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Oral Answers to Questions
(6 months, 3 weeks ago)
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Alicia Kearns (Rutland and Melton) (Con)
The Parliamentary Under-Secretary of State for Business and Trade (Alan Mak)
The Government recognise the importance of ensuring that UK businesses respect human rights throughout their operations. We continue to keep this area under review and will work with our international partners to understand the most effective ways of tackling forced labour in supply chains.
Alicia Kearns
I thank my hon. Friend for his answer. However, companies with well-documented links to Uyghur slave labour are dumping their goods here in the UK. That is because the United States has introduced the Uyghur Forced Labour Prevention Act and the EU has acted similarly. Last month, I, along with 43 Members of this House and 32 human rights organisations, wrote a joint statement calling for import controls on solar panels. Will the Minister agree to meet me to discuss that and to finally bring forward measures to clean up our supply chains?
Alan Mak
The Government are clear that British businesses and solar developers should not stand for receiving solar panels from companies linked to forced labour. We have already taken steps to address the issue through the Procurement Act 2023 and the Modern Slavery Act 2015. In addition, the forthcoming UK solar road map will outline a clear path to reaching our solar deployment ambitions, including on energy security. I reassure my hon. Friend that sustainable solar supply chains will form a central chapter of that road map, and I would be happy to either arrange or have a meeting with her.
Jim Shannon (Strangford) (DUP)
The Minister of State, Department for Business and Trade (Kevin Hollinrake)
On Monday, the House agreed a Government amendment to the Horizon exoneration Bill—the Post Office (Horizon System) Offences Bill—to include convictions in Northern Ireland. The Northern Ireland Executive faced unique challenges in delivering their own legislation in a timely manner. Including Northern Ireland in the Bill ensures that postmasters there are not left behind, and receive exoneration and access to compensation on a UK-wide basis.
Jim Shannon
First, let me put on record my thanks to the Minister, who has been an industrious, assiduous and great champion for the postmasters and postmistresses across this United Kingdom. There is not a person in the House who does not have great respect for him.
Further to Monday’s business in the House regarding that Northern Ireland provision in the Horizon Bill, which was brought forward by my hon. Friend the Member for North Antrim (Ian Paisley) and my right hon. Friend the Member for East Antrim (Sammy Wilson), will the Minister outline a timeline so that postmasters and postmistresses across all of Northern Ireland can see an end to the reputational and financial damage, and the heartache caused by the disgraceful operation of the Horizon scheme?
Kevin Hollinrake
I thank the hon. Gentleman for his kinds words. It is always a pleasure to work with him and his colleagues. It is our intention that the legislation will clear both Houses by July, although obviously not all of these things are within our gift. Should that be the case, as we fully expect it to be, the convictions will be quashed in July and compensation redress will be paid from August.
Sir Desmond Swayne (New Forest West) (Con)
Andrew Jones (Harrogate and Knaresborough) (Con)
The Secretary of State for Business and Trade (Kemi Badenoch)
UK exports were £862 billion in the 12 months to February. UK services exports reached a record £472 billion in the same period, which is an increase of 10%—they went up by £42 billion. Businesses, including small and medium-sized enterprises, can access my Department’s wealth of export support at great.gov.uk. That support includes the UK Export Academy, which has had more than 18,000 registrations; our 160 international trade advisers, who help about 6,000 SMEs each year; and 388 export champions, across every part of the UK.
Sir Desmond Swayne
Are we really the fourth largest exporter in the world?
Kemi Badenoch
I am pleased to tell my right hon. Friend that we are. There are many, many more good statistics, which he will find in the publication my Department produced at the end of January; it contains further good news stories on UK exports. The UK is a global exporting superpower and the world’s second biggest services exporter. Services exports to the European Union are at a record high and have increased by 36% since 2018.
Andrew Jones
My right hon. Friend has just detailed very encouraging data, much of which results from the hard work of SMEs. Will she give a bit more information about what support is available specifically to SMEs to help them grow and export more of their products and services?
Kemi Badenoch
The Department has declared this year the year of the SME. People often hear news that sounds as though it is just about big business, but SMEs employ most of the people in the UK. We have a network of 160 international trade advisers and our export support services. We have also put in place schemes such as a Help to Grow management course, which 5,290 participants had completed by November. We also have a business support service, which provides support to about 30,000 people in England every year.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Further to those comments about SMEs, in the light of the termination of the trade show access programme, which supported SMEs in gaining international market exposure, what is the Government’s strategy to provide equivalent or enhanced support to ensure UK food products remain competitive within EU markets?
Kemi Badenoch
We know that a lot of people are disappointed that we closed the trade show programme, but it was a pilot programme and it did not yield the business successes that we had hoped. We are investing in those things that are providing success and demonstrating real benefits. The UK Export Academy is one of them, along with the export support service, as I mentioned, and the international trade advisers. Many of them will have expertise in food and drink. If the hon. Gentleman writes to us with a specific case, we will be happy to help.
Gareth Thomas (Harrow West) (Lab/Co-op)
Unfortunately for Government Members, and more importantly for the country, the Office for Budget Responsibility’s recent figures, which I know the Secretary of State struggles with, show that exports have dropped on her watch and are set to have declined again this year. If she has a moment to spare from her leadership campaign, she might read the landmark report published by Aston University last week on the significant boost for British exports that a veterinary agreement could deliver through British farmers and the agrifood industry. Why will she not pursue an agreement that is so obviously in Britain’s national interest?
Kemi Badenoch
The OBR puts out lots of figures and the Opposition cherry-pick the ones they think will be most helpful, thinking that we have not done our homework. I encourage the hon. Member to look at the OBR forecasts for growth for this country, which are very high, and I ask him which specific period he is referring to. He should look at what has happened to exports overall, not just periods including covid, which explain why we have had some drops in food exports.
Gareth Thomas
I asked the Secretary of State about the veterinary agreement; I suspect no one on the Opposition Benches will be surprised that she has not shown any interest in a trade agreement that would help British farmers. According to the House of Commons Library, under the last Labour Government exports rose by 55%, but since then exports have risen by only 32%. Is the truth not that British exporters always do better under a Labour Government?
Kemi Badenoch
That is absolute rubbish. It is not true. The veterinary agreement that he is talking about would create dynamic alignment with the EU, which is not what this country voted for in 2016. We are delivering what the people voted for. Yes, there will be difficulties—we are sorting them out. It is time that the Opposition moved on and accepted the will of the people.
Sir John Whittingdale (Maldon) (Con)
The Minister for Trade Policy (Greg Hands)
I thank my right hon. Friend for the valuable work he is doing as the Prime Minister’s trade envoy to the Republic of Korea. I look forward to his upcoming visit there. He is famous for his timely interventions. Detailed round 2 discussions on an upgraded FTA took place in London from 18 to 22 March, which provided an opportunity to conclude the exploratory phase of negotiations. We now look forward to text-based negotiations in round 3, which is due to take place in Seoul from 24 June.
Sir John Whittingdale
I thank my right hon. Friend for his answer ahead of my visit to Korea next week. Does he agree that the Indo-Pacific region offers huge opportunities for global growth, particularly as it will be home to something like half the world’s middle-class consumers over the coming decades, and therefore that upgrading this agreement is likely to bring huge benefits to the UK?
Greg Hands
My right hon. Friend is absolutely right. The Indo-Pacific is a vital part of the world for the UK and forms the centrepiece of our strategy going forward diplomatically and on trading ties. He is right that the Republic of Korea will play a vital role in that. The recently signed Downing Street accord with Korea outlines the breadth and depth of the ongoing relationship. We look forward to the comprehensive and progressive agreement for trans-Pacific partnership coming into effect later this year, and we look forward to seeing if the Republic of Korea will apply.
Kevin Brennan (Cardiff West) (Lab)
I am sure the right hon. Member for Maldon (Sir John Whittingdale) does a very effective job in South Korea. I visited myself with the Digital, Culture, Media and Sport Committee a couple of years ago and saw those opportunities. However, there is some concern about transparency around the use of trade envoys. Will the Minister confirm to the House that under this Government no trade envoy has ever demanded and been given the use of a house for their exclusive use?
Greg Hands
The hon. Gentleman has slightly jumped the gun, as the next question on the Order Paper relates to trade envoys. May I say how proud we are of the cross-party trade envoy programme, which I think he will hear about in a moment? We think they do an excellent, good value-for-money job for the United Kingdom in promoting trade in a number of key markets.
Sir Chris Bryant (Rhondda) (Lab)
The Minister for Trade Policy (Greg Hands)
The Prime Minister’s trade envoys provide invaluable support in progressing the UK’s trade and investment agenda in 61 markets across the world. The travel costs incurred by the Prime Minister’s trade envoys were: £63,566 for the financial year 2021-22; £226,014 for 2022-23; and £232,325 for 2023-24. These costs were for flights, for accommodation when the official British residence was unavailable and for other sundry expenses.
Sir Chris Bryant
There is a great deal of murkiness about the trade envoys. I note that, in answer to my hon. Friend the Member for Cardiff West (Kevin Brennan), the Minister point blank refused to deny that at least one trade envoy has explicitly asked for the exclusive use of a house while acting as a trade envoy. The Minister has point blank refused to publish the breakdown of all the trade envoys and their costs for absolutely spurious reasons. If a Select Committee visits South Korea, for instance, all the details of the costs are published, but not if a trade envoy goes. How can we possibly judge whether the £750,000 that has been spent so far in the past three years has been well spent? Is there any accountability whatsoever, or is this really just a means of providing sinecures for people who are liked in Government?
Greg Hands
Well, there is a lot of bluster there and not a few accusations. The hon. Gentleman may wish to try to stack these things up a bit. It is a cross-party programme, not a Government-only programme. Many Labour MPs, Labour peers and others are members of the programme. Gifts and hospitality are already published in departmental registers. If I may say so, Mr Speaker, two qualifications for this cross-party role are diplomacy and discretion, which might explain why not everybody has been asked to do it.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
The Secretary of State for Business and Trade (Kemi Badenoch)
My Department works closely with the Scottish Government and their agencies to promote Scottish products in overseas markets. We have recently delivered our Made in Scotland, Sold to the World exporter roadshow in Glasgow. On top of that, I am pleased to say that the PG Paper Company, a brilliant Scottish business, has just received an award in this year’s Made in the UK, Sold to the World awards.
Neale Hanvey
The value of Scotland’s oil exports to the EU reached £9.4 billion in 2023, with total oil exports up 14.7%, so the value of oil as an export commodity cannot be overstated. Those billions of pounds in exports can be balanced against the modest £80 million investment that would increase Grangemouth’s profitability threefold, secure its long-term future and save Grangemouth from closure. Does the Secretary of State accept that it would be absurd for Scotland to be the only major oil-producing nation without a refinery capacity, and will she agree to meet me to discuss this matter further, given that the Scottish Government are otherwise occupied?
Kemi Badenoch
The hon. Gentleman is right to raise this issue. It is something that we are concerned about and the UK and Scottish Governments are working together to understand all the options for the future of the refinery, and working closely on the issue through forums such as the Grangemouth Future Industry Board. I am very happy to meet him—as are other Ministers—to discuss this matter further.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
Does the Secretary of State agree that, while there has been great progress in promoting and increasing the export of traditional Scottish products, such as whisky, we also need to support new businesses, such as one in South Lanarkshire that is keen to expand electronic vehicle infrastructure into the United States?
Kemi Badenoch
Yes, my right hon. Friend is quite right: our exports need to be about the future, not just about the traditional industries, such as Scottish whisky, which are the pride of Scotland and of the UK. Electric vehicles are one way that we will hit our net zero target, and this is an area that the Department for Energy Security and Net Zero is focused on and that I support in Business and Trade. If there is anything specific that we can look into for his constituency, we would be very happy to help.
Stephen Kinnock (Aberavon) (Lab)
The Parliamentary Under-Secretary of State for Business and Trade (Alan Mak)
The UK Government’s £500 million grant will safeguard steelmaking in Port Talbot, 5,000 jobs in the company and thousands more in supply chains across the UK that would otherwise have been under serious threat. The transition board, with a further £100 million of funding—£80 million from the UK Government and £20 million from Tata—will also support those affected. That funding will help supply chain businesses to strengthen and diversify their customer base, creating sustainable jobs and business opportunities in Port Talbot and the wider region.
Stephen Kinnock
When it is finally introduced, the carbon border adjustment mechanism will provide a vital tool to ensure that British steelworkers have a level playing field so that they can compete against heavily polluting steel industries in other parts of the world, but recent media reports have indicated that India is lobbying No. 10 for an exemption from the UK CBAM. Does the Minister recognise that CBAMs work only if they are comprehensive across all countries and sectors, and if we start giving exemptions here or there the entire policy will unravel? That is particularly important given that Tata’s plan for Port Talbot is based on importing millions of tonnes of semi-finished product steel from India, a country that produces its steel with significantly higher carbon intensity. Will the Minister confirm that under no circumstances will India be given an exemption from the UK carbon border adjustment mechanism? A yes or no answer will suffice.
Alan Mak
I was pleased to visit the hon. Gentleman’s constituency as part of my first round of visits in this new role. I look forward to meeting him again later this month. He is right that the Government are committed to ensuring that UK decarbonisation efforts lead to a true reduction in global emissions. The CBAM policy is still being designed. The consultation is ongoing, and I recommend that he contributes to it.
Holly Mumby-Croft (Scunthorpe) (Con)
Residents in Scunthorpe are particularly concerned about steel supply chain jobs related to virgin steelmaking. My hon. Friend’s predecessor, my hon. Friend the Member for Wealden (Ms Ghani), was very clear from the Dispatch Box that we obviously need a place for virgin steelmaking in the UK, and that that place is Scunthorpe. Will he confirm that he agrees with her, and that nothing is off the table in his negotiations with British Steel?
Alan Mak
I was pleased to visit my hon. Friend’s constituency to meet steelworkers and British Steel management during my visits last month. I know that she is a passionate and dedicated champion for her community and for steelworkers there. I look forward to meeting her again next week ahead of the visit of the Secretary of State to her constituency, and to discussing these matters and others.
Sarah Jones (Croydon Central) (Lab)
No commitment to virgin steel from the Minister, then—what a shame. I welcome him to his place, and note that he visited Port Talbot steelworks last week, but he failed to meet any actual steelworkers of course. Instead of avoiding discussing the Government’s plans for £500 million of taxpayers’ money for the loss of nearly 3,000 jobs, will he please commit to meeting some Port Talbot steelworkers, and will he publish his economic assessment of the impact of the UK losing its capacity to make virgin steel—or is his actual plan to just keep his head down until the Prime Minister finally has the guts to call a general election and leave all these problems piling up for somebody else?
Alan Mak
This Conservative Government have given more support to the steel sector than any Government before us. When I went to Port Talbot, I was pleased to meet steelworkers, and I will continue to do so. I also sit on the transition board. I will continue to support steel in south Wales and all the opportunities that the sector will bring.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
The Minister for Trade Policy (Greg Hands)
My hon. Friend is a great champion of international trade, as the Prime Minister’s trade envoy for Mongolia. He will be pleased to know that annual trade between the UK and the Caribbean economic community, CARICOM, in 2023 was £5.1 billion—up 11% in current prices on the previous year. In December 2023, I represented the UK at the inaugural joint council of our economic partnership agreement, where I met representatives of CARICOM and the Dominican Republic, collectively known as CARIFORUM, underlining the importance of our trading relationship and exploring opportunities to further boost trade.
Daniel Kawczynski
I speak as the chairman of the all-party parliamentary groups on St Kitts and Nevis, Guyana and the Caribbean. It is an extremely important region for the United Kingdom, one of the largest concentrations of British overseas territories and Commonwealth nations in the world, with historic links with the United Kingdom, but the copy-and-paste trade deals that we have with them, carried over from the European Union, are not sufficient. We need a more tailor-made, specific trade agreement between the United Kingdom and the Caribbean Community to ensure that some of those protectionist measures that the European Union imposed on our CARICOM friends can be rescinded. When will that happen?
Greg Hands
I thank my hon. Friend for his engagement in the region, in St Kitts, the Caribbean as a whole and Guyana, which remains in all our minds at the moment given the situation on its borders. He is right to highlight the CARIFORUM trade deal; it is a deal that the UK values, and I mentioned that we have had the inaugural meeting of the body designed to ensure that the deal has good effects on our trade with the Caribbean. I might suggest arranging a meeting between my hon. Friend and the trade commissioner Jonathan Knott, who I am sure would be delighted to meet him to discuss Caribbean trade possibilities still further.
Rob Butler (Aylesbury) (Con)
The Minister of State, Department for Business and Trade (Kevin Hollinrake)
I thank my hon. Friend for his question and for his work as one of our trade envoys to the Kingdom of Morocco—I know he is a true diplomat and the soul of discretion. We recently announced that we were raising the monetary thresholds that determine company size, reducing burdens on smaller businesses and removing low-value and overlapping reporting requirements. Around 13,000 medium-sized companies will be reclassified as small companies, and 100,000 small companies will be reclassified as micro-companies. This will save small and medium-sized companies around £145 million a year.
Rob Butler
I visit many small businesses in my Aylesbury constituency, and I am always incredibly impressed by their spirit of entrepreneurship and the huge effort and hard work that they put in to succeed. They want to be able to devote as much of their skill and time as possible to finding new customers, selling more of their products and creating jobs, not to bureaucracy, admin and onerous regulation. As the true party of business, our Government have already made great progress supporting business, as the Minister has just outlined, but what more can his Department do to help the small and micro-firms that are the engine of our economy?
Kevin Hollinrake
My hon. Friend is a real champion of small business, and we meet often talk about these matters. This Government’s policies have pushed the UK to third place in the OECD rankings for start-ups—third out of 39 countries—and we have a suite of programmes to help small businesses. Most importantly, we offer access to finance, with our Start-Up Loans Company, growth guarantee scheme and equity investment schemes, the seed enterprise investment scheme and the enterprise investment scheme. We offer supportive advice through our Help to Grow management suite, including our newly launched “Help to Grow: Management Essentials” course, which is two hours’ free online training for small businesses. We are also removing barriers through non-financial reporting. As well as the monetary size thresholds, we are consulting on increasing the employee size thresholds from 250 employees for a medium-sized company to 500, which will save medium-sized companies a further £150 million a year.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
Alongside the despair and financial pressures faced by small businesses, the British Poultry Council recently reported that unreciprocated EU border checks have unfairly saddled UK exporters with £55 million a year in extra costs, while their EU counterparts pay absolutely nothing. Does the Minister agree that this Government’s failure to negotiate a fair sanitary and phytosanitary agreement with the EU has directly undermined British businesses and exposed our exporters to severe competitive disadvantages?
Kevin Hollinrake
I am surprised that the hon. Gentleman’s question is put that way. We are trying to make sure that we have a fair and level playing field for UK exporters and EU exporters. Of course we need checks on the borders on that basis—it would not be fair to UK producers if that was not the case—but what he is pushing for in a sanitary and phytosanitary agreement is what his hon. Friend the hon. Member for Harrow West (Gareth Thomas) was pushing for: dynamic alignment with the EU, which would lock us into EU rules permanently. We do not believe in that. We believe we have a bright future outside the European Union. He would lock us back into the customs union and the single market.
Dr Jamie Wallis (Bridgend) (Con)
The Parliamentary Under-Secretary of State for Business and Trade (Alan Mak)
The UK is a global hub for advanced manufacturing, and according to the OECD, the UK’s manufacturing sector has had the fastest growth in the G7 since 2010. The importance of the sector was highlighted in the Manufacturing Technologies Association’s recent “The true impact of UK manufacturing” report. Manufacturing contributed £217 billion gross value added to the UK economy in 2023, and plays an outsized role in the key drivers of growth, including by accounting for over 40% of UK exports.
Dr Wallis
The UK leads the way in areas such as artificial intelligence, robotics and the internet of things, which are important for our future, especially in manufacturing. How is that strengthening British businesses and the British economy?
Alan Mak
It is well known across the House that my hon. Friend is a strong champion for manufacturing and advanced technologies. The Government are also strongly committed to supporting research and development and innovation, because they contribute significantly to our economic growth. In particular, industrial technologies such as robotics and AI are supporting manufacturing businesses to be more productive and sustainable. That is why the Government have increased R&D investment to £20 billion a year, and are expanding Made Smarter, our highly successful industrial digitisation programme for small and medium-sized enterprises.
Andrew Bridgen (North West Leicestershire) (Ind)
Mainly because of this House’s worship of the false idol of net zero, electricity costs to businesses in the UK are four and a half times higher than those in China and three times higher than those in India. Can the Minister explain how manufacturing businesses in the UK can compete with that on world markets?
Alan Mak
I hope that the hon. Gentleman will join me in welcoming the introduction of the British industry supercharger, which reduces electricity costs for major energy-intensive industries. I hope that it will benefit businesses in his constituency and across the country.
Richard Thomson (Gordon) (SNP)
A key sector of the manufacturing economy is the plastics industry, which employs 155,000 people and has an annual turnover of £28.7 billion. In July 2023, the UK Government began a consultation on the plastic packaging tax and the methodology behind it. In February, some 14 organisations signed a joint letter to the Government urging the swift publication of that consultation. When exactly do the Government expect to be able to respond to that long-overdue consultation?
Alan Mak
The hon. Gentleman is right: the UK plastics industry is highly important and contributed £8.2 billion to the economy last year. I am aware of the consultation, which is led by the Treasury, and I will ensure that he gets a reply.
Greg Smith (Buckingham) (Con)
The Secretary of State for Business and Trade (Kemi Badenoch)
Over the past two years, UK-US trade has grown 35% from £230 billion to £311 billion, while shared investment between our two nations now totals over £1.1 trillion. In March, following the excellent work of our trade envoy, my right hon. Friend the Member for Bournemouth West (Sir Conor Burns), I signed a state-level arrangement with Texas. That means that UK businesses now have memorandums of understanding with eight US states with a combined GDP equivalent to a quarter of the whole US economy.
Greg Smith
I am delighted to report that US motorsport giant Andretti has shown a massive vote of confidence in the UK by taking 40,000 square feet of facilities in Buckinghamshire, with another 70,000 square feet on order, and is already employing over 100 people locally in high-tech jobs. That clearly opens up huge opportunities for automotive and motorsport supply-chain businesses on both sides of the pond, including General Motors. Will my right hon. Friend join me in welcoming Andretti to the UK in its bid to get on to the Formula 1 grid, and what more can she do to ensure that automotive and motorsport supply chains can operate on both sides of the Atlantic?
Kemi Badenoch
I was delighted to see my hon. Friend visit the opening of Andretti Global’s new facility in Silverstone last month. I wish it luck as it continues its preparations to enter Formula 1. That investment is another vote of confidence in the world-leading innovation that the UK has to offer. Andretti Global will also specifically benefit from the MOU that we have signed with Indiana, which will enhance our trade relationship in key areas, including advanced manufacturing.
Patrick Grady (Glasgow North) (SNP)
The Minister of State, Department for Business and Trade (Kevin Hollinrake)
The 568 ml pint quantity is one of several changes to pre-packed wine sizes that are expected to come into force on 19 September 2024, supporting the thriving UK wine sector by providing opportunities for innovation and greater choice. In light of those changes, Wine GB—which represents producers—said:
“We welcome the chance to be able to harmonise still and sparkling bottle sizes and we are happy to raise a glass to the greater choice that allows UK producers for domestic sales.”
Patrick Grady
That answer is nowhere near as definitive as the press release that the Minister’s Department put out on 27 December last year—which is still on the Government website—with the headline
“‘Pints’ of wine stocked on Britain’s shelves for the first time ever”.
That headline did not say “will be stocked”, “might be stocked” “could be stocked”, or “to be stocked”; it implied that pints of wine were, and are, available to buy right now in shops across the UK. Will the Government admit that the reality is that there has been little to no demand for, or interest in, that supposedly glorious Brexit benefit, and that in fact it is entirely possible that pints of wine will never be stocked on UK shelves?
Kevin Hollinrake
It is never difficult to distinguish the hon. Gentleman from a ray of sunshine, is it? Our wine industry is thriving, with over 900 vineyards across Great Britain. The UK wine industry produced 12.2 million bottles of wine in 2022, and our new post-Brexit powers provide us with new options. Those include new legislation that aligns existing sizes across still and sparking pre-packed wine so that both can be sold in 200 ml and 500 ml quantities, for which we know there is good demand.
Wera Hobhouse (Bath) (LD)
The Minister for Trade Policy (Greg Hands)
In March, the UK and New Zealand highlighted the importance of our environmental commitments at the first ever environment committee under our new free trade agreement. We continue to engage with New Zealand on implementing the environmental chapter, and will monitor the proposed Bill that the hon. Lady mentioned during its passage through New Zealand’s Parliament.
Wera Hobhouse
The New Zealand FTA entered into force on 31 May 2023. It contains a commitment in article 22 that each party will not
“waive or otherwise derogate from, or offer to waive or otherwise derogate from, its environmental laws in a manner that weakens or reduces the protection afforded in that law”.
Is there not a danger that the fast-track approvals will erode those protections? What steps will the Government take to ensure that New Zealand absolutely upholds its commitments under the FTA?
Greg Hands
As I said, we will continue to monitor the passage of that proposed legislation, but the hon. Lady must recognise that the UK and New Zealand are incredibly like-minded in these areas—on climate, the environment and clean growth. The environment chapter in our free trade agreement is one of the most ambitious in any FTA anywhere in the world. It breaks new ground for both the UK and New Zealand in supporting our shared climate and environmental goals, clean growth, and the transition to a net zero economy.
Patrick Grady (Glasgow North) (SNP)
The Secretary of State for Business and Trade (Kemi Badenoch)
Post Office governance is a priority for the Government, and I have said many times that it is vital that we have the right people leading that organisation. I am therefore pleased to tell the House that, on Wednesday, I announced the appointment of Nigel Railton as its interim chair. Having previously been chief executive of Camelot, Nigel brings a wealth of experience of transforming organisations, and I am confident that he is the right person to lead the Post Office through this period. Nigel Railton will take up his post as soon as possible, and will be invited to give Ministers his views on the future direction of the Post Office in due course.
Patrick Grady
When will the Government admit that their Brexit dream of people quaffing pints of wine and invoking the spirit of Churchill was always a fantasy, and that the reality is, in fact, a Brexit nightmare of border checks, reduced consumer choice and business closures?
Kemi Badenoch
It is nonsense to say that this reduces consumer choice; it actually increases consumer choice. I cannot imagine why anyone would be complaining about the sale of pints of wine. If the hon. Gentleman does not like them, he does not have to buy them.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
The Minister of State, Department for Business and Trade (Kevin Hollinrake)
I thank my right hon. Friend for her work on this, and she raised this important matter with me at meetings last month. We allocate £50 million for the uncommercial part of the network, and part of that should help the services in her constituency. I know she is disappointed at the closure of the outreach service in Kelsale, but there is an alternative permanent post office branch in Saxmundham, 1.3 miles away. I am happy to continue the conversation between her and the post office to make sure that she gets the services she needs in her constituency.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Shoplifting cost UK retailers £1.8 billion in 2023, the highest figure on record. The Government’s £200 shoplifting threshold has effectively decriminalised this offence, which is costing businesses dear. What discussions has the Minister had with the Home Secretary about scrapping it, as Labour plans to do, so retailers and customers are protected and high street businesses can thrive?
Kevin Hollinrake
It is not true to say that we have decriminalised thefts under £200. The hon. lady needs to speak to police officers and her local chief constable to make sure she understands how this works. I have worked very closely with the Home Office and the Policing Minister to make sure we have a retail crime action plan, which includes a vexatious offence with more severe sentences for people who assault shop workers. We have got an action plan together and it is working well with retailers, and I am very keen to see her support that plan.
Rushanara Ali
Well, it is not working, and the Minister and the Secretary of State should take this seriously, because it is damaging our high streets and causing huge concern up and down the country. He and the Secretary of State should go and meet those businesses, and hear from them directly.
Turning to another issue, we have seen 14 years of Conservative under-investment in public infrastructure, a failure to provide certainty and a failure to get a grip on the economy. Business investment has also suffered. Had it matched the average investment levels of France, Germany and the US, our GDP would be nearly 4% higher today, and wages would have been boosted by £1,250 a year. Can the Secretary of State outline how she plans to fix this crippling investment gap, and what will she do to make sure businesses get the support they need so that we can get the economic growth this country desperately needs after 14 years of under-investment?
Kemi Badenoch
I remember a time when Labour Members were telling everyone that we should not invest in nuclear, and it is under this Conservative Government that we are investing in nuclear infrastructure. That has only happened under Conservative Governments. The hon. Lady asks about the plan. I would remind her about the global investment summit we had in November, which raised nearly £30 billion in one day. No one is better than our current Prime Minister at delivering inward investment for this country. Business investment is rising, and it is rising because of the policies that he and the Chancellor have put in place, such as capital expensing.
Greg Smith (Buckingham) (Con)
The Parliamentary Under-Secretary of State for Business and Trade (Alan Mak)
I thank my hon. Friend, who I know is a strong champion of aerospace exports in this House. Last year’s autumn statement extended the aerospace technology programme budget by a further five years, with an additional £975 million of new R&D funding from 2025 through to 2030. As part of this vote of confidence in the UK civil space sector, our trade missions and trade promotion activities by my Department and our embassies around the world continue to help companies with export contracts worth millions of pounds.
Richard Thomson (Gordon) (SNP)
In 2017, Boris Johnson claimed the UK was “first in line” for a post-Brexit trade deal with the United States. While negotiations opened in May 2020, no progress has been made since October of that year. When does the Secretary of State expect to be able to deliver this alleged Brexit benefit, and what does she think will arrive first—a trade deal with the US or pints of champagne to toast it with?
Kemi Badenoch
As everyone on the Government Benches knows, even if we had a trade deal with the US, the hon. Member would be standing there telling us how he would be voting against it. The fact of the matter is that the US is not carrying out any free trade agreements with any country. There is nothing we can do about that, so instead we have been negotiating deals with states at an individual level, as I mentioned. For the last one, the governor of Texas came to the UK to sign a trade deal memorandum of understanding between Texas and the United Kingdom. Our relationship with the US is going well. I spoke about exports increasing, and our trade increasing to £311 billion. Trade with the US is going well. We will continue to pursue a free trade agreement, but trade requires two parties in order to deliver.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
Are Ministers as concerned as I am about continued reports that Royal Mail is determined to move away from a six-day service? In a large rural constituency such as mine, with an older population, people continue to rely on the Royal Mail for important communications. Can the Minister make clear that that is not the direction of travel the Government want Royal Mail to go in?
Kevin Hollinrake
We absolutely agree with that point, and we have been clear with Royal Mail and the regulator Ofcom that we want a continued six-day service. Royal Mail and hopefully Ofcom will have heard what my right hon. Friend and I are saying today: the six-day service must continue.
Jim Shannon (Strangford) (DUP)
The Minister for Trade Policy (Greg Hands)
Of course the Government as a whole are monitoring this situation very closely. We have very good relations with the Government of the Republic of Ireland, and I will pass on the hon. Member’s comments to the Cabinet Office and the Foreign Office.
Holly Mumby-Croft (Scunthorpe) (Con)
Would it be acceptable if the UK became the only country in the G7 that could not make its own virgin steel?
Kemi Badenoch
My hon. Friend will know how committed this Government are to the steel industry, but at the moment it is going through a transition. We care about having primary steel-making capacity in this country—that is something we want to do and to keep, but as she knows, even now we still import ore. I know she is concerned about British Steel and its future. I will be visiting her constituency in Scunthorpe and we will be able to discuss those matters further.
Stephen Kinnock (Aberavon) (Lab)
Alan Mak
The hon. Gentleman and I both sit on the Tata transition board, which has a dedicated group to look at the welfare of contractors and supply chain partners. We will ensure that we support those people as much as the direct employees of Tata.
Rob Butler (Aylesbury) (Con)
One of the many benefits of Brexit has been our ability to take back control of our trade negotiations. The comprehensive and progressive agreement for trans-Pacific partnership is one of the most exciting, so will the Minister provide an update on the status of our accession to CPTPP?
Greg Hands
I am delighted to be able to do so, and delighted to have such an enthusiastic supporter of CPTPP, which is an enormous benefit to this country. The UK joining will take its share of global GDP from around 11% to just over 15%. The UK will be the first country ever to accede to CPTPP, which includes most of the fastest growing markets in the Asia-Pacific region: the UK joining shows that it goes beyond the region. On accession, we are delighted that Royal Assent has been given to our Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Act 2024, and we are looking forward to UK ratification in the coming weeks. Three of the 11 parties have ratified so far—Japan, Chile and Singapore—and we look forward to further parties ratifying it in the coming weeks, to make progress on this extraordinary opportunity for this country.
Wera Hobhouse (Bath) (LD)
Greg Hands
I gave evidence in front of the EFRA Committee just last week on this very issue with our Minister for Food, Farming and Fisheries, my right hon. Friend the Member for Sherwood (Sir Mark Spencer). We put in a huge amount of resources. We have a number of commissioners and trade support people around European Union countries and around the world promoting agrifood exports. I add that we also have a record level of services and exports to the EU, some of which will be in the agriculture sector. We have, contrary to the constant doom and gloom that the hon. Lady brings to this question time every five weeks, a very good story to tell about the successes of the United Kingdom when it comes to trade.
Dave Doogan (Angus) (SNP)
Scottish salmon is just one of the Scottish businesses that serve to prop up the failing UK economy, yet trade organisation Salmon Scotland revealed recently that the salmon industry in Scotland is losing £100 million a year in trade with the EU. Since 2019, that has amounted to a 17% drop in trade. What message does the Secretary of State have for this business in Scotland, where all businesses and two thirds of the electorate rejected this hard Tory Brexit?
Greg Hands
We hear this from the Scottish National party all the time, opposing everything in terms of UK trade agreements. It is actually Scottish goods that benefit from so many of these trade agreements that we have negotiated, such as whisky when it comes to the Australian and New Zealand deals and the coming deal we hope to do with India. All these deals benefit Scottish goods in particular, yet the SNP has opposed or abstained on every single trade deal that has ever been done by either this country or by the European Union. [Interruption.] The hon. Gentleman knows it is true. The SNP has abstained on Japan and on Singapore; it is against Canada, against South Africa, against Korea, against Australia and against New Zealand; and its Members even failed to show up on the Ukraine agreement. It is a woeful record when it comes to supporting Scotland from the SNP.
Andrew Jones (Harrogate and Knaresborough) (Con)
What action are the Government taking to strengthen critical supply chains?
Alan Mak
The Government launched our critical imports and supply chain strategy earlier this year, and I chaired the Critical Imports Council last month. We are bringing together 23 organisations to make sure that our supply chains are robust, and I look forward to my hon. Friend’s input into that.
Christine Jardine (Edinburgh West) (LD)
The village of Kirkliston in my community recently became the latest to lose its post office—there have been a whole series of closures. That community is not isolated, but it is not in the centre of Edinburgh, and there is no alternative. As I say, it is one of a series, so can the Minister tell us what the Government are going to try to do to halt this decline in post offices?
Kevin Hollinrake
As I said in response to an earlier question, we put in £50 million to support the uncommercial parts of the network. I am sorry that the post office that the hon. Lady mentions has closed. I am happy to meet her to see what we can do to ensure that there is a local post office. There are network access requirements on the Post Office, and 99% of the population must be within 3 miles of a post office. If that is not the case in her area, I am happy to do what I can to ensure that that is rectified.
Kevin Brennan (Cardiff West) (Lab)
When the Minister for Trade Policy, the right hon. Member for Chelsea and Fulham (Greg Hands), bragged to my hon. Friend the Member for Rhondda (Sir Chris Bryant) earlier that his trade envoys had to have a qualification of “diplomacy and discretion”, did he have in mind the former trade envoy to Colombia, the hon. Member for Fylde (Mark Menzies)?
Kemi Badenoch
If the Opposition want to make an accusation, they should go ahead and do so, rather than this playground game that they are playing, which is insulting to every trade envoy, on both sides of the House, who is delivering for this country.
Richard Foord (Tiverton and Honiton) (LD)
Green Resource Engineering Ltd, a highly successful company in Willand, already exports £1 million of engineering business to South Korea every year and has done so for the last six years. The managing director, Richard Booth, let me know that exporting to Korea is already straightforward; by contrast, getting parts in from Europe has become a real headache. Rather than fretting about a free trade agreement with Korea, how are the Government monitoring additional red tape after having left the European single market?
Kemi Badenoch
We have the most comprehensive free trade agreement with the EU—more than with any other country in the world—so that should not be the reason for difficulties in bringing in components. If the hon. Member has something specific that we can look at, I will be happy to take a look, but we have been doing everything to ensure that trade—in auto in particular—continues to boom, and it is booming. We were able to stop the issue with rules of origin, which was going to have a deadline at the end of this year. In terms of specific components that are having trouble getting across the border, I will need a bit more detail to provide him with an answer, but that is not about leaving the EU.
Allan Dorans (Ayr, Carrick and Cumnock) (SNP)
India is the second largest market for Scottish whisky in the world, making it an extremely important market for the Scottish economy. Currently, whisky exported to India has a 150% import tariff placed on it. What steps is the Secretary of State taking to ensure that, in any trade deal signed with India, that tariff is reduced?
Greg Hands
We are engaged in a live negotiation with India at the moment and the hon. Member would not expect me to comment on the progress of a live negotiation. India is obviously in a pre-election period as well. However, I can tell him that Scotch whisky tariffs are very much part of that negotiation; everybody knows that that is one of the key UK objectives. May I perhaps add that, if we do get a good deal on Scotch whisky, I will look forward to the SNP for the first time actually voting for a trade deal with India?
Sir Michael Ellis (Northampton North) (Con)
Does my right hon. Friend agree that it would be odd and inappropriate for the United Kingdom to impose any form of arms embargo against Israel when His Majesty’s armed forces are in the region and working with Israel to provide humanitarian support, and the UK would expect Israel to help in the protection of His Majesty’s forces?
Kemi Badenoch
My right hon. and learned Friend makes a good point. The Prime Minister addressed this issue yesterday. I know that there is a lot of interest in arms exports to Israel, and yesterday my entire Department was blockaded by protesters, meaning that civil servants who needed to get to work could not do so. The Government continue to monitor closely the situation in Israel and the Occupied Palestinian Territories. All export licence applications are assessed on a case-by-case basis against the strategic export licensing criteria. The Government take their defence export responsibilities extremely seriously and operate some of the most robust export controls in the world.
Mrs Pauline Latham (Mid Derbyshire) (Con)
Could the Secretary of State explain what she is doing to help businesses in my constituency that have difficulties because we do not have the skills to increase the business—they cannot expand because they lack some skills? Could she explain what she is doing to help with that skills shortage?
Kevin Hollinrake
I thank my hon. Friend for championing businesses in her constituency. We are putting £3.8 billion into skills training for people who work for businesses, which is important. We are also improving skills for entrepreneurs and business owners through our help to grow management programme—it can be found on the help to grow webpage—a 12-week mini-MBA, which is 90% funded by the Government. We also have “Help to Grow: Management Essentials”, which offers two hours of totally free online training for aspirant new business owners.
Nick Smith (Blaenau Gwent) (Lab)
Can the Secretary of State tell us about the UK’s supply of cyber-security professionals and whether a lot of that work is now being offshored?
Kemi Badenoch
I am afraid that I do not have the details to answer that question. On the face of it, given the information I have, it is not something I have heard before, but we can write back with more information. However, it does not sound like that is the case.
Tonia Antoniazzi (Gower) (Lab)
In my constituency we have the fantastic company Selwyn’s, whose seafood is first class. It exports a lot; what is the Government’s current assessment of the export of cockles and other seafood in the Welsh market?
Greg Hands
I thank the hon. Lady for her question and her interest in this important sector. We regularly meet the UK seafood sector, which can often be subject to very high tariffs from foreign markets, but the UK’s quality shines through. It is a key part of many of our current trade negotiations. I urge her to watch this space. We are always happy to meet the company concerned, but I can reassure her that when it comes to seafood exports, the Department is constantly engaged both in trade policy and in the support we give our exporters.
Business of the House
(6 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Nick Smith (Blaenau Gwent) (Lab)
Could I please ask the Leader of the House for the forthcoming business?
The Leader of the House of Commons (Penny Mordaunt)
The business for the week commencing 6 May will include:
Monday 6 May—The House will not be sitting.
Tuesday 7 May—General debate on defence.
Wednesday 8 May—Consideration in Committee of the Finance (No. 2) Bill.
Thursday 9 May—General debate on miners and mining communities, followed by a general debate on the BBC mid-term charter review. The subjects for these debates were determined by the Backbench Business Committee.
Friday 10 May—The House will not be sitting.
The provisional business for the week commencing 13 May includes:
Monday 13 May—Motion to approve the draft Procurement Regulations 2024, followed by a motion to approve the draft Agriculture (Delinked Payments) (Reductions) (England) Regulations 2024, followed by debate on a motion on the risk-based exclusion of Members of Parliament.
Tuesday 14 May—Motion to approve the draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024, followed by a motion to approve the draft code of practice on fair and transparent distribution of tips.
Wednesday 15 May—Remaining stages of the Criminal Justice Bill (day 1).
Thursday 16 May—Business to be determined by the Backbench Business Committee.
Friday 17 May—Private Members’ Bills.
Nick Smith
I thank the Leader the House for the forthcoming business.
I pay tribute to the former Member for Hazel Grove Lord Stunell, who sadly passed away this week. Our thoughts are with his family and friends.
I welcome to our Benches my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter). His words on how the Government have run down our NHS speak for millions. It is remarkable that the Conservative majority of 80 has been almost halved in four years.
This week, there has been a victory for the victims of the infected blood scandal regarding the deadline for compensation. I thank my right hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) for her tireless work on this cause. Could the Leader of the House outline when the timetable for compensation will be set out?
Closer to home, people across south Wales are troubled by the job losses at Tata Steel in Port Talbot. Will the Government work with Tata to ensure that compulsory redundancies will be avoided? Time is of the essence, and there are worried steelworker families across south Wales.
The business for next week is light, with no votes until Wednesday. We can guess why the Prime Minister would want to keep his parliamentary colleagues off the estate. The internal politics of the Tory party have become so febrile that they are getting in the way of good governance. While our constituents face ever higher bills, the Government have simply run out of steam. Tomorrow, we will hear the verdict of the voters. In recent months we have begun to see the runners and riders for the next Tory leadership contest. The Leader of the House says that she has the Prime Minister’s back. Coincidentally, she has been supporting her colleagues up and down the country. Following on from schnapps with Shapps, can we look forward to gin with Jenrick or perhaps Pimm’s with Penny? I am a Scrabble fan, but there is a new game of political Cluedo coming along. Who could be the one to strike the fatal blow against the Prime Minister? Will it be cocktails with Kemi in the garden? My money is on the Leader of the House with the sharpened Telegraph column in the drawing room.
Another possible leadership contender is the Foreign Secretary, Lord Cameron. Has he recused himself from part of his role? That point was raised twice last week at Cabinet Office questions, with no clarity provided. Our parliamentary scrutiny is weakened when the Foreign Secretary is out of reach in the other place. Lord Cameron has unanswered questions from Members of this House. He is yet to reply to my letters asking about his time at scandal-hit Greensill Capital. One question was about his use of private planes and personal taxation. We learned this week that Lord Cameron still enjoys VIP air travel. Taxpayers had to foot the bill for his trip to central Asia in a luxurious private jet. How does the Leader of the House think that looks to struggling families across our country dealing with a cost of living crisis?
We wish the Leader of the House, the Foreign Secretary and fellow leadership rivals well. We may well see them touring the TV studios. The Prime Minister has hinted that he may call a general election this summer if his party performs well today, or he may cling on as the clock runs down. Mr Speaker, you can understand the Prime Minister’s hope that something will crop up, but after 14 years in charge it is clear that it is time for change. Each Thursday morning, the Leader of the House puts on a good turn. Some say it is a dress rehearsal for the following Wednesday lunchtime. Who knows? This time it may come to pass.
Penny Mordaunt
First of all, I would like to join the hon. Gentleman in paying tribute to Lord Stunell of Hazel Grove, who sadly passed away on Monday. He entered the House of Commons in 1997, leaving for the Lords in 2015. He was Parliamentary Under-Secretary of State for Communities and Local Government in the coalition Government and I know Members on all sides of the House will mourn his loss. On our Benches, we are particularly grateful to him for being an effective and collaborative Minister in the coalition, working alongside colleagues to bring in the Localism Act 2011 and drawing up the national planning policy framework. I hope that the many tributes paid to him in the coming days will be a comfort to his loved ones.
I join with the many remarks made by colleagues regarding the tragic loss of Daniel Anjorin, and also the incident in Sheffield. My thoughts, and I am sure those of the whole House, are with all those affected, especially Daniel’s family. I also pay tribute to the police for their courage. They often get a hard time from us in this place, but we should never forget the risks they take and the service they do us. I know the House will also be glad to see His Majesty the King out and about with the public again. I wish all candidates in today’s elections good luck.
The hon. Gentleman tempts me, but I am going to resist, because there is nothing I could say that would be more detrimental to the hon. Member for Central Suffolk and North Ipswich (Dr Poulter)—to his character, his integrity, his standing in his community and his future prospects—than what he has done to himself. I think that is just about dawning on him.
I, too, welcome the progress on the infected blood issue. The hon. Gentleman knows that the Paymaster General has set out the timetable for the body to be established on 20 May. We now have a clear timetable that I hope will give confidence to all those infected and affected by this terrible scandal.
I will certainly make sure that the hon. Gentleman’s comments on Tata Steel are heard by the Secretary of State.
I have to break it to the hon. Gentleman that it is not going to be Pimm’s with Penny. I am more of a pints with Penny person. But yes, I too have read that I am to be installed, rather like a new boiler, into No. 10 next week. I have to say, Mr Speaker, that there is as much truth to those stories as there is to Labour’s assurances to its business community that it is not actually going to do the things that it has been saying it is going to do and has promised its union paymasters.
Let me say again that I support our Prime Minister, and I will continue to support him after this weekend and beyond, because his plan is working. I will do everything I can to ensure that Labour does not get a chance to wreck the nation again. The nation has chosen a new trajectory to protect its border, to enable growth, and to trade more with the world to strengthen its partnerships with allies. Our exports are 2% above 2018 levels, and we are the fourth largest exporter overall and the largest net exporter of financial and insurance services in the world. Trade barriers have led to a £15 billion uplift for UK businesses in the last five years, and since 2010 UK manufacturing growth has been higher than that of any other G7 nation. We are on the right path, and we have to stick to it. I do not want to give Labour the chance to unpick all that we have done, from Brexit to trade union reforms.
The hon. Gentleman asked about a general election, and whether something was going to crop up. I think that something is going to crop up. Whether it is pensions, the NHS, rail, tax or welfare, the Labour party claims that it is going to do one thing but is planning another, and I think that the public will see through that. It is the most audacious deception since the big bad wolf donned a winceyette nightie and asked Little Red Riding Hood to admire his upper dentures, but unlike red Riding Hood the British people have met this wolf before, and they remember that the story does not end well.
The British people remember how disastrously Labour ran our trains, and we have read this week that to improve efficiency, Labour plans to run fewer trains. They remember MRSA-infected hospitals, and they are now seeing the unforgivable state of the NHS in Wales as it struggles with a reduced budget. Labour is responsible for that, as it is Labour that cut the NHS budget. They remember Labour council tax hikes for pensioners and others on fixed incomes, which constituted the largest increase in their outgoings. In government Labour doubled council tax, and in Wales it has tripled it. The British public will look at the council league tables, out today, and notice that the worst services are provided by Labour councils, those charging the highest taxes are Labour local authorities, and the areas with the worst crime rates are Labour-controlled; and where do we see the lowest employment rate, the smallest pay packets and the worst NHS waiting lists in the whole UK? In Labour-run Wales.
Always, every single time Labour is in office, every single time the British people give Labour a chance, they find themselves worse off, poorer and less safe, badly served and with more unemployment, and they see that the nation is weaker. At least those in the Labour party are consistent. So I say to the British people, “Don’t give them the chance to do it again.”
Further business will be announced in the usual way.
Sir Peter Bottomley (Worthing West) (Con)
The question of local council elections has been raised. Those who want some amusement can read Acts 5:41, quoted in today’s Times and provided by the Bible Society, although I am not suggesting that my right hon. Friend should read it now.
I walked here today through Victoria Tower Gardens, where it is still impossible to walk along the river because of the barricades around the Buxton memorial fountain, which are far too extensive. If people care about memorials in Victoria Tower Gardens, they ought to make sure that the gardens are properly accessible whenever that is possible.
The Select Committee on the Holocaust Memorial Bill reported recently in document HC121, and I have tabled early-day motion 711—I do not expect my right hon. Friend to respond to this today.
[That this House notes the First Special Report of the Holocaust Memorial Bill Select Committee, HC121, on the problems with the current proposal and the restrictions faced by the Committee considering the hybrid Bill; respects the conclusions and recommendations on page 20; agrees with the list of matters related to the current proposals for a Holocaust Memorial and believes these need updated attention on deliverability from the Infrastructure Commission, from the National Audit Office on likely capital costs and recurrent annual costs, from the Chancellor on future funding control, and from the police and security services on maintaining unfettered public access for use of Victoria Tower Gardens while protecting the Memorial; asks His Majesty's Government and the Holocaust Memorial Foundation agency to commission the views of the property consultants on a comparison of the current proposal by Sir David Adjaye in Victoria Tower Gardens with viable alternatives, to commission the full appraisal and to hold a public consultation on the selection of site; and further asks His Majesty's Government to commit to having this or an amended proposal considered first by the local planning authority before considering whether to call in the application, noting that an open-minded observer could doubt another minister in the Levelling Up department should be asked to make an independent decision on an application by the Secretary of State.]
As the Committee has clearly indicated, before the Government think of bringing the Bill back to the Chamber of the House of Commons they need to do a number of things. First, they must review security. We have seen the Holocaust memorial in Hyde Park covered up because of marches going on around London, and everyone knows that a memorial in Victoria Tower Gardens of the kind that is proposed would be a major target. The only way of providing security is to exclude the public from this park, which is the only park for local residents.
Secondly, the National Infrastructure Commission has said that this project is undeliverable. Will the Government please ask the members of the commission whether they have changed their minds? Last year the National Audit Office reported that the costs had risen in one year from £102 million to £137 million. Will the Government please ask its members whether that can be reviewed? How will the Chancellor agree to pay running costs of between £5 million and £10 million?
I think that the Government ought to delay, do what is suggested in my early-day motion, and then report back to the House.
Mr Speaker
It might be more helpful if the Father of the House applies for an Adjournment debate.
Penny Mordaunt
I am sure that my hon. Friend knows how to apply for a debate and will listen to your encouragement, Mr Speaker. I will certainly ensure, as I do every week, that the Secretary of State has heard the issues that my hon. Friend raises—I will feed them in. On the matter of security, he will know that there is a working group, led by the Houses of Parliament and those in Government, to make sure that all these very important issues are looked at.
Deidre Brock (Edinburgh North and Leith) (SNP)
Just when we think the Government can stoop no lower, they release a sickening detention video, using real-life trauma to show their voters how tough they are. Who instructed the civil service to produce such a piece? Can we have an apology from the Home Office for its appalling misjudgment in electioneering with this footage, and a debate on whether the concept of electoral purdah still exists? If it does, who the heck regulates it?
Meanwhile, the disastrously handled Brexit border checks are causing further chaos, as predicted. The Leader of the House may have seen the reports from the Sevington inland border facility about lorries with perishable goods, the prospect of rotting food and flowers being binned, compromised biosecurity and, of course, crashed IT systems. We have confusion, delay and additional crippling costs—otherwise known as Brexit. I was in the House yesterday for the statement that the Business and Trade Secretary hurriedly brought out, and she seemed to brush aside these failures to prepare as mere supply chain issues, preferring to brag about Brexit. The thing is, her figures rely on a growth in service exports—City pals are doing very well.
Meanwhile, the British Chambers of Commerce, which knows a thing or two about the issue, describes the much-warned-of mess at Sevington as
“the straw that breaks the camel’s back”
for many UK businesses. This is terribly serious for our small and medium-sized enterprises, particularly our farmers and fishers. Do the Government care? For the third time, I ask the Leader of the House for an urgent debate specifically on the Tory trade tax so that someone can be held responsible to the House for this cack-handed mess. Will she take it up?
