedfordshire might be a fantastic place for one of the proposed pilot areas?

[The Prime Minister]

I pay tribute to all kinship carers for the incredible work they do. I would be happy to review the plans the hon. Gentleman mentions and make sure Ministers have a look at them too. I pay tribute to all those in his constituency and elsewhere who are doing a terrific job; in Government, as he knows, we are looking at ways we can support them further and we will continue to do so.

[Dame Maria Miller (Basingstoke) (Con)]

The Prime Minister knows that in Basingstoke we also need a new hospital. That is why he has given £900 million for our hospital trust to make that happen. Does he agree that that is a once-in-a-lifetime investment and must not just modernise the NHS healthcare that is provided, but support his plan to double medical training places by 2031? We are also ready to build our hospital a bit quicker, if that helps.

[The Prime Minister]

I am pleased that through our new hospitals programme Hampshire Hospitals NHS foundation trust will receive significant investment that will ensure that excellent care is available for my right hon. Friend and all her constituents. I think the trust started its consultation last year and the results are due at the end of March. We look forward to making sure we can deliver the project as quickly as possible, as part of the record capital investment in the NHS to deliver faster, better care to patients everywhere.

[Bill Esterson (Sefton Central) (Lab)]

Q5. Reports suggest that the Prime Minister’s family investment company, Catamaran Ventures, is being wound up and that his wife is exiting her interests in her childcare company, Koru Kids. Will the Prime Minister keep his promise to the Liaison Committee, which includes a number of Conservative MPs, and confirm whether he has forgotten to register any of his financial interests? Will he also publish all details of Catamaran Ventures’ investments?

[The Prime Minister]

I take very seriously my responsibilities to register and declare all my relevant interests. All of them have been declared in accordance with the ministerial code and it is the role of the independent adviser to advise on what it is necessary to publish within that list, including in the case of Ministers’ family members. When specific questions are asked in sessions such as the Liaison Committee, as I have been in dialogue with the Committee, declarations are made on top of that, which I have made. As I have said from the Dispatch Box, my wife has been an investor in British companies over the past years, but that is now something that she has ceased to do going forward.

[Anna Firth (Southend West) (Con)]

New, very large shellfish beds have been discovered in the Thames estuary, including those of razor clams and Manila clams, which are both highly prized around the world. Will my right hon. Friend join me in congratulating local fisherman Mr Paul Gilson on his proactive work, and will he come to Leigh-on-Sea to meet my local fishermen, so we can discuss how to maximise this brilliant Brexit bonus for Essex fishermen?

[The Prime Minister]

I join my hon. Friend in welcoming this fantastic discovery. We have been capitalising on the benefits of Brexit since we left the European Union and we are making sure that we can transform opportunity in the UK, particularly in fishing communities. I know my right hon. Friend the Minister for Food, Farming and Fisheries will be happy to meet her to discuss what more that could mean, and I hope I also have the opportunity to come and see her and see this incredible discovery for myself.

[Mrs Paulette Hamilton (Birmingham, Erdington) (Lab)]

Q6.   I was a nurse in our NHS for 25 years. It is an offence to my colleagues and our patients when the Prime Minister pretends that he has a grip on NHS waiting times. Despite his big pledge to cut waiting lists, they have grown by half a million patients in the last year alone. He can blame striking all he likes, but after 14 years of the Tories, who can possibly say that the NHS is better off?

[The Prime Minister]

I thank the hon. Lady for her decades of service in the NHS, and commend all the work of our fantastic hard-working nurses in the NHS. I am pleased that we have delivered early on our manifesto pledge to have 50,000 more nurses in the NHS, together with record numbers of doctors, elective surgical hubs and community diagnostic centres, all of which means that we are now treating more people in the NHS than we have ever done before. One thing that is hampering progress on tackling the waiting lists is obviously industrial action, so I hope that the hon. Lady will join the million NHS workers, including nurses, midwives, therapists, paramedics, consultants and specialty doctors, all of whom have reached a fair and reasonable pay settlement with the Government, and urge the junior doctors to do the same.

[Mr Speaker]

I call Andrew Percy.

[Andrew Percy (Brigg and Goole) (Con)]

Thank you, Mr Speaker.

“I believe that not all Jewish people are bad.”

“Palestinians are dying whilst the Zionists are laughing their lives away.”

“How do you send letters believing the western media on how Hamas is a terrorist group? For all I know the only terrorist group is the Zionists.”

Those are not my words, but words produced by pupils as young as 11 in schools in this country, one of whom signed off their letter saying that they sought “vengeance”, although that word was crossed out. Pro-Palestinian activists were invited to another school in the north-west of England to educate pupils on the history of Palestine, and displayed slides to those students that denied the existence of the state of Israel. We know that other schools have allowed absences for people to attend protests, where, of course, there have been many examples of antisemitism. This is completely unacceptable. Will the Prime Minister look at what is going on in our schools and hold an independent review of how we can do more in our curriculum to educate about the perils of antisemitism?

[The Prime Minister]

I thank my hon. Friend for raising what is a deeply concerning issue. As I have said before, there is no place for antisemitism or the glorification of terrorism in Britain, especially not in our classrooms. That is why we welcomed the recent report from Lord Mann, the Government’s independent adviser on antisemitism, and in particular his recommendation on how schools can tackle antisemitism. We will continue to work together with Lord Mann on this vital issue. I look forward to hearing further suggestions from my hon. Friend, too.

[Hannah Bardell (Livingston) (SNP)]

Q10. When my best friend and constituent Dr Laura Williams lost her husband suddenly at 35, she was left alone with three children under the age of five. Nothing could have prepared her for that grief and loss. I have witnessed at first hand what a remarkable job she has done to carry on and stay afloat, but that has been made much harder by the fact that bereavement support payments have been cut to just 18 months—an allowance that is primarily for children who lose a parent. Will the Prime Minister be kind enough to meet Dr Laura and me to hear at first hand her experience of losing her husband, and to see what can be done for those who, like her, are bereaved with young children to support?

[The Prime Minister]

I am very sorry to hear about the hon. Lady’s constituent and her tragic loss. I would be very happy to meet her at the earliest opportunity.

[Mr Speaker]

I call Dame Jackie Doyle-Price—congratulations.

[Dame Jackie Doyle-Price (Thurrock) (Con)]

Thank you, Mr Speaker.

Passengers have been crossing the Thames between Tilbury and Gravesend in my constituency since 1307, but the ferry service today is currently under threat because of the withdrawal of local authority funding. With so many people using that ferry service to come to work in Tilbury docks, and given the upcoming expansion of the Thames freeport, will my right hon. Friend encourage the local authorities to do all they can to ensure that we take full advantage of the opportunities through a new contract for the service, and perhaps expand the service as a way of getting more people to work in the new jobs that are being created?

[The Prime Minister]

My hon. Friend is right to highlight that the Tilbury to Gravesend ferry service forms an important part of the local transport services provided by local authorities. Obviously, those funding decisions are for the relevant councils, but I encourage them to consider the importance of cross-river transport in their local community, which she highlights, as part of their upcoming local transport plan.

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

Q12. Has the Prime Minister seen the utterly damning new UNICEF report showing that in the decade to 2021, child income poverty rose way faster in the UK than in any of the other 39 countries analysed? Scrapping the benefits cap, scrapping the two-child limit and rolling out the Scottish child payment UK-wide could reverse a decade of utter failure, so why will he—or indeed the so-called official Opposition—not commit to those potentially transformative, but affordable, policies?

[The Prime Minister]

I point out to the hon. Gentleman that since 2010 the number of people living in poverty has actually reduced by 1.7 million, including hundreds of thousands of children, but the best way to make sure that children do not grow up in poverty—which no one wants to see—is to make sure that their parents are in work, and then to make sure that they can keep as much of their hard-earned money as possible. That is why I urge the SNP to think again about its plans to make Scotland the highest-taxed part of the United Kingdom for an average worker.

[Philip Davies (Shipley) (Con)]

My constituents know only too well the disaster of living under a Labour regime. Just before Christmas, the Labour council in Bradford announced that it was bankrupt, and then spent the first three hours of the subsequent council meeting debating Gaza and Israel rather than the perilous financial situation it was in. Will the Prime Minister support my campaign and that of my hon. Friend the Member for Keighley (Robbie Moore) to get our constituencies out of Bradford Council’s control? It is more urgent than ever. Will he also make sure that the Government deliver a swimming pool in Bingley, which is something that was run down and then closed down as part of the mismanagement of Bradford Council?

[The Prime Minister]

My hon. Friend makes an excellent point: whether it is local councils in his area, in Nottingham or indeed in Birmingham, we see a track record of Labour mismanagement of finances in local areas. We all know, as my hon. Friend points out, that when that happens—when Labour is in power—it is working people who pay the price. That is why we have to stick to our plan.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

Q14. If he will launch a consultation on the potential merits of introducing social energy tariffs for disabled people and low-income households.

[The Prime Minister]

We are providing extensive financial support worth over £100 billion—or £3,500 per household on average—between 2022 and 2025 to help everyone with their energy bills.

[Marion Fellows]

Last month, Marie Curie told me that terminally ill people who want to die at home have been forced into hospitals to die because they cannot afford to heat their homes sufficiently. Will the Prime Minister meet me, Marie Curie and other organisations, including energy companies that are fully supportive of a social energy tariff, and try to find a way forward?

[The Prime Minister]

I will make sure that the hon. Lady gets the meeting she needs with the appropriate Minister. We are working very closely with Ofgem to make sure that the most vulnerable households are protected—especially this winter—and, crucially, we are developing the priority services register that vulnerable households, including those that are disabled or face particular needs, can sign up to for free to receive extra help with their energy supplier, but as I said, I will ensure that the relevant Minister meets with Marie Curie and the hon. Lady.

[Katherine Fletcher (South Ribble) (Con)]

Prioritising connecting towns in the north of England is a big part of Network North, so you will be pleased that I have a suggestion, Mr Speaker. Direct trains between Preston and Liverpool do not exist because passengers have to get off because there are buffers at Ormskirk. Science, technology and new multi-modal battery trains are going to allow that to be an accessible possibility, and then get Midge Hall station in Leyland reopened; does my right hon. Friend agree that that is a great idea and we should crack on with it?

[The Prime Minister]

Network North will significantly improve connectivity across the north, including through £3 billion to connect up all the major towns and cities of the north and £12 million to improve connectivity between Manchester and Liverpool. My hon. Friend is a fantastic champion for the region and I know that she and my hon. Friend the Member for Southport (Damien Moore) recently discussed Midge Hall station with the Transport Secretary, who is looking at options. We are keen to use every penny that will be saved from our decision on HS2 to reinvest back in the north, in local communities, and my hon. Friend’s idea sounds fantastic.

[Dr Rosena Allin-Khan (Tooting) (Lab)]

Every parent’s worst nightmare is watching their children starve and suffer, yet in Gaza living hell is being realised, with innocent children eating weeds and 1,000 children having lost one or more legs, with many of them having to have them amputated without anaesthesia or pain relief. I am sure the Prime Minister will agree that this is inhumane, so will he please publicly call for unhindered access for food and medicine to reach Gaza, and tell Israel to stop attacking healthcare facilities?

[The Prime Minister]

As I have said previously, we are deeply concerned about the devastating impact of the fighting in Gaza on the civilian population, and particularly, of course, children. Too many people have lost their lives already and there is a desperate need for increased humanitarian support to Gaza. I have stressed those points repeatedly to Prime Minister Netanyahu, and we are doing our bit to get more aid in. As I have said, we have trebled our aid commitment. Earlier this month, we sent in the first maritime shipment of aid into Egypt, which will help, and we are working with the United Nations to deliver a new humanitarian land corridor from Jordan into Gaza. I agree with the hon. Lady that we want to see more aid going into Gaza to help the most vulnerable people, and we should be proud in this House that the United Kingdom is playing a leading role in making that happen.

Post Office Horizon Scandal

Wednesday 10th January 2024 Commons Chamber

12:40

[Sir David Davis (Haltemprice and Howden) (Con)]

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on compensation and outstanding matters relating to the Post Office Horizon scandal.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

As the Prime Minister indicated a few minutes ago, I will inform the House about the further steps the Government are taking to address the Horizon scandal.

The Government are taking measures to speed up the flow of compensation. We have already set a target of issuing initial offers for 90% of group litigation order cases within 40 days of receiving a completed application. I announced in November that we would be introducing a £600,000 up-front offer for claims with overturned convictions, which people could choose to take rather than going through the detailed assessment process. This has already made a real difference. Before my announcement, only five of the relevant people had reached full and final settlements; I can now report that, with the help of the minimum payments, we have finalised 30 cases. This has obviously speeded matters along for those who have taken this up-front offer. It has also helped those who have chosen individual assessment, because resources can be concentrated on those cases.

I can announce today that we are taking similar measures in respect of the group litigation order scheme. We will now make people in that scheme an up-front offer of £75,000, which will save them having to go through a full assessment. However, as with overturned convictions, if they believe they are entitled to more, they are welcome to continue with the full assessment. Not only will this allow the Department to focus its resources on the larger cases, but it will allow claimants’ lawyers to do the same. The pace at which we can get claims into the scheme is the key constraint on how quickly we can settle them. The up-front offer is smaller for the GLO scheme than for the overturned convictions because the claims tend to be smaller. We estimate that perhaps a third of GLO claimants may want to consider this route. I am sure the House will welcome this measure.

When I made my statement on Monday, I heard Members from all parts of the House share my desire to ensure justice for postmasters who have been convicted of offences as part of the scandal. The whole House is united on this, and in the light of last week’s excellent ITV series, I believe the whole nation is united on it, too. We have all been moved by the stories of postmasters who have been unjustly convicted and the terrible effects over the period of two decades on their finances, health and relationships. Indeed, we have seen whole lives ruined by this brutal and arbitrary exercise of power.

Hundreds of convictions remain extant. Some of those convictions will have relied on evidence from the discredited Horizon system; others will have been the result of appalling failures of the Post Office’s investigation and prosecution functions. The evidence already emerging from Sir Wyn Williams’s inquiry has shown not only incompetence, but malevolence in many of their actions. This evidence was not available to the courts when they made their decisions on individual cases. So far, 95 out of more than 900 convictions have been overturned. We know that postmasters have been reluctant to apply to have their convictions overturned—many of them have decided that they have been through enough and cannot face further engagement with authority. Many fear having their hopes raised, only for them to be dashed yet again.

The Horizon compensation advisory board has recommended that we should overturn all the convictions of the postmasters who were prosecuted in the Horizon scandal. I think its motivation for doing so is absolutely right, and we will work with it to speed up the process. May I put on the record my thanks to Lord Arbuthnot, who is in the Gallery today, and the right hon. Member for North Durham (Mr Jones) for their work on the campaign generally and on that advisory board?

Following the recommendation would involve unprecedented action by Parliament to overturn specific verdicts of the courts. The Government completely recognise the importance of an independent court system and judiciary, so the recommendation raises important issues of constitutional principle. This is therefore not a decision we can take lightly. It also creates the risks of a different sort of injustice.

I am sure that a great many people were wrongly convicted in the scandal, but I cannot tell the House that all of those prosecuted were innocent or even that it was 90%, or 80%, or 70%. Without retrying every case, we cannot know. The risk is that instead of unjust convictions, we end up with unjust acquittals, and we just would not know how many. The only way we could tell would be to put all cases through the courts, further dragging out the distress for many innocent people.

[Mr Speaker]

Order. This is a very important issue, so I will allow the Minister to continue, but that means the time of the Opposition spokesperson will also increase, as does Sir David’s. It is too important an issue to curtail the Minister, but officials ought to be aware that when they provide speeches, they are for three minutes. However, I want the Minister finish his speech, because the issue is far too important.

[Kevin Hollinrake]

I apologise, Mr Speaker, for the length of this response to the urgent question, but the matter is, as you say, of vital importance.

We have been faced with a dilemma: either accept the present problem of many people carrying the unjustified slur of conviction, or accept that an unknown number of people who have genuinely stolen from their post office will be exonerated and perhaps even compensated. I can therefore announce that we intend to bring forward legislation as soon as we can to overturn the convictions of all those convicted in England or Wales on the basis of Post Office evidence given during the Horizon scandal. The Government will in the coming days consider whether to include the small number of cases that have already been considered by the appeal courts and had convictions upheld.

We recognise that this is an exceptional step, but these are exceptional circumstances. As the House knows, people with convictions that have been overturned are offered a choice between having their compensation individually assessed or settling on an up-front offer of £600,000. As far as possible, we want to avoid guilty people walking away with hundreds of thousands of pounds of public money, but we cannot make the provision of compensation subject to a detailed examination of guilt. We have concluded that to ask the court to do that again would be unfair to individuals.

We cannot turn this into an administrative exercise. All we ask is that as part of their claims for compensation, postmasters sign a statement to the effect that they did not commit the crimes of which they are accused. Anyone subsequently found to have signed such a statement untruthfully will be putting themselves at risk of prosecution for fraud. I do not pretend to the House that that is a foolproof device, but it is a proportionate one that respects the ordeal that these people have already suffered. It means that an honest postmaster will have his or her conviction overturned and, just by signing one document, can secure compensation.

No one should take our decision as a criticism of the judiciary. The original decisions were taken in good faith in the understanding that prosecutions were properly conducted and that assertions about the robustness of the Horizon system were true. But, as I said earlier, these are exceptional circumstances and we need to act quickly and decisively. Time is one thing that we and the convicted postmasters do not have. Our arrangement will apply to all those convicted in England and Wales based on Post Office investigations, including those prosecuted by other bodies who relied on the product of those investigations; the fruit of a poisoned tree.

We have plenty more work to do on the solution. We need to prepare the legislation, and I want to discuss our solution with the advisory board, which I am meeting later this afternoon. Some prosecutions have been undertaken in Scotland and Northern Ireland, where justice is devolved. We are, of course, engaging with the Scottish and Northern Irish Administrations in respect of wrongful convictions in their jurisdictions. We will do those things as quickly as we can and keep the House informed.

The House will have heard that we are well aware of the imperfections of the solution. I am sure that that will attract some critics, but when they criticise I invite them to say what they would do otherwise. Would they leave many people suffering under the burden of unjust convictions for many years—perhaps forever—with no access to compensation, or would they create some administrative process for deciding innocence, which would be more onerous for the victims? I very much hope that the whole House will stand with the Government to deliver rapid justice to convicted postmasters who have been waiting much, much too long.

[Mr Speaker]

I will extend the time. It was so important to get all of that on the record. I believe that the Minister wanted to make a statement but was overruled. At least we have certainly had that statement now.

[Sir David Davis]

As the Minister said, earlier this week many of us across the Chamber called for this appalling injustice to be solved in months, not years. It looks as though the Government have responded correctly to that call, ensuring swift justice. But there are undoubtedly difficult constitutional and legal issues involved, as he laid out in detail.

Some of the victims that I have spoken to say they need an individual exoneration rather than a grand pardon because they are understandably concerned about being bracketed with the very small number of people who will actually not be innocent. Will the Minister undertake to continue looking into this matter and address the quite proper concerns of the legitimate victims?

I would also welcome further elaboration on compensation. Fujitsu, which has played a central role in the scandal, is still at the heart of Government IT systems. Will Fujitsu will be required to meet some of the costs of the undoubtedly enormously expensive compensation that we are paying out? Finally, will the Government accelerate the investigations to convict those who are really guilty of causing the scandal by perverting the course of justice?

[Kevin Hollinrake]

I thank my right hon. Friend for the urgent question and for his collaboration with us on these matters. We have looked carefully at the issue of individual exonerations and did not see any way possible to do that without an exhaustive and time-consuming administrative process, which would add further burdens to those that people have already suffered.

The other issue is getting people to come forward again, which has been one of the major problems in getting people to appeal their convictions. We see the solution that we have adopted as very much the lesser of two evils. Nevertheless, we are keen to discuss mitigations and safeguards with other Members of the House. I set out one earlier on—the requirement to sign a statement of innocence—and I am keen to work with him to look at other mechanisms that we can use to ensure that those people who get their convictions overturned and access compensation are actually innocent of the charges.

My right hon. Friend made the important point about Fujitsu, which has been raised many times. As he knows, part of what the Government did was to put in place a statutory inquiry, chaired by Sir Wyn Williams. It is due to complete by the end of the year, and, hopefully, it will report soon after. At that point in time, we will be able to assess more clearly who is actually responsible. Many people may have already formed a view on that, but we think it right that we follow a process to identify individuals or organisations who are responsible for the scandal. Of course, we would expect those organisations to financially contribute. There are financial and legal measures that we can take.

As regards individuals, it may be that there is sufficient evidence for the authorities to take forward individual prosecutions, and I think many in the House would welcome that.

[Mr Speaker]

I call the shadow Secretary of State.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Thank you, Mr Speaker, for granting the urgent question; I congratulate the right hon. Member for Haltemprice and Howden (Sir David Davis) on securing it. This issue has rightly left the public outraged at the scale and shocking details of this injustice. As I said on Monday, Labour believes the Horizon scandal to be one of the greatest miscarriages of justice in British history, where people lost their livelihoods, liberty and their lives; then, when trying to find justice, they were delayed at every turn.

It is unconscionable that, despite the landmark legal rulings, several years on people have still not been able to access the compensation that they are entitled to. We are all united in this House in wanting the sub-postmasters to be exonerated in full—it is important to say exoneration and not a pardon, because a pardon implies guilt that is forgiven—and for them to receive compensation with urgency. We recognise that that is not straightforward and the result may be imperfect, but this is an unprecedented scandal that requires an unprecedented response. The alternative of not acting is even less desirable. Labour stands ready to work with the Government to deliver a solution that achieves that long-awaited justice and compensation at pace.

May I thank the Minister for the ongoing conversations we have been having on this matter? Can he guarantee that compensation payments will immediately follow any exonerations under the terms of the compensation schemes as they stand today? Could he indicate a timescale for that? I know he appreciates that victims cannot continue to wait years for payments.

Given what the Minister said about the implications of a blanket exoneration, we will need to consider what safeguards might be necessary, to ensure that, as best as possible, public money does not flow into the pockets of those who are not entitled to it. He mentioned that people may be asked to sign a statement. Will that be drawn up consistently with the work of the advisory board?

Crucially, we discussed on Monday the cases that have now been identified from the pre-Horizon pilot scheme, which are identical to those coming out of Horizon. Will those cases be covered by any proposals that the Government bring forward? Any plan that does not cover all convictions will rightly not command the full support of the House.

As the sub-postmasters—they must surely get the credit for these extraordinary measures—have repeatedly said, what matters now is getting compensation to people swiftly. The whole House is united in its determination to deliver the justice, truth and compensation that has been denied and delayed time and time again.

[Kevin Hollinrake]

I thank the hon. Gentleman for his response to my remarks. I appreciate his offer to work with us and to stand with us to deliver compensation and the overturning of convictions. The first step will be legislation; again, we are happy to work with him on that. That may take some weeks to deliver, but the sooner, the better. The introduction and passing of that legislation will be a matter for both Houses, but our intention is to get on with that very quickly.

From there, it should be a simple process: a statement needs to be signed, as the hon. Gentleman and I both referred to. We will work with the advisory board to ensure that the statement is appropriate. Following the signing of that statement, if people choose the detailed assessment route, that will be more complex because it will look at not just financial loss but personal impacts, such as on health or on other livelihoods, and consequential losses. If people choose the fixed sum award route of £600,000, that process can be very quick, which is one of the reasons why we have managed to complete 30 full and final settlements already, many using the fixed sum route.

The hon. Gentleman raised the issue of people using the pilot version of Horizon, of which we are cognisant. Every postmaster around the country has been written to and should be aware that the compensation scheme is available. We believe that these schemes cover that pilot period for Horizon. I am very happy to work with him and the right hon. Member for North Durham (Mr Jones) to ensure that the people they have identified have already been contacted. The good news is that, following the excellent ITV dramatisation, we have seen a good number of new cases come to light. We are keen for people to come forward, whether they have suffered convictions or financial detriment through shortfalls. We are keen to ensure that those people get access to compensation as quickly as possible.

[Paul Scully (Sutton and Cheam) (Con)]

I thank the Minister and the Lord Chancellor for their work. It has been longer in the making than the drama series, but they met their promise over two days by coming up with the first stage of the solution. Too many victims want nothing to do with the British justice system, the Post Office or Government. They have had enough. Does my hon. Friend agree that there is no perfect solution? The best we can aim for is one that is fast and provides life-changing money to restore these people’s lives as best we can.

[Kevin Hollinrake]

I thank my hon. Friend for his question and for the sterling work he did as my predecessor in this job. Many people recognise the incredible work he did following the outcome of the court case with the compensation schemes that he instigated. He is right that there is no perfect solution, but we have worked across Government to try to find the best possible one. If we want a fast solution that, as he said, provides life-changing compensation to people who have been deprived of that in recent years, we believe that this is the best one.

[Mr Speaker]

I call the Scottish National party spokesperson.

[Marion Fellows (Motherwell and Wishaw) (SNP)]

I thank the right hon. Member for Haltemprice and Howden (Sir David Davis) for securing this very important urgent question. I am sorry that it was not a statement, because then I would have had prior sight of what the Minister was going to say.

When we stood here on Tuesday, I asked how long “some time” would be, and I am glad that things are progressing quickly, although with a note of caution—I totally understand the hesitation to introduce any kind of blanket Bill or whatever. We need to move things forward and keep up the momentum from the ITV series in the press, here and everywhere.

We also still need to listen to the victims. Only this morning, some of the postmasters said that we should all stop referring to compensation, but refer instead to financial redress. This is not compensation but money due to them, and we need to get it to them as quickly as possible. The hon. Member for Sutton and Cheam (Paul Scully) said that some people do not want to go anywhere near justice or the Post Office. We must encourage people to come forward. I am meeting constituents who were involved who have not officially approached me yet, and I am sure that many others across the House will be in exactly the same position.

Scottish law is different, as the Minister is well aware. The Cabinet Secretary for Justice made a statement yesterday, and said that the Scottish Government were looking at Fujitsu contracts, which is really important. I cannot speak for the Scottish Government, but I know there will be no hesitation in moving things forward. As chair of the all-party parliamentary group on post offices, I will write to the Crown Office and Procurator Fiscal Service in Scotland.

[Kevin Hollinrake]

I thank the hon. Lady for her question and, once again, for her work in the all-party parliamentary group for post offices. I am sorry that I was not able to share a statement with her, and I appreciate her welcoming what we have done today.

I am very happy to term this “redress”; it is only about putting people back where they would have been, and trying to make good what has happened to them. I understand what she says about compensation, but this is there to compensate people financially for losses and impacts on their lives.

I could not agree more that, as well as delivering compensation more quickly and fairly, the No. 1 thing we would like to happen is for more people to come forward. A simplified process that does not require postmasters themselves to file an appeal will mean that this is done more quickly. The routes to compensation have been simplified, and we very much hope that people will come forward. That seems to be our experience right now. We will continue to engage with the devolved Administrations to ensure that they have everything they need, as they may want to adopt similar measures.

[Duncan Baker (North Norfolk) (Con)]

I welcome this legislation, and I thank the Minister for the amount of work he has done at such great speed. We are still at a midway point in the journey. There are still criminal prosecutions to come. One question that has never been answered is just how much money was taken unlawfully from thousands of innocent men and women. The Post Office took that money, and we have never known that figure. Even the most basic accountant knows that it will run into hundreds of millions of pounds. Could the Minister force the Post Office to publish the grand scale of the money it stole from people?

[Kevin Hollinrake]

I thank my hon. Friend for contributing to these important debates in the House once again. He brings first-hand experience, as the only postmaster serving in the House. He is quite right to say that money was taken, and someone must have noticed it. One would think that the finance departments or auditors would have noticed it, as it would have appeared in some kind of suspense account and was presumably transferred out at some point. I will endeavour to find out the number, as I do not have it. We do know that prior to Horizon being installed in the post office network, there were around five prosecutions a year. That suddenly jumped to about 60 a year. We know that there were significant numbers of prosecutions, and the fact that there are around 3,500 postmasters in the various compensation schemes illustrates the scale of the problem. I will endeavour to find out a number for him.

[Mr Kevan Jones (North Durham) (Lab)]

I thank the right hon. Member for Haltemprice and Howden (Sir David Davis) for securing this UQ. I know the Minister wanted to make a statement but was overruled by No. 10 so that the Prime Minister got the glory of making the announcement. A serious point is that had we not got this UQ, there would have been no debate today, which is a disgrace.

The Minister knows that the advisory board has been tied in a Gordian knot for quite a few months, which is why we wrote our letter to the Justice Secretary before Christmas. He is right that this will be messy whichever way we do it, but it needs to be done, because people are still out there with convictions that need overturning. I welcome the advisory board having discussions later this afternoon and in the next few weeks on how things should take place, but I urge the Minister—I know he will—to engage with all political parties in this House. If we can get all parties’ support for the proposal, that will make it a lot stronger.

The point raised by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) about the pre-Horizon schemes is important. I welcome the changes to the compensation, as they will speed things up for some victims, but in the case of those who have died whose convictions are overturned, will their estates be able to access compensation?

[Kevin Hollinrake]

Once again, I thank the right hon. Gentleman for all his work on this campaign over many years and for his work on the advisory board, which has been an essential part of seeking a resolution. I will of course continue to work cross-party, as I have done all the way through on this matter, from the Back Benches and now from the Front Bench. I appreciate the support and engagement we have had from all political parties in this area, both Front Benchers and Back Benchers.

Yes, we are cognisant of the pre-Horizon pilot scheme, and we will keep working to make sure the people involved are included in compensation. Yes, if people have sadly passed away—over 60 have passed away waiting for compensation and justice—the compensation will go to their estate and therefore to their family. That is an assurance I can give him.

[Priti Patel (Witham) (Con)]

The Minister has announced that approximately one third of the 555 individuals involved in the group litigation will benefit from the up-front payment of £75,000. What other support will there be for those in that group litigation who suffered losses way in excess of that £75,000? How will the Government assess not just the financial losses but the reputational damage they suffered, the health impacts and the family breakdowns that many endured? How will it work in practice? As the Minister outlined, time is pressing. This is very difficult and there is no one-size-fits-all answer, but individuals need recompense sooner rather than later and to feel that justice for this institutional state failure will actually act in their favour.