It seems that business questions have become nothing more than a venue for parading opinions. As Madam Deputy Speaker had to remind the Leader of the House and the shadow Leader of the House last week, business questions are about the business of this House, so can we leave the scripted opinions on Scotland and her Government to one side for once and have a debate, in Government time, on the unbelievable mess at Sevington and its impact on the wider supply chain? Or will she, too, just ignore this crisis of her own Government’s making, raise a laugh for her nervous Back Benchers and opine on Scotland instead—a country about which she knows little and cares less?
Penny Mordaunt
The first issue that the hon. Lady raises is a matter of taste about videos that I understand the Home Office has produced, which show, I assume for the reassurance of the British public, that those who do not have the right to remain in the UK will be deported. There are images of people being put into the back of police vehicles. Scotland has produced quite a few similar videos—although the people being put into the back of police cars have been members of the SNP. I will certainly ensure that the Home Secretary has heard the hon. Lady’s concerns, and that they are taken into account.
The hon. Lady asserts various things about the border operating model. Many of the things that she points to are not true. The system has not gone down, and she is incorrect about the other issues that her party has been reporting. Some customers are having issues, but they are being resolved. I really hope that the SNP will one day acknowledge the hard work of Scotland’s business community, including businesses that are providing services and exporting them around the world.
We are the largest net exporter of financial and insurance services, and many of those businesses are in the hon. Lady’s constituency and the surrounding area. Edinburgh is the second largest financial centre in Europe, behind only the City of London, which is something to be immensely proud of. The work that we are doing not just on trade deals, but on our memorandums of understanding—for example, with the United States at state level—means that it is easier for an accountant in her constituency to work on a project in the United States than it is for an accountant in the state next door. That is something to be celebrated, and has led to our being the fourth largest exporter overall. I hope that the hon. Lady might reflect on that and consider it in her exchange with me next week.
Sir Alec Shelbrooke (Elmet and Rothwell) (Con)
I am proud of the work that I and colleagues across the House did, along with our dear, departed friend Sir David Amess, to raise the issue of endometriosis, a terrible disease that affects millions of women across the country. It is only since we started to raise the issues around it that its profile has risen. I am surprised to learn how many young women do not know about the disease, which is not in the sex and health education curriculum in schools. Can we have a debate, through the Department for Education, on ensuring that gynaecological diseases are in the curriculum for both girls and boys, because if someone does not know a disease exists, how will they know they might have it?
Penny Mordaunt
I thank my right hon. Friend for all the work he is doing alongside the all-party parliamentary group on endometriosis to raise awareness of this condition and to ensure that there is improving care. He will know that we have invested £25 million to roll out women’s health hubs across the country, not just to tackle backlogs but to provide information and raise awareness. I will ensure that the Secretary of State for Education has heard what he has said today.
Ian Mearns (Gateshead) (Lab)
I apologise to the House for my absence over the last two weeks. I am glad to say that things are improving as we deal with a very difficult family situation.
The Leader of the House was kind enough to mention that the Backbench Business Committee has been allocated Thursday 16 May, and it will be our intention to put on a debate on the parliamentary ombudsman’s report on the state pension age for women.
All Chamber slots up to the Whitsun recess are now allocated, but we still have several Westminster Hall slots to allocate for the new, improved start time of 12.30 pm on Thursdays, which seems to be working quite well. We have three slots to allocate between now and the Whitsun recess, and we would welcome applications.
Penny Mordaunt
Mr Speaker, I am sure you will agree that there is no need for the hon. Gentleman to apologise. I hope he heard all our good wishes to him and his family while he was away.
I thank the hon. Gentleman again for advertising the forthcoming Backbench Business debates. The Women Against State Pension Inequality Campaign is a topic that many Members will welcome, and they will want to attend and take part.
I also thank the hon. Gentleman for being greatly responsible for the new Westminster Hall start time, which he has also advertised today.
Alicia Kearns (Rutland and Melton) (Con)
Transport for the East Midlands has found that 60% of drivers feel unsafe driving on the A1, and over half report either being in an accident or knowing someone who has been in one. In 2022, there were 500 collisions on the A1, which is 26% more than on the A5 and 16% more than on the A2. Can we please have a debate in Government time on safety upgrades to the A1? This affects dozens of constituencies, as the A1 is the longest road in this country. Will my right hon. Friend also kindly advise on when we can expect to see the next review of upgrading A roads to motorways? This is the No. 1 issue for my constituents. I have sat in traffic on the A1 on many a school run after appalling accidents that take one or two days to clear.
Penny Mordaunt
I thank my hon. Friend for her work on this issue, which is of huge importance to her constituents, and for her diligence in consistently raising it with the Government. She will know that the next draft of the road investment strategy, covering 2025 to 2030, will be published shortly, and I will ensure that the Secretary of State for Transport has heard what she has said today. I also understand that the roads Minister, my hon. Friend the Member for Hexham (Guy Opperman), is happy to meet her to discuss these specific concerns.
Wera Hobhouse (Bath) (LD)
First, I thank the Leader of the House for her kind words about Lord Stunell of Hazel Grove. We lost a wonderful friend and colleague, who, until the very end, campaigned for his community and called out injustices across the country. My sincere condolences go to his family at this time.
We Liberal Democrats have for many years called for tougher controls on UK exports of arms to ensure they are not used in human rights abuses. We have called for a presumption of denial to apply to countries whose Governments are listed in the Foreign Office’s annual “Human Rights and Democracy” report. A presumption of denial would mean that the default position of the UK Government is not to permit arms exports. For many years, the Foreign Office has listed human rights issues arising from action that the Israeli Government have carried out in the Occupied Palestinian Territories. In the light of a possibly imminent humanitarian catastrophe in Rafah, if the Israeli Government are carrying out their threat to attack, may we have an urgent debate in Government time about UK arms exports to the middle east?
Penny Mordaunt
I send our thoughts to all Liberal Democrats, who have lost a treasured member of their party. It is said of Andrew Stunell that he was the activists’ activist, and I know that he will be greatly missed.
On UK arms export control, the hon. Lady will know that we have stringent policies in this country and that the actions that are taken stemming from those policies are scrutinised by this House. We take this incredibly seriously. As for the specifics, I also point her to the fact that we have seen Israel have to defend itself against the most unwarranted and reckless attack from Iran. It is very important not only that we say that Israel has a right to defend itself, but, because it is one of our allies and partners, that we understand our obligations to enable it to do so. These are difficult matters and she will know that both the Government’s policy and the procedures in this House to scrutinise the actions that come from this policy are stringent indeed.
Selaine Saxby (North Devon) (Con)
“The Long Call” by Ann Cleeves was written about my constituency and filmed there. Inspired by the Woodyard community centre in the novel, a number of third sector organisations are looking to support and bring together different third sector groups in a safe and accessible space for work, ideally breathing life back into one of the derelict buildings that North Devon has far too many of. Might my right hon. Friend lend her signature to a copy of the novel for the charities involved, in order to help raise much-needed funds? Will she also help us secure a debate in Government time on how we can ensure that small third sector organisations best work together to share administrative costs?'
Penny Mordaunt
I thank my hon. Friend for again attending business questions to shine a spotlight on some good work going on in her constituency. I would be very happy to do as she asks, and I thank her for bringing this interesting initiative and the work of third sector organisations in her constituency to the House’s attention.
Tonia Antoniazzi (Gower) (Lab)
Three members of the Williams family in Gowerton, in my constituency, have had their His Majesty’s Revenue and Customs contact address changed to the same unknown address without their knowledge, consent or authorisation. As well as raising clear general data protection regulation concerns, that is having huge implications for Department for Work and Pensions issues that they face, and impacting on their credit score. I have seen the HMRC response to the mother’s complaint—it gave no answers; I have seen all the correspondence. The family has had phone calls from bailiffs and they are scared. They are capable, competent people but they are unable to get a response. Does the Leader of the House share my concerns about this serious data breach? Will she alert and raise this issue with the relevant Ministers and Departments, and advise me on how to resolve it?
Penny Mordaunt
I am sorry to hear that the hon. Lady’s constituents are suffering in that way. The situation sounds completely bonkers and if she gives me further details after business questions, we will get it sorted this afternoon. Her constituents should not have to put up with that.
Mrs Pauline Latham (Mid Derbyshire) (Con)
The hon. Member for Blaenau Gwent (Nick Smith) seems to be really pleased with the Opposition’s new recruit, but it will make not one jot of difference to their voting figures because the hon. Member for Central Suffolk and North Ipswich (Dr Poulter), who has moved sides, is rarely in the House.
I have spoken before about my Marriage and Civil Partnership (Minimum Age) Act 2022. It came into force in February last year, and makes it a criminal offence to exploit vulnerable children by arranging for them to be married. I have spoken to teachers and lecturers who know nothing about the Act. We must ensure that teachers, lecturers, faith leaders and the police know how to spot the signs of potential forced or arranged marriages. Will the Leader of the House speak to her colleagues across Government to ensure that we get these messages across much more effectively to communities throughout the country?
Penny Mordaunt
I thank my hon. Friend for all the work she has done on this subject. She has campaigned diligently on it, and made a huge difference to the lives of many people. The forced marriage unit, which is run jointly by the Foreign, Commonwealth and Development Office and the Home Office, is leading the Government’s work in this area. It is running outreach and undertaking casework, and operates both inside and outside the UK. I will ensure the relevant Minister and officials have heard her suggestions on how its work can be enhanced.
Gareth Thomas (Harrow West) (Lab/Co-op)
The situation in Gaza continues to be profoundly disturbing. We need a humanitarian ceasefire, all the hostages brought home, and no incursion by the Israel Defence Forces into Rafah; that would be catastrophic. The United Nations Relief and Works Agency is pivotal to avoiding famine in Gaza and for the future of Palestinians more generally. Could we have a debate in Government time on why Ministers will not yet restart funding to UNRWA, given the call by no less than the UN Secretary-General, António Guterres, for donors to restart that funding?
Penny Mordaunt
I thank the hon. Gentleman for raising those concerning matters. I will certainly make sure that the Foreign Secretary has heard the concerns he has raised. Aside from the immediate issues on which the hon. Gentleman is primarily focused, UNRWA has been financially fragile for a long time, with little long-term financial planning and security. There are many issues that the Foreign Secretary and his team will want to consider before taking a decision on whether to restart funding.
Nick Fletcher (Don Valley) (Con)
Hayfield Lane Primary School in Doncaster is a great school, with great teachers, a great head, Mrs Tempest, and wonderful children. Sadly, the Labour Mayor of Labour-controlled Doncaster Council has failed this great school. Her dither and delay is a disaster, and it is affecting our children. Despite many years of letters, phone calls, meetings and false promises, the school still has a leaky roof, soaked carpets, water in the electric system, mould in the classrooms and a smell of damp throughout. It is a disgrace that the Mayor is allowed to subject our most vulnerable—our children—to that. Can we have a debate on the need for elected Mayors to step up and do their job of maintaining schools, like Hayfield Lane Primary School, instead of constantly blaming the Government for their own shortcomings?
Penny Mordaunt
I thank my hon. Friend for standing up for, and campaigning on behalf of, parents and children in his constituency. His local authority has been allocated £900,000 for this financial year, to be prioritised across its schools, including the school he mentions. That is on top of the school rebuilding programme, which is transforming buildings across the country, including three in the Doncaster local authority area. I know that my hon. Friend has raised and campaigned on the matter considerably. He will know that where there are serious problems with school buildings and the responsible bodies that are supposed to be looking after them fail, the Department for Education will provide additional advice and support on a case-by-case basis. I will write to the Secretary of State for Education this afternoon and ask that her Department meets my hon. Friend to discuss this serious matter. Doncaster local authority is failing in its duty, and that needs to be addressed.
Patrick Grady (Glasgow North) (SNP)
The Leader of the House has announced all kinds of worthy general debates, including on statutory instruments, leaving plenty of time for Dissolution and wash-up, if need be, but she has not announced any Opposition days. She will be in receipt of a letter from the Chair of the Procedure Committee, which says:
“If, however, the Government has specific proposals in relation to any changes it envisages to Standing Orders”
on Opposition days,
“the Committee would be willing to examine and consult on such proposals”.
It goes on:
“In the meantime, however, we expect that the Government will not ‘hold hostage’ the scheduling of any further Opposition Days to the completion of any such work, as to do so would be profoundly unfair on opposition parties.”
Will the Leader of the House confirm that she is not holding Opposition days hostage?
Penny Mordaunt
I can confirm that, and I hope to be able to schedule some more Opposition day debates soon, but we want some assurances about the processes that will govern them. I know that everyone agrees that it is incredibly important the rights of minority parties be protected in this place. That is the point of those debates, and we should have confidence in them in the future.
Sir Michael Ellis (Northampton North) (Con)
Can we have a debate on antisemitism at UK universities? There are reports in today’s press that some groups wish to replicate American-style protests, during which there has been rioting and criminal damage. At Columbia, students have chanted terrorist slogans. At Stanford, they have worn Hamas headbands. At Princeton, they have flown the Hezbollah flag. At Harvard, they have torn down the stars and stripes and raised a foreign one, and at George Washington, they called for the “final solution”, and posted signs saying that they would not disperse until Jews go back to their “real homes”. We do not want this type of terrorist-supporting delinquency at UK universities. Does the Leader of the House agree that the Government and Opposition parties must combine to do everything they can to stop such things happening here?
Penny Mordaunt
My right hon. and learned Friend is right to draw attention to the disgusting scenes that we have seen in some universities in the United States. Those activities are being met with the appropriate action, and some universities have taken a very strict stance on them. I think and hope that all UK universities will be in no doubt about their responsibilities to all who attend their campuses and facilities, but particularly those in communities who feel under attack. That is what we expect of them; we hope and expect that they will meet the notion of similar protests with an extremely strict response.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
The London Standard, the Slough Observer and other media outlets have recently reported serious bribery allegations made against Slough borough councillors heading up the planning process. That is extremely concerning. Complaints and rumours have circulated around the town for months. Does the Leader of the House not agree that it is critical that the police delve deeply into the matter, and do a thorough investigation, in order to restore public trust and confidence in elected representatives? Not questioning under oath the credible businesses that have been brave enough to put their concerns in writing, as well as those accused of bribery, would be a huge disservice to democracy. Will she also ensure that the Home Secretary takes an active interest in this critical matter?
Penny Mordaunt
I am responsible for many things, but operational police matters is not one of them. I will certainly make sure that the Home Secretary has heard what the hon. Member has said.
Virginia Crosbie (Ynys Môn) (Con)
The UK hedgehog population is in sharp decline. Next week is Hedgehog Awareness Week and an opportunity to promote the plight of this beloved, iconic species. It costs around £50 to look after a hedgehog admitted to rescue. Anglesey Hedgehog Rescue is run by brilliant volunteers Sue Timperley, Debbie Evans and Chris Mead, and to raise funds, they are running a name the hedgehog competition. Will the Leader of the House take part? What would her hedgehog name be?
Penny Mordaunt
May I first congratulate my hon. Friend on raising awareness of this much-loved critter? I also congratulate the volunteers at Anglesey Hedgehog Rescue, and I wish them well in their endeavours. Given that these little creatures are prickly, they move very slowly—definitely below 20 mph—and curl into a ball when challenged, I am tempted to say that Welsh Labour would be an appropriate name, but that would perhaps be doing the hoglet a disservice, so instead, given that both our constituencies are by the sea, how about “Urchin”?
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
Yesterday’s judgment from the president of the family division of the High Court concerning the practices of online, Singapore-registered GenderGP set out the following facts. Testosterone was prescribed to a 15-year-old girl with a co-morbid diagnosis of autism and anorexia, in a “negligent approach” that led to “dangerously high” serum levels, placing her at “risk of sudden death”. There was no physical examination, “extremely poor quality” psychological assessment, and no record of counselling or informed consent. An NHS paediatrician checked the girl’s serum levels against those of an adult male. I have asked this before, but these scandals keep happening, and I will continue to raise them in this place: can we have a full debate on how we extract gender ideology’s influence from our public bodies and Government policy, and protect young people from these online charlatans?
Penny Mordaunt
I am very sorry to hear about the case that the hon. Gentleman raises. It is right that we should have the same scrutiny in this area of medicine as we do in any other, whether in the NHS or in private practice. I will ensure that the Secretary of State has heard what he said about that case. He will know that she is working within her jurisdiction in the NHS to ensure that healthcare professionals and the bodies that scrutinise them know what their responsibilities are, particularly in this area.
Andrew Jones (Harrogate and Knaresborough) (Con)
I recently met the local constituency group Pumping Marvellous, a support group for people with heart failure. Members talked about how the NHS services that they use could be improved through integration—specifically through digitisation, which would enable better patient record access. In the Budget, the Chancellor announced £3.4 billion for increased NHS digital investment, which will unlock £35 billion of savings. Can we have a debate on NHS digitisation, so that we can explore the benefits for patients, doctors and nurses, and ensure that the voices of support groups and users are heard?
Penny Mordaunt
I thank my hon. Friend for raising that. We know that where good reforms have been brought in, patient outcomes are vastly improved. We will all have examples of that from our primary care practices, and particularly our hospitals. We want to ensure that that is sped up, and that artificial intelligence helps with tailoring treatments and interventions and further increases good patient outcomes. The opportunities are massive. It is a very good topic for a debate, and he will know how to apply for one.
Kevin Brennan (Cardiff West) (Lab)
Has the Leader of the House had a chance to read the report of the all-party parliamentary group on music, which I chair, on artificial intelligence in music? It came out this week. If she has not, would she like me to send her a copy, so that she can consider holding a debate on the subject in Government time? It is a key issue. This technology can bring great benefits, but we must not allow it to be our master; it should be the servant of human creativity, and the creative community should have the right to protect their creations in any scheme that is agreed between industry and tech firms. Will she look at the report and consider a debate?
Penny Mordaunt
I congratulate the hon. Gentleman and his colleagues on producing this timely and necessary report, which I am sure will be of interest to many Members of this House. I would be delighted to receive a copy, and I will ensure that the Secretary of State for Culture, Media and Sport also has one. I will invite her to follow up with him.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
The APPG on HIV, AIDS and sexual health, which I co-chair, welcomed the recent publication by the Department of Health of the pre-exposure prophylaxis road map; however, knowledge about PrEP remains very low among certain groups, particularly in the black, Asian and minority ethnic community, and among women, so there is much more to do to raise awareness of PrEP and its possibilities. Will my right hon. Friend facilitate a meeting between the APPG, HIV groups and the Minister for public health, my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom), to see what we can do to tackle inequalities in the use of PrEP?
Penny Mordaunt
I thank my right hon. Friend for raising this issue. We have made huge progress in enabling people to protect themselves through access to PrEP, but he is right that awareness of the opportunity that it provides is not universal. I will ensure that the Department of Health and Social Care has heard his concerns and encourage it to do as he asks.
Allan Dorans (Ayr, Carrick and Cumnock) (SNP)
This week we have seen the incredible bravery of Metropolitan police officers in Hainault, who literally ran towards a situation knowing that they were putting themselves in personal danger and at serious risk of injury or death. Two of those officers received very serious, life-changing injuries. We all owe a debt of gratitude to all police officers, who on a daily basis place themselves in such circumstances to keep us all safe.
That debt must also extend to obtaining justice for police officers who have lost their lives while on duty, and 17 April marked the 40th anniversary of the murder of WPC Yvonne Fletcher, who in 1984 was hit in the back by shots fired from inside the Libyan People’s Bureau. Despite the identity of one of the offenders being known, no one has ever been charged in connection with Yvonne’s murder. May we have a debate in Government time on the circumstances surrounding the murder of WPC Fletcher?
Penny Mordaunt
First, I thank the hon. Gentleman for his words about those Metropolitan police officers and the police in general. I am sure the whole House will want to send our good wishes to those officers. We have heard the update that the Met chief gave on their condition, and I hope all Members will join me in wishing them a speedy recovery. I hope they are out of hospital soon. I will ensure that both the Foreign Secretary and the Home Secretary have heard what the hon. Gentleman has said. He will know that Ministers work on the issue and, where they are able to have bilaterals with others who may be able to assist in this area, they do so—it is part of the script that they use when having those meetings—but I will ensure they have heard what he has said today.
Rob Butler (Aylesbury) (Con)
Last week I went to the Aylesbury Vale young enterprise company of the year finals at Aylesbury Vale Academy. The winners were a team from Aylesbury Grammar School who produced and sold biodegradable greetings cards implanted with wildflower seeds that can be planted and grown. Will my right hon. Friend join me in congratulating them and all the other young enterprise finalists, and may we have a debate in Government time to underline the importance of teaching the value of the private sector and of the role of business in creating jobs, generating wealth and enabling the economic growth that pays for public services?
Penny Mordaunt
I thank my hon. Friend for allowing us all to send our congratulations to Aylesbury Grammar School and all those involved in that good initiative—perhaps the House of Commons gift shop would like to stock that fantastic product. I also thank him for allowing us all to reflect on the force for good in the world that enterprise and businesses represent in our local communities, not only through supporting the charity sector, but through the enormous revenues they raise to keep everything that matters to us going.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Following the Aberfan disaster in October 1966, donations from around the world were used to build the Aberfan and Merthyr Vale Community Centre. The centre has been managed by a leisure trust and is home to a library, gym and swimming pool. Until two days ago, it faced possible closure. Despite that, the trustees—none of them local—refused to engage with me, trade unions, their own staff or residents, and they only engaged with the local authority at the eleventh hour. May we please have a debate on how charity trustees who hold cherished local assets can be held to account?
Penny Mordaunt
I am sorry to hear about the situation in the hon. Gentleman’s constituency. Losing any facility is not good for a community, but losing one with such heritage and hopes for a legacy that it might deliver for its local community is very upsetting. He will know how to apply for a debate, and I encourage him to continue his work to bring together the trustees and the community. When that happens, solutions are found. The Department for Levelling Up, Housing and Communities has enabled asset transfers and other things to happen in order to allow such facilities to continue, and my office stands ready to assist him in any way we can to get the right advice.
Jo Gideon (Stoke-on-Trent Central) (Con)
The Government’s long-term plan for towns will ensure that local people can develop plans that deliver the priorities of their community and are given the tools to change their town’s long-term future. Better access to finance for microbusinesses and social enterprises is a critical element of such a plan, and the Government could facilitate it through changes to financial regulations. Will the Leader of the House allocate Government time for a debate on the future of community enterprise and community lending, including Bank of Dave-style initiatives that drive local growth?
Penny Mordaunt
My hon. Friend raises good points and ideas. She will know that the next questions to the Chancellor will be on 7 May, and I encourage her to raise those matters with him then. I will give him the heads-up today to ensure that he has heard her sensible suggestions.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
As a founding member of the Scottish constitutional convention, and the only Member of the present Commons whose signature is on Scotland’s claim of right, I know one or two things about devolution. Indeed, it will very shortly be the 25th anniversary of the first sitting of the Scottish Parliament. I politely ask whether we might have a debate on how Scottish devolution came into being, the ideals that lay behind it, and how the present Scottish Government are undermining those first ideals.
Penny Mordaunt
I thank the hon. Gentleman for that very good suggestion, and I am sure that such a debate would be well attended. Having headed up UK-wide organisations, particularly in healthcare, I know that one strength of having different systems of governance to reflect different parts of the UK is that they work together and learn from each other—how our four chief medical officers work together, for example. Devolution was envisaged as four nations working together for the common good of their citizens, but we know that is not the SNP’s interpretation of that opportunity. That would be a good debate and I encourage him to apply for it —and if he does, I will attend.
Kirsty Blackman (Aberdeen North) (SNP)
Outside of London, Aberdeen has the highest proportion of non-UK-born citizens anywhere on this island. Today the Home Office looks set to remove and detain someone who fled persecution in their home country and has begun to build a life in Aberdeen. Right now, the people of my city are out on the streets making it clear that refugees are welcome in Aberdeen. What can I do to ensure that if someone is detained and removed from Aberdeen, they are given basic human necessities such as water on the hours-long journey away from our city, and to ensure that the Home Office updates the MP and answers their questions in relation to that detention?
Penny Mordaunt
The hon. Lady will know that the Home Office will always talk to Members of this House about constituency cases of whatever nature, but it is clear that, given our finite resource, we can honour our obligations to those seeking asylum here only if our asylum system can deal with the volume of people coming in. We should use those finite resources in a way that helps people, but we can also choose which individuals we want to help and ensure that people who do not have leave to remain in this country do not remain here. That is what this democratic Parliament has decided to do, because the British people wish us to do it. She ought to reflect on that.
Andrew Bridgen (North West Leicestershire) (Ind)
There are a number of bodies that the public rely on to be impartial and to protect the public interest, including the General Medical Council, the Solicitors Regulation Authority and the Civil Aviation Authority, to name but three. When independent regulators take moneys from the World Economic Forum or other vested interests, they lose their independence, so can we have a statement from the relevant Minister on how we are going to end regulatory capture, something we have seen at the Medicines and Healthcare products Regulatory Agency with disastrous consequences? Can that Minister also explain why the guidance to so-called independent regulators says that it regards their regulation as a tool of government?
Penny Mordaunt
Regulators have very clear responsibilities —that is well understood. Members of this House will work with them on a whole raft of issues to raise concerns about the sector they cover and how they are operating in their local area. If the hon. Gentleman has any specific charges of a regulator not doing its job, as he knows, the Department for Business and Trade will shortly be bringing forward a White Paper about how we improve regulators in the UK. We are always interested in what can be improved, but he has made quite a serious allegation today, which he should follow up with the Secretary of State.
Christine Jardine (Edinburgh West) (LD)
As millions of people across England and Wales go to vote in today’s council elections, will the Leader of the House join me in recognising the work of my constituent, the right honourable Lord Provost of Edinburgh, Robert Aldridge, who this week marks 40 years of continuous service as a councillor in Edinburgh? That longevity is the envy of many others in Scottish politics, and I am sure will be the ambition of many of those who are starting their career today.
However, like this place and many other parts of our democracy, councils do not always reflect the diversity of their area. In 2022, the Local Government Association found that 92% of councillors were white, 40% were retired, 46% had caring responsibilities and just 12% had a disability, so may we have a debate in Government time on how we could make local government roles more accessible and more representative of their communities?
Penny Mordaunt
I am sure that the whole House sends its congratulations to Councillor Robert Aldridge on this landmark anniversary, and thanks him for both his service and his stamina in the role. The hon. Lady raises a very important point: we want many people from many different backgrounds and with many different skills to come forward and run for office. It is an excellent topic for a debate—she will know how to apply for one—but of course we can all encourage people in our communities to come forward, step up and serve.
Dave Doogan (Angus) (SNP)
As a child of the 1970s, I am certain that the Leader of the House will value and remember fondly the performances of AC/DC. However, she may not know that AC/DC’s frontman, Bon Scott, is no less than a child of Angus—of Kirriemuir in particular. I am certain that she will wish to welcome this weekend’s Bonfest festival, wish it every success, and congratulate DD8 Music on the promotion of that tremendous international music festival. However, one thing that causes problems for music festivals across this island is the Brexit obstructions that prevent many musicians from coming from the EU to perform in Scotland, and Scottish and English musicians from performing in the EU. Does she agree that we should have a debate in Government time about how we can best reconcile that situation with the Brexit reality that we find ourselves in?
Penny Mordaunt
The hon. Gentleman will not be surprised that I disagree with his characterisation of the UK’s choice to leave the European Union as a highway to hell, but I will ensure that the relevant Minister has heard his concerns. Of course, I congratulate everyone involved in what sounds like a very jolly festival, and I hope a good time is had by all.
Richard Foord (Tiverton and Honiton) (LD)
Today we read in the press that the oil and gas company Shell will take some of its bumper profits, creamed off the top of people’s soaring energy bills, and use it for share buy-backs. Shell plans to start a £2.8 billion share buy-back scheme to inflate its own share price, rather than to help tackle the climate emergency or boost our economy. A 4% tax on share buy-backs as proposed by the Liberal Democrats could raise about £2 billion per annum for our public services, so could we please have a debate on share buy-backs and the potential benefits of such a levy?
Penny Mordaunt
The hon. Gentleman will know that, on any such proposals that the Liberal Democrats wish to put forward, they can question the Chancellor next Tuesday when the House returns. He will also know that the Government have done a huge amount of work with both energy companies and their suppliers to assist in alleviating the cost-of-living issues that households and businesses are facing.
Jim Shannon (Strangford) (DUP)
Thank you, Mr Speaker. These are the strongest legs in the Chamber, without a doubt.
I thank the Leader of the House for the opportunity to highlight the prevention of violations of freedom of religion or belief. It has been more than a year since the outbreak of the civil war in Sudan, and Sudanese civilians certainly bear the brunt of the atrocities committed due to the fighting, with thousands killed and millions internally displaced. While His Majesty’s Government are working with others to resolve the crisis, the vulnerability of Sudanese Christians has been overlooked. Christians and their churches are being targeted, and there have been reports of rape, kidnap and looting against Christians. Even when the war ends, religious minorities fear future persecution. Will the Leader of the House join me in condemning the atrocities against Christians in Sudan, and what can she do with the Foreign Secretary and the Government to combat these crimes as they work to find a solution to the conflict?
Penny Mordaunt
I again thank the hon. Gentleman for raising awareness of an issue that has affected enormous numbers of people, but does not necessarily get the airtime on the UK media that it warrants. He will know that the Foreign Secretary and the Minister covering this region are very focused on ensuring, and will do all they can to make sure, that civilians are protected and security issues are properly addressed. As part of that, he will know that the envoy for freedom of religion or belief and the team supporting that post will be very focused on this matter. As I always do, I will make sure that the Foreign Secretary has heard his concerns, and I thank him.
Backbench Business
Security in the Western Balkans
(6 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Alicia Kearns (Rutland and Melton) (Con)
I beg to move,
That this House recognises the acute security situation in the Western Balkans; supports the territorial integrity and sovereignty of Kosovo and Bosnia and Herzegovina; condemns the attack by Serb nationalist militants in Banjska, Kosovo on 24 September 2023; further supports the authority of the Constitutional Court in Bosnia and Herzegovina; further condemns Russian interference in the Balkans; notes with concern pro-Russian and pro-Serbian irredentist political rhetoric in Montenegro; and urges the Government to increase its engagement with regional partners and international allies to improve the security landscape of the Western Balkans.
A pivotal moment for the western Balkans approaches —a moment that will decide whether the dream of a democratic, peaceful, Euro-Atlantic, integrated Balkans can be realised, or whether we will return to the nightmare of the 1990s. Without peace, there can be no progress, and with the threat of violence and the embrace of hatred, insecurity is bred. Today, I hope to set out some steps that the Government can take to protect peace and, as we all hope, to protect us from having to confront the dreadful alternative of conflict. I thank the Backbench Business Committee for agreeing to this debate, which is very much appreciated, and I welcome the ambassadors of Bosnia and Herzegovina and of Kosovo to the Chamber.
I want to start by discussing Bosnia and Herzegovina, which, with its multi-ethnic character and constitution, acts as a linchpin for the wider region. Next year, we mark the 30th anniversary of the Dayton agreement, which brought an end to the horrors of the Bosnian war. Before the war, 34% of people in Sarajevo were married to spouses of a different ethnicity, with children who studied and played together and neighbours who cooked together, but they suddenly found themselves separated by conflict, unable to understand why their world had fallen apart and why those they had called friends shunned and abandoned them.
The tragedy of the Bosnian war is embodied in the story of the 25-year-olds Boško Brkić and Admira Ismić, known as the Romeo and Juliet of Sarajevo. Boško was a Bosnian Serb who was deeply in love with his girlfriend Admira, a Bosniak. Both were trapped in the siege of Sarajevo by the Bosnian Serb army, and attempted to escape in 1993, hoping to continue their young lives, full of hope and away from the horrors of war. As they attempted to leave the city, Boško was shot by a sniper and killed instantly. Another shot injured Admira, who in her last moments crawled to Boško and embraced his body, eventually succumbing to her wounds while she hugged her beloved. Their final embrace, as Admira lay dying, signalled the unwavering strength of their bond and represented the rejection of hatred and of ethnic division. The hopes of the young Romeo and Juliet of Sarajevo continue to be held by many people across Bosnia and Herzegovina, and it is our duty to empower them to dream of that brighter future, and to do all we can to limit the return of violence and more cruelty on the streets.
Sir Alec Shelbrooke (Elmet and Rothwell) (Con)
I thank my hon. Friend for securing this debate at a crucial time. I do not think it an exaggeration to say that the current situation is a tinderbox and on knife edge, to mix metaphors. The story she has just relayed is important. Does she agree that it illustrates that the nationalistic leaderships who wanted to stir up hatred were in such a minority, because the vast majority of the population of Bosnia and Herzegovina were unaware of their ethnic backgrounds? They saw themselves as Bosnians, and that was exploited by those nationalist tendencies.
Alicia Kearns
My right hon. Friend, unsurprisingly, is absolutely right. That is why it is so important at this time, when we see the risk of a return to the tinderbox, that we in this place attempt to safeguard the truth. We must never forget the horrors of the Bosnian war or the siege of Sarajevo, which is still the longest in modern history and where almost 12,000 civilians were killed. Neither should we forget the genocide of Srebrenica, where 8,000 men and boys were murdered, or the 100,000 people dead and the 2 million displaced.
Sadly, those who seek to break up Bosnia today use the past as a weapon, inverting it to retraumatise victims and glorify atrocities. Milorad Dodik, the so-called President of Republika Srpska, has consistently denied the Srebrenica genocide, despite a 2021 Bosnia-wide law banning genocide denial. As we know, denial is a continuation of genocide. A group of countries including Bosnia, Germany and Rwanda is bringing a resolution to the UN General Assembly formally to recognise 11 July as the international memorial day for the victims of the Srebrenica genocide. The resolution is supported by Balkan countries including Croatia, Montenegro, Albania, North Macedonia and Slovenia, yet Serbia opposes it.
Enshrining remembrance of the Srebrenica genocide and other victims of the Bosnian war in international law sends a strong message that the international community rejects historical revisionism and the weaponisation of the past. It also prevents the revictimisation of survivors, and sends a strong message to Milorad Dodik and all those who seek a return to the 1990s that we have not forgotten and we will not forget. I am grateful that the Foreign Secretary has made it clear that the UK will both vote for and promote the resolution. Some, however, are seeking to misrepresent that resolution. What it does not do is pass collective judgment against the people of Serbia. It is about individual responsibility and ending the denial of genocide to build a better future with a common language. Denial prevents communities from coming together and building new futures, and the memory of past traumas steels us in our mission to safeguard modern-day Bosnia and Herzegovina.
The Dayton agreement, to which the UK is a signatory, established the office of high representative and the constitutional court of Bosnia to ensure the state’s viability and development. Milorad Dodik has sought to violate the treaty, passing illegal laws in Republika Srpska to reject the authority of both those entities. He is now before a court on charges relating to those violations, and if found guilty will be banned from holding office and face up to five years in prison.
Predictably, rather than face up to the consequences of his actions, Dodik has threatened Bosnia and Herzegovina, stating that Republika Srpska will secede from Bosnia if he is convicted. Republika Srpska is not Dodik; Dodik is not Republika Srpska, and he is wrong when he endangers all those who live within its environs. That cowardly attempt to shield himself behind state institutions will have dire consequences for all Bosnians, and the UK must be unequivocal in our support for the constitutional court and its judgments.
Russia has a clear interest in fomenting conflict in the Balkans to distract from its renewed illegal invasion of Ukraine. Sadly, it holds a veto over the security framework of Bosnia and Herzegovina and the renewal of EUFOR. That consequently hands it a veto over the entire region, which is akin, some might say, to handing a match to an arsonist. Eventually you will be forced to put out the fire.
Sir Alec Shelbrooke
Just to illustrate where we are with Russia, Dodik gave the highest order of Republika Srpska to Putin.
Alicia Kearns
Dodik absolutely did do that. Once again my right hon. Friend is absolutely right. Over the next few days, there will be a great Easter coming together of Dodik, Vučić and others around a Greater Serbia, which I will touch on briefly.
I ask the Government to work with our allies to consider an alternative peacekeeping framework to EUFOR, led by NATO. The Dayton agreement gives NATO explicit permission to legally establish a force in Bosnia for peacekeeping without time limit or UN approval. There is widespread support from the Bosnian Government, and its legality under the Dayton agreement means that neither Dodik nor Putin could block it, unlike the current arrangement with EUFOR. As a minimum, the UK should send a NATO peacekeeping force to the strategic Brčko district, which I am sure my right hon. and gallant Friend the Member for Beckenham (Bob Stewart) will speak about shortly. Even one battalion of NATO troops in Brčko would make a secession militarily impossible and have a stabilising effect on all of Bosnia’s politics.
Bob Stewart (Beckenham) (Ind)
I entirely endorse that point. A British battalion positioned in Bosnia would give a very strong signal. Frankly, a British battalion is probably the best battalion to send into such a peacekeeping situation.
Alicia Kearns
My right hon. and gallant Friend is absolutely right. To that point, I know that the Foreign Secretary, in answering questions from Members in the other place yesterday, said that he would prefer to emphasise and focus on Kosovo, but we saw that when British troops went into Kosovo last September, there was a resurgence in the delivery of the mandate. My right hon. and gallant Friend is right that British troops would make a fundamental difference. The fact that the Dayton agreement gives us explicit permission to create a new security force means that we should actively be debating it.
Finally, the UK should look at extending the sanctions levied against Dodik and other senior figures in his circle, which I was relieved to secure a few years ago. The joint sanctions with the UK and the US have begun to take serious effect, with Bosnian banks closing the accounts of those targeted. I urge the Government to consider sanctioning other figures from Republika Srpska who support laws designed to undermine the high representative and the constitutional court, promote genocide denial and glorification, and attempt to transfer Bosnian state assets to their personal control.
Bosnia, with its multi-ethnic character and constitution, is a barometer for the entirety of the western Balkans. When threatening the break-up of Bosnia, Dodik said:
“If anybody tries to stop us, we have friends who will defend us.”
I say, let us show him that Bosnia, too, has friends, and none more steadfast than the United Kingdom. Now is the time for deterrence, diplomacy and a rejuvenated NATO to take the initiative and ensure that Bosnia’s sovereignty and security are protected.
While the situation in Bosnia is tense, Kosovo is the only country in the western Balkans to have faced an attack on its soil since our last debate on the western Balkans. The Banjska attack carried out last September saw 30 heavily armed Serb militants murder a Kosovan police officer, Afrim Bunjaku, before engaging in a firefight from the Banjska monastery. The amount of weaponry seized from the militants was truly extraordinary. I have seen it myself, and I refer to my declaration in the Register of Members’ Financial Interests.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
I thank the hon. Member for securing today’s important debate on security in the western Balkans. On a recent visit to Serbia as part of a cross-party parliamentary delegation, I witnessed the immense potential as well as the stark challenges in the region. Does she agree that the UK Government must do their level best to help to defuse tensions between Serbia and Kosovo, to ensure that the rights of minorities on both sides of the border are protected and, crucially, to promote democracy by doing their level best to reduce Russian influence in the region and in Serbia?
Alicia Kearns
Without question, everyone must help to defuse the situation and everyone must support ethnic minorities, and we should be clear that we in this place, as I will say later in my speech, want to be a friend to a democratic Serbia. That is what we all aspire to in the region.
To go back to the Banjska attack, the arsenal of those 30 militants included 41 anti-tank rocket launchers, 66 automatic rifles, two automatic grenade launchers, four mortars, two armoured vehicles and more than 50 kg of explosives. The weapon serial numbers lined up. Those were not miscellaneous items. Nor were they old or expired stock—some were just a couple of years old. I am sure the Minister will agree that such a level of weaponry is not typical for provincial militia. It therefore begs the question: who was supporting the Banjska attackers and why?
The answer may lie in some of the footage recovered from those who undertook the attack, which shows the militants training in a Serbian military base on 20 September, just four days before the attack. Likewise, some of those aforementioned serial numbers on the weaponry match up to the maintenance documents recording the same weapons as belonging to the Serbian military.
Countless times in the House—in writing and in private meetings—I have asked the Government to release an assessment of whether the Serbian state provided material and strategic support for the Banjska attack. The US has completed a report on who is responsible and their links to the Serbian Government. Our allies need to release that urgently because truth matters and accountability matters. Without that report, the truth is denied and there is no deterrence, because impunity breeds contempt for the rule of law and order.
Swift and equitable accountability for acts of aggression is crucial if we want to discourage future violence and dispel any notion of appeasement. So I ask again: who organised the Banjska attack, who provided the weaponry and what do we assess was their intent? I would be grateful if the Minister answered that when he responds.
What we do know beyond doubt is that the attack was led by Milan Radoičić, a former vice-president of the Srpska Lista party. The current wave of tension in northern Kosovo exploded when Srpska Lista orchestrated an electoral boycott of municipal elections last May. Without the participation of Kosovan Serbs, the election returned Albanian mayors. The installation of the mayors by the Kosovan Government sparked unrest. We have all spoken about how risky that was, including I directly to the Government. However, we then saw a violent attack on Kosovo Force—KFOR—by Serbian militias that injured 25 Italian and Hungarian troops, some of whom will never walk again. At the time, the UK, the US and the EU condemned Kosovo for installing the democratically elected mayors, but did not criticise Serbia for its support of the boycott and Srpska Lista.
I wrote a joint statement, signed by 74 parliamentarians from Europe—including almost every chair of a Foreign Affairs Committee in Europe—the US and Canada, asking for a fairer approach to the crisis and for Kosovo not to be singled out. The statement, and multiple votes and debates in the EU Parliament, have shown that the international community want to see a more even-handed approach to Kosovo and Serbia.
Kosovo has since, under international pressure, facilitated a referendum in the northern municipalities to allow elections for new mayors. Srpska Lista again orchestrated a boycott, frustrating the democratic process and inflaming intercommunal tensions even further. The US has been clear now, however, that Kosovo has fulfilled its democratic obligations and the northern mayors are legitimate. The EU, unfortunately, has been less clear in its messaging, insisting on a “both sidery” approach. Can the Minister confirm that the UK recognises that Kosovo has attempted to rectify the situation under its constitution and that, regardless of boycott by Srpska Lista, the current mayors are legitimate, regardless of their ethnicity? I also point out how disappointing it is that ethnicity continues to play such an important role in the Balkans.
Despite constant impediments by Russia and Serbia, Kosovo is on the verge of membership of the Council of Europe, with its application moving to the Committee of Ministers for approval this month. Membership would mark a vital milestone in Kosovo’s progress from the dark days of the 1990s. Kosovo’s journey is one in which we have played an important role, which we should all be proud of. However, some internationally have said that Kosovo should be admitted only if it creates an association of Serb-majority municipalities. The UK should reject that firmly. While I do not want another Republika Srpska in the western Balkans at all, an ASM will be created as part of the Belgrade-Pristina dialogue, but it cannot be rushed or extracted through external pressure. Can the Minister confirm that the Foreign Secretary will vote for Kosovo’s admission to the Council of Europe this month, regardless of progress on the ASM, and encourage all allies to do so?
More broadly, the UK, as a former member of the Quint, should assume a more active role in the peace talks. Our current passivity is untenable in the face of such a volatile situation. We are no longer constrained by EU consensus and non-recognisers, and we must be more inventive in diplomacy. We must find not just our voice but our backbone, stop standing on the sidelines and take action when we have a duty to support our allies.
Equally, the UK should be engaged with the five EU states that do not recognise Kosovo’s sovereignty to help boost Kosovo’s trajectory towards EU and NATO membership while solidifying the inviolability of its territorial integrity. The US and the EU should also adopt a resolute posture when addressing Serbia’s leadership for their role in stoking instability, aligning with Putin and increasing autocratic tendencies at home and abroad. The UK and Kosovo have a fantastic relationship, and I thank the Foreign Secretary for visiting Kosovo earlier this year to demonstrate that partnership. The bond was forged during NATO’s intervention in 1999, when British troops helped to avert further atrocities and put Kosovo on a path towards democracy, which it has fully embraced.
Our armed forces continue to play a role. After the Banjska attack, the Princess of Wales Royal Regiment quickly deployed to bolster KFOR, acting professionally to defuse the situation. Likewise, the Royal Regiment of Fusiliers deployed last year in a period of heightened tensions. The British Army is highly respected and appreciated, and I am sure the whole House will join me in thanking each and every soldier who served there with distinction. They made an enormous difference.
I urge the Government to work with NATO partners to ensure that KFOR is given the support and taskings it needs to maintain peace and stability across Kosovo. We should consider the establishment of a new security alliance between the US, the UK and other willing NATO member states with Kosovo to help to allay the immediate security concerns. Let me give an example of why that is needed. Last December, President Vučić said that Serbia should simply follow the example of Azerbaijan in Nagorno-Karabakh and wait for special geopolitical circumstances to allow it to reclaim Kosovo. That is a statement of intent and should not be ignored.
Such comments from a head of state are unacceptable. Indeed, Vučić threatened me last year for speaking out against the smuggling of weapons into Kosovo. My warnings were decried by many, yet what I predicted devastatingly came to pass in Banjska. I am grateful to the Speaker and to this House for the support I was given at that time.
There were also reports of electoral irregularities during the Serbian election and the bussing in of people, followed by the opposition MP Nikola Sandulović being kidnapped and brutally beaten by Serbian authoritarian terrorists. It is fitting that the Serbian opposition operates under the banner of “Serbia against violence”. We in this House want to be friends with a democratic Serbia. We want free and fair Serbian elections. There needs to be political reform, and that begins with free and fair elections. I fear that we are not seeing that, especially with Xi Jinping today in Serbia encouraging it to join BRICS.
Mr Dhesi
During a recent cross-party parliamentary delegation visit to Albania, we witnessed for ourselves—thanks to fruitful meetings with the President, the Speaker, Ministers, MPs and others to help strengthen ties—that Albania is a close, trusted ally in defence and migration. The UK Government are helping to support a great deal of work to tackle modern slavery. We also witnessed the UK Government supporting youth initiatives in Kukës. There was also considerable concern in Albania, and during my recent meeting with the British Albanian diaspora, about the sovereignty of Kosovo. Does the hon. Lady agree that the British Government must work with Albania and other allies to ensure that we help to protect Kosovan sovereignty?
Alicia Kearns
Yes, we must do that.
I had hoped to touch on Montenegro, but I will conclude. We can protect the truth in Bosnia by voting for a UN resolution to commemorate the Srebrenica genocide. We can end Dodik’s threats of secession by transitioning to a NATO-led peacekeeping mission under the provisions of the Dayton agreement. We can continue our successful programme of sanctions to shut down the accounts of those who threaten peace. In Kosovo, we can build on the UK’s proud legacy by voting to admit Kosovo to the Council of Europe, and we can redouble our commitment to KFOR and extend its mandate by taking a more proactive approach to countering militias and criminality. We can commit to a fairer and more even-handed approach to the Belgrade-Pristina dialogue, and in Serbia we can work with international partners to promote free and fair elections and a media environment.
We must be clear that we stand on the side of the people of Serbia, and that irredentist dreams care little about the people of the Balkans. It is within our power to support stability and security through deterrence and being resolute in our commitment to the region. Inaction is a choice that we cannot make. We must not step back and we must not look away.
Jim Shannon (Strangford) (DUP)
Thank you so much for calling me so early, Madam Deputy Speaker. I really appreciate that. I was rather caught off balance, to be truthful.
Madam Deputy Speaker
I checked with Mr Speaker that it was constitutionally all right for me to do that. We were both rather surprised to find this situation.
Jim Shannon
Madam Deputy Speaker, you, Mr Speaker and I very much believe in the constitution, so we are on the same page. Thank you so much.
I commend the hon. Member for Rutland and Melton (Alicia Kearns) for leading the debate with such a detailed and helpful contribution. I also commend her for her leadership as Chair of the Foreign Affairs Committee, and for her stance in this Chamber on these issues in relation to not just the Balkans, but everywhere. She knows I am impressed by her contribution and what she does.
The current security situation in the western Balkans has prompted considerable international concern. The United Kingdom of Great Britain and Northern Ireland, with its history of engagement and long-standing partnerships in the region, has also raised its voice to the challenges that threaten the development of the western Balkans into a more stable and resilient region. With that in mind, it is really important to be here to discuss how we can provide further support and do more. There are more elegant speakers than I in the Chamber. I look forward to everyone’s contributions.
The situation is particularly worrying due to Russian interference that continues to destabilise and polarise the region. The hon. Lady referred to that in her introduction. Russia considers the western Balkans as an important region in which to exercise its foreign policy by inciting instability and division, ultimately aiming to assert its place as a great power in the region. Media and disinformation are some of Russia’s great tools in accomplishing that, and it uses them in Ukraine and all over the world. It is not the only one doing it.
Russia continues to interfere in the politics of Montenegro, often through Serbia; some nationalist Serbs in Montenegro are using media, specifically social networks, to promote Russia and pro-Serbian irridentist political rhetoric. The gravity of the situation is clear. I am concerned that any Russian involvement in the western Balkans serves only to undermine democracy, escalate tensions and destabilise the region. Indeed, in the axis of evil, Russia is right there leading at the top of the pyramid, along with others across the world.
I am very much looking forward to the contributions of the shadow Ministers and, in particular—if I can say so, Madam Deputy Speaker—my good friend the Minister, who always encapsulates our thoughts and concerns in a way that encourages us. I look forward to what he will say.
I think it was the hon. Member for Rutland and Melton who, in November 2022, instigated the last debate on the western Balkans. I spoke in that debate—I think that was the last time we debated this issue—and I reaffirm my position that Putin’s regime is the greatest threat to prosperity and peace in the Balkans. I condemn any Russian interference in the region. I ask our Government, our Minister and others to join me and others in this House in doing so. It is clear that Russia is a danger to peace not only in the Balkans, but in the world, and in Europe in particular. Is it any wonder that many other countries—Latvia, Lithuania, Estonia, Poland, Germany and all those within the Russian axis some time ago—all fear their very survival from Russia’s intent?
The Russia-Ukraine crisis poses an additional concern to security and stability in the western Balkans. While Russia’s invasion of Ukraine prompted some Balkan Governments to distance themselves from Moscow, Serbia has shown its commitment to its strong ties with Russia by refusing to support the EU sanctions regime amidst the ongoing conflict. Again, the influence of the axis of evil is clear. It relies on Russia for gas and oil, and on Russia’s support for its denial of Kosovo’s independence. However, Serbia’s support for the UN resolution denouncing Russian aggression against Ukraine and its refusal to recognise Russian annexation of Ukrainian territory suggests that Russia is gradually losing its stronghold on the country. Only time will tell, but it would be very helpful, Minister, to have the thoughts of the Government and the Department on that. Do they see a gradual moving away by Serbia from Russian influence? Some indications show that, but whether they are strong enough and deep enough only time will tell.
Alicia Kearns
The hon. Gentleman may not be aware that in the last few days Aleksandar Vulin—a former spy chief for Serbia who, having been sanctioned by the United States Government for his involvement in gangs and narcotics, moved to Republika Srpska and was made a senator for life—has just been brought back as Deputy Prime Minister. Does he agree that that is gravely concerning, and is relevant to his point about people being put in place who have been sanctioned by the United States and are strong fans of Russia? Does he agree that it can be destabilising and make our partnership with Serbia challenging, especially when it comes to defence and security matters?
Jim Shannon
The hon. Lady’s tremendous knowledge of this part of the world in particular, and the interest that she pursues so assiduously, cannot be ignored. She is right to underline the influence of Russia and its wish for people to be placed where they can have influence on its behalf, and I share her concern.
If the UK brings its global economic strengths to partnering with Serbia and other western Balkan states, there is a potential for those countries to increase their resilience against hostile foreign interference and progress towards wider economic development through trade and diplomatic efforts. The right hon. and gallant Member for Beckenham (Bob Stewart) is admired by all of us here for the leadership that he showed in the Balkans when he was in the armed forces and for his knowledge of this subject following his experiences, and I know that when he speaks later he will remind us of how awful that particular war was. But if we can move forward and assist the world’s wider economic development through the trade and diplomatic efforts that I have mentioned, let us do that. We cannot ignore the negatives, but it is always good to find solutions as a result of a positive attitude and a focus on our strategy.