[Kevin Hollinrake]

I thank my right hon. Friend for her question and for the number of times she has raised this particular issue and set out her thoughts, which have proved very useful. We think that 30% of people from the group litigation order scheme have chosen the £75,000 fixed sum award route. Clearly, that is an estimate. We at least have some evidence from the other scheme on how effective that is.

If people choose not to go down that route, and if they believe their losses are in excess of that, they can go down the full assessment route. We are trying to make that as rapid as possible. It is a process of alternative dispute resolution. Potentially, things can happen very quickly, but if that cannot be agreed then it goes to an independent panel for assessment. There is independence at every part of the process. People going down that route can get interim payments if they are needed, so that they do not suffer financial hardship. We are keen to make sure not only that people get a fair amount, but that it is also seen to be fair. Independence is an essential part of that process.

[Christine Jardine (Edinburgh West) (LD)]

I thank the right hon. Member for Haltemprice and Howden (Sir David Davis) for securing the urgent question, and I thank the Minister for the swiftness with which he has acted, and particularly for his recognition of the need to talk to the devolved Administrations and of the fact that the situation in Scotland is slightly different, as the Post Office was not able to prosecute there and that was done through the official Crown services. With that in mind, and given the need he expressed to encourage people to come forward—in Scotland, it is very much more difficult to gauge how many people were affected—it is not just enough for us to say, “Please come forward.” We need a proactive campaign to encourage people to come forward and reassure them that they will not face the same sort of delays that the victims of Hillsborough and the infected blood scandal have faced, but that this will be acted on swiftly.

[Kevin Hollinrake]

I thank the hon. Lady for her remarks. Although they were prosecuted under different authorities in Scotland and Northern Ireland, the cases were generally prepared by the Post Office itself, so I do not think we have any greater confidence about the status of those convictions than we have in those in the rest of the UK. We are therefore very keen to engage with the Scottish Administration on what we are doing. Hopefully, there will be a consistent scheme across the UK.

I agree entirely with the hon. Lady that we need to be proactive in our message to people about coming forward, and in our message from the House that we are working together and that this process is now much more streamlined. It will not even necessarily require sub-postmasters to make an application for their conviction to be overturned. That will happen much more quickly, and any access routes we have now for compensation will be made swifter and more rapid. I think those things alone will mean more people come forward. As I said, we have seen a good number of new people come forward. Hudgell, one of the solicitors involved in claims for some of the victims, have had, I think, 130 new people contact them on the basis of the TV programme and possibly because of the new actions we are taking to make sure compensation is more smoothly and easily available.

[Sir Robert Neill (Bromley and Chislehurst) (Con)]

The Minister, and indeed all of us in this House, will recognise the desire to get the swiftest possible redress for the victims of this appalling injustice, but does he also accept that legislating to overturn convictions that were imposed by our independent courts is constitutionally quite exceptional? Therefore, in justifying that, will he set out in full what consideration was given to the practicality of going down the normal route of referring those convictions to the Court of Appeal before the legislative route was decided upon? What discussions were there with the senior judiciary about its practicality? Given the novel and constitutional nature of the legislation, will he seriously consider committing to the Committee stage of any Bill being taken on the Floor of the House and, because it is novel and constitutional, will he consider that it is appropriate for a draft Bill to be given swift pre-legislative scrutiny?

[Kevin Hollinrake]

I thank my hon. Friend for his question and for his willingness to work with us. He and I have discussed the matter in the past few days, and I appreciate his expertise and advice. Yes, absolutely; this is a very significant step and not one that we would take lightly. We fully respect the independence of the courts. We set out very clearly the reasons why this is different—that is important. We are setting a precedent, but it is clear why we are doing so. The involvement of private prosecutions is very relevant, and that also relates to work that he has done on the Justice Committee. My right hon. Friend the Secretary of State for Justice has engaged with the people he refers to in the judiciary, to ensure that they understood what we were doing and why we were doing it. Those conversations were constructive, rather than resisted, but I am very happy to take up my hon. Friend’s offer to continue that engagement and to discuss the draft Bill with him.

[Mr Speaker]

I call the Chair of the Business and Trade Committee.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I thank the right hon. Member for Haltemprice and Howden (Sir David Davis) for securing the urgent question. I am very much looking forward to cross-examining the Minister when he comes before the Business and Trade Committee next Tuesday, when we will be hearing evidence from Mr Bates and his colleagues. We will also be putting questions to Fujitsu. Can I push the Minister on the point I made on Monday night? Three years after the landmark case, 85% of convictions have not been overturned, only 4% of the cases have resulted in a full and final settlement, and we have heard evidence from victims this week already that even when settlements have been made, the cash has not yet been handed over. Can I ask the Minister again what his target is? What is his goal, approximate or otherwise? When will those wrongfully prosecuted have their full and final settlement delivered, in cash?

[Kevin Hollinrake]

I am very much looking forward to appearing before the right hon. Gentleman’s Select Committee and hearing some challenging questions, which I would welcome. To be clear, 64% of all those affected by the scandal have received full and final compensation. He talks about the smaller cohort who have come forward in relation to convictions. Only 95 have had convictions overturned. In order to try to expedite the payment of compensation to those people, we have introduced the fixed-sum award route, which is proving very successful. I am not aware of his point about people not actually receiving the cash, but I am very happy to engage with him on that, because there is every intention that once a decision has been taken to go down the fixed-sum award route, the sum is paid pretty much instantly. I am very happy to find out what exactly is happening in those cases. Where people have gone down a full assessment route, that is understandably more complex, as various considerations about loss, financial forensic information, health and reputational loss—a key facet in most of these cases—will be taken into account.

The right hon. Gentleman asked for a date. We have always intended to deliver all the compensation by August this year, and that is still the case. We would like to do it more rapidly, and for many people we will do it more rapidly, but not everything within the timescales is in our gift, because people are required to go down a full assessment route in order to compile a claim to which we can then respond. However, we have set ourselves some criteria relating to time and service levels to enable us to respond to claims in a timely fashion.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

I thank the Minister for engaging with the concept of trying something innovative in order to move this process on. I think it right for the senior judiciary to be consulted, but I also think it is probably the only way to make the process move speedily. I also thank him for meeting me to discuss my constituent Mrs Jasvinder Barang, whom I have been talking about for a long time. She was one of the first to have a conviction overturned, more than three years ago, but she is still waiting for her full, individually assessed compensation. Can anything more be done to enable her case finally to be dealt with, such as providing extra legal resources or assessors, and can the Minister give me any sort of timescale?

[Kevin Hollinrake]

It was a pleasure to meet my right hon. and learned Friend yesterday, and on other occasions, to talk about Mrs Jasvinder Barang. As he is aware, people whose convictions have been overturned can choose between two routes: the individual assessment of claim or the fixed-sum award, the latter being a much more rapid route because individual assessments can be complicated. While I cannot speak about the point that a specific case has reached, I will be happy to return to my right hon. and learned Friend on the issue.

One of the benefits of the fixed-sum award route is that those who choose it do not need either the resources required for their own legal representation or the resources to be used on our side, or the Post Office side, for the assessment of claims. I am happy to continue to work with my right hon. and learned Friend and with the advisory board to try to make the whole process more streamlined and more rapid, which is a challenge that we will go on trying to meet whenever we can.

[Andrew Bridgen (North West Leicestershire) (Ind)]

I welcome the announcement that all convictions of sub-postmasters based on the flawed Horizon evidence will be overturned, but given that the material facts of these cases have not changed—and many have been known for over a decade—may I ask why the Minister thinks it has taken the airing of a TV docu-drama and the public outcry associated with it to force the Government, and indeed the whole House, to belatedly do the right thing for innocent victims of a huge miscarriage of justice? What does that say about our democracy and about our judicial system, and can the Minister think of any other issues that might benefit from the same level of media scrutiny?

[Kevin Hollinrake]

I thank the hon. Gentleman for his work; he has been a constant campaigner on behalf of his constituents, and has contributed to every debate I have seen on this issue. However, I think his challenge is a little unfair. As he knows, I worked on the issue as a Back Bencher, and as a Minister I have made it my No.1 priority for the past 15 months. This is not something that we have just picked up, and he can see how much we have done.

Of course, during this process we have learnt things, and things have happened that we did not expect. We did not expect it to be so difficult for people to overturn convictions after the overturning of the first convictions, and we did not expect it to be so difficult to assess the damages and losses. We have tried at every point to accelerate compensation. We introduced the fixed-sum award last November, long before the TV series was broadcast, and before then there were measures involving tax treatments. We also started to look at different ways of overturning convictions long before the TV series was aired. So it is not the case that the series, excellent though it is, has resulted in these changes.

I think it is fair to say that the whole House and the whole country were shocked by what they saw on television, and that has made it easier to push certain developments forward more quickly, but I believe that we would have arrived at this position in any event. Nevertheless, I am glad we are here today moving things forward at this pace.

[Sir Robert Buckland (South Swindon) (Con)]

I warmly welcome the statements from the Prime Minister and from my hon. Friend. I thank my hon. Friend for his hard work, and I am also grateful for the work of other Ministers, such as my hon. Friend the Member for Sutton and Cheam (Paul Scully), in pursuing and dealing with this injustice.

The key point to bear in mind is that, owing to the number of people who have refused to come forward, Parliament has an obligation to act. In the case of existing appeals, the matter can be dealt with by the Court of Appeal in respect of the quashing of any convictions, pursuant to an Act of Parliament, but the key challenge lies in all the people who are not in the court system. Will my hon. Friend work with me and others to ensure that the system he envisages—I think he is talking about statutory declarations, which would perhaps come under section 5 of the Perjury Act 1911—is got right in order to avoid further disincentives for innocent people to clear their names and, in the words of judges up and down the country, “walk from the court without a stain on their character”?

[Kevin Hollinrake]

I thank my right hon. and learned Friend for his work and for his advice over recent days. As he has said while we have been trying to resolve this issue, there is no perfect solution and there are going to be compromises. We are keen to reach out to the people he has identified who have not entered the system because they are deterred by the processes that they would have to go through in order to gain access to compensation. I am keen to continue to work with him on all the measures that we will need to put in place over the next few weeks to ensure that we get this right, and get it right first time.

[Sir George Howarth (Knowsley) (Lab)]

I join others in thanking the Minister for his statement, during the course of which he acknowledged that people would worry about the possibility that good intentions would not be backed by action. To counter that, would he consider publishing some target dates by which both the legal and the administrative matters ought to be concluded, so that people might gain some reassurance that this is not going to drag on for a very long time like, for instance, the Hillsborough and contaminated blood scandals?

[Kevin Hollinrake]

We hope to complete all the legal and administrative aspects of the compensation payments by August, while Sir Wyn Williams’s inquiry is due to conclude by the end of the year. We should see the conclusions of that inquiry very rapidly and hope to publish them as soon as possible, given that it is a statutory inquiry. Following that, the authorities may well decide that there are grounds for prosecution. We are certainly taking a keen interest in who else might pick up the cost of the compensation, which is significant and is currently being borne by the taxpayer. Where we can identify others who are responsible, we are keen for them to pay for their wrongdoing.

[Mr Mark Francois (Rayleigh and Wickford) (Con)]

I commend the Minister, the Justice Secretary and those who have advised them for having to exercise the judgment of Solomon but, none the less, coming up with a practical and, importantly, rapid solution.

Fujitsu is a multimillion-dollar company with numerous Government contracts, including a number with the Ministry of Defence. It has persistently, for years, been reluctant to admit to the weakness in its system. Does the Minister agree that Fujitsu now has a moral duty, if not a directly legal one, to put right that wrong? Should we not review all its Government contracts, and if it will not do the right thing—which it should—should we not consider suspending them?

[Kevin Hollinrake]

We do see this solution as being practical and rapid, as my right hon. Friend has described it. As for his point about Fujitsu, which he has often raised, he is right to say that it has significant Government contracts with, among others, the Ministry of Defence and, I believe, His Majesty’s Revenue and Customs. It is right that we let the process take its course, and that the inquiry looks at who was responsible for what between the Post Office and Fujitsu, and who told who to do what. It is therefore right to have a process whereby we set criteria and parameters for who can access Government contracts. We should have those conversations when we have identified exactly who was responsible. We will not be able to do that for some months, but we are keen to do it as soon as possible.

[Ian Paisley (North Antrim) (DUP)]

This was an appalling travesty, which impacted the lives of so many innocent people in all four corners of this kingdom. Our hearts go out to them, and I welcome the swift action that the Government are now taking to resolve the problem. I hope it goes some way towards helping those people through a terrible time.

Will the Minister assure me that he will not allow any delay in implementing the proposals in Northern Ireland? Excuses are made all the time, for example, that there is no devolved Assembly in Northern Ireland. No devolved Minister had a role in this, therefore there is no role for them with regard to the victims. Will the Minister sort things out for them as quickly as possible?

[Kevin Hollinrake]

That is exactly our intention. We are keen to make the scheme UK wide so that everybody knows exactly where they stand. As I have said, despite the fact that the legal system is different in Northern Ireland, the assembly of the vast majority of cases was done by the Post Office, so the same issues apply. We do not want any delay. We are keen to engage with the Northern Ireland authorities as quickly as possible.

[Dame Maria Miller (Basingstoke) (Con)]

I welcome the announcement. The evidence is clear that hundreds of victims have lost trust in the criminal justice system, so we need an exceptional process that ensures that every miscarriage of justice can be put right. However, the scandal involves more than financial redress. There are reports that the Post Office insisted on non-disclosure agreements, which silenced victims. In particular, the family of former postmaster Martin Griffiths felt forced to sign a settlement with the Post Office, with a non-disclosure agreement, which hid events around Martin taking his own life for almost a decade. Will my hon. Friend urgently reconsider calls that I and others have made to ban the use of non-disclosure agreements in all severance agreements? I am glad to see the Minister of State, Ministry of Justice, my right hon. Friend the Member for Charnwood (Edward Argar) on the Front Bench. I think that both Ministers share my concern and want action.

[Kevin Hollinrake]

That is a well-timed question, given that my right hon. Friend the Justice Minister is sitting next to me. My right hon. Friend the Member for Basingstoke (Dame Maria Miller) is right to say that this is an exceptional process. As she knows, non-disclosure agreements cannot prevent somebody from going to the police—

[Dame Maria Miller]

That was not my point.

[Kevin Hollinrake]

That was not the point my right hon. Friend was making. I understand her point. She wants to ensure that non-disclosure agreements are not used for the purpose she described or for other purposes, such as sexual harassment and bullying. She is running a fantastic campaign and we have heard what she has said. We will continue to work with her.

[Karl Turner (Kingston upon Hull East) (Lab)]

Thank you, Mr Speaker, for granting the urgent question.

I thank the Minister for the heavy lifting he has done in the 15 months he has held his post. I also commend the Lord Chancellor for his work behind the scenes. He will have taken advice and guidance from the Lady Chief Justice. Will the Minister say what her guidance was? It is an exceptional process, which we all support, but we would like to know what her guidance was.

In 2006, I was instructed as a defence lawyer. We must never again get ourselves into a situation whereby an organisation such as the Post Office brings private prosecutions, and is the complainant, the criminal investigator and, indeed, the prosecutor. Will the Minister make a statement about when the Government intend to prevent the Post Office from prosecuting any matter ever again?

[Kevin Hollinrake]

I thank the hon. Gentleman for his work. I am aware of his involvement on behalf of his constituents. I also put on record my thanks to my right hon. and learned Friend the Lord Chancellor—and, indeed, the Prime Minister—who cleared his diary on several occasions to deal with these issues. Conversations took place with the Lady Chief Justice, but I am not at liberty to reveal their content. I was not at the meeting anyway, but we do not tend to publish legal advice. As the hon. Gentleman knows, there are quite a few lawyers in both Houses. They do not necessarily share the same position on legal matters, and I have no doubt that legal opinions will be made clear. However, this case is exceptional. It is an exceptional situation, so we have done the exceptional.

We want to ensure that this never happens again, and the hon. Gentleman is right that private prosecutions played a part. He asked for a statement and I am sure that my right hon. and learned Friend the Lord Chancellor will make one at some point. My right hon. and learned Friend has expressed an interest in, and some concerns about, private prosecutions in the UK, as has the Justice Committee. I am therefore sure that he will come back to the House on that at some point.

[George Freeman (Mid Norfolk) (Con)]

I thank the Minister, the Lord Chancellor and the Prime Minister for gripping the matter as quickly as they have. I know that the Minister and the Lord Chancellor were advocates on this matter when they were Back Benchers. I also pay tribute to my hon. Friend the Member for Sutton and Cheam (Paul Scully), who gripped the matter after his election in 2015 and in his role as a Minister.

I was never Minister for the Post Office, but I remember being asked, as a Minister in the Department, to cover for an absent Minister. I refused to just read out the speech I had been given and asked for a day of proper briefings from officials. When I asked to meet Paula Vennells, I was told that she refused to meet me without her lawyer.

The saga raises important issues about scrutiny, accountability and responsibility in public office and public administration. They are difficult questions that the House must tackle. Will the Prime Minister, the Deputy Prime Minister, the Lord Chancellor and the Cabinet Office therefore look at the wider lessons from this appalling scandal about the failures of accountability and scrutiny in our system of government, and about this House’s ultimate responsibility to the people of this country to ensure that the Government serve the people, not the other way round?

On the point that my hon. Friend the Member for North Norfolk (Duncan Baker) made, how much money was stolen from the postmasters? Will the Minister consider some sort of corporate fraud action to get the money back? The money was taken off them and us, and we should get it back from the company that took it.

[Kevin Hollinrake]

I thank my hon. Friend for his remarks and his question. I am pleased that Paula Vennells has handed back her CBE. It was absolutely the right thing to do. As part of the inquiry, at some point we will of course identify who was responsible—individuals and organisations. In terms of corporate fraud, the beneficiary to some extent was the Post Office. Of course, the Post Office had to be funded by the Government to make the payments, so it is difficult to see how we would get the money back from the Post Office. There are other organisations, such as Fujitsu. I have talked about that previously, and we will look at that once the inquiry has concluded.

On scrutiny, many Ministers and officials will ask themselves questions about what happened. It is our job to ask the key questions at the right time and not necessarily to take the first answer we are given. We should push back and ensure that we get to the bottom of the issue. There is no question but that there were failures. I will not identify who failed, but many people will be asking themselves serious questions. The inquiry may well identify where we could have done things better.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Former Plaid Cymru councillor Noel Thomas’s 16-year quest for justice has had enormous repercussions for him and his family. He faced imprisonment, bankruptcy and the loss of his home. He describes his nine months in prison as “hell on earth”. Noel’s story has also had repercussions throughout north-west Wales. I know of people who will not work on post office counters. That has meant that some communities have lost their post offices. Not only have individuals suffered agony, but communities have lost essential facilities. What assessment has the Minister made of the loss of post offices following the scandal, and the effect on communities, particularly rural communities?

[Kevin Hollinrake]

On behalf of the Government and the Post Office, I apologise for what happened to Mr Thomas, who obviously featured very heavily in the programme. It was such a moving story, and anybody watching would have been moved to tears by what happened to him and others.

Individual sub-postmasters lost their reputation, and they can get compensation for that, but the right hon. Lady is right to say that the post office network itself may have suffered some loss of reputation. I still believe that our post office network is hugely valued, and that citizens and constituents hold it in very high regard. To make sure that we have suitable post office provision around the country, the key thing is to ensure that post offices are financially viable and sustainable. We are working very hard on that. For example, we are encouraging the Post Office to take a firmer line in negotiations on the banking framework, which is a significant revenue opportunity for the network, and on parcel hubs. We see a bright future for the network, but it is vital that we draw a line under this scandal before we secure that future.

[Dean Russell (Watford) (Con)]

I pay tribute to the Minister for his work to bring this to the Chamber with such speed. My first question is on mental health. The victims of the Post Office’s awful Horizon scandal—and they were victims—have been traumatised. We have heard awful stories of individuals who sadly took their life through suicide, and I am sure many others likely came close to that. I want to make sure that the compensation schemes take into account the distress and mental health pressures these people experienced over many, many years, and still experience today.

My second question looks to the future. How do we stop this happening again? I am very conscious of the big increase in the use of artificial intelligence. It is possible to go back to the Horizon system and see where these, in some cases, malicious incidents took place but, with artificial intelligence, it will be much harder to do that. Can the Minister assure me that checks will be made in any Government systems, especially those using artificial intelligence, to ensure that humans are not unjustly blamed for artificial intelligence errors that could lead to a similar scandal in future?

[Kevin Hollinrake]

My hon. Friend is one of my predecessors, and I thank him for the job he did. His tenure was all too short, but he did a great job. I know he raised this matter when he looked after this part of the brief.

We are discussing mental health support for individuals and, potentially, families with the advisory board. The compensation schemes very much take mental health into account, and assessing those impacts is one of the reasons why it takes a while to make sure people receive proper redress.

My hon. Friend raises an interesting point about AI, in which I know he is keenly interested. We should look carefully at the use of AI in prosecutions, and I am sure my right hon. and learned Friend the Lord Chancellor is doing so.

[Clive Efford (Eltham) (Lab)]

I commend the Minister again for his excellent work. This is an unprecedented situation that requires the solution he suggests. May I ask him again about “no public interest” cases, including my constituent’s case? The situation has changed since I asked him about it on Monday, and new cases have come forward. The Post Office must have a list somewhere. It must know who was held to be in breach by the Horizon accounting system.

There may be people out there who are frightened to come forward because they have signed non-disclosure agreements. Is it possible for us to tell the Post Office, “Come on, cough up. Let us know who has not been contacted”? Letters could then be written to those people, perhaps by the advisory board, to invite and encourage them to come forward. We need to give them the confidence to do so, because they might be frightened about being approached by the Post Office. I am sure that anyone who signs one of the agreements that the Minister mentioned will want an assurance that they will never again be pursued by the Post Office.

[Kevin Hollinrake]

The hon. Gentleman has been a regular contributor on this issue. We are keen to include “no public interest” cases within the scope. They are currently treated slightly differently in terms of compensation. Not everybody has the same route to compensation, but the advisory board has been very keen to make sure that there is a single way forward for people who have suffered from convictions.

Some people are nervous about coming forward. Various bodies, including the Criminal Cases Review Commission, have written to people with convictions. There is work to ensure that anybody who might have suffered as a result of this scandal is properly communicated with by someone they trust. I am very happy to talk to the hon. Gentleman and the advisory board about whether we have done enough and whether we could do more.

[Bob Blackman (Harrow East) (Con)]

Hundreds of individuals have been wrongly convicted of crimes they did not commit. I commend my hon. Friend for his work. In his statement, he mentioned the malevolence that took place during these prosecutions. How is it right that individuals who gave false evidence are potentially still in post? Why are Post Office managers still in post when they knew what was happening? Should they not be brought to account and lose their livelihoods and pensions, rather than those who were wrongly convicted?

[Kevin Hollinrake]

The short answer is yes; people who are guilty of offences—ones that can be prosecuted—should be brought to account. All kinds of different routes might be available to make sure they suffer as a result of their actions. We are keen to make sure that happens.

We think the inquiry is the right route to expose the evidence. Of course, our prosecutors can look at the evidence before the inquiry at any point. Anybody can see what is happening in the inquiry. We hope that the inquiry identifies those responsible, and that suitable action is taken against those people and organisations.

[Nick Smith (Blaenau Gwent) (Lab)]

What a sorry tale this is. I am glad that a solution to his scandal has been brought forward today, but the Post Office is owned by the UK Government, who have a shareholder—usually a senior civil servant—on the board. What did those Government shareholders tell Ministers about this issue over the years? Does the Minister think this arrangement provided sufficient scrutiny of the Post Office for Parliament and the sub-postmasters?

[Kevin Hollinrake]

It is fair to say that the answer is no, because this scandal has occurred and there must have been a systemic failure in the relationship, either in the Post Office or in different parts of Government. We currently do not know where it failed, but we are all keen to see the outcome of the inquiry, which should conclude by the end of this year. A report will follow, and we are all keen to see its conclusions. We can then identify who is responsible and decide what might be done.

The Department for Business and Trade has learned lessons from what happened, and I think there is now a much better oversight and governance relationship between the Department and the Post Office. That is too late for many people, of course, but it is not too late to find the answers that the hon. Gentleman is looking for.

[Mr David Jones (Clwyd West) (Con)]

The entire House will welcome today’s announcement. The Government have made exactly the correct decision, given the balance of mischief. Can my hon. Friend say whether the convictions to be quashed under the process he has announced today will include not only those prosecuted by the Post Office itself but those prosecuted by the Crown Prosecution Service? On the latter, will the Ministry of Justice review the decision-making process prior to the decision to prosecute?

[Kevin Hollinrake]

Yes, absolutely, we believe that the overturning of convictions would happen in respect of cases prosecuted by the Crown Prosecution Service too, not least because, as we understand it, the files were compiled by the Post Office, based on its evidence. That would seem right and proper if the evidence was not correct, and we know that to have been the case because of what has happened with Horizon and because of the behaviour of some individuals in the Post Office team—those responsible for investigations. Clearly, there was inappropriate behaviour. The answer to my right hon. Friend’s question is yes, and it is only right that we look at what happened. As I say, the Lord Chancellor is looking at the whole issue of private prosecutions and how those cases were put together and prosecuted.

[Vicky Foxcroft (Lewisham, Deptford) (Lab)]

Many Members across the House have mentioned the ITV drama and it may interest them to know that the director of “Mr Bates vs The Post Office” is in the Gallery. He has been watching Prime Minister’s questions and this urgent question closely, hoping for some positive news. It is welcome that we have had some positive news, but he has a few questions for me to ask the Minister. He really wants to know: what are the timeframes for overturning the convictions? I know that we have heard some answers on that, but a bit more detail would be helpful. When will people finally receive the full compensation they deserve? When will those responsible finally be held to account?

[Kevin Hollinrake]

I thank the hon. Lady for her question. I was not aware that the director is with us today, but may I just put on record the fantastic job that he has done in bringing this to the public consciousness and raising consciousness of this matter within this House? One thing that that has resulted in is today’s statement; we would probably have got here at some point in any case, but it is good to be here today, earlier than we would have been had that dramatisation not been aired.

The hon. Lady is right to challenge us on the timeframes. The timeframe for passing legislation in this House is always somewhat uncertain, because that is not all within the Government’s gift, as legislation passes through both Houses. We are keen to legislate as quickly as possible, but it is likely to take a matter of weeks, because there is some work we need to do to make sure that that legislation is in the right place. As for timescales for full and final compensation across all schemes, we are hoping to do that by August. Again, we are not in charge of all those timescales, because the process requires people who want to go through the full assessment route to compile and submit their claim. We will then be able to respond to it as quickly as possible. As for the answers she is looking for, which we all want to see, the inquiry is due to conclude by the end of the year and we would expect it to report shortly after—that should give us those answers.

[Robin Millar (Aberconwy) (Con)]

I am grateful to the Prime Minister for his announcement and I welcome this response from the Minister. I know that a lot of work has gone into this issue, but the energy and attention he brings is well received across the House. This is the right thing to do.

Notwithstanding the remarks of my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill), it occurs to me that important information has emerged in evidence during the process of prosecutions so far. The Minister, if I understood his response correctly, referred to “malevolence” in behaviour. Will he ensure that whatever process unfolds will contain a mechanism by which information that would be useful for consideration in further action will be gathered and collated, given that people will not necessarily have the mechanism of a court case and a legal testing of their situation?

[Kevin Hollinrake]

I am keen to engage with my hon. Friend to make sure that we get what he needs. Malevolence is the right word in this respect and it is important that we learn the lessons from that, in terms of both private prosecutions and the wider inquiry. We are very keen to do that, but of course I am happy to engage with him to make sure that we address any lessons he thinks we need to learn. This is not just a lessons-learned exercise; we want to hold people to account, but there are also lessons we can learn. It is important that we learn them, and I am happy to talk to him about what he thinks we should do, in addition to what we have set out already.

[Joanna Cherry (Edinburgh South West) (SNP)]

No one, particularly nobody in public life, should get away with perjury, perverting the course of justice or attempting or conspiring to do that. I am therefore glad to hear the Minister say today, as he did in response to me earlier this week, that the question of further prosecutions arising out of this scandal should be carefully looked at.

On financial redress, does the Minister agree that it is important that those who have been convicted should get legal advice? If, as I suspect, those prosecutions were malicious ones, the damages to which those people are entitled could be very hefty and they would be unwise to accept an offer from the Minister, generous as it might be, before they had received legal advice about what they would be entitled to if they could prove that the prosecutions were malicious.

[Kevin Hollinrake]

I thank the hon. and learned Lady again for her remarks. Yes, I would like to see prosecutions flow from this. The inquiry will help with that of course, and other investigations by prosecution authorities will be ongoing. Legal advice is hugely important and the compensation schemes we are running do provide legal advice to individuals thinking of taking an offer. That should be carefully considered before people choose one route or another. We are trying to make sure that the choice is as easy as possible, and that where people have made that choice the compensation is delivered as quickly as possible.

[Virginia Crosbie (Ynys Môn) (Con)]

Noel Thomas, one of my constituents, was a former sub-postmaster who was wrongly convicted. His conviction for false accounting in 2006 was overturned by the Court of Appeal in 2021. How is my hon. Friend ensuring that sub-postmasters such as Noel Thomas, across the UK, are heard, supported, recompensed, recognised and, most importantly, exonerated? Will the Minister meet Noel Thomas, should he wish that to happen?

[Kevin Hollinrake]

I would be delighted to meet Noel Thomas. A key part of the excellent dramatisation “Mr Bates vs The Post Office” and of “Mr Bates vs The Post Office: The Real Story”, which sits behind it and which people can also watch, features Mr Thomas. His story was incredibly moving and anybody who saw it would be moved by it, so of course I will meet him. I am keen to ensure that he gets not only the apology he deserves, but the redress he deserves, and I am sure we can discuss that when we meet. The Government are keen to make sure that the compensation schemes work as effectively as possible, to make sure that Mr Thomas gets the compensation he needs and he is able to move on with his life.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Following the excellent ITV drama, whose makers I congratulate, there is a clear belief, expressed by my constituents, that sub-postmasters and sub-postmistresses must have their names cleared and be fully compensated. There is also a view that those responsible for this appalling miscarriage of justice should be held to account, which is what we need to see unfolding in the next months. One of my constituents has said:

“The whole affair has made me ashamed of the Post Office hierarchy, the Government and the UK legal system.”

What are the Minister and the Government going to do to restore public trust? Will he expand on the timescale of action to ensure that justice and the fullest redress is given to all those affected?

[Kevin Hollinrake]

Having dealt with a number of different redress schemes over the years, including those following some of the banking scandals, my experience with victims—the same applies in respect of the Post Office—is that they want two things: compensation and people being held to account. That is not least because, if people are held to account the chances of the same thing happening again might be reduced, as everyone would know that they will be held to account. That acts as a deterrent, in addition to its being something that people want to see to make sure that justice is served. Of course, the Government are not in charge of prosecutions, which are done by the various people in charge of prosecutions—the police and the CPS. I am sure they are looking closely at the evidence that is already out there and will look at the further evidence that comes to light through the inquiry. It is due to complete by the end of the year and hopes to report soon after. That deals with the inquiry side of things. As for compensation, we are keen to deliver all compensation by August, but we hope to do so sooner.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for the clear commitment and perseverance he has shown. He took this on and he clearly wants to have a result. For the many families who have an empty seat at the table, the compensation does not come close to cutting it, as we say in Northern Ireland—they all want justice. What justice can be delivered in terms of software producer Fujitsu, whose software is still being used by Government agencies, to ensure that there is accountability and some form of restitution?

[Kevin Hollinrake]

I thank the hon. Gentleman for his constant contributions on this subject and many others. It has been a pleasure to do this role, to take on this huge issue, which he and I both spoke about as Back Benchers, and to make the progress we have seen today. We are helping people whose lives have been devastated, so it is my pleasure to do this work. I thank Members from the Opposition parties for their support to that end, and I thank the officials who have done a tremendous job in trying to ensure that we get justice and compensation as quickly as possible.

Yes, we should identify those responsible and hold them to account, be they organisations, like Fujitsu, or individuals. The significant compensation bill is currently funded by the taxpayer, so it seems only right and reasonable that any organisations or companies responsible for the scandal will also contribute towards that compensation.

[Holly Lynch (Halifax) (Lab)]

In my constituency, Mr Robinson ran the Illingworth Road post office. When he had the Horizon software installed and could not get the figures to add up he began, out of desperation, and unable to get the Post Office to understand, to move money between the DWP and Horizon software. He was then prosecuted by the Department for Work and Pensions. He did not benefit from any of the money it was alleged that he had stolen, but he has not been eligible for compensation for the £43,000 he was forced to pay back, or for the time he spent in prison, all because of the flawed software. If I write to the Minister with the details of Mr Robinson’s case, will he look at it and provide advice on how we can finally clear Mr Robinson’s name?

[Kevin Hollinrake]

I am keen to work with the hon. Lady on that. We are aware of CPS and DWP cases, and I would be keen to find out exactly what happened in that case. It is our intention that anybody who suffered a conviction because of Horizon is properly compensated, so I can give her that assurance. The case she raises illustrates some of the complexities around isolating exactly what was responsible for somebody’s conviction. When we considered solutions, we looked at how people tried to compensate for a loss suffered in one part of their business, resulting in a conviction in another part of the business. That is how we arrived at the solution to comprehensively overturn convictions.

[Daisy Cooper (St Albans) (LD)]

We all want to see swift financial redress and justice, and many Members from across the House have talked about accountability. Paula Vennells has, quite rightly, handed back her CBE, but many sub-postmasters are asking why she was given it in the first place and why she was given a role as a director of the Cabinet Office. Will the Minister explain why in 2019, after the High Court judgment was handed down exposing her full involvement in the Horizon scandal, she remained in post as a director of the Cabinet Office and was not sacked? If he is unable to explain that today, will he write to me with an explanation of what conversations were had at the time?

[Kevin Hollinrake]

The hon. Lady asks some fair questions and I am happy to take them away. It was right and proper that the former CEO, Paula Vennells, handed back her CBE. I am a former CEO myself, and people cannot expect to be honoured for services to an organisation when that organisation failed so many of its key people. The points the hon. Lady raises relate to a time prior to my being in Government and I do not know the answer to her question. With hindsight, many people would see that appointment as a mistake, but I am happy to take her points away.

[Yasmin Qureshi (Bolton South East) (Lab)]

I welcome the Minister’s response to the urgent question. Several of my constituents have been affected by this scandal. One of them has written to me to say that when they successfully appealed as part of the group action in 2019, they were told their costs would be deducted from the compensation, which therefore left a very small amount of money as compensation. I tabled a question and talked to a Minister about this three years ago, but I had, effectively, no response. Will the Minister give an assurance that those people will now be properly compensated and not have their costs deducted?

[Kevin Hollinrake]

I thank the hon. Lady for her work on this issue. She is right to say that the 555 sub-postmasters in the group litigation were offered a £57 million settlement, £46 million of which was taken by their legal representatives, leaving £11 million, which worked out at around £20,000 each. As a Back Backbencher, I was keen to ensure that there was a scheme for those people rather than only for people who had not taken part in that action.

The group litigation order scheme was brought forward by the Government and we have already settled 21 cases, in which people have received full and final compensation. People can also get interim payments through that scheme and, as I announced today, rather than going down the route to full assessment they can choose a fixed-sum award of £75,000. That scheme is available to the hon. Lady’s constituent and they can take advantage of it.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

The public outcry as a result of the ITV drama clearly indicates the huge support for our sub-postmasters among the public. As part of righting the wrong of the Horizon scandal, is it not time to look at the remuneration of current sub-postmasters, including the option of directly employing them, if they so wish, as opposed to the independent contracting system we have at the moment, so that their income reflects their huge contribution to our communities?

[Kevin Hollinrake]

I absolutely agree with the hon. Gentleman that we have to improve the remuneration of sub-postmasters and the businesses they run. We want to ensure we have a viable network going forward. We have 11,700 branches around the country. We have set a minimum number of 11,500, and a minimum of 99% of our population has to be within three miles of a post office, so we have already set access criteria. We are keen to ensure that the network is viable going forward; the hon. Gentleman offers one solution to that.

The Government already offer significant financing for the Post Office—about £2.5 billion over the last 10 years—in addition to other financial commitments we have made for other matters, such as rebuilding the IT system. We feel that the post office network has a bright future, particularly in areas such as access to cash, the banking framework and parcel hubs, and we see the remuneration opportunity improving in future years.

[Michael Shanks (Rutherglen and Hamilton West) (Lab)]

On Monday, I asked the Minister how we can ensure that any system is the same across the whole of the UK. In the past few days, before today’s announcement, what discussions has he had with the Lord Advocate in Scotland about the decisions? Has he given any consideration to legislative consent motions so that this Parliament could legislate to ensure that the same system is in place across the whole of the UK—something the Scottish Government are reportedly minded to consider? If that is not the case and the Scottish Parliament takes a different approach, how will the Minister ensure that the compensation regime is the same across the whole of the UK, so that people who may not have their convictions changed in Scotland in the same way still have access to the same compensation?

[Kevin Hollinrake]

I am very keen to make sure it is a UK-wide scheme, both in terms of compensation and people’s access to it. We have already had conversations with the Scottish Administration—I think they happened yesterday evening—so that they fully understand our intentions. Clearly, these matters are devolved in Scotland, so there are different routes to make sure that there is one scheme across the UK. I am keen to continue those conversations and make it as easy as possible for postmasters to overturn convictions or access compensation.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

We all welcome the fact that, at long last, postmasters can finally expect full justice and restitution for the devastation that they and their families have suffered. However, does the Minister share my concern that, notwithstanding restitution and justice for postmasters, the Post Office, once a most trusted brand and institution, has been forever and irreparably tarnished by those who presided over this scandal having prosecuted and persecuted so many decent people who were serving their communities?

[Kevin Hollinrake]

I do not quite agree with that. Clearly, it has not been the Post Office’s finest hour by a long chalk, but the Post Office brand itself is revered around the country. The reputation of Post Office Ltd—the central organisation—has been tarnished, and we are keen to move on and help the Post Office to rebuild that relationship. It has, for example, recruited 100 area managers to try to improve its relationship with sub-postmasters, which I think is helping. But there is work to do to improve the relationship between the centre and the network. As a constituency MP, my experience is that my constituents very much appreciate, value and revere the post offices in their community.

[Kate Osborne (Jarrow) (Lab)]

I thank the Minister for some of the detail around today’s announcement regarding the convictions; it will come as a relief to many.

As highlighted by the ITV show, the 555 worked tirelessly for justice, and that, of course, opened the door for so many others, but they feel they are being penalised for taking this litigation forward, with compensation still not being paid to so many. As well as others, the Post Office needs to be held responsible for the part it has played in this scandal at every stage, including the lies and the blocking of justice, yet it is the Post Office and the Government’s expensive lawyers who are currently litigating every case. I have to ask whether that is right.

Will the Minister look to remove the Post Office from all the roles that it currently plays in relation to compensation decisions and, instead, put in place a more independent arm’s length body that will deliver full and fair compensation to all?

[Kevin Hollinrake]

I thank the hon. Member for her work. We have engaged with her on this issue regularly, and she works very hard on behalf of her constituents. We are keen to make the compensation available more quickly. As announced today, her constituents, if they were a part of the 555—the GLO—will have access to the fixed-sum award of £75,000, which is a much quicker route. But if they go down the full assessment route, which they have every right to do, we have committed that, once a claim is submitted, the dispute resolution process will respond to that claim within 40 days in 90% of cases.

The hon. Member is wrong to talk about the cases being litigated against; the process is done by dispute resolution with my Department, not with the Post Office. If that cannot be agreed, it is sent to an independent panel, which will then recommend what award should be given. The Post Office is not involved and independence is at the very heart of this process, so I believe that her constituents will get full and fair outcomes, but we want to make sure that is done as quickly as possible, and we are working on that on a daily basis.

[Richard Foord (Tiverton and Honiton) (LD)]

Russell Ward-Best from Ottery St Mary was accused of stealing £17,000. He avoided prosecution by resigning, and another sub-postmaster I represent paid the alleged shortfall to avoid prosecution. Russell Ward-Best was declared bankrupt and died before he was found innocent and cleared. Will the Minister comment on financial redress for all sub-postmasters and their families, including those who were not prosecuted?

[Kevin Hollinrake]

I am very sorry to hear what happened to Mr Ward-Best. His family should be able to get compensation through the historic shortfall scheme. That scheme is there to put Mr Ward-Best, if he were still with us, back to where he would have been had this detriment not occurred, and that can take into account things such as bankruptcy. That money would then be paid to his estate, which would then flow through to his family. The same compensation is available, despite Mr Ward-Best very sadly no longer being with us.

[Alison Thewliss (Glasgow Central) (SNP)]

One sinister feature of this scandal has been how the Post Office has tried to intimidate and scare people into compliance. While researching this, I read that those receiving an historic shortfall scheme offer had been erroneously told by the Post Office that they were not allowed to talk about the terms of their compensation. The Post Office had no right to do that, but there will be a legacy of people who will be scared to talk out about this, or cause a fuss, because they believe that they are not allowed to do so.

Can the Minister put something on the record to give reassurance to those people who have been deliberately and maliciously misled by the Post Office into silence? The Post Office should not be able to do that, and those affected should be able to have their story told and to get justice.

[Kevin Hollinrake]

I thank the hon. Lady for her point. I am not aware of the particular case to which she refers, but it is certainly our position that we want to work closely with people who have been through that scheme. The advisory board originally just covered the group litigation order claims. We then expanded its remit to cover all three schemes, so that it could ensure that they provided fair outcomes to all those involved. We wanted to give a level of consistency across the three schemes. The hon. Lady may want to contact Lord Arbuthnot or the right hon. Member for North Durham (Mr Jones) to discuss her concerns. I am happy to discuss the matter with the advisory board to see what might need to be done.

[Wera Hobhouse (Bath) (LD)]

We can never right the original wrong or undo all the suffering; all we can do is make sure that the misery is not ongoing. For those who do not look for a grand pardon, what rights of appeal exist other than a request to the Criminal Cases Review Commission?

[Kevin Hollinrake]

The hon. Lady is right to say that no amount of final compensation can ever make good what has happened to many of these people, whether it is loss of home, loss of business, loss of livelihood, loss of reputation or loss of life. No amount of money can ever compensate for that, but we are keen to make sure that, wherever we can, people do get compensated across all those different areas. Compensation schemes provide for pecuniary and non-pecuniary losses, which are some of the things that, sadly, have happened to people in their personal lives. That is exactly what we have set out today. We are keen to make sure that, if people are overturning convictions, there is no requirement to go to the CCRC to do that. It is something that we can do through legislation in this place, and we will be setting out exactly how we will deliver that in the coming weeks.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the Minister for again coming to the House and answering so thoroughly a great many questions. It is very obvious that the House is concerned about this matter.

Points of Order

Wednesday 10th January 2024 Commons Chamber

14:18

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

On a point of order, Madam Deputy Speaker. Jagtar Singh Johal, my constituent, is entering his seventh year in arbitrary detention in India. In that time, he, his family and I have lost count of the number of Foreign Secretaries who have run the Department. Having said that, in recent weeks I have never seen such an utter disregard for what is most likely the most important consular case on the Foreign Secretary’s desk.

Yesterday at the Foreign Affairs Committee, in response to my hon. Friend the Member for Argyll and Bute (Brendan O’Hara)—I have informed him that I would be mentioning him—the Foreign Secretary seemed to intimate a willingness to meet me and my constituents, the family of Jagtar Singh Johal. It is clear to me that, given his response, the Foreign Secretary may not have been aware of my letter dated 14 November 2023, which sought to have a meeting. To date, I have had no formal response, although unsurprisingly, before Prime Minister’s questions, the family and I had a holding response from the Department, which stated that

“replies…requesting a meeting with the Foreign Secretary are being processed”.

I have no doubt that after two months I may eventually get a formal response from the Foreign Secretary.

Given the nature of the case, which you have heard me raise on many occasions, Madam Deputy Speaker, and in which there may be a death penalty charge, you will understand that speed is of the essence. I am therefore looking for clarity on the following issues. Is it normal for a senior Minister of State to take so long to correspond with a Member of Parliament when time is critical? Do the conventions of this House extend to Ministers in the other place? Given that the Defence Secretary stated yesterday that

“the relationship between the UK and India is not transactional, instead both countries are natural partners with many commonalities and shared goals”,

what confidence can I and other Members of Parliament have that the Government will represent our constituents held in India equally in comparison with others? Finally, given that the Foreign Secretary seems to have intimated that it is no longer their intention to attend the Foreign Affairs Committee every six weeks, as was stated to the House, will Mr Speaker demand that the Foreign Secretary be brought to the Floor of the House to answer questions from Members of the House of Commons?

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the hon. Gentleman for his point of order. As he says, we have all heard him raise this matter many times. I appreciate the urgency of Mr Jagtar Singh Johal’s situation, given that the death penalty is a possibility. The hon. Gentleman raises some important points that are indeed points for the Chair. I can answer one question quickly and simply: Mr Speaker has said many times that he expects Ministers to answer correspondence from Members of Parliament in a timely fashion. For the hon. Gentleman to have gone two months without acknowledgment of, or answer to, his letter is clearly not acceptable.

The hon. Gentleman asks about the accountability of a Minister who is not a Member of this House. That is a rather more difficult situation. He asks whether Mr Speaker can in some way summon the Foreign Secretary to this House. Under current regulations, no, he cannot, but it is normal for Ministers who are Members of the House of Lords to find different ways to demonstrate their accountability to the elected representatives of the people. Of course, questions can be asked in the other place, but that is not at all the same as a question being asked on behalf of a constituent by their Member of Parliament.

The hon. Gentleman mentions the Foreign Affairs Committee. It was my understanding that the Foreign Secretary had undertaken to appear regularly before that Committee; that would certainly be a way in which ministerial accountability could be demonstrated and undertaken. The exact status of the situation, I cannot answer for. It is not a matter for the Chair, but the hon. Gentleman has rightly raised important points. I know that Mr Speaker will be concerned about accountability, which is a matter for the Chair. I will ensure that he is aware of the points that the hon. Gentleman has raised, and I am certain that those on the Treasury Bench will convey to Foreign Office Ministers the concerns that have been expressed.

[Sir David Davis (Haltemprice and Howden) (Con)]

Further to that point of order, Madam Deputy Speaker. I, too, have campaigned on behalf of Mr Johal, and I, too, have been dissatisfied with the response of the Foreign Office—over years, not just over the last few weeks. In conveying the concerns of the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) to Mr Speaker, would you also say that they are not confined to him, or indeed to the SNP? They are felt across the House.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the right hon. Gentleman for clarifying the situation. It is obvious that the entire House is concerned about this matter, and about the general matter of accountability. I will ensure that Mr Speaker is aware of that.

[Martin Docherty-Hughes]

Further to that point of order, Madam Deputy Speaker. Thank you very much for your response to my initial point of order. You raised the fact that it is not yet possible to bring the Foreign Secretary to the Floor of the House. Would a change to Standing Orders allow the Speaker to bring the Foreign Secretary to this elected Chamber to be held accountable?

[Madam Deputy Speaker (Dame Eleanor Laing)]

I understand the point that the hon. Gentleman is making, which I know is of some concern. It is not entirely a matter for the Chair, but I understand that the Procedure Committee is considering the whole position of the accountability of Ministers who are Members of the House of Lords. I am certain that the hon. Gentleman will make the Chair of the Procedure Committee aware of his concerns. I have every confidence that the right hon. Member for Haltemprice and Howden (Sir David Davis) will also do so, as will I.

Scottish Law Officers (Devolution)

1st reading
Wednesday 10th January 2024 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

14:26

[Joanna Cherry (Edinburgh South West) (SNP)]

I beg to move,

That leave be given to bring in a Bill to amend the Scotland Act 1998 to grant to the Scottish Parliament legislative competence in respect of the role and functions of the Scottish Law Officers; and for connected purposes.

My Bill is designed to give the Scottish Parliament the power to amend the role of Scotland’s Law Officers, including dividing the role of the Lord Advocate into two separate jobs: one as head of Scotland’s prosecution service, and the other as a Minister of the Scottish Government and its chief legal adviser. The present Lord Advocate performs both roles, and both legal scholars and politicians are becoming increasingly concerned that that may give rise to a conflict of interest, or at the very least a perception of a conflict of interest. I wish to stress that no criticism of the current or previous Lord Advocate, or indeed of the current SNP Government, should be inferred, because the dual role of the Lord Advocate is a historical anachronism that predates devolution.

The dual role was rubber-stamped by the devolution settlement, and to date no Conservative or Labour Government have attempted reform. I believe that reform is long overdue. The Scottish National party manifesto for the 2021 Holyrood election promised to consult on separating the roles of the Lord Advocate, and the Scottish Government have committed to review the role of the Lord Advocate by the end of the current Parliament, the initial phase of which is to be informed by expert research. I understand that a report on the expert research is to be published soon; however, because of reservations in the Scotland Act 1998 it is not open to the Scottish Parliament to create either a new Law Officer or a new public prosecutor. That is why my Bill is necessary.

Given that both criminal and civil justice are devolved matters, it is only right that the Scottish Parliament should decide how best to reform the role of the Lord Advocate. Furthermore, it is the Scottish Parliament that will be furnished with the necessary expert research that has been commissioned by the Scottish Government. If we are to take at face value assurances from the United Kingdom Government that they do not wish to undermine the devolution settlement, and that they respect the powers that have been devolved, I believe that they should leave it to Scotland’s Parliament to carry out the task of reforming the role of Scotland’s Law Officers.

The Lord Advocate is the senior of the two Scottish Law Officers. The other is the Solicitor General. The Lord Advocate is both a Minister in the Scottish Government and the holder of a historic office—the role of Lord Advocate goes back many hundreds of years—that now has a range of functions associated with the maintenance of the rule of law and the proper administration of justice.

The Lord Advocate is head of the systems of criminal prosecution and investigation of deaths. She is also principal legal adviser to the Scottish Government. She represents the Scottish Government in civil proceedings and the public interest in a range of statutory and common-law civil and constitutional functions.

The Scotland Act states that, in relation to criminal prosecutions and the investigation of deaths, the Lord Advocate must act independently of other Ministers and, indeed, any other person, and I believe that the Lord Advocates have acted independently. The former First Minister, the right hon. Alex Salmond, took steps to underline that independence by depoliticising the appointment process and providing that the Law Officers should not routinely attend Cabinet meetings. There was a downside to this: it deprived the Scottish Government of the benefit of advice from a lawyer who shares their political persuasion. Such advice was previously available to other Governments and is something from which the UK Government benefit.

The Lord Advocate is appointed by the King on the recommendation of the First Minister, with the agreement of the Scottish Parliament. Unlike other Ministers, she cannot be removed from office by the First Minister without the approval of the Parliament. The Lord Advocate has an important role in ensuring that legislation passed by the Scottish Parliament is within its legislative competence, and she has powers under the Scotland Act in relation to the resolution of legal questions about the devolved powers of Ministers and the Parliament. We saw that in action recently during the referral to the United Kingdom Supreme Court on the question of whether the Scottish Parliament had the power to hold a second independence referendum.

Accountability to the Scottish Parliament is an important aspect of the Lord Advocate’s constitutional role. She may, but need not, be a Member of the Scottish Parliament and, if not an MSP, she is entitled to participate in the proceedings of the Parliament but may not vote. She can therefore be questioned by MSPs about the exercise of her functions, although she is not required to answer questions or produce documents in relation to the operation of the criminal prosecution system in specific cases.

There is a tension in the principle that the Lord Advocate should be both independent in her capacity as chief prosecutor, but also politically accountable as a Law Officer. The Venice Commission of the Council of Europe, which advises member states on rule of law issues, recommends that member states take steps to ensure that their state prosecution systems are seen to act independently of Parliament and Government. For the record, I think the Scottish state prosecution system operates independently of Parliament and Government, but because the two roles are held by the one person, there is always the perception that that might not be the case.

Elsewhere in the UK and in the Republic of Ireland, the two roles are held by different people, which avoids any possible conflict of interest or the perception of one. In England, there is an Attorney General, who is a member of the Government of the day, and, quite separately, a Director of Public Prosecutions, who is appointed by a public appointment process completely independent of Government. Of course, there is the third office of the Lord Chancellor, who performs some constitutional functions. The experts advising the Scottish Government might want to think about something akin to that third role for some of the Lord Advocate’s functions under the Scotland Act.

Concern about potential conflicts in the role of the Lord Advocate has increased in recent times because of some high-profile cases, including the Scottish Government’s handling of complaints against Alex Salmond, the malicious scandal in relation to prosecutions over the takeover of Rangers football club, and the police investigation into SNP finances. It is important to understand that similar concerns have been raised in the past. In the early days of the devolved Scottish Parliament when Labour was the Government, in the wake of the resignation of a Labour-appointed Lord Advocate, there was a big debate about the potential conflict of interest prompted by concerns around the Lockerbie prosecution, the growing importance of the European convention on human rights under devolution, and the Lord Advocate’s then role in some judicial appointments. There was considerable disquiet back in 2000 that the Lord Advocate was performing the role of politician, prosecutor and judge-maker.

Since 2002, the appointment of judges in Scotland has been the responsibility of an independent panel. The Lord Advocate has no involvement in that, so her role does not really pose—as some people sometimes say—a problem for the constitutional principle of the separation of powers. This is not an issue of the separation of powers between Executive, legislature and judiciary, because the Lord Advocate does not have anything to do with the judiciary.

To come back to present times, the report of the Scottish Parliament’s inquiry into the Scottish Government’s handling of harassment complaints found that events around those issues had shown a

“long-standing tension in the Lord Advocate’s dual roles,”

and said that “public perceptions” were important. It is important that the role of chief prosecutor in any state be free from all suspicion of political interference. I stress that I am not saying that there has been political interference; I want to protect the role from the suspicion that there might be.

It is also important that Scottish Governments of whatever political hue have the benefit of a legal adviser who shares their political views while still giving independent advice. That, after all, is what the UK Government, Welsh Government and Irish Governments enjoy. Their Law Officers are usually parliamentarians from the same party as the Government of the day.

As I said, the Scottish Government have accepted that there is a case for separating the two roles of the Lord Advocate. I am delighted that both the Secretary of State for Scotland, who is in his place, and his shadow, the hon. Member for Edinburgh South (Ian Murray), who explained to me why he could not be in his place for this Bill, agree that there is a case for separating the two roles. My Bill has support from the Liberal Democrats, the Alba party and a distinguished Conservative Back Bencher, as well as SNP colleagues. I hope that the existence of cross-party support means that this private Member’s Bill has a chance of becoming law, leaving the final decision on the role of Scotland’s Law Officers where it should be: with the Scottish Parliament.

Question put and agreed to.

Ordered,

That Joanna Cherry, Chris Stephens, Douglas Chapman, Patricia Gibson, Carol Monaghan, Marion Fellows, Ronnie Cowan, Kenny MacAskill, Mr Alistair Carmichael, Wendy Chamberlain, Christine Jardine and Sir David Davis present the Bill.

Joanna Cherry accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 22 March, and to be printed (Bill 76).

Finance Bill (Programme) (No. 2)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the Order of 13 December 2023 (Finance Bill: Programme) be varied as follows:

In paragraph (5) of that Order, for “Thursday 18 January” substitute “Tuesday 30 January”.—(Robert Largan.)

Question agreed to.

Finance Bill

Committee of the whole House
Wednesday 10th January 2024 Commons Chamber

(Clauses 1 and 2, schedule 1, clause 21, schedule 12, clauses 25, 27 and 31 to 34, schedule 13 and new clauses relating to those clauses and schedules)

Considered in Committee

[Dame Eleanor Laing in the Chair]

Clause 1

Permanent full expensing etc for expenditure on plant or machinery

Question proposed, That the clause stand part of the Bill.

[The Chairman of Ways and Means (Dame Eleanor Laing)]

With this it will be convenient to consider the following:

Clause 2 stand part.

Schedule 1.

New clause 1—Review of reliefs for research and development—

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the implementation costs of the measures in section 2 incurred by—

(a) HMRC, and

(b) businesses.

(2) The review under subsection (1) must include details of the implementation costs of all measures related to credit or relief for research and development that have been introduced since December 2019.”

This new clause would require the Chancellor to publish a review setting out the total implementation costs of all changes to research and development reliefs in the current Parliament.

New clause 3—Assessment of impact of Act on business investment and economic growth—

“Within six months of the passage of this Act, the Chancellor of the Exchequer must carry out an assessment of the impact of section 2 and Schedule 1 of this Act on business investment and economic growth, and lay a report of that assessment before both Houses of Parliament.”

This new clause would require the government to produce an assessment of the impact of the Bill’s new regime for research and development carried out by companies. This assessment would need to examine the impact on business investment and economic growth.

14:39

[The Financial Secretary to the Treasury (Nigel Huddleston)]

This Government’s aim is to grow the economy for the good of everyone by removing barriers to private sector investment and delivering a tax system that is supportive of business. At the spring Budget 2023, the Chancellor set out his approach for a highly competitive tax regime. By announcing a package of generous tax incentives, combined with a rate of corporation tax that remains the lowest in the G7, this Government have ensured that the UK continues to be one of the best places in the world for businesses to grow and invest.

The Bill marks our next step in making the UK one of the most competitive tax systems among major economies by enhancing the support that the corporation tax system provides to businesses that drive growth by making long-term investments. It meets the Government’s commitment to introduce permanent full expensing, as announced at the autumn statement, solidifying our international competitiveness and creating the certainty that businesses have told us they need in order to confidently invest. The Bill will also drive UK business innovation by merging the existing research and development expenditure credit scheme with the small and medium enterprise scheme. Merging those schemes will simplify and improve the system for supporting cutting-edge research and development.

Turning first to clause 1, at spring Budget 2023, the Government introduced two new temporary first-year capital allowances for qualifying expenditure on plant or machinery. The first was a 100% first-year allowance for so-called main rate expenditure, known as full expensing, which allows companies to write off the full cost of plant and machinery in the year that the cost is incurred. The second was a 50% first-year allowance for expenditure on special-rate assets such as lighting systems, thermal insulation and long-life assets, allowing companies to write off half the cost of an asset in the year that it is incurred, with the remaining balance written down at 6% in every year afterwards.

The Chancellor was clear that his long-term ambition was to make those new reliefs permanent once the fiscal and economic conditions allowed, and at the autumn statement he confirmed that he was able to do just that. Clause 1 delivers that ambition, making both full expensing and the 50% first-year allowance permanent by removing the end date of 31 March 2026. That means that companies will be able to permanently benefit from full expensing. It solidifies our position as joint top of the rankings of OECD countries with regard to plant and machinery capital allowances, and means we are the only major economy with permanent full expensing.

The change will give companies the certainty they need to make long-term investments, and responds to calls from the CBI, Make UK, Energy UK and 200 other business groups and leaders, and from companies including BT Openreach, Siemens and Bosch, which have said that making the policy permanent would be the single most transformational thing the Government could do for business investment and growth. According to the Office for Budget Responsibility, it will generate almost £3 billion of additional business investment each year and £14 billion over the course of the next five years. The forecast is that GDP will be 0.1% higher by the end of the forecast period and slightly below 0.2% higher in the long term as a result.

[Richard Fuller (North East Bedfordshire) (Con)]

I applaud the Government’s initiative to make full expensing permanent, but of course we know there will be a general election within the next 12 months. Has my hon. Friend heard from the Opposition whether, if they were to be in Government, they would maintain it?

[Nigel Huddleston]

My hon. Friend is incredibly knowledgeable about this area through some of his previous business and ministerial experience, and that is a question I am intrigued to hear answered by the Opposition shortly. I believe it is vitally important, because the whole point is to give businesses the confidence to invest in the long term, and certainty is key to the investment decisions being made.

[Richard Fuller]

Further to that point, does my hon. Friend not think, as I do, that it is an aspect of a responsible Opposition to be clear, right now as we are debating this in this House, what they would do were they to be in Government?

[Nigel Huddleston]

I think my hon. Friend is kicking off what is likely to be a long debate over the course of the next year, but an important one for our constituents and businesses. The economy will play a pivotal part in discussions this year. It is very clear what we are doing: we are implementing vital changes, asked for by business and in response to business, to provide that business certainty and an environment in which they and therefore our constituents can thrive. I do not think any of us want to put that at risk. However, without the clarification and confidence from the Opposition about what they might do, these issues will be raised and the uncertainty can persist. We on the Government side of the House are committed to this, and my hon. Friend is right to make that clear.