The UK’s objectives for the western Balkans include overcoming divisive ethnic nationalism and conflict. The attack by Serbian nationalist militants in Kosovo last year is a prime example of the necessity for our Government to pursue effective action to achieve that objective, especially with regard to Kosovo-Serbia relations. Perhaps, when the Minister responds to the debate, he will give us his thoughts about how those relations are proceeding, and what more we can do to bring about solutions.
In the light of the Serbian militants’ attack, we remain committed to supporting the territorial integrity and sovereignty of Kosovo, and oppose any action to undermine that. We, or rather our Government and our Minister, have been extremely strong on policies in that regard and their implementation, and I commend them for their leadership. I know that every one of us is greatly encouraged by it. However, the response to the attack from Kosovo and Serbia underscores ongoing tensions that can only exacerbate the regional security challenges, and we ask our Government to join us in condemning such attacks.
The attack is an indicator of nationalist sentiments that have increased in recent years, threatening the stability of not only the countries involved but the entire region. The focus of the debate is on security in the western Balkans, but what happens there will affect all the surrounding areas as well, as the hon. Member for Rutland and Melton emphasised in her speech, and it is important for us to do our best in that context. However, we recognise the need for this topic to be debated in the House, because the western Balkans certainly remain vital to UK and European security. We must bear in mind that Albania, Montenegro and North Macedonia are our NATO partners. Their peoples may be culturally or ethnically different, but they are morally focused on finding a solution, and I find that encouraging. Their partnership with us is critical in maintaining stability in the wider region. The stability of the western Balkans remains fragile, and we cannot ignore that.
The four regions of the United Kingdom of Great Britain and Northern Ireland come as one, and we fight as one in the British Army, the Royal Air Force and the Royal Navy, which I am greatly encouraged to see. Even colleagues on the SNP Benches will be encouraged to see those from Scotland who serve in uniform. Before it is too late, we must work alongside regional and international partners to change the situation in the western Balkans. The United Kingdom should redouble its efforts to address areas of needed reform in the western Balkans, including democracy, the rule of law and defence against foreign threats.
Thank you again, Madam Deputy Speaker, for calling me early in the debate, and I thank the hon. Member for Rutland and Melton for bringing forward this issue. I thank the Minister and the Government for their leadership, and for their achievements so far. I want that work to continue, so I call on them to utilise their regional and international partnerships, which are built on mutual accountability and trust, to improve the security situation in the western Balkans. Today we add our voice to the efforts to make the necessary changes, and I look forward to the contributions from others, who will equally reinforce the importance of today’s debate.
Bob Stewart (Beckenham) (Ind)
Some present will recall that I was the British battalion commander under UN command in Bosnia in 1992 and 1993. Since then, I have given evidence in four war crimes trials. I have visited Bosnia frequently over the last 31 years, and what happens there and to the people who live there matters to me and to all those people who have served there—whether in the military, for a charity or whatever. Somehow that country grips us, and it matters to people in our country.
I was last in Sarajevo just over two weeks ago, principally to attend the remembrance service for the Ahmići massacre, which took place on 16 April 1993 and where 116 people like us were killed. Those people may well have been Muslim, but they thought like us; they just had a different religion. Like us, they wanted to bring their children up, they wanted schools and they wanted things to work. That is why Bosnia matters—we are very much akin to the people who live there.
Today, Bosnia remains a very fraught place, with tensions between the three main communities: Bosnian Serbs, Bosnian Croats and Bosnian Muslims. I could say there are tensions between the Christian community and the Muslim community, but I would like to point out that there are other people there, such as members of the Jewish community, particularly in Sarajevo. Tensions remain just below the surface, and sometimes they break through.
Bosnian society today is still like a lemonade bottle that someone has picked up and shaken. They put it down and think all is calm; they can see through it, and there are no bubbles. When they take the top off, there is an explosion—boom! Tensions in Bosnia remain ready to explode. These tensions are, of course, exacerbated by Russian support for Republika Srpska, which Russia already treats as an independent state. Recently, at a conference in St Petersburg, it was treated as a sovereign entity with its own flag. There have been strong indications, and maybe more than that, over the last few years that Russian weapons are going to Republika Srpska. With Russian encouragement, Dodik, Republika Srpska’s leader, whom my hon. Friend the Member for Rutland and Melton (Alicia Kearns) has already mentioned, is blocking all moves by the Muslim-Croat Federation and Republika Srpska—those two entities together are the country of Bosnia and Herzegovina—towards EU membership.
Just last week, Dodik stated that things will change after 2 May, which is today. Many people interpret that to mean that he will push for the secession of Republika Srpska from the Federation of Bosnia and Herzegovina. If that were to happen, such a change would be a disaster for the western Balkans and would very likely result in yet another civil war. Our excellent ambassador to Sarajevo, Julian Reilly, is really worried about that.
Equally, our ambassador is terribly concerned about the number of qualified young people who are leaving Bosnia. Youth unemployment in Bosnia is at nearly 40%. No other country in Europe has such an appalling statistic. Bosnia is bleeding its youth, and the youth are the future of any country. The reason for that statistic is mainly the political situation and the unstable base on which the country sits.
Alicia Kearns
Is my right hon. Friend concerned that there is going to be an Easter Assembly, where Dodik and Vučić plan to sign a declaration around Greater Serbia? What does he think that means? What message does it send about Vučić’s plans and support for the tacit secession of Republika Srpska?
Bob Stewart
I thank my good and hon. Friend for saying that. I totally agree with the implication. The real problem is that Russia is encouraging this to happen. Republika Srpska, under Dodik, is pushing for it, and the Serbs will play both sides. If it were to happen, we could have an appalling situation like we had in the early 1990s.
In fairness, the British are doing all we can to help, particularly economically. We are trying to pump-prime Bosnia’s industry to support the setting up of new companies. Bosnia is still governed by the short-term rules—they were meant to be short-term rules—agreed at the Dayton peace conference in 1996. The rules were supposed to last a couple of years at most, but they have never been replaced. They really need to be sorted out to make a workable system for everyone who lives in Bosnia—Serbs, Muslims, Croats, whoever.
Sir Alec Shelbrooke
Everyone is grateful for the service that my right hon. Friend gave to the world. He experienced and witnessed trauma to try to bring about that peace and, in doing so, had to deal with many areas of corruption. Does he believe that a drift away from the big stick has allowed the undermining of the very issues that he says need to be addressed?
Bob Stewart
I thank my right hon. Friend.
There has been drift. We had the most wonderful high representative Paddy Ashdown, who really did wield the big stick—and it worked. His name is still revered and he was a friend of mine—he remains one, although he is gone. We need a high representative with more power, and we need the situation to be sorted out so that people do not get away with criminal acts. The mafia are still rampant. When I was in Bosnia, I had to deal with three sides militarily and with the mafia, who were appalling. I do not want to go into how to deal with the mafia, because that is not the purpose of this debate, but they are always there and they are the people who do not want change. [Interruption.] I have slightly lost my place; I knew I should not have written my speech!
Corruption and cronyism remain and are largely supported by the system. Last year, when I visited Tuzla, in the north of Bosnia, I met a highly qualified young lady who was desperate to go to medical school and become a doctor. She had all the qualifications but she told me that she could not go because she was not a member of a certain political party and, more importantly, because she did not have enough money to bribe the officials to put her on a list to go to a medical school. She was in despair and felt that the only future for her and her friends lay in leaving the country.
Our country has put a lot of effort into supporting peace and stability in Bosnia. We have done so on many levels: politically; socially; economically—a lot of economic work has gone on in Bosnia; and of course militarily. I really believe that our efforts have been worth it; we have saved many lives, and nothing is more important than to save someone’s life. We have to continue to do that. We have to do all we can to help the Muslim, Serb and Croat people of Bosnia. All that the vast majority of them want is a decent life—one that we are lucky enough to have—where their children go to school, where they can get jobs and where they do not need to worry too much about law and order. We are lucky to live in this country; there but for the grace of God go all of us. We could have been born Bosnian.
Richard Foord (Tiverton and Honiton) (LD)
It is a genuine honour to follow the right hon. Member for Beckenham (Bob Stewart). He is revered in this place for his knowledge of the western Balkans, not only because he reads a lot about the area and visits Bosnia a lot, but because of his rich experience from the 1990s, when it was at its most bloody.
I also pay tribute to the hon. Member for Rutland and Melton (Alicia Kearns). I say humbly, as the newest Member present in the Chamber today, that a Chair of the Foreign Affairs Committee ought not just to comment on some of the things going on in the world today, but anticipate what we might see in the future. We often come to the House to ask urgent questions about events, in the middle east or elsewhere, that are happening right now, but real statespeople look forward and think about what might happen in the future and how we can head that off.
I thank those Members who paid tribute to the late Lord Stunell. We were very shocked and saddened by his loss. It reminds us of another loss in the other place, that of Lord Ashdown. When I was trying to decide whether to speak in this debate or to go out and campaign in the local elections, I had to think, “What would Lord Ashdown be more appalled by? Would he be more appalled by my absence from campaigning or the debate?” Although it was a finely balanced decision, I think he would have wanted somebody on the Liberal Democrat Benches talking about the western Balkans.
I will concentrate my remarks on Kosovo, not just because of my personal experience—I spent a year there, all told—but because Kosovo has the most recently changed international border in the region. In 2008, many members of the international community, including the UK, recognised the state of Kosovo. One has to pay tribute where it is due, and it was good to see that Lord Cameron visited Pristina not long after he was appointed, at the beginning of January this year, when many others were sleeping off a hangover.
My first trip to Kosovo was working with KFOR on trying to encourage Serb returns to Kosovo. That reminds us that the efforts by the international community to build peace in Kosovo were grounded in trying to establish a safe and secure multi-ethnic environment. It is easy to forget just how much effort the international community put into trying to keep Kosovo a very diverse place. While I was working on Serb returns, I met a lady whose husband and children had been dreadfully butchered—hung from a tree and disembowelled. I later went back and worked with the Kosovo Protection Corps, an organisation that had grown out of the former Kosovo Liberation Army and subsequently became the Kosovo Security Force. For many, that was going to be the future Army of Kosovo. I have, therefore, had the privilege of seeing things from two extreme sides and I feel I am able to see things from two very different perspectives.
While there is still a strong sense of grievance in the Kosovo-Serb community, there is no doubt that Moscow is playing on that. Moscow would love to see Belgrade acting as some sort of satellite, or even a proxy. We have pretty good reason to believe that Moscow is delighted to see the middle east burning right now because it serves to distract from its illegal war in Ukraine. In much the same way, we suppose that Moscow would be very pleased if the Balkans were on fire too.
Alicia Kearns
I thank the hon. Gentleman for his kind words earlier in his speech. Is he aware that when the Foreign Secretary was giving evidence to the Foreign Affairs Committee he described Serbia as a proxy of the Russian state?
Richard Foord
I was not aware of that but it sounds feasible. We should try to bring Serbia away from the mantle of Moscow, if we can. I appreciate that is not entirely within our gift. One way to do that is through economic means, by trying to attract Belgrade and Serbia to our cause.
We must think, too, about the Kosovo Serbs. More than 10% of Kosovo Serbs have left Kosovo in the past year. Clearly, they are electing to leave, unlike what we saw in 1998-99 when people were being burned out of their homes. It was ethnic cleansing on a scale that, thankfully, we have not seen in southern Europe since. My fear is that, by legitimising the election that the Kosovo Serbs chose to boycott, we might inflame or enrage that sense of grievance that exists among those Kosovo Serbs.
Thinking about the intervention from the Chair of the Foreign Affairs Committee, I was intrigued to see that members of the International Relations and Defence Committee in the other place wrote a letter to Lord Cameron earlier this year, and among the list of suggestions that they made was one promoting a BBC Albanian service, which strikes me as an excellent idea as it would encourage the spread of our soft power in Kosovo.
When we hear remarks about Greater Serbia, we have to pay tribute to how the international community deliberately avoided creating a Greater Albania in the wake of the ethnic cleansing in Kosovo. It deliberately avoided any sense that the international community was seeking to annex territory. That stands in stark contrast to what Russia has sought to do in Ukraine. It may claim that there are precedents for redrawing international borders, but it cannot point to Kosovo as any sort of precedent, given that that involved the creation of an independent state, and that what we see in Ukraine at this time is nothing but aggression and imperial annexation.
I accept the premise that Russia is keen to interfere in the western Balkans, and is seeking to stoke tension between Serbia and Kosovo. My feeling is that we must try to avoid the Serbs becoming susceptible to the goading that is coming from Moscow.
The proposal from the Chair of the Foreign Affairs Committee for a trilateral security alliance is an interesting idea. What we saw in the wake of the invasion of Ukraine was Pristina appealing to its allies—appealing to the United States and to NATO to admit Kosovo into NATO. In the absence of that, I suppose that deterrence through a strong alliance with Kosovo makes a whole lot of sense, and, of course, we have seen similar proposals in relation to Warsaw and Kyiv.
Yes, deterrence is required, but my closing point is that we should not afford Moscow greater opportunities to appeal to the Serbs. There are some well-educated and well-informed Serbs who have grievances about what went on in the early 2000s. We must try to appeal to both the Kosovo Albanian community and to the Kosovo Serbs and try to create that much sought after multi-ethnic state.
Sir Alec Shelbrooke (Elmet and Rothwell) (Con)
I pay tribute to my hon. Friend the Member for Rutland and Melton (Alicia Kearns), the Chair of the Foreign Affairs Committee, for securing this debate at such a critical time.
In November, I was in Sarajevo with the NATO Parliamentary Assembly for a Rose-Roth seminar, which involved a series of lectures and presentations. We got to hear about what was going on from many angles, which led me to the conclusion that I could make one statement saying one thing and another saying the complete opposite. There is a paradox in the country, and the truth of it all depends on one’s perspective. For example, people will say that basically nothing has happened since 2017, and that the country is in a stalemate and is not moving forward in many of the areas my right hon. Friend the Member for Beckenham (Bob Stewart) mentioned. In the same breath, they say that the country is moving forward, building more solid foundations, and becoming a more trusted partner of international institutions. Where the truth lies between those statements is what we are exploring in today’s debate, but we know that corruption is still rife, and there are too many self-serving interests.
In the interests of time, I will not repeat the examples given by my right hon. Friend. He outlined them perfectly, especially the example of the young girl who wanted to start a medical career. The reality is that if someone is not a member of a political party, or cannot pay certain people, they can be caught in a trap. Corruption, electoral fraud, the state of law—these are all things that the Government are trying to work on in Bosnia with the Organisation for Security and Co-operation in Europe, but they are not taking major steps forward. There are, however, politicians and parties that are trying to break away from the established corrupt institutions. We will watch the elections with interest over the coming years, especially in Sarajevo, as anti-corruption candidates start to stand. We have a responsibility to support those processes, through organisations that we support, such as the OSCE.
My right hon. Friend is absolutely right: brain drain is a massive issue for Bosnia. A country cannot survive and have an economic future if what remains is just the retired population, and those who would serve its best interests are leaving. In 2021, 182,000 people out of a population of 3.2 million left. Ten years ago, there were 300 vacancies in the military, which 7,000 people applied for. Last year, there were 300 applications for 1,000 vacancies. That is a stark change in a decade. Military investment in Bosnia and Herzegovina has stalled at 1% for a decade. That is not enough to maintain the equipment, let alone a force. We then start to see those with corrupt and criminal interests able to get a foothold again—and, more fundamentally, not being worried about any consequences.
There is a way that we can turn that around and support Bosnia. It is about, in words that I have used already, the big stick. My right hon. Friend described Paddy Ashdown using that big stick. I think my right hon. Friend was a little shy about his role in the country, doing what he could to keep criminality under control. The blunt truth is that too many politicians are playing a very dangerous game in Bosnia, in Republika Srpska and the surrounding area. When it looks as if democracy will threaten their position, they launch into nationalist fervour and push that forward. That is exactly what Dodik did in Republika Srpska: he moved to a relatively moderate position, until it looked as though his position was under threat, and then became far more extreme.
It is easy in such a debate to discuss where we are and where things are going. We say that what we did in the war was 30 years ago. I think that sanitises things slightly. I remember watching—it has to be 25 years ago—the BBC drama “Warriors”. I only watched it once, and I was traumatised by it. It was an excellent drama.
Bob Stewart
“Warriors” was based on my infantry battalion, and it demonstrated how brilliant, well trained and decent our servicemen are in such situations. I am very proud that “Warriors” won the Montreux golden rose for its production.
Sir Alec Shelbrooke
I am more than grateful to my right hon. and gallant Friend for making that point. He is held in high esteem in this House, in Parliament and in the outside world for the role that he played in that operation.
I was coming on to say that the reason why I have never been able to watch that programme again is that it was horrific. I was not in the services, and I did not go out to Bosnia. I watched that drama in my very early 20s, and I found it so horrific that even though it has been repeated since, and even though it is excellent, I have not been able to watch it. That must not be forgotten. The hon. Member for Tiverton and Honiton (Richard Foord) outlined some of the horrific scenes that took place—the butchery, the savagery, the hatred that led decent people and neighbours to carry out those acts. We have to recognise them in this House and never forget.
I had the privilege of being the international chairman of the Conservative party for a period. We did a lot of work with the Westminster Foundation for Democracy, a body through which Labour, Liberals and Conservatives work with their sister parties to help build democracies. It was set up after the Cold War. I am proud that I was able to work with three factions from the centre right in Bosnia, to get those right-wing parties around the table, talking and working towards developing a better future. I used to say, “I don’t know whether this will have any long-term effect, but at least I can one day look my maker in the eye and say that I tried.” I had a very tiny part in trying to make peace last, because that is what we have to do.
Tragically, in my opinion, Republika Srpska representatives did not turn up to the Rose-Roth seminar of the NATO Parliamentary Assembly in November, apart from one person who very bravely did and got a hell of a lot of pushback for it. Its representatives have been disengaging. That is what I mean when I talk about the dangerous path that they are on. Take the history of the second world war. By about the 1960s, German society started to teach about the holocaust. That was a very important moment; it turned to education to make sure that history could not repeat itself. In Bosnia, however, not only are people not talking about some of the crimes against humanity that took place during the war, but in some of the schools in Republika Srpska, they are actually saying, “It’s lies—it didn’t happen. This the problem. We’ve got to separate out.” We should be highly concerned about that.
What lies behind all that is the arm of Russia. I have heard that Russia is not directly involved. It is not supplying arms; it is not doing some of the things that it has done in other parts of the world, such as Syria and Ukraine. However, the hand of Russia is there, politically and disruptively, and we do not have to look very far to see it. This is a critical moment.
My hon. Friend the Member for Rutland and Melton and my right hon. Friend the Member for Beckenham used the word “deterrent”. One thing we could do today is take a British battalion, in a NATO-led operation, to those areas, and act as a deterrent. I do not want any forces to have to try to stop the slaughter of innocent civilians. We now have an opportunity, in that the Minister is here to take these points back to the Foreign Office. I know that Ministers are always constrained in what they can and cannot say at the Dispatch Box, but we have to send a clear message in this debate.
History does not have to repeat itself. We do not have to have programmes that I have only ever been able to watch once in my life because I found them too horrific for me, let alone for the many Members of this House who served in Bosnia, or those now in the other place who were Ministers at the time, and had to deal with the consequences. There is ongoing trauma. I have met service personnel, some of whom served under my right hon. Friend the Member for Beckenham, and I have heard and seen the deep distress that they live with to this day, having tried to protect innocent civilians. That does not have to happen again. We can, and we need to, take action this day. That is the responsibility of the developed western world. It has responsibility for managing its military, and for the ethics that we apply to stop those who, purely as part of power-grabbing political games, play the nationalistic card, which will lead to murdered civilians. We see that today in Ukraine because we did nothing after Crimea.
Bob Stewart
If we deployed a British battalion in Bosnia under the very small NATO headquarters there, it would show that we meant real business, and aimed to stop things this time. It would, by its presence, demonstrate power, but hopefully it would not have to use force. Battalions from other countries could help, too. My goodness, Minister, this is a time when taking a little action would have a huge dividend.
Sir Alec Shelbrooke
I am bringing my comments to a close, and my right hon. Friend has absolutely summarised the point that I am trying to make. I am on the NATO Parliamentary Assembly, I am the chairman of its Defence and Security Committee and I lead the UK delegation. What do we talk about more than anything else? The word “deterrent.” Deterrence has to be better than going in to try stopping a war. We can do this today. My right hon. Friend’s intervention has absolutely summed it up. Minister, if there is one message to take away at the conclusion of the debate, it is that we can prevent horror that could happen very soon—maybe as soon as the end of this week.
Fiona Bruce (Congleton) (Con)
As the Prime Minister’s special envoy for freedom of religion or belief, I had the privilege of visiting Kosovo in February, having been encouraged to do so by the Foreign Secretary, Lord Cameron. I went to discussions on freedom of religion or belief with Government Ministers, civil society and faith leaders to explore the relationships between different faith groups and to gather best practice on freedom of religion or belief in Kosovo. I had the very pleasurable experience of joining the Kosovo Government’s celebrations of the 16th anniversary of Kosovo’s declaration of independence. Above all, the main aim of my visit was to reaffirm the UK’s commitment to strengthening its relationship with Kosovo.
I have visited many countries in my 14 years as a Member of Parliament, and I can honestly say that I cannot recall a warmer welcome than the one I had from everyone I met in Kosovo, from the President and Prime Minister to Government officials and civil society. Indeed, that warm friendship was started in my first meeting, before I had even left the UK.
Alicia Kearns
My hon. Friend gives us the opportunity to reflect on the fact that none of us wants to be stood here talking about conflict in the Balkans, or just about security. In fact, when I was elected to this place, I said that I would talk about the future for those countries. I thank her for reflecting on the fact that those countries are full of people who want brightness and future, and who are full of joy and hope for their country. I thank her for bringing that moment of reflection, which was missing from our debate. That is what we want to focus on: prosperity, future, hope and co-existence.
Fiona Bruce
I thank my hon. Friend for that intervention. On that national day of celebration, I had the experience of listening in the Parliament of Kosovo to reflections by leader after leader about the progress their country has made in democracy, in governance and in other ways over the past 16 years. The pride that they showed was heartwarming. I will give one small example, but a very real one: one of those leaders spoke about how good it is that now, when a young child sees a policeman or a man in uniform in the streets in Kosovo, they do not run away in fear. It was a privilege to be there.
My first encounter with someone from Kosovo was with Kosovo’s ambassador to the UK, Ilir Kapiti—I am pleased to see that he is watching from the Gallery. From the first moment I met him, he extended the hand of friendship. He helped facilitate the visit, which I know was also enjoyed by my colleague and hon. Friend the Member for Cleethorpes (Martin Vickers), who is the UK trade envoy to the region. My hon. Friend has now visited Kosovo seven times, and I was very impressed to find that he is on first-name terms with the Prime Minister, who greeted him as Martin. That shows the importance of the relationship that Kosovo has with the UK. It was my pleasure to emphasise how much we want to reciprocate, because Kosovo is an important country in the region. It is an important bulwark of stability against malign influences, and I very much wanted to convey the message that the UK wants to work with Kosovo to strengthen stability in the region, and to do all we can to assist that country in doing so.
When I went to Kosovo, not only were all my meetings convivial and productive, exhibiting a deep and enduring affection for the UK, it was clear to me that Kosovo and its people display great respect for differences in religion or belief, despite—or perhaps because of—the region’s tumultuous history. The purpose of my visit was to encourage a celebration of Kosovo’s religious diversity and the lessons we can learn from its people’s experiences to ensure the promotion of freedom of religion or belief in a multi-ethnic society.
I also put on record my appreciation for Kosovo’s contribution over the past three-plus years to the International Religious Freedom or Belief Alliance, a network of 43 like-minded countries determined to promote freedom of religion or belief around the world and to call out its abuses. We are a very active alliance, and I am proud to serve as its vice-chair; from 2022 to 2023, I was its chair, but our Czech Republic ambassador Robert Řehák is now the very active chair. I commend Kosovo for its engagement: the alliance has 43 member countries, but some are much more active than others, and Kosovo is one of those. It has signed a number of our statements, demonstrating its commitment to religious diversity—for example, on discrimination against the Baha’i community across the world, on the contribution of the Jewish faith and combating antisemitism, on Christians more recently, and on the international day for commemorating the victims of acts of violence based on religion and belief. Those are just a few of the statements that Kosovo has signed.
I also commend Arton Krasniqi, Kosovo’s envoy to the alliance—and therefore my counterpart—for his personal commitment. There are some representatives in our alliance who one can tell have a genuine and heartfelt commitment for the work of promoting freedom of religion or belief around the world, and Arton is one of them. He makes sure that, whenever he can, he joins our meetings internationally. This year alone he has met us in Washington and Geneva, and just before the end of last year he met us in Prague. His personal commitment to the work of our alliance demonstrates his meaningful engagement and also that of his country.
It was with great pleasure that I met Liza Gashi, the Deputy Foreign Minister, among others from the Government in Kosovo while I was there. She immediately wanted to emphasise to me the importance in which Kosovo holds strengthening relationships between different faiths and of religious diversity. She said she wanted to hold in Kosovo, organised by the Government, a conference on freedom of religion or belief. I was delighted to hear that, because these gatherings really are important. Very shortly after my visit, her determination was followed up with a memorandum, written by one of her staff, detailing proposals for a Kosovo religious freedom forum this year, 2024.
The memorandum states:
“The Kosovo Religious Freedom Forum seeks to address pressing issues surrounding religious freedom, tolerance, and coexistence in the region. Hosted in the Republic of Kosova, this forum will bring together renowned religious leaders, policymakers, scholars…to foster dialogue, understanding, and cooperation among various religious communities… the conference aims to highlight the importance of religious freedom as a fundamental human right and a conduit for peace and how countries can work together to address the challenges facing religious freedom today.”
It also states that the conference would very much bring to bear the
“lessons learned from Kosovo’s rich history of religious tolerance”.
I look forward to the discussions about that gathering progressing between Minister Gashi and the chair of our alliance, Ambassador Řehák.
During my visit, I was also very pleased to meet Hajrulla Çeku, the Minister of Culture, Youth and Sport. He similarly emphasised to me the importance he attached to Kosovo being an increasingly multi-ethnic state and society. I was delighted to hear that he is working hard to plan the hosting of the Mediterranean games in Kosovo in 2030. I was equally delighted to hear him extend his hand towards a meeting with Bishop Teodosije of the Serbian Orthodox Church, indicating how willing he was to meet him in whatever forum the bishop would like. I was equally pleased that the bishop, when I met him, gave a clear indication of his willingness to reciprocate in that regard. It was a very important moment, and I know that our new ambassador in Pristina, Jonathan Hargreaves, will do all he can to promote that relationship.
I welcome the Government of Kosovo’s approach to religious freedom. It was excellent to hear, shortly after my visit, that the Government of Kosovo had implemented the 2016 constitutional court decision, which confirmed the Decani monastery’s ownership of several hectares of land. That was a practical demonstration of their commitment to religious pluralism, and the securing of that was something I sought while there—although I of course claim no credit for the fact that it happened.
We cannot take for granted the continued security of the region, and we must continue to address legacies of the past, while also working for a more prosperous and secure future. I believe that religious freedom and the work that Kosovo is determined to undertake have a vital role to play. Our ambassador, Jonathan Hargreaves —he has recently returned after beginning his tenure there—is particularly determined to do all he can to make progress on dialogue with Serbian representatives, and to help promote, facilitate and follow up on a joint meeting of the independent monitoring committee, and the dialogue that we hope will ensue.
Kosovo may not be a large country, but it has an important role to play in the Balkans. It is important not only for that region, but for the wider stability of the world, as we work in an increasingly unstable world. The UK recognises the importance of working together to secure that, and in my role as the Prime Minister’s special envoy for freedom of religion or belief, I look forward to playing my part and, I hope, returning to Kosovo soon to play my role in the conference, which I hope will take place later this year.
Patrick Grady (Glasgow North) (SNP)
I congratulate the hon. Member for Rutland and Melton (Alicia Kearns) on securing this incredibly valuable debate, and on her commitment to ensuring stability and security in the western Balkans, not just in her time in this place but throughout her professional career. The other incredibly valuable contributions we have heard all speak to Members’ own personal expertise and experience, and demonstrate why the Backbench Business Committee was right to grant time in the Chamber for this important debate. Many of my hon. Friends have worked closely with the hon. Lady and the Foreign Affairs Committee, and in some of the parliamentary assemblies that were mentioned, on these issues over the years.
The security and stability of the western Balkans affects the security and stability of the wider region, especially here in Europe. As we have heard, conflicts and disputes in the different countries often act as proxies or plays for influence by other actors on the global stage. Sadly, much of that is not new. Anyone who has studied basic high-school history will know that the roots of the first world war are often traced to the assassination of Archduke Franz Ferdinand on the streets of Sarajevo in June 1914, just short of 110 years ago. For the many reasons we have discussed, the region continues to this day to be seen as something of a tinderbox or powder keg, or even a shaken but unopened bottle of fizzy lemonade.
Much progress was made, especially with the establishment of the Dayton accords in 1995, but those structures have not been without challenge or strain over the years, and there are increasing challenges to the status quo, as we have heard throughout the debate. The increasingly assertive stance of Milorad Dodik within Republika Srpska threatens the territorial integrity of Bosnia and Herzegovina, as the motion suggests, and tensions remain high between Serbia and Kosovo after cross-border violence. The Ohrid agreement between those countries is welcome, but it must be followed up with practical action.
The roots of the instability, and political instability in particular, run deep. That in turn has significant consequences across the region, including ubiquitous corruption, inter-ethnic tension, strong organised crime, autocratic tendencies and limited human rights. The powerful speeches about freedom of religion or belief are testament to that. Organised crime in particular remains a challenge, and drug and weapons trafficking, illegal immigration, money laundering, contraband or terrorist acts all add to the sense of instability and insecurity. These factors explain and sometimes compound the opportunities for external influence and exploitation by bad faith actors.
The hon. Lady’s motion refers to Russia, and the SNP joins her in her condemnation of Russian attempts to amplify tensions in the region for its own gain. Putin clearly sees the western Balkans as central to his arguments for the return of multipolarity in world affairs, in opposition to what he sees as a US-dominated unipolar order. For example, by blocking UN recognition of Kosovo’s independence, Moscow tries to position itself as a defender of Serbian territorial integrity, which boosts Russia’s popularity among Serbs and puts pressure on Belgrade to maintain friendly relations with Moscow. As we have heard repeatedly in the debate, Russia continues to back Bosnian Serb antagonists both officially through Republika Srpska and informally through myriad cultural, religious, educational and paramilitary groups.
At the same time, Russia’s full-scale invasion of Ukraine in 2022 has seen the western Balkan countries emerge essentially as a new frontline in Russia’s geopolitical confrontation with the west. Russia has used the media and information sphere, stepped up its political influence and mobilised proxy organisations to project its narratives, protect its interests and slow the region’s integration into western institutions. However, integration continues to provide something of a counterbalance. Progress continues to be made towards that integration, in particular the prospect of accession to the European Union and, perhaps for some countries, eventually to NATO. Those are the institutions that have promoted peace, security and economic development among their member countries and international partners for decades, since the end of the second world war.
Countries that wish to join the EU should largely be supported and encouraged to do so, and at least to start making progress towards the different membership criteria that would allow them to pursue membership in future. That has not necessarily been the case for the UK Government’s attitude towards the European Union. There is some irony in promoting and encouraging expansion in one direction, while dealing with the consequences of Brexit in the other.
Alicia Kearns
I think that is a deeply cynical and unfair point to make. The people of Bosnia and Kosovo want to join the EU, and therefore it is right we support them in their ambitions. We are not saying we think they should join because we think it is right; we are saying that, if that is what they want—if that is their determination—we will support them in that journey because it is right for them. The hon. Gentleman’s point is deeply unfair. If I am honest, it brings domestic politics into a debate that so far has rightly focused on the Balkans and their people, rather than lowering down to domestic politics. It is disappointing to make that point today.
Patrick Grady
I take the hon. Lady’s point, and I am not trying to upset much of the consensus we have heard today, but there have been consequences. A message was sent by the United Kingdom when it decided that the European Union was not for it. Many of us during that debate—we do not need to rehearse it just now—warned that that was a potential consequence of the UK’s decision to leave. I will not go any further on that, and I want to agree with the points that have been made.
There is an important role for the UK to continue to play, as the hon. Lady’s motion notes, particularly by increasing engagement with international allies and regional partners. Indeed, the counterpart to her Committee in the House of Lords made a number of important recommendations in a recent letter to the Foreign Secretary, all of which the SNP would welcome being taken forward.
Those recommendations include: actions by the leaderships of Serbia and Kosovo to implement the Brussels and Ohrid agreements; supporting the high representative in efforts to tackle secessionist activity by Republika Srpska; re-evaluating the possibility of rejoining Operation Althea, the EU-led peacekeeping mission in Bosnia and Herzegovina; the provision of funding for a BBC Albanian service; the use of longer-term funding instruments to support development in the region; more activity to promote economic growth and combat corruption; continued participation in the Quint; and continued collaboration with EU and US partners on development, security, reform and democratisation.
I agree with the points that the right hon. Member for Elmet and Rothwell (Sir Alec Shelbrooke) made about the value of the Westminster Foundation for Democracy in that regard, speaking as someone with some experience of that.
Richard Foord
The hon. Member referred to Operation Althea, a European Union-led operation that the UK chose to leave on leaving the European Union; we left in 2020. Does he think that the UK would be wise to go back into that operation, as it can, as an associated state, or should there be a parallel security arrangement of the sort suggested by the Chair of the Foreign Affairs Committee?
Patrick Grady
The recommendation of the House of Lords Committee was that the United Kingdom should re-evaluate the possibility of rejoining the operation, so that is the kind of direction in which there should be travel. It is about identifying the most important and appropriate role that the United Kingdom can play. Whatever form that takes, these are practical and achievable steps that the Government could take to demonstrate their willingness to be a good global actor.
A secure and stable, peaceful and prosperous region is not just in the interests of the people who live in the countries that make up the western Balkans—we heard powerful testimony about how people want to get on with their everyday lives—but in the interests of all of us who want to live in a peaceful and prosperous world.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I thank the Chair of the Foreign Affairs Committee, the hon. Member for Rutland and Melton (Alicia Kearns), for securing the debate and all hon. and right hon. Members for their insightful and considered contributions. I recognise in particular the speeches by my friend the right hon. and gallant Member for Beckenham (Bob Stewart) and the hon. and gallant Member for Tiverton and Honiton (Richard Foord), who have direct experience of both Bosnia and Kosovo and the region more widely. There were also excellent contributions from my hon. Friend the Member for Slough (Mr Dhesi), the hon. Member for Strangford (Jim Shannon), the right hon. Member for Elmet and Rothwell (Sir Alec Shelbrooke) and, of course, the hon. Member for Congleton (Fiona Bruce), and the hon. Member for Glasgow North (Patrick Grady) on behalf of the SNP.
I draw attention to my declarations in relation to my role as a shadow Minister and visits to the region. I, too, welcome the presence today of the two ambassadors from Kosovo and Bosnia. It is always a pleasure to meet and work with them.
We heard poignant tributes to the late Lord Ashdown and the late Lord Stunell, to which I add my remarks. I also pay tribute to my former colleague Tony Lloyd, who is deeply missed in this place. He played a key role on the western Balkans in the last Labour Government and continued to take a keen interest in the security and stability of the region.
We are all too aware of the crises we currently see in the middle east and Africa and, of course, the terrible war in Ukraine, but we must not lose sight of the strategic importance of other key regions, and indeed our historic diplomatic, military and other obligations to them. Of course, the western Balkans is one such region. I am pleased that, despite the many political differences in this place, the debate has underscored that there is cross-party support and concern for maintaining the values of democracy, security and stability in the region, a commitment to the prevention of conflict and atrocities, and the defence of fundamental human rights.
As a Parliament, and indeed as a country, we must recognise the continuing tensions across the region and—this warning has been made many times in the debate—their capacity to destabilise the countries and peoples in the region, with potentially dire consequences not only for the peoples of the region but for European security more widely. The destabilising role that Russia is playing has been rightly recognised and referenced many times.
Sir Alec Shelbrooke
The hon. Member for Glasgow North (Patrick Grady) also made that point. He was about to sit down so sadly I could not intervene on him. The hon. Member for Cardiff South and Penarth (Stephen Doughty) is absolutely right about the consequences for the rest of Europe. Dodik is not just talking about Republika Srpska as it stands; he is talking about a greater Republika Srpska, with parts of Serbia, parts of Kosovo, and parts of Montenegro, which is a NATO ally. With Russia’s help to cause disruption—in history, that has happened in similar ways—all of us could easily be dragged into a war if we allow this nationalistic fervour to take the route that he is preaching.
Stephen Doughty
The right hon. Member is absolutely right to highlight some of the deeply irresponsible rhetoric we have heard in recent weeks as well as over longer periods. We all know the risks posed by that from the historical conflicts we have seen in the region. The concerns raised are indeed shared by NATO as well as by our colleagues in the EU, the United States and others. I emphasise that the region is a priority for me and our shadow foreign affairs team, as it would be for any future Labour Government. Indeed, over the past two years, I have personally met diplomatic, parliamentary and governmental representatives from every country in the region as well as our excellent envoy, Lord Peach. I pay tribute to our excellent ambassadors in the region, and our Foreign, Commonwealth and Development Office teams for all their work. Just last week, I met colleagues from Albania, the Bosnian ambassador, delegations from Kosovo and other envoys across the region. As has been referenced, it is crucial that we work together with key allies and partners.
The horrors of the 1990s are ingrained in the minds of many people across this country and the House, including armed forces personnel from my own family. I have powerful memories of visits, particularly to Bosnia with the right hon. Member for Beckenham, and to Kosovo. We all know the terrible consequences that can happen if ethnic hatreds are allowed to devolve into identity-based violence. I think of the young man my own age whom I met, Nedžad Avdić, a survivor of Srebrenica, and the horrors that he went through. I was a young lad enjoying a beach holiday in south Wales while his family and others were slaughtered around him. Those examples will never leave my mind.
No dynamic underscores the need for our collective engagement more than the enduring challenges in the relationship between Kosovo and Serbia. The Opposition remain strong supporters, along with the Government, of Kosovo’s independence, sovereignty and security. Earlier this month, it was disappointing to see many in northern Kosovo boycott the local referendum. Only 100 out of 46,000 registered voters cast ballots in the predominantly Serb municipalities. That comes despite the Government in Pristina agreeing to annul last year’s local elections and hold new ones.
I have had the pleasure of visiting Kosovo, as I mentioned, and meeting members of all communities. It is clear that there can be a positive future for Kosovo, involving Kosovan Albanians, Serbs and other minorities. It was pleasing to see the Kosovan delegation recently visiting Northern Ireland and learning from our examples of different communities coming together and living in peace despite their differences, finding ways forward and political solutions. We should all want to support those efforts.
We are proud of our historic actions in relation to Kosovo, but it is crucial that we play our part now. I pay tribute to the UK forces who have gone in to reinforce the existing UK forces in KFOR, particularly after the incidents that have been referred to in Banjska and elsewhere. It is crucial that those responsible for destabilising are held to account and brought to justice. We must work closely with all colleagues to ensure that those tensions do not develop in any further devastating direction.
It is also crucial that we support the decisions of people in the region and note the decision of the Parliamentary Assembly of the Council of Europe to approve its recommendation for Kosovo to become its 47th member state. It is crucial that any tensions are not escalated. Kosovans must be free to determine their own paths.
I welcome the UK Government’s recent statements on this matter. I hope the Minister can outline what recent discussions he has had with EU counterparts, the United States and others about the ongoing tensions, how we can work to prevent further destabilisation and how we can ensure that contribution to KFOR continues. Where does he see the diplomatic dialogue going to normalise relations between Belgrade and Pristina?
Reference has been made to the internal dynamics within Serbia. I have heard from many figures across the Serbian political spectrum. It is very important that we support democracy, inclusion and stability within Serbia, and that people are allowed to take part in political processes there. I also recognise that there are tensions in a number of other countries, which we do not have time to go into today. The situation in Montenegro and North Macedonia—both key NATO allies—has been particularly fragile over recent years. I had the pleasure of visiting Skopje and meeting political figures across the spectrum. What are we doing to ensure that those countries continue on a path of democracy, stability and the rule of law?
We have had extensive discussions today about the situation in Bosnia. As I said, I met the ambassador recently. We have all joined today in raising concerns about the rhetoric of Milorad Dodik and others. We have joined the Government in supporting sanctions against those who seek to undermine Dayton. When it comes to recognition of the past atrocities and otherwise, it is about identifying those responsible, not going against a people or a whole community, as the Chair of the Foreign Affairs Committee pointed out. We have also seen concerning steps in Republika Srpska towards a so-called foreign agents Act, mirroring developments elsewhere and again removing democratic transparency and the ability of human rights organisations to hold Governments to account. It is a hugely worrying step, and I would appreciate the Minister’s comments on that.
Finally, it has been a pleasure to meet colleagues from Albania, another key NATO partner, in recent weeks. It is good to see increased co-operation with Albania on migration and trade. The British Council is playing a crucial role, particularly on the future for young Albanians, which was rightly raised by my hon. Friend the Member for Slough. I hope the Minister can say a little bit about the positive steps being taken in our bilateral relationship with Albania.
The United Kingdom has crucially important relationships across the region. We must strive to play a positive and engaged role through our ambassadorial teams and through international forums. Crucial elections are taking place in the region over the coming weeks. We must ensure that security and stability in the western Balkans remain a priority, particularly given the warnings in relation to Kosovo and Bosnia. I hope the Minister will say what steps will be taken at the upcoming European Political Community summit, which we will be hosting in July, not only to bring together parties but to promote peace and stability in this crucial region.
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (David Rutley)
I congratulate my hon. Friend the Member for Rutland and Melton (Alicia Kearns) on securing this timely and very important debate. I pay tribute to her for her work as Chair of the Foreign Affairs Committee, along with her tireless and very active efforts to secure a more stable, peaceful and prosperous future for the people of the western Balkans. The Minister of State, Foreign, Commonwealth and Development Office, my hon. Friend the Member for Wealden (Ms Ghani), the Minister for Europe, would have been delighted to take part in the debate. She is currently travelling on ministerial duties, so it is my pleasure to respond on behalf of the Government. I am grateful to hon. Members for their many thoughtful and emotive contributions, which help us to understand the significance of the region.
The people of the western Balkans clearly deserve the opportunity to live in stable, inclusive and democratic societies where they can heal the scars left by conflict and grasp every opportunity to thrive and prosper. That is what we are striving towards: all six countries playing their full part in the Euro-Atlantic family of nations, with the opportunities and benefits that brings. Sadly, as we have heard today, we are a long way from the peaceful and stable Balkans we all wish to see. The contributions from my hon. Friend the Member for Rutland and Melton and the hon. Members for Glasgow North (Patrick Grady) and for Cardiff South and Penarth (Stephen Doughty) highlighted the context within which we are working: democracy is fragile at best; political elites are ramping up ethno-nationalist tensions for their own benefit; and Russia, as was highlighted by Members across the House, is fanning the flames of division to distract attention from Ukraine and move the region away from the west. It is good to see the House united in calling out that behaviour.
We must, of course, avoid a return to conflict in the western Balkans at all costs. We are painfully aware of the serious consequences that that would have in the region and beyond. Meanwhile, it is clear that political weakness and instability in the western Balkans is threatening the UK’s security. Endemic corruption is fuelling illegal migration and allowing serious organised crime groups to thrive and operate in this country, including in the drugs trade.
With that in mind, we are taking a multi-faceted approach. First, we are addressing the drivers of instability, whether that be Dodik’s push for secession or heightened tensions between Serbia and Kosovo, but we are also focusing on the underlying factors enabling that. We are engaged with all six countries, taking a cross-Government approach underpinned by our programmes in the region. Last year, we spent over £47 million on supporting security and defence, preventing conflict and promoting media freedom, along with efforts to tackle corruption and organised crime, and to empower women and girls.
Given the growing instability, with all the risks it poses, we are prioritising the western Balkans in our diplomatic engagement. As others have pointed out, the fact that one of the Foreign Secretary’s first visits was to Kosovo, in January, demonstrates the importance that we place on our ties with the region. Indeed, the Prime Minister’s special envoy to the western Balkans, Lord Peach, visited the region 12 times last year and made a further 16 trips to other interested countries, as well as engaging regularly with international organisations such as NATO and the EU.
The UK has long worked with Serbia on shared priorities and will continue to do so, making clear the points on which we disagree and judging individuals by their actions. It is not for us to comment on the appointment of individual Ministers, but it clearly raises questions when we see a US-sanctioned individual in the Government.
A number of issues have been raised today about the relationship between Kosovo and Serbia. We have seen an increase in violence, including last September’s terrible attack in Banjska, which was described very clearly by my hon. Friend the Member for Rutland and Melton. In every meeting, every call and every letter that we exchange with Serbian and Kosovan leaders, we urge them to avoid inflammatory rhetoric and escalation and engage constructively in the dialogue. Only through genuine dialogue and mutual good will can we normalise relations between Kosovo and Serbia and start to build the brighter future that their citizens deserve. We also continue to make it clear to the Serbian authorities that they must co-operate fully with efforts to hold to account those responsible for the Banjska attack, take steps to tackle cross-border arms smuggling, and encourage Kosovo Serbs to return to the institutions and serve the communities that they represent. We have also made clear to the Kosovo Government the need to ensure that minority communities can play a full and equal role in the country’s future.
We are disappointed that the mayoral recall referendum on Sunday 21 April was boycotted by Kosovo Serbs. It was arranged specifically to return Kosovan municipalities to representational governance, and it is important for a route back to that to be found. I can confirm to Members, if they do not already know, that the UK will vote for Kosovo to join the Council of Europe.
Points have been raised about investigations of the Banjska attack. The Kosovan police and prosecutors are the appropriate authorities to investigate it, and it right for us to wait for that investigation to conclude. We have previously sanctioned Radoičić, as well as the Kosovan criminal charged with organising the attack. We have urged Serbia to hold perpetrators to account and address the ongoing problem of cross-border arms smuggling.
Along with others, the hon. Member for Tiverton and Honiton (Richard Foord) rightly spoke of the role of Lord Ashdown in Bosnia and Herzegovina, but I think we all recognise the important role performed there by my right hon. and gallant Friend the Member for Beckenham (Bob Stewart). He reminded us that that country matters, and highlighted the tensions that exist there. I will never forget visiting Sarajevo with my family. One cannot but be moved by being in that great city, meeting its people, and being reminded of the horrors of the past.
We recognise that we are facing the threat of Republika Srpska seceding from Bosnia and Herzegovina. We have condemned Dodik’s secessionist actions, and have under- lined our steadfast support for the High Representative. We are working with our international partners to deter further attempts at destabilisation, and to support the reforms that are necessary for progress towards EU accession.
Richard Foord
The Minister has mentioned deterrence. We heard from the right hon. Member for Beckenham (Bob Stewart) and the Chair of the Foreign Affairs Committee that what might serve deterrence better at this time would be putting a British battalion or battle group into Bosnia. Does the Minister agree with their suggestion, and would that be feasible with a regular Army of 73,000?
David Rutley
At the moment we have no plans to contribute to EUFOR or to rejoin, but we recognise that it is vital for Bosnia and Herzegovina’s security, and we work hard to support it. NATO supports the force under the Berlin-plus arrangements, and the UK continues to be a strong supporter of Bosnia and Herzegovina’s armed forces. That was underlined by the deployment of the First Battalion Royal Anglian Regiment to train alongside Bosnia-Herzegovina armed forces personnel in October and November last year.
I come back to sanctions, which are an important aspect of the situation in Bosnia. In January, we sanctioned a Bosnian media company for undermining the country’s constitution. That builds on the sanctioning in 2022 of Dodik and the then President of Republika Srpska, Željka Cvijanović, and we constantly keep our approach to sanctions under review. We will consider targeting others who continue to seek to undermine the situation in Bosnia-Herzegovina.
Sir Alec Shelbrooke
I am listening carefully to what my hon. Friend is saying. We must be very careful not to allow recent history to repeat itself. President Obama made it crystal clear that if chemical weapons were dropped in Syria, it would cross a red line and would not be tolerated, but nothing happened. Then Russia walked into Crimea, and nothing happened. Now we have a war in Ukraine. It is all very well saying that we will work through diplomacy and sanctions, but what I am really interested in is saving lives. I do not expect a response now, but I urge my hon. Friend to go back to the Foreign Office and say that this debate has highlighted that normal diplomatic routes are not going to be enough. We need a big stick.
David Rutley
I know my right hon. Friend’s views well, and he communicates them with alacrity and clarity. We will reflect on his remarks, but I want to underline that we are taking a comprehensive approach to a very serious problem, and it is good to see support across the House. I and the Government have heard the points that have been made.
I am getting the eagle eye of Madam Deputy Speaker, so I will accelerate through the last parts of my speech. In response to the hon. Member for Cardiff South and Penarth, we will continue to support North Macedonia’s Euro-Atlantic path. We welcome the progress that is being made in Montenegro under Prime Minister Spajić, which is geared towards boosting economic growth, bolstering the rule of law reforms and building closer ties with the country’s European neighbours.
I would also like to talk about the very important contribution from my hon. Friend the Member for Congleton (Fiona Bruce), who is the Prime Minister’s special envoy for freedom of religion or belief, about the really important work that she has been doing in Kosovo. It was good to see how her work, and indeed the work of civil society and religious groups in Kosovo, is helping to celebrate the diversity of religion and belief. It is important that Kosovans are actively participating in the wider FORB agenda, because we can learn from their experience, to put it frankly.
The UK is determined to bring about a more stable, secure and prosperous future for the western Balkans, for the sake of all our people. This includes supporting the Governments of the region to build open and inclusive societies with strong democratic institutions, helping them to tackle the criminality and corruption that drives illegal migration and blights economic growth, and ensuring that women and minority communities are empowered to play a vital role in society.
I congratulate my hon. Friend the Member for Rutland and Melton on securing this debate, and on her huge contribution to it and to the action that is being taken. It is important to focus on this important region, and on the steps that we need to continue to take to help underpin the stability of the people who live there.
Alicia Kearns
Thank you, Madam Deputy Speaker, for convening this debate. I thank the Minister for his response.
The future of the Balkans must be one of peaceful co-existence—it is what their people desperately want, and it is what the world needs. We also need to end the retraumatisation that is taking place through the falsification of history, and to ensure that when we see crises, we step up and act. Foreign policy is not just about reacting, although too many people think it is. It is about shaping, mitigating and supporting, and we have a duty to act, not least in the Balkans.
I will finish by saying that in the face of denial rages a truth undeniable—eyes that saw too much, and eyes that saw nothing. We must see in this place, we must speak in this place, and we must make sure that the country acts. I thank every hon. Member who took the time to contribute to this important debate, not least because the local elections will have called on all of them to be elsewhere. I really appreciate their commitment to this cause.
Question put and agreed to.
Resolved,
That this House recognises the acute security situation in the Western Balkans; supports the territorial integrity and sovereignty of Kosovo and Bosnia and Herzegovina; condemns the attack by Serb nationalist militants in Banjska, Kosovo on 24 September 2023; further supports the authority of the Constitutional Court in Bosnia and Herzegovina; further condemns Russian interference in the Balkans; notes with concern pro-Russian and pro-Serbian irredentist political rhetoric in Montenegro; and urges the Government to increase its engagement with regional partners and international allies to improve the security landscape of the Western Balkans.
Pension Schemes
(6 months, 3 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I beg to move,
That this House has considered pension schemes.
I am grateful to the Backbench Business Committee for allowing time for this debate. I last spoke about this issue in a half-hour debate in Westminster Hall on 17 January, and there have since been a number of significant developments, not least the third report of the Work and Pensions Committee, which is a good and substantial piece of work. I am delighted to see its Chair, the right hon. Member for East Ham (Sir Stephen Timms), in his place, and I will touch on the report towards the end of my comments.
Events have unfolded for the various pension schemes over the last few months, and what I spoke about in January as being particularly pertinent to the beneficiaries of the defined benefit schemes at BP and Shell has begun to look more like a wider course of conduct. There are significant developments under way, not least the Government’s recent consultations, which could significantly shape the way in which defined benefit pension schemes treat their beneficiaries in the future.