[Nigel Mills (Amber Valley) (Con)]

I think the Minister just read out that the assessment is that this measure will create £3 billion additional investment per year. Is that right? If I remember the Green Book correctly from the autumn statement, the annual cost of this measure was £11 billion, which I think equates to £55 billion of extra capital expenditure. Is he saying that £52 billion of that £55 billion is just bringing forward investment that would have happened later, and £3 billion is new, or have I somehow got my numbers wrong and this will generate a load of investment that would not otherwise have happened?

14:45

[Nigel Huddleston]

My hon. Friend is right to point out the timing element with both full expensing and R&D; I will come on to R&D in a moment, because I think that is the £55 billion figure he mentions, but these measures, particularly the full expensing, will of course have a long-term impact over a long period of time. The cost is up-fronted, but the benefit is over a long period, and anyone who has worked in business understands that. He is right to point out the anomaly, and it is a very important point because a lot of people probably would not understand it, but the fact that the OBR has highlighted the incremental impact on the economy overall shows that there is a clear and transparent net benefit. The timing of the impact changes, but we are talking about additional investment right away, because we will be giving businesses the confidence to be able to make those decisions and invest immediately.

[Matt Rodda (Reading East) (Lab)]

I appreciate the Minister’s comments so far. Can he confirm how many times policy has changed in this important area since 2019? While he is making some further points today, it seems that Government policy has changed quite erratically, and that in itself is difficult for businesses to respond to when they are looking for certainty in planning for the long-term.

[Nigel Huddleston]

I agree that certainty for business is pivotal, but with both full expensing and R&D the Government, the Chancellor and others have been indicating the direction of travel for some time and therefore giving increased certainty. As I have said, it was mentioned a while ago that we intended to pursue the policy of full expensing when the economic circumstances allowed, and now they do. R&D, which I will come to in a minute, has been discussed for quite a long time and is the result of extensive co-operation with industry.

It is also the reality, though, that Government policy needs to change in response to the nature of a changing economy and to things such as digital, the cloud and so on. When it comes to other investments, we need to make sure that new and emerging policy areas are covered as well. We have seen today, as we saw in the autumn statement, a very clear direction of travel from the Conservative side of the Chamber, which is about incentivising businesses and cutting taxes. Permanent full expensing also simplifies the capital allowances regime overall, as companies can claim the full cost in year one, reducing the need to claim writing-down allowances year on year.

Turning to clause 2 and schedule 1, the Government have also announced the closure of the R&D tax relief review launched in 2021—the point I was just making to the hon. Member for Reading East (Matt Rodda)—alongside a set of changes to simplify and improve the system. Clause 2 makes changes to merge the current R&D expenditure credit and SME schemes for expenditure in accounting periods beginning on or after 1 April 2024, simplifying the system and providing greater support for UK companies to drive innovation.

The merged scheme will have an above-the-line mechanism similar to the R&D expenditure credit, with a rate of 20%. That will make the benefit more visible and easier for companies to factor into their investment decisions. Additionally, small and medium enterprise lossmakers will now be able to carry forward their losses rather than having to surrender them, which will give a total benefit of up to £45 per £100 of R&D expenditure.

There will also be a reduction in the rate at which the merged scheme credit is taxed for lossmakers, from 25% to 19%. That is worth around £120 million per annum to non-intensive lossmakers and will increase the up-front cash benefit for lossmakers. Subcontracting rules in the merged scheme will allow the company taking the decision to do R&D to claim relief on contracted-out R&D. That approach is based on the current SME scheme, which was identified as the best option in the consultation we delivered, and has been refined further following engagement with industry last summer.

Subsidy rules will also be removed, allowing SMEs to claim relief for work for which they receive a grant of a subsidy. This represents an increase in generosity for SMEs as well as being a major tax simplification.

The Government are also legislating for enhanced support for loss-making R&D-intensive SMEs. That was announced at spring Budget 2023 and will benefit 23,000 SMEs a year by providing further support to the most R&D-intensive SMEs while merging the current schemes. The Government are promoting the conditions for enterprise to succeed. Companies claiming the existing SME tax relief will be eligible for a higher payable credit rate of 14.5% if they meet the definition for R&D intensity.

At the summer statement, the Government announced several improvements being made to that enhanced support. The R&D intensity threshold is being lowered to 30% from 40% from April 2024, meaning that around 5,000 more companies will benefit from the support. A one-year grace period is being introduced, providing greater certainty by ensuring that companies that dip under the 30% threshold will continue receiving relief for one year. The same subcontracting rules as the merged scheme will apply to this enhanced support, further helping to simplify the system with one set of rules that both SMEs and larger companies will follow.

Overall, R&D reliefs will support an estimated £55 billion of business R&D expenditure in 2028-29—a 25% increase from £44 billion in 2021-22. Expenditure on R&D reliefs is forecast to increase in every year of the scorecard period. We will also restrict nominations and assignments for R&D relief payment. That measure ensures that genuine businesses get the payment for their R&D claim directly, rather than receiving it through an agent, and is designed to benefit genuine claimants and reduce non-compliance.

Subject to limited exceptions, no R&D tax credit payments will be made to nominee bank accounts, and any R&D tax credit payments must be paid directly to the company that claims for the R&D, so claimants will now receive their payments directly, giving them more control. That will ensure that the person claiming the relief has better oversight of the claim and receives the money into their account quicker. Claimants will also be clearer on exactly how much money is being charged by their agents, rather than just receiving a net amount after fees have been deducted. That builds on previously announced measures and policy changes to help to ensure greater company control over R&D claims.

The Government are committed to making the UK the best place in the world to do business. Full expensing and R&D tax relief support businesses to grow and invest, which will boost productivity and economic growth. That remains the key way to raise everybody’s living standards and to fund high-quality public services throughout the UK. I commend clauses 1 and 2 and schedule 1 to the Committee.

[James Murray (Ealing North) (Lab/Co-op)]

Let me start by briefly considering the context in which we are debating clauses 1 and 2. As we know, the Bill follows the Chancellor’s statement on 22 November last year, in which he claimed that he was delivering an “autumn statement for growth”. As the Committee may remember, the Office for Budget Responsibility confirmed on the same day that growth forecasts had been cut by more than half for the coming year, cut again for the year after that, and cut yet again for the year after that. Independent analysts confirmed that, even after all the changes the Government had announced, personal taxes would still rise. In fact, personal taxes are now set to rise by £1,200 per household by 2028-29, with the tax burden on track to be the highest since the second world war. Despite people across the country paying so much in tax, public services are collapsing, the NHS is on its knees, and more and more families are struggling to make ends meet.

That was the context in which we considered the Bill on Second Reading just before Christmas: 13 years of Conservative economic failure had left people across Britain worse off. The only thing to have changed since then is that we now face 14 years of Conservative economic failure. It may be a new year, but those in the governing party face the same cold truth: nothing they can say or do now can repair the damage that they have done to our economy.

People in businesses across Britain deserve so much better. As a foundation of better management of the economy, our country needs and deserves stability, certainty and a long-term plan. It is for that reason that, although we welcome the fact that clause 1 makes full expensing permanent, which we have long called for, it simply cannot make up for the years of uncertainty that businesses have faced. Businesses need stability and predictability to help them plan for growth, and their long-term planning has been held back because the Government have been chopping and changing business taxes and reliefs year after year, with no evidence of anything resembling a long-term strategy.

[Richard Fuller]

I was very pleased to hear the shadow Minister say that the Opposition welcome the full expensing. That helps, but maybe he can go further to clarify. In new clause 6, tabled in his name, the Opposition are calling for a review of all business taxes and reliefs, which would include full expensing. He will know, as will the hon. Member for Mid Bedfordshire (Alistair Strathern) who is sitting behind him, that there is a particular potential investment decision in our county. Will the shadow Minister make it explicit that the Labour party’s intention is to include in its manifesto for the next election a commitment to maintaining full expensing?

[James Murray]

As I have said, we have long been calling for full expensing, and we welcome the fact that it is being made permanent. I do not mean to sound jokey in my response—I am deadly serious when I say this—but if the hon. Gentleman wants to know what a Labour Government would do if we got into office, there is one way to see that eventuality come about: we could have a general election sooner rather than later, instead of dragging things on throughout the course of 2024.

Frankly, the country needs to move on from the current Government. Just look at their record on capital allowances since the last general election. The hon. Member for North East Bedfordshire (Richard Fuller) spoke about certainty and the need for stability, but let us look at the changes that have happened to capital allowances over the past four or five years. As I mentioned on Second Reading, back at the beginning of this Parliament, the annual investment had been raised to £1 million on a temporary basis. That temporary basis was extended by the Finance Act 2021, extended again by the Finance Act 2022, and then made permanent by the Finance (No. 2) Act 2023. Meanwhile, over the course of this Parliament, the super-deduction came and went entirely. Last year, full expensing for expenditure on plant or machinery was introduced but only on a temporary basis for three years.

Now, of course, Treasury Ministers are amending what their predecessors announced last year by making full expensing permanent. Although we welcome that policy, I wonder how long it will last. Frankly, I wonder how long any policy can be expected to last under this Government, when they are led—in the loosest possible sense of that word—by such a weak Prime Minister. If we accept clause 1 at face value, we welcome its principle of making full expensing permanent, as that is something that we have long called for. I will focus the rest of my questions on some of the specifics of the Government’s approach.

As ever, I am grateful to the excellent team at the Chartered Institute of Taxation for all their thoughts on the detail of what the Government have proposed in this clause and others. I know that one matter of interest to the chartered institute was the fact that, at the autumn statement, the Government said that they would publish a technical consultation on leased assets. I would be grateful if the Minister told us when that will be published.

Furthermore, both the Chartered Institute of Taxation and the Association of Taxation Technicians—to which I am also grateful for its thoughts on the detail of the Bill—have queried which companies and assets are eligible for full expensing. I would be grateful if the Minister clarified which assets are outside the scope of full expensing, and whether the Treasury will publish a detailed list of what does and does not count as plant and machinery. I would also be grateful if he told us how many firms will not be eligible for full expensing because they are partnerships. I know that many who take an interest in this matter would welcome clarity on that.

In clause 2, the Government propose changes to the system of tax credits for research and development. As with their approach to business taxation and capital allowances, the Government have failed to deliver any sense of stability when it comes to R&D tax credits, despite certainty and predictability being so crucial to businesses that are making investment decisions. That much is clear when looking at the list of changes that we have debated in Finance Bills over the course of the current Parliament alone: the Finance Act 2020 changed the rate of R&D expenditure credit; the Finance Act 2021 changed how much R&D tax relief small and medium-sized enterprises could claim; the Finance Act 2023 again changed the rates of R&D tax relief; the Finance (No. 2) Act 2023 changed further how the relief operates; and now, the Finance Bill before us changes the system of reliefs yet again. We accept, of course, that some change is necessary and important to enable legislation to function well, but that does not seem to be what we have seen. What we have seen is a Government incapable of providing stability, predictability, and the long-term plan that businesses need to invest and grow. It is clear that after 14 years in office, the Conservatives are incapable of providing that crucial foundation for our economic success.

[Matt Rodda]

My hon. Friend is making an excellent point, which comes to the nub of the argument: the Government are not capable of providing business with the certainty it needs. That is such a tragedy, because so many wonderful emerging industries in the UK which have incredible potential need that certainty, as indeed do other businesses.

14:59

[James Murray]

My hon. Friend is absolutely right. So many businesses in the UK that are keen to invest, grow, and make people across Britain better off are being held back by the lack of stability and certainty from this Government. I cannot help but notice that the Government recognise the symptoms of the problem—that a lack of stability and certainty is indeed a problem for economic growth—but they are simply unable to provide a response to that problem, and provide the long-term plan that Britain so desperately needs.

We know that so much chopping and changing without any clear long-term plan has had a cost for our economy, by undermining prospects for investment, innovation and growth. Indeed, the Institute of Chartered Accountants in England and Wales has shared with us the view of its members that there is a lack of confidence when claiming R&D tax relief within the UK, and their belief that

“this has arisen due to the various changes made to the rules in quick succession over the past few years.”

We also know, of course, that having so many changes one after the other has a direct impact on taxpayers as well as businesses, as the public finances bear the costs for all the impacts on His Majesty’s Revenue and Customs in terms of IT systems and staffing. Our analysis of HMRC policy papers suggests that the changes made and proposed within the current Parliament have had a cumulative impact on operational costs for HMRC of more than £60 million. That sum is likely to include a substantial waste of taxpayer money as a result of so many piecemeal changes rather than coherent and lasting reform.

In order to be clear and transparent on the costs of all the Government changes to R&D tax credits, we have tabled new clause 1. The new clause would require the Chancellor to publish a review setting out the total implementation costs of all changes to research and development reliefs in the current Parliament. I hope Ministers will accept that straightforward new clause, but if not, I look forward to Government Members who would be interested in such transparency joining us in supporting it. Furthermore, if Ministers are not prepared to vote for the new clause or accept it, I would be grateful if they could at least commit to writing to me with the figures that our new clause requests.

Turning to the substantive impacts of clause 2, we should be clear about what the clause does. In the autumn statement, the Chancellor said that the Government were

“creating a new, simplified R&D tax relief that combines the existing R&D expenditure credit and small and medium-sized enterprise schemes.”—[Official Report, 22 November 2023; Vol. 741, c. 325.]

We have heard similar words from the Minister in this debate. In reality, though, the Government’s plans still effectively maintain two separate schemes: although they seek to merge the two existing schemes, they continue to provide additional support for R&D-intensive SMEs through the existing SME scheme, rather than its forming part of the new merged scheme. Although we recognise that R&D-intensive SMEs may need extra support, the Chartered Institute of Taxation has pointed out that the Government’s plans are

“less a merger than the shifting of most SMEs into a revised scheme based on an ‘RDEC’ approach, with the SME scheme remaining for a smaller group of R&D intensive SMEs.”

The Association of Taxation Technicians has pointed out the impact this may have, saying that

“the introduction of new rules to define R&D intensive SMEs and the possibility of companies moving in and out of the two regimes as their expenditure profile changes will arguably result in an overall increase in the complexity of the R&D relief regime, rather than simplification.”

As I said, we recognise that R&D-intensive SMEs may need additional support, but I would be grateful if the Minister could explain why the Government have chosen to continue operating a separate scheme to provide that support, rather than delivering it as part of the new merged scheme.

Alongside understanding the Government’s intention regarding the design of the new regime, I would also like to question the Minister about the timescales for implementing the measures in clause 2. In the policy documents associated with the autumn statement, it was clear that the new regime would apply from April 2024 onward. In the Bill, however, schedule 1, which clause 2 introduces, makes clear that the changes will apply from an “appointed day”—a day to be appointed by the Treasury in regulations. I would be grateful if the Minister could confirm in his reply what that appointed day will be. Is it 1 April 2024, or will it be a later date?

As April is less than three months away, if the appointed day does indeed fall within that month, is the Minister confident that that leaves enough time for proper consultation, and for any new systems and processes to be put in place by businesses, agents, software providers and HMRC? If, instead, the appointed day is later than April 2024, those affected need to know what is happening. I hope the Minister will be able to provide clarity on that question today; otherwise, sadly, this seems to be yet another example of continued uncertainty for businesses from this Government.

Finally, we know that the Government are concerned about the level of non-compliance with the R&D tax credit schemes. In their policy paper published in November about the merging of the current schemes, they wrote:

“Further action may be needed to reduce the unacceptably high levels of non-compliance in the R&D reliefs, and HMRC will be publishing a compliance action plan in due course.”

Tackling non-compliance is of course very important, so I would be grateful if the Minister could confirm in his reply when HMRC will be publishing the promised compliance action plan.

I am also very aware from meetings I have had with smaller businesses that they often face a great deal of confusion over the guidelines associated with R&D tax credits. Whereas larger businesses will typically have the resources and institutional capacity to navigate those rules, I am concerned that smaller businesses often do not, and may find themselves having to pay for expensive consultants to help them understand them.

HMRC could have a role to play in supporting small firms with clarity about the guidelines on R&D tax credits, as well as, of course, in its role in tackling genuine fraud. Indeed, the Startup Coalition—an organisation that advocates for policies to support innovative firms in the UK—has highlighted the need for HMRC to improve, and has called for improved

“transparency around adjudicating whether activity is R&D to provide certainty for firms.”

The ICAEW has made similar points, stressing the need for guidance and education and making clear that

“the new rules will significantly affect all sizes of companies including those smaller entities with limited professional tax resource.”

I therefore urge the Minister to make sure that any plan for improving compliance with the rules also focuses on making the rules easier to comply with wherever possible, and on working with small, innovative firms to help give them the certainty they need to thrive.

To conclude, Labour will not be opposing either of the clauses, but I urge Treasury Ministers to accept our new clause 1 and, when they reply, to respond to the specific points that I have raised. More widely, it is clear from their approach to capital allowances and R&D tax reliefs that the Conservatives are incapable of providing stability and a long-term approach. Their failure is letting down businesses across our country who stand ready to play their part in growing the economy and making people across Britain better off.

[Maggie Throup (Erewash) (Con)]

I am delighted to be able to speak in Committee on the Finance Bill, which I believe emphasises the Conservative principles of encouraging entrepreneurs, free enterprise and innovation. Many in this Chamber will know that I do not have a traditional finance background, but I did run my own business for 19 years, which I think qualifies me to identify when fiscal measures are really going to help business. That is what I see in the Bill, especially clauses 1 and 2, which I will speak to today.

First, I will take the opportunity to speak in favour of clause 1, which will support UK business by making full expensing permanent. In the spring Budget 2023, the Chancellor introduced major reforms to the system of capital allowance by replacing the super-deduction system with three years of full expensing. The new measure, which was initially put in place until 1 April 2026, allows companies to claim the full cost of their expenditure on plant or machinery against tax when the business investment is made. That measure was well received by businesses across the UK, as my hon. Friend the Minister has already stated; he quoted a number of large plcs, but the measure has also allowed a number of Erewash-based businesses to benefit and prosper.

Dales Fabrications Ltd previously claimed a super-deduction, the predecessor of full expensing, on a very significant piece of machinery. It sounds quite complicated to me, but it is a 4-metre press break with lots of bespoke options. The benefits of the super-deduction were of such significance that the business purchased additional and highly beneficial tooling concurrently with the machine. The now chairman of the business said to me:

“In reality, we would have inevitably deferred that additional tooling purchase without the super deduction, thus meaning we wouldn’t have had 100 per cent of the benefits of our new machinery from day one and would have been effectively denied access to some types of work that went beyond typical industry-standard sizes.”

The owner of another business, Millitec, said:

“Super deductions are really good and a real incentive for us to invest.”

The successor of the super-deduction, which means being able to expense fully the cost of plant and machinery on a permanent basis, as proposed in clause 1, will undoubtedly continue to be a huge incentive for businesses across the UK to invest in their futures and in UK plc. I know from speaking to my local businesses that they really welcome this, and see it as one way to be able to expand and grow their business. However, I have a question for my hon. Friend the Minister. The terminology of plant and machinery is very broad, so when he responds could he provide some clarity for my Erewash businesses about what is defined as plant and machinery, to help them understand what is in scope? For example, does it extend to IT equipment? I think that having a better understanding of the terminology will really help businesses of all sizes to take full advantage of what is on offer.

The contents of clause 1 shows that the Government are on the side of business. Ahead of the autumn statement last year, 200 businesses—including AstraZeneca, which was so instrumental in the covid vaccine roll- out, and Toyota, a major employer of many of my constituents—wrote a joint letter to my right hon. Friend the Chancellor asking for the 1 April 2026 expiry date to be removed, so making full expensing permanent. Today, by supporting clause 1 and making full expensing permanent, we are backing businesses and helping them to succeed. It also shows that the Government are listening to businesses and making sure they are putting in place measures that will really help them grow their business.

Clause 1 will provide businesses with the biggest tax cut in modern history, worth over £10 billion a year, making the UK capital allowances regime one of the most generous in the world. Since the introduction of temporary full expensing in April 2023, the UK has become an appealing place to invest. The UK has had the second highest investment growth in the G7 and three times that of the US. Making full expensing permanent can only perpetuate that growth. Will my hon. Friend say when he winds up whether plans are in place to extend full expensing to plant and machinery that is either leased or hired? Those two options are often the only affordable ones for businesses with big ambition, but limited capital.

Let me turn to clause 2 and schedule 1. The Bill will simplify research and development rules by merging the small and medium-sized enterprises and the R&D expenditure credit schemes. Whether it is trialling and distributing the successful covid vaccines, which helped us defeat covid-19, or testing and developing new innovations that will enable us to meet our net zero targets, R&D businesses play a vital role in growing our economy. At the spring Budget 2023, my right hon. Friend the Chancellor announced enhanced support for R&D-intensive SMEs worth around £500 million per year, a consultation on the potential merged R&D tax relief scheme and support for those loss-making R&D businesses. As a result, the measures in this Bill show the Government’s unwavering support for R&D businesses.

Specifically, clause 2 and schedule 1 will help reduce bureaucracy and ensure that taxpayers’ money is spent as effectively as possible by simplifying the R&D tax system. That will stop many businesses having to navigate the complex transition between the two existing schemes. It is anticipated that the reduction of the intensity threshold in the R&D-intensive businesses scheme from 40% to 30% from April this year will allow around 5,000 extra SMEs to qualify for an enhanced rate of relief. A one-year grace period will also be introduced, providing certainty for companies dipping under the 30% threshold that they will continue to receive relief for one year. This is a vital measure for so many R&D-focused businesses, which inherently have peaks and troughs of activity. Taken together, these changes will provide £280 million-worth of additional relief per year by 2028-29 to help drive innovation in the UK.

15:10

As a former biomedical scientist and someone who continues to take a keen interest in the area, I know that the measures in clause 2 and schedule 1 will undoubtedly benefit the bioscience sector. The Government are adopting an interesting position on subcontracting. The Bill will allow the decision maker to claim for subcontracted R&D work. Will the Minister confirm that proposed new section 1133(3) will mean that if a company is contracted to do work that is not research and development but then decides to carry out some related R&D work, it will be entitled to claim relief for it? Will he also confirm that the new measures will allow a business that contracts out to a research organisation qualifying activities, such as a clinical trial, to claim for the costs of the contract? If this is the case, I am sure that R&D subcontracting will increase collaboration and knowledge sharing, which are crucial for economic growth.

I have no doubt that the measures announced in the Bill will be the ignition that accelerates the UK’s economy and leads us to a brighter future. I will support the Bill throughout today.

[The Chairman of Ways and Means (Dame Eleanor Laing)]

I call the SNP spokesperson.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am only going to make some brief remarks on the two clauses. The UK Government are clearly scrambling to fix an economic mess of their own making, and the Bill is full of such measures.

On clause 1, during the autumn statement I welcomed this move, but it does little to deal with the damage to business that has been caused by the big grey elephant in the room that none of the parties wishes to mention, which is Brexit. Far from the ideal of removing red tape and decreasing bureaucracy, as we have heard thrown about in this Chamber, it has actually led to more red tape and more difficulties for business. This is just one of the measures the Government should be taking, among many others they must consider in future. I hope to come to those later in the debate.

The “years of uncertainty” that the hon. Member for Ealing North (James Murray) mentioned have indeed been years of uncertainty caused by this Government, but they have definitely been impacted by the Brexit that Labour now supports, along with the Liberal Democrats. People are struggling with a cost of living crisis, and it is affecting domestic sales too, so they need other fixes. Again, I will have some questions about that later.

Clause 2 and schedule 1—I hope this will be helpful for the Minister—are like trying to make a jigsaw puzzle with no box, no picture and just some random bits and pieces to try to plug together to make something out of. Productivity does not work without the skills required in research and development. We do not get the advance or the boost we need without that and, once again, the spectre of Brexit means that we have a skills shortage across the nations of the UK. That is particularly affecting Scotland, which needs its own immigration rules. It is something we would ask to have powers over, short of our call—it would of course be the absolute best result—for Scotland to have independence so it can make these decisions itself.

[Nigel Mills]

It is a pleasure to speak in this debate. I want to direct my remarks to clause 1, on permanent full expensing for the purchase of plant and machinery, which I discussed during the autumn statement and on Second Reading.

This is actually quite a radical and expensive policy. We have, probably for longer than all our lifetimes, given companies relief for capital expenditure using capital allowances. That was originally quite a generous 25% in the first year—I suspect that most plant and machinery had a longer life than that when the rules were produced. We have chosen to do that for all these years, rather than just letting a business deduct its own accounting calculation of depreciation, because we did not want the manipulation of tax deductions by businesses doing their tax returns. We chose to do it this way.

The tool that Governments of all colours for decades have had when the economy hits trouble is to give first-year allowances and various enhancements. I remember a 40% first-year allowance and a 50% first-year allowance. We have had full expensing up to £1 million, as the shadow Minister referred to. That has been the way of incentivising investment in a period of economic recovery for probably as long back as there has been a toolkit.

Now we have landed on permanent full expensing, so businesses get full relief on plant and machinery spend in the first year. What are the Government expecting to happen differently here? Are we expecting capital investment by businesses of more than £1 million a year that otherwise would not be economically viable and would never have happened? Are we expecting investment to be brought forward and to take place earlier than it otherwise would have? That would be entirely welcome and would probably modernise businesses, protect jobs and give them a chance to grow in a way that they perhaps would not have had, which is not a bad policy aim at all. Or are we just giving business an earlier tax relief than they otherwise would have had, whereby they bank that and are happy but it does not change behaviour?

It is hard to get behind the numbers on this measure in the Green Book. As I said earlier, the estimate at the end of the five-year period, and probably the first full year that making this permanent will make a difference, is a tax cost of £10.9 billion just for this measure. If we run the numbers, bearing in mind that businesses will already have had 25% tax relief on that same expenditure in that year, that means we expect a £55 billion higher claim to get tax relief in that financial year than otherwise would have happened. However, the Minister said that only £3 billion of that is estimated by the OBR to be additional investment that would not otherwise have taken place at some point. It suggests that we have a lot of investment being brought forward with a lot of more generous tax relief that would have happened anyway. Will the Minister explain what the Government are aiming to achieve and what is being forecast? Is the OBR being unduly cautious? That would enable us to understand how we judge whether the measure has been successful.

Are we expecting to see whole loads of investment in plant and machinery that never would have been viable before, or are we expecting to see it brought forward? If what we are getting is brought forward, at some time the cost should start to taper down, because this is not a new tax relief that businesses would not have already had; it is just an acceleration of tax relief and businesses will pay more tax in all subsequent years, because they are not getting the relief they used to get. The measure could cost £11 billion in the first year and gradually that would level down and in the fullness of time there would be no more annual cost, in effect. Can the Minister clarify that?

It is not immediately clear how the Government plan to assess whether the measure has worked or is working. I assume that from electronic corporate tax returns we can track down to the pound the amount of investment claimed for full expense relief every year. We could have a report within six months of the end of a calendar year on how much of these 100% allowances has been claimed and compare that with the total amount claimed for capital allowances in whichever preceding years we like. We could see whether full expensing was driving behaviour change. Will the Minister talk us through what he expects to happen and how he will assess whether this has been an effective way of boosting productivity and increasing investment for £11 billion a year? It is probably one of the most sizeable line entries we have seen in a Finance Bill in my 14 years here. Normally we expect the big number to be a tax cut for individuals, and this measure is significant.

As we are making this measure a permanent feature of our tax system, it shines a light on what we are trying to get from our corporation tax system. There will not be any kind of compliance saving. The Minister made a brave attempt at saying there might, but effectively all that will change is that the number that a business currently puts in its additions to its writing down allowance pool will now be put in the 100% first-year claim box. It is the same number in a different box; that is the only compliance change we have here. It throws into question some previous policy decisions we have made, because for a business to get full benefit from this, it needs to be paying enough tax to use the full relief in that first year.

If a business cannot use the full relief, the incentives are not as powerful as they would otherwise be, because then the option is effectively to carry that excess deduction forward, but we introduced rules a few years ago that are strict on how many losses a business can use in a year. If we really think that giving people the earliest possible cash tax benefit for capital investment drives investment, we should probably take away that restriction on using losses, so that businesses can get the benefit as early as possible and not have it spread over a number of years going forward. Will the Minister explain whether the Government will look at that and make sure we are not accidentally undoing some of the benefit we are seeking to get?

My second question is: what do we do with the legacy writing down allowance pool that relates to plant and machinery expenditure for God knows how many past years? On a reducing balance basis of 25%, it takes many, many years to get full tax relief for expenditure, so every business will have a large pot of money that it has not yet had tax benefit for. Are we expecting them to run that down at 25% reducing balance a year and still be doing so in 23 years’ time, by which point no one will have any idea what on earth that balance ever was? Or should we say, “That is a bit of a nonsense. Why do we not just let you take the whole balance at 20% a year over the next five years and finish that problem off, because we do not need to be focusing on that?”? We could find any number we like there, but it would draw a line under that past expenditure in a way that genuinely simplifies things.

We then have the question of, “What do we do with capital expenditure on items that are not plant and machinery?” The tax relief we give on structures and buildings is not generous, but if we are trying to drive an increase in productivity and large businesses to invest in new gigafactories to build batteries for electric cars or for electricity storage or whatever, do we not want to incentivise them to build the factory building as well, rather than either giving them no relief or giving it over a long time? If we are spending £11 billion a year to encourage investment in plant and machinery, should we not spend a little money on trying to encourage other things that are key for industrial investment to take place, by being a bit more generous on buildings and structures? Has the Minister any thoughts on that?

The Government did a capital allowances review only a year or two ago, which did not look at permanent full expensing as one of the options, but it would be interesting to see whether they have had any further thoughts on that. We are now asking every business to go through and track every item of capital that they spend and treat it differently in their tax return from how they treat it in their accounting records. Then we have all manner of different laws depending on whether it is a long-life asset, a short-life asset, a car or an environmentally friendly car—I could go on. For the amount now at stake, and given that we have given full relief for plant and machinery, which is the biggest amount, do we really need all that cost and complexity? Or should we just say for all those other items, “You can just have your accounting calculation”? Okay, businesses might take it a bit quicker than we would like, but in actual fact the cost of that is not all that material in the grand scheme of things.

We could move to a system where the only adjustment someone has to make to their tax return is to claim a very generous tax relief on plant and machinery, and they would not have to touch anything else. That would be a more coherent corporation tax regime, now that we have spent all this money incentivising plant and machinery. It would then genuinely be a compliance saving for a business in that situation.