Although I initially thought that I was dealing with a couple of oil companies, I now see that it is a range of different companies. Yesterday I read an alarming brief from the pensioners of Hewlett-Packard. It is pretty clear that, as this area of pension policy develops, an ever larger number of large corporates will take the same path as BP and Shell. Ultimately, it will be our constituents, as beneficiaries, who lose out if we get it wrong and if these companies are allowed to do as they wish, rather than as they ought, on the position of their pensioners.
Sir Julian Lewis (New Forest East) (Con)
I am grateful to the right hon. Gentleman for securing this debate. I have been contacted by three retired members of ExxonMobil, which has a very large refinery in my constituency. I was reluctant to name the firm because I have not had a chance to ask for its side of the story, but the three letters tell me that exactly the same thing has been happening. Those three people were given no discretionary rise this January, and it was then modestly reinstated after protests were made. There is clearly some sort of co-ordinated effort, and not in a good way, exactly as the right hon. Gentleman describes
Mr Carmichael
It pains me to say it, but I think the right hon. Gentleman is absolutely right. What might have started with the oil and gas companies is clearly going much wider.
I should declare an interest, as I hope to be the beneficiary of a defined benefit pension, if I live that long, having been in the House before the move to career average earnings in 2011.
I will not rehearse what I said about the decision of BP, Shell and others not to pay a discretionary increase, which mattered significantly to their pensioners at a time when inflation was running north of 11%. However, it is worth reminding the House that a fundamental point of fairness is at stake here. When one is past retirement age, one no longer has the choices one has when one is of working age. If someone in employment is unhappy with the money they get for the work they do, they can look around and find another job, or they may choose to retrain and do something else more profitable. Once someone is of retirement age, they no longer have that choice and flexibility, which is why it has long been established as a matter of public policy that the beneficiaries of pension schemes require protection. After all, this is simply deferred income, with our being paid later, after we have stopped working, for the service we have done. It is a fundamental aspect of that protection that it should take as its starting point the undertakings that were given.
At BP and Shell, and I do not doubt ExxonMobil, people were given vigorous encouragement to join pension schemes and invest in them. They were given undertakings at the time that one advantage of a big pension scheme at a company such as that was that they would later in life have an income that was protected against inflation. So a question of good faith is at play here.
I have no doubt that for many of the big corporates, the BPs, Shells, Hewlett-Packards and so on, the possibility of paying money to those who are no longer economically active and contributing to their business is tiresome and inconvenient. I never cease to be amazed by the extent to which those at the top of these big corporates seem to think that somehow the corporates are as big as they are simply because of the role that they have played. They do not seem to understand that they are the inheritors of businesses that were built by others, who are now among those who would be the pension beneficiaries. If one is to stand on the shoulders of others, it is always good to respect the fact that one enjoys the view one has because of the shoulders on which one stands. I am sorry to say that that seems to have been forgotten in the boardrooms of too many of our large corporates.
I have expressed these concerns about BP, in particular, before. I remind the House that I have a large number of BP pensioners in my constituency, because for many years BP operated the oil terminal at Sullom Voe. It was a good employer and we valued its presence in the community for many decades. I am concerned now to see that BP pension fund trustees with a collective 94 years of membership of the fund have been replaced with four with precious little involvement, two of whom are citizens of the United States. Since we last debated this issue, both Shell and BP have again refused any discretionary increase to their beneficiaries—in essence, they are doubling down.
The briefing I have received from the Shell Pensions Group is of particular concern. As it is crafted succinctly and concisely, I shall, with your indulgence, Madam Deputy Speaker, read it into the record. It says:
“Shell has imposed this benefits cut upon its pensioners during a period when:
the Fund was in healthy surplus and well able to afford full cost of living increases without call upon Shell’s sponsor covenant; and
Shell, its shareholders and senior executives benefited hugely from the same energy crisis that was already causing their pensioners extremely high rises in their cost of living.”
The Shell Pensions Group has done considerable and detailed research on that point. From the actuarial reports and the scheme’s accounts, it concludes that
“during the same period, instead of a balanced approach using about 25% of the surplus (as quoted by Shell as necessary for a full cost of living increase) to the immediate benefit of the 93% of members whose pensions are currently deferred or in payment, the Trustee has largely opted to dissipate the surplus by massively accelerating completion of its Low Reliance (upon Shell) investment transition plan. This fifteen year plan was commenced in 2018, but with the acceleration opportunity provided by the surplus arising from increased bond deals, it was almost fully completed in 2022.”
That is where the money that could have funded the pension increases has gone. It has gone into accelerating a programme that was supposed to take 15 years and instead has been concluded in four years.
I am afraid to say to the Minister that the Shell Pensions Group also has strong concerns about the consultation that he launched on 24 February, under the heading “Options for Defined Benefit schemes”. It says:
“We are therefore aghast that…the Pension Minister opened a new consultation…with a view to identifying ways of encouraging and enabling sponsors of DB schemes to claw back surpluses. We feel that the foregoing demonstrates that sponsors require no assistance or encouragement in that and on the contrary, stronger measures are necessary to hold the surplus for the benefit of the beneficiaries, particularly in contributory schemes in which they have invested their own money by way of deferred salary and additional voluntary contributions.”
The Select Committee report has given careful consideration to this matter. Along with most of those to whom I speak, I am well pleased with the recommendations of the report in that regard.
BP also continues to double down. There continues to be no formal engagement with the pensioners’ group—what the previous chief executive officer called “the zero- engagement strategy”. I would have loved to have been at BP’s annual general meeting this year; by all accounts, it sounds to have been a heated affair. The analysis published recently in The Times by its financial editor ties in very well what BP is doing with the concerns we should all have about the future direction of travel. In a recent article, the financial editor wrote:
“Everyone at least pays lip service to the notion that meeting pension promises in full is paramount. No surplus should be touched without a meaty asset buffer being built up. No sponsor should be allowed to extract cash without showing a strong covenant—providing reassurance that it will still be around to pick up the pieces if things go wrong.
But even those safeguards aren’t nearly enough to fully protect members, according to a trenchantly argued submission from a ginger group of BP pension fund members, the BP Pensioners Group. Attempts by employers to evade their promises will be “legion” it says; they will “trim back or remove any benefit possible”; they will “abuse loopholes” in the rules to maximise their clawbacks. They will push hard to minimise what members should “reasonably expect”.
It also warned that the prospect of executive bonuses being fattened up by success in grabbing back surpluses will be far more potent in driving company behaviour than any residual feeling of responsibility to ensure schemes pay every last penny of promised pensions. The message is that it could all end up in an unseemly scramble.”
The article continues:
“The bitter dispute with BP is just “a foretaste” of how relations between many other DB pension fund members and their former employers are going to sour if the surplus-grabbing reforms are pushed through without proper safeguards. The old world is dead.”
That sums up very well the tension between surplus clawback and the need to honour the commitments that were given to beneficiaries. We see so often this mismatch, which affects the ability of the citizen to take on the big corporate, or the big public body. This is just the private sector version of what happened to the sub-postmasters. The Post Office was big enough, strong enough and well enough connected simply to ignore the sub-postmasters, to lie about them, to straight-bat their concerns, and to deny what was obvious to everyone until they could no longer manage to do so.
What is the agenda here, and ultimately who will be the winners and the losers? It is pretty obvious that the pensioners will not be the winners. We should consider the reputational damage that the issue is doing to BP and Shell. Obviously, any oil and gas company these days has to be a fairly thick-skinned corporate entity, but still I ask myself why they simply refuse to engage. Why are they denying the very obvious and clear justice of the case being put forward by their own pensioners groups? I find it difficult to see any explanation other than that the funds are being fattened up before being hived off to insurance companies or others.
The Times—The Thunderer—is not the only news outlet to have reported on BP pensions recently. On 29 March 2024, the PR Newswire reported a case in Houston, Texas, in which the judge told BP that it must reform its pension plan, following an eight-year legal battle over pension losses. Again, we are dealing with big corporates, which have deep pockets and can see off the attention of the small pension beneficiaries. PR Newswire said:
“A group of Standard Oil of Ohio (Sohio) oil workers received a winning decision…after an eight-year legal battle with BP Corporation North America, Inc. (BP), in a huge victory for oil workers, with a federal judge ruling that BP”—
this is worth paying attention to—
“‘committed fraud or similarly inequitable conduct’ in how it announced a pension formula change more than 30 years ago…Federal judge George C. Hanks, Jr., ruled that BP violated the Employee Retirement Income Security Act (ERISA) of 1974 and plaintiffs”—
that is, the workers—
“are entitled to appropriate redress by ‘equitable relief.’ The court ruled plaintiffs demonstrated BP committed multiple violations of ERISA in its communications to its employees…The Sohio retirees maintained, since 1989, BP had insisted the new formula would provide benefits as good as or better than the old formula. The judge agreed and found there is a pension shortfall for many.”
It is worth reflecting exactly what the people who took that case were motivated by: the work that they had done for BP. The article continues:
“Fritz Guenther, lead plaintiff, dedicated his work life to BP often in dangerous conditions on the North Slope of Alaska. He worked two weeks on, two weeks off for years relying on BP’s representations regarding his retirement. While he is still healthy, he says many of his colleagues face health issues, while others still have died within the past eight years. The retirees’ legal fight is taking place against a backdrop of a retirement wave nationwide, with the US Census Bureau estimating that one in five Americans will reach the age 65 or older by 2030.”
That was the nature of the commitment that BP employees in America gave to the company, and it is a measure of the moral bankruptcy that appears to be at the heart of that corporate that it could not see that payback was necessary for these people in their retirement.
I will touch briefly on the Work and Pensions Committee report to which I have repaired. I apologise for doing something that I was always told not to do as a law student: I will read from the rubric, rather than the substance of the report. I welcome what the Committee said about scheme surplus and governance. In particular, the executive summary says:
“Many schemes are much closer than they expected to being able to enter a buy-out arrangement with an insurer to secure scheme benefits.”
I touched on that earlier. The Committee was also right to talk about the various reasons why the flexibility would be advantageous to wider interests. There is a balance to be struck between the company, the beneficiary, and the national interest, in relation to the money being available for investment. That balance has to be properly struck, and it will inevitably slew towards the interests of Government and corporate interests, unless the necessary protections are put in place.
The Committee also observed:
“We note the current consultation on the level of funding a scheme would need to have for surplus extraction to be an option. However, strong governance will also be essential. We recommend that DWP should conduct an assessment of the regulatory and governance framework that would be needed to ensure member benefits are safe and take steps to mitigate the risks before proceeding.”
In this brave new world for defined benefit pensions, that is a warning that the Minister and the Government would do well to take onboard. If they do not, I am afraid that the losers at the end of the day will be our constituents, the beneficiaries of such pension schemes. We will look back in years to come, and we will see that the cases of BP, Shell, ExxonMobil, Hewlett-Packard and others are simply the canaries in the coalmine.
Madam Deputy Speaker (Dame Eleanor Laing)
I call the Chair of the Work and Pensions Committee.
Sir Stephen Timms (East Ham) (Lab)
I welcome the debate, and congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing it at a time when a lot is happening in pensions policy. I will take advantage of its broad scope to comment on wider issues, as well as picking up on the points that he made. I agree with a great deal of what he said.
Auto-enrolment, which was devised by a Labour Government, legislated for under the coalition, and implemented under subsequent Conservative Governments, has been a huge success in increasing the number of employees saving for a pension, but a lot of challenges remain. Above all, the amounts that people are saving under auto-enrolment are not enough for an adequate retirement income, and if we do not increase pension saving soon, we will have a crisis of inadequate pension incomes before very long. The gender pension gap remains much too big. Pension saving among self-employed people, to whom auto-enrolment does not apply, has plummeted.
The Chancellor is rightly looking at how he can boost investment in the UK economy from pension funds, but UK pension funds, for understandable reasons, some of which the right hon. Member for Orkney and Shetland touched on, have largely withdrawn from investments in companies, as regulation has pushed them to reduce the risks that they face. We must not force those defined benefit funds that are still open and investing to close prematurely.
The right hon. Gentleman highlighted this afternoon, as he has previously—he mentioned his debate in Westminster Hall—that members of some defined benefit pension schemes, such as those of BP and Shell, and I think ExxonMobil, as the right hon. Member for New Forest East (Sir Julian Lewis) pointed out, have in recent years not received the discretionary increases that they used to. We looked at that issue in the Select Committee report on defined benefit pension schemes, which we published on 26 March. We took oral evidence from the BP Pensioner Group, and we also heard from the HP Pension Association—the right hon. Member for Orkney and Shetland also mentioned that company. The association represents people who previously worked for the computer company Digital, which Hewlett-Packard acquired. Much of those people’s working lives was before 1997. There was no general requirement to uprate pensions in payment before 1997, and our witness told us that Hewlett-Packard pensioners had received only three discretionary increases to pre-1997 benefits, amounting to 5% in total, since 2002, which is just over 20 years.
In our report we called for the Pensions Regulator to find out how many schemes had discretionary increases on pre-1997 benefits in their rules and how that discretion has been exercised in recent years. Given recent improvements in scheme funding levels, we also called for DWP to look at
“ways to ensure that scheme members’ reasonable expectations for benefit enhancement are met, particularly where there has been a history of discretionary increases.”
Perhaps the Minister, when he winds up, would comment on whether he will look at the reasonable expectations for benefit enhancements for scheme members with a lot of pre-1997 service, and whether they can be met. The Hewlett-Packard Pension Association is calling for a code of ethical practice to be drawn up between the Pensions Regulator and DWP, particularly on pre-1997 pensions, and for their former employer and its pension trustees to work out a policy for sustainable future discretionary increases.
Mr Carmichael
I am grateful to the right hon. Gentleman for touching on an area that I should perhaps have given more attention to. The most important protection we can give the beneficiaries is through ensuring that there are independent trustees, and that the office of trustee cannot be manipulated by the company. Does the Select Committee have any proposals for improvement in that regard?
Sir Stephen Timms
The right hon. Gentleman is quite right. We have noted a bit of a move towards sole trustees in a number of cases, which clearly gives rise to concerns about how one person can represent the interests of the members of a pension scheme. We are reflecting on that in our work, but one of the members of the Hewlett-Packard scheme wrote to me this week—he may well also have written to other Members—about
“the further fear and despair they are now feeling as it dawns upon them that their company and pension scheme trustees are meanwhile preparing plans to derisk by transferring their Pensioner responsibilities to an Insurance Company”—
something the right hon. Gentleman touched on. That transfer will quite possibly mean
“no subsequent possibility ever for pre-1997 increases.”
He calls that “a frightening prospect”, and it is hard to disagree.
The Committee also looked at concerns about the new defined benefit funding regime to be introduced for scheme valuations from September. We noted that the regime had been developed
“in a different era when the vast majority of DB schemes were in deficit and amidst concern that employers were seeking to evade their responsibility to underfunded schemes.”
There have been big changes since then, especially in the wake of the liability-driven investment crisis following the Budget of 18 months or so ago. In particular, there have been significant improvements in scheme funding, but the principles of the new regime have not been changed. Schemes are expected to target a position of low dependency on the sponsoring employer, meaning low-investment risk at the point of significant maturity. That has promoted concerns that the funding code will, when introduced, force more unnecessary de-risking, particularly among open schemes, as well as among those that are closed but have long time horizons, which would increase costs to employers and result in premature closure.
We said that the DWP and the Pensions Regulator needed
“to act urgently to ensure they do not inadvertently finish off what few open schemes remain by further increasing the risk aversion”.
In a letter to the Committee on 18 December, the Minister told us that both the Department and the Pensions Regulator were
“acutely aware of the need to take account of the specific needs of open schemes,”
and he agreed that
“open schemes should not be forced into an inappropriate de-risking journey.”
We welcomed that assurance, but it needs now to be reflected in the final wording of the funding code and in the regulator’s approach.
The vote in Parliament on the statutory instrument came before the final version of the funding code was published, so Members did not quite know what they were voting for at that point. We recommended that the Department and the Pensions Regulator should work with open schemes to address their concerns, particularly on the employer covenant horizon—the length of time for which they are confident in the sponsoring employer’s willingness and ability to support the scheme—and report back to us on how they will do so before the new funding code is laid before Parliament.
Since our report was published, feedback from schemes suggests that things may not be moving in the right direction. In a consultation response last week, the University Superannuation Scheme—a large and still open scheme—described the regulator’s proposed approach as
“university superannuation schemes”.
In its view, the statement that it will be required to complete under the terms of the new code will demand
“significant…resource for little or no benefit to our members.”
To the USS, and to me, that appears inconsistent with the assurances that open schemes will not be adversely impacted by the new funding regime. The USS adds:
“Not…having had sight of the revised…Funding Code and accompanying covenant guidance has exacerbated”
their worries.
I know that the Minister understands these concerns well. Closure of those schemes would reduce pension fund investment in the productive economy at a time when the Chancellor wants—absolutely rightly—to increase investment from pension schemes into the productive economy. Can the Minister tell us when he expects the new funding code to be published, whether he will report back to the Committee before then on how the concerns of open schemes have been addressed, and whether he is open to considering a separate chapter in the funding code, setting out how the code will apply to open schemes?
Let me take a few minutes to talk about what is happening on the defined contribution side of the picture.
Sir Julian Lewis
I wonder whether the Chair of the Select Committee shares my concern that when those schemes go wrong, it seems to take an interminable time to get any form of resolution. I have in mind a scheme that I am sure he is familiar with: the Atomic Energy Authority Technology pension scheme. The Government gave strong guarantees from the Dispatch Box that transferring into that scheme would give benefits roughly similar to those of remaining in the original Atomic Energy Authority scheme, but that did not happen. I first quoted the concerns of my constituent, Dr Keith Brown, in 2016. The most recent answer that I received to a question on this subject was:
“This is a complex issue requiring further consideration”
between the DWP and the Cabinet Office. I first raised the matter in 2016, but the Government are still saying that in 2024.
Sir Stephen Timms
The right hon. Gentleman makes a very fair point. That is certainly a very long-running case, and the Select Committee has recently been looking at a notable pension scam case—the Norton Motorcycle Company pension schemes, which was a straightforward scam—that has been running for years and years. He is right that we need to find ways to speed up some of these processes, because the victims in these cases have their lives really blighted. We are allowing that blight to last for years and years, and that needs to change.
On the issue of defined-contribution schemes, the Committee published a report in September 2022 on saving for later life, which pointed out that auto-enrolment has been a very big success, doubling the proportion of eligible workers saving in a pension. I applaud the approach now being taken by Uber following the Supreme Court case that it lost, and the recognition agreement that it now has with the GMB trade union. It is now auto-enrolling large numbers of its drivers into a pension scheme, albeit with higher opt-out rates than elsewhere, which is making some real inroads into pension scheme saving in the gig economy. We need much more of that among other gig economy workers. However, many auto-enrolled people are not contributing enough at the moment for an adequate retirement income, and quite a lot of them are probably not aware of that. Contribution rates need to go up.
As such, the Committee recommended that the Government should first implement the recommendations of the 2017 auto-enrolment review: reducing the minimum age for auto-enrolment from 22 to 18, and minimum contributions being paid from the first pound of earnings. Almost all of our witnesses supported those measures, and we welcome Royal Assent being given to the legislation that will implement them. That legislation requires a public consultation on implementation, and for its findings to be reported to Parliament before the regulations are made. However, as yet there has been no consultation, and nor has any date been announced for it, so can the Minister tell us when the Department will be consulting on implementation of those regulations? Will that consultation be launched before the end of this Parliament, and does he still expect—as the Government have long maintained—that those changes will be implemented by the mid-2020s?
We always knew that auto-enrolment would lead to many small pension pots. People change jobs, so they accumulate, on average, 10 pension pots across their working life. By November 2022, there were over 12 million deferred pots under £1,000. The Department for Work and Pensions has proposed automatic default consolidation to deal with small pots, but that will not in itself stop small pots from building up in future. As such, the Department has proposed a lifetime provider model with member choice, so that employees tell their employer which pot to put their contributions into, and a pot for life, so that employees stay in the pension scheme they started out in throughout their working life unless they choose to move.
Consultation responses on those proposals raised some very serious concerns from the TUC, Age UK, and the Pensions and Lifetime Savings Association and the Association of British Insurers—the main industry bodies. Age UK, for example, said that the proposals would be
“highly disruptive and lead to poor outcomes for mass market savers.”
Major concerns raised in the responses include potentially unwinding the consensus on auto-enrolment; that other measures in train, such as pensions dashboards, value for money and consolidation, will reduce the number of small pots anyway and improve value; that the proposals would benefit savers with larger pots, but harm lower-income savers; and that they would increase employers’ costs while entirely removing their role in selecting a pension scheme for their staff.
I have heard time and again, as I am sure the Minister has, how important employers are to trust in pension savings and that employers have delivered in auto-enrolment what we have asked them to deliver. Other such concerns are that these changes would require a new infrastructure, which would be hard to build, as pensions dashboards have certainly proved to be; and that they distract attention from the important effort to increase auto-enrolment contributions over time, which the responses argue—correctly, I think—should be the main focus of changes over the next few years. The Minister will be very familiar with all those concerns. Will he tell us when the Department will publish its response to the lifetime provider model consultation, and does he acknowledge that responses to the consultation so far have indicated very significant risks in the Government’s proposal for rather limited gains?
There is a lot going on in this area. I am very grateful to the right hon. Member for Orkney and Shetland for giving the House the opportunity to reflect on all this at this particular time. There has been some good progress, for example with auto-enrolment, but a lot more work is needed. I look forward to hearing the Minister’s reply.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
It is a pleasure to follow the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Sir Stephen Timms), and I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for securing the debate. It gives us a chance to raise a number of issues, and I have listened with particular interest to the remarks about defined-benefit schemes and the recent report of the Select Committee, which is what I want to talk about today.
I speak, as the MP for Cardiff South and Penarth, on behalf of the many individuals affected by the collapse of the Allied Steel and Wire pension fund. That of course affected not just constituents in Cardiff South and Penarth, but people across south Wales and in other locations in the UK. I have regularly met constituents and others affected by that terrible injustice. Over the time I have been in the House, I have heard the passionate way in which they have made their case, which is heart- breaking. They put into a pension scheme expecting a defined benefit after many years of service in a tough industry—steelmaking, which has a proud tradition in my constituency, as it does across south Wales—yet they have not received what they paid in for. That is essentially because the employees were members of the ASW pension plan and the ASW Sheerness Steel Group pension fund, both of which were wound up underfunded.
Those members ended up having to rely on the financial assistance scheme, which, as has been said, provides financial assistance to members of defined-benefit pension schemes who lost all or part of their pension following their scheme coming to an end between 1 January 1997 and 5 April 2005. The arrangements that were made resulted, in theory, in members receiving something broadly equivalent to 90% of the expected pension, which is obviously less than what they expected to receive, but this could be reduced if it was above the FAS cap. Of course, members who had paid in substantial amounts before 5 April 1997 did not receive any index linking, which means that the value of their pension pots has been substantially reduced. Even the funding that went in after that date will not have kept pace with actual inflation, because it was related to the increase of up to a maximum of 2.5%. The net result is that many of them received somewhere between 40% and 50% less than they felt they were entitled to.
Those members, many of whom paid into the schemes in good faith, have often explained to me very clearly how they were originally sold the schemes. They were told it was going to be absolutely solid—as solid as the steel they were making—yet they found themselves in real difficulties in later life. Sadly, many of those members have since passed away, or suffered illness, financial hardship, mental distress and many other issues during that time.
Christine Jardine (Edinburgh West) (LD)
The hon. Member raises a point that I have been particularly concerned about. Constituents have recently come to me because they are facing problems getting their pension entitlement from Police Scotland, so from a public sector pension. One of the lessons we need to learn from these continual scandals is that we need to act quickly, because the longer we take, the more people lose out, and people pass away and never get the justice they deserve.
Stephen Doughty
I agree with the hon. Lady. Indeed, that is reflected in what the Committee set out, which I will come to in a moment. Quite understandably, those pensioners have made it clear to me that they see themselves in the ilk of other huge, historic injustices, such as those we have heard about in recent months with the sub-postmasters Horizon scandal and the infected blood scandal. Obviously, the longer it goes on, the more pain and financial and mental distress they endure, and tragically many pass without receiving any of what they were entitled to, and certainly not the full amount.
I have met numerous Pensions Ministers and written to them many times. I have spoken in this House many times and told the stories of these pensioners. I thank shadow Front-Bench colleagues, in particular the acting shadow Secretary of State, my hon. Friend the Member for Wirral South (Alison McGovern), and my hon. Friend the Member for Lewisham, Deptford (Vicky Foxcroft), who is on the Front Bench today. I also thank previous shadow Pensions Ministers, including the late Jack Dromey, for all they did to engage with pensioners, but people are still not getting the answers that they rightly expect—I will come on to the response that I have had from the Minister in due course.
Let me turn briefly to the recommendations in the DWP report, which I know the Minister is familiar with. Its 22nd recommendation states:
“Financial Assistance Scheme members are likely to have more of their service before 1997, so are particularly likely to be affected by non-indexation of pre-1997 benefits. Any improvements for PPF members should also apply to FAS members.
Given the age of many FAS members, the Government should legislate as a matter of urgency to provide indexation…for pre-1997 rights…The Government should review the Financial Assistance Scheme, including looking at the case for removing other discrepancies in FAS compensation, compared to the PPF”.
Paragraph 156 of the report states:
“Like the Deprived Pensioners’ Association and Prospect, the Pensions Action Group—”
which has worked on behalf of these pensioners over many years—
“said that indexation on pre-1997 benefits is its priority. Most FAS members have the majority of their service before 1997 and most were in schemes that provided for indexation of between 3% and 5% on all members’ pensionable service. Non-indexation of benefits…means that the average FAS award (£2,700) is progressively lower than the amount expected from the original pension schemes. Terry Monk said: ‘people should get what they paid for—end of story. If people paid for it, they should get it.’”
That is a sentiment I have heard over and over again from my constituents and others.
As I said, I have engaged with many Pensions Ministers —there have been many over the years while I have been in the House—and I had a letter from the Minister on 18 April regarding those on whose behalf I wrote to him. It said:
“I am aware of, and welcome, the report of the Work and Pensions Select Committee into defined benefit pensions. These are complex matters which require careful consideration. Any solution needs to be balance and take account of the interests of Financial Assistance Scheme members and taxpayers who fund the Scheme. Therefore, I am now actively considering next steps…with an aim to publish our response in early summer.”
Will the Minister meet me, my constituents, and other representatives who have been campaigning on this for so long? Will he give some timeline for when he expects to respond to the Select Committee and the specific points? Will he provide his Department’s estimates of the costs involved, and say how those weigh up in different scenarios? This issue obviously affects thousands of individuals. I have heard different figures quoted at different points for addressing the concerns, and it would be good to understand his independent assessment.
A passionate case has been made by my constituents and those affected. This was a highly publicised scheme. The former ASW site is now under new ownership but it is still at the heart of my constituency and a visible sight in Butetown and Tremorfa. Many of those affected live locally and did not get what they thought they were going to get. That has caused huge distress to them and their families. We need to provide them with some answers, and I urge the Minister to look carefully at the case they have made and at the findings of the Committee.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is a pleasure to speak in this debate, and I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing it and the Backbench Business Committee on granting it.
This is an important matter, no matter what age people are. I appreciate that today we are not talking particularly about state pensions, but I call on those on the shadow Front Bench to please desist from this scaremongering about what may be happening with state pensions. All parties have committed to having the triple lock in their election manifestos, and it has worked well. There has been a big uplift in the state pension since 2010. We worked on that with the Liberal Democrats when we were first in coalition and have continued with it, with a couple of exceptional reasons in the pandemic—once when we used primary legislation to ensure that people could get the triple lock, and again when we recognised the unusual situation with covid earnings. We know that pensioners have welcomed the significant increase in their first state pension payment of this tax year, with most of them seeing that significant uplift in the week just gone.
Stephen Doughty
The former Secretary of State says we should not be scaremongering, but there are some serious concerns. Does she accept that the Pensions Regulator report said that the mini-Budget of the former Prime Minister, the right hon. Member for South West Norfolk (Elizabeth Truss), contributed to a £425 billion drop in pension fund assets, which has affected every pensioner and every potential pensioner in this country? Will the former Secretary of State not at least accept some responsibility for that?
Dr Coffey
I certainly will not accept responsibility for that. I am conscious of the arrangement with the Pension Regulator, but also the situation that happened with liability-driven investments. The Bank of England saw that as a risk in 2018 and did nothing about it. I come back to the fact that the state pension is well trusted and well regarded, and it is scaremongering to suggest anything otherwise.
I am conscious that today we are talking about private pension schemes. In my short time as Secretary of State for Health and Social Care, what came up time and again—this Government addressed it—was the reduction in the lifetime allowance to about £1 million, which the Conservatives had introduced. I appreciate that for many people, it would be a mountain to climb to get to that kind of pension pot, but for doctors, consultants and some nurses, the lifetime allowance was proving a barrier to them continuing to work within the NHS. A sensible approach was taken, and I am pleased we have done that.
One thing that has been constant is the generous tax elements for private pensions. It is why we have had such a successful industry and why there is a difference between us and many other countries around the world in what comes from the state directly and what comes through private pensions. I recognise that the previous Labour Administration put in place the building blocks for auto-enrolment and the creation of the National Employment Savings Trust, and that was a good thing to do. I am pleased that we started that journey just over a decade ago.
Contrary to the predictions, it was good to see how many young people did not opt out. That is a huge success story, and it is why I share with the Chairman of the Select Committee, the right hon. Member for East Ham (Sir Stephen Timms), a keenness to make sure we get on with the consultation to which he referred. I am sure the Minister will answer that point. I appreciate that there will always be concerns about the possible impact on jobs. I get it, and it may be that we need a two-stage consultation: one stage about age and one considering a lower earnings level. It would be good to get on, because everybody realises that the sooner people start, the more they benefit. That is an important part of why auto-enrolment has been such a success.
Another recent change in legislation is the creation of collective defined contribution schemes. Clearly, there is still some interest in those, and Royal Mail is potentially closest to starting one. We should see what we can do to advocate for that model for many institutions. This is a brave comment to make in this speech, but I wonder whether Parliament should lead by example and see whether the Members of Parliament pension scheme should move to this approach. I am conscious that the taxpayer pays for our contributions through the Government and so on, and we have an uncertain career path by becoming Members of Parliament, but where something is good enough for others and we are creating legislation for it, we should consider leading by example and giving some impetus to that new legislative vehicle. I may not be popular for saying that, and I am conscious of how some of the issues with the McCloud judgment and similar matters led to a two-tier system, which has now been rectified. However, that scheme undoubtedly need not be as complex.
I am pleased about the changes that happened in the Treasury, responding to calls from Departments such as the DWP, which led to an opening up through the Mansion House reforms of the consolidation of funds and aspects of super-funds. What we need from pension investment is good returns so that our pensioners will be prosperous—that is ultimately what this is about—and we need to galvanise what we are doing to ensure that.
I am not one of those people who believes that we will be retiring at 75 or whatever—far from it. There is a rational end to that approach. It will not necessarily take courage but it will require some imagination, co-ordination and collaboration to ensure that we have sustainable pension outcomes for the future. That is where we can start to learn from other countries. When I was in the Department for Work and Pensions, I was interested in what is done in Japan. Dare I say, if I end up doing another PhD in the future, it will probably be on how pensions are part-funded in Japan, recognising its ageing demographics? We should recognise that that is the situation in our country, too. We should not be all doom and gloom about this issue. We need to innovate, but we can also look at what others have done to address it.
There is another really important thing. I started work in 1997 for a company called Mars Inc. where—it was little known to me; I did not realise how beneficial this was—I was on a final salary defined-benefit pension scheme with zero contribution. I did not have to contribute a penny. Over time, that did not stay affordable for Mars. I had not appreciated that benefit—I think to some extent that is why auto-enrolment is so successful—but in that job I learned the importance of making sure that employers are careful with how they manage pensions on behalf of employees and the role of the trustees.
We can think back to Robert Maxwell raiding pensions. I know that Mars sold a business to his company, and that went wrong in terms of the pensions. People may not be aware that pensions are not included as part of the TUPE process—they are specifically excluded, recognising how they could limit sensible company mergers and acquisitions—but I am conscious of how people may not really think about that until much later in life.
To return to the reforms and why they are necessary, the trustee is so important. I had hoped that we would have a “year of the trustee” campaign. Although being a trustee is an interesting role to have—I admit that I have never been one, although I have expressed interest in the past—it means being heavily involved in regulation. That could be overwhelming at times for people who may want to be a trustee because they believe in the people they work with and those who worked there before them, as well as being mindful of the future, but who are not necessarily well versed in all the ins and outs.
I know that the fiduciary duty is really drummed into trustees. For defined-contribution schemes in particular—where, candidly, there is no expectation of what the outcome will be—the hammering home of that fiduciary duty has led to a low-risk approach, which has been very low-cost but with very low returns. That is not what we should want. No wonder people are buying other homes and becoming landlords: they see a fixed asset, which they know they can sell in the future and on which they can make a reasonable expectation, whereas people putting money into their pension pots have no huge sense of what that could buy them in the future. We have changed the laws so that people do not have to put everything into an annuity, but it still is a matter of concern. I am conscious that there have been issues with the pensions dashboard, and I hope that the Money and Pensions Service will solve that. Perhaps the Minister can update us on progress in that regard. It is vital that people start to look at that now, not just as they are about to retire.
What are the benefits of the reforms, and why should there be sufficient professional advice? Those intermediary advisers often get significant fees, but still recommend that people go for gilts and pretty low returns. There is a different way. I hope that the reforms will start to be taken up by the industry, which asked for them, in order to take full advantage and recognise the issues ahead. We need to see the impact of the changes in legislation and the variety of consultations. We made the changes to improve prosperity for pensioners now and in future. I would be keen to hear from the Minister if there is any news on market trends in that regard. The local government pension scheme should lead by example. The Government have put greater demand on local government through levelling up, but is vital that we see that change.
There is a second part of pension schemes that is worth raising. I wonder whether Members know just how many trillions of assets there are in UK pensions alone. The answer is about £3 trillion. Organisations such as Make My Money Matter are trying to encourage people to use their future pension pot to ensure we have a thriving planet. I do not agree with the divestment approach, but it is important that companies invested in the energy of today are invested in the energy of the future. Without the support of pension funds, we will not get that necessary investment.
Pensions are a superpower for the prosperity of people and the planet. I was pleased when we introduced the regulations on disclosure of alignment to the Paris agreement. I would like to go further and encourage the Secretary of State to bring forward similar regulations to apply to nature. Work has already started—the Task Force on Climate-related Financial Disclosures made it happen for carbon. I think we were the first in the world to do that, by the way. We can do the same for nature. The Taskforce for Nature-related Financial Disclosures is a good comparison. The International Sustainability Standards Board is looking at that, and we are close to getting that outcome. I appreciate that the Minister may not have considered that recently and he may not be able to respond, but I encourage him to do that. We only have a certain amount of time, although I hope that as science allows us to live longer, we will claim our pensions for longer, so we want to ensure a prosperous future.
On the superpower element, I praise Nest, which has done a great job. It was set up just over a decade ago, and now manages a huge amount of money. There is even room for it to expand through consolidation, which the Pension Protection Fund could also look at. Nest is leading by example. As a pension firm that is starting to invest in the energy of the future with a substantial proportion of its funds, rather than rely on gilts and similar, Nest should be truly celebrated.
Although fiduciary duty must be the No. 1 priority, let us try to get more trustees to recognise that they are responsible for ensuring that the returns from DC schemes are as good as the benefits for members of defined benefit schemes. We need to release the market and protect people as we have done. Pensions being a superpower is not necessarily the sexiest thing to say in this Chamber, but it is one of the most important decisions that we have made in legislation in recent years. We need to continue that momentum.
Jim Shannon (Strangford) (DUP)
I thank and commend the right hon. Member for Orkney and Shetland (Mr Carmichael) for leading today’s debate. I attended his half-hour Westminster Hall debate on this issue and supported him when he outlined his case in the short time he had. He has done exceptionally well today in doing the same thing, but in much more detail.
It is important to discuss pension schemes, and to ensure they are properly understood and regulated. There are still so many people out there who are misinformed, or do not really understand how pensions work or what their purpose is, so I am glad to be able to debate this issue. The Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), referred to auto-enrolment. I want to refer to it, too. The right hon. Member for Orkney and Shetland set out a lot of detail, as did the Chair of the Select Committee and others, referring to a number of companies. Most people will obtain a pension at some stage of their lives and, through employment, will actively pay into it.
One point I would like to make, and which the Chair of the Select Committee referred to, relates to the provision of pensions for our young people and what steps we can take to ensure they understand that provision. This is another issue that I believe should be taught within learning for life and work. It should be in the curriculum and a part of our focus. The right hon. Member for Orkney and Shetland said that he had his first pension at the age of 22. I had my first pension at the age of 18. My mother took me down to John Thompson —he is not here any more—who was the pension man in Ballywalter. I said, “I don’t need one.” He said, “Oh, you do.” And I signed up. Of course, you never say no to your mum. I certainly didn’t and I do not regret that. Over the years, and after taking out other pensions, all of a sudden they are quite valuable and exceptionally good to have. Also when I was an 18-year-old, my mother took me down to the Northern Bank—now Danske Bank —and opened an account for me. She gave me £10 to start the account. Way back in the ’60s, that was quite a lot of money. You could probably have bought a wee car at that time. I am not sure what state the car would have been in, but I think you could have bought one for £10 or thereabouts. The point I am making is that it is important to save and to have a pension.
We ask young people to look to their future and to start to plan, but there is little provision within the education system to teach them about pensions, savings and mortgages, and there should be. I know that that is not the Minister’s direct responsibility, but perhaps he could give some assurance on whether it could become a subject for the curriculum. I have had conversations with my staff on the importance of paying into pensions. My youngest staff member’s response was exactly that. She bought her first house, saving for almost a decade for the deposit and paying thousands of pounds for mortgage advisers, insurance, solicitors fees and lenders fees. Young people are just about surviving to live in the present, but there is now an expectation that they must save in a pension for their futures. The purchase of a house is such a critical factor that a pension often takes second place. What steps can be taken to ease the financial burdens on our young people and enable them to see the benefits of taking advantage of pensions?
I recently asked a parliamentary question on considerations being given to a potential opt-in scheme for young people under the age of 18. There is massive cause for this. Another two girls in my office have been working since the age of 13—part time, obviously, but still working—and so many young people out there are employed from as young as that. Why shouldn’t they reap some sort of benefit from working at that age? I understand the Government are to make a change to the Pensions (Extension of Automatic Enrolment) Act 2023 to enable that to happen in the “mid-2020s”. As we quickly approach that, perhaps the Minister could give an update on the matter and where it stands.
My last point on pensions relates to the WASPI women. This is not the subject of today’s debate, and there will be a debate on it in a fortnight’s time. I secured a debate last month in Westminster Hall on the issue. Although it is not the pension issue for today’s debate, the scale of the issue and its popularity highlights the importance of planning pensions. That is the point I want to refer to. The Minister will be aware that compensation is owed, but, given the nature of today’s debate, let me gently remind him that it is possible for lessons to be learnt. In setting the scene, the right hon. Member for Orkney and Shetland spoke of what had gone wrong and the need to ensure that it would not happen again, and we hope that, as a result of this debate and others, the issue of the WASPI women will never happen again either.
The incentive to save for the future must be there for people of all ages, not just young people but those in their 30s and 40s who voluntarily do not pay into their pensions because they do not think it worth their while, given the current cost of living and the many demands on their purses. It is also worth noting that some employers match employee contributions, while others pay considerably more. The incentive must be there for people to prepare for life after work, and I firmly believe that that should start in the LLW and careers sector of the education system. We should “learn them early”. We should reach young people in the right way and prepare them for the world that is to come, and pensions are clearly a part of that.
Allan Dorans (Ayr, Carrick and Cumnock) (SNP)
I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) and the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), for their work in bringing this important matter to the House.
The right hon. Member for Orkney and Shetland mentioned pension schemes including those of Shell and BP, but I want to focus on the Hewlett Packard Enterprise pension scheme, and a decision that directly affects more than 1,500 people living in my constituency and in neighbouring constituencies. I speak on behalf of my constituent Patricia Kennedy, as well as 9,625 members of the Hewlett Packard Enterprise UK pension scheme, which includes more than 4,000 members of the Hewlett Packard Pension Association. These are people with an average of 20 years’ loyal service, the bulk of it pre-1997. They were promised a good pension. They expected a “fair deal” from a world-leading corporation that they helped to build, but now find themselves left with a “raw deal”. In general, their pensions now have less than 70% of the expected buying power.
In 1977, Digital Equipment Corporation of Massachusetts opened a factory in Ayr. The company, known locally as Digital, was a major boost to the local economy, and, indeed, apart from the Government, was one of the largest employers in Scotland, with a major production facility on the outskirts of Ayr. At the time, the Digital pension scheme was regarded as one of the best in the United Kingdom. Annual increases were discretionary, but pensions more than kept pace with the best available.
In 1998 Digital Equipment merged with Compaq, and in 2001 that organisation, in turn, merged with Hewlett Packard. In 2017 Hewlett Packard split, and Hewlett Packard Enterprise took over responsibility for the Digital pension scheme. Employees of Digital, Compaq and Hewlett Packard joined and paid into the pension scheme in the reasonable expectation that future pension benefits, which would have provided them with a reasonable pension on retirement, would continue to increase in line with the cost of living. Sadly, however, that has not happened. Since Hewlett Packard Enterprise took over the pension scheme there have been only three discretionary increases, of 1% in 2004, 1% in 2008, and 3% in 2022.
Hewlett Packard Enterprise, while presenting itself to its customers and investors as the most ethical company in the world, is taking advantage of the weakness in the UK pension legislation relating to pre-1997 service. That has resulted in a “raw deal” average pension of £9,700, which, even when topped up with the maximum state pension, results in “low income living” as defined by the Government. Regardless of its legality, this practice is heartless, immoral and unethical, and it is absolutely unacceptable from a major global corporation.
By contrast, Hewlett Packard Enterprise has had an global annual net revenue—a profit—of between $50 billion and $120 billion since 2002, totalling around $1.5 trillion. In 2023, Hewlett Packard’s chief executive was paid $1.3 million, a bonus of almost $2 million and $15.7 million in stock options. Shareholders got $1 billion in dividends that year.
If other, far less profitable companies can pay increases to their pensioners, surely Hewlett Packard can as well. We might ask why it does not. The answer is simply that it does not have to. In fact, it does not even have to explain how it comes to the decision that it makes each year. The decision-making process, what factors are considered and how pensioners’ needs are represented all lack transparency, and there is nothing that compels the company to change that. It has made its point for years, and there is a deadlock.
I am a realist. Although I call on the UK Government to put pressure on a US-headquartered corporation, that is unlikely to break the deadlock. However, there is a way forward. On Wednesday 18 October 2023, David Carson, a representative of the Hewlett Packard Pension Association, gave oral evidence to the Work and Pensions Committee on the defined benefits pension schemes inquiry, as was mentioned by the Chair of the Committee. The Hewlett Packard Pension Association also made three written submissions, which feature in the Committee’s final report. The Committee mentioned these oral and written submissions in paragraph 83 of the report, and paragraph 9 of the conclusions. It commented:
“Some pension scheme members are dependent on discretionary increases to ensure their pension payments keep up with the cost of living. Where these have not been awarded the effect has been, over time, to erode their standard of living. This can be particularly the case for those with rights built up before April 1997, when there was no general requirement to index-link pensions in payment.”
The Pensions Regulator should undertake research to find out: how many schemes have provision for discretionary increases on pre-1997 benefits included in their rules; whether the discretion is for the trustees, sponsoring employers or both; the number of years in which schemes have paid discretionary increases on pre-1997 rights; and the number of years in which they have not done so, as well as the reasons for that. As a matter of urgency, I strongly encourage the Pensions Minister, the Government and the Pensions Regulator to complete the research, which I believe will make it undeniably clear that an ethical code of conduct is required to ensure collaboration between companies and trustees on developing policy and strategy for pre-1997 discretionary increases.
Clarification is also needed from the Government on section 221A of the Pensions Act 2004. That section was inserted by paragraph (2) of schedule 10 to the Pension Schemes Act 2021, which states:
“The trustees or managers must determine, and from time to time review and if necessary revise, a strategy for ensuring that pensions and other benefits under the scheme can be provided over the longer term.”
That could be central to breaking the deadlock. If discretionary increases are viewed in the same way as other benefits in a pension scheme, it follows that companies and trustees must work together to devise a strategy for ensuring that pensions and other benefits under a scheme can be provided over the longer term.
We also need the research to be done by the DWP and the Pensions Regulator, a code of ethical conduct to be developed, and clarification from the Government that the intent of the Pension Schemes Act 2021 is that companies and trustees must work together to devise a strategy for ensuring that pensions and other benefits under a scheme, which include discretionary increases, can be provided over the longer term. I appreciate that the Minister may not be able to provide clarification on these matters today, but I would be grateful for a written response in due course.
Finally, although this debate focuses on private pensions, no debate on pensions would be complete without mentioning the greatest ever pension injustice—the 3.8 million WASPI women, including 6,800 in my constituency, who were not informed by successive Governments of changes to the age at which the state pension would be payable. The Government have ignored the plight of these women for nine years.
The Government hoped that the WASPI women would go away, but they have not, although 40,000 are unfortunately dying each year without getting any form of compensation. Some 240,000 have already tragically passed away, including my constituents Margaret Meikle and Morag Syne. The Government must urgently support and progress the private Member’s Bill tabled by my constituency neighbour, my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown). The Bill had its First Reading earlier this year, and it would require the Secretary of State to publish proposals for a compensation scheme for women born between 6 April 1950 and 5 April 1960 inclusive who have been adversely affected by the increase to the state pension age.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing and opening this debate. He has spoken passionately about this subject in the House before, especially in relation to the BP, Shell and other oil and gas schemes, and about the way that decisions are being made because of concerns other than the best interests of scheme members. I admire his knowledge and determination to support those who have been affected by adverse changes to their pension schemes.
My good friend, my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), passionately raised the case of his constituents who are Allied Steel and Wire pensioners, and he spoke of the need for the Government to carefully consider the Select Committee’s report. I hope that the Minister will meet hon. Members and their constituents, and that he will update hon. Members who have so doughtily put forward their constituents’ cases. I worked as a trade union official in a previous life, and I represented many members in pension disputes, so I have experience of this area.
I thank the Backbench Business Committee for granting this debate, and I thank colleagues for their valuable and insightful contributions. Young people are frequently, quite rightly, advised to start planning for their retirement as early as possible. When people make plans for their future, they do so in good faith. A contract is effectively created between employer, or state, and employee to provide for an income to be paid in later life. Although it would be naive to think that nothing could change during the intervening decades, people make decisions about how they will afford their retirement when they enrol in a pension scheme.
The right hon. Member for Orkney and Shetland has previously spoken in this place about the emotional representations he has received from people affected by the changes to the BP defined benefit scheme. I am sure nobody here could fail to be moved by the words of the dying BP pensioner who was told that his widow will no longer be protected from inflation, despite previous assurances. Pensions are, after all, not only an income while we are alive. They are also a way of providing for loved ones after we are gone.
My Lewisham, Deptford, constituency is not so well known for its oil and gas, but I have a constituent who is affected. When they contacted me last year, my constituent outlined how, in practical terms, BP’s decision to override the recommendations of its pension fund trustees meant that the pensions of some 60,000 individuals in the UK had declined, in real terms, by 11% in just two years. For an individual in their 60s on an average pension, that 11% cut equates to a loss of income of about £60,000 across their retirement. Some 16,000 of the individuals affected are in their 80s and 90s, and it is not a great leap to assume that many may be in poor health and may have faced spiralling energy costs over the last few years. That is just one example of the huge impact that policy changes can have on individuals.
Let me turn to the wider pensions landscape. There are three types of pension in this country: defined benefit, defined contribution and the state pension. All have been touched on at various points during this debate. We have reached something of a critical moment in pensions policy. The last far-reaching review of the UK’s pension system, carried out by the Pensions Commission, reported in 2005. Since then, the UK has weathered a global financial crisis, a pandemic and the highest levels of inflation for almost 40 years. Over the same period, home ownership rates have fallen and there has been a big rise in self-employment, thanks to the gig economy. In short, the way people are—or are not—saving for their retirement has changed, and we need to determine whether the current pensions landscape is still working.
That is why in November my right hon. Friend the Member for Leeds West (Rachel Reeves) announced a wide-ranging pensions review. Our review will look across the whole sector. It will set out proposals to ensure that individuals get the best possible returns, and will identify the barriers to pension funds investing more in UK productive assets. Perhaps a quick review of the track records of Labour and the Conservatives will provide further evidence of why Labour is best placed to hold that review. Under the last Labour Government, pensioner poverty halved—a million were lifted out of poverty. So how are things going under the Conservatives? On their watch, one in five pensioners now lives in poverty; gas and electricity bills have rocketed; mortgages and rents have gone through the roof, and more older people are renting into retirement; and increasing numbers of pensioners are relying on their hard-earned savings to get by.
Analysis carried out recently by Labour has shown that the state pension is the main source of income for more than 6 million people. Women, over-75s and single pensioners would pay the heaviest price if the Tories cut the state pension to fill the £46 billion tax black hole created by their unfunded proposal to cut national insurance. That would see the pension cut by £96 a week, or pensioners paying more in tax. That is proof that you can’t trust the Tories with the state pension.
In the midst of a cost of living crisis that is hitting pensioners hard, the Government are failing to ensure that families are getting the support that they are entitled to; up to 880,000 eligible pensioners are not claiming pension credit. When we look at various workplace pensions, our analysis shows that average pension pots are £6,300 smaller than they would have been had wages grown at the rate they did under the last Labour Government. A worker on average earnings can expect to have amassed a £70,600 pension pot since 2010. However, if wages during that period had grown at the rate they did under Labour, the same worker would have built up a £76,900 pot.
Working people will feel the cost of Tory chaos for years to come, with the Government’s failure to make work pay wiping thousands of pounds off the value of the average pension pot. All that is before we get to the Government’s broken promises on the triple lock, and the billions that the right hon. Member for South West Norfolk (Elizabeth Truss) wiped off pension funds with her disastrous mini-Budget. We may not represent the same party, but I hope that the right hon. Member for Orkney and Shetland will agree that older people are paying a heavy economic price for the mess created by the Tories.
The number of people aged over 65 will increase from 11 million to 14.5 million over the next 20 years. We are living longer—one in four babies born today will be around to celebrate their 100th birthday—yet the Centre for Ageing Better says that a financially secure and healthy later life is becoming increasingly unlikely for millions of people.
Labour’s record on pensions is clear. We lifted a million pensioners out of poverty. We introduced pension credit, boosting the incomes of the poorest pensioners, a disproportionate number of whom were women. As my right hon. Friend the Member for East Ham (Sir Stephen Timms) rightly pointed out, we created automatic enrolment, which brought 10 million more people into workplace pensions and gave them a level of retirement income they otherwise never would have had. When the Tories broke the triple lock, which has been vital in protecting pensioners’ incomes and providing security, we campaigned against that. Under Labour, the triple lock is safe.
Furthermore, we will never put the nation’s financial stability at risk by playing fast and loose with the economy. We will tackle the cost of living crisis head-on and ensure that individuals have the security they deserve in retirement. We will give future pensioners the ability to prepare for retirement with confidence by creating more better-paid jobs in every part of the country, helping people get into, stay in and get on in work, and championing decent second pensions for all.
Pensioners, along with everyone else in the country, need change. Labour has a plan to grow the economy, put money back in people’s pockets, make work pay and be the party of pensioners again. Although it is not within the Minister’s power to call a general election, perhaps he could have a word with someone who can.
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to be here today. I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) and the Backbench Business Committee for allowing the debate, which is a second outing on the issue within a few months.
We all agree that occupational pensions are crucially important. Many hard-working people across the country depend on their occupational pensions for an income in retirement, having spent years paying into their pension scheme. The right hon. Member for Orkney and Shetland spoke powerfully, once again, about the situation that his constituents face, and he referred to others as well. He spoke powerfully about the situation as he saw it. All of us have constituents who have done the right thing, worked hard and contributed to their occupational pension scheme, so it matters to all of us that they get what they have been promised when it falls due, as set out in the rules of the scheme.
When we last debated the issue, in Westminster Hall in January, I made the point that I would not speak about specific schemes, and I will not do so today. I will comment in more general terms. What comments I might make about the generality of the issue should not be taken as an oblique commentary on any of the schemes mentioned in the debate today, no matter how tempting that might be for some.
Since the debate in January, the world has indeed moved on, and I have tried to take some steps as well. As has been said, we published a consultation on options for defined-benefit schemes in February. The consultation reflected a new funding landscape, where funding levels are generally high and many schemes are in surplus. The consultation sought feedback on proposals to make surplus extraction easier, where it is safe to do so, and on the model for a future public sector consolidator, operated by the Pension Protection Fund. The consultation is now closed and we are currently analysing the responses. It closed only a fortnight ago, so we are not quite there yet, but there will be a Government response in due course. But I can be clear today that better outcomes for savers lie at the heart of our proposals. I stress, given the comments we have heard today, that the proposals on surplus sharing include a range of safeguards, as the starting and foundational principle, to ensure that member benefits are protected.
Mr Carmichael
I can understand the attractions of such changes for Governments and corporates, but I impress upon the Minister the need to ensure that if changes of this sort are to be made then the first protection always has to be for the beneficiaries. If there is to be flexibility for Governments and corporates to get investment in big infrastructure projects, that is to be encouraged but it should never be at the expense of the pensioners themselves.
Paul Maynard
That is very much the approach that I am taking with this matter. It has been discussed at great length at the sector roundtables that I have been present at. It has been a very strong theme that I have heard, so I can assure the right hon. Gentleman that I am acutely conscious that that is the lens through which I am looking at the issue.
Sir Julian Lewis
My hon. Friend did say that things had moved on since January. May I gently remind him that it was in January that he told the Work and Pensions Committee that he was waiting to hear from his officials who were in discussions with the Cabinet Office about the AEA Technology pension scandal? He has since been saying that there is no timeline for how these people will be advised of appropriate redress. Does he expect there to be no timeline between now and the general election, or can they expect a definite answer at some point before then?
Paul Maynard
My right hon. Friend has pre-empted a topic that I was about to come to, because I could see that it was going to come up in the discussion on the Select Committee report. I have now been to see the Cabinet Office Minister with my officials, and my officials then went back for a second visit. So although I cannot give him a timeline, I can say that I am motoring this issue along as rapidly as I can. When I say that this is complex, it is because it is complex; it is not merely because that is a useful and convenient word to cover a multitude of things. We continue to work as fast as we can to try to reach a conclusion. I hear the points that he has made to me, both in this place and outside, about wanting to draw this to a conclusion as best we can.
The regulations that I referred to on the funding and investment strategy clarify what prudent funding plans look like, allow open schemes to take account of new members and future accrual, make it explicit that there is headroom in the regulatory environment for schemes to invest more productively, and require all schemes to be clear about their long-term strategy to protect member benefits.
DB funding levels have improved in recent years, and it is important that schemes take advantage of the opportunities that this brings. The scheme funding regulations will help schemes get the most from their assets, while at the same time ensuring that scheme members can be confident that they will receive the benefits that they are promised.
The regulations embed good practice and build on the existing funding regime for DB schemes by providing clearer funding standards, which will ensure, as far as possible, that schemes are properly funded over the long term. Scheme members can and should be confident that the regulations provide increased security for their promised pensions, which is important to many of the people whom the right hon. Member for Orkney and Shetland is trying to support through this debate.
In addition, the new general code for the Pensions Regulator has come into effect since we last discussed these issues. The new general code consolidated and simplified 10 of the existing codes to make it easier for trustees and those running occupational pension schemes to find the information they need on the regulators’ standards of conduct and practice. It came into force at the end of March this year.
I will do my best to reply to some of the points that have been raised in the debate before I continue with my speech. I am grateful to the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), for covering many of the issues in what was a very helpful report on DB schemes. I know that we often discuss Select Committee reports in this place on a Thursday, and it is quite right that we should do so. Normally, however, we do so after the Government have issued their official response to that Committee report. If the Chair of the Select Committee will forgive me, I will not pre-empt every recommendation in the report. But I can assure him that I sat down for a marathon session with my officials not so long ago, going through every last sentence in the report, so I can tell him that I am giving the matter full consideration.
It is worth noting that both the right hon. Member for East Ham and the hon. Member for Strangford (Jim Shannon) mentioned the auto-enrolment reforms. I am happy to place on the record today our ongoing commitment to consult in the mid-2020s on that issue. I am keen to make progress. I hear all across the Chamber that there is a recognition of why it is important that we make as rapid progress as we can.
The right hon. Gentleman mentioned that he will have to provide a consultation. He summarised the general tone of the contributions very well. Certainly there have been more responses to that consultation than to any other during my time in the Department. I have read most of them myself, rather than just waiting for the summary. I have absorbed similar mood music to the right hon. Member for East Ham, and I hope that we can have a proper Government response very soon.
Sir Stephen Timms
I thank the Minister for the attention that he is paying to the recommendations in our report. On the auto-enrolment review recommendations, does he envisage the consultation on implementation happening this side of the election?
Paul Maynard
No decision has yet been taken on when that might be. It would be wrong for me to speculate at the Dispatch Box about when it might occur but, as I say, I am keen for it to happen as soon as we can manage it.
The hon. Member for Cardiff South and Penarth (Stephen Doughty) rightly raised his constituents and the AWS pensioners. As he may be aware from the oral evidence I gave to the Work and Pensions Committee, I have met with the pensioners. I fear this always sounds like a cliché, but I listened carefully, commissioned work on the back of that meeting, received that work and reviewed it, and then commissioned some further work on the back of that. The policy development process is ongoing. I am happy to meet the hon. Gentleman. He asked for a timeline. He actually read out my timeline when he quoted my reply to him from 18 April, so he answered his own question. As I say, I will happily meet with him and the pensioners, but I caution him that I doubt that I can say very much more at this stage than I have already. He may want to consider at what point he wishes to have a further meeting, given that it is a long way for them to come from south Wales to hear me say what I already said to them a few months ago, but I am working hard on the issue.
My right hon. Friend the Member for Suffolk Coastal (Dr Coffey) spoke eloquently about the potential value of CDCs, not least in this place. I cannot wait for the Royal Mail one to get off the ground. I welcome her comments on the importance of employers doing right by their employees. We should always note just how many do that. She asked for an update on the pensions dashboards. As I am sure the House knows, there was a reset of the pensions dashboards shortly before I arrived in the Department. I have taken a close personal interest in it, having overseen a few rail infrastructure projects in my time that also needed a bit of a reset. The chief executive of the Money and Pensions Service, Oliver Morley, and I are taking a careful, scrupulous and in-depth interest in the progress of the reset. I am satisfied that we are making good progress. The timetable for connections has now been issued, and we are very much on track.
The hon. Members for Strangford and for Ayr, Carrick and Cumnock (Allan Dorans) mentioned WASPI. I am not sure that there is much that I can usefully add right now, because I do not think that this is the debate for it. I note the comments that were made and entirely understand them. As the hon. Member for Strangford mentioned, there will be a debate on WASPI in this place very soon, as an important part of the engagement with Parliament that the ombudsman identified. I look forward to hearing what Members have to say.
I will do my best to cover a few issues around discretionary increases, because it is important to put on record the legal situation. There are clear legal requirements for schemes to provide indexation on all defined-benefit rights accrued after 1997, and on guaranteed minimum pension rights accrued between 1988 and 1997. Some pension schemes go beyond the legal requirements and provide more generous indexation. If higher levels of indexation are set out in the scheme rules, those levels of indexation must be paid. The scheme rules set out the pension package that members have the right to receive. Some schemes provide additional indexation on a discretionary basis. In some cases, these payments may have been made regularly in the past, but they are not part of the pension package promised by the employer; rather, they are, and remain by definition, discretionary.
I understand the frustration that will cause for pension scheme members no longer receiving such discretionary increases, and during a previous debate I committed to looking closely at the situation in order to better understand whether the arrangements that we have in place are working as intended. That commitment still stands, and I recently met with the Pensions Regulator to personally discuss the issue, along with many of the other concerns that were raised in January, and indeed some of those raised today. I have to stress that the legislation does not and cannot seek to set out exactly what every scheme must do in each and every circumstance. The legislation sets out some minimum standards for indexation. That does not prevent more generous arrangements, which may be brought into a scheme through its rules or provided on a discretionary basis. Those arrangements are the concern of the scheme trustees.
The Government set a minimum legal requirement, which trustees and sponsoring employers can exceed if they choose, if they judge that scheme can afford it in the short and the long term. It is important to achieve a balance, providing members with some measure of protection against inflation while not increasing a scheme’s costs beyond what most schemes can generally afford. Trustees, whether of big firms or small ones, must have an eye to the future viability of their scheme.
I am very grateful to all Members who have contributed to this debate. It has been wide-ranging, partly because, being called “Pension Schemes”, it covers a multitude of issues beyond the more precise ones that the right hon. Member for Orkney and Shetland raised. I am grateful to all who have participated, and I commit to working much harder on this issue in the future, because I know how important it is to many of our constituents.
Mr Deputy Speaker (Mr Nigel Evans)
With two minutes, I call Alistair Carmichael to wind up.
Mr Carmichael
When I contacted the Speaker’s Office this morning, I was told there was only myself and the right hon. Member for East Ham (Sir Stephen Timms) down to speak, so I am delighted that we have had a good debate. We have had contributions from no fewer than 10 Members, which, given what is happening elsewhere today, is quite significant.
A number of Members made reference to the WASPI issue; I did not do so in the course of my remarks because it was not really germane, but it is a point well made and I very much associate myself with it. The ombudsman took long enough to get a report on that, and now we need to get on and honour it. Otherwise, what is the point of having an ombudsman in the first place?
The function and purpose of debates such as this is to ensure that the concerns of our constituents are heard in Government; the presence of the Minister on the Front Bench is an important symbol of that. The companies to which reference has been made, BP, Shell, ExxonMobil, Hewlett-Packard and Allied Steel and Wire, are some of the best known high street names in the country, and I hope that what we have heard in this debate will be heard also in the boardrooms of those and other companies. The people who run those companies should understand that we are watching what they are doing, that they have an obligation to treat their former workers and their pensioners fairly and that, if they do not have it within themselves to do that, we in Parliament and in Government will make sure that they have to.
Question put and agreed to.
Resolved,
That this House has considered pension schemes.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
On a point of order, Mr Deputy Speaker, I understand there are reports online of a veteran allegedly being prevented from using their veterans ID card, which is a Government-issued ID card, for voting today in the elections that are taking place across the country today. I am sure that will be of concern to Members across the House. A Government Minister has apparently made a public apology and said that they will try to get the issue resolved. I wondered whether you had had any notice of an urgent statement next week on the matter. It does seem bizarre, not least because current military identity cards can be used, and the card is a Government-issued document. I declare an interest as a holder of one of those veterans cards, but it does seem very strange and I hope we can get some clarity on this from the Government. Have you had any notice of such a statement?
Mr Deputy Speaker (Mr Nigel Evans)
I have had no notification from any Government Minister that there will be a statement today. As you know, at the end of proceedings today, we go into the May recess and we will be reassembling on Tuesday. I know that those on the Treasury Bench will make certain that your comments are made available to Ministers, in order that there can be a response.
Kingsmill Massacre Inquest
(6 months, 3 weeks ago)
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Jim Shannon (Strangford) (DUP)
First of all, may I thank Mr Speaker and the Table Office for allowing and facilitating this debate? It is with sadness, but also with determination and commitment, that I bring this matter to the House. I have spoken to the Minister of State, who I am pleased to see in his place; I gave him my speech beforehand and told him some of the things that I am asking for. With that purpose, we try to move forward to address these issues.
The debate refers to an event that took place 48 years ago. The reason it has taken so long is that the inquest happened only about two or three weeks ago. Although I asked for an urgent question on the Monday after that, I am very pleased to have this Adjournment debate.
This date is perhaps a poignant one because we understand that the Northern Ireland Troubles (Legacy and Reconciliation) Act 2023 has come into effect, which should mean the end of the probing of legacy issues. However, I am aware that the Police Ombudsman for Northern Ireland has said that her remit is to continue investigating former police officers for a further year. I am not sure why that remit continues, because people seeking truth and justice, including about Kingsmill and in other avenues, have been told that the date is passing. That is one of the questions that I have asked the Minister, and perhaps he could respond to it later.
It would appear that the vilification of the Royal Ulster Constabulary is to continue, with funding available, and I find that difficult to understand. My party—and, I believe, all Opposition parties—opposed the 2023 Act in its entirety, including on state bodies. My view was that the Government were seeking to cease any Police Ombudsman cases. I am afraid that that question must be answered, because there is an anomaly and a discrepancy there. Those who loved ones at Kingsmill and elsewhere must have their questions answered.
The Kingsmill massacre lives in the annals of history, along with the Darkley gospel hall attack, as the pinnacle of evil intention. There is absolutely no doubt about that in my mind or the minds of people outside this Chamber who are watching the debate. I want to give some details about what took place, because I think that they will illustrate the evilness of man.
The massacre took place on 5 January 1976, just after 5.30 pm. A red Ford Transit minibus was carrying textile workers home from their work along the rural road to Bessbrook. As the bus cleared the rise of a hill, it was stopped by a man in combat uniform standing on the road and flashing a torch. The workers assumed they were being stopped and searched by the British Army. As the bus stopped, eleven gunmen in combat uniform and with blackened faces emerged from the hedges. A man with a pronounced English accent—perhaps that put the bus driver at ease—began talking. He ordered the workers to get out of the bus and to line up facing it with their hands on the roof. He then asked, “Who is the Catholic in the bus?” Fearing that the gunmen were loyalists who had come to kill their Catholic colleague, his workmates tried to stop him from identifying himself. However, when Hughes stepped forward the gunman told him: “Get down the road and don’t look back.” The lead gunman then said, “Right,” and the others immediately opened fire on the workers. The eleven men were shot—[Interruption.]
The Minister of State, Northern Ireland Office (Mr Steve Baker)
I am extremely grateful to the hon. Gentleman for reminding us of just how wicked those events were, and for the passion with which he represents his constituents on these issues. I am clear that those were not the actions of soldiers in a war; they were the dishonourable crimes of cowardly terrorists. It is a matter of great regret that they have not expressed contrition or remorse, and that they did not confess to those crimes and suffer the justice that they were owed.
Jim Shannon
I thank the Minister for that intervention.
The eleven men were shot at very close range with automatic rifles, which included Armalites. It is clear that 10 men were murdered because they were Protestants —that is what it was about. [Interruption.] A total of 136 rounds were fired in less than a minute. The men were shot at waist height and fell to the ground. Some fell on top of each other, either dead or wounded. When the initial burst of gunfire stopped, the gunmen reloaded their weapons. The order was given to “Finish them off”—in other words, no survivors—and another burst of gunfire was fired into the heaped bodies of the workmen. One of the gunmen also walked among the dying men and shot each of them in the head with a pistol as they lay on the ground. Such horror; such barbarity; such evil.
Ten of the men died at the scene; I will name those 10, if I can. They were John Bryans, 46 years of age; Robert Chambers, 19 years of age; Reginald Chapman, 25 years of age; Walter Chapman, 23 years of age; Robert Freeburn, 50 years of age; Joseph Lemmon, 46 years of age; John McConville, 20 years of age; James McWhirter, 58 years of age; Robert Walker, 46 years of age; and Kenneth Worton, 24 years of age. Alan Black, who was only 32 at the time, was the only one who survived. He had been shot 18 times, and one of the bullets had grazed his head. He said:
“I didn’t even flinch because I knew if I moved there would be another one”—
only that time, it would not have grazed his head, but would have killed him. After carrying out the shooting, the gunmen calmly walked away. Shortly after, a married couple came upon the scene of the killings and began praying beside the victims.
Those are the undisputed facts of the case. However, what the inquiry has found is what was first suggested by the Historical Enquiries Team investigation in 2011: that although the IRA was supposedly on ceasefire at the time, it was in fact the Provisional IRA that carried out the atrocity. The coroner said in his findings:
“The attack was carried out by the IRA operating under the authority of the Army Council which had, in April 1975, given wide authorisation to IRA units”.
It was sanctioned at the highest level by IRA terrorist scumbags.
However, the coroner failed to name the three known IRA terrorist individuals who carried out the killings, who are now deceased themselves. He should have done so; it was common knowledge, but for the purposes of the coroner’s report, they should have been named. I think it is important that that is put on record: he failed to name and shame at least three known individuals, now themselves deceased. Those names were available in various media outlets, including the BBC.
Eleven automatic weapons were used to kill those 10 Protestant workmen. Those weapons were linked to 40 other serious republican terrorist crimes over a 15-year period, including the murder of two paratroopers in 1974 and the killing of Chief Superintendent Harry Breen and Superintendent Bob Buchanan in 1989. The coroner’s report further found that the organisation of the attack was planned well in advance in the Republic of Ireland. I have spoken to the Minister of State, and he knows that I am going to ask about this: the excuse within the findings, that the gardaí were not asked for information that they held at the time, is completely untenable. It further makes a mockery of the current legal proceedings and the Government’s legacy legislation that this clear evidence of the gardaí’s unwillingness to help with investigations, then and now, is so blatant. What police organisation would say, “You didn’t ask us for the information, so therefore we’ll not give it to you”? Police organisations—in this case, the Garda Síochána— should have worked alongside the Royal Ulster Constabulary and ensured that all the evidence they had was made available, but it clearly was not. There are questions to ask in relation to that.
The other thing that concerns me greatly—this is the second part of the questions that the Kingsmill families are asking—is that the coroner refused to disclose information contained in secret files provided to him by the security forces in closed hearings. The three people who carried out the attack had on-the-run certificates given to them so that they could get away with their past crimes. It grieves me greatly to have to record the heartache and pain that those families feel because some of those people have got off. Why and how could that be the case?
There is another point I want to raise with the Minister, and it is really important to do so simply because there are just so many questions to be asked. The findings omit any discourse on the perpetrators, when it was said in south Armagh at the time that the dogs on the street knew who had carried out this atrocity—the Kingsmill massacre—with the murder of 10 innocent Protestant people. Indeed, it is widely held that the perpetrators carry on-the-run letters. Some elected Members have publicly joked—I can think of one in particular who joked with loaves of Kingsmill bread on the anniversary. The families do not laugh: they carry the pain. Some of the families wonder why the investigation of this massacre has received nothing like the results of other investigations that have resulted in prosecutions.
I make the point to the Minister of State, whom I spoke to beforehand: why is it that this was planned in the Republic of Ireland and was carried out from the jurisdiction of the Republic of Ireland, and those people were able to cross the border with impunity and then the Garda Síochána did not seem to do anything about it. The Minister of State will know my own personal case, and indeed everyone in this House probably knows it. My cousin Kenneth was murdered by the IRA as well—
Mr Deputy Speaker (Mr Nigel Evans)
Order. If the hon. Member wishes to take the time to compose himself, I am quite happy to wait for him to do so. There is no pressure on him whatsoever. I know how emotional this is for him, and indeed for the House, so I am quite happy for him to compose himself.
Jim Shannon
Thank you, Mr Deputy Speaker.
My cousin Kenneth Smyth was murdered by the IRA on 10 December 1971. I use that as a comparison because it is true, and the three people who killed him escaped across the border, in the same way as the IRA men—11 of them—who killed the 10 Protestants at Kingsmill. There is a question to be answered, and there is a debt of justice. I am a believer, as you know, Mr Deputy Speaker, and I believe that people in the next world will have their justice, and we will have justice. However, I would like to see justice happening for the families in this world, and that is what I wish to see. On behalf of the Kingsmill families, I want the answer to the question: why was the Garda Síochána not forthcoming? On the murders of the two police constables, about which my party has certainly asked questions in the past, we want justice for them as well.
I have heard the cries for a public inquest, and it is very clear from what people are saying that they want to see that. I think it is right—very right—that the request should be forthcoming, yet it appears that the Northern Ireland Troubles (Legacy and Reconciliation) Act will halt this. However, as I indicated at the start of this all-too-brief contribution, the police ombudsman has highlighted that her role has been permitted to carry on for a further year, so why are the Kingsmill massacre families precluded?
A response to the coroner’s report, which I am going to quote in its entirety, states:
“It is for the reasons outlined above that Alan”,
who is the survivor,
“the Kingsmills families and”
others
“have called on the Secretary of State”—
in this case, it is the Minister of State who is answering on his behalf—
“to announce a full, independent Public Inquiry into the Kingsmills Massacre. We would like to have the support of our public representatives”.
I believe that the coroner’s finding has reaffirmed that call.
It is what we have all known for years, and there are many people in the Province who seek justice. Our family seeks justice, and the Kingsmill massacre families seek justice. There has to be a day of reckoning, and I would certainly like to see that day of reckoning happening in this world. The coroner’s finding reaffirmed what we have all known for many years, but that is all, and the families are asking for more. I ask this of the Minister of State, with great gentleness but firmness—he will not mind my doing so—and in a way that I hope underlines that the Kingsmill massacre families deserve more. I very humbly ask today for that inquiry and for that justice, with a public inquiry and with those questions answered for them. Thank you very much.
The Minister of State, Northern Ireland Office (Mr Steve Baker)
I am glad to respond to today’s debate on a subject that is as ever, as we have seen, very painful and difficult. The Government recognise that, as my hon. Friend the Member for Strangford (Jim Shannon) has shown, the victims are people who feel. They are people who grieve and as my hon. Friend—he is my hon. Friend—has vividly illustrated, the scars run deep and the pain that people suffer, even today, is very great and vivid. We certainly recognise that. People want facts and they want justice. I am extremely grateful to my hon. Friend for giving people voice today. He has done it with great skill, authenticity and passion. It is worth saying if he will allow me—I hope he will forgive me —that he is a strong and courageous man. I know that, and I myself feel that I reflect some of the passion that he does, even though I can never quite feel it.
I lived through the troubles as a boy, and as a young Royal Air Force officer in the ‘90s. Since I was on fast jets I was never posted to Northern Ireland, but I did have to check under my car every time I got in it in the ‘90s. People were shot dead—people who perhaps looked like me because we had short hair and looked military. I have not suffered losses as my hon. Friend has, and any of us who have any reason to consider the troubles and what they meant, must in great humility acknowledge the suffering of those who lost those they loved. Indeed, we have to acknowledge the contribution of those who served to defend us from great evils, about which he has elaborated.
I hope that today I will be able to answer my hon. Friend’s questions, and I am extremely grateful for advance sight of his remarks. I believe I will be able to satisfy him in at least some regard, and if I am not able to, I will be glad to meet him and discuss matters further. I come first to the findings of the inquest. The Kingsmill murders, in which the Provisional IRA shot dead 10 Protestant workmen and left one severely injured, is an appalling example of the pain and suffering inflicted on civilians during the troubles. We must never forget that it was the civilian population who suffered most in terms of lives lost from that period of violence, with close to 1,900 people killed. The victims and families of Kingsmill, including the sole survivor of the attack, Mr Alan Black, have fought for many decades to get information and accountability from those responsible.
The coroner for the inquest delivered clear and detailed findings, including: that Kingsmill was a horrific and overtly sectarian atrocity committed by the IRA under the authority of the Army Council, and the attack had absolutely no justification; that the attack had been planned well in advance, and an attack of such scale required a significant amount of planning; that the attack occurred in the aftermath of, and ostensibly as a response to the Reavey and O’Dowd murders, but the reality is that it had been planned long before they took place.
The coroner also said that the rumours concerning the involvement of Captain Robert Nairac in the Kingsmill attack are entirely false, and I would like to quote from the Judicial Communications Office:
“The Coroner was entirely satisfied that Captain Nairac had no role whatsoever in the Kingsmill atrocity. He said:
‘Captain Robert Nairac was a highly decorated soldier, and his memory is ill-served by those who persist in rumour mongering concerning his involvement in Kingsmill. Moreover, the false accusation serves to distract from the proper attribution of responsibility for those who carried out the attack. Rumours concerning the involvement of Captain Robert Nairac in the Kingsmill attack are entirely false.’”
The coroner also said that the attack was, at least in part, planned in Ireland. The border between Northern Ireland and Ireland was “exploited by terrorists” and allowed for
“planning, training, organisation, weapons storage and retreat at a safe physical and legal distance from the authorities that would be faced with investigating terrorist acts in Northern Ireland”.
Despite these findings I acknowledge, with regret, that there will be some unanswered questions for the families. That is unfortunately often the case in what are complex, sensitive, and decades-old troubles-related cases. One key reason why such questions remain unanswered in this case is what the coroner described as
“the absence of any disclosure or evidence from those who caused the deaths”.
The coroner said that the inquest
“did not receive disclosure from any individual concerned in the attack, nor their organisation, nor their political representatives.”
In fact, numerous calls to assist the inquest were met with silence. As a result, despite the savagery of the attack, the coroner found that there has been
“no acknowledgement by the IRA of the utter wrongness of the atrocity, its impact on those bereaved or the damage caused to the entire community”.
As we look forward to an amazing period of opportunity for Northern Ireland ahead of us, with the Executive restored and performing extremely well, there is a great role to be played as we move towards reconciliation by people who have the opportunity to express contrition and remorse. It is extremely difficult to forgive someone who claims that their actions were necessary and that they were soldiers in a war. They were not; they committed acts of terrorism, as this incident clearly illustrates. I encourage everyone involved to express contrition and remorse, to seek forgiveness and to help Northern Ireland to move on. That is in everyone’s interests, whatever their view on the constitutional question.
The hon. Gentleman asked me about the Police Ombudsman for Northern Ireland and letters of comfort. To address his point about the ombudsman’s work, I will provide clarification on what investigative bodies can still deliver. Section 38 of the Northern Ireland Troubles (Legacy and Reconciliation) Act 2023 specifically prohibits the commencement or continuation of any troubles-related criminal investigation from 1 May 2024, apart from those that will be conducted by the Independent Commission for Reconciliation and Information Recovery. That remains the case for all investigative bodies, including the Police Ombudsman for Northern Ireland.
In the Northern Ireland Troubles (Legacy and Reconciliation) Act 2023 (Commencement No. 2 and Transitional Provisions) Regulations 2024, which we laid yesterday, we included a transitional provision to clarify that in cases where an investigation had been completed prior to yesterday, 1 May, and only final administrative tasks remained outstanding, which may include activities such as report writing, family engagement or publication, they may be retained and completed by their original owner, but no further investigative work may now be done, except by the ICRIR in relation to troubles-era offences, and that includes the ombudsman. The transitional provision applies to any body that had such outstanding final administrative tasks on 1 May 2024, including Operation Kenova, the Police Service of Northern Ireland and the Police Ombudsman for Northern Ireland.
Jim Shannon
The issue for the families is that they are aware that the Garda Síochána had information pertinent to this atrocity—this massacre—of 10 innocents. The question that they are asking and that I am asking as a Member of Parliament, which I hope the Minister of State can respond to, is about evidence not available before that is available now. It could have a determining impact on decisions. I know I also asked on behalf of the families for a public inquiry, but if all the information and evidence that should have been available, but was not, is available now, it could put a different stain or paint a different colour on what happened. It could lead to those who were responsible being held accountable.
Mr Baker
I believe I will be able to cover all those points that the hon. Gentleman has raised as I go through my remarks. I hope you will not mind my saying, Mr Deputy Speaker, that we are not short of time. It is worth, for the hon. Gentleman and those watching, my giving a proper answer. I hope to do that, and I will certainly take further interventions from him as we go on.
In relation to alleged on-the-run letters in the hands of perpetrators, the then Secretary of State for Northern Ireland, my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) set out the Government’s position on the on-the-runs scheme fully in her statement to the House of Commons on 9 September 2014. That followed detailed consideration of the report by Lady Justice Hallett, which was published in July 2014. In her statement, the then Secretary of State was clear that the on-the-runs scheme was at an end and there was no basis for any reliance on letters received by so-called on-the-runs under the scheme. During legislative passage of the legacy Act, the Government again confirmed that position. I do not know who did or did not receive on-the-run letters. I will come on to that matter in a moment, but it will now be an operational matter for the ICRIR to consider. It is not something on which I can elaborate further.
Jim Shannon
If the responsibility falls on that body, is it in order to ask it to clarify the matter of the on-the-runs letters? That was clearly not done in the coroner’s report, but the families indicate clearly that it did have them.
Mr Baker
I would be grateful if families made reference to the ICRIR. Later, I shall publish a link to its website, which speaks about investigations. I have had a good look at the website in preparing for the debate—I will come on to that—and I will send that link to my hon. Friend, so that he can share it with people. Yes, people should certainly make a reference, and I hope that the ICRIR will feel able to satisfy them, but he will know that it is independent of Ministers, so that is not a matter for me, but for the commission.
I believe that Members of the House will share the Government’s disappointment that the inquest could not obtain the co-operation it desired from those implicated in, or with knowledge about, the atrocity, and who may have been able to provide additional information for the families involved. The Government have long recognised that truly effective information recovery requires the co-operation of the various different actors during the troubles. That is exactly why the new Independent Commission for Reconciliation and Information Recovery is supported by both a legislative requirement for full disclosure by the state, and by powers to compel witnesses to provide evidence. I am pleased that the ICRIR commenced its functions on 1 May, as expected.
Those powers mean that the independent commission will have the tools that it needs to obtain as much information as possible for individuals and families. In fact, the Northern Ireland High Court recently found that the disclosure powers held by the commission were not only compliant with the state’s international obligations, but could improve on current inquests mechanisms. Individuals suspected of holding information that might be pertinent to a review by the commission will now be required to co-operate with the commission or risk a significant sanction. Refusal to comply with a notice of disclosure by the commission is subject to a penalty notice of up to £5,000.
I turn to remarks by Peter Sheridan, the commissioner for investigations. In an article released by PA Media titled, “Chances of prosecutions from new legacy body ‘vanishingly small’”, Mr Sheridan said:
“I have heard across the board about how justice stops on the first of May. Actually, if people read the information, the opposite is true. I, as the commissioner for investigations, have the ability to do criminal justice-style investigations and report to the prosecution service either in England and Wales or here in Northern Ireland where we find evidence available.”
He further said:
“I want to be absolutely honest with victims and survivors on what is a vanishingly small possibility around criminal justice prosecutions. Not that there isn’t still hope, there could be evidence available that is enough to prosecute.
But he also explained:
“If you take Kenova, £40 million, eight years work and no prosecutions. So we have to be honest with people of what’s achievable about cases that are 20, 30, 40, 50 years old.”
That is the situation we face, and that is why we have instituted the commission. It will have the opportunity to engage in culpability investigations.
My hon. Friend and the families are keen for people to be named. Culpability investigations are described on the website. I understand my hon. Friend’s concern regarding the naming of individuals. It is important to note that there should be consideration of many issues, and judgments made, including about the safety of life. Such considerations will remain relevant as the process moves forward.
The ICRIR will seek to establish all the circumstances of the death or other harmful conduct, using its full range of statutory powers, including the ability to compel witnesses. The commission will, at the conclusion of its review, write a final report. It will make findings, on the balance of probabilities, on issues such as who and what was to blame; importantly, it will answer specific questions asked by families, where that is possible. However, the content of reports is an operational matter for the ICRIR. It is independent of Ministers, as is right and proper. I am confident that many people out there would not believe Ministers, so it is important that the ICRIR is independent. I encourage people to look at the website, and I will tweet the link later. I hope that the hon. Gentleman will feel able to share it with families.
Turning to the Irish Government, one of the coroner’s other key findings—the exploitation of the border in the planning, execution or aftermath of criminal activity, not just in this case but throughout the entirety of the troubles—is well established, as the hon. Gentleman indicated. As he will know well, there are many troubles-related cases in which criminal activity is suspected to have taken place across jurisdictions. For individuals and families who are the victims of such cases, effective information recovery will require the provision of information by the Irish authorities.
One such case is the Omagh bombing. The UK Government continue to press the Irish Government to co-operate fully with the inquiry on that, and, if necessary, to establish similar processes in Ireland, to facilitate the full provision of answers for the families affected. I repeat that invitation to the Irish Government today. They are very welcome to establish processes for co-operation with the commission, to the end that the hon. Gentleman mentioned. Where they have information that could help with information discovery and reconciliation, I encourage them to work with the commission.
To date, the Irish Government have declined to commit to co-operating with the commission to facilitate the provision of information to families who request it. The recent Northern Ireland High Court judgment found the commission to be operationally independent from Government and capable of conducting reviews in accordance with the state’s obligations under articles 2 and 3 of the European convention on human rights. We hope that that will lead to further engagement by the Irish Government with the commission. The approach taken by the Irish Government to co-operating with the Kingsmill inquest—the coroner expressed gratitude for the co-operation of the Irish authorities—should act as a useful template for future co-operation with both the Omagh bombing inquiry and the ICRIR.
I would like to put on record that the relationship between the UK Government and the Irish Government is, today, one of robust friendship. We are friends and partners, not rivals or opponents. We are going forward together in a spirit of constructive co-operation on a wide range of matters. I am proud to have played some part in making that possible. This would be a great time for our two nations to co-operate in detail on issues of the past, to help lay to rest various suspicions or expose wrongdoing, and so make progress.
Jim Shannon
I thank the Minister for that positive outlook. I brought this Adjournment debate on behalf of the families who lost 10 loved ones, and the survivor Alan Black. Could the Minister’s answer and the correspondence be conveyed to the Taoiseach down south and the necessary Minister there, with the message that we seek justice for the Kingsmill massacre families, to ensure that after 48 years, their case is answered?
Mr Baker
I would be astonished if the Irish Government were not following this debate live. We have friends in the embassy of Ireland and in the Government of Ireland whom we respect, and with whom we wish to continue to develop a friendship and co-operation. The relationship between the UK and Ireland is fundamental. For too long, we failed to look west, but we should have done. As is often said, one of the problems we face is that the Irish never forget the history, and the English never remember. We need to make the effort to remember, and to go forward as friends in a spirit of co-operation. It is precisely because we respect Ireland and its status as an independent nation making its own choices that we can really only plead, encourage and invite it to join us in working with the ICRIR.
The hon. Gentleman made the case on why An Garda Síochána was not forthcoming. I will just say that that will have been heard by the Irish Government, and I think he makes a powerful case for further co-operation. The Garda will have records that may assist in answering the kinds of questions that he raises. It is in their interests to defend their excellent reputation. In the interests of defending themselves, the records should be shared. I certainly wish to offer no criticism.
In closing, I express my sincere hope that the conclusion of the long-running Kingsmill inquest will bring some form of comfort to the families affected. Where questions remain, I urge the families seeking answers to make use of the powers of the new commission. The ICRIR is led by Sir Declan Morgan KC and staffed by dedicated individuals experienced in working on legacy and reconciliation issues, and the Government have full confidence in its ability to deliver for victims and survivors, including those affected by the awful, appalling and unjustifiable actions of the IRA at Kingsmill in January 1976.
Question put and agreed to.
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Westminster Hall
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National Grid: Pylons
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Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Matt Warman (Boston and Skegness) (Con)
I beg to move,
That this House has considered pylons and upgrades to the national grid.
It is a pleasure to serve under your chairmanship, Mrs Latham. I thank the Backbench Business Committee for awarding this debate on the great grid upgrade.
To begin, it is a busy day in politics, as we know, so a number of colleagues have asked me to mention their work for them and to share the concerns that many of us have about the approach that National Grid is taking and about proposals, unnecessary in many cases, to cover the landscape of some of the most beautiful parts of the country in pylons, which will cause permanent damage to the local economy and landscape. Specifically, my neighbour, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), my right hon. Friend the Member for Montgomeryshire (Craig Williams), and my hon. Friends the Members for Waveney (Peter Aldous), for Cleethorpes (Martin Vickers), for Sleaford and North Hykeham (Dr Johnson), for Brentwood and Ongar (Alex Burghart) and for South Suffolk (James Cartlidge) have all done huge amounts of work. Without wishing to put words in their mouth, all share at least some of the concerns that I will mention.
I am grateful to my hon. Friend the Minister for being present to respond on behalf of the Government, but I hope that he will take our concerns back to the policy Minister, the Minister for Energy Security and Net Zero, my hon. Friend the Member for North Swindon (Justin Tomlinson). I am sure that the Minister will be grateful for another meeting with our group on this important matter.
My constituents are angry with National Grid and at the proposals to rewire the national grid in such a way as to use Lincolnshire as, frankly, a dumping ground for infrastructure that could be done better and differently. The proposal for a line from Grimsby to Walpole is to have pylons across the country for many tens of kilometres, rather than having it underground or, even better, offshore. The proposal is unwelcome enough in itself, but National Grid tells us that constraints Government have put on it mean it is required to use pylons, rather than underground or offshore. National Grid also says, however, that the new eastern green link is only viable when it is largely offshore.
What angers my constituents about the proposal, and angers many of the constituents represented by colleagues present in the Chamber, is not simply a desire to see the local economy and the local landscape preserved from the blight of pylons; it is an anger at what feels like an incoherent strategy by National Grid. That is within a framework set by Government, which is why I am grateful that we have the Minister here to talk about it from a Government perspective.
We should also acknowledge that the way in which National Grid has behaved has not delivered the kind of transparency to make constituents feel that this is a meaningful consultation on proposals that will not be temporary, although pylons are nominally temporary. The pylons will be with us for many years to come, and they will cost many millions of pounds, from an approach that I believe is fundamentally short-sighted.
The longer-term view of that very necessary rewiring of the national grid will not benefit from an approach that does not take into consideration what we are seeking to achieve with projects such as Grimsby to Walpole and many others, and projects such as the eastern green link bringing power down from Scotland to the south and the east midlands. We should be seeking a more coherent approach that looks at what rewiring the grid successfully for the long term will deliver.
In my conversations with National Grid about whether we use direct current or alternating current, pylons, or offshore or onshore, what is clear is that it has a legitimate desire—proposed by and originating from Government—to get this done quickly. That is the right thing to do, given that we see the grid coming under very different strains from those for which it was designed. Now, rather than bringing power out from a spine down the middle of the country, we are bringing power in from offshore. That requires a different approach, but the different approach is so fundamental that surely we cannot do it in this piecemeal way that involves a number of multibillion-pound schemes that, where they have been reviewed, for instance in Essex—I am sure that my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) will talk about this as well—it has been decided that they could be done better and more coherently.
I have spoken to many hundreds of my constituents in public meetings, in email and on social media over many months, and their anger is not simply about the desire to talk about the landscape. It is about the desire to see proper use of taxpayers’ money, and that should always be our top priority.
I want to talk about three of the key issues that my constituents raise above all else. Primarily, this is about food security. Lincolnshire is one of the most productive parts of our agricultural economy. Whether we are talking about the blight of pylons or the blight of underground cabling, which should be taken much more seriously, it is vital that we consider how much land will be taken out of production by the proposals. There is the pretence that underground cabling can be remediated and then we can go back to fully productive land, but that is a project for a number of years and the land is never, as any farmer will tell us, quite the same again. That is why we come back to an offshore approach being our first choice, but food security is a vital issue either way.
Constituents are deeply concerned in an area where the two industries that matter most are first agriculture, and second tourism. We know that many businesses have built their entire livelihoods, and have bolstered the local economy by providing jobs, in areas that, although they may not technically be designated as areas of outstanding natural beauty and so on, are ones where that economy is built on the landscape in which people come and stay on holiday, in which people come and spend wonderful months of the year.
The approach that National Grid is taking, set by Government, does not consider food security in that way. It does not consider the economic impact of what is being proposed. Thirdly, as I said at the beginning, it does not consider what we could do if we began not with a blank piece of paper but with a coherent approach that asks, “What are we seeking to achieve?”, with a number of different projects.
The reason why we have a good number of people in Westminster Hall today for an election day debate, and several people saying that they would like to be here as well, is that there is real evidence up and down the country that National Grid is not delivering the strategic approach that it should be and it is not being tasked by Government to consider all the most important issues. Those are food security, economic impact and the coherent strategy that we all need to see. It is no wonder that constituents are angry when they see food security ignored, economic impact ignored and value for taxpayer money ignored.
We can see that there are other approaches. Whether we are talking about, as I mentioned earlier, an approach that uses DC cabling rather than something else, which has been found in some situations to be cheaper, or whatever, we should be looking at all the options in pursuit of a coherent approach that is value for money for taxpayers.
I want to end with two final points. The first is that National Grid has been holding a number of consultations across Lincolnshire on the Grimsby to Walpole project—it has been holding consultations across the country on its other projects—and one of the things that it asks is, “How can we mitigate the impact of pylons?” I have not yet met a single constituent who has said to me, “I don’t like these 50-metre pylons, but I would be okay with a 40-metre one.” That is not meaningful mitigation, and I think it is disingenuous to pretend that the project, in its current terms, would not have a huge impact. I ask the Government to consider whether that approach has been coherent and consistent, and whether there is a case for pausing the current set of conflicting projects and looking again at how we can make them work in a way that is better value for taxpayers and better for the grid in the long term. That is my ask.
It would be reprehensible of me not to point out that the Labour approach is explicitly pro-pylons. The shadow Chancellor, the right hon. Member for Leeds West (Rachel Reeves) has said that pylons are the future. If we wanted a demonstration of how little Labour understands rural Britain and the needs of the future of the electricity grid, there we have it.
Dame Nia Griffith (Llanelli) (Lab)
On that point, the hon. Gentleman may want to note that the Welsh Labour Government have opened a review and are instructing an independent advisory body to look into the potential of underground cabling. I gently point out to the hon. Gentleman that we have a far more comprehensive view of issues on this side and he might like to acknowledge that.
Matt Warman
That could be the first occasion when a Conservative is being asked to refer positively to Labour-run Wales. On this occasion, however, I am delighted to do so. I would certainly welcome at the very least a review of the process and a review of Labour policy, which is, as I have said, explicitly pro-pylons. Perhaps we can have unanimity across the House that we should look again at whether pylons are the right way forward and the possible role of underground cabling. I should add that that is a rare endorsement—if an endorsement at all—of Labour-run Wales.
To conclude, I simply say this: my constituents are angry. I have never had more emails or more packed public meetings on any other issue. They do not deny that there is a real need to upgrade the grid for the future, but they want to see value for money for taxpayers, landscapes not unnecessarily blighted and an approach that acknowledges that the economic impact and the impact on food security should be the Government’s coherent and top priority.
Mr Richard Bacon (South Norfolk) (Con)
I congratulate my hon. Friend on securing this debate, the subject of which is of huge concern to many constituents across the whole of eastern England, including East Anglia. Does he share my concern that if National Grid is to bring our constituents with it, it should be clear, open and transparent? I have had an instance in my constituency where National Grid brought a presentation to a village hall suggesting that a certain route was a fait accompli when it plainly was not. Does my hon. Friend agree that we need more clarity and more transparency?
Matt Warman
I absolutely agree with my hon. Friend that we need more clarity and transparency from National Grid. It is right that too many of my constituents and, by the sounds of it, my hon. Friend’s constituents feel that this is a fait accompli. The consultations are supposed to be meaningful if they are to preserve any kind of democratic consent, and we all need to encourage National Grid to deliver that kind of transparency, in particular on the costings of the different options. I thank my hon. Friend for that intervention.
To conclude, I want simply to reiterate my previous point: we should think about food security, economic impact and what is best for the taxpayer when it comes to a necessary rewiring of the grid. I implore the Minister to take the message back loud and clear to the Secretary of State for Energy Security and Net Zero, the right hon. Member for East Surrey (Claire Coutinho), because that is what is in the interest of the constituents of all hon. Members here today.
Mrs Pauline Latham (in the Chair)
Due to the number of speakers, I will have to reduce the limit for speeches to four and a half minutes. If hon. Members wish to be called in the debate, I remind them that they should bob, which they are doing. Also, as my hearing is not brilliant, please can hon. Members face the front and not turn to other hon. Members when they respond?
Wera Hobhouse (Bath) (LD)
Thank you for calling me to speak, Mrs Latham.
The demand for electricity is expected to grow so much that by 2050 we could be using twice or nearly three times as much electricity as we use today. More and more of our energy is now generated by offshore wind farms and solar, which means that significant new infrastructure is required to connect the vast amount of cleaner energy from where it is generated to homes and businesses across the country. We have ambitious targets for more offshore wind development in the coming decades, but the grid is simply not ready for it.
National Grid has recognised the urgent need for investment, but its great grid upgrade must also confront the challenge of safeguarding our natural environment and consider the views of local people. The recently published UK Government state of nature report confirmed catastrophic landscape degradation and loss of wildlife. Britain is now acknowledged to be the most nature-depleted country in Europe and one of the most damaged in the world, so it is imperative that alongside the modernisation of our national grid, we prioritise the protection and preservation of our natural surroundings and indeed the amenities of our local communities. It is also vital that new energy initiatives bring tangible benefits to the communities in which they are located.
Since 2013, National Grid has had the benefit of strategic landscape guidance from an independent panel of national stakeholders selected by the regulator, Ofgem. The independent chair of that panel throughout the time since then has been Professor Chris Baines, whom I have met on a number of occasions. His views are really inspirational. His visual impact programme emphasised the importance of reducing the visual impact of overhead power lines in some of the most sensitive landscapes across England and Wales. Through a process of close consultation with communities, technical experts and special interest groups, National Grid and its contractors have successfully carried out major landscape engineering work and landscape restoration in several highly protected and varied landscapes. However, that is not the case throughout England and Wales, which is what we really need to point out here today. There is advice and there are protections, but even though the national grid needs to be expanded rapidly, National Grid should listen to experts such as Professor Baines.
Since I do not have much time left, I will also express my concerns about what National Grid is saying about the costs of onshore and onshore connections. I will share some of the thoughts of another group I have met: Suffolk Energy Action Solutions. In its paper, “Britain's Winning Solution”, it presents the idea that an offshore grid could pool energy offshore and use subsea cables to transport energy closer to demand, coming onshore at brownfield sites that can become energy superhubs. The group says that this plan would eventually negate the need for 50% of onshore infrastructure, namely the substations and interconnectors that criss-cross the country.
Carrying energy closer to demand would also help to mitigate the significant costs associated with network capacity issues. The cost to consumers, which has already been mentioned in this debate, from wind power oversupply and the need for curtailment payments was estimated to be £806 million in 2020, and National Grid expects that figure to increase to £2.5 billion per annum by 2025.
This type of offshore solution has already worked abroad, with Belgium and Denmark building more of their transmission network infrastructure offshore by creating offshore hubs and taking cabling onshore at brownfield sites. The UK should at least consider this option. National Grid claims that it would be more expensive, which might be true in the short term, but we must consider that this integrated approach to connecting offshore projects would significantly reduce the physical infrastructure needed to connect offshore wind farms to the grid.
Also, in our transition to net zero, it is vital that we take people with us. If we continue the confrontational approach that we have heard about, we will not get to net zero in 2050. We will not achieve that target if we alienate our communities. I urge the Government to look very carefully at the solutions that I have outlined and I also urge National Grid to listen very carefully to what has been said in this debate today.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
It is a pleasure to serve in this debate under you, Mrs Latham. I congratulate my hon. Friend the Member for Boston and Skegness (Matt Warman) on securing it and the Backbench Business Committee on granting it. Given the number of speakers that we have here in Westminster Hall compared with the number of speakers for the business in the main Chamber today, I wish we were in the main Chamber. However, we have to make the most of the opportunity that we have.
The Minister here today heard a 35-minute speech from me on 19 March, and although I appreciate that he is not the policy Minister, being a Government Whip is really important. In many ways, Whips can reflect the views and feelings of the House on critical issues such as the one we are debating today, and I know that he is very astute at doing that.
It is vital that we have a reliable grid, given the amount of renewable energy that this Conservative Government have the ambition and plans to deliver. Whether it is wind, interconnectors or solar, infrastructure needs to be in the right place, and not necessarily just where it is cheapest for the developer. Ofgem and others have a role in terms of energy bills, but we are talking about long-term infrastructure, so a sensible approach that ensures that it is fit for purpose is vital. As far as I am concerned, infrastructure needs to be closer to where the demand will be.
Sizewell C’s construction is already starting, so this is not a case of “not in my back yard.” In fact, there is already plenty of energy in my part of the world, including from wind farms and similar things. The problem is that, given the amount of infrastructure that will be required, we are talking about going on to greenfield sites, and complicated areas of cabling. I admit that no new pylons are currently planned in my constituency, but I know that colleagues such as my hon. Friends the Members for South Suffolk (James Cartlidge) and for Brentwood and Ongar (Alex Burghart) have been working hard on the issue for their constituents.
If we were to update the technology, we could reduce the infrastructure, as the hon. Member for Bath (Wera Hobhouse) mentioned. Suffolk Energy Action Solutions and Saxmundham Against Needless Destruction, the groups involved in Friston and the surrounding areas, have done extensive research, including on what we could do about high-voltage direct current and the offshore platforms, which is what the Belgians and Dutch do. The offshore coordination support scheme should not go ahead with that plan. The reason I say that is that I do not believe that Sea Link will be needed if we ensure that the connections go into established brownfield sites—the Isle of Grain, potentially Tilbury and potentially even Bradwell. My right hon. Friend the Member for Maldon (Sir John Whittingdale) hopes to get a nuclear power station at Bradwell with other technology in the near future, so it has already been designated and set aside for that sort of connection. If we were to innovate and use more recent technology than what has been costed so far, we would come up with a much smarter proposal that reflected the concerns of our constituents. That is why I now want a moratorium on any new connections until we have the strategic spatial plan, which is due next year. That should also have security considerations added to it.
We must also have full transparency, including the publication by the national energy system operator of its assessments and independent reviews, with comparisons with current plans. We should recognise that the economics are such that, at the moment, the sums seem only to include the development; they do not include the Government actually paying people not to put electricity into the network. When we combine that with our starting to get more high-voltage DC—not AC—onshore through the cabling, we come up with a cost-neutral proposal.
The proposed increase in pylons does not directly affect my constituency, because we already have them, but we do not need the level of infrastructure that we once did. That is a 20th-century approach to a 21st-century issue. That is why I want to ensure that the residents of Friston and elsewhere are listened to.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
Diolch yn fawr iawn, Mrs Latham. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Boston and Skegness (Matt Warman) on securing the debate. He has succeeded where I failed, but I am grateful to be able to contribute to the debate, which he led so ably.
There is no time to fall into poetic prose to describe the beauty of my constituency, but it is known as the garden of Wales—the Minister will just have to take my word for how beautiful Carmarthenshire is. I accept climate change realities, I accept the need to increase energy security, I accept the need to improve electricity distribution in our communities, especially in rural areas, and I accept the findings of the Winser report: that we are going to need a whole lot of new infrastructure to meet those challenges. I am not coming from a position of political denial.
I am facing huge upheaval in my constituency, however, because there are now four distribution and transmission routes being proposed for Carmarthenshire. In Roman times, all roads led to Rome; in west Wales, all pylons lead to Llandyfaelog, where new national grid infra- structure is being built. That is in the south of my constituency, which will be joining the new Llanelli constituency following the boundary review. That is a planning matter for Carmarthenshire County Council. All those councillors waving placards against pylon development in Carmarthenshire at the moment must use their leverage during the planning process to try and secure some of the objectives we have in mind. If they just bend the knee during the planning process, I am afraid that the backlash in the wards of Carmarthenshire will be strong. I echo the comments from the hon. Member for Boston and Skegness on the anger in our communities at the proposals.
The lines that I face are: the 132 kV Green GEN Cymru route along the Towy valley, linking an energy generation site in Powys down to southern Carmarthenshire; another Green GEN route originating in Ceredigion, going through Teifi valley and down to southern Carmarthenshire; a 132 kV National Grid Electricity Distribution proposed route along the Cothi valley; and a 400 kV National Grid route linking north and south Wales.
National Grid Electricity Distribution is the recognised distribution network operator for my part of the world. However, Green GEN Cymru is in the final stages of a licence application with Ofgem to become an independent distribution network operator. When I met the umbrella organisation for the IDNOs about a year ago and explained what Green GEN Cymru were proposing, they thought I was mad. The reality is that Ofgem are on the verge of approving an application licence for Green GEN Cymru, and there is huge concern locally about the whole process. There has been a lack of engagement by Ofgem. It is something that we are really going to have to look at. I have had no opportunity to express my concerns to Ofgem in a face-to-face meeting.
The 132 kV lines now come under Welsh Government responsibility. They used to be the responsibility of the UK Government. I had an experience with a previous line 12 years ago, which was dealt with by the UK National Infrastructure Commission. The route was undergrounded along the floor of the Towy valley following that process. I am glad that the Welsh Government are undertaking a study into new techniques, and into cable ploughing in particular.