I support the measure and truly hope that it works, but, as a significant amount is being spent, it would be helpful to understand what we are trying to achieve and how we will know whether we have been successful. I hope that the Government will move on to think about how we can slightly recast our tax system so that it makes sense, having made this radical and generous change.

[Nigel Huddleston]

I thank hon. Members for their contributions. I will take a few moments to respond to quite a few questions raised during the debate. First, I reassure hon. Members that further guidance will be provided on these schemes. Of course, we do not want all the schemes just to exist; we want them to be used so that they have a real-world impact. More information will therefore be coming out about a variety of areas over a period of time.

I gently remind the hon. Member for Ealing North (James Murray), who yet again took the opportunity to talk the UK economy down—the Opposition always do—that every single Labour Government have ended with unemployment higher than what they inherited from the Conservatives. I think the public are well aware of that pattern.

I turn to the many questions raised. I thank my hon. Friends the Members for Amber Valley (Nigel Mills) and for Erewash (Maggie Throup), and indeed Opposition Members for their contributions. On timing, the Government have been clear since the merged scheme consultation was published in January last year that the intended implementation date for the scheme is April 2024. Importantly, in response to that consultation and in recognition of comments, the merged scheme will apply to accounting periods starting on or after 1 April 2024 rather than to expenditure incurred from that date. Again, we will provide further guidance on that.

15:30

On leasing and hiring, which was raised by my hon. Friend the Member for Erewash and the hon. Member for Ealing North, the Government committed at the spring Budget to engaging with stakeholders with a view to extending the scope of expensing to include assets for leasing and hiring. As the autumn statement confirmed, that will continue to be considered. We will launch a technical consultation on draft legislation shortly—in early 2024.

Several hon. Members asked about the perfectly valid and important point of what specifically will be included. I have a whole list of what is defined as plant and machinery—as I said, I reassure hon. Members that further guidance will be provided: it includes things such as computers, printers, office equipment, vehicles, vans, lorries, tractors, forklift trucks, tools, ladders and drills, and equipment such as excavators, compactors, bulldozers and so on. That is quite a comprehensive list, but more information will be provided.

My hon. Friend the Member for Amber Valley raised an important point about buildings. Of course, while they are not included in full expensing, businesses can instead receive relief through the separate structures and buildings allowance that the Government introduced in 2018.

On fraud, which was raised by the hon. Member for Ealing North, over the last three years HMRC has significantly increased the number of people working on R&D compliance to over 500. We have also announced policy measures to counter non-compliance in R&D schemes and will follow-up with a more detailed compliance action plan outlining of how HMRC will reduce error and fraud. That will be released in due course.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Following on from the comments of the hon. Member for Amber Valley (Nigel Mills) about the impact of the schemes and given the Federation of Small Businesses’ request for some publication about the impact of these tax reliefs on R&D levels, will the Minister also publish a report on their impact on different regions and subregions?

[Nigel Huddleston]

All taxes are kept under review, as are their impacts, so some of the calls for further analysis are not necessary because we do that as a matter of course. It is important to stress that many external studies have found that when full expensing has been introduced in other countries, it has been very effective in supporting investment. Of course, the OBR forecasts predict a boost of £3 billion each year. The analysis of the impact of the super-deduction is already taking place, but companies have 12 months from the end of their accounting period to amend their tax returns, so HMRC will not have complete data on the impact of the super-deduction until 2024. However, we will provide further analysis in due course.

My hon. Friend the Member for Erewash mentioned a whole range of real-world impacts from these measures and the previous measures, including the super-deduction, as well as, importantly, the annual investment allowance of £1 million, which affects the 99% of smaller businesses that can effectively benefit from full expensing. In the autumn statement, we announced full expensing for larger businesses: the top 1%, who conduct about 80% of full investment.

I am aware of time, but will cover a couple of other key points that were raised. My hon. Friend the Member for Erewash raised subcontracting. Again, we engaged extensively with stakeholders on this issue over the summer, and the Government have developed an approach that will allow the person taking the decision to do R&D to claim that relief. That was the preferred result of the consultation. However, an exception will apply in the important area that she mentioned of companies doing R&D—such as in a clinical trial—in the UK for another company that is ineligible for relief because, for example, it is an overseas customer. That is to make sure that the impact is there for everyone to benefit from. The hon. Member for Ealing North also mentioned partnerships; a corporate partner is eligible for full expensing, but an unincorporated partner is not. Again, the annual investment allowance of £1 million covers the investment needs of almost all unincorporated partnerships.

The hon. Member keeps harping on about taxes rising. I strongly advise him to look at his December payslip and compare it to the one he will get shortly. Maybe he will have the decency to come to me and tell me whether his tax is lower or higher. Each fiscal event needs to be taken separately. At the last one, the autumn statement, we cut taxes—national insurance is down 2p. [Interruption.] If the hon. Member does not believe me, I pose this challenge to him: if his payslip shows that his taxes are lower, perhaps he will do me the courtesy of coming to me and apologising, or give the difference to a charity, to put his money where his mouth is.

We do not believe that new clause 1 is necessary because the information has already been published in the tax impact and information notes alongside each change, which give a clear explanation of the policy objectives, along with details of the implementation costs for both HMRC and businesses. Therefore, the new clause is not necessary. I urge the House to reject it, and I commend clauses 1 and 2 and schedule 1 to the Committee.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Schedule 1 agreed to.

New Clause 1

Review of reliefs for research and development

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the implementation costs of the measures in section 2 incurred by—

(a) HMRC, and

(b) businesses.

(2) The review under subsection (1) must include details of the implementation costs of all measures related to credit or relief for research and development that have been introduced since December 2019.”—(James Murray)

Brought up and read the First time.

Question put, That the clause be read a Second time.

15:37

Division 36

Ayes: 224

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Labour: 163
Scottish National Party: 36
Liberal Democrat: 14
Independent: 7
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Green Party: 1
Alba Party: 1

Noes: 294

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Conservative: 287
Democratic Unionist Party: 3
Independent: 2

Clause 21

Ensuring consistency of Parts 3 and 4 of F(No.2)A 2023 with OECD rules etc

Question proposed, That the clause stand part of the Bill.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Schedule 12.

Clauses 31 and 32 stand part.

Schedule 13.

Clauses 33 and 34 stand part.

New clause 2—Review of measures to tackle evasion and avoidance—

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the measures in sections 31 to 33 to tackle evasion and avoidance.

(2) The review under subsection (1) must include details of—

(a) the average sentence handed down in each of the last five years for the offences listed in section 31;

(b) the range of sentences handed down in each of the last five years for the offences listed in section 31;

(c) the number of stop notices issued in each of the last five years to which the measures in section 33 would apply; and

(d) the estimated impact on revenue collected in each of the next five financial years resulting from the introduction of the measures in sections 31 to 33.”

This new clause would require the Chancellor to publish details of the sentences given and stop notices issued in each of the last five years to tackle evasion and avoidance, as well as the revenue expected to be generated from the measures to tackle evasion and avoidance in this Act in each of the next five years.

New clause 4—Assessment of impact of Act on multinational profit shifting and tax competition between jurisdictions—

“(1) Within six months of the passage of this Act, the Chancellor of the Exchequer must carry out an assessment of the impact of section 21 and Schedule 12 of this Act on multinational profit shifting and tax competition between jurisdictions, and lay a report of that assessment before both Houses of Parliament.

(2) The report must consider the efficacy of the measures contained in section 21 and Schedule 12 in achieving the policy objective of combatting base erosion and profit shifting.”

This new clause would require the government to produce an assessment of the impact of the Bill’s “Pillar Two” measures, in order to ascertain whether these measures have been successful in achieving their policy aims.

New clause 5—Tax compliance reporting—

“(1) Within six months of the passage of this Act, the Chancellor of the Exchequer must carry out an assessment of the impact of sections 31 to 34 and Schedule 13 of this Act.

(2) The report must consider the capacity and ability of HMRC to enforce compliance with the measures contained in sections 31 to 34 and Schedule 13 of this Act, including setting out staffing arrangements within HMRC's Customer Compliance Group for undertaking enforcement work relating to sections 31 to 34 and Schedule 13 of this Act.”

This new clause would require the government to produce an assessment of the impact of the Bill’s tax evasion and avoidance measures. The assessment would need to examine whether the capacity and ability of HMRC was sufficient to properly enforce those measures.

New clause 7—Review of effectiveness of section 31 measures in preventing fraud involving taxpayers’ money—

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, conduct a review of the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money.

(2) The review must evaluate the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money through comparison with the effectiveness of—

(a) other measures that seek to prevent fraud involving taxpayers’ money, and

(b) the approach taken in other countries.”

This new clause would require the Chancellor to review the effectiveness of measures in this Act to prevent fraud involving taxpayers’ money, and to compare them with other measures that seek to prevent fraud involving taxpayers’ money and the approach taken in other countries.

[The Exchequer Secretary to the Treasury (Gareth Davies)]

Clauses 21 and 31 to 34 and schedules 12 and 13 cover technical changes to pillar 2 of the international tax agreement—doubling the maximum sentence for the most egregious forms of tax fraud—the introduction of new powers to tackle the promotion of tax avoidance, and action against fraud in the construction industry scheme.

The UK’s tax gap is currently at an all-time low, at 4.8% of total tax liabilities. That is due to strong Government action to tackle all forms of non-compliance in the tax system, but we are never complacent. That is why we have introduced more than 200 measures since 2010, including 40 since 2021, to reduce the tax gap even further. The Government are taking action to ensure that individuals and companies pay the taxes that are due in the UK. We want to deter individuals from committing fraud in the first place. That is why we are doubling the maximum sentence for tax fraud.

The Government are also taking action against tax avoidance by introducing a new criminal offence of the promotion of tax avoidance and by expediting the disqualification of directors of companies that promote tax avoidance. The measures are designed to protect tax revenues, which are important for funding our vital public services.

It is also important to protect tax revenues from companies shifting profits offshore. That is why the UK implemented pillar 2 on 31 December 2023. We are updating existing legislation with technical amendments today to ensure that UK legislation is consistent with newly agreed guidance, to address further stakeholder comments to clarify terms, and to avoid unintended consequences.

Clause 31 strengthens our enforcement powers when it comes to tax offences. It doubles the maximum prison term, from seven years to 14 years, for individuals convicted of the most egregious cases of tax fraud. This applies to all taxes and duties administered by HMRC. It also increases the maximum penalty for counterfeiting from 10 years to 14 years. These measures demonstrate, I hope, the Government’s intent to crack down on tax fraud and to deter criminal actions that damage the public purse.

Clauses 32 and 33 and schedule 13 seek to target the promotion of tax avoidance, in order to protect taxpayers and reduce the damage inflicted on the public finances. Recent powers such as HMRC’s power to name promoters and their schemes, and its power to issue stop notices, are effectively disrupting promoters’ activities. None the less, a small number of promoters persist in attempting to sidestep the rules, so clause 32 and schedule 13 enable HMRC to act swiftly to seek the disqualification of directors and other individuals who control or exercise influence over companies involved in the promotion of tax avoidance. They enable the removal of those individuals from the avoidance market and will deter others from becoming directors of companies that promote avoidance.

In the Finance Act 2021, the Government introduced rules that allow HMRC to issue stop notices that require promoters to stop promoting specified tax avoidance schemes. Stop notices are an important deterrent tool, as failing to comply with a stop notice can lead to a substantial civil penalty. Clause 33 increases the consequences of failing to comply by introducing a new criminal offence, which will apply to promoters who continue to promote an avoidance scheme after receiving a stop notice. Creating a criminal offence signals the severity of this issue and reinforces the importance of complying with a stop notice.

Finally, clause 34 tackles serious non-compliance in the construction industry. The construction industry scheme requires contractors to withhold tax unless a subcontractor holds gross payment status. Most gross payment status holders are legitimate and compliant construction businesses but, in recent years, gross payment status has been used by organised crime organisations to facilitate fraud. This allows unscrupulous actors to compete unfairly against legitimate businesses. Clause 34 therefore strengthens the tests for gross payment status by adding VAT to the taxes with which subcontractors must demonstrate compliance. This measure is predicted to raise around £300 million over the next five years.

Each of these clauses helps to protect vital tax revenue used to fund our public services. They seek to deter taxpayers from knowingly defrauding the Government and encourage them to act against the promotion of tax avoidance. I therefore ask that clause 21, clauses 31 to 34 and schedules 12 and 13 stand part of the Bill.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I call the shadow Minister.

[James Murray]

I rise to speak to the new clauses in my name and that my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq).

Clause 21 and schedule 12 relate to the implementation of pillar 2 of the OECD/G20 inclusive framework on base erosion and profit shifting. Labour supports this clause and schedule as they are intended to modify the existing multinational and domestic top-up taxes introduced in the Finance (No. 2) Act 2023, to make sure these new taxes work as intended. We have long supported the global deal on the taxation of large multinationals, as we want to see it working as effectively as possible.

We know that the OECD guidance on implementing the deal is coming out in tranches, so it is important that UK legislation is updated to reflect that. We recognise that, as with any global deal of this scale, its details are complicated and its implementation will take time, yet we have been clear throughout its development that we support the principle of a global agreement as a crucial step in making the tax system fairer, thereby helping to make sure that British businesses that pay their fair share of taxes are not undermined.

Indeed, nearly three years ago, in April 2021, I first set out in the Commons our support for a global deal to make that tax system fairer, to make sure that a level playing field is there for British businesses and to stop the international race to the bottom on tax for large multinationals. The Treasury Ministers at the time appeared at first lukewarm in backing plans emerging from the United States for a global deal. Eventually, however, the then Chancellor, now the Prime Minister, began to support the deal in public. We were glad that the current Prime Minister seemed to have come round, but I am not sure all his Back Benchers have. For instance, I wonder whether the hon. Member for North East Bedfordshire (Richard Fuller) would agree with the Prime Minister when he said:

“We now have a clear path to a fairer tax system, where large global players pay their fair share wherever they do business.”

We agree with the Prime Minister on that point, but I just wonder whether everyone on the Conservative Benches does. I am reading some of their faces and I think the answer is clear. Could it be that the Prime Minister lacks support from prominent Back Benchers within his own party on a policy he is now championing? Surely not. But Treasury Ministers should rest assured that if their Back Benchers pull any tricks on clause 21, they will have our support for it to pass.

16:00

Of course, clause 21 relates to pillar 2 of the OECD deal, which seeks to make sure that large multinationals pay a minimum rate of 15% corporate tax in every country in which they operate. There is, of course, also pillar 1, which involves partially reallocating taxing rights over the profits of large multinationals to the jurisdictions where consumers are located. We know that the implementation of pillar 2 is going ahead, as this Bill makes clear, but pillar 1 appears to have slowed. So I would be grateful if the Minister provided an update to the House of progress toward the implementation of pillar 1. We know, for instance, that there is still work to be done to reach the necessary agreement between all major economies, so perhaps he would confirm whether the Government are still committed to pillar 1 being implemented. If so, what steps has he taken since taking up his role to help make that happen?

Clause 21 relates to making sure that large multinationals pay their fair share of taxes, but clauses 31 to 34 deal with wider questions of tax avoidance and evasion. We believe the Government should make sure that there are always tough prison terms and powerful deterrents for those who commit fraudulent tax evasion and other serious tax offences, and that those punishments should be well publicised and effectively enforced. Likewise, Labour believes there is a strong case for tougher punishments for those who commit fraud against public services, Government and the public purse. Other countries have stronger laws and sanctions than the UK has for such offences, which mean that judges can hand down tougher punishments to criminals who have ripped off the taxpayer, such as by wilfully defrauding the country through public contracts or business support. Our new clause 7 would require the Government to be open and honest about what they are doing to prevent fraud involving taxpayers’ money, in terms of the measures in this Bill, other measures more widely and in comparison with the practices overseas. Those who defraud the taxpayer are stealing from the country and it weakens our public services. We want to see fraudsters and organised crime gangs met with the full force of the law. As a country, we should have the most effective possible measures in place to prevent fraud involving taxpayers’ money. Our amendment today will be the first step in making sure that that is the case, and I urge all MPs to join us in voting for it.

In the legislation before us, we see the Conservatives trying to act tough by raising the maximum prison term for tax offences from seven to 14 years, but the Government’s own figures reveal that average sentences for tax fraud are just two years—once again, they cannot hide from their record. They have failed to take tax fraud seriously, and any changes they make after 14 years in office are far too little, far too late. It is clear from an HMRC report looking at the approach taken by its fraud investigation service towards tax compliance and serious fraud in 2022-23 that the average length of custodial sentencing was 24 months. We believe that the public deserve more information on how sentencing is working under the current Government, so our new clause 2 requires data to be published setting out the average sentence, and the range of sentences, handed down in each of the last five years for the offences that clause 31 applies to. I urge Ministers to accept our new clause 2, but if they are not willing to do so, will they write to me with details of all the information that it requests? Whatever that data may show, it seems clear from the data that is already available that under the Conservatives sentences appear to be nowhere near the existing seven-year maximum, and so 14 years seems even more distant a prospect. Whatever the Government may say about sentencing, our courts system is already hamstrung by being neglected and facing the highest backlog on record—65,000 cases in the Crown courts and over 350,000 in the magistrates courts. We will not oppose clause 31, but this debate has made clear the depth of the Conservatives’ failure on law and order, and just what a mess they have created.

Clause 32 and schedule 13 would enable HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance. We support the principle behind the clause and will not oppose it. However, as the Chartered Institute of Taxation and, in particular, the Low Incomes Tax Reform Group have helpfully pointed out, there are questions about making sure these powers are targeted and used correctly. These questions arise because of cases where the true promoters of tax avoidance schemes recruit others, often vulnerable or naive individuals, to be directors of the company involved, thereby shielding themselves from any action. To be effective, the legislation needs to respond to that situation. On the one hand, the law needs to be able to pursue those ultimately responsible, whether they are formal directors or not. On the other hand, there needs to be a degree of discretion about the punishment of those recruited to be sham directors when they may be vulnerable people.

On the first of those points, I understand that the Government are aware that those ultimately behind an avoidance scheme may not be directors themselves and the legislation seems to recognise that. As the Low Incomes Tax Reform Group pointed out, the original draft legislation referred to directors, shadow directors and managers, which they felt covered the full range of people who may be behind tax avoidance schemes. However, while the legislation includes references to shadow directors, the category of managers is no longer mentioned. In his response, will the Minister explain the rationale behind removing the reference to managers and consider whether that needs to be reconsidered?

On those recruited to be sham directors, the Low Incomes Tax Reform Group has given powerful examples of where young or vulnerable people can be recruited without understanding what they are getting into. While ignorance is not an excuse, it is reasonable for HMRC to ensure that the consequences for vulnerable individuals who have unwittingly got involved are not unreasonably harsh.

Furthermore, this is about not only protecting vulnerable people but ensuring the sham directors do not end up taking the fall for those behind the scheme, thereby letting the latter off being punished and leaving them free to exploit a new round of vulnerable recruits. In his response, will the Minister explain what processes and checks HMRC will be putting in place to identify vulnerable people, thereby making sure that any action against sham directors is appropriate for the individuals concerned?

We know that there is a wider issue of bad faith actors setting up shell companies with fake directors, and then using those shell companies for a range of purposes, including the practice of sitting behind dodgy American-themed candy stores to avoid paying business rates. We have been calling for tougher identity-verification requirements for new companies. In the case of business rates, this would strengthen councils’ ability to take enforcement action against those who do not pay their bills. I realise it is beyond the scope of this debate, but will the Minister write to me with details of what conversations he has had with the Secretary of State for Business and Trade about using powers in the Economic Crime (Transparency and Enforcement) Act 2022 to specify identity verification requirements for new companies with Companies House?

Clause 33 introduces a new strict liability criminal offence for failing to comply with a stop notice issued by HMRC in relation to a tax avoidance scheme. In practice, this clause will escalate the punishment for failing to comply with a stop notice from its current position, which is penalties of up to £100,000 or £1 million in certain circumstances, to instead meaning that the promoter has committed a criminal offence if they fail to comply with a stop notice without a reasonable excuse.

We welcome firm action being taken against those promoting tax avoidance schemes. However, the Chartered Institute of Taxation has made it clear to HMRC that it is concerned that the decision to issue a stop notice, and thereby determine that a criminal act may have been committed, will rest entirely with HMRC with no external oversight. To make sure that appropriate safeguards are in place, I understand the Chartered Institute has proposed that failure to comply with a stop notice should be a criminal offence only if judicial approval for the issue of the notice has been obtained first. Alternatively, at the very least, the Chartered Institute of Taxation has made it clear that HMRC’s internal governance overseeing the issuing of stop notices must work effectively. Similarly, the Institute of Chartered Accountants in England and Wales has proposed a number of safeguards, which I understand the Government have said that they will not consider. The ICAEW has also suggested that such stop notices should be issued only through a decision taken at a higher level of seniority within HMRC than at present.

I understand that HMRC has said that it does not support any of the range of safeguards proposed by these representative bodies, but has said that it will be sharing a clear picture of its governance process in due course. I would be grateful if the Minister confirmed when that will happen, and what checks and balances he expects this governance process to enshrine.

Finally, I will address clause 34, which relates to the construction industry scheme and gross payment status. Under the construction industry scheme, we know that contractors make deductions from payments to subcontractors and pass that money on to HMRC as an advance payment against the subcontractors’ tax liabilities. We know that a subcontractor can avoid this money being withheld by applying for gross payment status. Clause 34 limits those subcontractors who can hold this status by excluding any who fail to meet VAT obligations and who are involved in various categories of tax fraud. We welcome the principle of this measure in setting out to penalise subcontractors who do not follow the rules on tax. However, we recognise the concern, which was again raised by the Chartered Institute of Taxation, that it could have a disproportionate effect on the cashflow and reputation of subcontractors if they were to lose gross payment status as a result of minor VAT compliance failures.

We therefore welcome the fact that, as we understand it, draft regulations have been published to attempt to address this point. I would welcome the Minister’s further reassurances today that the Treasury will engage with the industry, including the Chartered Institute of Taxation, to make sure that the regulations are effective.

As I have made clear, we will not be opposing the clauses being considered in this debate, but I look forward to the Minister’s response to the detailed questions that I have raised in relation to them.

[Richard Fuller]

I wish to raise just a couple of points. Let me turn to the issues of pillar 2 and the moving forward of the Government’s policy on that in clause 21 and schedule 12. Obviously, that relates to changing the decision maker on the taxation rates for multinationals operating in this country from the British Government, elected by the British people, to the determinations of an international organisation through treaty.

As we move forward, it is important to be aware of the changing context. Hon. Members, particularly those from the Conservative Benches, have raised in the past the issue of who else is coming along to this particular minimum tax global party. We already know that China, one of the major economic actors in the world, is not part of the OECD, will not be complying with us and will not be part of these regulations. First, I am interested in any updates the Minister may have on those views about China. Secondly, it is clear that there will be an election in the United States later this year and that there is a significant difference in opinion between the Republican party and the Democrats about whether they will enact the US’s part in the taxation policies of pillars 1 and 2—particularly in pillar 2. Given that there is a reasonable chance—some say it is better than a 50:50 chance—that there may be a change in Administration in November and the United States could then withdraw from participation in the OECD process, can the Minister, in his summing up, give some reassurance to those Conservative Members who, although always supportive of the Prime Minister, may just want to make sure that we have clarity on what we would do in the eventuality that neither of the two major economies in the world—the United States and China—are taking part in this particular global minimum tax from multinationals.

I would also be interested to hear from the Minister—perhaps not from the Dispatch Box today, but separately with the taxation Minister—where the definition of certain words is moving in the Treasury and HMRC when it comes to tax avoidance and tax evasion. I recall that, many years ago, the difference was that tax evasion was illegal and that tax avoidance, while perhaps not what the HMRC wanted to happen, was legal. We see in the Finance Bill references to tax avoidance that imply that it is illegal. I worry that there is insufficient clarity, from HMRC’s perspective, on the difference between tax evasion, which is illegal, and tax avoidance, which is legal but perhaps not desirable. Perhaps the Minister could give some clarity on that.

All those on the Treasury Bench will be aware of the persistence of the concerns about the loan charge and other aspects of tax avoidance schemes, which HMRC has gone to court over, winning in certain actions and then deciding to apply blanket solutions to cases where there has never been a finding of fact in a court regarding the particular schemes. My specific question—I hope that this is within scope, Dame Rosie; you will tell me if it is not—is why we have not brought HMRC’s approach on tackling the loan charge to a conclusion. People have been pursued for far too long in an area that is far too grey. It would be interesting if the Minister had an update on that.

16:15

Lastly, I commend the shadow Minister, the hon. Member for Ealing North (James Murray). I did not like his speech on the first group, but I thought that his speech on the present group was very good and very reasonable. He made a very important point, which I am sure the Government will want to look at, on failure to comply with stop notices, and the requirement—proposed, I think he said, by a third party—for some sort of judicial approval before a notice is issued. At the moment, the Bill basically says that HMRC, undefined, can issue such notices. That really is quite a significant further expansion of HMRC’s responsibilities. The shadow Minister referred to a good point: more protection is needed for those who might be caught by such notices. I am sure that those on the Government Front Bench always listen to points made on both sides of the House, but I thought that I would commend that point from the shadow Minister.

[Sarah Olney (Richmond Park) (LD)]

I will speak to new clauses 4 and 5, tabled in my name. I reiterate that the Liberal Democrats do not support the Bill, which is a deception from the Government after years of tax hikes on hard-working families. It arises from an autumn statement that contributed to a record fall in living standards by maintaining the Government’s stealth tax on working families through the freezing of income tax thresholds. Some of the measures under consideration today may have worthy aims, but that wider context must be noted.

New clause 5, tabled in my name, would require the Government to produce an assessment of the impact of the Bill’s tax evasion and avoidance measures. That assessment would specifically need to include a review of whether the staffing of the compliance functions of HMRC is sufficient to implement the new measures. That follows the revelation to me in answer to a parliamentary question last year that almost 2,300 HMRC tax compliance staff are still working on matters relating to our exit from the European Union and covid-19 schemes. That means that thousands of staff who would usually be working on recovering taxes or dealing with other issues are instead being redeployed to manage the Government’s mishandling of the pandemic and the Brexit deal.

It is alarming to see civil servants being moved from one crisis to another—an indication of a Government in non-stop firefighting mode. We have known for a long time that HMRC is an organisation beset by understaffing issues. Last year, the Institute of Chartered Accountants in England and Wales said that such chronic understaffing is not only causing unacceptable delays to businesses and families but hindering activity and actively hurting our economy. With that knowledge, can we have faith that HMRC will be properly equipped to put the measures in the Bill into action?

While the measures in clauses 31 to 34 and schedule 13 may have worthy aims of combating tax avoidance and fraud, the knowledge of those shortcomings makes it very difficult to have confidence in the capacity of HMRC, and in particular its compliance functions, to administer the measures effectively. I therefore urge the Government to accept new clause 5, and support the Liberal Democrats in ensuring that HMRC is fully equipped with sufficient staff to tackle tax avoidance properly.

New clause 4, also in my name, concerns the Bill’s pillar 2 measures, in clause 21 and schedule 12. It would require the Government to produce an assessment of the impact of those measures, examining whether they have been successful in achieving their policy aims. As Liberal Democrats, we strongly believe in the need for a fair international system that tackles corporate tax avoidance and evasion for the benefit of all countries. We welcome the pioneering work that has taken place under the auspices of the OECD for the formation of a fairer international tax system. The measures in clause 21 arise from that process and enable the UK’s adoption of the income inclusion rule and domestic minimum top-up tax rule. As such, they are to be welcomed; however, issues remain.

Most crucially, we believe that the global minimum corporation tax rate set at 15% under the deal remains too low. Liberal Democrats have called on the Government to help negotiate an increase to 21%, as originally proposed by the US under President Biden. Organisations such as Oxfam have highlighted that the 15% minimum rate still leaves many developing countries at a disadvantage, as they will continue to face unfair competition from tax havens. It is extremely disappointing to see the Government’s failure to back a rate of 21%, despite having raised UK corporation tax to 25%. The significant progress that has been made should not be obstructed or diluted, but if we are serious about pursuing the goal of a fairer global tax system, we must also take the time to ensure that the best path is being followed.

[Nigel Mills]

I understand the intent of what the hon. Member says. Could she explain how the review could be done within six months of the Act being passed, given that no business will have filed a tax return with any adjustments in until well after that period? Indeed, half the world probably will not have introduced the measure by that stage. Would that not be a bit of a premature assessment? Would we not risk that assessment showing no progress and then strengthening the arguments of those who would like to repeal it? It would probably be quite a bad assessment to do at that stage.

[Sarah Olney]

I welcome the hon. Member’s intervention, and—dare I say it—I completely agree with him. Of course, one is constrained by what one can amend in legislation, but I would like to see that as the start of an ongoing process of review. Let us be honest, it is an innovative proposal, not just because it requires an international co-operative effort, but because that very effort is innovative. It is therefore something that we as a sovereign Parliament should be keeping very much under review as the work continues.

I briefly note that the Finance Bill has implications for theatre tax relief, which plays a crucial role in enabling the development of new theatre productions in the UK. UK Theatre and the Society of London Theatre have raised concerns with the Treasury about those implications, which could damage how that essential relief operates. I therefore urge Ministers to liaise with those groups and particularly to provide assurance that international touring will not be hampered due to the Bill’s definition of UK expenditure. That is certainly an area that would benefit from scrutiny in Public Bill Committee.

Although the Liberal Democrats support certain measures in the Bill, such as the extension of full expensing, the Bill as a whole does not have our support, arising, as it does, from an unjust and deceptive autumn statement. I urge hon. Members to support the amendments tabled in my name, in particular new clause 5, which would hold the Government to account to ensure that HMRC is properly resourced to allow it to implement the measures in the Bill.

[Gareth Davies]

I thank hon. Members from across the House for their contributions. I will speak relatively briefly but will try to address some of the points raised. I will deal last with the new clauses, and in the meantime address some of the questions from the hon. Member for Ealing North (James Murray) from the official Opposition. He asked about pillar 1 and the progress being made. This Government fully support pillar 1 and are keen to maintain momentum on its progress as soon as possible. He should take comfort from the recent publication of the substantially agreed text of the multilateral convention. That demonstrates progress, but as I say, we are not complacent on that and are keen to see further progress as soon as possible.