The argument for pylons is that undergrounding is far more expensive, but the new cable ploughing technology is extremely impressive. It can be used to plough about a kilometre of line a day, and it is far cheaper than traditional undergrounding. The undergrounding analysis is based on a Parsons Brinckerhoff and Institute of Engineering and Technology report that was completed in 2012. The technology is there. I should say that the largest company in Europe happens to be based in my constituency, in Pencader.
I am asking UK Government Ministers to engage with the work of the Welsh Government and ensure that the Welsh Government have the resources to undertake that work. It could solve a lot of problems for the UK Government in the future.
Virginia Crosbie (Ynys Môn) (Con)
It is an honour to serve under your chairmanship, Mrs Latham. I thank my hon. Friend the Member for Boston and Skegness (Matt Warman) and the Backbench Business Committee for enabling this debate.
I am speaking in this important debate to give a voice to many of my Ynys Môn constituents, such as Jonathan Dean, who are concerned about the impact of pylons on Ynys Môn and the Welsh countryside. They are also concerned about the impact on two of our most important sectors: agriculture and food security, and tourism. It is important that the planning process takes into account the impact of infrastructure on the environment and the unique characteristics and vistas of Wales. It is important we have a plan, that we have joined-up thinking, and that we have transparency.
It will come as no surprise that I rise to speak to the challenge of our future energy supply. After all, Ynys Môn, Môn Mam Cymru—the mother of Wales—is an energy island ready and waiting to be powered back to life. We have wind, wave, tidal, solar, hydrogen and nuclear projects. We have £4.8m from the UK Government for the Holyhead hydrogen hub. Morlais, the wave project, has benefited from the UK Government ringfencing marine energy in the contract for differences allocation round. Ynys Môn’s potential to supply cheap, clean power to cut household bills and strengthen our energy security is being held up by slow upgrades to the national grid.
There are enough low-carbon energy projects planned, such as the Wylfa nuclear site, to meet peak electricity demand nine times over. However, the grid is not being built and reinforced fast enough for developers to connect to it. Some projects are having to wait until 2038 to connect to the system, despite being ready to go.
Wera Hobhouse
Does the hon. Lady acknowledge that, really, this means that developers will go away from the UK and invest in other countries? That is a big concern for investment in renewables in the UK.
Virginia Crosbie
I absolutely welcome that debate and how important it is to have developers investing in this sector. I also welcome the action that the Government are taking. Last year’s connections action plan will cut the time that it takes for low-carbon projects to connect to the electricity grid. The Chancellor also announced plans for a strategic spatial energy plan in the autumn statement to set out what energy infrastructure needs to be built, where and when.
Closer to home, I am proud that this Conservative Government grasped the nettle and committed £160 million, through Great British Nuclear, to secure the Wylfa site on Ynys Môn. If successful, that project could create 9,000 construction jobs and 900 long-term jobs, and provide a source of clean, reliable energy for decades to come.
I urge the Minister to finalise the new national policy statement for nuclear to speed up the approval process and announce the outcome of the small modular reactor competition as soon as possible. SMRs have the potential to cut the costs of nuclear, diversify our energy mix and generate steady, clean power. We must not let this opportunity pass us by.
It is also thanks to this Conservative Government’s leadership that we have seen the creation of the new £26 million Anglesey freeport. With spades in the ground at Prosperity Park, the Anglesey freeport is expected to create 13,000 new jobs and generate £1 billion of investment across the island and north Wales. Celtic freeport in south Wales and Teesside freeport show the potential of freeports to boost our manufacturing base for new renewable technologies. Last year, we saw the power of this net zero economy, with £74 billion in gross value added to the economy as a whole and more than 765,000 people employed. The people of Anglesey are ready and waiting to play their part.
Building on that model, I would like to see the Government target a new wave of business rates reliefs at areas with low-carbon industries that need to invest in skills training. That could create thriving enterprise hubs across the country like the one at Menai Science Park—M-SParc—and unleash a new generation of skilled workers ready to power Britain.
But, of course, our new power generators and the jobs that they bring with them will be rendered redundant if we do not have the grid connections in place to put them to use. Where new transmission lines are needed to deliver the wind power of the Irish sea, or Ynys Môn’s new nuclear site at Wylfa, it is important that developers engage with local communities and ensure that they are properly compensated for the disruption that the construction will cause. To achieve that, the Government should extend and mandate community benefits for transmission and generation.
Last year, the Chancellor committed to giving communities that host transmission infrastructure discounts on their electricity bills of up to £10,000. That package also included extra benefits that could be transformational for some communities, with schools and village halls refurbished, educational bursaries created and improvements made to local healthcare provision. That is a sound investment for developers and bill payers alike. By building out the grid, we can make the whole system more efficient and reduce the waste of constraint payments, in which renewable generators are paid to switch off when the system cannot cope. That could save a staggering £1 billion a year and help in the push to decarbonise our electricity supply by 2035.
By increasing the capacity of the national grid in a way that takes into account the beauty of our countryside —especially of places such as Ynys Môn—we can realise Ynys Môn’s promise as the mother of Wales, supplying clean, home-grown power to our United Kingdom. I now call on the Government to give us the tools that we need to do the job.
Dame Nia Griffith (Llanelli) (Lab)
I congratulate the hon. Member for Boston and Skegness (Matt Warman) on securing this debate. We on the Labour Benches certainly want to see an effective and speedy transition to renewables so that we can slash energy bills, cut emissions and make progress on the way to net zero—which is so vital to stem global warming—and, of course, increase our energy security by not being reliant on imported gas.
We in Wales have fantastic resources, be that for onshore and offshore wind, rooftop solar or a range of marine technologies, and we want to see them used. It was very disappointing to see the UK Government’s failure last year to get any bids for offshore wind because they failed to listen to the industry. As has been noted by Welsh Government Ministers and hon. Members on the Welsh Affairs Committee, significant investment is needed in the national grid infrastructure to get the electricity from where it is generated to the areas of dense population and industry.
There is huge concern that enormous pylon projects will spoil areas of considerable natural beauty and take up space on agricultural land. As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) mentioned, the Towy valley is a prime site currently under consideration for routes for grid projects, and we are very keen to see underground cabling considered. As he said, part of the area will be coming into the Llanelli constituency after the boundary changes.
Undergrounding is perfectly possible, whether for big projects such as the gas pipe coming across west Wales, or, as I have seen, the use of a mole plough that can pull a plastic water pipe across a field to protect the pipe and stop the water supply freezing. A much more sophisticated version of the plough is available that can use the same technique for underground cabling, and we want that to be considered.
I pay tribute to my Labour colleagues, Martha O’Neil in Caerfyrddin and Jackie Jones in Ceredigion, for listening to residents’ concerns about pylons and taking them up with Welsh Government Ministers. I draw attention to the fact that in ministerial answers, Welsh Government Ministers have stated a preference for underground cabling where practical.
Of course, cost is an issue, and we need much more up-to-date information. The electricity transmission costing study dates from 2012, and the “Lifetime Costs Report” by Western Power dates from 2014. It is very important, as the Institute of Engineering and Technology has done, to look at the whole picture: the operation, the maintenance and the energy losses, and things such as storm damage where overground infrastructure is much more vulnerable than underground. An awful lot more work needs to be done in that area.
I am pleased that just a fortnight ago in the Welsh Senedd, Jeremy Miles, our new Cabinet Secretary for Economy, Energy and Welsh Language, explained that the Welsh Government will establish an independent advisory group on the future electricity grid for Wales. The group will seek to build an understanding of the possible approaches and alternatives to delivering electricity transmission infrastructure across Wales, including the role of pylons and underground cabling.
In conclusion, yes, we want to see a roll-out of renewables, but we want to take our communities with us, and there are ways in which we can do both. We want to ensure that we do these things in a practicable way, and that we have horses for courses in appropriate places to get the very best of our natural resources in the most compatible way with our community needs.
James Wild (North West Norfolk) (Con)
I congratulate my hon. Friend the Member for Boston and Skegness (Matt Warman) on bringing this important debate to the House. I am speaking on behalf of my North West Norfolk constituents who would be adversely affected by the Grimsby to Walpole link, and by the eastern green link proposals for two offshore projects as part of the great grid upgrade. “Great for whom?” is the question that many of my constituents have.
Under the proposals, 90 miles of a new, high-voltage electricity transmission line would be constructed along with new substations, including at Walpole in my constituency, near to the existing substation. It would consist of a 50-metre-high pylon every 300 metres or so. That is half the height of the Elizabeth Tower and getting on for the height of Ely cathedral. In addition, National Grid is consulting on two new offshore electricity infrastructure projects, eastern green links 3 and 4, which are primarily subsea links bringing electricity from Scotland to England.
As we increase generation from renewables, there needs to be investment to connect those sources to homes and businesses. The issue, though, is how we do that in a way that minimises the impact on local people, our countryside and our communities. Three options for the Grimsby to Walpole scheme were considered—two onshore and one subsea. The subsea option looked at a Norfolk or a Lincolnshire landfall. There are undoubtedly challenges about a Norfolk landfall, given the number of designated sites in my area, with fewer issues for a Lincolnshire solution. They need to be assessed carefully. However, as in other areas, the default for National Grid has been to rule out such options without proper consideration, despite the fact that pursuing them would lessen the visual impact, the environmental effect and disruption to communities. That needs to be revisited as the process continues.
Having discounted the subsea option, National Grid is proposing nearly 100 miles of new pylons. Many constituents have raised strong concerns and objections to the preferred route, including the damaging visual impact that the pylons would have on our beautiful landscapes. Much of the land on the proposed route is grade 1 arable land. When we are looking to improve food security, taking that out of use goes against the Government’s intention.
Pylons and substations cause noise and disturbance for local communities. The proposed area could also affect many protected sites, including the Wash, one of the most important sites in Europe. Indeed, the Government have applied for UNESCO world heritage status for the east Atlantic flyway for migratory birds, including through Norfolk and Lincolnshire, which would be threatened by current plans.
When I met local councillors, parish councillors and parishioners, they were concerned about the location and the impact of a new large substation. They have also asked what assessment has been made of upgrading the existing pylon infrastructure. Of course, that would need reinforcement of the pylons that are there, but that would be less intrusive and more cost-effective. Considering improvements to existing lines is a requirement of the national planning policy statement, so that also needs to be addressed ahead of the next consultation.
In contrast to the Grimsby-Walpole plan, the eastern green links are for subsea cables, with landing points on the Lincolnshire coastline. They would then run underground for 80 miles to the proposed converter stations and a new transmission station in Walpole in west Norfolk—yes, underground. If the underground cable is a preferred option for that project, why not for the transmission line scheme? What scope is there for the proposed Grimsby-Walpole link to be integrated into that? Again, that needs to be looked at further.
On consultation, eight weeks is wholly inadequate, given the amount of documentation published and the length of time that National Grid has been working on this. To be polite, there has been a lack of a co-ordinated approach, but the two schemes could work better together, so we need a much more transparent process.
There are major concerns across west Norfolk about the proposals. People are rightly opposed to the damaging impact on our communities, countryside and farmland. The plans cannot be the final answer; they must be changed.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
It is a pleasure to serve under your chairmanship, Mrs Latham. I congratulate the hon. Member for Boston and Skegness (Matt Warman) on securing the debate; it was my pleasure to support him in applying for it.
I suspect that I speak largely for my friend, the hon. Member for Angus (Dave Doogan), when I say that Scottish and Southern Electricity Networks, the power company, has not covered itself in glory in the north of Scotland, or indeed, in Scotland in general. There is a feeling of hopelessness among my constituents—believe you me, it is a very hot issue. I have in my hands just some of the emails I am getting. Big, big meetings are being held in places such as Helmsdale, with 200 people turning up. That is very unusual for people who do not normally come out on a winter’s evening and are usually quite peaceable about things. So this is a bit of a mess.
When we say to SSEN, “What do you propose with this?”, it says, “Well, it’s pylons—of course it is pylons,” and they produce all their maps. We say, “What about offshore or undergrounding?”, and it says, “Actually, it’s the Government and we are going down the pylons route.” That makes us feel as though we are sleepwalking into something that we just do not want at all.
In the north of Scotland, SSEN is already going to put one subsea cable down the length of the east coast of Scotland, or much of that coast. If it is putting down one cable, why can it not simultaneously lay two more? Why does it not use one vessel to put the whole lot offshore? Again and again, when we talk about undergrounding, the response is, “Goodness me, too expensive. Dear, oh dear, oh dear.” But we know about the Welsh example and examples in other parts of the world where it is done.
As others have said, this is a strategic decision for the UK. It will be about electricity for many decades to come, so we want to get it right. It has been put to me that it is a lot easier to fix something underground. If there is a blip in an underground cable, it can be found easily, but fixing a cable on a mighty high pylon in the teeth of a highland gale is not desperately funny.
I wish that people did not feel helpless and could be taken along with the project. People are reasonable, but right now, there is a feeling of hopelessness: “We don’t like it and nobody is listening to what we say.” But there is a let-out. Planning powers are devolved to the Scottish Government. To give an example, the Scottish Government have been up front about this for a number of years and said, “If there is any proposal to have a new nuclear power station built in Scotland, we’ll call it in and refuse it under planning powers.” My point is to implore the Scottish Government to realise and understand how controversial this proposal is, and to say, “Wait a minute. Under planning powers, we’re going to call it in and we’re going to look at it.” I believe that could be done.
By curious coincidence, a debate is happening right now, simultaneously, in the Scottish Parliament—it is a complete coincidence. I hope and pray that the MSPs who speak in the debate will go for that pause. If that courageous decision were taken to pause this and say, “Hang on, can we look again at this?”, I believe that that would help our friends and colleagues in other parts of the United Kingdom. But somebody has to take the initiative on this, because otherwise we are just sleepwalking. When we do that, people lose faith, and if that happens—no matter what party we are—it is dangerous for democracy.
This is a strategic decision for the future. We must take people with us, and I take great comfort from the fact that I think we are all singing off the same sheet. I look forward with great interest to what the Minister has to say, and I also look forward with great interest to hear what the Scottish Government have to say.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
I chair a group of Essex, Suffolk and Norfolk MPs, some 15 of us, known as OffSET, the Offshore Electricity-grid Taskforce. We are campaigning for an offshore electricity transmission system in place of what National Grid now calls Norwich to Tilbury, to which my right hon. Friend the Member for Suffolk Coastal (Dr Coffey) referred. I also join in the congratulations to my hon. Friend the Member for Boston and Skegness (Matt Warman) on securing this debate.
We in OffSET share our objective with ESNP—Essex Suffolk Norfolk Pylons, which is the citizens’ campaign against pylons—and we are backed by a petition of 32,000 people and growing, across the three counties. We all want the same: to make the best use of wind power from the North Sea, maximising the use of green electricity in the UK at acceptable cost, by providing new capacity to get offshore wind electricity and onshore solar to consumers in London. The more we have studied the proposals, the clearer it has become that the present Norwich-to-Tilbury plan will not meet those objectives. In fact, they are against the UK national interest and should not be approved by Ofgem.
I say that with no sense of blame for anyone involved. I think that the Minister, his predecessors, DESNZ officials, National Grid Electricity Transmission, National Grid ESO—Electricity System Operator—and Ofgem are all doing their best. The very fact that we now have a concept called “holistic network design”, however, underlines the shortcomings of the piecemeal approach driven by the old regulatory regime, which has given rise to the proposal.
We are delighted that the Government initiated the offshore co-ordination support scheme to fund studies into alternatives to the original National Grid proposal. That resulted in the “ESO East Anglia Network Study”, containing an evaluation of 10 further options for amending or improving Norwich to Tilbury. The shortage of time may preclude going back to the drawing board and starting a new offshore design from scratch, but Norwich to Tilbury is already discredited, and undeliverable without substantial revision.
ESO’s modelling still finds that the majority of proposed network designs, including all plausible options, fail to transmit the power from where it is generated to the high-demand areas and in particular to the constrained area of north London. The Government—I have written to the Minister about this—must insist that National Grid ESO conducts further modelling to resolve the northern boundary constraints into London. Option 5b in ESO study’s mentions a possible link between Tilbury and Isle of Grain, which might resolve the problem, but it is the very option that ESO has not yet modelled. Without that, Norwich to Tilbury cannot possibly be justified, and we have the data to prove it.
Under all plausible scenarios, interconnectors would export that clean electricity to Europe for 80% of the time at a loss to the UK, in order to avoid making constraint payments to the wind farms. That cannot possibly justify the 60 million pylons across our landscapes. That is the main reason why I oppose the new inter- connector with Germany called Tarchon, which would join a new National Grid East Anglian connection node near Ardleigh in my constituency. Ironically, that connection causes so much of the environmental damage. It requires the Norwich-to-Tilbury project to divert to the east of Colchester by crossing the Dedham Vale special landscape area and then to double back to the west, parallel to the line of the A12. Even undergrounding high-voltage AC cables is hugely disruptive to the landscape and its archaeology.
Tarchon would not proceed without an Ofgem-approved cap and floor agreement. Ofgem’s press release stated:
“Interconnectors can make energy supply cleaner, cheaper and more secure”,
but none of those three claims applies to Tarchon. The ESO report found that Tarchon will not increase UK electricity security even in the most extreme case and will not help us to achieve net zero. In fact, our exports reduce Germany’s carbon emissions but put ours up, because we continue to rely on fossil fuels to keep the lights on in London.
It gets worse: ESO’s analysis of the system constraints concludes that power will be exported even when overall UK prices are high. The constrained northern boundary into London means that Tarchon is expected to export power 80% of the time, regardless of domestic prices.
What about the cost to UK electricity bill payers? Tarchon will cost £5 billion, underwritten by electricity bill payers, and at least £7 billion in returns to the largely foreign investors will be protected. We cannot allow it to proceed. The fact that high-voltage direct current undergrounding has emerged as a viable option means that the Government should pause the great national grid upgrade. In Germany, HVDC is the default option—
Ben Lake (Ceredigion) (PC)
It is a pleasure to serve under your chairmanship, Mrs Latham. I, too, congratulate the hon. Member for Boston and Skegness (Matt Warman) on securing this very important debate. Like other colleagues, I want to voice and relay the concerns of many of my constituents across Ceredigion about the proposed new pylon line, which my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) referred to.
The communities raising these concerns are not blind to the urgent need to address climate change and decarbonise our economy. Indeed, the Welsh Government’s “Energy Generation in Wales: 2022” report, which was published last October, details the equivalent percentage of local electricity consumption met by local renewable electricity generation for each county in Wales. For Ceredigion, 118% of our local electricity consumption in 2022 was met by local renewable electricity generation. The communities voicing concerns about the impact of new pylon infrastructure on the environment and the potential devaluation of their properties are not doing so from a point of ignorance and are not denying the urgent need to contribute to our decarbonisation efforts. Indeed, the communities along Ceredigion’s coastline and interior valleys have long made a contribution to these decarbonisation efforts, and will continue to do so.
At the heart of this debate is the idea of a just transition that balances the concerns of communities with the need for new infrastructure. Although definitions of a just transition differ, my understanding of the concept is that it is about seeking to bring about fairer outcomes from the transition to net zero by maximising the benefits of climate action and minimising the negative impacts on communities. We have already heard that a failure to ensure a just transition exacerbates inequalities, affects support for action to address climate change and biodiversity loss, and leads to legal challenges. Ultimately, it can impact policy implementation.
This is a difficult balance to strike, or at least it was in the past—I am very pleased to say to the Minister that a solution has been found to make things a lot easier. My hon. Friend the Member for Carmarthen East and Dinefwr mentioned a new technique called cable ploughing. We all agree that the national grid urgently needs upgrading and strengthening, but it is disappointing that the Government have thus far failed to consider the benefits and advantages of cable ploughing techniques by an innovative company based in my hon. Friend’s constituency in Pencader, further down the Teifi valley from some of the communities that have been impacted by this pylon line. It has been innovative in using spider ploughing machines to advance the way that cable ploughing techniques can install these transmission cables, and it drastically reduces the cost and time taken to complete the infrastructure upgrade.
In the past, the Government have argued that undergrounding is too expensive, but this new technique shows that it can be done much quicker, at a much lower cost, with a reduced impact on the local environment. It is worth emphasising the comparison between this cable ploughing technique and the erection of pylons. One pylon company said that it might take the best part of four months to install and equip a single pylon tower. We can compare that with the fact that ATP, the company in my hon. Friend’s constituency, averaged, when working on the Seagreen project, 1.45 km of cable installation per day. That means opening, installing and closing with just one cable ploughing machine, and with minimal environmental impact, such that the land was returned to the owner the following day. Cable ploughing could be a means of balancing the need for new electricity infrastructure with the importance of minimising not only financial costs but unnecessary environmental impact and community opposition.
The UK Government have repeatedly been asked to commission an up-to-date study to take into account these new techniques and a cost comparison with traditional pylon infrastructure. My ask for the Minister today is simply this: could he please agree to do so?
Sir John Hayes (South Holland and The Deepings) (Con)
My hon. Friend the Member for Boston and Skegness (Matt Warman) has done the House a service by bringing forward this matter for our consideration. I want, in the time available, to speak about three things: utility, beauty and legitimacy.
T. S. Eliot said:
“Half the harm that is done in this world is due to people who want to feel important.”
Such people invariably use utility to justify their claim: “This must be done. There are no other options. There is no choice. This is necessary.” But the truth is that very often there are competing necessities. Certainly, it is necessary to think strategically about a grid fit for the future. I try, as a matter of a mix of good taste and good judgment, to resist the arguments of Liberal Democrats, but the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) is frequently irresistible, and today the hon. Member for Bath (Wera Hobhouse) made an excellent point about the relationship between supply and demand. This is too rarely considered, and because it has not been considered enough—I first encountered the argument when I was the Energy Minister —transmission and distribution costs have grown and grown, so that they are now roughly 15% of every electricity bill. We do need a grid that works; that is a necessity. But there are other necessities too. In terms of utility, let us just think about the point that my hon. Friend the Member for North West Norfolk (James Wild) made about sites of special scientific interest on the Wash —a unique habitat for migrating birds. Is that really compatible with 87 miles of 50-metre-high pylons? Of course it is not. That is a competing necessity.
Let me say a word about beauty. Those who do not know the fens will not necessarily appreciate the glory of the open landscape and the big skies that are justly celebrated. They have never been filled by tall structures, apart from churches—of course, churches are about God, in a way that pylons could never be. Let us not fill those big skies and destroy that precious, unique landscape in this way. It would be a crime, in my judgment, to do so. Let us believe in the beauty of the fens and the glory of our countryside—our green and pleasant land—and defend it. I hope that that is what my hon. Friend the Minister will do when he winds up this debate. National Grid does not seem concerned about that and, when challenged on cost—because cost-effectiveness is of course important—it frequently insists that no other option is viable, yet the Germans are looking at just such another option.
Sir John Hayes
I will give way to the hon. Lady, given that I was so nice about her earlier.
Wera Hobhouse
I will be very quick. Should National Grid not recognise that all these objections actually increase the costs, because the timelines get much longer, and that is usually where the costs increase dramatically?
Sir John Hayes
Absolutely, and as Lincolnshire County Council has pointed out, National Grid’s calculations underestimate the compensation that would be paid, the damage to the environment—all the other additional costs that are associated with putting pylons on land, but that will be avoided if cables are put under the ocean. That is what I gather the Welsh Government are now considering, and it is what the Germans have already taken as their default position. And yet we are told that pylons are the future. My goodness, when that was said, I could not help but laugh—without meaning to be impertinent in any way, Mrs Latham—because they are anything but the future. Surely that is yesterday’s approach to tomorrow’s problems.
Let us glory in beauty, in the way that the planning system now increasingly does. The new national planning policy framework, I am delighted to say, states:
“Planning policies and decisions should contribute to and enhance the natural and local environment by…recognising the intrinsic character and beauty of the countryside, and the wider benefits from natural capital and ecosystem services”.
Furthermore, when I asked the then Minister of State at the Department for Levelling Up, Housing and Communities, my right hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), about the fens in particular, she said:
“Special consideration will…be given to preserving the landscapes of, for example, the Somerset levels, Romney Marsh and the magnificent fens of Cambridgeshire, Lincolnshire and Norfolk.”—[Official Report, 13 December 2022; Vol. 724, c. 1013.]
That is precisely what we want.
The third thing that I said I would speak about is legitimacy. I have a petition, initiated in my constituency and beyond, which has already attracted 1,200 signatures against the pylon proposals. Popular consent is essential if we are to get the support that we need for an energy policy that works. People do not want this. It is not necessary, it can be avoided and we expect the Minister to do just that, in the name of the people, of utility, of beauty and of legitimacy.
Dave Doogan (Angus) (SNP)
It is nice to see you in the Chair, Mrs Latham. I offer a great many thanks to the hon. Member for Boston and Skegness (Matt Warman) for securing this important debate. It is clear that elected Members are consistent in their approach to the situation, no matter the colour of their rosette. I will seek as far as possible not to be too political in my observations, and I hope that I succeed in that ambition.
My constituents, like many others, are frustrated with the opacity of the dynamic The network owner and operators in the north of Scotland is Scottish and Southern Electricity Networks—the corresponding body in England and Wales is National Grid—and the process of holding it to account is extremely frustrating. With some legitimacy, SSEN will say, “We have been tasked by the ESO to deliver this much energy down this corridor with this price envelope and by this time,” and when we crunch those numbers, we end up with pylons. If we speak to the ESO about that frustration, it says, “Oh, no, we are technology agnostic. We do not care how SSEN deliver that system—that is up to them—as long as it is consistent with our delivery schedules.” That is a clear disconnect from the outset.
The ESO has been guilty of gross complacency in anticipating that when delivering this level of civil engineering across sensitive parts of this island—we are talking purely about GB, rather than UK—people locally will say, “That’s okay. I don’t mind pylons. Just throw them up wherever you like and we will all get on with it.” That is not acceptable or legitimate, and that is distinct from the ambition to decarbonise our electricity system and the ambitions of net zero.
There is no debate about the need to transmit the electricity from where it is generated to where it is required, but it is about how we do that. We have heard a whole range of compelling arguments this afternoon about why we should look at alternative solutions, and I will touch on some of the difficulty that my constituents in Angus face around that dynamic. These are very exercised, intelligent and experienced people saying no to the prospect of pylons going through the northern opening of the big Strath—Strathmore. I am not sure if hon. Members are familiar with Angus. We have heard about the garden of Wales, and I can assure everyone that Angus is the garden of Scotland. Strathmore is not designated to be an area of outstanding natural beauty, but I assure everyone that it is beautiful, outstanding and natural.
We already have a 275 kV line coming down the Strath. We have a prospect under the ESO’s holistic network design of an additional 400 kV pylon line coming down the Strath. We now learn that under the TCSNP, which is nothing to do with my party—apparently it is a strategic network plan, but it is not very strategic, if you ask me—there is an additional 400 kV line to come down the Strath. It is not realistic or fair to think that people will say, “Oh well, that’s okay. We accept that three towering lines of pylons must come down one of the most beautiful parts of Scotland.” It is not fair to constituents across GB who are similarly affected, and it is not fair to our collective ambition to decarbonise our energy system. Undoubtedly, because of the complacency of the ESO—goodness knows what Ofgem was doing throughout all this—there will be planning appeals, delays and public inquiries. Where does that leave our ambitions for net zero?
For context, Scotland generates 11.4 GW from wind—we are probably delivering against that today. We are connected to England, where the market largely is, by a 6 GW interconnector, so we can see the scale of the gap we are talking about. The wind generation capacity that has been developed in Scotland by both the Scottish and the UK Governments did not happen overnight; it has happened over two decades. It is therefore a fairly ignominious position for the UK Government to find themselves in, where there is such a chronic mismatch between transmission capacity and generating capacity. That is important, because the roll-out of the network is a firefight. It has not been done in a planned and strategic manner, with proper stakeholder engagement and management. It is being rushed through, in relative terms, overnight because the situation is critical.
We heard from the right hon. Member for Suffolk Coastal (Dr Coffey) about the need to pay generators curtailment fees because we cannot get their energy on to the network, but that is only half the story. We are not factoring in the cost of switching on gas to replace the energy we need from wind but that we cannot get to the market because of constraints on the network. Then, when we start to look at the gross effect of that cost build-up, we open the door to looking at more expensive infrastructure other than pylons and still having a sound business case. That is the ambition of constituents in Angus and in many other places as well.
Undergrounding and, in particular, offshoring need to be looked at, for interconnectors going from Scotland to England, where the population centres are towards the south. Offshoring should be the default position until we can make a robust argument against such an ambition, for which the challenges are manifold. In Angus, we have the very start of where seed potatoes can be grown. It is a tremendously important cash crop for Scotland, which cannot really be grown elsewhere in GB. However, crops are literally blighted by potato cyst nematode, which goes from farm to farm. What, therefore, happens when all the construction vehicles are going from farm to farm in my part of the world and in other places in the north of Scotland? It is not acceptable.
I listened with care to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and I accept as an actual matter of fact the role of the Scottish Government in planning and their ability to make a decision. Let us not, however, try and saddle the Scottish Government with the burden of the impact on communities. They are just as keen as the UK Government to see network capacity developed, but, unlike the UK Government and their agencies, they are not mandating how it should be developed. They will take a role under planning law—I am sure I do not need to explain that planning is quasi-judicial and a decision is not made on the basis of how someone is feeling one day—and transact that consistent with policy in Scotland. However, this is not a challenge of the Scottish Government’s creation. Energy is a reserved matter for the UK Government and the UK Parliament, so the genesis of the challenge remains here at Westminster.
I want to underline that my constituents, and I am sure the constituents of everyone in this room, are talking about their need and their ambitions to see something more innovative and more realistic, consistent with their ambitions and the natural environment. A discussion is needed about cost-benefit analysis where the cost is not simply financial; it is about the cost to society, the cost to communities and the cost to the environment. That all needs to be factored in as well. It must also be understood that the infrastructure is disaggregated across 40 million billpayers and then, again, across many decades of return on capital invested by the infrastructure. It will last for many decades. When we are therefore initially confronted with a figure that is £1 billion, £2 billion, £3 billion or possibly £4 billion more expensive than option A, we have to look at what that means in terms of an actual cost to an actual billpayer per year. I am not satisfied that that type of analysis has been done.
My constituents, along with right hon. and hon. Members in this debate, are frustrated that they have neither the cost of the pylon route to come through their part of this island, nor a comparative analysis of what the undergrounding or subsea solution would be, other than that it would be expensive. That kind of nebulous nonsense does not wash with people. They will have to have some further detail on that.
Mrs Latham, I have no shortage of respect and admiration for the hon. Member for Bolsover (Mark Fletcher), but I am very disappointed that there is no Minister from the Department present to hear this debate. I trust—in fact, I am sure—that we will get a sturdy and robust response from the Minister here today, but it is a pity it was not one from the Department for Energy Security and Net Zero.
Mrs Pauline Latham (in the Chair)
For future reference, my name is pronounced “Layth-am”, not “Lath-am”.
Dr Alan Whitehead (Southampton, Test) (Lab)
I will make sure to pronounce your name “Layth-am”, and not otherwise, Mrs Latham. And, given my experience in previous debates, I will make sure that I face you when speaking this afternoon.
I congratulate the hon. Member for Boston and Skegness (Matt Warman) on obtaining this Backbench Business debate. It has been very interesting, and has enabled us to set out the exquisite dilemma in terms of the relationship between the imperatives of grid strengthening and grid development, and managing our processes in such a way as to ensure that everything we are doing for the net zero imperative can be connected and organised so that we get the benefit of the renewable change for the future. That undoubtedly means—and this is a very basic reality check—that we cannot do without a huge extension and development of our grids, both onshore and offshore, in order to bring about that future benefit.
In addition, it is estimated that we will consume or demand something like 64% more electricity—possibly even more than that, as the Minister points out—across our country by 2035. That all has to be supplied, delivered and landed. Among other things, as the hon. Member for Ynys Môn (Virginia Crosbie) pointed out, we first have to make sure that the new power we are producing—onshore, offshore, new nuclear, offshore wind, floating wind, or whatever it may be—gets connected up so that it can deliver the additional electricity.
Secondly, we also have to make sure that the new power can get where it needs to go. As other hon. Members have mentioned, we have a huge crisis in our country at the moment, namely a failure to deliver power from where it is landed to where it is needed. We have a tremendous constraint problem in the delivery of power across the country, particularly north-south. Constraining power that is landed when it should be flowing down the cables to where it is needed will potentially be a huge waste of resource for the future.
I have said that this is a serious dilemma, when we consider the current proposals to make progress on this particular issue—as it happens, there is a new publication called, “Beyond 2030: A national blueprint for a decarbonised electricity system in Great Britain.” It was published about a month ago by the Energy System Operator, which of course is not the national grid; it is the system operator, which will become the National Energy System Operator very shortly. This publication is part of the strategic planning arrangement for the future.
We can see from that “blueprint” that most of what will be wanted past 2030 is offshore. The bootstraps that have been mentioned, in terms of dealing with constraint issues, are all offshore. I lay some blame at the Government’s door for the arrangements for landing offshore wind energy in the future. Unlike the point-to-point arrangements in the past for offshore wind, the future arrangements will deal with nodal collection out to sea and therefore the energy will be landed at many fewer points.
Many hon. Members have asked whether those arrangements should be largely at sea, and the answer is, “Yes, they will be largely at sea, and quite right, too.” That is what we need to ensure we keep our eye on, in planning for the future. To go back to the dilemma, however, that arrangement cannot be the case everywhere; we cannot simply manage a system of new cabling where it all goes out to sea, it is not landed and not transported across the country.
The problem that we all have to solve is where those things are not out at sea and have to be on land—a pretty limited number of the proposals in the “Beyond 2030” report are on land—and how we can do that in the best way to ensure, as hon. Members have already said this afternoon, we take the public with us and are united in recognising why we need those particular things to happen and why they are being done.
I am very interested in the observations today about how we can ameliorate what we put across land when we recognise that there is an imperative for us to do so, taking into account all the other things that are already being done offshore. First, that means—this is actually in the gift of Government right now—that we change the arrangements whereby undergrounding is always considered to be a much more costly operation, simply because the full effect is not taken into account, as the hon. Member for Bath (Wera Hobhouse) mentioned. That full effect is the overall strategic effect of undergrounding as opposed to building pylons in onshore arrangements.
If we had a different way of measuring that full effect through our permissioning systems, we would go a long way towards making undergrounding a much better proposition for onshore arrangements. Indeed, as the hon. Member for Ceredigion (Ben Lake) said, the interesting new developments in cable ploughing and other technology can substantially reduce the cost of undergrounding in the future.
There are several ways, including demand-side measures, to establish whether we actually need quite the length of cabling that we think we will need in the future, and there are ways in which we can make that imperative much more palatable to our population. What is not on the table is doing nothing about cable extensions because, as I have said, that would just take us back to the dilemma of the imperative—we have got to get on with cable extensions and very quickly if we are to deliver our green revolution.
Jamie Stone
I have heard SSEN ask on several occasions, “Well, what can we do for the community to make things more acceptable?” That type of proposed deal strikes me as unacceptable. I hope the hon. Gentleman agrees that just offering something to a community will not really sort the problem at all. “You take the pylons, and we’ll do this and do that”—I bet that we have all experienced that type of exchange.
Dr Whitehead
The hon. Gentleman is quite right. The idea of bunging people a few pounds to make something that is a problem less of a problem is not really a long-term strategy. Instead, we need to gain first understanding and secondly consent for what we continue to do overground, and indeed to try to integrate that with what we do at sea, to ensure we have maximised those arrangements. That will allow us to say that we have got our grid together so that it can face the demands that will be placed on it, and that we have done so in a way that allows our country to work well for the future. This afternoon, I hope the Minister will concentrate his thoughts on how we do that together.
Mark Fletcher (Bolsover) (Con)
It is a pleasure to serve under your chairmanship, Mrs Latham. I must apologise that the Minister responsible, my hon. Friend the Member for North Swindon (Justin Tomlinson), was unable to be here today, as he is otherwise engaged. I congratulate my hon. Friend the Member for Boston and Skegness (Matt Warman) on securing this debate. As I listened to some of the contributions, I did regret that the Minister responsible did not leave me his hard hat. Indeed, since I was told yesterday that I would be responding to this debate, my right hon. Friends the Members for Louth and Horncastle (Victoria Atkins) and for Montgomeryshire (Craig Williams) and my hon. Friend the Member for South Suffolk (James Cartlidge) have all contacted me about this issue, so I have some idea of the pressures that come with this role. I can see that this is a particularly difficult issue for many constituents.
An expanded electricity network is critical to lowering consumer bills, securing our energy supply, delivering green growth and skilled jobs and decarbonising our electricity system, but it must be delivered strategically and sensitively, in a way that considers and mitigates the impacts on communities and on our treasured landscapes. I thank all hon. and right hon. Members for their contributions today. We all recognise that this is an important subject for our communities. My colleagues and I are clear that community voices must be heard in our transformation of the electricity system. As the Prime Minister has made clear, we are making the change to net zero in a way that supports communities and families. That is true for new electricity infrastructure, and the organisations responsible for the planning and delivery of that infrastructure are working to deliver on that.
This country is undergoing an energy revolution, which has reducing consumer costs, respecting environmental and community considerations and protecting national security at its core. Members will be under no illusion that in order to bring new home-grown electricity on to the system, we must expand the electricity network considerably, rewiring from where new generation is being built, in our wind-rich seas and new coastal nuclear sites, and connecting it to areas of demand. We anticipate that we will need to meet double the current level of demand by 2050, and we will need an efficient, high-tech system to transport that power to drive our country forward.
The Government are leading efforts to speed up this network expansion to connect new generation and demand when and where it is needed. We are acutely mindful of the potential visual impacts of electricity transmission infrastructure on communities, particularly overhead lines. The reinforcement of the network to transport this low-carbon electricity is being delivered through a balance of methods, including making upgrades to existing infrastructure, such as offshore and undersea power cables. The use of undergrounding is the starting presumption in nationally designated areas—national parks or areas of outstanding natural beauty—to protect those landscapes.
Sir John Hayes
Given what I said about the agreement the Government made to protect flat lands such as the fens in relation to onshore wind, which involves much lower structures, will the Government, on the grounds of consistency, add the fens to the list the Minister has just set out?
Mark Fletcher
I thank my right hon. Friend for that intervention. I am not empowered to give that particular positive response, but he has already called on me throughout the debate to respect beauty, and I hear what he has said loud and clear.
Elsewhere, overhead lines should be the strong starting presumption, but this remains flexible, and undergrounding may be used in other areas in certain circumstances, namely where there is a high potential for widespread adverse landscapes and/or visual impacts. Such decisions will be weighed up through the planning process. The Government have worked with the Electricity Systems Operator to create a new process for strategic planning for electricity networks, which considers the four principles of impacts: on the environment, on communities, on costs to consumers, and on the deliverability and operability of that system. That design process looks at the network holistically, identifying areas where existing infrastructure should be upgraded and reinforced, and considering where co-ordination efficiencies, or innovations such as offshore cabling, can be used to reduce the overall impact on communities of infrastructure expansion.
New innovations in cable technology are enabling a very substantial offshore network to be created to help reduce the need for new transmission infrastructure on land. The recommendations in the ESO’s most recent network plans mean that, by 2035, three times as much undersea cabling could be laid than new pylons in Britain. However, we will inevitably require some new onshore infrastructure, as those offshore links have to make landfall and run inland. We must also consider the impacts on the marine environment and marine users, such as the fisheries industry, just as we would on land, as well as the far greater costs of offshore cabling.
Dave Doogan
I respect the Minister’s logic, but while it is all very well to transmit subsea, it has to come on land somewhere to find its way to the consumer base. The line that I am talking about, which goes between Aberdeen and Carlisle, is transmitting energy down half the length of GB. That is not making landfall; that is transmitting down the land of the island. It is a different proposition, and is it not inconsistent with his logic?
Mark Fletcher
I thank the hon. Gentleman for that contribution. I have to be incredibly careful when it comes to the specifics of individual projects. He will appreciate, as he mentioned in his own speech, that there is a quasi-judicial role for the Department and for the Secretary of State, so he will forgive me if I do not comment on a specific case.
I recognise the concerns that communities have about energy infrastructure projects proposed in their areas, and hon. Members are right to raise that issue today. That is why, in last year’s autumn statement, the Chancellor announced proposals for a community benefits scheme for communities living near new transmission network infrastructure. That will see communities receive funding of £200,000 per kilometre of overhead lines in their area, £40,000 per kilometre of underground cables, and £200,000 per substation—and communities can decide how that funding is best spent locally. In addition to those generous community benefits, the Chancellor also announced that properties closest to the new transmission network infrastructure will receive electricity discounts of up to £1,000 per year for 10 years.
Of course, the electricity system needs to be expanded at a scale and a pace not seen for decades, but that must be done—and is being done—with community views at the forefront. That transformation will not only reduce household energy bills but foster skilled jobs and high-quality investment across Great Britain. Once again, I congratulate my hon. Friend the Member for Boston and Skegness, and I am incredibly conscious that he should have some time to finish up at the end. I will return to the Whips Office, where I will be silent forever more.
Mrs Pauline Latham (in the Chair)
Unfortunately, there is not time for the hon. Member to wind up.
Question put and agreed to.
Resolved,
That this House has considered pylons and upgrades to the national grid.
Volunteers
(6 months, 3 weeks ago)
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Jo Gideon (Stoke-on-Trent Central) (Con)
I beg to move,
That this House has considered the contribution of volunteers.
I am delighted to speak on the theme of volunteering. The absence of a large number of Back Benchers gives me the chance to opine at length on a subject close to my heart. I thank the hon. Member for City of Durham (Mary Kelly Foy), who kindly co-sponsored this debate with me; she sends her apologies for health reasons, but would like me to state her recognition of the enormous contribution of the volunteers, in County Durham and beyond, who do so much for our communities. I would like to use this debate to do exactly the same.
This may be my last opportunity to highlight the wonderful work of individuals and organisations in my constituency without the pressure of a tight time limit, Ms Nokes, so I hope that you and the Minister will indulge me if I incorporate into the debate a love letter to the wonderful people it has been my privilege to work with in the great city of Stoke-on-Trent, including the more than 70 charities and community groups who share their wisdom and provide mutual support at my charity roundtable. In a city where many people struggle with both their finances and their health, I am humbled by the work of the many volunteers who step up to help those who are less fortunate, and by how those with little look after those with less.
The resilience of my local community stems from a strong sense of place and identity, and decades of disappointment about a lack of investment after the decline of the traditional industries that were a feature of the city: the steelworks, the mines and the potteries. As the city sees a renaissance, with the growth of new creative and digital sectors, transport and logistics and new civil service jobs, there are still too many who struggle with the cost of living or with accessing services. The help that volunteers provide is essential.
Next month, charities across the UK will be celebrating 40 years of Volunteers Week, an annual campaign that starts on the first Monday of June. It is an opportunity for charities and the wider public to recognise, celebrate and thank the UK’s incredible volunteers for all that they contribute to our local communities, the voluntary sector and society as a whole. I am grateful for the opportunity to have this debate in advance of Volunteers Week: it allows me not only to highlight the incredible achievements of our country as a result of volunteering, but to make a call to action to those who have got out of the habit of volunteering or may never have had the opportunity. I encourage them to look at their local community and consider how they might help out and give their time.
Volunteering is critical to a vibrant, flourishing and resilient civil society. It benefits volunteers and the organisations with which they are involved; it has transformational impacts on beneficiaries and their communities, delivering public services and building social cohesion. That support can be seen particularly clearly during crises such as the covid-19 pandemic, but community support is not simply about helping people affected by the pandemic or its economic and social aftershocks. The contribution of volunteers extends much further and deeper than unforeseen emergencies. Many people volunteer with sports clubs, youth groups—including the Scouts, the Guides and other uniformed groups—and faith communities or neighbourhoods. Others provide more specialised support, such as youth mentoring; working with prisoners or the homeless; or volunteering in a hospital or other health settings, such as through Helpforce, a charity providing volunteers in support of the NHS. In my own patch, the work of volunteers for the local hospice is remarkable.
There is a lack of robust data on the economic and wider social impact of volunteering, but it is worth noting that Andy Haldane, a former chief economist at the Bank of England, has valued the contribution of volunteering to the UK economy as being in excess of £50 billion a year, or 2.5% of GDP. Even that is likely to be an underestimate: if occasional and informal volunteering were included, the figure would probably be much higher. The latest data from the National Council for Voluntary Organisations shows that approximately 14.2 million people in the UK volunteer through a group, club or organisation, with many more volunteering informally.
Interestingly, people over 50 are most likely to volunteer and provide unpaid care. According to the latest community life survey results, respondents aged 65 to 74 were most likely to participate in formal volunteering at least once a month compared with other age groups, alongside the contributions they make to the economy through work. It is important that we recognise and value the impactful contributions that the many volunteers over state pension age make by bringing their wealth of skills and experience developed in the workplace.
The benefits work both ways. Volunteering can have a transformational impact on the lives of older people themselves. Research has shown that older people who take part in volunteering report improved wellbeing, improved life satisfaction and lower rates of depression. Older people are incredibly positive towards charities and do a great deal to support them, both financially and through volunteering. There is a real appetite among many older people to do more. Many have a skill that they would like to use to help a charity, but do not know how to get involved.
I feel strongly that more needs to be done to link older people up with volunteering opportunities, giving them the chance to access all the health and wellbeing benefits that are linked directly to community action. That is why I am hosting an over-55s fair at Staffordshire University on 31 May, to offer advice and connect people. It is a core part of my Nothing but a Number summit, which aims to make Stoke-on-Trent an age-friendly city. The importance of volunteering will definitely be on the agenda.
At the other end of the spectrum, social action has a dual benefit for young people: the positive impact for the chosen cause and the personal skill gained from the experience. It helps to improve students’ motivation at school, and is particularly powerful in developing soft skills such as leadership and teamwork, which are more difficult to teach in the classroom. Research has discovered that young people are extremely socially minded and believe that individuals have a duty to make a positive social contribution. They are committed to causes and want to use their time to make an impact.
Although many young people want to make a difference, they too need information on how to get involved. People want to volunteer. Time and again, I hear about people not knowing how to make the first step. That is the biggest barrier to volunteer recruitment. Despite the overall decline in volunteering, 62% of people who have not volunteered in the past three years say that they could be encouraged to volunteer. There is huge untapped potential, which provides a key opportunity for the Government to support the sector in unlocking this good will. The Scouts shared with me that people volunteer either because they have an existing connection to the Scouts or simply because they were asked to. We should not underestimate the power of simply asking people to volunteer.
I run a local charity roundtable every month. A lovely story was shared with me by the National Literacy Trust. One of its literacy champions, Caroline, began her journey with the trust during the summer of 2022, when she supported some of its very busy Tales in the Park events. Since then, the whole family have got involved. They are always on hand to support the trust’s work. They have run activities that benefit our community, including running literacy activities on Port Vale match days, running a Hallowe’en Booktacular event outside their house, where they gave out books as well as sweets, running a community bookcase outside their house, and supporting many of our local literacy events.
At school, Caroline’s son Jayden ran Look for a Book trails for his class during Kindness Week and supported his school with book donations. He even runs a community bookcase, wheeling out his trolley of books every Friday afternoon for parents to choose and swap books. Having started as a reluctant reader, Jayden is so proud to be a literacy champion and is keen to support his peers in any way he can. He just loves helping people. That is just one example of how inspiring young people to volunteer can encourage them to invite friends and family to join in their voluntary activities.
Jayden volunteers because he loves helping people. NCVO research shows that people overwhelmingly volunteer because they want to make improvements to the communities they live in and help the people around them. When people are asked why they volunteer, the most common motivation is simply the desire to make a difference. People also gain a sense of achievement by volunteering; they make new friends, gain new skills and improve their career prospects.
Not only does volunteering have significant value to society, but a recent report by the British Heart Foundation has found that it has clear benefits to the individual, and it can play a key role in contributing to the Government’s ambitions for increasing healthy life expectancy, levelling up and tackling loneliness. In particular, 94% of volunteers agreed that volunteering had helped them feel less isolated or lonely, 92% agreed that volunteering had helped their mental health and 80% agreed that it had helped their physical health.
Volunteering can take many different forms across all settings in society. One in five recent volunteers have volunteered for local community or neighbourhood groups, the most popular cause: that might include volunteering at food banks or hostels or helping the homeless. There are also many services delivered by volunteers that are deemed essential by the public: the Samaritans, St John Ambulance and Citizens Advice, to name but a few.
I read in the news recently that the boss of the supermarket chain Iceland had said that medics saved his life after he collapsed at last Sunday’s London marathon. He was racing to raise money for Alzheimer’s Research UK when he became unconscious just a mile from the finish line. He came around to St John Ambulance volunteers piling ice on his chest in an attempt to bring his temperature down from a dangerously high 42°C. Volunteers like these make an extraordinary contribution to our society. They played a huge part in the successful roll-out of vaccines during the covid-19 pandemic, and they continue to support communities through cost of living challenges.
Volunteering also keeps our high streets alive and preserves the heritage of our towns. Let us consider charity shops; we know that high streets around the country could be completely abandoned without them. Without people running things on high streets, we would lose the soul of our towns and cities. Dougie Mac is a well-loved Stoke charity, and I am sure that we can all picture the shop fronts for other charities such as Cancer Research, the Salvation Army and Oxfam. Charities up and down the country are so grateful for the volunteers who run their retail, without which they would cease to exist: the vast majority of their income has to be generated through commercial activities, and without volunteers, that would be impossible. We need to maintain the community input into keeping our high streets alive, and recognise the role that volunteers play.
To come back to local heritage, I love visiting Etruria Industrial Museum in Stoke. It has the only operational steam-powered potter’s mill in the world. It is managed by Bernard Lovatt and run entirely by volunteers. If not for Bernard, this significant heritage site would most likely have ceased to operate, despite being of huge historical impact not only to Stoke-on-Trent but to the history of ceramics manufacturing in the UK. Many of the places that we value, such as National Trust properties, would not survive without an army of volunteers. Passing on our knowledge of history to future generations would be impossible. Volunteering is vital for society, and the Government need to keep recognising that.
Who knows where volunteering can lead? My good friend Danny Flynn, the head of North Staffs YMCA, began his career in the charity sector by moving to London to work as a community service volunteer at a day centre for homeless people. He now runs one of the most successful YMCAs in the country. Under his leadership, many young people are given a helping hand. The monthly community meal encourages volunteer teams from across the city to cook a meal for 100 people in the community. A few months ago, I enjoyed taking the challenge up myself.
Every volunteering journey is different. Danika started volunteering as a community champion with Thrive at Five, a national charity that attends my roundtable. Supported and given the chance to learn new skills, she set up a club to support parents over the summer holidays. She now has a paid position walking alongside parents in their journey through the early years—all because she volunteered.
We know the profound benefit that volunteering has on the individual, on communities and on society, but there are still many barriers to overcome. When I spoke to volunteers at my local branch of St John Ambulance, I was surprised to learn that they have to purchase their own uniforms. That, plus the cost of travel, can be a barrier. I am grateful that the Government have already invested a lot of money in removing some of those barriers and getting people involved. In March 2023, the Department for Culture, Media and Sport launched the Know Your Neighbourhood fund with up to £30 million to widen participation in volunteering and tackle loneliness in 27 disadvantaged areas across England. However, we can still do more.
Volunteers are not valued enough by society as a whole, and the UK does not even measure the work of volunteers and voluntary organisations, so we cannot fully credit their contribution to society. That said, the scale of the voluntary response to the pandemic was undoubtedly amazing: millions of people looking after their neighbours reconnected the social fabric, but the effect did not persist because people had to go back to their jobs and had less time on their hands. Mid-covid, I wrote an article discussing the importance of supporting the voluntary sector in which I predicted that many of the vast army of individuals who came forward to help neighbours and neighbourhoods would disappear once everyone went back to their pre-covid life. Unfortunately, that is precisely the situation we now face. Levels of formal volunteering have declined and remain well below pre-pandemic levels. In 2017 17% of people had volunteered in the past 12 months; by 2023 just 13% had. That is an estimated 1.55 million fewer people volunteering over the period.
The long-term trend toward greater reliance on a smaller civic core is troubling. It is a real concern for charities: 40% report that the lack of volunteers has prevented them from meeting their main objectives. Small charities in particular, which make up 80% of the 165,000 registered charities in England, are facing huge problems with volunteer recruitment and retention, but this issue has been raised with me even by national charities, such as the Scouts, which make invaluable contributions to the voluntary workforce across the UK but are currently facing challenges in volunteer recruitment. That has led to unprecedented waiting lists and a worrying decline in their workforce.
The increase in need is not being matched by an increase in volunteering capacity. In fact, many charities are victims of their own success. They often deliver vital services that the public value but are not currently or fully delivered through public sector bodies. The voluntary sector is often asked to do more, but not given the funding to match.
Volunteers also need training and support. During the pandemic, an incredible volunteer army helped on every street by delivering shopping for neighbours who were shielding and aiding with the vaccine roll-out. Volunteers who go into people’s homes and work with the most vulnerable need training and support. I became aware of the professional requirements often required of volunteers when I visited one of my local organisations, Birches Head Get Growing, which is a wonderful group that collects and distributes food, clothing, household items, books and toys to tackle issues relating to poverty and waste. Co-ordinating a group of 30 to 40 volunteers and leading workshops and courses is a full-time job.
The belief of local charities and, most significantly, faith groups that we hold the solutions to the problems we face locally and that we can work together with the resources we already have to make an impact that will be an endless legacy for our communities, is truly inspirational, but it is becoming ever more challenging. Interestingly, we are seeing changing trends in the kinds of volunteering people seek: there is a preference for shorter term, more flexible or one-off opportunities. That is a shift from the traditional pattern whereby people provide large amounts of time to one organisation over many years. Although that poses challenges for organisations delivering services, it provides opportunities to attract new and more diverse volunteers.
Interestingly, 53% of new British Heart Foundation volunteer recruits between January and March 2023 were 16 to 24-year-olds, compared with 42% before the pandemic. Perhaps this is an opportunity to think about how we can retain engagement with a younger generation of volunteers, but in doing that, we also need to make sure that we address the fact that younger volunteers in particular are worried about being left out of pocket. Only half of volunteers surveyed by the NCVO said that their organisation would reimburse them for their expenses if they asked. The increasing financial barriers to volunteering are very likely to mean that even fewer people from deprived areas volunteer. The NCVO, which does an incredible job of supporting the voluntary sector, has done a lot of work with MPs through the all-party parliamentary group on charities and volunteering, and we will be publishing a report at the end of May that takes a deeper look at the “Time Well Spent” data on deprivation and volunteering.
When looking for other opportunities to open doors to volunteering initiatives, we should consider the workplace and businesses’ commitment to corporate social responsibility. Many businesses already excel at supporting volunteer efforts and collaborating with charities to leverage employee volunteering to address social and environmental issues. I recently heard from Amazon, which encourages employees to participate in a global month of volunteering to support causes that they are passionate about. Tens of thousands of Amazon employees in the UK will volunteer alongside their peers, adding to the company’s efforts to support its local communities throughout the year. In 2023 more than 43,000 hours were spent volunteering by Amazon employees in the UK.
I am always delighted to hear about everybody who volunteers, even in this place, and my own staff get involved with local initiatives too. Matthew Bridger has pioneered volunteer projects since he was 16, including setting up the Little House Project homeless shoebox appeal, and Izzy Kennedy from my office often volunteers in her local primary school to mentor children who struggle to engage in the classroom. Even in this place, we can encourage our small teams to use their talents and play their part.
People, particularly the younger generation, are increasingly conscious of companies’ reputations and corporate responsibility records. They want to shop with businesses that they see as ethical and are determined to work for organisations whose values they share. We should make it easier for businesses to do this, and work with employers to make volunteering easier. Voluntary organisations need a regular commitment, not the usual three volunteering leave days offered by employers. Will the Minister consider—or has he already considered— introducing a right to request paid leave for volunteering, or amending section 50 of the Employment Rights Act 1996 to enable reasonable time off for trustee duties? School governors, for example, are entitled to time off work under section. Trustees play a vital role overseeing charities, but there are currently an estimated 100,000 trustee vacancies.
We could make volunteering affordable by reviewing and uplifting the approved mileage allowance payment. The approved rate has not changed since 2012, despite the costs associated with motoring having increased substantially. While it is primarily aimed at employees, AMA is also used to reimburse volunteers who use their own car as part of their activities. To enable more people to give their time, might the Minister consider a fair, transparent review of the approved rate?
We should do more research into the potential impact of the cost of living on the ability of university students to participate in volunteering. I spoke to Birches Head Get Growing in my constituency, which provides extensive placements for university students as part of the work placement and site supervisor schemes. More attempts to get students to volunteer like that are needed, but the changed situation following the increase in student fees and the cost of living crisis means that students have become less able or less motivated to volunteer.
I have spoken in the past about social prescribing, which is another popular concept, but does not seem to have had the necessary funding attached at the delivery end. The idea is great, moving us away from medicalising every person’s needs and toward helping in a different community-based way. Examples include helping people to tackle obesity by signing them up to healthy activities, or loneliness by promoting participation in group craft activities; but the organisations that run those activities have costs to meet, and those need to come out of the budgets of prescribers. NHS England should work with the charity sector to increase social prescribing of volunteering, to improve people’s health and reduce pressure on GPs and other healthcare services. Departments should better capture and share information about Government-placed volunteers and the onward journey of those referrals. Again on the topic of data, we need to maximise the impact of the third sector “satellite account” within Office for National Statistics data to better understand and demonstrate the value of the charity sector and volunteering.
We should explore specific policy measures, such as the ones I have briefly mentioned, that support and promote volunteering. Alongside that, we should consider how broader policy choices and broader socioeconomic factors affect volunteering. There is currently no effective strategy for volunteering in England. How much does the Minister consult other Departments about the impact on volunteering of policymaking across a wide range of issues? Will he partner with organisations such as the NCVO and draw on the learning, experience and evidence of the sector to set a strategic direction for volunteering?
I am a great believer in trusting the people, so I am keen for those in our local voluntary sector, who work so closely with our local communities, to articulate a strong vision of a collective approach in order to develop a volunteering strategy that works for Stoke-on-Trent. I look to the Minister to develop a strategy that will work for the country.
Wera Hobhouse (Bath) (LD)
It is a pleasure to serve with you in the Chair, Ms Nokes. I congratulate the hon. Member for Stoke-on-Trent Central (Jo Gideon) on bringing this important issue to the Floor of the Chamber.
Volunteering is the beating heart of my Bath constituency. Without our volunteers, our charities would simply not survive and sustain the essential activities and services offered to communities. To understand that, we need only look back to the monumental volunteering effort during covid, with people helping with the vaccine roll-out, providing essential goods and medicines to those who were shielding, and ensuring that vulnerable individuals received essential support.
Our communities are so much stronger for volunteering, and I am so grateful to the culture of good will and being kind to one another that exists across my Bath community. It makes for a much better and stronger society, and today is a wonderful opportunity to say thanks to all our volunteers who make that enormous effort. Whenever I meet a volunteer, I see that they do not do it for glory or public recognition; they do it because they are passionately committed to the causes that they support, but today is an opportunity to publicly recognise what they do for us.
I do not want to be risk missing out any of the many voluntary organisations in my constituency, so I will just pay tribute to BANES 3SG, which is a membership network of over 200 charities, social enterprises and community groups in Bath and north-east Somerset. It really came together during covid-19. I hear that the hon. Member for Stoke-on-Trent Central is organising a volunteers fair, which the network has also organised.
Looking at the model of what BANES 3SG has done in the last four years, it has really transformed the whole of the third sector in my Bath community. It does fantastic work to support charities, social enterprises, and faith and voluntary organisations operating in Bath and north-east Somerset. It aims to strengthen the volunteering offer, and last year it held a volunteers fair that brought together local charities, residents and businesses. Having organisations such as 3SG, which facilitates co-operation between community organisations and statutory bodies in Bath and north-east Somerset, has a huge impact on the lives of so many people. As I said, it has really transformed how volunteering is delivered across the area.
Today’s debate is about not just saying thanks, but pointing out the challenges faced by volunteering and the third sector. The hon. Member for Stoke-on-Trent Central has already touched on many of them, but I will say a bit more about some. Volunteers come from all walks of life and it is important that we make volunteering accessible for all and identify the barriers in any given area. It is also important to recognise that volunteers are on their own personal journey and may come to giving their time for various reasons. Yet, as I said, most of the time it is because they passionately believe in making a difference. Volunteering also provides connections and support networks that people may not otherwise access.
The sector as a whole faces lots of challenges, not least huge cuts and financial pressures at a time when we are seeing a rise in need and when organisations often support people who are falling through the gaps. There is huge potential for better link-ups to support preventive work through initiatives such as social prescribing, which the hon. Member for Stoke-on-Trent Central has already talked about extensively, and volunteering can play a part in that. Many charities report that one of the biggest issues they face is coping with increasing demand on services while having to find long-term sustainable funding. Charities are almost four times more likely to identify funding issues as the most pressing issue facing their organisation, year on year since 2015. Volunteering is essential to help address that additional demand.
Unfortunately, volunteering has been severely affected by covid-19 and has not recovered since. Data from the Charities Aid Foundation’s “UK Giving” report found that only 13% of people said they volunteered in 2023, compared with 17% pre-pandemic. That represents about 1.6 million fewer people volunteering over the past five years, and that is a very big number. The National Council for Voluntary Organisations survey on the volunteer experience found a trend of decline in certain volunteering activities, including raising money or taking part in sponsored events.
Another barrier to people volunteering more often is reported worries about being out of pocket. We have heard that already this afternoon. That is exacerbated by the recent rise in the cost of living. For example, if someone previously commuted to a volunteering position by train, the increased fares may push that activity over the edge of affordability. Work commitments and caring responsibilities are also often cited as significant reasons for not volunteering. In many ways, it is not a surprise that as life gets harder, people’s attention focuses elsewhere and volunteering will decrease.
As we have also heard, volunteering has lots of benefits. Research has shown that people who take part in volunteering report improved wellbeing and life satisfaction and lower rates of depression. As mentioned earlier, it is also so important for our local communities to thrive. One issue, particularly among younger volunteers, is lower reported satisfaction rates. A long-term focus on helping people to find opportunities that suit them would improve fulfilment and increase the retention of volunteers. Trying to maintain volunteer numbers, as well as recruiting new volunteers, is a constant challenge for charities.
The good news is that willingness to volunteer remains very high. If we can address some of the barriers that prevent people from feeling that they can volunteer, there is untapped potential in the people who are willing to do so. According to the national survey on the volunteer experience, the top two most cited reasons for people being encouraged to volunteer is that they could be flexible with the time they committed and flexible with how they get involved, such as volunteering from home. It is therefore encouraging to see that those reasons can be addressed, with the data showing that flexibility in how people volunteer is increasing, and I know many charities in Bath are eager to be a part of that.
Volunteers carry out incredible work to help support non-statutory services. It is therefore wonderful to have a debate that shines a light on the subject and, once again, to say thank you to the thousands and millions of volunteers across the country who are helping to make our society better and richer.
Richard Foord (Tiverton and Honiton) (LD)
It is a privilege to serve under you as Chair, Ms Nokes—forgive me, I meant to say that it is a privilege to serve with you in the Chair. I should say first up that it would be tempting to just list the thousands of volunteers I represent in mid and east Devon. However, I will not do that because if I did, I know that I would miss some. Instead, I want to use a specific example that I know well: the Scout movement.
I am very grateful to Molly Taylor, who has done some research for all of us who wanted to speak in the debate on the Scout movement. I should say that I am grateful to the hon. Member for Stoke-on-Trent Central (Jo Gideon) for applying for the debate, and for pointing out how some people have got out of the habit of volunteering. The pandemic had an effect: on the one hand, it was really good for some people because it got them involved in their communities and volunteering to support others; on the other, it meant that those people who had volunteered for decades were given the opportunity to stay away and reflect on the volunteering that they had done.
Looking at the Scout movement in particular, there were 155,000 volunteers—both adults and young people —in 2020, and that dropped to 140,000 in 2021, but it has now been partly restored to 143,000. For me, the real crying shame is that there are 100,000 young people on the waiting list who cannot join a Scout group for want of another 40,000 adult volunteers. I know from my own involvement in the Scout movement, both as a young person and as a volunteer, that it can be really transformative for young people. It is a movement that exists for people of all socioeconomic backgrounds and all academic abilities.
For example, from what I have seen with Cullompton Scouts, we might find young individuals who do not perform particularly well in an academic setting, but once we put them into an outdoor environment, they really thrive and show their leadership potential, and that is really brought on by people who volunteer—people like James Buczkowski, who is the group Scout leader of Cullompton Scouts. I would like to give a couple of other examples as well: Helen Turner was the group Scout leader of Honiton Scouts and she has been recognised as an honoured citizen of Honiton for her 32 years in that role. I should say that, if one is approached and asked to volunteer for something like scouting, they might not anticipate that it is going to consume that much of their life. Actually, it is the pleasure of volunteering that keeps people in it and doing it for so long. James Bicknell, from Willand Scouts, is a former officer in the Royal Navy who has taken his public service ethos from his workplace into his time off, and he has really imbued that in the young people with whom he is working. Scouting can be really transformative for young people, and that gives a great deal of satisfaction to the adults who are involved.
Sometimes, the organisation and structure of some of the volunteer organisations that we have heard about today can lead others to suppose that the volunteers are in fact paid. That is certainly true for the Scout movement because it is uniformed and it all looks very formal. There is sometimes an assumption that there must be some remuneration in the background or even the payment of expenses. I was interested to hear about the idea that the mileage allowance rate should be uplifted, which strikes me as very sensible for all manner of workplaces. It probably would not affect everybody in the volunteer environment because a lot of the volunteers I know do not claim expenses, or will never have the opportunity to do so. That would probably detract from why they do it—the love of volunteering and the satisfaction it gives them.
It would very easy in this debate to talk about only the upsides and to shy away from some of the things that go wrong in volunteering. In lots of volunteer organisations, there have been incidents and accidents; there have been tragedies. For that reason, volunteer organisations now have quite strict health and safety safeguarding rules, and it is quite right that they do. Again, however, it is a tribute to the people who get stuck into such activity that they are willing to take on that responsibility, because their shoulders are broad enough to do so even though they do not get anything out of volunteering and are opening themselves up to greater liability in this age of litigation.
Why do they do it? I suggest that it is because of the outcomes. Again, if we talk to the people involved in scouting, they say that the paperwork might sometimes be a chore, but they volunteer because they see young people grow and thrive. That probably explains why when the Royal Voluntary Service polled people on what they get from volunteering, 49% of respondents said that they become happier, 52% said that they feel more connected to their community and 56% said that they feel more fulfilled.
Richard Thomson (Gordon) (SNP)
It is a pleasure, Ms Nokes, to serve under your chairship today.
I also take this opportunity to congratulate the hon. Member for Stoke-on-Trent Central (Jo Gideon) on securing an uplifting debate to conclude the week. In her opening remarks, she captured very well indeed the broad sweep and scope of volunteering, and the contribution that it makes, not only to the communities that benefit from it but to the volunteers.
I cannot possibly begin to try and namecheck everybody in my constituency of whom I am aware, and there are many more of whom I am not aware who make that kind of contribution. I am sure that all Members are in exactly the same situation. However, I will just mention three groups, just to give a sense of the scope of volunteering in my constituency.
There is the Gordon Rural Action group, which in many ways fulfils the functions that many of us would recognise as being the functions of the citizens advice bureaux. It does a power of work through various initiatives and through direct help to reduce social exclusion and tackle poverty, particularly in the more rural and outlying parts of my Aberdeenshire constituency. There is also the Ellon and District Men’s Shed, which I very much look forward to visiting next week. There is also the committee that is the powerhouse behind the Victoria Hall in the town of Ellon.
The Victoria Hall in Ellon was a council-owned asset. It is a very handsome building, but it was a bit unloved; it was not really being used to its full potential. There was a community asset transfer. A really go-getting committee of local people got behind the scheme and now the building is block-booked for dancing, exercise classes and just about anything that anyone could imagine; it has even been transformed into a cinema, with all the digital projectors and everything else. The volunteers have really seized that opportunity and the Victoria Hall is now a beating and thriving hub of the town in many respects, breathing life back not just into the building but into the town.
There are also the many Rotary clubs across the district. Before life got busy with parenthood and politics, I was a very proud member of the Rotary club in Oldmeldrum and every year, through a variety of activities, we raised thousands of pounds to support both local charities and international charities. We supported the efforts of Rotary International to eradicate polio around the world. We also embarked on many other projects locally, which were also able to gain significant financial backing from other partners. We ran mock job interviews at the local school; we organised cookery and music competitions for young people; we sent young people on outward-bound educational courses, so that they could understand their own potential as individuals; and the more green-fingered among our number tended to the community garden and cut the grass at the old folks home. In addition, thanks to the combined efforts of Rotary clubs across the north-east, we put on the Haddo House egg hunt, which I think is still the single largest free public event in the north-east of Scotland and which is beloved by generations across the region.
Individual effort is crucial, but the organisations are important because they match an individual’s willingness and energy with the opportunity to contribute positively. That is good for the organisations and it is most obviously good for the broader community, but—as we have heard —it is also excellent in many respects for the individuals because of what they get out of such activity. To all the volunteers and those who help to enable volunteering, I add my heartfelt and sincere thanks for everything they do and all they contribute to the common good.
There is a long and proud tradition of volunteering. We are all used to the idea of the third sector and charities providing services in our communities with the help of volunteers, and with or without the help of Government money. There is nothing intrinsically wrong with the idea that the Government should help to encourage and enable individuals to step in and help to do things that the state cannot, or that private business will not or perhaps should not.
When we think of volunteering in proximity to the public sector, it is probably of something like the Royal Voluntary Service running the cafés in our local hospitals, as my mother used to do at the Western General in Edinburgh, or perhaps a community transport service helping people to get around the area, rather than filling in for the full-time professional agencies of central or local government. We can also think more broadly of the work of the retained firefighting service or special constables.
The Royal National Lifeboat Institution, for example, has always relied on volunteers. The work of first responders in assisting the ambulance service across rural parts of the country has helped to save countless lives in situations where minutes really can be the difference between life and death. Volunteering brings a great deal to the table that central and local government can never be able to do and should never be expected to do. It is about making sure that to get the added benefit, we help people to have the time to give and offer them suitable outlets through which to give it.
The hon. Member for Stoke-on-Trent Central made some extremely good suggestions on how volunteering could be incentivised. I think we would possibly all agree that we live in a society where many people are underworked and many others feel greatly overworked. A lot can be done in that space to assist more people who would welcome the opportunity to volunteer.
For some time, we have had the right to ask for flexible working, even if there is no entitlement to always get it. That right at least exists, but it is much harder for many small businesses or small and medium-sized enterprises to support an employee in that, no matter what other benefits that individual might get and how they might grow in the process. Even something as basic as offering greater support to employees to allow those who wish to volunteer or who need to work unconventional hours to do so—whether that is for volunteering in its purest sense or for caring responsibilities for family, a child or an older relative—could transform not just the economy, but the quality of life for millions and millions of people.
It seems incredible that until comparatively recently, someone claiming unemployment-related benefits could have been penalised through the withdrawal of benefits if they volunteered for more than 16 hours, when a volunteering position could have given them purpose and helped to build skills and confidence, which would help everybody. I am delighted that the rules have changed. Benefit claimants are now able to have their volunteering commitment recognised, and that is allowed without the penalties that existed previously.
However, there is still more to do in this space. I find myself asking why some of the most experienced in our workforce find it so difficult to scale back their hours as they approach retirement without jeopardising their position in the workplace or future pension entitlements, depending on the rules of the schemes that apply to them. Not only does continuing with such inflexibility create a disorientating shock for some people when they eventually leave the workplace on retirement, but it deprives people of the opportunities to find future roles in communities, try things out and transition to what life at the end of a career and after work might look like. It deprives people of the opportunity to transition smoothly into the post-work environment, which would enable them to do something worth while, while also helping others to make the most of what life has to offer.
If we want to look at it this way, we have quite a big society—to use a phrase that was in vogue some years ago—but we do not make that society bigger or better by making the state smaller. We could use the power of the state to help to grow that society and allow people to get more out of their life and their contribution in work and in the community, to the great benefit of all.
In June 2021, I took part in a Westminster Hall debate on the community response to covid, and it is right that a lot of people volunteered and rushed to the fore in that crisis. It is saddening that much of that volunteering effort seems to have tailed off, because part of my hopes for building back better was certainly to build back better by harnessing the good will, commitment and community spirit that came to the fore during that time.
I will conclude today, much as I concluded then, that it is often in the worst of circumstances that we find the best of ourselves. Community and volunteering are intertwined with one another and with the understanding that each of us is part of something much greater and bigger than ourselves, and that our greatest calling in life, whatever we do, is to be called and to serve others. Thank you to our volunteers, thank you to the hon. Member for Stoke-on-Trent Central for securing this debate, and I thank everybody for their time.
Sir Chris Bryant (Rhondda) (Lab)
Ms Nokes, there could not possibly be a better way of spending this afternoon than taking part in a debate under your Chair. As you pointed out to me earlier, it is not just a privilege, but a massive privilege to be sitting here taking part in this debate with you in the Chair. I pay tribute to the hon. Member for Stoke-on-Trent Central (Jo Gideon) for bringing us to this debate.
However, I am scandalised by every single one of the contributions so far, because the largest number of volunteers who are out today are probably volunteering for political parties, and they have not even got a mention yet. They are the people who go out in sun and rain, in foul weather and fine. They sometimes get spat at—I have been shot at on one occasion. They get abuse, and sometimes they get people giving them a thumbs up, but they do it because they believe in the political system and in democracy. We all know that not one of us would ever be here if it were not for the contributions of volunteers in our political parties up and down the country. They will be far too busy today, but I put on record on behalf of us all, I am sure, our tribute to the volunteers in our political parties who do it for no other reward than the things that they believe in and trying to make a better world and a better country, in their individual ways.
I also pay tribute to the hon. Members for Bath (Wera Hobhouse), for Tiverton and Honiton (Richard Foord) and for Gordon (Richard Thomson). I think we have all had the same briefing note from the Scouts, so I will not repeat anything; that would seem rather otiose, and you might rule me out of order, Ms Nokes. I disagree, however, with the Members who said that they are not going to list all the volunteers in their constituency, because I will refer to some from mine. I represent one of the poorest constituencies in the land and, one could argue, in Europe, according to some socioeconomic indicators.
The truth is that there are politicians who believe that private is always good and everything should be left to the market, and that public is bad and we should try to shrink the state. There are also those who believe that private is always bad because it is based on profit, and they want everything to be done by the state. I have never subscribed to either of those views—it is horses for courses—but I believe that the third sector is absolutely essential in making either of the other two sectors work. In fact, most of what we would consider as the welfare state—schools, hospitals and so on—sprang out of the churches and the voluntary sector originally. The NHS simply would not be able to function in most parts of the country without the support of volunteers. I do not necessarily mean people fundraising for scanners, running events locally or whatever, but all the additional bits that make the recuperative process possible for so many patients. Once they have had what they get from the NHS, they need that extra bit from the voluntary sector. If I look at my patch, organisations such as Valleys Kids have probably made more of a difference than any other organisation to the life opportunities of some of the kids in the most difficult families and parts of the country.
Wera Hobhouse
Does the hon. Member agree that the charitable sector is so good at making the most out of every penny and doubling and tripling the amount invested by capturing the volunteering effort? However, they need a bit of seed funding and not to always be under threat of that funding being cut.
Sir Chris Bryant
Absolutely. One of the difficulties comes when they end up with a memorandum of understanding, or some kind of contract with the local authority, or the local health board as we have in Wales—it is a different structure from England. They are then effectively part of the state sector, which makes them less flexible and less able to adapt to situations around them. That has been a worrying trend over the past 20 to 25 years. Maintaining that sustainability for them is the real challenge. That is one of the problems facing Valleys Kids at the moment: trying to make sure that they have a strong financial future.
There is also Sporting Marvels. Sometimes we refer to “charities”, which is quite a strict definition. But actually, lots of people volunteer for things that are not charities, but that, none the less, have a charitable end result, such as all the sporting bodies in my patch. That includes people who turn up as coaches on a Saturday and a Sunday morning for the football teams or for Ferndale rugby club. I will not go through all the rugby clubs in the Rhondda, but I am a patron of Ferndale rugby club, which has its presentation dinner in a few weeks.
So many of these organisations do not get any financial support from the state. Many do not even get charitable status and, for them, it is an even more complicated process. As has already been alluded to, the rules about what people can do—quite understandably, if they are working with children and so on—are onerous, complicated and difficult. Having done work on acquired brain injury, I am conscious that we want any coach working in football, rugby or cycling to have a full understanding of how the new rules and protocols work and when they should take a child off if they have had a concussion. All these things make people think twice about whether they should be engaged in volunteering. That is why the state sometimes has a role in trying to make sure that the process is as simple as possible and that the charities and all the different organisations have access to good, easy and readily understandable advice.
I will mention one other organisation, the Rhondda Polar Bears, of which I am also a patron. The charity teaches kids with a variety of different disabilities how to swim. I will probably see them later this evening at Ystrad sports centre, if I get back to the Rhondda in time.
Richard Foord
Given that the shadow Minister is a trustee of a charity, does he recognise that it can be beneficial for employers, including those in the private sector, to release staff for work in the voluntary sector?
Sir Chris Bryant
Yes—the next word of my speech was going to be “trustees”. That is a very important point. Obviously, school governors, magistrates or reservists in the armed forces have specific rules about what they can expect from their employers. Many employers are absolutely delighted to be able to support the work of their staff, although it is obviously much more difficult for those working in small companies. However, the point is made about trustees as well.
I was actually going to make a slightly different point about trustees. For all I know, it may be easy to find lots of trustees who know how to deal with the banking system or charitable law or whatever in Surrey; it is more difficult in some of the areas that most need that support. That is why organisations such as the NCVO and the Prince’s Trust have been really important in providing mentoring and support in areas such as mine in the south Wales valleys, where we would love to have more trustees. We often end up getting the same people to be the trustees of all the different charities and organisations, such as the Rhondda Arts Festival, which is coming up at the end of June. I am a trustee of that as well. Although I do not have any financial interest in that, I should declare it none the less.
There are also the individuals. Stan Power is no longer with us, but he was a veteran—he served. He took it upon himself for many years, as a member of the Royal British Legion, to make sure that anybody with whom he came into contact who had ever been in the armed forces in the Rhondda knew of every single type of support that they were entitled to claim for. He did that entirely off his own bat, but obviously with the support of the Royal British Legion. He was an absolutely wonderful man who made life-changing possibilities for dozens and dozens of people in my constituency. The more we can enable a few more of those people in every constituency in the land, the better.
I want to refer to a charity that works across the whole country, because it exemplifies the kind of problems we have at the moment, as alluded to by others, and that is Headway. The Minister knows about Headway, which is a charity that works with people who have had an acquired brain injury.
One of the great things we have done in recent years, because of the Government’s brave decision in some cases to create major trauma centres, is that we have saved the lives of many more people when they have been in an accident, many of them with brain injuries. However, getting them the quality of life that we would be able to bring them if they had full rehabilitation is very difficult. All the different therapies in hospitals are very stretched, which is often why we rely for rehab on charities such as Headway, up and down the country.
Most constituencies will have a Headway group. Headway has 1,100 volunteers helping with rehabilitation, 500 more working at setting up branches and 400 working in the retail shops. That is an important part of the network that enables people to get back a quality of life, which is important for the whole of our economy. This is not a partisan attack, but unfortunately the Government do not know how many people in the UK are living with an acquired brain injury—it is just not a known fact. We reckon it is somewhere in the region of 1.4 million, and the charitable sector probably has a better idea than others.
Headway, however, is struggling financially. Many of its branches are worrying about whether they will be able to continue, partly because of a lack of volunteers, but mostly because of a lack of finance. Rehabilitation and the kit needed is often expensive. I hope that at some point we have a major review of how charities end up with their funding, and how we can ensure that they are sustainable into the future.
Several Members have referred to the fact that volunteering is good for people. We can certainly see that in Headway. Often, the person who takes someone to their Headway group will have had a brain injury 10 years ago, was looked after and had rehab, was re-socialised, found a family of people, and then volunteered, volunteered a bit more and a bit more, got a few days’ work, and now is the full-time staff employee. That is rehabilitation and volunteering at its absolute best. We could repeat that of every other kind of charity that we have been talking about.
Volunteering is good for people. It makes them feel useful. It allows them to gain skills, especially because they might have to retrain in areas where they did not have the skills at all in the past. It re-socialises people and makes them feel happier. I note the point made about people in their retirement—I am 62 and some in the room are slightly older than I am, and perhaps thinking about what to do in retirement—and volunteering is an important part of still feeling that we have something to contribute. Often, important skills can be fed back into the community by older people.
There are problems. The significant collapse in the number of volunteers has been referred to, from one in four people of working age to one in six in the past few years, and that is problematic. In 2022, 40% of charities reported that a lack of volunteers meant that they could not progress, could not grow or could not even commit to the projects that they were already engaged in. Some areas, as I said, have found that particularly difficult, because of the financial barriers. If someone is struggling financially and economically to put food on the table for their kids, then the cost of the bus or train fare—even if it is only £2.90, £4.60 or whatever—is prohibitive. Many people will feel reluctant to ask the charity for the money, so they end up not volunteering at all. I would love it if there were some form of bank where all that need could be met. Perhaps that is a project for someone for the future—a particular charitable venture.
Local authorities have been facing enormous financial struggles. In my own patch, Rhondda Cynon Taf has found it difficult to maintain its financial commitments, let alone increase them in line with inflation, as has been needed over the past few years. That has meant that lots of charities have struggled. On top of that, people are not using charity shops so much, which has also had a knock-on effect on their income.
As I think has already been referred to, the Scouts have something in the region of 100,000 young people on waiting lists. Would it not be brilliant if we could get every single one of them into the Scouts? I am a scout from many years ago—I have a few badges, which I will not go into. We would love it if we could have more troops in the Rhondda, because there are kids who would like to do it. The same goes for the Sea Cadets and a whole series of other organisations. Those organisations give kids a sense of purpose and an idea of themselves; they provide a set of extracurricular of activities that offer a different form of learning. They give them confidence. In many ways, they are very similar to some of the creative industries. I would dearly love for the Scouts to be able to recruit far more volunteers.
I have a few final points. The first is about philanthropy. I sometimes look to other countries. On Tuesday night, I had dinner with Edward Burtynsky, a Canadian photographer and an absolutely wonderful artist. He said that in Canada, it is axiomatic that, if someone becomes a billionaire, they will become a massive philanthropist, set up a charity and give to a wide variety of different charities. That has not become the norm in the UK in the same way as it has in America, Canada and some other countries. There is still room for us to explore how we can incentivise that even more, so that it is part of our national psyche.
The second point is about companies. Several hon. Members have referred to the importance of companies being passionate about their local communities. They know that they derive their wealth from those communities, and if they want to incentivise their staff, they will want to play an important part in their local communities. Some companies have been financially strapped, because of energy costs and things like that. The more we can praise those companies that make a radical difference in their local communities, the better. Perhaps we need to think of new ways of badging and thanking them for the extraordinary things they have done.
My final point is about the role of the state in all this. At this particular moment in British politics, I sometimes feel quite depressed, because it feels as if so many parts of what we relied on in our past just do not work as well as they used to. Some people will say, “Let’s try to recreate the social fabric of the 1950s,” but I do not think that that works. The world has moved on: the internet, social media and so on have completely changed things. However, I do want to return to that sense of public engagement—the sense that we achieve far more by our common endeavour than we do by going it alone. I could make the party political point that, if we press the reset button in a general election, perhaps some of that will be achieved. But what is even more important—and politicians and the state play a role in this—is ensuring that the whole country feels engaged in the national project, and that the whole of the local community feels engaged in the local project. We cannot do that without people volunteering for the common good.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)
It is a pleasure, as ever, to serve under your chairmanship, Ms Nokes. I, too, pay tribute to my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon) for securing this important debate.
During the debate, I was reflecting on my portfolio in DCMS, and thinking that many of the things for which I have responsibility would not function were it not for volunteers up and down the country giving of their time. The hon. Member for Rhondda (Sir Chris Bryant) was absolutely right to mention sport; the biggest cohort of volunteers is in the sports world, and all those groups up and down the country keep our nation active. So much of the youth sector, for which I have responsibility, is run by volunteers, particularly when it comes to supporting disadvantaged young people who need extra support and mentorship. I also thought about the civil society sector. Having worked in the hospice movement, I know that there is no way that we could have raised the money we needed were it not for people giving of their time. Then there are ceremonials. The coronation was a classic example of thousands of volunteers giving their time and ensuring that that spectacular event ran incredibly smoothly.
I, too, have to mention constituency organisations, although I am terrified of leaving any of them out. There are groups such as the Live at Home schemes that look after people of an older generation; Britain in Bloom groups and litter groups that look after our environment; and of course the sporting groups, which I have mentioned. I am also proud to be part of the Guiseley Lights organisation, which puts on huge street parties every year. We are enabling charities to raise the money they need to continue their work. I thank so many of the volunteers: Clare, Jim, Caroline, Steve, Lee and Vicky. Caroline runs our prosecco stall, and I do wonder how much of it she sneaks every now and again.
I also join the hon. Member for Rhondda in thanking the political volunteers out there today. It is a good point well made. It is not easy for them at times, and I am really grateful.
I also want to mention people who support work in the health sector. Ms Nokes, I understand that your dad is a volunteer car driver enabling elderly people to get to their medical appointments, even though he is 81 years of age, which is fantastic. That is precisely why I and the Government are committed to growing volunteering, trying to give people more opportunities to volunteer and celebrating the millions of people who already make a difference by giving up their time.
I want to recognise the power of volunteering. As others have said, it is a cornerstone of our society, and I am grateful for the selflessness we see. However, quality volunteering also requires effort and support, so I also pay tribute to the people who make volunteering happen and work tirelessly with volunteers day in and day out.
As others have mentioned, this year marks the landmark 40th anniversary of Volunteers’ Week. I know all Members will join me in praising the millions of volunteers up and down the country for the difference they make. This year’s Volunteers’ Week will culminate with the second Big Help Out weekend, which gives people the opportunity to take part in volunteering in their local area, many of them for the first time. It is a fantastic way of introducing people to the benefits of volunteering. I am glad that we have been able to provide funding to enable that. I was delighted to be at the launch of the Big Help Out campaign earlier this year, and look forward to seeing even more people take part in it over the course of the weekend. I hope many hon. Members here will do so too.
However, recognising volunteers should not be limited to once a year. That is why my Department works closely with No. 10 to co-ordinate the Points of Light award, through which the Prime Minister recognises outstanding individuals who work in their community inspiring others, too. That is an essential part of telling the story of individual volunteers from around the country and the remarkable efforts they make. I encourage hon. Members to look at DCMS’s social media, where they will see some really inspiring stories.
It is not enough just to celebrate volunteering, and we certainly cannot take volunteers for granted. My Department works to strengthen our knowledge about volunteering, including what motivates people to volunteer, and, as others have mentioned, the barriers that prevent them doing so. We know that recruitment and retention is an increasing problem, particularly for small local charities. There continue to be barriers to more people becoming involved in volunteering, ranging from a lack of awareness of the volunteering opportunities that exist to simply not having enough time.
As others have said, the community life survey found that 25 million individuals volunteered at least once in the preceding years. That is great, and I am very proud of those figures, but it is true that they have been in gentle decline over the last decade. A lot of research is being carried out on why that may be and what we can do to try to reverse that trend. One such piece of research is the “Time Well Spent” report that others have mentioned, which was produced by the NCVO and funded by my Department. It is well worth looking at the findings of that research in depth. We can see from that and other studies that the nature of volunteering is shifting. Broadly speaking, people are looking for opportunities that are far more flexible, easier to start, and more connected to their communities.
That is why we are also doing things such as the national youth guarantee, which is providing to every young person, by 2025, something to do after school, an opportunity to have an experience away from home and, crucially, an opportunity to volunteer, in the hope that that will then be something that they continue to do throughout their life. A number of people mentioned the Scouts and the Guides, and I am pleased that, as part of that initiative, we have given £16 million to uniformed organisations. I am also pleased to say that new groups are being set up. We have now provided another 4,500 new places, but I recognise that there is a big waiting list. I am glad to see that we have representatives of the Scouts in the Public Gallery, because in my interactions with them, I have been inspired by their dedication and I want to see more of those opportunities for young people.
We also need to recognise and celebrate the huge number of people who support others in their community of their own volition and who might not think of themselves as volunteers. As has been said, we saw that during the pandemic, when people wanted to ensure that their neighbours were safe and got the food they needed. But a lot of that was co-ordinated through local organisations and charities, and I am grateful to them. In my constituency, I think of AVSED—Aireborough Voluntary Services to the Elderly—which did so much during that time.
I have already mentioned the importance of rewarding and recognising volunteers through the Points of Light awards and the honours system. We know that the desire to make a difference is the most important motivation for people getting involved in their communities. Beyond our work to recognise volunteers, we are providing funding and working with an extensive range of partners to ensure that there are clear entry points for volunteering. Two years ago, as my hon. Friend the Member for Stoke-on-Trent Central mentioned, the Know Your Neighbourhood Fund was launched, and that provides £30 million, including £10 million from the National Lottery Community Fund to directly support charities and community organisations to widen participation in volunteering and, crucially, tackling loneliness. That is happening in 27 of the most disadvantaged areas. I am thrilled that we are able to support those charities and communities in that way, in the hope that that will help us to build the infrastructure we need and create those opportunities to volunteer.
One example is the Vision for Volunteering. That is a sector-led initiative to develop volunteering in England over the next 10 years. The Government have supported the vision from its outset, sitting on its advisory board and lending our support, and funding, to take this work forward, because it recognises that the nature of volunteering is shifting and we want to help communities to adapt to that. For example, one theme of the vision is to increase equity and inclusion, ensuring that volunteering is accessible and welcoming to everyone, everywhere. I was thrilled to meet just yesterday some of the partner organisations, alongside other agencies that support civil society. We were specifically talking about the crucial role that these support organisations play in providing the infrastructure for volunteering. We are looking forward to working collectively to see what we can do to help them in what are sometimes very challenging times.
The British public’s enthusiasm for volunteering was, as I said at the start of my comments, seen very clearly at the coronation of His Majesty the King, and it was exactly that that brought about the Big Help Out. I am grateful to all those organisations for wanting to carry that programme on so that we can bring about a sustainable volunteer network.
I want to respond to some of the points that were made and particularly the request for paid leave for volunteers and trustees. I do understand where people are coming from, but as I think others have mentioned, there is a danger that that could become a problem, particularly for small and medium-sized businesses. However, we do want to see employers develop their own corporate responsibility programmes and to encourage businesses, the public sector and charities to consider the role that employer-supported volunteering can play as part of their impact on society. We do try to encourage that and show the best examples of how that actually benefits the business, often.
Others asked for reviewing and uplifting of the approved mileage allowance payment. Under that scheme, organisations are able to reimburse volunteers for using their own vehicle while volunteering. They are able to agree what reasonable out-of-pocket expenses look like. However, costs of using their own vehicle are often worked out by using His Majesty’s Revenue and Customs’ mileage allowance payment rules, which Treasury is responsible for setting, and apply more broadly than just to volunteers. However, I was pleased that the Government announced at the spring Budget that we will keep the 5p fuel duty cut, which I hope will help in this area.
More broadly, looking to the future and thinking about the vision for volunteering, as I mentioned earlier, my Department is working in partnership on this. It is a strategic voluntary sector initiative to lead ongoing support and development of volunteering in England. That partnership is made up of DCMS, NCVO, the National Association for Voluntary and Community Action, Volunteering Matters, the Association of Volunteer Managers, and Sport England. I am pleased to say that we have been able to provide £600,000 to fund that work, and I look forward to seeing how that develops.
Others mentioned social prescribing. As part of our national sport and physical activity strategy, we are working closely with colleagues in the Department of Health and Social Care because we see social prescribing as a way of getting people more active. Volunteering will, by its very nature, be a big part of that, so we will continue to work in that area. Of course, the Department leads cross-Government volunteering policy, and will continue to do so.
The hon. Member for Rhondda mentioned philanthropy, and he is absolutely right; there is a lot that we can learn, and I am pleased to say that, as a Department, this is an area of focus. We see pockets of it where it goes well—in London and the south-east—but I want to see that much more broadly across the country, and we will continue to work in that area.
This debate has demonstrated that we all share the same ambition; we want to celebrate volunteers and what they do. I am grateful to hon. Members for highlighting those things, especially in the run-up to the 40th anniversary of Volunteers Week, so that we can celebrate and recognise the contribution of the millions of people who dedicate their time and support their communities.
Jo Gideon
It has been an absolute pleasure serving under your chairmanship, Ms Nokes. I think that we have had a very positive debate. We have all had the opportunity to praise some of our local charities, volunteers, and organisations that work with volunteering. As the hon. Member for Bath (Wera Hobhouse) said, volunteers come in all shapes and sizes.
I have to slightly disagree with the hon. Member for Tiverton and Honiton (Richard Foord) about the mileage allowance. Some people can afford to pay for their own petrol, or diesel or whatever, but if they cannot, that should not be a barrier to them being able to volunteer when they want to.
We have covered a huge range of topics, and I do not want to delay people longer, so I will just say that this has been enormously positive. To misquote Dylan Thomas, I do not plan to go gentle into that good retirement, so this is something that I will continue to fight for into the dusk. I very much thank everybody who has taken part. And thank you, Ms Nokes, for your chairmanship.
Question put and agreed to.
Resolved,
That this House has considered the contribution of volunteers.
Written Correction
(6 months, 3 weeks ago)
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Ministerial Correction
(6 months, 3 weeks ago)
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Levelling Up, Housing and Communities
(6 months, 3 weeks ago)
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Felicity Buchan
…Clearly, I regret the uptick in homelessness—it is very serious and the Government are doing everything to address it—but the most recent homelessness statistics, published yesterday, show that over 17,000 households had homelessness prevented in the fourth quarter of 2023, and almost 50,000 homeless households were supported to secure accommodation in that same period.
[Official Report, 1 May 2024; Vol. 749, c. 149WH.]
Written correction submitted by the Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for Kensington (Felicity Buchan):
Felicity Buchan
…Clearly, I regret the uptick in homelessness—it is very serious and the Government are doing everything to address it—but the most recent homelessness statistics, published yesterday, show that over 17,000 households had homelessness prevented in the fourth quarter of 2023, and 16,550 homeless households were supported to secure accommodation in that same period.
Written Statement
State Threat Prevention and Investigation Measures: 20 December 2023 to 19 March 2024
(6 months, 3 weeks ago)
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The Minister for Security (Tom Tugendhat)
Section 55(1) of the National Security Act 2023 requires the Secretary of State to report to Parliament as soon as reasonably practicable after the end of every relevant three-month period on the exercise of their STPIM powers under the Act during that period.
STPIMs were introduced through the 2023 Act and came into force on 20 December 2023. There have been no STPIM cases during this first reporting period.
[HCWS439]
House of Lords
NHS England: Ovarian Cancer
(6 months, 3 weeks ago)
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Baroness Hayter of Kentish Town
To ask His Majesty’s Government what assessment they have made of NHS England London stating that “anyone with ovaries can get ovarian cancer” in a social media post rather than referring to “women”, whereas at other times NHS England refers to “men” in relation to prostate cancer; and whether this wording has been market tested with women, including those for whom English is a second language, to ensure that it is fully understood.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
We are writing to NHS England about NHS London’s social media post, to reiterate the expectation that biological sex should be front and centre of all health-related information. Removing language around biological sex has the potential for unintended health consequences. The Government are committed to upholding the rights of women and girls, which is why we are consulting on updates to the NHS constitution, including the use of clear language based on biological sex.
Baroness Hayter of Kentish Town (Lab)
I warmly welcome the Minister’s response, which is probably welcomed across the House. Given the Government’s welcome assurance that “single-sex wards” means “biologically single-sex wards”, will he also discuss with the GMC the video on its website that advises doctors to ask trans patients which wards they would prefer to go in? Perhaps he could also talk to the GMC about its practice of allowing doctors to change their gender on the register without any advice that they should inform patients of their biological sex. Although I approve of the Government saying so, it is very hard for patients to ask for a doctor of a particular sex for intimate care if they do not know the sex of their doctor.
Lord Markham (Con)
First, I thank the noble Baroness for all her work in this space. I will continue to work closely with her, including by writing to and meeting the GMC as necessary on all these matters. On her second point, while I respect that many clinicians may wish to keep their information private, we have to understand that, for many people, it is the patient’s right to be treated by someone of a particular biological sex and to know what that is. We have to make sure that those feelings and understandable sensitivities—which are sometimes religious—are catered for.
Baroness Burt of Solihull (LD)
My Lords, I totally agree that the wording looks a bit odd, to say the least, and that we should give special consideration to the wording for people for whom English is not their first language. However, there are tens of thousands of trans and non-binary people who would be missed out if we did not spell out that trans men can still get ovarian cancer and trans women can get prostate cancer. Does the Minister agree that what we need is clear, incisive language, so that everyone can be aware of the health risks that apply to them?
Lord Markham (Con)
Yes, absolutely. We all come at this from the perspective of making sure that health is front and centre, which is why the primary descriptors should be “man” and “woman”, as I think we all agree. Beyond that, we should clarify that “woman” may mean a “person with ovaries”—but the primary descriptor is “woman”. I hope that we can all agree on that.
Baroness Meyer (Con)
My Lords, given the lack of specific data on the consequences of NHS England’s adoption of gender-neutral language and services, does my noble friend the Minister agree that the millions of women who have been affected should have been consulted before such measures were implemented? Does he agree that, if medical records fail to document patients’ biological sex, clinicians would be at risk of giving trans people the wrong medication?
Lord Markham (Con)
Yes. Once again, I come at this from the perspective that health is the primary factor here. Clearly, a person’s biological sex is a key part of the information on their record that any clinician needs to know, so that absolutely needs to be primary.
Lord Cashman (Lab)
My Lords, I will make a simple point with which I hope the Minister agrees. Is it not to be welcomed that we come up with language that is inclusive and reaches as many people as possible, as the noble Baroness, Lady Burt, suggested, and as is indicated in the framing of the information we are discussing?
Lord Markham (Con)
Yes. To reiterate, I think that we should always use “man” or “woman” as the primary descriptor. For people with English as a second language, “woman” is very understandable. We can then be inclusive by saying a “person with ovaries”, so that we are absolutely clear. My remit here is health, so I want to make sure that most people, especially if English is their second language, understand who we are referring to when we say “woman”.
Lord Patel (CB)
My Lords, I am slightly reluctant to stand up and get involved, but I have done so previously, and I will continue to support the campaign led by the noble Baroness, Lady Hayter, to make sure that the words “woman” and “mother” are not removed from our language—I absolutely support that. I will muddy the waters a bit. There is, in medical terms, a syndrome called androgen insensitivity syndrome, which occurs in about two to five per 100,000 births. The person born is registered at birth as a female, because they have the phenotype of a female and external genitalia that resemble those of a female. They grow up as female, and the diagnosis is often not made until puberty, when they do not menstruate—but they develop breasts. They do not have ovaries. They often identify themselves as female for the rest of their lives, and they occasionally get married. I have looked after such a person myself. They are registered as female, they do not have ovaries and they sometimes have internal testes, which can become cancerous. So it is correct that only people with ovaries can develop ovarian diseases, including ovarian cancer. As I said, I have muddied the waters.
Lord Markham (Con)
I am not sure that there was a question there, so I might take the easy option of thanking the noble Lord for his comments—and for maybe muddying the waters—and moving on.
Lord Collins of Highbury (Lab)
My Lords, all noble Lords have raised the issue and the Minister has put it quite rightly: health has to be the primary consideration, language is quite important, and how do we reach difficult communities who are isolated, whether for community or religious reasons, and so on? On a visit to Kenya last year, I was able to see innovative practices. Women living with HIV are 60% more likely to get cervical cancer, so local treatment centres were being used as a way of testing and screening so that comorbidity was properly addressed. The success of these campaigns was because they were backed up by using individuals trained in the community to empower and educate their community. They provide a critical service by building trust and confidence, because many people are reluctant to be tested and screened in the way that noble Lords have been talking about. That innovation has been incredibly successful in Kenya. Does the Minister agree that we can learn from that sort of thing and start doing it in this country?
Lord Markham (Con)
Absolutely, and I hope noble Lords have seen that I am keen to learn from wherever. I would be interested to understand more in this case. As I think we are all saying in these arguments, it is about making sure that we are being sensitive and inclusive in language, but that we are also being very clear in our language about what we mean so that health always comes first.
Lord Allan of Hallam (LD)
My Lords, I recently looked at the prostate-specific antigen screening programme advice, which was very good and met the requirements that the Minister has set out. However, I got there only because of a Peer-to-Peer networking episode, where I bumped into another Peer who said, “You really need to go and look at the PSA screening”. It struck me then that this journey into screening programmes is still very confused and ad hoc. Will the Minister look at that and at how we can make sure that whoever you are and whatever your gender, your age and your other risk factors, you get the direction you need into the right screening programme?
Lord Markham (Con)
I thank the noble Lord; he is always very good at bringing up some of those cases. I will look into it and make sure that we do that.
Baroness Fox of Buckley (Non-Afl)
My Lords, I welcome the untangling of linguistic confusion and the implications for policy. However, when the Minister says, “When we say ‘woman’, we all know what we mean”, I am not convinced that that is true in policy circles. Increasingly, inclusive linguistic demands are that “women” includes men who self-identify as women, which means that by-women and for-women provision, such as rape crisis centres, domestic abuse support and so on, is actually not women-only at all. When the Minister says, “We all know what we mean by ‘woman’”, can he make it absolutely clear that he means “woman” as in “natal woman” and not those who identify as women?
Lord Markham (Con)
I guess what I am trying to say here—again, always with my health hat firmly on—is that I want to make sure that when we describe something in a health sense, I want that person to know that we mean them because we are doing something which applies to them, often in the case of ovarian or cervical cancer. By saying “woman”, obviously in most cases that will make it very clear that it applies to them—particularly to those with English as a second language—and they know what that means. To make sure we are covering all the bases, I am very happy that we have that secondary descriptor of a “person with ovaries”. I am trying to cover all the bases in an inclusive way so that the health message gets through.
Nuclear Test Veterans: Support
(6 months, 3 weeks ago)
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Lord Watson of Wyre Forest
To ask His Majesty’s Government what support they provide to nuclear test veterans.
The Minister of State, Ministry of Defence (The Earl of Minto) (Con)
My Lords, we are grateful to all service and civilian personnel who participated in the British nuclear testing programme and contributed to keeping our nation secure. That is why, as recognition, in November 2022 the Prime Minister announced the Nuclear Test Medal. We are also funding projects to celebrate, support and memorialise nuclear test veterans.
In addition to the existing range of veterans’ support available, the Government have instigated further benefits through the Veterans’ Strategy Action Plan, which outlines over 60 commitments to be delivered by 2028, including access to housing and healthcare, maximising veteran employability and recognising historic advantage. Over two-thirds of these commitments have already been met.
Lord Watson of Wyre Forest (Lab)
I am grateful for that Answer, but the MoD was ruled to have acted unlawfully when it withheld Terry Gledhill’s medical records. That was part of 4,000 papers maintained as state secrets by the AWE at Aldermaston, which were then declassified and described by a Minister as being innocuous but which are now at risk of being locked away again after a security review by the warhead director at the MoD. I say to the Minister that there is a big, important reason why this matter has to be put right. We are about to invest £20 billion in the new warhead programme, and those of us who publicly defend the independent nuclear deterrent, on all sides of this House, will play their part in maintaining public trust and support for that project. Does the Minister agree that our job will be made much easier if all test veteran records are made public, apologies are made where appropriate, and compensation is delivered where necessary? We do not have a Bikini island this time; we have to defend public trust in the ethics of the new programme.
The Earl of Minto (Con)
My Lords, no medical records have been withheld from veterans before, during or after participation. Records can be accessed via subject access request under the Data Protection Act. The Atomic Weapons Establishment does not hold individual medical records. They are either held by the MoD or transferred to the National Archives.