The hon. Gentleman very reasonably asked for more information on sentencing and the action taken by HMRC. I will give him some data. Last year, there were 240 prosecutions. Within that, there were 218 convictions, and 130 of those were custodial sentences and 110 were suspended sentences. That equates to a 90% success rate for HMRC. The hon. Gentleman is right that the average length of a custodial sentence is 24 months. We want to extend a maximum sentence for two reasons: first, to make it clear that we consider fraud and all fraudulent activity some of the most serious crime possible because of its impact on public finances; and secondly, because if the maximum sentence increases, we expect all sentences to rise, as sentences are judged relative to the maximum sentence. However, I stress that it is the Sentencing Council that issues the guidance to judges and it is ultimately judges and the courts who rightly decide what sentences are given to those found guilty.

The hon. Gentleman asked about safeguards for stop notices, and he is right to highlight that that is an important measure for HMRC. I can tell him there have already been 20 stop notices issued since HMRC started issuing them just a year ago, but there are robust governance processes and safeguards in place, including review and appeal rights. However, any criminal sentences are decided by the courts and it is the Sentencing Council that will decide on that. I will look carefully at the other questions he has raised and ask for a written response. If we have that data, I commit to writing to him with that information.

My hon. Friend the Member for North East Bedfordshire (Richard Fuller) has rightly and consistently raised his questions and concerns on pillar 2. I can tell him that the UK is implementing pillar 2 in time and alongside EU member states, Japan and Canada, which I think he would agree are all peers. He asked about China. China has not announced implementation plans for pillar 2, but it is a member of the inclusive framework of countries that are in negotiations right now on pillar 2 and we are monitoring that very carefully, as he would expect. The US Administration have always supported both pillars 1 and 2 and have been one of the strongest advocates for them; as he will know, in 2017, the United States introduced its own domestic version of pillar 2, requiring those companies with foreign income to pay a minimum level of taxation.

The punchline, to answer my hon. Friend’s ultimate question, is that already the agreement has been put in place to ensure that, by 2025, 90% of multinationals will be in play, so we are confident in the robustness of that agreement. He asked about the loan charge; I do not believe that is in scope for this debate, but the Financial Secretary to the Treasury will follow up with him and engage with him and the loan charge and taxpayer fairness all-party parliamentary group in due course.

I will briefly address the new clauses that have been laid down. I will deal with new clauses 2, 5 and 7 together, as they all relate to tax avoidance and evasion, and then I will address new clause 4. New clause 2 would require the Chancellor to provide a report on the average sentence and range of sentences given to offences being amended in clause 31, the number of stop notices issued that clause 33 would apply to and the impact of those clauses on tax revenues. New clause 5 would require the Chancellor to carry out an assessment of the impact of clauses 31 to 34 and schedule 13 on HMRC’s compliance activities and new clause 7 would require the Chancellor to review the effectiveness of the provisions of clause 31 in combating fraud involving taxpayers money.

Let me say straight out of the gate that I agree it is important that we regularly review and evaluate policy. However, the new clauses are unnecessary, as HMRC already publishes detailed information about its compliance and performance on a regular basis. As I have said, the UK tax gap is already at an all-time low of 4.8% and will remain low and stable, given the measures that we are implementing. Every year, HMRC publishes information on the number of custodial sentences received for tax compliance offences and the average sentence length in HMRC’s annual report and accounts. The 2023-24 annual report and accounts will be published this summer, providing a full overview of HMRC’s performance. As most of that information is already publicly available in routine HMRC publications, the assessments legislated for by the new clauses are unnecessary, in our humble view.

New clause 4 would require the Government to report an assessment of the technical changes to pillar 2 introduced in clause 21 and schedule 12. It would consider the efficacy of the technical changes and their impact on multinational profit shifting and tax competition between jurisdictions. The Government consider that such a report is not necessary because the amendments in the Bill are technical changes to enhance the pillar 2 legislation that received Royal Assent just last year. Those amendments simply help to ensure that the policy objectives of the legislation are met fairly and effectively, reflecting both new international guidance and stakeholder comments. Ultimately, it is about avoiding unintended consequences in legislation that has already been passed. Of course, the Government will monitor pillar 2’s overall impact as businesses begin to respond to its implementation around the world—130 countries are privy to it.

I hope to have reassured Members that the additions in new clauses 2, 4, 5 and 7 are not necessary. For the reasons that I have set out, I urge the Committee to reject them. I commend clauses 21 and 31 to 34, and schedules 12 and 13, to the Committee.

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Schedule 12 agreed to.

Clauses 31 and 32 ordered to stand part of the Bill.

Schedule 13 agreed to.

Clauses 33 and 34 ordered to stand part of the Bill.

New Clause 2

Review of measures to tackle evasion and avoidance

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the measures in sections 31 to 33 to tackle evasion and avoidance.

(2) The review under subsection (1) must include details of—

(a) the average sentence handed down in each of the last five years for the offences listed in section 31;

(b) the range of sentences handed down in each of the last five years for the offences listed in section 31;

(c) the number of stop notices issued in each of the last five years to which the measures in section 33 would apply; and

(d) the estimated impact on revenue collected in each of the next five financial years resulting from the introduction of the measures in sections 31 to 33.”—(James Murray.)

This new clause would require the Chancellor to publish details of the sentences given and stop notices issued in each of the last five years to tackle evasion and avoidance, as well as the revenue expected to be generated from the measures to tackle evasion and avoidance in this Act in each of the next five years.

Brought up and read the First time.

Question put, That the clause be read a Second time.

16:32

Division 37

Ayes: 228

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Labour: 165
Scottish National Party: 37
Liberal Democrat: 14
Independent: 7
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Green Party: 1
Alba Party: 1

Noes: 298

---

Conservative: 293
Independent: 2
Democratic Unionist Party: 1

New Clause 5

Tax Compliance Reporting

(1) Within six months of the passage of this Act, the Chancellor of the Exchequer must carry out an assessment of the impact of sections 31 to 34 and Schedule 13 of this Act.

(2) The report must consider the capacity and ability of HMRC to enforce compliance with the measures contained in sections 31 to 34 and Schedule 13 of this Act, including setting out staffing arrangements within HMRC's Customer Compliance Group for undertaking enforcement work relating to sections 31 to 34 and Schedule 13 of this Act.”—(Sarah Olney.)

This new clause would require the government to produce an assessment of the impact of the Bill’s tax evasion and avoidance measures. The assessment would need to examine whether the capacity and ability of HMRC was sufficient to properly enforce those measures.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

16:47

Division 38

Ayes: 18

---

Liberal Democrat: 12
Independent: 2
Plaid Cymru: 2
Labour: 2
Social Democratic & Labour Party: 1
Green Party: 1

Noes: 300

---

Conservative: 295
Independent: 2
Democratic Unionist Party: 1

New Clause 7

Review of effectiveness of section 31 measures in preventing fraud involving taxpayers’ money

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, conduct a review of the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money.

(2) The review must evaluate the effectiveness of the provisions of section 31 in preventing fraud involving taxpayers’ money through comparison with the effectiveness of—

(a) other measures that seek to prevent fraud involving taxpayers’ money, and

(b) the approach taken in other countries.”–(James Murray.)

This new clause would require the Chancellor to review the effectiveness of measures in this Act to prevent fraud involving taxpayers’ money, and to compare them with other measures that seek to prevent fraud involving taxpayers’ money and the approach taken in other countries.

Brought up and read the First time.

Question put, That the clause be read a Second time.

17:01

Division 39

Ayes: 222

---

Labour: 163
Scottish National Party: 37
Liberal Democrat: 13
Independent: 6
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Green Party: 1
Alba Party: 1

Noes: 301

---

Conservative: 296
Independent: 2
Democratic Unionist Party: 1

Clause 25

Rebate on heavy oil and certain bioblends used for heating

Question proposed, That the clause stand part of the Bill.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

With this it will be convenient to discuss clause 27 stand part.

[Nigel Huddleston]

I will take clause 27 first. The changes that it makes clarify how VAT and excise legislation should be interpreted in the light of changes made by the Retained EU (Revocation and Reform) Act 2023, which came into effect on 1 January. The Act ends the supremacy and special status afforded to retained EU law in the UK. As we made clear when it was introduced, the Government are taking a bespoke approach to UK VAT and excise law. In line with the 2023 Act, clause 27 confirms that, for VAT and excise, it will no longer be possible for any part of any UK Act of Parliament or domestic subordinate legislation to be quashed or disapplied on the basis that it is incompatible with EU law. In other words, it will no longer be possible for businesses to rely on EU law where it is in conflict with domestic law. The measure also provides that UK VAT and excise law continues to be interpreted as Parliament intended, drawing on rights and principles that currently apply in interpreting UK law.

17:15

This legislation, which was subject to a Provisional Collection of Taxes Act 1968 resolution from 1 January, ensures the stability of the VAT and excise regimes and provides legal certainty for businesses following the changes in the Retained EU Law (Revocation and Reform) Act 2023 taking effect. It mitigates the risk of relitigating the settled interpretation of UK law, protecting billions of pounds of Exchequer revenue.

VAT and excise duty from alcohol, tobacco and hydrocarbon oil raise over £200 billion of revenue a year. VAT is a litigious area, with the existing framework and precedents protecting large amounts of revenue. For example, £5 billion of tax revenue was protected in just five VAT cases with the support of such precedents. VAT operates in real time, with VAT invoices and the associated money being passed between businesses and other businesses or consumers on the basis of the law in place at that time, which means legal certainty is key. Businesses rely on this to ensure that their tax affairs are correct, and HMRC relies on it to collect tax.

EU principles and rights will therefore continue to apply solely as aids to interpreting UK legislation. Any potential change in interpretation would create uncertainty for business. It could open up loopholes to be exploited by those looking to avoid paying their fair share, risking billions of pounds of Exchequer funds.

I move on to clause 25. At Budget 2020, to help meet our climate change and air quality targets, the Government announced that we would remove the entitlement to use rebated fuels from most sectors. Rebated fuels, such as red diesel and certain heavy oils, incur a lower rate of fuel duty, in contrast to the petrol and diesel used by cars and other road vehicles, which incur the full rate of fuel duty. As part of these reforms, the Government decided to continue to allow rebated heavy oils, other than red diesel and bio-blends made with red diesel, to be used for all heating uses, due to the concern that removing the entitlement to use these fuels for this purpose would significantly increase the heating bills of the households and businesses that use them, especially in areas off the gas grid.

However, as enacted, the Hydrocarbon Oil Duties Act 1979 prevents machines and appliances from using certain rebated heavy oils for commercial heating. That includes fuel oil used in some commercial heating applications, including in furnaces. As the Government’s intention was to continue to allow the use of rebated fuel for heating, HMRC has exercised its discretion on collection and management powers to allow the use on this basis. The assumption was that the existing legislation would be changed at the earliest opportunity, which is what we are doing now. Clause 25 amends the 1979 Act, giving clarity to the dozen or so businesses affected by this anomaly, in line with the Government’s announced policy position. I make it clear that no consumers have been disadvantaged by this error.

These changes are necessary to provide legal certainty for business and to ensure that the relevant regimes operate as intended. I therefore commend clauses 25 and 27 to the Committee.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I call the shadow Minister.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I rise to speak to the clauses relating to VAT and excise, beginning with clause 25, which restores the full tax rebate for machines and appliances that use non-gas heavy oils and bio-blends for commercial heating purposes. The Government have said that this is to correct an anomaly brought about by the April 2022 changes to the Hydrocarbon Oil Duties Act 1979, which mean that machines using kerosene have benefited from a full rebate while those using other types of heavy oil were made ineligible for lower duty rates when used for heating.

The Government have said that their April 2022 tax changes were intended to reduce the use of gas fuels and to make progress against the UK’s climate commitments. However, perversely, under the current system companies receive a tax penalty for using next-generation renewable fuels such as hydrotreated vegetable oil for heating, instead of kerosene, despite the fact that HVO produces nearly 90% less greenhouse gas emissions. I therefore support clause 25, which seeks to correct that unintended error and restore equivalent tax treatment for the use of non-gas heavy fuels for commercial heating. However, let us be clear: the correction will have a limited impact on businesses across the UK facing rocketing heating bills as the cold starts to bite this winter.

We also know that it is often the scandalous lack of grid connections that forces many businesses, particularly in rural areas of Scotland, to operate their machines off grid, using heavy oils and biofuels. Changing tax incentives, although significant, will not deliver the overhaul our energy system needs to become a clean energy superpower. After 13 years of mismanagement, our energy grid is on its knees, with new developments forced to wait up to 15 years for a new connection and more than £200 billion of privately funded energy projects stuck in limbo.

Labour will prioritise reforming the grid, overseeing the largest upgrade to our national transmission infrastructure in a generation and accelerating connections for those who are forced off grid. We cannot afford to keep dragging our feet any longer. The Government claim they are serious about delivering the transition and boosting the use of clean energy sources, but the neglect of our grid infrastructure has been shocking. We know that the significant increase in both clean power generation and clean industry that the UK will need to reach net zero will require four times as much grid infrastructure in the next seven years as has been built in the past 30. Although the Opposition do not oppose clause 25, which is a welcome correction, ensuring that tax incentives for non-gas heavy fuels remain consistent is the bare minimum we should be expecting from the Government on this vital issue.

I move on to clause 27, which seeks to clarify UK primacy on VAT and excise law following the passage of the Retained EU Law (Revocation and Reform) Bill. The Government’s draft legislation seeks to ensure that in relation to VAT and excise law it will no longer be possible for any UK Act of Parliament or domestic subordinate legislation to be quashed or disapplied on the basis that it was incompatible with retained EU law. The Government state that this measure will

“ensure the stability of the VAT and excise regime”,

providing legal certainty for businesses. Labour, unsurprisingly, supports the objective of this legislation; ensuring that firms have clarity over how the VAT and excise regimes should be interpreted following the UK’s departure from the EU is crucial to retaining business confidence. However, following the Government’s public consultation, which concluded in November, it remains entirely unclear whether the measure achieves its stated objective of reducing the complexity for businesses of interpreting the VAT regime.

In its consultation response, the Chartered Institute of Taxation highlighted a number of concerns about the proposals, pointing out that the significant complexity in interpreting this draft legislation risks undermining the certainty it seeks to deliver. Specifically, the CIOT points out that the distinction drawn in the legislation between disapplication and the quashing of UK law as a result of EU law, and interpretation,

“might in practice be insufficient to achieve the desired result”.

Consultation feedback also pointed out that the measures in clause 27 do not make it clear how far higher courts are intended to be bound by prior case law from the Court of Justice of the EU, thus creating uncertainty for businesses and advisers.

Although taking a “bespoke UK approach” to VAT and excise legislation is welcome in principle, the draft legislation also fails to address the fact that the removal of the reliance on EU provisions will create significant gaps in UK legislation where our domestic rule book did not fully transpose EU directives. It is not just tax experts that have sought to draw attention to this issue through the Government’s consultation; the industry body for the banking and finance sector, UK Finance, has warned over and over again that the draft legislation

“does not appear to adequately address”

the complexity of the VAT landscape

“thereby sustaining a high degree of uncertainty for industry and the prospect of settled interpretations of VAT law being disturbed.”

The trade body pointed out that although EU VAT law includes a clear VAT exemption for intermediary services in connection with bank accounts, the exemption has not been implemented in UK law. With business no longer able to rely on the direct effect of EU law, material changes to VAT exemptions in the financial services sector will come into effect. That is just one example from my own shadow brief, but it highlights the additional uncertainty that this “clarifying” draft legislation has already created for business. Despite the clear message from tax experts and industry in the consultation, it seems that the proposals are at best problematic. It is of particular concern that the Government seem to have ignored that feedback and ploughed on, with not a single amendment made to the draft legislation.

Detailed guidance is needed to address the significant issues that have already been raised regarding clause 27 and to ensure it meets its objectives. Labour will not oppose the measure as we remain supportive of it in principle, but urgent clarity is needed as it will come into effect from the beginning of this year. The shock that a Government measure designed to provide “legal certainty and stability” has raised more questions than answers has slightly worn off for those of us obliged to follow the circus on the Government Benches on a daily basis.

To conclude, we will not oppose the two clauses, but the detail of the proposals continues to raise questions about the competence of the Government. From being able to afford low-carbon fuel and avoid crippling heating bills to having certainty over the VAT regime, UK businesses deserve far better. After 13 years of leadership, we need a Government who can provide the confidence that businesses desperately need, using the clean energy sources of the future to drive growth and investment across the country.

[Sir Mike Penning (Hemel Hempstead) (Con)]

It is a pleasure to have sat through the Committee stage of the Bill and to hear the Government talk about the advantages we have from Brexit. I am pleased to hear that the Government have looked, and continue to look, extensively at the taxation system—in particular at the interpretation of VAT, as mentioned in this clause.

One interpretation of VAT in this country massively affects people who are visually impaired and those who cannot read, perhaps because of dyslexia: there is no VAT on books, but the Treasury apply VAT at 5% to audiobooks. If that interpretation of VAT is to be taken as far as it possibly can, I am disappointed that disabled people are not being protected within the structure of the Bill, in the way that they have been for many years.

Years ago, when I was disabilities Minister, I was told that VAT changes could not happen because we were in the EU. We are no longer in the EU and we can set our VAT rates as we would like. It would be fundamentally good if the Government came forward with an interpretation of VAT that said that people who rely on audiobooks, through no fault of their own, do not have to be penalised by VAT at 5%. I am not talking only about the visually impaired—I declare an interest: I am dyslexic and rely on audiobooks, although not completely. People who do not read Braille are being punished as well.

The Government continue to look at new taxation rules and new ways of making sure that people do not get around the taxation system, and it is clear that they are looking at the implementation of VAT. What better spring present for those who rely on audiobooks than for the Minister to say that he will meet me, talk about the issue further and perhaps look at the early-day motion in my name?

[Drew Hendry]

The technical changes in clauses 25 and 27 open up a lot of questions. I agree with the Labour Front Bench spokespeople that there are many questions on operation that still have to be answered, but there are wider questions about both these clauses, inspired by their context. Before I get to them, I want to point out that this Finance Bill is a stark reminder that the Westminster Government never reflect the values of the people of Scotland. We need independence so that we can build a fair and dynamic economy that works for everyone. People are suffering through the bitterest cost of living crisis. The provisions set out in the Finance Bill are nowhere near enough to help households in Scotland, which have been left paying the price for disastrous decisions by Westminster Governments—not least the harm of Brexit. There is no help for families struggling with rocketing food prices, and no help for mortgage payers, many of whom are now seeing huge increases in their fixed-rate deals.

17:30

The cold is biting right now. A week ago, this Westminster Government oversaw not the hoped-for help of the £400 energy bill rebate that we in the SNP called for, but another 5% hike, courtesy of the price cap increase.

Although clause 25 is righting a small wrong, people living off the gas grid deserve a lot more help than is being offered with this measure. They should have had the comfort of being included in regulation under Ofgem, as imperfect as that organisation is. Indeed, I introduced a ten-minute rule Bill in this House to ask for that, yet people living off grid are still suffering from a wild west approach to pricing in how they heat their homes. That affects many people across my constituency and other large rural areas. They simply do not have a choice when prices surge. This is a tiny measure being taken today, and more should have been done.

I mentioned the £400 support that we called for, but a social tariff should also have been considered. There should have been reductions, not increases, in the price cap to help people at this juncture. Energy policy, as we know, is fully reserved to Westminster, and it is the Chancellor who decides whether people can afford to put the heat on. Well, a lot of folk cannot afford to do so.

In my constituency, and across the highlands and islands, we produce six times more clean, cheap, renewable energy than is needed by the people living there. The massive bulk of that production is exported to other parts of the nations of the UK, yet, in return, we get to pay higher standing charges and higher unit prices in a climate that demands that we use more to make life bearable. We suffer the highest fuel poverty. Electricity charges in the highlands are around 30% higher than they are here in London, according to Ofgem. How is that fair?

The Chancellor offered £1,000 a year off energy bills for those living near planned new power lines and generating equipment. The question we now ask is: what about those already living next to and among generating equipment? Why should they not be included and compensated in the same way? After the long years of this energy injustice, it must now be time to right that wrong. The Chancellor must establish a highland energy rebate, and, again, speed is of the essence. All of this and more should be done, but the fact is that this place does not act on Scotland’s needs. We have the energy, but we do not have the power. We should have that through independence.

On clause 27, as highlighted in the explanatory notes to the Bill and in the Minister's comments, we know that the Chancellor will raise more than £200 billion pounds a year in VAT and excise duty alone, a significant amount of that on the back of Scotland’s food, whisky and oil production. The Conservatives’—and now Labour’s and the Liberal Democrats’—Brexit was supposed to release the means to support business. Instead, all Brexit has brought is red tape and heartache. We see the results of that today in this debate. So let us see the Government step forward. I am not expecting them to fulfil the wild promises of Brexit—there is no possibility of that—but let us see whether they can live up to a tiny amount in the form of a VAT cut for the tourism and hospitality sector and some support for disabled people. I agree with the right hon. Member for Hemel Hempstead (Sir Mike Penning) that there should be more attention paid to that.

The UK Government’s attempt to sell the tax measures set out in the statement as a giveaway for working people is beyond belief. The Office for Budget Responsibility has been clear that the Chancellor’s decision to freeze income tax will create 3.2 million extra taxpayers by 2028, with 2.6 million people more in higher tax bands. This is a Tory-made cost of living crisis. The reality is that households in Scotland are paying the price for the UK Government’s mismanagement of the economy, with an especially devastating impact on vulnerable people.

The stark difference between the UK Government’s autumn statement, and consequently the Bill, and the Scottish Government’s Budget, which prioritises ensuring that everyone in Scotland can have a decent standard of living, is a timely reminder of why we need to get our own governance. In December, a report by UNICEF found that the UK’s child poverty rates were among the highest in the world’s richest countries. The report compared well-off countries’ efforts to reduce child poverty, and the UK ranked as one of the worst-performing, coming 37th out of the 39 nations of the EU and the OECD.

We also know that the cost of living crisis is disproportionately impacting disabled people. Again, the call for a VAT cut is valid, but there was nothing in the Chancellor’s autumn statement or the Bill that will do anything to make it easier for those with disabilities to get through this cost of living crisis. Indeed, the Government seem committed to making the lives of those with disabilities more difficult through a renewed focus on ramping up the use of cruel benefit sanctions. In October last year, research by Scope found that nearly one in three disabled people face debt. James Taylor, executive director of strategy at Scope, noted:

“When disabled people are being pushed into debt and can’t afford to eat, stay warm or shower, it’s clear the system is broken. These figures lay bare the fact disabled people are being hit hardest in this crisis.”

It is utterly shameful that the UK Government have failed to introduce measures in the autumn statement or the Bill that would improve the lives of millions of people who are facing poverty, and in some cases actual destitution. The fundamental problems with the autumn statement and the Bill are what was omitted from it.

[Patrick Grady (Glasgow North) (SNP)]

Is this not the problem? If we do not invest in people’s health and wellbeing, in the long term it will cost the NHS, social services and the Department for Work and Pensions even more to support people as they continue to spiral down. Does that not contrast with the preventive approach that the Scottish Government take, with such innovations as the baby box and the child payment?

[Drew Hendry]

My hon. Friend is right: the on-costs of not doing so lead to further problems, and to higher costs not only to the public purse but to the mental and physical wellbeing of those who are impacted by the cost of living crisis.

These major fiscal events serve as a tangible example of the total mismatch between the values of the UK Government and the people of Scotland. The things that the UK Government choose to spend money on and the tax measures that they have chosen to leave out of the Bill, such as abolishing non-dom status, are a clear reminder of that. It is abhorrent that at the same time as announcing cruel measures to force ill and disabled people into work, the UK Government did not include any provisions on making the tax system fairer. There are countless examples of the UK Government wasting money and then attempting to claw back the funds by targeting groups who are the least well off. The return to draconian measures forced on ill and disabled people is just the latest example. The stark difference between the Bill and the Scottish Government’s Budget, which prioritises ensuring that everyone in Scotland can have a decent standard of living, is a timely reminder of why we need independence.

The SNP believes that building a strong economy starts with giving people a decent standard of living, and our most recent Budget reflected that, as my hon. Friend the Member for Glasgow North (Patrick Grady) mentioned. The Scottish Government’s Budget reflects the people of Scotland’s shared values and speaks to the kind of Scotland that we want to be. It is important to remember that the Scottish Government have achieved that against the backdrop of their very limited ability to raise additional revenue through taxes, and having to work largely with a fixed budget. Despite those very difficult circumstances, the Scottish Government have once again shown their commitment to protecting the NHS from strikes, as well as investing in it and shielding the most vulnerable people, as far as possible, from the impact of regressive Westminster policies.

While the Tories have just delivered a 3% real-terms cut to England’s NHS in their autumn statement, the Scottish Government announced an increase to the frontline NHS budget in real terms. They also remain committed to helping those most impacted by the cost of living crisis. In their Budget last month, the Scottish Government increased the game-changing Scottish child payment in line with inflation to £26.70 a week, giving more support to the more than 323,000 under-16s who receive it. They maintained their commitment to invest £1 billion over the course of this Parliament to tackle the poverty-related attainment gap, with £200 million to be distributed in 2024-25. They are committed to funding the £12-per-hour real living wage for adult and child social care, and early learning and childcare workers in the private, voluntary and independent sectors that deliver funded provision. They have helped households through the cost of living crisis by making available an additional £144 million of funding to councils that agree to fully fund a council tax freeze in 2024-25—the funding equivalent of supporting a 5% increase. Those are just the latest measures the Scottish Government have taken to promote equality.

The Scottish Government have of course introduced landmark policies to ensure that everyone in Scotland has access to a decent standard of living. If Westminster was in charge, Scotland would lose things like free university tuition, free school meals, free period products, free bus travel for under-22s and free childcare for three and four-year-olds, as well as eligible two-year-olds. All that is possible because the Scottish Government take a different approach to a Budget than this place, and we need to ensure that we can do that in a much more effective way through the powers of independence.

[Nigel Huddleston]

I think some hon. Members may have tried to expand the debate strictly beyond the scope of the measures we are debating; for understandable reasons, I will stick strictly to the clauses.

My right hon. Friend the Member for Hemel Hempstead (Sir Mike Penning) made some important points about ensuring that we take full advantage of the benefits of leaving the European Union. Of course, we have already made progress in that area by removing, replacing and improving retained EU law, including revoking all direct EU regulations in relation to customs duty, introducing a UK tariff and domestic customs regime, introducing VAT relief for women’s period products and for the installation of energy-saving materials, and so on. On the points he made regarding potential future changes to VAT, we of course always keep tax under review. He will forgive me for not making tax policy at the Dispatch Box this evening, tempted as I am; that is the purpose of key fiscal events. I will absolutely commit to meeting my right hon. Friend, as I am always willing to listen and hear comments.

Comments were made about encouraging the use of greener fuels. The Government encourage the use of renewable fuels through the renewable transport fuel obligation, which incentivises the use of low-carbon fuels and reduces emissions from fuels supplied for use in transport and non-road mobile machinery. On the point about the Court of Justice, the European Union (Withdrawal) Act 2018 provides that Court of Justice of the European Union judgments issued since the end of the implementation period are not binding on UK courts. On the point about codifying everything, trying to codify all interpretative effects into black and white UK law would of course be a huge endeavour and would require a complete review of all that legislation, taking many years and still leaving significant tax revenue at risk.

Question put and agreed to.

Clause 25 accordingly ordered to stand part of the Bill.

Clause 27 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill (Clauses 1 and 2, schedule 1, clause 21, schedule 12, clauses 25, 27 and 31 to 34, and schedule 13) reported, without amendment, and ordered to lie on the Table.

Economic Activity of Public Bodies (Overseas Matters) Bill

3rd reading
Wednesday 10th January 2024 Commons Chamber

Third Reading

King’s consent signified.

[Mr Deputy Speaker (Mr Nigel Evans)]

I must inform the House that the reasoned amendment in the name of Keir Starmer has been selected.

17:45

[The Secretary of State for Levelling Up, Housing and Communities (Michael Gove)]

I beg to move, That the Bill be now read the Third time.

I am grateful for the opportunity to move the Third Reading of this Bill. As the House will know, this Bill was introduced before the King’s Speech, in the last parliamentary Session; it is a carry-over Bill. I begin by thanking all those who took part in the consideration of this Bill on Second Reading, in Committee and on Report.

Inevitably, following on from its introduction, debate around the Bill has occurred in the dark shadow of the events of 7 October and the continuing conflict in Israel and Gaza. That is why I want to stress, as I sought to do on Report, my gratitude for the thoughtful way in which every Member of this House has contributed to debate on this Bill. While there is, I know, a difference of opinion about the appropriateness of the measures we are bringing forward, everyone in this House is committed to ensuring that we act against antisemitism, everyone in this House is committed to ensuring that we can see a peaceful solution to the conflict in the middle east, and everyone in this House is committed to a two-state solution as the means by which we can bring peace to that troubled region.

The Bill upholds a principle that was originally outlined in our 2019 general election manifesto. During the course of consideration of the Bill we have heard from a number of organisations, both in Committee and in broader public debate about the Bill, all affirming its timeliness and importance in dealing with the continuing and growing threat of antisemitism, and upholding the importance of making sure that the UK Government speak with one voice, in a united way, on behalf of all of us, on foreign policy, as a reserved matter for the Government.

In that context, it is important to deal with one or two entirely understandable and legitimate concerns that have been raised about the interplay between the Bill itself and UK Government foreign policy. I know some particular concerns have been raised about clause 3(7). I assure colleagues that the clause does not contravene in any way our foreign policy or inhibit in any way the UK Government’s taking action if we believe there is activity in the Occupied Palestinian Territories that requires to be called out.

We continue to raise, as the Foreign Secretary has recently, issues of illegal settler activity, and Lord Cameron has been clear with the Israeli Government that the UK Government are in profound disagreement with some of those actions and some of that activity. I will come on to that in just a second. I should say that the clause does not prevent the Government establishing sanctions or using travel bans against those who have been linked to blatant human right abuses. It is simply the aim of this legislation to prevent public bodies from adopting their own foreign policy, as such decisions should ultimately be the remit of the Government and this House.

[Several hon. Members rose—]

[Michael Gove]

I know, given the nature of the debate on this Bill, that a number of colleagues would like to intervene; I will try to answer questions briefly, because I know a number of colleagues would like to take part in the debate.

[Richard Fuller (North East Bedfordshire) (Con)]

Hypotheticals are not always helpful, but I beg my right hon. Friend’s indulgence in this hypothetical on that particular point about the interaction between clause 3(7) and UK foreign policy. UK foreign policy is clear that illegal Israeli settlements in the occupied territories are against international law. This Bill would provide that, if a pension fund were given an investment policy for expanding, say, an infrastructure fund proposal in the occupied territories, it would have no moral basis for refusing to invest, although that investment would be expanding Israeli policies contrary to UK foreign policy. Can the Secretary of State explain how to unpack that so that what he has just said is what I believe is true?

[Michael Gove]

It is specifically the case that public bodies, including the local government pension scheme and local authorities, should not be taking decisions that conflict with UK Government foreign policy, and we are absolutely clear that it would conflict with UK Government foreign policy if they were to engage in freelance activity of that kind. However, it is perfectly open to any representative, including any elected representative, to express their personal disapproval of the activities of the Israeli Government or any organisation that operates within the settlements.

[Richard Burgon (Leeds East) (Lab)]

I have been listening carefully to what the Secretary of State is saying on that point, but last year, the Government stated:

“The UK has a clear position on Israeli settlements in the Occupied Palestinian Territories: they are illegal under international law”.—[Official Report, 23 March 2023; Vol. 730, c. 412.]

To speak plainly, is not the Secretary of State ashamed that, through this clampdown on the democratic right to boycott, his Government are restricting the rights of those who want to take peaceful action against violations of international law, and are in effect siding with those breaking international law?

[Michael Gove]

With respect to the hon. Gentleman, who has taken a close personal interest in the conflict—I appreciate the sincerity with which he raises that point—absolutely not. There is a clear intention in the Bill, which is to deal specifically with the boycott, divestment and sanctions campaign and its attempts to use the legitimacy of local government and other intermediate institutions to undermine the UK Government’s foreign policy. The UK Government, of whichever colour, must speak with one voice on behalf of the whole United Kingdom when it comes to foreign policy matters. As I am sure the hon. Gentleman will agree, the Minister of State, Foreign, Commonwealth and Development Office, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), and the Foreign Secretary have, from this Dispatch Box and in the other place, been clear with the Israeli Government when they think that it is appropriate to criticise their actions and indeed those of individuals operating within the settlements, but there is an important distinction to be drawn between criticism of the Israeli Government, criticism of the acts of particular individuals and the nature of the BDS campaign itself.

I am grateful to Opposition Front Benchers—although we have our disagreements—and to Labour Friends of Israel for making it clear that the BDS movement itself is explicitly and regrettably antisemitic. It deliberately sets out to argue that the state of Israel as a home for the Jewish people should not exist.

[Tom Hunt (Ipswich) (Con)]

I agree with the comments that the Secretary of State has just made. Israel is pretty much the only country that is targeted in this way despite the fact there are a number of appalling regimes around the world. On local authorities, does he agree that a lot of councillors should focus on their core job of running local services instead of virtue-signalling and clumsily weighing in on complex international issues?

[Michael Gove]

Not for the first time, I entirely agree with my hon. Friend. He summed up in that intervention two of the critical points in the Bill. First, local government has many important functions. Intervening in foreign policy in a way that can exacerbate community tensions is emphatically not one of them. Secondly, there has been a unique focus on the state of Israel. Of course, there are criticisms that can and should be mounted against the state of Israel, its Government and their activities. However, the BDS campaign singles out Israel for special treatment. We have not seen attempts by local government to criticise, for example, the actions of Bashar al-Assad in Syria or a variety of other regimes that have been targeting innocent Muslim lives.

Again, one point that was made clearly by the now sadly departed former Chief Rabbi, Lord Sacks, was that antisemitism is a virus that mutates over time. In the past, it was directed towards Judaism as a faith. Then it mutated to be directed towards the Jewish people through direct racism. Now antisemitism finds an expression through an attempt to deny the Jewish people the same right of self-determination and the same right to a homeland that we extend to all peoples.

Support for the Bill from Jewish organisations in this country—the Jewish Leadership Council, the Board of Deputies of British Jews and so on—has been clear, but perhaps the most telling are the words of the Community Security Trust, which is there to physically protect Jewish people and communities. The CST is scrupulous in not offering any commentary on matters in Israel and the middle east or on foreign policy—it eschews doing so because it recognises the diversity of views within the Jewish community on some of those questions—but it has said that BDS

“has a chilling impact on Jews, a modern reminder of anti-Jewish boycotts. It also serves to legitimise the shunning of Jews from ‘decent’ society. And having been shunned…that’s a half way house to all manner of more abusive and physical outcomes.”

When we have seen a 537% increase in antisemitic incidents, I think it important to bear those words in mind.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

My right hon. Friend is making some extremely important points about the nature of the BDS movement. Is it not the case that, as he says, there have been very few examples of councils looking to use the levers available to them to protest against other international issues? Is that not because the whole BDS movement—in fact, the label “BDS”—has been entirely constructed as a weapon against the state of Israel? When we look at the origins of the movement, we see, unfortunately, that it is riddled from top to bottom with antisemitism.

[Michael Gove]

I am afraid that my right hon. Friend is absolutely correct. Again, to be more than fair, many prominent Labour voices have made precisely that point: the BDS campaign, those who created it and those who run it are very clear that they are singling out Israel. They want to see an end to Israel as a Jewish state.

I am very conscious of the fact that a number of right hon. and hon. Members wish to contribute to the debate. I also want to emphasise again that a horror and revulsion of antisemitism and prejudice of all kinds is shared across this House, as is a determination to see peace in the middle east. We have rehearsed the arguments, with great contributions in Committee and on Report, and I believe that this Bill is a targeted and proportionate approach to dealing with a unique evil. I hope that we will be able to support the Bill, but as I say, dissenting voices in this House must always be heard with respect. With that, I commend the Bill to the House.

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. As everybody knows, the debate will come to a conclusion at 6.45 pm. A number of people are trying to catch my eye, so I am thinking that speeches should last not much longer than three minutes, to be frank, depending on the contributions of the Front Benchers.

17:56

[Angela Rayner (Ashton-under-Lyne) (Lab)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House, while opposing any discrimination or prejudice in the economic activities of public bodies, believing that all such bodies must act without bias or selectivity when making ethical decisions on procurement and investment and recognising the impact selective and biased campaigns have had on the Jewish community in particular, declines to give a Third Reading to the Economic Activity of Public Bodies (Overseas Matters) Bill because it does not effectively address the problem it rightly seeks to solve, is incompatible with international law and UN Security Council Resolutions, risks undermining support for groups around the world facing persecution, includes needlessly broad and sweeping draconian powers while placing unprecedented restrictions on public bodies to express a view on current and proposed policy and represents a major departure from the UK Government’s long-established diplomatic position on the Occupied Palestinian Territories and Golan Heights, in a way that undermines the UK’s future credibility and capacity to support diplomatic negotiations towards a just and lasting peace in Israel and Palestine based on a two-state solution, at a time when consistent support for that objective is more important than ever.”

Let me start by making clear that the Labour party completely opposes a policy of boycott, divestment and sanctions against Israel. It is in everyone’s interest that we find a way forward to address a genuine problem. Never has that been as important as it is now, at a time of heightened tensions, fear and distress both at home and abroad.

As such, throughout the passage of this Bill, we have always tried to seek consensus. We do not think it is wrong for public bodies to take ethical investment and procurement decisions. In fact, there is a long tradition of councils and other bodies taking stances on such questions. However, there is a difference between applying consistent ethical principles and legitimate criticism of foreign Governments, and what some have tried to do by targeting just one individual state—for example, the world’s only Jewish state—or, worse, using the cover of these issues to whip up prejudice or discrimination. That is completely wrong. For the Labour party, that will never change, and I thank the Secretary of State for acknowledging that we share common ground on those fundamental principles. On that basis, I had hoped that by now we would have a Bill that reflects that common ground.

However, unfortunately, our efforts for consensus have been met with blanket refusal. Four times we have come to this House with an alternative approach, and four times Ministers have led Government Members in voting down every single one of those proposals, seeking not to unite the House but to divide it in every sense. We did not want to be in this position, where the House is being told to approve such a deeply flawed piece of legislation, but regrettably that is where we have ended up, because the Bill before us is indeed deeply flawed.

The Bill contains sweeping new powers that create more uncertainty and run counter to our international obligations: provisions that would ban public bodies from making procurement decisions based on a country’s use of forced labour; a completely unprecedented clause that makes it illegal for public bodies, many of them directly elected, to express their view on policy; a new power for the Secretary of State himself to call in and interrogate those he suspects fall foul of the Bill; and, at its heart, a measure that is incompatible with both the Government’s own long-standing foreign policy and international law, flying in the face of the UK’s obligations. That is why I respectfully dispute what the Secretary of State said in his opening remarks. Explicitly equating Israel with the Occupied Palestinian Territories and the Golan Heights is an unprecedented step. To my knowledge, this wording has never appeared in British statute before, and it seriously undermines our country’s long-standing, consistent and cross-party support for a two-state solution, so I could not be more disappointed.

There are moments when all sides of this House come together to resolve the deep-seated issues facing our communities, and this could have been one of them. Instead, the Government have refused to listen, so as the Bill is read a Third time, we have had to put forward a reasoned amendment as a final plea to the Secretary of State to reconsider. We all know that this is a highly unusual procedure, so I want to make it clear why we have deemed it necessary. We recognise that there is a problem to solve and we want to solve it too, but if this Bill means a protracted legal battle in the courts, creates more uncertainty than it addresses or, worse, simply fuels yet more division, it will have achieved nothing. It could, in fact, make matters worse.

I have no doubt that this Bill will be scrutinised and challenged if sent to our colleagues in the other place. I can only hope that we find further opportunities to forge a consensus, but the Bill before the House is simply not fit to send to them. The greatest shame is that, in this challenging time, we had the chance to speak with one voice against discrimination and division, and for unity at home and lasting peace abroad, and it is in that spirit that I urge the whole House to support our amendment.

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. There are eight Members standing, so let us start with a limit of four minutes.

18:02

[Kit Malthouse (North West Hampshire) (Con)]

Again, as I said on Second Reading and on Report, I speak with a heavy heart and in some dismay, but I tell those on my Front Bench that I will be voting against the Bill this evening.

This Bill obviously comes at a dreadful time, as we mourn the deaths of so many Israelis in heinous circumstances on 7 October and the deaths of so many Palestinians subsequently, many of whom still lie under the rubble. The fact that we in this House would seek to legislate against non-violent protest in such an illiberal and draconian way seems to me tragic at this particular point in time.

As the Secretary of State knows, there are broadly three areas in which I and other colleagues attempted to amend the Bill and have concerns. The first area is, as the shadow Secretary of State pointed out, the separate identification in the Bill of Israel, and its conflation with the occupied territories and the Golan Heights. We believe that contravenes our undertakings at the United Nations and, indeed, in international law, which of course means that the Bill will spend a lot of time in the courts, if it eventually sees the light of day. At the same time, that is a cause of great dismay to our allies in the Arab world, who of course we need at the moment more than ever to join us in seeking peace in the dreadful conflict taking place in the middle east. That we should undermine our own status as fair dealers, as it were, in that part of the world seems to me an unforced error.

The second area of serious concern is obviously the impact on free speech. Again as the shadow Secretary of State pointed out, it seems to me incredible that we are putting elected officials and others in a position where if they just stand up in certain circumstances and say they disagree with the law, they will be committing a criminal act. It seems to me an incredibly illiberal and backward step that we would strike a blow against pluralism in that way. The Bill could stand without those restrictions on free speech, and as the Secretary of State will know, we attempted to amend it to remove them, but that attempt was rebuffed.

The third area is the sheer scale of the Bill’s impact and the number of organisations that will be drawn into it. It is not just the local government pension fund, of which I am a member, but also every university in the land and private sector companies that perform a public service of some kind and are contractors to the Government that will be drawn in. That is important because, as the Secretary of State will know, this subject is very litigious. There are lawyers sympathetic to Israel and those sympathetic to Palestine. From the Secretary of State’s speech, it seems that the Bill is aimed squarely at that particular conflict in this world. Lawyers on both sides will gear up, and an industry will arise to attack, defend, analyse and scrutinise every decision, and all these bodies will have to take significant internal legal advice to deal with it as well. Subjecting them all to this enormous burden seems to me disproportionate to the problem that the Government are trying to address.

Finally, my greatest concern is for the impact on British Jewry. As the Secretary of State has said, he is trying to bring this Bill in to deal with the growth in antisemitism in the United Kingdom, but my view is that the Bill will play entirely into the hands of the antisemites. I imagine that this Bill will be manna to those rotten social media groups and WhatsApp groups that espouse conspiracy theories about Israel and the Jewish community. They will see this, as Jonathan Freedland—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I call the SNP spokesperson, with no time limit.

18:06

[Chris Stephens (Glasgow South West) (SNP)]

It is a real pleasure to follow the right hon. Member for North West Hampshire (Kit Malthouse). I hope that other Members listened to his contribution and what he had to say, because I share his concerns about using domestic legislation in this Bill to deviate from Foreign Office policy. That is the clear concern that many of us have.

In an exchange with the hon. Member for Caerphilly (Wayne David) when we explored this matter in Committee, we talked about what the actual foreign policy is. The Bill, as it is currently constructed, clearly conflates Israel, the Occupied Palestinian Territories and the Golan Heights, yet the UK Government’s guidance on overseas business risk states:

“The UK has a clear position on Israeli settlements: The West Bank, including East Jerusalem, Gaza and the Golan Heights have been occupied by Israel since 1967. Settlements are illegal under international law, constitute an obstacle to peace and threaten a two-state solution to the Israeli-Palestinian conflict.”

The concern we have is that the Bill is less than subtle as a change, if not to direct policy then certainly in emphasis. Equating Israel and the occupied territories is unique in any legislation, let alone in a statement, and it questions the UK’s long-established, cross-party support for a two-state solution based on 1967 borders.

As a party, we believe that the Bill is also an assault on Westminster’s devolution settlements, not just for the Scottish Parliament but for the Welsh Senedd. The legislation undermines devolution and restricts the ability of public bodies to make their own moral judgment on matters of human rights and climate consciousness.

I heard the Secretary of State argue that public bodies should not deviate from foreign policy. As we have discovered in this debate and in all the debates we have had, in 1981, City of Glasgow District Council—a Labour-led local authority—gave Nelson Mandela the freedom of the city of Glasgow. It also encouraged the boycotting of South African goods and services, but Foreign Office policy at the time was not to support sanctions on the apartheid South African regime, so the question again is: could Glasgow District Council in 1981 have awarded Nelson Mandela the freedom of the city of Glasgow, and would it have been allowed to encourage the boycott of South African goods and services, under this Bill? If the Bill had been in place then, the answer to that question would be no.

[Tommy Sheppard (Edinburgh East) (SNP)]

My hon. Friend is doing a great job of putting on record the SNP’s opposition to this foul piece of legislation. Does he think it is particularly distasteful and grotesque that the Bill is coming at this time and that the UK Government’s only legislative response to what is happening in the middle east is to try to bring forward proposals to stifle criticism of Israel, when it is clear and there is so much evidence that Israel stands facing charges of breaching international law and breaching the Geneva convention? Surely most right-minded people in this country who believe in decency and fairness will think that this is the wrong thing at the wrong time.

[Chris Stephens]

I thank my hon. Friend for that intervention. I think many Members have a concern about whether it is appropriate to proceed with the Bill at this moment in time. Other Members may wish to state that when they get the opportunity to speak.

The Bill extends to devolved Governments and local authorities in the devolved nations; because procurement and investment by public bodies are not reserved matters, it would appear to breach the Sewel convention if the devolved legislatures do not agree. I note that the Scottish Parliament has not provided legislative consent to the Bill.

We are also concerned that public bodies will not be able to make decisions about environmental protections. For example, Friends of the Earth has said that the Bill will

“prevent public bodies from divesting from fossil fuel, as well as diverting their money away from inadvertently funding human rights abuses abroad, such as modern slavery in corporate supply chains.”

Labour rights would also not be allowed to be considered. Poor workers’ rights are not restricted to any one region of the world—we see them from China to Colombia, from Bangladesh to Angola, from Cambodia to Qatar and from Mexico to Romania—and, according to the World Economic Forum, the abuse of workers’ rights around the world reached a record high in 2022. I believe that when public bodies make funding arrangements for procurement or anything else, they should be allowed to consider labour rights. Our concern is that the Bill does not allow that to happen.

I want to make it clear—as I have at every stage of the Bill—that the Scottish National party is concerned that antisemitism is on the rise around the world. We must not look away, and we must call it out whenever we see it. Antisemitism is a truly global and iniquitous poison. The Bill does not address the very epidemic of rising antisemitism that the Government claim they want to tackle. We are also concerned that the Government have ignored the evidence and concerns that many organisations have put forward about the Bill. The Balfour Project, the trade union Unison—of which I am proud to be a member—the Union of Jewish Students and Jews for Justice for Palestinians have all provided good evidence on their concerns about the Bill, but I am afraid they have not been taken on board by the Government when we have considered these matters.

The Government have rejected sensible amendments. Some of us have real concerns about clause 3 and very real concerns about clause 4. I never thought I would ever say it, and I am having to say again that I seek the removal of clause 4. The Government rejected amendments to protect devolution and other public bodies, and amendments to ensure compatibility with human rights. The changing of foreign policy, the impinging on the rights of devolved institutions and other public bodies, the ignoring of the evidence and the rejecting of sensible amendments are the key reasons why the Bill does not deserve a Third Reading.

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. There will be a three-minute limit until the end of the debate.

18:13

[Theresa Villiers (Chipping Barnet) (Con)]

I support the Bill and urge others to do so as well. But I also want to emphasise that I very much respect the views of those who have concerns about how it will operate in practice, and I know that all Members of the House, whatever their views on the Bill, remain committed to a peaceful settlement and a negotiated two-state solution.

I have just returned from a visit to Israel, which will appear in the next publication of the Register of Members’ Financial Interests, and I believe strongly that we should be backing Israel, not boycotting it. It has had to take military action to defend itself from a vile and repulsive terrorist attack in which more than 1,000 people lost their lives.

Last week I visited an exhibition in Tel Aviv about the Nova music festival, where hundreds of young people were gunned down. The displays of shoes, clothes and bags were chillingly reminiscent of Yad Vashem and the piles of belongings taken from Jewish people on arrival at the death camps. We can be in no doubt that the BDS movement is divisive and damaging: it rejects a two-state solution and consistently opposes efforts to bring Israelis and Palestinians together. As the Government have stated again this evening, BDS activities drive antisemitism. I am especially concerned about the impact of Israel boycotts on campus, where anti-Israel hatred so often morphs into racist treatment of Jewish students. It is entirely unacceptable for Jewish students to feel unable to be open about their faith or identity for fear of reprisals and harassment.

Furthermore, foreign policy is the responsibility of Government. It is, and always has been, a reserved power. There is no need or justification for universities, local authorities or other public bodies to run their own foreign policy. If sanctions or boycotts need to be imposed, that is a decision to be made in this House at a national level.

In conclusion, this important Bill, at a very difficult time, tackles a very serious problem. I commend it to the House and I hope my colleagues will back it.

18:16

[Layla Moran (Oxford West and Abingdon) (LD)]

It is with a heavy heart, again, that I am participating in today’s debate. Throughout December, alongside the Pope and the Archbishop of Canterbury, I sought to shed light on the suffering of Christians in Gaza city, who include my own family. Let me express sincere gratitude to Members across the House who have approached me in the last few days to ask how they are. Although the media attention mitigated the immediate dangers, the plight of Gaza’s residents persists—living hand to mouth, drinking unclean water and wondering how on earth the world is letting this happen. I am equally concerned about the impact on the streets in the UK. We are seeing a rise in antisemitism and anti-Muslim hate, which is unacceptable and must be called out.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

I, too, extend my sympathies to the hon. Lady and her family. My own council Cyngor Gwynedd called for an immediate ceasefire last month. Echoing people’s concerns, it condemned both Hamas violence and Israel’s disproportionate attacks on civilians. The Senedd has also called for a ceasefire. The Bill will restrict members of Welsh democratic institutions from voicing their views, and I am sure the hon. Lady agrees that such restriction on free speech is a threat to our democracy across the nations of the United Kingdom.

[Layla Moran]

I absolutely agree. The Bill does not respect directly elected bodies and those representatives. The issue is also about the timing. The death toll in Gaza now exceeds 22,000, and over 100 Israeli hostages remain. I do not put those numbers side by side to compare, because every single individual lost or missing is a tragedy. The humanitarian situation has reached new depths. A doctor constituent of mine who is working in Gaza said that he has seen preventable deaths due to staff shortages, and the medical system has totally collapsed. We now have injured with nowhere to go.

Tomorrow, the International Court of Justice will consider South Africa’s case on Israel’s alleged violations and obligations under the genocide convention. I am sure I need not remind this House that it was precisely local government-led interventions here in the UK—which would be outlawed under the Bill—that pressured the Thatcher Government to add their support to the people of South Africa. Yesterday, the Foreign Secretary said that he did not agree with the ICJ case and

“I do not think we should bandy around terms like genocide”.

South Africa is not bandying around terms. The ICJ is precisely the court in which those allegations should be looked at. The principle is simple: the UK should not pre-judge the outcome of the legal case. It should back the process and the court itself full-throatedly.

I end by simply saying that the Liberal Democrats will continue to advocate for an immediate bilateral ceasefire, securing hostage release, delivering aid and working towards that precious two-state solution. Our response to this war will be judged by history. In a fractured world where democracies need to be strengthened and the international rules-based order helped, the Bill undermines local government, damages our global standing and divides our streets. This place should be a place where we unite, not divide people. Frankly, the Liberal Democrats believe that this debate should not be happening. We stand with humanity and peace, and it is for that reason that we will be voting against the Bill today.

18:20

[Sir Michael Ellis (Northampton North) (Con)]

The Government’s introduction of the Bill is welcome and I support it. It was in a Conservative party manifesto years ago, and we have a mandate and an obligation to pass it. This legislation will finally stop public bodies from wrongfully pursuing their own independent foreign policy agenda, which have almost exclusively been the result of divisive, antisemitic partisan campaigns pursued by the antisemitic BDS movement. Of course, as has already been mentioned, that is a movement whose executive board, the BDS national committee, is a coalition of proscribed terrorist groups, including Hamas. So I support the Bill.

The boycott movement has undeniably succeeded, sadly, up to this point in its chilling and racist effects. Who can forget the loathsome policy—frankly, it was reminiscent of 20th century fascism—of West Dunbartonshire Council in 2011, when its libraries banned new book volumes printed or published in the Jewish state? Yes, it banned Jewish books. Allied Universal, the parent company of G4S, sold a business in Israel following pressure from the movement. In a series of councils across England, Scotland and Wales, including Leicester City Council, Swansea City Council and Gwynedd Council, motions were passed banning imports from Israel. They are inherently discriminatory and a breach of our World Trade Organisation obligations. Those councils are an embarrassment to this country and they should have been ashamed of their racism.

The supreme irony is that Palestinian and Israeli businesses in the region condemn the movement. If anyone takes the trouble to listen to the leaders of those businesses, they are instead seeking bilateralism. Nearly 100,000 Palestinians are employed by Israeli companies. Their workforces receive higher wages and enjoy greater protections than elsewhere in the Palestinian economy and its equivalents across the middle east. Regrettably, the BDS movement strengthens extremists and weakens moderates, which is why it has even opposed peaceful coexistence projects, such as Heartbeat and OneVoice, that bring Israelis and Palestinians together.

Speaking as a former Attorney General, I assure the House that the ban will not apply to individuals or private organisations where they are not carrying out public functions. That is testimony to the Government’s respect for freedom of speech.

[Richard Graham (Gloucester) (Con)]

My right hon. and learned Friend has confirmed that the Bill will not apply to individuals, which is absolutely right and reassuring. Does he agree that it is also vital that the Bill should not be seen to interfere in any way with British Government policy on the illegal activity by Israeli settlers in the Occupied Palestinian Territories, or indeed the sanctions that the Government have already applied against some of them?

[Sir Michael Ellis]

I am grateful for that question and I think the Secretary of State has answered it in the affirmative. The Bill will not change the UK’s approach to the middle east peace process or its position on settlements, and nor should it: whichever Government happen to be in power, it is only right that this House and the Executive of this country make those sorts of decisions. It will, however, strengthen the Government’s diplomatic hand by rightfully returning the powers that have gradually been siphoned away by local authorities, third-tier councils and the rest of it, encourage peaceful coexistence and fulfil our manifesto commitment.

The Bill will push back against the malevolent anti-western forces of Hamas. It is those that threaten our way of life and dissolve our security. It is that movement that has been abetting malicious international forces in Tehran and in the Kremlin. It is for those reasons that the House not only has a responsibility but a fundamental duty to vote for the Bill today.

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I shall be calling the Secretary of State to wind up the debate no later than 6.42 pm, and the Division will take place at 6.45 pm.

18:24

[Claudia Webbe (Leicester East) (Ind)]

As we have already heard, the Bill is largely an explicit reaction to the success of Leicester City Council in defeating legal attempts in 2018 to force it to end its boycott of goods from illegal Israeli settlements until Israel complies with international law and ends its illegal occupation. Arguably, Leicester’s stance has been thoroughly vindicated by events over the last few months, during which Israel has launched what South Africa and many United Nations bodies have called “genocidal acts” on Gaza, which have also killed hundreds in the west bank and the Occupied Palestinian Territories, while protecting Israeli settlers as they beat and even kill Palestinians trying to go about their peaceful lives.

While Leicester and other councils have been shown to be doing the right thing, the Government have found themselves yet again on the wrong side of the issue, backing the oppressor against the oppressed and giving the Israeli regime licence to kill tens of thousands. Many of my constituents back the council’s actions and bitterly oppose Israel’s war crimes against Palestinians, and the illegal settlements whose proliferation has only accelerated. The Bill would prevent Leicester and councils like it from carrying out the will of the voters who elected them, tying the hands of the principled and enforcing the will of a Government who have shown that they prize geopolitical and economic ends above the lives of tens of thousands of innocent children, women, teachers, doctors, aid workers and journalists. It is a Bill designed to hobble democracy and decency. It subjugates local British democracy to the actions and wishes of a foreign occupying power. It is clearly also intended to circumvent the will of the court, given that Leicester comprehensively won its case against those trying to overturn its boycott.

The Conservatives appear to have little regard for South Africa’s forensically compiled case against Israel, which has invoked the Convention on the Prevention and Punishment of the Crime of Genocide at the International Court of Justice. Tomorrow that case will begin to be heard at The Hague. A boycott, divestment and sanctions campaign lasting almost three decades was a vital factor in the bringing down of South African apartheid. South Africa knows all about the power of such a peaceful but resolute campaign, and is uniquely well placed to bring a case to the International Court of Justice, invoking the genocide convention against Israel. However, despite having only six weeks ago appended their signature to Gambia’s genocide case at the International Court of Justice against Myanmar, specifically because of Myanmar’s treatment of children—

[Mr Deputy Speaker]

Order. The hon. Lady’s time is up.

18:24

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

There is about £70 billion of local government spending in the UK, which is a very significant economic factor. It is entirely right that, in a context where local authorities have their remit within the Public Services (Social Value) Act 2012 and the most advantageous tender rules, introduced by the Department for Levelling Up, Housing and Communities, they are able to ensure that that money is spent in a way that fully expresses their ambitions and the aspirations and views of their local communities. Clearly we need to ensure—and this is why I support the Bill so strongly—that we have appropriate limits when there are risks that that will stray into causing real, serious division and interfere with what is more appropriately national policy.

During my time at the Local Government Association, I engaged in a good deal of effort working with the local government friends of Israel group and observing the massive amount of BDS lobbying of local councillors. I must pay tribute to our local government counterparts. Overwhelmingly, despite that pressure, they took the view that this was not an appropriate course of action, and that in fact they should ensure that the concerns and aspirations of their residents were front and centre rather than engaging with international campaigns that were both beyond their remit and at risk of conflicting with the more broadly expressed objectives of the country.

We should not forget—this is why what the Secretary of State said about retaining the capacity for freedom of speech is so important—that we have counterparts in local government who are specifically elected on an international platform. For example, many will recall Justice for Kashmir, later the People’s Justice party, which became a significant force in the politics of Birmingham City Council. It was specifically elected on an international law issue. Later, its members joined the Liberal Democrats. Clearly, communities felt that the issue was so important that they were prepared to elect local councillors on that platform.

As a Member who represents a diverse constituency and who has heard a lot from people on both sides of this debate, I want to finish by saying that the incredibly bitter divisions that have arisen about the Bill and other issues are not seen and felt by my constituents in day-to-day life. When a local Muslim charity wanted a base, it found one in St John’s church. When it wanted to raise funds to purchase its own permanent base, the local synagogue spoke out in support of that. There is a real sense of solidarity among our communities, regardless of faith or any other element of diversity in their backgrounds. We need to ensure that BDS, which solely targets the state of Israel, is restricted from inflicting any further damage on our communities.

18:30

[Andy Slaughter (Hammersmith) (Lab)]

This is a bad Bill both in intent and in the methods that it adopts, which are harmful to Britain’s reputation around the world, to human rights, to the proper conduct of state actors and corporations, to citizens’ freedom of speech and to the actions of public and elected bodies. It has nothing to recommend it. It aims to prevent any boycott and to affect the right of public bodies, especially those that are elected, to consider factors beyond commercial procurement and investment decisions, such as ethical factors, which are often also commercially sensible factors. It neuters the exercise of choice by pension funds, employees and citizens. It constricts the freedom of expression of religious groups, trade unions and elected councillors. It proscribes freedom of speech in a draconian way, which sets an unfortunate precedent.

[Matt Western (Warwick and Leamington) (Lab)]

Does my hon. Friend share concerns that clause 4 may contradict the Higher Education (Freedom of Speech) Act 2023 and go against the academic freedom that is enjoyed on university campuses?

[Andy Slaughter]

I do not think it is lost on any hon. Member that the Bill flatly contradicts the Government’s rhetoric on freedom of speech in a most draconian way.

The so-called exceptions require actions to be unlawful before action can be taken, but we know how difficult it is for foreign states to have convictions against them in that way. The Government produced no evidence, only assertion, to support the provisions.

The Bill fails every test. It weakens human rights protections for persecuted groups around the world, from the Rohingya to the Uyghurs. It particularly fails Israel and Palestine. It singles out Israel for special treatment. In the words of Daniel Levy, the respected commentator and former Israeli negotiator when talking to MPs earlier today, the Bill demands a lower, not a higher standard of Israel. It does not distinguish between Israel and the Occupied Palestinian Territories. Singling out Israel and conflating Israel and the OPT breaks the consensus that both main parties have maintained under successive Governments.

The subject of settlements often comes up. For example, the right hon. Member for North West Hampshire (Kit Malthouse) and I raised it in the urgent question earlier this week. Why, at a time when Foreign Office guidance advises against investment in settlements, when the Government have rightly spoken out about settlements being reintroduced in Gaza and rightly talked about sanctions against violent settlers, do the Government try to prevent, through the Bill, any action from being taken against settlements that are illegal under international law? A ban on settlement goods or investment in settlements is not the same in any respect as a boycott. The Government constantly dodge that issue, and they need to deal with it. The signals that they are sending out are entirely contradictory.

I hope that the Bill will be defeated. If it is not defeated and the reasoned amendment is not accepted tonight, I hope that we will return to the issue in the other place and that the Bill will not see the light of day before a general election. It certainly should not. It would be a shameful legacy, even for this Government.

18:34

[Nicola Richards (West Bromwich East) (Con)]

I thank my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities for bringing forward this landmark Bill. The Government should be applauded for taking such strong action.

The Bill’s intention to promote community cohesion should be endorsed by all Members of this House, especially when antisemitism has sharply risen here in the UK since 7 October, the day that saw the most deaths of Jewish people since the holocaust, in a horrendous massacre committed by the Hamas terrorist group. Jews worldwide have suffered anti-Jewish hatred in response to that slaughter.

Before Israel had even responded, before Israel and its allies could even fathom the full extent of the utter horror sown by Hamas, demonstrators filled the streets of London to celebrate Hamas’s attack. Flags flown in solidarity with our ally Israel were vandalised. In the two months from 7 October to 13 December. the CST recorded 2,098 antisemitic incidents here in the UK, dwarfing the 800 incidents recorded in the first nine months of 2023.

Jewish businesses have been targeted, as well as businesses with any small connection to Jewish owners or the Jewish state. Social media is rife with long lists of companies to boycott, just because the BDS movement does not like the people who run them. Intimidating protests have taken place outside the likes of Zara and McDonald’s. Young children have been taunted after enjoying their Happy Meal at the fast food chain and, in one incident, rodents were released into a McDonald’s chain in Birmingham, in my neighbouring constituency.

Jewish students have been boycotted, with university societies and Sunday league football clubs refusing to play against Jewish players and societies. BDS targets not only businesses but people. It is appalling that publicly funded bodies would give succour to such division and extremism.

Yesterday, I held a Westminster Hall debate on the increase in antisemitic offences, and I was pleased to hear colleagues’ commitment to stamping out anti-Jewish hatred on the streets of the UK. That commitment to reducing antisemitism will be helped by voting in favour of this Bill today.

The BDS movement is antisemitic. The movement is against peace and normalisation. It calls for the eradication of Israel, the world’s only Jewish state. The Anti-Defamation League reports that BDS campaigns frequently include antisemitic tropes of Jewish power and dual loyalty, as well as accusing the Jewish people and Israel of being culpable for crises across the globe. BDS activity advanced by public bodies has legitimised and driven antisemitism in the UK. By exclusively targeting Israel and singling out Jewish people in the UK, it has created divisions that our society needs to be repaired.

This is our opportunity to reassure the Jewish community and show them our support. BDS unfairly targets Jewish businesses and people, as well as Palestinians who work for Israeli companies—I have spoken about that before. At a time when we strive for peace in the middle east, BDS inflames tensions and rejects co-existence. I stand in full support of this Bill and of the Jewish community here in the UK and abroad.

18:38

[Alison Thewliss (Glasgow Central) (SNP)]

I oppose this anti-boycott Bill on several points. It is difficult to see its timing as anything other than a cynical move by the UK Government. The Secretary of State talks about support for community cohesion and a peaceful two-state solution, but this Bill does nothing to achieve either. Instead, it will seriously curtail our civil liberties and undermine devolution. If the volume of correspondence I have received on this Bill is any indication, the people of Glasgow, as ever, see right through the Tories.

My hon. Friend the Member for Glasgow South West (Chris Stephens) mentioned the granting of the freedom of the city of Glasgow to Nelson Mandela. In 1986, Glasgow District Council renamed St George’s Place as Nelson Mandela Place as a mark of the city’s solidarity with Nelson Mandela, who was still imprisoned at the time. The point was that the South African consulate was located on the street and was forced to use an address bearing the name of South Africa’s most high-profile political prisoner.

This act of international resistance would simply not have been possible if this legislation had been in place in 1986 as, at that time, the UK Government were still refusing to condemn apartheid. Who would want to speak with one voice when that was what the UK Government were saying on Scotland’s behalf? Indeed, even discussion of such an act would have been unlikely to take place under clause 4’s gagging effect. According to Liberty:

“In practice, a public body seeking to comply with the Bill is likely to take steps to distance itself from anything which suggests that it holds any political or moral views as to the conduct of foreign states, for fear that it could be found to be in breach of the ban or the related prohibition on statements.”

This legislation will undoubtedly alter the executive competence of Scottish Ministers and should be opposed by all of those who value devolution.

The provisions in this Bill are disproportionate and, frankly, unnecessary. The Bill hands sweeping powers to the Secretary of State and the Treasury to request information from the devolved Administrations to assess whether a breach of the boycott ban or gagging clause has occurred and to impose a compliance notice. This is a huge overstep. There are already significant protections in Scottish procurement legislation for bidders from countries where a relevant trade agreement exists. It is not clear what problem the UK Government are trying to fix with this Bill. Worse, the Bill makes it unlawful for Scottish Ministers even to publish a statement that they would have acted in a certain way if not curtailed by these measures. The legislative consent memorandum published by the Deputy First Minister describes this as an “assault on democratic expression”.

As we head into an election year, the Prime Minister is affirming that the legacy he and his predecessors will leave behind will be one of a democracy in tatters, faith in public institutions annihilated and our hard-won rights stripped bare. It is increasingly the case that the only hope left for people in Scotland to protect our democratic freedoms is the hope of an independent Scotland.

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Miriam Cates, to speak until 6.42 pm.

18:41

[Miriam Cates (Penistone and Stocksbridge) (Con)]

I support this legislation, but I find it very sad that we need it. When I first heard about the holocaust as a child at school, I was shocked. I was shocked at the scale of the evil, the horror of what happened to the Jews and the fact that it could have been allowed to happen. As an adult, I have visited Yad Vashem, Auschwitz and the forests in Poland where thousands upon thousands of Jews, including children, were murdered in cold blood by Nazi soldiers because they were Jews.

No one walks away from those sites in any doubt about the potential consequences of antisemitism, but one thing I was sure of before 7 October was that that would never happen again. Surely the world—this country, at least—is alive to the consequences of anti-Jewish attitudes, to the importance of not tolerating antisemitism and to the need for Israel, an Israel that has the same right to exist and to defend itself as any other sovereign nation. But now I am not so convinced that we have learned the lessons of antisemitism. Polling shows shocking levels of support for Hamas among young people here and in the United States. That is being driven by social media, but it is also being fostered—

[Mr Deputy Speaker]

Order. With the leave of the House, I call the Secretary of State.

18:42

[Michael Gove]

Thank you very much, Mr Deputy Speaker. I would like to thank everyone who has spoken on Third Reading, including my hon. Friend the Member for Penistone and Stocksbridge (Miriam Cates), who was articulating the vital importance of recognising where antisemitism begins and where it ends. I also wish to thank those who spoke powerfully from a personal point of view: my right hon. Friend the Member for Chipping Barnet (Theresa Villiers), who has only recently returned from Israel, of which she has been such a strong friend and supporter, and the hon. Member for Oxford West and Abingdon (Layla Moran). Our heart goes out to not only her family, but all those suffering in Gaza at the moment.

I wish briefly to address one misconception, which is that this Bill acts as an effective restraint—a gagging clause—on free speech. The hon. Member for Hammersmith (Andy Slaughter) talked of faith groups being silenced and so on. As the explanatory notes make clear, individuals are in no way prohibited from expressing their view, however disagreeable we might find it, on the conflict in Israel and Gaza, or from expressing a view, which I would abhor, that the state of Israel should not exist. What is clear is that only public authorities, not individuals, are governed by this Bill. The hon. Member for Warwick and Leamington (Matt Western) rightly drew attention to the importance of freedom of speech, not least on campus and with academic freedom at its heart. I can reassure him, and he can be reassured, that whatever other misgivings he has about this Bill, it is not a direct assault on the principle of free speech. It is simply, clearly and tightly drawn in order to ensure that public bodies, public authorities, cannot abuse the position that has been vested in them as corporate bodies to more broadly undermine the foreign policy of the UK or, particularly in this case, as has been pointed out by a number of hon. Members and indeed by the Opposition Front-Bench team, to give succour to an explicitly antisemitic campaign. Again, I stress there will be different opinions across the House about the best way of securing Israel and of securing freedom for the Palestinians. The fact that debates are so intense in this House reflects the care and passion that so many Members bring to that debate.

However, the Bill is explicitly about making sure that citizens in the United Kingdom, who have been targeted by explicitly antisemitic campaigns, get the protection for which the organisations that stand up for them have been asking. In the spirit of the Community Security Trust, the Board of Deputies of British Jews and the Jewish Leadership Council, I hope that as many Members as possible—

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

On that point, will the Secretary of State give way?

[Michael Gove]

I will not as I have only seconds left. I hope that as many Members as possible will feel that they can support the legislation.

18:45

More than one hour having elapsed since the commencement of proceedings on the first motion, the Deputy Speaker put the Questions necessary for the disposal of the business to be concluded at that time (Order, 25 October). Question put, That the amendment be made.

18:45

Division 40

Ayes: 228

---

Labour: 163
Scottish National Party: 38
Liberal Democrat: 13
Independent: 6
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Conservative: 2
Green Party: 1
Alba Party: 1

Noes: 284

---

Conservative: 279
Independent: 2
Democratic Unionist Party: 1

Question put forthwith (Standing Order No. 62(2)), That the Bill be now read the

Third time.

18:59

Division 41

Ayes: 282

---

Conservative: 279
Independent: 2
Democratic Unionist Party: 1

Noes: 235

---

Labour: 162
Scottish National Party: 40
Liberal Democrat: 13
Conservative: 8
Independent: 6
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Green Party: 1
Alba Party: 1

Bill read the Third time and passed.

Business without Debate

Wednesday 10th January 2024 Commons Chamber

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Electronic Communications

That the draft Online Safety (List of Overseas Regulators) Regulations 2024, which were laid before this House on 28 November 2023, be approved.—(Mr Mohindra.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Terms and Conditions of Employment

That the draft National Minimum Wage (Amendment) (No. 2) Regulations 2023, which were laid before this House on 13 September 2023, in the last Session of Parliament, be approved.—(Mr Mohindra.)

Question agreed to.

Inter Faith Network for the UK

Wednesday 10th January 2024 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Mohindra.)

19:13

[Holly Lynch (Halifax) (Lab)]

I sought to secure this debate to be an advocate for the great work of the Inter Faith Network, which feels more important and more necessary than ever before, but also to be clear with the Government that the network faces imminent closure if they do not deliver on their July 2023 commitment to continue to provide funding.

Here in the UK, we are a religiously diverse country. The Inter Faith Network was founded in 1987 as a way to advance public knowledge and mutual understanding of the teachings, traditions and practices of the different faith communities in Britain, including an awareness of both their distinctive features and their common ground, and to promote good relations between people of different faiths in this country. I do not think anyone could find fault with that.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I thank my hon. Friend for securing this debate. I am a big fan of Hounslow Friends of Faith because of the work it has done to bring communities together—particularly at times of heightened community tensions that affect our communities—but also its other activities, such as a public health video on suicide prevention. Does my hon. Friend agree that the success of our local Friends of Faith or equivalent organisations is only possible because there is a robust national organisation that supports them in their work?

[Holly Lynch]

I am really grateful to my hon. Friend for that intervention. She is absolutely right, and I join her in paying tribute to Hounslow Friends of Faith. She has shared a really powerful example of where faith communities can work together to deliver truly beneficial projects and initiatives that go deep into communities, perhaps in ways that other statutory agencies cannot.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I thank my hon. Friend for allowing me to follow the intervention made by my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury). In the letter I wrote to the Secretary of State on the funding issue in May last year, I made the point that for almost four decades the Inter Faith Network for the UK has been dedicated to increasing understanding and co-operation between peoples of different faiths.

Does my hon. Friend agree with Charanjit Singh, chair of Hounslow Friends of Faith—making such a contribution at times of tension when dialogue is most needed, as has been outlined—that we need the Inter Faith Network to be supported, so that the national body can make sure that local organisations can do their vital grassroots work?

[Holly Lynch]

I am once again grateful to my hon. Friend. She has made a really powerful case for the support that the national network provides to those local community groups, which then facilitate and host the dialogue that is not always easy, but is absolutely vital. We are all so grateful for the role and the benefit it then has within our communities, and how it brings people together at times when we most need that really important work to be undertaken. She is absolutely right.

The IFN’s member bodies include national faith community representative bodies from the Buddhist, Christian, Hindu, Jewish, Muslim and Sikh faiths, such as the Board of Deputies of British Jews, Hindu Council UK, the Muslim Council of Britain and the Methodist Council, to name just a handful.

[Afzal Khan (Manchester, Gorton) (Lab)]

In my own beautiful city of Manchester, incredible activities and inter-faith work goes on. Two weeks ago, an article in The Telegraph insinuated that the Secretary of State for Levelling Up is concerned that the Muslim Council of Britain is a member of the Inter Faith Network. The Muslim Council of Britain upholds British values, and champions mutual respect and tolerance by coming together through inter-faith initiatives. It has long been a trusted group consulted by many Members of this House, although the Conservative Government have consistently rejected Muslim civil society groups. Does my hon. Friend agree that these attacks on the Inter Faith Network and the Muslim Council of Britain are disappointing, and take away from the important work that they do?

[Holly Lynch]

Again, I am grateful to my hon. Friend. He has provided another powerful example of how that inter-faith work is so important in his part of the world, Greater Manchester—we are already hearing examples from right across the country. I know that the Inter Faith Network is incredibly proud to host the Muslim Council of Britain among its members. I know that my hon. Friend does a great deal of work with the Muslim Council of Britain; long may that continue, because it is an incredibly important partner in that dialogue and those conversations, and again, can carry some of those messages deep into communities in a way that some other organisations cannot. My hon. Friend has made an incredibly powerful point.

As well as those I have mentioned, small but significant faith communities are also represented, including the Quakers, Baha’i, Spiritualists and Pagans. The IFN’s members also include national and regional inter-faith organisations, local inter-faith bodies, and educational and academic bodies with an interest in multi-faith and inter-faith issues, such as the University of Salford Faith Centre and the Cambridge Interfaith Programme.

[Jim Shannon (Strangford) (DUP)]

First, I congratulate the hon. Lady on bringing this forward. I spoke to her beforehand; she has brought forward a subject that is close to her heart, close to mine and, I believe, close to the hearts of everyone in the Chamber.

As the hon. Lady will know, I chair the all-party parliamentary group on international freedom of religion or belief. We speak up for those with Christian faith, those with other faiths and those with no faith, because we encapsulate or try to encapsulate the very point that the hon. Lady is putting forward. I am greatly supportive of this issue.

Does the hon. Lady believe that the appointment of the special envoy for freedom of religion or belief was a step in the right direction that has achieved a great deal? Does she further agree that more can and should be done to show support for all faiths—all of them—throughout the United Kingdom of Great Britain and Northern Ireland, and to recognise the sterling work carried out by the faith-based groups that the hon. Lady has referred to across the UK?

[Holly Lynch]

I am really grateful to the hon. Member; it would not be an Adjournment debate without a thoughtful and powerful contribution from him. He does a great deal of work in this area and is an enormous advocate for so many of the faith groups that he brings together and is a champion for in this place, so I pay tribute to him. He made a very good point in his intervention, and I thank him for that.

[Bob Blackman (Harrow East) (Con)]

I thank the hon. Lady for initiating this debate. In Harrow, we certainly have a very strong inter-faith community that brings together and organises everyone from every religion in a very positive way, which is extremely helpful, particularly at times of trouble. However, there have been criticisms of the Inter Faith Network—not necessarily about its aims, but about the way it has been run. I have had supportive comments from some elements in Harrow to say what a wonderful job it is doing, but I have also heard criticism of the way it is being run. Has she has had a chance to examine those criticisms and see whether there is any foundation to them whatsoever?

[Holly Lynch]

I welcome the intervention. As part of preparations for this debate, I have certainly looked into any concerns about and any criticisms made of the Inter Faith Network. I do not think it comes as a surprise that there are those who are uncomfortable about inter-faith work; that is actually where such a partnership approach very much needs allies in this place.

I have looked carefully at the way the network is organised and run, and it appears to me to be incredibly diligent. I have touched on its broad membership, to which the hon. Gentleman also alluded. It is in demonstrating the critical mass of those different organisations being brought together that says to me that nobody is doing this work as successfully as the network is. It is as effective as it is because so many people trust the work it is doing and have bought into its aims and the way it conducts its business. I have been able to thoroughly satisfy myself as part of this process that it is doing very good work, is run very diligent way and is effective at what it does. I hope that, in the rest of my speech, I can satisfy any further points to that effect.

[John McDonnell (Hayes and Harlington) (Lab)]

What has restored my faith and confidence in the network is how it has responded to some of the criticisms in a very open way and by inviting people into explain their views, rather than getting drawn into what could be sectarian rows or internecine strife on religious and other grounds. How it has reacted has in many ways demonstrated the strength of the organisation.

[Holly Lynch]

Again, I am very grateful to my right hon. Friend for that point. Some of the IFN’s publications, such as the letter from the co-chairs to the editor of The Telegraph only this week, have been very candid and transparent. It has been incredibly accountable in the work it does and the way it goes about it, so I entirely agree with him on that point.

[Sir Stephen Timms (East Ham) (Lab)]

Will my hon. Friend give way?

[Holly Lynch]

I will give way, but then I will have to make some progress.

[Sir Stephen Timms]

Is it not clear that the kind of dialogue across faith divides that the Inter Faith Network facilitates is more needed at this moment than ever? Unless the Government keep their promise to provide funding for this financial year, we are going to lose that capacity entirely. Would that not be a terrible tragedy?

[Holly Lynch]

My right hon. Friend is exactly right, and I thank him for making that point. We need the work that the IFN does now more than ever. If we lose that—those friendships, the trust born out of that facilitated membership and the programmes, initiatives and dialogue built up over years and years—it will take an awfully long time to rebuild it. Even should funding perhaps become available in the future, it would be gone. It would take a lot time and effort to put it back together, and that would be an absolute travesty. As I say, we need that work now more than ever.

I will make some progress. All the IFN’s members are clearly listed on its website. Those I have mentioned give just a hint of the range and number of members who proudly belong. Examples of its work include leading a programme of events to celebrate national Inter Faith Week every November. Last year’s events, which included a parliamentary drop-in, engaged more people than ever before. The network publishes practical guidance, such as the “Looking after one another: the safety and security of our faith communities” guide, in partnership with the Department for Levelling Up, Housing and Communities, the Home Office, the Crown Prosecution Service, the National Police Chiefs’ Council, the National Fire Chiefs Council and the Equality and Human Rights Commission. It has supported the development and strengthening of local inter-faith engagement through publications such as “Deep connections: Women’s local inter faith initiatives in the UK”, which was published in March last year. It brings together national faith community bodies to discuss topics such as faith and organ donation, social care and hate crime and to share good practice on working with other faith communities.

The IFN monitors and evaluates its work carefully to ensure that it is continuing to be effective in enabling an ever-growing number of people in the UK to take part and benefit from stronger inter-faith relations, to tackle ignorance, prejudice and hatred linked to religious identity, to grow their religious literacy, to develop bonds of trust and friendship and to co-operate on social action projects for the benefit of wider society.

While so many MPs will speak with great pride about representing diverse communities, as the former chair of all-party parliamentary group on social integration I recognise that we also need to provide opportunities for people to engage, interact and learn about each other. Only when we nurture the relationships and friendships between different people do we establish trust and break down barriers.

The international backdrop to this inter-faith work in the UK means, as we have discussed, that it could not be more important. The horror of Hamas’s attack on Israel on 7 October, followed by the utter devastation of Israel’s response upon the people of Gaza, have inevitably impacted on communities here in the UK. Tell MAMA recorded 1,432 anti-Muslim cases between 7 October and 13 December—a sevenfold increase in reported incidents. The Community Safety Trust reports that it has seen an increase in anti-Jewish hate acts of 534% in the same period, compared with the same period last year.

We know that we have to do more to promote and nurture trust, understanding and respect between different communities, and this feels like a time when we should be supporting, not undermining, inter-faith work. Alongside that, I am aware that the Government last published their four-year hate crime action plan in 2016. It was updated in 2018, but it has not been updated since, nor has a new plan been published. Given these stark increases in unacceptable hate crimes, I would be grateful if the Minister clarified when we can expect some progress on that front.

From 2001 onwards, the IFN has sought and received grant funding from Government that pays for its very small team of four people and to facilitate those incredibly important meetings. Since then, funding from Government under successive Administrations towards IFN’s work programme has been a vital component of funding, alongside other forms of support, such as donations from individuals, trusts, faith communities, other bodies and membership fees.

It was a real setback when, on 31 March last year, IFN received a letter from an official at the Department for Levelling Up, Housing and Communities saying that further funding would not be given from April 2023 onwards. I, like many MPs here for this debate, tabled written parliamentary questions, wrote to Ministers and asked questions in the Chamber to query the logic of that and raise concerns about how it had been handled. However, on 7 July 2023, IFN received a letter from DLUHC saying that following a review by Ministers of funded programmes across the communities and integration portfolio, funding was now being offered to IFN. The funding was offered in the form of access to 2022-23 underspend plus some new funding. The letter explained that the money would be for use from July 2023 to March 2024. It would be subject to grant funding agreements and other conditions.

Despite the best efforts of IFN and its allies, including many of us here in Parliament, as things currently stand, the July 2023 to March 2024 grant funding agreement has not been provided and therefore that funding cannot be accessed. I am reliably informed that when the present offer of funding was made last July, the letter said that funding would not be provided beyond March 2024. So while the IFN continues to try to find alternative solutions, the truth is that its small team of staff have been given notice of redundancy. The Inter Faith Network is about to close—it is on life support—without clarity from the Government about whether financial support will be forthcoming.

As we have touched on, the Inter Faith Network has critics. I think that is inevitable—there will always be some who feel threatened by inter-faith work—but I hope that the Government would be proud to support it. In addressing some of the criticisms made, it is worth stressing that the co-chairs of the network have made clear that the IFN has a long-standing policy on the making of statements, which precludes making direct comment on overseas events; instead, members work together on responding to the impact of any such events on communities here in the UK.

It is worth saying that anyone seeking to criticise the Inter Faith Network for failing to single-handedly deliver world peace would be painfully misguided. The work that it does, and the dialogue it facilitates, is only a good thing. I hope that the Minister will agree, at least in principle, that we need more of it, not less.

I look forward to what the Minister has to say. Before I close, I take this opportunity to pay tribute to the co-chairs of the Inter Faith Network, Mr Narendra Waghela and Rev. Canon Hilary Barber, as well as the executive director Harriet Crabtree. Hilary Barber is the reverend of Halifax minster in my constituency and has been instrumental in establishing Calderdale’s inter-faith council as well as now holding this special national role. I pay tribute to him and all those who work so hard in our communities on inter-faith initiatives to benefit all our communities.

[Michael Shanks (Rutherglen and Hamilton West) (Lab)]

I thank my hon. Friend for bringing forward this important debate and draw the House’s attention to my entry in the Register of Members’ Financial Interests: I am proud to be a trustee of Interfaith Glasgow, which runs a weekend club for refugees in the city. Interfaith Glasgow builds connections between different groups and reduces social isolation. In the long run, it saves the Government money by trying to provide preventive support to people who need it, as well as bringing people together from their various communities. To pick up what my hon. Friend said earlier in her speech, does she agree that such initiatives really bring our communities together and that now, when our communities perhaps seem more divided than at any time recently—although I am not sure that they are as much as it would seem—and the news is often full of negative stories of division between communities, they should be supported in any possible way?

[Holly Lynch]

I am grateful to my hon. Friend for sharing that example from Glasgow, which demonstrates inter-faith work at its best, getting out and delivering initiatives and programmes that are so effective at bringing people together when it feels like we are living in quite a divided world. I thank him for his work as part of Interfaith Glasgow and all those he works with who make that programme possible.

I hope that the Minister has heard from across the Chamber and across the country the value of that work in our communities, with the support of the national Inter Faith Network in bringing people together—we absolutely need that to be done—to deliver important dialogue. It is not always easy, but it is effective; it does work. We will all feel the benefit of those conversations. I hope he has some positive news for us in his response.

19:33

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Simon Hoare)]

First, and in all sincerity, I thank the hon. Member for Halifax (Holly Lynch) both for the way in which she approached the debate and for the strong, powerful advocacy she presented to the House of the work, the value and the merit of the network. She set out the case very clearly indeed. I am delighted to respond to the debate. The policy Minister for this issue is my noble Friend Baroness Scott of Bybrook. I am the faith Minister in the Department, which is why it falls to me to respond to this Adjournment debate.

I have been struck by the heartfelt and very sincere comments from colleagues from both the main parties against a backdrop of increasing tension, the root cause of which is often religious and historical differences. Vital work is done across our communities and societies by so many groups and organisations, including the Inter Faith Network, to build bridges, develop understanding and host and facilitate conversations. If ever there were a case for jaw-jaw being more important than war-war, it is that. I commend all those from all faith groups across the United Kingdom who partake in that important work.

The Government are fully persuaded of the importance of developing and maintaining strong relationships across faiths and beliefs. That is crucial to the fabric of our nation. We know full well that faith communities play a key role in society, and not just within their own community, as very often those people involved are motivated to get involved with a whole mesh of community networks and other voluntary organisations. They meet colleagues, develop friendships and get each other involved. That is a vital part of people’s identity. We fully support the invaluable work done by people around the country who are inspired and motivated by their faith to do good for others.

[Mr Jonathan Lord (Woking) (Con)]

The Minister is speaking eloquently. I would like to mention the Woking People of Faith. Woking has some extremely strong faith communities, which also work together. That has been great over the years for community cohesion, and never has it been more important than at the moment when our borough faces financial challenges. Our churches and mosques are stepping up to work even harder to help the vulnerable. I agree very much with what he is saying, and I think it would be helpful to have more support at a national level for these fantastic local initiatives.

[Simon Hoare]

I will be speaking to the leader of my hon. Friend’s council tomorrow on the wider matter of local government finance, but we are not here to discuss that this evening. He makes an incredibly valid and important point, which I was seeking to make, too: those who are involved in faith groups reach out to do other things in our communities and societies, bringing people together. At a time when people often feel terribly isolated, when the only community they think exists is on the screen that they hold on their hands, those interactions of conversation and common humanity are phenomenally important.

I make absolutely no apology for declaring myself a proud multiculturalist, believing entirely that our country is stronger, richer and more powerful—and I do not mean financially richer or muscularly more powerful—and a better place as a result of our faith and other communities in our country doing all that they do. We are incredibly supportive of those efforts to bring people together.

His Majesty the King has often reflected on the significance of better understanding of faiths, and has spoken of the importance of remaining united in partnership and friendship. We know full well that he recently held an event at the palace to speak with young people. It is crucial that young people see faith not as an abstract thing or something for older people, but as something that unites the generations. Inter-faith activity is important, too, and learning and understanding more about different faiths can help bring about positive change in our society. As we live in an increasingly diverse society—for which I make no apology, and I doubt anyone in the House does—improving inter-faith relations is even more important.

The conflict between Israel and Hamas and its impact on community tensions in the UK has brought into sharp focus a number of issues. We must continue to encourage—if at any time, certainly now—a greater understanding of different faiths and beliefs to help foster better relationships and eliminate all forms of intolerance or hatred.

[Sir Stephen Timms]

I am conscious that time is running out. Are the Government going to honour the promise they made to the IFN in their letter of July last year?

[Simon Hoare]

I will come on to that in a moment if the right hon. Gentleman will just bear with me. The Department is—as per its letter of 7 July 2023, which was sent to Harriet Crabtree OBE—undertaking a variety of analyses with regard to the network. I hope my right hon. Friend the Secretary of State will be making an announcement in the not too distant future, but I am afraid I am not able to confirm that this evening.

[Holly Lynch]

I stress again that the staff have been made redundant and are working their notice. It will be such a devastating tragedy if the money comes too late and, because of Government inaction, it is forced to close. I just want to stress that point to the Minister one more time.

[Simon Hoare]

Let me assure the hon. Lady that I hear precisely what she has said. I will communicate that through to ministerial colleagues and to officials in the Department who are dealing with this matter. She makes the point powerfully and I hear what she says. Any organisation that secures funding from the public sector, be it in central or local government, always values certainty and security. I am seized of that and of the time pressures to which she alludes.

[Seema Malhotra]

Could the Minister confirm whether the Department has also been in touch with the IFN to say that there is going to be a forthcoming announcement?

[Simon Hoare]

The letter of 7 July set out to Dr Crabtree the funding criteria. That letter has not been either rescinded or updated, so it stands as the de facto communication, if you will, between the Department and the network. Officials and Ministers will be working on that, as I say, and the Department hopes to be able to make an announcement in pretty short order.

[Michael Shanks]

Will the Minister give way?

[Simon Hoare]

I do not think I can give way, because I think I have about 57 seconds left before the end of the debate.

[Ruth Cadbury]

Sign the cheque!

[Simon Hoare]

I have neither chequebook nor pen to hand.

Let me say, in closing, that the work of the network is understood and the importance of that work is very clear. The network is not the only body that provides forums and organisations to deliver inter-community and inter-faith discussions. There are others, but we hope to be able to make an announcement in due course.

Question put and agreed to.

19:43

House adjourned.