Lord Alton of Liverpool (CB)
My Lords, does the Minister know that some 1,500 of the test veterans who are still alive, of the 20,000 who were affected, have attended meetings here in Parliament and have claimed that, because some records were incomplete, those records have not been made available to test veterans? Will he look at that specific issue? Also, given that sites such as Maralinga in Australia, where some of the tests took place, are still regarded as uninhabitable, does he not agree that this demonstrates that people who were serving Crown and country were placed in harm’s way?
The Earl of Minto (Con)
Yes, my Lords, I agree with that. It has been widely recognised. A lot of the data that is held is extremely historic and, at times, what the issue really is can get blurred. As I have indicated in previous Written Answers on this subject, my right honourable friend the Minister for Defence People and Families visited the Atomic Weapons Establishment in March to personally review these 150 documents that are being referred to and which allegedly relate to test veterans. He is committed to update the other place in due course—actually, in pretty short order. I do not wish to pre-empt that Statement.
Baroness Goldie (Con)
My Lords, the decision to award a Nuclear Test Medal is very welcome. The MoD endeavoured last year in advance of Remembrance Day to issue as many of these medals as possible. How many of these medals have now been issued?
The Earl of Minto (Con)
My Lords, I can. Just over 22,000 individuals come into scope. We have received 4,800 applications. Of those, 4,400 have been approved. An assessment is going on because of some of the complications I mentioned earlier. As of today, we have dispatched 4,345—2,569 to veterans and 1,776 to next of kin. Before Remembrance Day, which noble Lords may remember was one of the issues last year, we succeeded in dispatching 1,220. Priorities since then have been for the over-90s and those with a terminal disease.
Baroness Smith of Newnham (LD)
My Lords, in responding to the Question, the noble Earl talked about the commitments to the veterans of the tests but said that the information, if it is kept at all, is now very old—which is true, but so are the veterans. Does His Majesty’s Government really believe that a medal, or the no-fault compensation scheme under the War Pensions Scheme, is sufficient for those who were subject to tests and to bloods being taken, potentially without agreement? Is His Majesty’s Government really doing enough for the veterans who are still alive and their families, many of whom, unlike with other issues associated with war, will have been affected by miscarriage or birth abnormalities?
The Earl of Minto (Con)
My Lords, the opportunities for nuclear test veterans are the same as for all veterans who are now in civilian life. All veterans can seek support from the Veterans Welfare Service, which is MoD-managed. The nuclear test veterans who believe that they have suffered ill health due to service can apply for no-fault compensation under the War Pensions Scheme. There is also the war disablement pension, which is available to all veterans who served prior to 2005, including all nuclear test veterans.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, the time taken and the reluctance to give compensation in this case make it similar to the case of infected blood, and we see it again with the sub-postmasters. Has the Minister come around to the view that I am coming around to—that, irrespective of who is in government, there is a tendency in Whitehall to refuse compensation to people who deserve it? Is that not something we all ought to do something about?
The Earl of Minto (Con)
My Lords, the broad issue of compensation is very thorny. Obviously, compensation needs to be evidence-based and appropriate and it needs to follow the correct tracks. I do not believe that Governments, of whatever hue, try to slow down compensation. I think what they try to do is get it right.
Lord Tunnicliffe (Lab)
My Lords, is this not an example of the malaise that we have in the handling of veterans? Veterans are unhappy and we are in a bad situation with both recruitment and retention. Over 76% of veterans are dissatisfied with the Armed Forces compensation scheme and 500 veteran households are declared homeless every three months. Establishing an independent Armed Forces commissioner as a voice to improve service life and fully incorporating the Armed Forces covenant into law would give veterans the legal support that they deserve. Would the Minister support these measures?
The Earl of Minto (Con)
My Lords, all Governments take the issues of veterans extremely seriously. As I said earlier, the Veterans’ Strategy Action Plan is a further attempt to offer veterans additional support as they leave our Armed Forces, on employment, housing and all sorts of issues that are peculiar to veterans having served our country. It is only right and proper that we should continue to press those as hard as we possibly can.
Lord Lexden (Con)
My Lords, following the question from the noble Lord, Lord Foulkes, is it not the case that compassion should be the central consideration in the Government’s work to provide compensation? I hesitate to suggest it, but a little more compassion would be no bad thing.
Tees Valley Combined Authority: Best Value Notice
(6 months, 3 weeks ago)
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Lord Scriven
To ask His Majesty’s Government what consideration they have given to issuing a Best Value Notice to the Tees Valley Combined Authority, given the scale of the legal costs that its subsidiary the South Tees Development Corporation is likely to incur after losing a court case that it brought against PD Teesport.
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Swinburne) (Con)
All local authorities must comply with the best value duty to make arrangements to secure continuous improvement in the way in which their functions are exercised, having regard to a combination of economy, efficiency and effectiveness. Best value notices provide for early engagement with an authority that may be exhibiting indicators of potential best value failure. However, incurring legal costs alone is unlikely to trigger the issue of a best value notice.
Lord Scriven (LD)
My Lords, it is not just the case which is referred to on the Order Paper. The 26 recommendations of the Tees Valley Review relating to Tees Valley Combined Authority are not legally binding or enforceable. Last week, the current mayor cast doubt on his commitment to implement recommendation 22, which is to renegotiate the appalling 90:10 profit deal that favours the private sector after half a billion pounds of public sector money had been invested, when he said that it was a “great deal” and that he would do it again. Is it not time to stop relying on voluntary agreements, regardless of who the mayor is, and for the Government to issue an enforceable best value notice to protect the interests of local taxpayers?
Baroness Swinburne (Con)
The Secretary of State has requested a report on the progress with the action plan in six months, including encouragement to work with the Local Government Association and the Centre for Governance and Scrutiny. We have been encouraged by the mayor’s response that he will quickly implement all the recommendations. It is only fair and consistent that the mayor and the combined authority have the time needed to develop and implement action plans to respond to the recommendations in the review.
Lord Watts (Lab)
My Lords, if I had acted in the same way when I was a local authority leader, I would have been surcharged. Is it not about time that the mayor had the same sort of qualification, that he has to deal with his public money in the same way as his own money, and he should have fiduciary duty like local authority leaders have?
Baroness Swinburne (Con)
There is a strengthened governance code for all the combined mayoral authorities and all these types of devolved government. I am sure that, as we progress with this, we will see those governance systems start to work more efficiently and effectively.
Lord Shipley (LD)
My Lords, on 5 March 2024, the Government issued a best value notice to the West of England Combined Authority. On 24 January 2023, it issued a best value notice to Cambridgeshire and Peterborough Combined Authority, and it renewed that on 30 January 2024. Why are the Government refusing to implement an enforceable best value notice on Tees Valley Combined Authority when it imposes them on other combined authorities?
Baroness Swinburne (Con)
To assist the House, let me say that best value notices are similar to the Department for Education improvement notices, which are issued following an Ofsted inspection and are a step before statutory intervention. A best value notice is issued to a local authority exhibiting indications of future best value failure. The notice is posted on GOV.UK and outlines the Government’s concerns with the authority and the clear expectations of the actions needed to ensure continuous improvement. The examples given are a clear way in which those non-statutory instruments can be used. With regards to Tees Valley, it has just undergone a major independent review with 28 recommendations; we will see in six months’ time if it has been conformed to.
Baroness Taylor of Stevenage (Lab)
My Lords, the Minister has just said that not only will the Government not ask the NAO to come in to do the review, but the mayor is not doing what the review indicated. The Minister has responded to previous questions about requesting that the National Audit Office carry out a detailed forensic review of deals that have been done there by saying that it is not appropriate. Can I therefore ask her what outstanding questions she believes there are in relation to value for money for the people of Teesside? If we are not going to have a best value notice or a National Audit Office review, what steps will the Government take to examine the ongoing questions?
Baroness Swinburne (Con)
As the noble Baroness and others in this House will know, whether people are doing what they say they are doing and whether we are achieving best value for money is under constant and ongoing review. The role of the National Audit Office is not to audit or examine individual local authorities, and its power would not normally be used for that purpose. We have already an independent review, and people have accepted its findings; we need to ensure that all 28 of those recommendations are implemented and delivered.
Lord Blunkett (Lab)
My Lords, this is a very serious issue. I met someone yesterday who told me that their father, who lives in the Tees Valley mayoral area, had decided they were going to vote for the incumbent candidate because he was a really good Liberal Democrat.
Baroness Swinburne (Con)
I am sure he is therefore voting for the person who is delivering for him and his local community, regardless of political affiliation.
Lord Scriven (LD)
My Lords, the Minister’s answer does not make sense. The Tees Valley Review concluded that, because of the poor governance, the lack of transparency and the deals that were done in the way they were done, value for money for the taxpayers of Tees Valley could not be guaranteed or ascertained—that is fact within the review. The mayor last week changed his commitment to implement the 26 recommendations, and he specifically said on recommendation 22 that he would do it again. Can I ask why the Minister feels it is not worth revisiting potentially looking at a best value notice in light of current events?
Baroness Swinburne (Con)
Given, as I have outlined, that there are already initiatives under way to implement all 28 recommendations, I do not feel that a non-statutory best value duty notice would achieve anything other than duplicate what is already under way.
Asylum Seekers: Missing from Registered Address
(6 months, 3 weeks ago)
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Lord Thomas of Gresford
To ask His Majesty’s Government how many asylum seekers whose applications are pending are currently missing from their registered address.
Lord Gascoigne (Con)
My Lords, the department does not routinely publish this data, given that the figures are subject to frequent change. In addition, the Home Office, through a variety of means, including face-to-face and digital reporting, has robust procedures in place to prevent absconding and re-establish contact.
Lord Thomas of Gresford (LD)
My Lords, the Irish Justice Minister claims that 80% of asylum seekers arriving recently in Ireland have crossed the Northern Irish border through the common travel area. What steps are the Government taking to monitor these movements from GB to Northern Ireland and then from Northern Ireland to Ireland? Is there an agreement between the Governments, as the Irish claim, for them to be returned to the safe country known as the United Kingdom?
Lord Gascoigne (Con)
As the PM said, the comments from Irish politicians show that illegal migration is a global challenge, and that is why multiple countries are talking about third-country partnerships, as this House passed only the other day. We believe that they will follow where the UK has led. The Prime Minister said yesterday that we cannot go about cherry-picking any of our international agreements. The Secretary of State is seeking urgent clarification that there will be no disruption or police checkpoints at or near the border. I can confirm that the UK has no legal obligation to accept returns of illegal migrants from Ireland. It is no surprise that our robust approach to illegal migration is already providing a deterrent.
Lord Swire (Con)
My Lords, what is no surprise, or should certainly come as no surprise, is that the Home Office has absolutely no idea where these people are. Worse than that, the Home Office has absolutely no idea where the alleged hundreds of thousands, if not millions, of people who are not in this country officially are either. Are we not at the point now that we need to seriously look once again at the issue of ID cards?
Lord Gascoigne (Con)
Much as I am loath to do this, I have to disagree with my noble friend’s broad point. In the scheme that he referred to, an initial cohort of suitable cases, around 2,000 people, were identified for removal and placed on immigration bail with strict reporting conditions. For those outside the group, there is still a wide range of tools, some of which I discussed earlier, to maintain contact with them. This includes face-to-face and digital reporting, and it is worth making the point that many individuals are residing in Home Office accommodation. But it is also worth making the point that compliance for this cohort has remained high, and therefore we are confident of the whereabouts once the decision to detain is made.
Baroness Taylor of Stevenage (Lab)
My Lords, Home Office sources have told the Times that only 400 to 700 detention spaces are reserved for migrants who are due for deportation to Rwanda. Can the Minister confirm that this equates to less than 1% of the current asylum backlog in the UK? The Prime Minister promised to detain everyone who has crossed the channel on a small boat, a record 30,000 last year. Given that we have only 2,200 detention spaces, what will happen to the remaining 28,000?
Lord Gascoigne (Con)
The point to make is that we were well prepared for this moment when it comes to Rwanda. I appreciate the time limits, but we have already done a number of things. We have trained dedicated caseworkers and increased the number of detention spaces to 2,200. We are doing a whole variety of things around ensuring that the legal proceedings are done speedily. We have looked at the flights; the Prime Minister has already said that this will be done over the next 10 to 12 weeks, and we also have an airport on standby ready to deliver what we said we would.
Baroness Smith of Newnham (LD)
My Lords, as the noble Baroness asked, what is happening to the other 28,000? If we think there are 30,000 who came irregularly last year and His Majesty’s Government have found 2,200 places, where will everybody else reside?
Lord Gascoigne (Con)
I do not think it would be appropriate for me to go through the different groups and numbers in detail. Turning to the original Question, I can say that those with a genuine claim would want to be at their registered address and not abscond, simply because that would be in their interests in pursuing their claim. There are many checks for the minority who game the system, and we have a significant uplift in our capability to tackle this. We have procedures in place to work alongside the police and other agencies to track them.
Baroness Berridge (Con)
My Lords, the Home Office is lawfully able to accommodate those who are under the age of 18. Can my noble friend the Minister outline whether that power has been used? If it has, do we know exactly where those under-18s are or have any of them gone missing?
Lord Gascoigne (Con)
I am grateful to my noble friend, who has asked a number of similar questions in this area. This is important. In fact, my first Question at the Dispatch Box was about unaccompanied asylum seekers, and the duty of care to children is obviously something that the department and the whole Government take incredibly seriously. I understand that there are a number of dedicated hubs for children asylum seekers, and I am pleased to say that we have closed all seven hotels that we used to accommodate unaccompanied asylum-seeking children. I do not know the specific statistics for how many have gone missing, but I will take that back to the department and write to my noble friend.
The Lord Bishop of Lincoln
My Lords, the Minister talked about hotels. The population of seaside towns, such as Skegness, have been very welcoming of asylum seekers staying in hotels. In effect, hotels are a way of monitoring the presence of asylum seekers over time. The frustration of people in Skegness and other coastal towns is that the slow progress in processing asylum seekers is having an impact on the tourist industry, the local economy and jobs in these towns. Is the Minister aware of that?
Lord Gascoigne (Con)
I am grateful to the right reverend Prelate. I have to say to the people of Skegness that I remember many a fine time in that part of the world when I was a young lad. Sadly, I have not been there recently. The right reverend Prelate is absolutely right that many communities up and down the land have been very hospitable, understanding and supportive. Helping those who need it goes to the vein of what this country is. The general point is that immigration, both legal and illegal, needs to be controlled. I am pleased to say that we have made great strides in clearing the backlog and that 100,000 cases have been processed, as we promised. I am happy to look at any outstanding issues in this area and pick them up with the right reverend Prelate outside the Chamber. He is very right, and we pay tribute to the people of the country for helping all people in need.
Lord Morrow (DUP)
My Lords, can the Minister help the House with this? The Dublin Administration speak of 80% of asylum seekers crossing from Northern Ireland, but does he have any idea what the figure is? Some tell us that it is 80% of 20 people, which is not a vast number. Furthermore, it is very clear that the Dublin Administration insisted that borders must be open at all times. Why are they changing their mind now?
Lord Gascoigne (Con)
I am afraid I do not know what number that is 80% of, and nor do I think it appropriate to talk about it, but this Government are absolutely committed to the Good Friday agreement. We will do all we can to ensure that there is no hard border between Northern Ireland and Ireland. This is an incredibly sensitive issue and I know that some of the noble Lord’s colleagues raised this in a debate in the Chamber yesterday evening. As I said earlier, the Secretary of State is seeking urgent clarification with his Irish counterpart.
Lord Blunkett (Lab)
My Lords, I froze on Skegness beach as a child, but I return to the question from the noble Baroness, Lady Smith. Under the Illegal Migration Act, anyone who comes here undocumented is not processed. Perhaps the Minister, who is a decent guy, will tell us the figure for those who are unprocessed and permanently resident here because they cannot be transported in such numbers to Rwanda.
Lord Gascoigne (Con)
As a point of clarity, at no stage did I say that I was sunbathing on the beaches of Skegness—or Skeggy, as we used to call it. Braver people would. On the noble Lord’s point, it is worth returning to what we have said about tackling illegal migration. We have been in contact with a number of individuals who will be sent to Rwanda through the passage of that Act, but it is not appropriate for me to go into further detail on that. There are reporting restrictions in place for those individuals.
Bank of England (Economic Affairs Committee Report)
(6 months, 3 weeks ago)
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Lord Bridges of Headley
That this House takes note of the Report from the Economic Affairs Committee Making an independent Bank of England work better (1st Report, HL Paper 10).
Lord Bridges of Headley (Con)
My Lords, it gives me great pleasure to open this debate. I begin by thanking all members of the Economic Affairs Committee for their time, toil and commitment which went into producing our report, and our excellent clerk, our policy adviser, and our special adviser Professor Rosa Lastra. I also remind the House of my registered interest as an adviser to and shareholder in Banco Santander.
Our report aimed to answer a simple question about the Bank of England: how is independence working? We asked that partly because last year marked a quarter of a century since the Bank was granted operational independence over monetary policy—a decision that signified an enormous transfer of power from elected representatives to unelected officials. Since then, the Bank’s remit has grown. It has undertaken quantitative easing on a massive scale and inflation hit a 41-year high in October 2022, resulting in a loss of public confidence in Threadneedle Street. All this raises questions about the Bank’s accountability and performance. Accountability and performance are different, but clearly related. If an unaccountable body performs poorly, what then? Our committee thought it was time to kick the tyres and learn lessons. Our focus was primarily on monetary policy; we did not examine individual decisions, nor events.
Let me start with the Bank’s overall record on inflation; I stress “overall”. Inflation remained within 1% of the MPC’s target almost 90% of the time between 1997 and 2021. The precise contribution of independence to that record is difficult to quantify—we heard that globalisation contributed too—but we concluded that independence should be preserved for the simple reason, to quote one witness,
“that there is a greater likelihood of interest rates being adjusted for economic reasons, rather than to suit … political objectives”.
That said, we concluded that reforms are needed and I will highlight some of the reasons why.
The first is the Bank’s recent performance on inflation. Like many central banks, the Bank of England mistakenly thought that inflation was transitory. Possible reasons for this include a perceived lack of intellectual diversity in the Bank, as in other central banks, which contributed to insufficient challenge to modelling and forecasts. In particular, our committee was struck by the notable absence of any detailed discussions about money supply in the monetary policy reports. To quote one witness,
“money supply was ignored in a rather foolish fashion”.
The second reason we need reform is what has happened to the Bank’s remit, which, as I said, has ballooned. This complexity risks jeopardising the Bank’s ability to prioritise its primary objectives. The governor told us:
“It makes policy-making more complicated”.
Its sprawling remit risks drawing the Bank into the Government’s wider policy agenda, raising questions about accountability, which I will come on to.
Another reason we need reform is to address the blurring of monetary and fiscal policy thanks to quantitative easing. A powerful tool to combat the monetary contraction after the 2008 financial crisis, QE’s continued deployment since then swelled the Bank’s balance sheet to a record high of just under 50% of GDP and shortened the overall duration of the Government’s liabilities, increasing the vulnerability of the Government’s overall debt stock to movements in short-term rates.
Although the quantum of quantitative easing is a monetary policy decision, decisions on debt duration have consequences for debt management. Furthermore, and crucially, the taxpayer is on the hook for any losses incurred by the Bank thanks to QE. But the deed of indemnity—the contractual document between the Bank’s asset purchase facility and the Treasury—is secret. That all needs addressing.
That brings me to another reason we need reform: accountability. The growth in the Bank’s remit and QE have not been met with a commensurate increase in accountability and parliamentary scrutiny. A democratic deficit has emerged which risks undermining confidence in the Bank and its operational independence.
Given those reasons, we proposed a number of what I consider to be very reasonable steps to address all this. I shall not read out a long laundry list, but they included: pruning the Bank’s remit; reviewing hiring and appointments; a memorandum of understanding which clarifies how the interaction between monetary policy and debt management should operate; publishing the deed of indemnity; and a parliamentary review of the Bank’s remit and operations every five years. Our overarching point was simple: the framework for independence and the operations of the Bank need reform.
What was the response from the Bank and the Treasury? Let me start with our concerns around forecasting and the big issue of groupthink. As many Lords will know, the Court of the Bank of England commissioned the Bernanke review into its forecasting. That review, in itself, shows the benefit of challenge. The review’s findings were pretty scathing of the Bank’s approach to forecasting and recommended changes on which I am sure a number of noble Lords will want to comment. But the review did not go into any depth on the key issue of diversity of thought, for the simple reason that it was not included in the review’s remit. To my mind, this is odd. As the governor himself told us, the models are not like a “sausage machine”, in his words, but reflect people’s judgment. I agree with that; in fact, I would go further: the output of models are not tablets of stone. They might shape decisions, but they should not determine them. What is more, the Bernanke review’s tight remit specifically excluded looking at any past decisions or events, so it was really not set up to ask the basic question: what went wrong, and why?
What is being done to improve challenge and tackle groupthink? In the responses, we are pointed to dissenting votes on the MPC. This is obviously true, but it rather ignores the fact that, between March 2020 and September 2021, when inflation was rising, the MPC was, month after month, unanimous in its view that this rise was transitory. Next, we are told that no review of Bank appointments is necessary, as the Treasury is committed to diversity in public services in its appointments. But what kind of diversity? Is diversity reflected in the recent appointments to the Bank’s most senior positions? Might they suggest that the Treasury is the primary school for the Bank?
We are told that the MPC monitors monetary aggregates, so our recommendation, that there should be an analysis of their relevance to the Bank’s inflation outlook, was rejected. I am conscious that we might fall into the trap of groupthink that there is groupthink. However, having mulled over the evidence that we received, I think that our recommendations are measured, and that the response to them was—to be polite—somewhat defensive.
What of the other reasonable proposals we made, that the remits of the MPC and the FPC should be pruned? The Treasury’s written response states that:
“As both Committees have complex roles, it is right that their remit reflects this complexity”.
But the next paragraph says that it agrees that there is benefit in improving the clarity and focus of the remit letters—something the Chancellor confirmed to us a few weeks ago, when he told our committee that the Treasury “could probably do better” at simplification. However, he then pointed out that, despite his slimming down the remit as regards climate change, climate change objectives
“are bedded into what the Bank of England has to do anyway”.
I find all this slightly confusing, so I have a simple question for my noble friend the Minister: does the Treasury think that the remits are still too complex? Are we at the beginning, not the end, of the process of simplification?
Let me now turn to QE and QT. Both the Bank and the Treasury argue that we do not need a memorandum of understanding to clarify how the interaction between monetary policy and debt management should operate. I beg to differ. The taxpayer is ultimately bearing the risk of QE and the costs incurred, and decisions are being taken concerning huge sums of public money without regard to the usual value-for-money requirements—a position that the Treasury Select Committee in the other place concluded is “highly anomalous”. More clarity is needed.
That brings me to the need to publish the deed of indemnity. The governor told us:
“I could not see anything in it … that I think would excite people if it were published, but it is not my decision—it is the Treasury’s”.
Yet the Treasury’s response says that the document should not be published because it contains “market sensitivities” and
“operationally sensitive information relating to QE”,
which risks
“undermining the transparency of the APF”.
The Bank and the Treasury appear to be at odds on this. In my simple mind, either this document will not excite people, or it contains market-sensitive information which will. Can the Minister tell us who is right—the Governor or the Chancellor? But the bigger point is this: given that the taxpayer is bearing the cost of QE, Parliament should surely be told how the relationship between the Treasury and the Bank works and who is responsible for taking what decisions and on what grounds.
That brings me to the final issue: parliamentary accountability. Operational independence should mean just that: politicians stay out of the Bank’s day-to-day decisions. But how often does Parliament debate the Bank’s overall performance, its remit letters or issues such as QE and QT? The answer is: not much. Our focus here in Parliament is largely on fiscal policy, not monetary policy—the Treasury in the City of Westminster, not the Bank in the City of London. We need to address that democratic deficit. An overarching review of the Bank’s remit every five years, as our committee recommended, would not undermine independence but strengthen it. Such a review could look at one of the other big issues: the inflation target itself, on which we heard conflicting views as to whether 2% is the right target.
Another question a parliamentary review could consider is whether we have the right balance between accountability and independence with regard to the appointments of the most senior Bank officials and their tenure and reappointment. As I said at the start, when things go wrong, does Parliament really have sufficient means to hold the Bank’s leadership to account?
The Bank and the Treasury are staffed by many professional, committed public servants. I certainly do not want to trash either institution, but I fear that the tone of the Bank’s and the Treasury’s responses to our report and its reasonable recommendations reminded me of a policeman at the scene of a crash. Concerned onlookers want to know what has happened and why, but the policeman politely shuffles them off, saying, “Nothing to see here. Just an unfortunate incident. Move along, please”. Well, I am staying put. Yes, operational independence should be preserved, but reforms are needed.
Viscount Chandos (Lab)
My Lords, I am very grateful to the noble Lord, Lord Bridges of Headley, for introducing this debate, and for the exemplary work that he and other members of the Economic Affairs Committee have done to produce this report. I was privileged to be a member of the committee previously, when it conducted inquiries into both quantitative easing and the case for a central bank digital currency. This report revisits those subjects, at the same time as taking a broader view of the Bank’s working. The result is a powerful endorsement of Select Committees generally sticking with subjects and themes over a longer period of time, rather than allowing an inquiry to be seen as a one-off.
There is not a single conclusion or recommendation in this report with which I disagree, which prompts me, like the noble Lord, Lord Bridges, to ask myself whether the unanimity of the committee and the wide support for its findings represent an example of the very groupthink that the committee questioned the Bank of England and other witnesses on. So perhaps I should express my disappointment that the title of the report is blander than some in the past, even if the Governor of the Bank of England was critical of the committee suggesting that the Bank’s use of QE might equate to “addiction”.
As a young banker—so a very long time ago—I developed admiration and respect for the Bank and its culture. As a market participant, it had a profound understanding of the financial markets without generally being captured by them. Of course, even in those halcyon days, there were problems and failings, from BCCI to Barings, but there was widespread confidence in the integrity and competence of the Bank, even though it did not enjoy formally the independence that was granted to it by the Labour Government in 1997.
The structure and remit of the Bank has, as the noble Lord, Lord Bridges, already said, changed considerably—massively—even since then: from one deputy governor to four and from eight executive directors to 21. The multiplicity of additional objectives and “have regards to” was also highlighted by the noble Lord. Has the culture of the Bank remained fundamentally unchanged as a result of this process and evolution? I believe that at the core, the best aspects of this culture remain, but that the recommendations of the report are important and necessary steps for protecting and reinforcing it.
I will focus on two issues: transparency and governance. In doing so I will comment on more specific policy issues and performance. I profoundly believe that transparency should be at the heart of public bodes generally; even the intelligence services are now significantly more open, if in a limited and carefully controlled way. Rather nostalgically, this made me think of my maiden speech, a frightening 42 years ago, on the subject of a European directive on bank accounting. Back then, although the clearing banks did report their true profits, merchant banks still disclosed profits only after transfer to or from a hidden reserve. As a middle-rank employee of one such bank, I questioned whether this really added to the stability of the financial system, faced by innumerable chairmen of banks in the same debate—I think the management of banks has become a little more diverse—arguing for the maintenance of the status quo.
Transparency should be at the core of the financial markets, and of the Bank of England’s role in them. For that reason, I regret that, in the otherwise sensible review of the Bank’s forecasting, Ben Bernanke did not advocate the adoption of forward guidance or the use of a so-called dot plot to provide markets with more data on which to base their interest rate expectations. The central bank is not there to provide the framework for traders to maximise the opportunity for trading games; it is there to create a stable and predictable environment for the benefit of the economy as a whole.
Likewise, as the noble Lord has already touched on, I am baffled by the Treasury’s refusal to publish in full the indemnity under which the Bank of England makes whole any losses from the QE and QT programme. The reasons given by the Government are as opaque as the policy itself. In what way would the publication of the deed of indemnity jeopardise the Government’s cash management operations? Would the Minister be kind enough to answer that when she comes to wind up, and explain why the protection of the Debt Management Office’s operation is not unfairly at the expense of other market participants?
After the nearly three years since the committee’s report on QE was published, it is still hard to come to any definitive conclusions, but this latest report provides an important update. I believe that the QE programme, in its three phases, was right in principle but wrong in degree. Its efficacy in bringing stability to the financial markets at times of maximum stress was clear, but it was of indeterminate impact in more general macroeconomic management. As a result, the scale of the purchases was almost certainly too great, and the speed of subsequent sales too slow. This has arguably exacerbated the problems of responding to a rising interest rate environment, and increased the cost to the Exchequer of the intervention. Can the Minister say what the net realised gain or loss currently is since the start of the programme, and what the mark to market unrealised loss is on the assets still held by the Bank, all of which are for the Treasury’s account under the deed of indemnity, as -far as we know?
Very briefly, on governance and appointments there are serious doubts about, among other factors, intellectual diversity and political independence in relation to the court, the MPC and senior management. Some of this is visible; more lurks below the surface. I very much hope that the next Government—no complacency, on today of all days, but I hope a Labour one—will conduct a thorough review of the governance arrangements and appointment rules for every part of the Bank of England, and in addition look at the whistleblowing and independent process for resolving problems as and when they occur.
I very much hope that the Economic Affairs Committee will continue to bring its laser-like focus on the workings of the Bank of England, with many aspects of its operations not covered in this report. As the noble Lord, Lord Bridges, has also advocated, I hope that your Lordships’ House will have much more time than in the past to debate these issues.
Lord Macpherson of Earl’s Court (CB)
My Lords, I declare my interest as chairman of C Hoare & Co, a bank that opposed the setting-up of the Bank of England, became reconciled to it a couple of centuries ago, and now regards it as a privilege to be regulated by the Bank.
I congratulate the noble Lord, Lord Bridges, and members of the committee on a first-rate report. Operationally independent institutions can survive and prosper only if there is proper parliamentary accountability. All too often, that accountability can descend into cheap point-scoring. I believe this House’s Economic Affairs Committee plays a crucial role in injecting serious, rigorous and impartial thought into economic policy debate.
Like the noble Lord, Lord Bridges, I was a little disappointed by the Government’s response to the report. I should confess to having drafted similar responses, with an appropriately dead hand, in the past. I am hoping the Minister will be a little more forthcoming in her response than the Chancellor was, but I am not betting on it.
It is good news that inflation is firmly heading back towards the Bank of England’s target of 2%, but we should not underestimate the impact of the recent rise in prices. Inflation is not some technical economic construct; it has a pernicious effect on people’s lives. It affects their ability to budget and to plan. It has the biggest impact on those least able to protect their incomes, and that is usually the weakest and most marginal in society.
It is therefore important that we learn the lessons of the upsurge in inflation in 2021-22. The Bernanke report is a good start but, as others have noted, his remit was quite narrow. The Bank’s forecasting model clearly has limitations, but then so do all forecasting models. That is why we should never become mesmerised by them.
Economic policymakers need to step back from mechanistic forecasts and focus on the underlying data here and now. Sometimes that data tells a clear story. Quantitative easing was necessary in 2009 and it was effective, but later rounds of QE were an imperfect response to what were, in any case, supply shocks. Ever-increasing amounts of QE were necessary to have an impact on long-term interest rates and, in my view, resulted in an excessive build-up of money and liquidity in the system. QE did not cause inflation, but it certainly enabled it to take root.
I do not want to be too harsh on the Bank. As Bernanke observes, other central banks made similar mistakes, and the build-up of excess demand was as much the Treasury’s responsibility, through an excessively loose fiscal policy, as it was the Bank’s, but I hope the Bank will pay just a little more attention to monetary and liquidity indicators in the future.
That brings me to my second point. The Bank is doing a good job in unwinding QE, and it underlined its independence in pressing on in the autumn of 2022, despite potential political pressure from the Government. But, as QE unwinds, we are going to hear a lot about the losses sustained by the Bank. We hear rather less about the gains from the early years of QE, when interest rates were falling. Of course, had the ring-fence that the late Alistair Darling wisely put in place in 2009 remained there this would have been less of a problem, but the coalition Government chose to, in effect, draw down the gains as a way of meeting their fiscal rules. We are now paying the price.
I anticipate that future Governments, faced with even more challenging public finances, will want to put a stop to the fiscal leakage caused by QE. The key thing here is that the Government should not interfere in monetary policy: the remuneration of reserves must be a matter for the Bank. In taking any tax decisions, the Treasury needs to take into account the impact on the efficiency of the banking system as a whole.
The committee’s report is right to draw attention to the ever-increasing breadth of the Bank’s remit. It is always tempting for the Government to leave it to independent institutions to take the difficult decisions, but that carries big reputational risks since it draws the Bank further into debates best left to democratically elected politicians. It also fails to recognise that the Bank has limited instruments at its disposal. I fear the Government sometimes ignore Tinbergen’s law that you need as many policy instruments as you have independent objectives.
The committee has also made some good points on appointments. Noble Lords will not be surprised that I am more relaxed than most about the Treasury’s colonisation of senior policy positions at the Bank, and I welcome the appointment of Clare Lombardelli as a new deputy governor, who has experience working at the Bank and the OECD as well as the Treasury, but I agree with the committee that the Government need to find the right balance when it comes to appointments. I would welcome more interchange with the private sector.
I wonder whether we need quite so many deputy governors as we have. I recall advertising for one vacancy and conducting a process. The Chancellor ended up appointing two candidates, simply because both were very well qualified and he and the then governor could not decide who was the best.
Recent events have underlined the importance of external members of the MPC. It has been good to see, on the one hand, Swati Dhingra ploughing her lone furrow arguing for looser policy and, on the other, Catherine Mann and Jonathan Haskel making the case for tighter policy. I was struck by a recent report from an external member of the MPC that mentioned staffing shortages constraining external engagement. I wonder whether the Bank executive should provide a liaison person at a more senior level to ensure that the externals’ needs are met. Independent thought matters, and the Bank should continue to find ways of supporting external MPC members.
Finally, I should briefly mention the vexed issue of the publication of the deed of indemnity relating to the asset purchase facility. This puts me in mind of the Schleswig-Holstein question. There were probably three people who understood it: Alistair Darling, who is, very sadly, dead; me, who cannot remember; and my noble friend Lord King, who, as luck would have it, is not mad. Fortunately, he is the sanest man I know. He is also a man to be reckoned with, not least because yesterday he was appointed president of the MCC, on which I congratulate him. That the committee—and, by implication, my noble friend Lord King—has recommended that the deed be published is good enough for me. I can conclude only that the reason the Chancellor has not published the deed is that he did not understand the question. I would therefore like to ask the Minister under what, if any, circumstances the Government would publish the deed of indemnity.
To come back to where I started, this is a good report by the Economic Affairs Committee and I support its recommendations. The guiding principles of monetary policy put in place in the 1990s, not least by the noble Lord, Lord Lamont, of an inflation target of 2%, maximum transparency and an operationally independent central bank still hold good. Bank independence works and Governments interfere with it at their peril.
Lord Lamont of Lerwick (Con)
My Lords, I congratulate the noble Lord, Lord Bridges, on his excellent speech and this very good report. I was not a member of the committee but I am most impressed by the report and agree with all the conclusions. I will concentrate on recommendations 10 to 13, which deal with forecasting, the alleged lack of diversity, and groupthink—subjects mentioned by the noble Lord, Lord Bridges. I want also to look at the Bernanke report, which we now have.
In discussing forecasting, it is important, as I think the noble Lord, Lord Macpherson, suggested, to demythologise the subject. First, contrary to what many people believe, policy is not dependent on forecasts. Secondly, we do not, and should not, elevate forecasters into some priestly caste examining the entrails and telling us whether the gods will look favourably on a particular action. The gods are often deaf. Forecasting responds to a deep human need but, alas, the forecasts are often wrong.
There are several reasons why forecasts are fallible. One, which we should welcome, is that human beings are not machines or computers. They do not always react as they did last time. Another is the limits of government statistics. I do not think I should be saying this, but do we really believe that we can add up all activity in the economy month by month and measure changes to the last month within a fraction of a percentage point? Inevitably, government statistics are continually revised. Recessions that once undermined confidence and spread doom mysteriously disappear years later. Then there are exceptional events. You cannot forecast a pandemic. You may know that one is likely, but you do not know when. These are exceptional events but, unfortunately, history is exceptional events.
In his response, Dr Bernanke made some constructive suggestions for improving the Bank’s forecasting capacity to do with staff, software and hardware, but I suspect that these are all at the margin. They will always be subject to the limitations inherent in forecasting that the noble Lord, Lord Macpherson, referred to, and one cannot escape the need for an element of judgment.
The governor, Mr Bailey, pointed out that the Bank has not one model but several, but that invites the aphorism: all models fail but some are useful. Dr Bernanke makes this very point: a forecast can be inaccurate and still be useful in enabling us to understand why the policy was wrong. Forecasts make a central bank more transparent and accountable, particularly if a policy has been consistently applied but the outcome is not as forecast.
Dr Bernanke’s comments on the Bank’s forecasts are, interestingly, somewhat milder than the newspaper headlines. He points out that the Bank was in the middle of the pack of central banks when it came to inflation and output. Its belief that inflation was transitory was one shared by many central banks, but that merely poses another important question: why did so many central banks get it so wrong? Was it a case of groupthink? Interestingly, Dr Bernanke defends the Bank of England against accusations of a lack of diversity in the MPC. Surprisingly, his view is that there is more diversity than in other central banks, and some of the witnesses, including Charles Goodhart, agreed, so it will be interesting to have the Minister’s comments.
Too much diversity of thought for the sake of diversity itself can push a committee towards artificial consensus in which no one believes. This is where the fan charts, so loved by the Bank of England, have been so convenient. Who can disagree with a fan chart covering so many possible outcomes? As in an oriental dance, a fan can be used to conceal as well as to reveal. For that reason, Dr Bernanke recommends getting rid of the fan charts and substituting conditional forecasts, which he terms “scenarios”. This might help to deal with the problem of exceptional events, but will it contribute at all to forward guidance?
What about groupthink between central bankers themselves? There may be value in forecasts that are wrong, but there is a difference between predicting the right trajectory with errors and predicting a completely wrong trajectory. Many central banks thought the pandemic would continue to be deflationary, hence the resort to a huge injection of quantitative easing. At the time, a number of commentators, including Paul Tucker, the former deputy governor of the Bank, questioned why central banks wanted to stimulate aggregate demand just as aggregate supply was closing down. It was almost as though there was an assumption that QE ought to be the default response to every crisis. That would surely be a mistake.
Dr Bernanke is a disciple of Milton Friedman. I was therefore surprised that he did not address the point made in conclusion 11 of the report that the MPC did not seem to have had any detailed discussions about the money supply or made any analysis of monetary aggregates and their effect on inflation. To be fair, the governor denied that this was the case, but Roger Bootle said in his evidence:
“Over the past few years … we have gone from a situation in which economic policy … was governed entirely according to … a certain definition of the broad money supply”—
that was the policy in the early 1980s—
“to one in which, apparently, the Bank took no notice of monetary aggregates at all”.
I was particularly interested in this, for the very reason that the noble Lord, Lord Macpherson, kindly mentioned: in 1992, when we introduced a new framework for policy, namely inflation targeting, the target was accompanied by target ranges for monetary aggregates. The regime of inflation targeting was continued and carried through to Bank of England independence by Gordon Brown, but the ranges for monetary aggregates were discontinued. Inflation targeting is not a perfect policy. It can be criticised for being backward-looking and a rear-mirror policy. But monetary policy, as Dr Bernanke reminds us, operates with time lags and therefore enables policymakers to focus on not just the current rate of inflation but what we expect inflation might be in two years’ time.
The report makes the point that the Bank has too many secondary objectives to which it is asked to have regard. Many of these objectives are not really affected by the instruments available to the Bank. This must be true of climate change. The Government ought to be clear that tackling climate change is a matter for the Government. To expect the Bank to lead on that makes no sense. I quote the governor himself, who said that climate change
“is not really an issue of monetary policy”.
In addition to the inflation target, the Bank is also charged with supporting the Government’s objectives on growth and employment. A major change was introduced in 2013, when George Osborne gave the Bank a new remit in which the MPC was tasked with setting out the trade-off when deciding how long it would be before an above-target inflation rate came back to target. As the governor said, these changes gave the Bank much more flexibility over how quickly it could bring inflation back to target. This considerable latitude, which is welcome in one sense, may be another reason why the Bank was so slow to raise interest rates and get inflation back towards target—and we are not there yet. As things have demonstrated in the United States, the last furlong may still prove difficult. Indeed, one former central banker said to me that, if we get inflation back to target without positive real rates of interest, it will be the first time this has ever happened. Let us hope that the optimists are right and that we are heading back towards target.
As my noble friend Lord Bridges said, the Bank is very different from the one made independent in 1997-98. It has expanded its discretion and the tools it uses. Its credibility matters. So it is important that it is robustly scrutinised and challenged, precisely as this report and this debate are doing.
Lord Gadhia (Non-Afl)
My Lords, I declare my interest as a member of the Court of Directors of the Bank of England but speak today in a personal capacity.
First, I offer my compliments to the noble Lord, Lord Bridges of Headley, and his committee for the thoroughness of their evidence sessions, attracting a star cast of witnesses, to provide a timely review of the Bank’s 25 years of operational independence. Together with the review of economic forecasting commissioned by the court from Professor Ben Bernanke, the Bank now has a substantial body of independent input on which to propose forward-looking reforms. I know the governor and his colleagues are taking this process seriously and will provide a further update by the end of the year.
As someone who has experienced the Bank in close proximity for the past 18 months, I am pleased to share some observations and hope that I can dispel a few myths and add some nuance to this debate. At the outset, it is worth noting that in my brief time serving on the court, I have not come across anything remotely resembling the deep state, but instead a group of truly committed public servants who are faithfully seeking to fulfil their statutory remits.
The Bank takes accountability to Parliament incredibly seriously and devotes substantial time preparing for and participating in evidence sessions. In fact, if anything, the scope for improvement in scrutiny lies less with the Bank and more through enhancing the capabilities, attitude and co-ordination within Parliament. The decision to appoint separate committees of each House to review post-Brexit financial regulation is a case in point. If there is a democratic deficit of accountability, it is often a self-inflicted one. With due respect to the House of Commons, it should be especially mindful of the behavioural consequences of seeking “gotcha” moments which might generate media headlines but do little to gain deeper insight into the trade-offs which often lie at the heart of key policy issues. This makes our institutions more risk averse and contributes to a culture which incentivises overregulation and suppresses innovation.
The core conclusion of the report on the effectiveness of independence is not only reassuring but a timely reminder of the underlying rationale for removing political involvement from day-to-day monetary policy decisions. During this election year, we can be confident that, if and when interest rates start to come down, they will do so for economic and not political reasons.
The benefits of this policy credibility in anchoring expectations should not be underestimated. It is often difficult to prove a counterfactual or attribute cause and effect, but we saw the disastrous consequences when market confidence evaporated in autumn 2022. The emergence of the unfortunately named “moron premium” in UK gilts is a proxy for the type of cost that citizens would incur if political decision-making trumped economic reality.
Among the other key conclusions of the report were concerns about groupthink, mission creep and boundaries between fiscal and monetary policy. I shall touch on each. The Bernanke review demonstrated that the process of challenge is as much about the analytical tools available as the individuals. The court meets regularly with external members of the policy committees, who are a diverse and engaged group. They contribute positively to challenging the executive and each other, with little evidence of groupthink, as demonstrated by the historic voting record of the MPC. However, they require the necessary support and input. One significant gap in recent years has been deciphering post-pandemic changes in the labour market. That has probably been more significant in our understanding of inflation than monetary aggregates.
On the remit, the Bank is a rule taker, not a rule maker. The post-financial-crisis structure of the Bank, determined by Parliament and further embellished by the recent Financial Services and Markets Act, is a complex web of committees and mandates that hangs together and works largely as intended. In turn, it shapes the organisational structure of the Bank, which feels proportionate to the scale and responsibilities that it holds, but it places an almost superhuman requirement on the governor to be across a vast span of policy and organisation.
For the MPC specifically, given the limited policy instruments at its disposal, it is not clear how adding multiple secondary objectives achieves much more than a feelgood factor for politicians. Streamlining the remit letters would be welcome but remains a matter for the Chancellor of the day, subject of course to scrutiny from Parliament. I concur with my colleague David Roberts, chair of the court, that organisations work best when they have clarity and simplicity of objectives and goals.
It is entirely appropriate for fiscal policy to be asymmetric—namely, the MPC takes the Government’s fiscal policy as a given, and the onus is on the Chancellor to make tax-and-spend decisions that do not undermine price stability. It is right that this modus operandi is underpinned by close dialogue between the Bank and the Treasury but not by explicit co-ordination.
With regard to quantitative easing, I have sympathy with concerns about swapping out longer-duration gilts with short-term deposits. That makes the cost of servicing government debt more volatile, but it is something that the Treasury was fully aware of when it granted the deed of indemnity to the Bank to facilitate QE. In the context of quantitative tightening, as long as the Bank and the Debt Management Office are in appropriate dialogue, which they are, a memorandum, as suggested, would add very little.
The role of the court has evolved over time. It has modernised into a unitary corporate board responsible for everything up to, but not including, policy decisions. That includes resource allocation and budgets, investments, culture, capabilities, technology and delivery for a 5,000-strong organisation with an £800 billion balance sheet, which processes a similar amount in payments every day. The court is very much part of the accountability chain, as acknowledged in the committee’s report. Our ability to shape the organisational agenda and provide internal challenge is significant, and the current court is certainly up for shouldering that responsibility, as demonstrated by our commissioning of the Bernanke review.
However, there are limitations. Like a conventional private sector board, we do not possess hire-and-fire powers over senior management, unfettered rights to determine strategy, or absolute oversight. At times this is frustrating, but it is equally unrealistic to expect an elected Government to cede complete control. Instead, we exercise our mandate through influence, with much depending on the receptivity of the serving governor and deputies to receive the court’s input, as well as through collaboration with the Treasury. To make the court more effective and better use our expertise, I believe that closer involvement in making appointments and in setting budgets, especially with the introduction of the bank levy, would help to strengthen overall governance and accountability.
The Bank is a unique organisation that plays a crucial role in our nation’s economic life. We should certainly seek to improve its operations and hold it to proper account, something that I am personally committed to as a member of the court, but equally we shoot ourselves in the foot if we undermine the Bank’s credibility, standing and independence, which has largely served us well over the past 25 years and more.
Baroness Lane-Fox of Soho (CB)
My Lords, I too thank the committee for this extremely effective and wide-ranging report. I shall make a short intervention with three different hats on.
The first of those hats is as president of the British Chambers of Commerce. We work closely with the Bank on our quarterly economic survey, and our customer and policy insights team works closely with it to swap and use data between the two organisations. It will perhaps be no surprise to this Chamber that, as I travel about as president of the BCC from Poole to Coventry to Doncaster to Glasgow, I hear anxieties about two AIs: artificial intelligence and alarming inflation. Our recent quarterly economic survey shows that business confidence is still very flat. Businesses do not invest at the minute and, although there has been some easing in their hiring constrictions and they are beginning to find more of the talent they need, confidence levels are still low.
I know from conversations with businesses as I travel about, whether to a cheese-wrapping factory or a racehorse training college in Doncaster—one of my favourite days out—that part of the reason for that is people’s opaque view of what is happening in the economy, at the heart of which we must put the Bank of England. More can be done to explain the role of the Bank and—this goes to my noble friend Lord Macpherson’s point—how it is affecting people further down the chain in the economy, who often bear the brunt of the inflationary aspects that we see: a small supplier having a horrible time with their supply chain, or a business struggling to pay the wages it needs to hire people in its bars. While we have a close and productive working relationship with the Bank of England, we also see the direct consequences of the policies that it enables. I personally believe that more could be done to keep the transparency and the levels of trust high in what the Bank of England is doing for the economy, especially among the 85% of our economy that are small businesses, as noble Lords will know.
The second hat that I wear is as a director of Peers for the Planet, an organising group in your Lordships’ House, as many noble Lords know. While I hate ever to disagree with my far more learned friend the noble Lord, Lord Lamont, I believe it is a risk that the Bank of England is not putting resources into climate change analysis. Of course the Bank is not responsible for the policies that will help us to combat the climate crisis but, even as recently as 2022, we saw a German drought directly impact small businesses because of issues related to our supply chains here into the UK, and that created a small inflationary peak. It is essential that we do not reduce the Bank’s capacity to analyse the effects of the climate crisis as they hit us. We know that the Bank has substantially fewer climate-based resources than other central banks of similar size and scale, and 54 experts wrote to the governor in March this year to say so.
For my third point—because I can never resist an opportunity in your Lordships’ House to talk about digital transformation—I am wearing the hat of an ex-digital champion for the UK and creator of the Government Digital Service and GOV.UK. I realise it was not in the remit of this committee’s work, but I am much struck by the extremely harsh assessment in the Bernanke report of the Bank’s IT and digital systems. There is plenty of talk about collaboration with the fintech sector and I have seen the governor talking about the impact of AI in the world, but that is different from the investment needed in hardware and software to have an effective Bank. We know that across the institutions in this country there is a substantial deficit of understanding of what the digital world is now enabling, and the tools that we have in the modern age which will enable us to do a better job.
I am clearly not an expert in the Bank of England but I appreciate the scale and challenge that this would present to any institution. I urge the Government to keep up the pressure, advice and help in supporting the Bank to make those necessary transformations. Catching up with digital investment is very hard. It can be very expensive and can go very wrong, but it is also essential.
The committee’s report starts by saying that the Bank of England was established in 1694 for the “public Good and Benefit” of all people. I urge the Bank of England to make sure that it is still using the tools of and looking at the risks of the modern age, while thinking about the make-up of the economy for the modern age to fulfil that remit.
Lord Moynihan of Chelsea (Con) (Maiden Speech)
My Lords, I stand in this House to make my maiden speech, aware of the great honour that membership of this House entails—surely undeserved in my case. With each week that I am here, I get to understand more of the extraordinary nature of this House, of the wonderful and supportive help that is given to us Peers by the doormen, the clerks and the many talented and experienced officials. I am so grateful to the many who helped me be introduced to this House: Garter, my noble friends Lord Kamall and Lord Moore of Etchingham, noble Lords on all sides of the House, my excellent mentor and noble friend Lord Borwick, the Clerk of the Parliaments, Black Rod and many others.
I am told that it is customary to offer brief details of one’s life to noble Lords before commencing upon the body of one’s speech. Perusing other maiden speeches, I was glad to note that at least a few noble Lords had chequered early lives, which is something I share with them. But in my mid-20s, I managed to get myself to America, first studying finance and economics at MIT and then staying in the US for almost two decades, advising banks around the country and on Wall Street, which gave me knowledge and experience of relevance to this debate. Happily married in New York, I had not planned to return to the UK but, in 1992, was offered an opportunity to run a large British company that at that point was on the verge of bankruptcy, which fortunately for me meant that no one more competent than me had any interest in taking it on. The company survived its encounter with me; I was happy to be back in Britain. I later branched out into the field of venture capital and have founded a score or more of new companies, mostly of a scientific or technological nature—at least some of which did not go bankrupt.
Moving on to my attempted contribution this afternoon, I heartily recommend the excellent report of my noble friend Lord Bridges’s committee to this House. I had been warned not to say anything controversial in a maiden speech; however, Ben Bernanke’s report has thoroughly beaten me to the punch on that. For my own effort here, I offer noble Lords what I hope are three less controversial conclusions that can be drawn from the report.
First, it is welcome that money is now to be taken into consideration. We all know that inflation, as the noble Lord, Lord Macpherson of Earl’s Court, has just said, is devastating—particularly for the old, the poor and those living on fixed income. The cost of living rises for everyone. For retiring savers who do not have a defined benefit pension arrangement, buying annuities during a time of quantitative easing means very low future lifetime incomes. Yet excessive QE creates excess money, which then creates inflation, which then destroys the small value of the retiring savers’ income even further. On the other hand, for borrowers, QE offers attractively low initial interest rates—but that causes asset inflation, so you have to borrow to the hilt to buy your house, and then inflation arrives. Interest rates double, as do your now unaffordable mortgage payments, so both savers and borrowers suffer from QE. Is a QE-inflation-recession cycle a better option than letting markets decide interest rates and letting economies recover more naturally than with intervention?
Some would argue that the QE approach has proved worse, so it was welcome that the Bank’s governor stated in evidence that he believes that money plays a part in inflation. The Bank of England’s chief economist, less reassuringly, stated that the elevated level of UK inflation stems largely from the impact of external shocks rather than excess money growth. Yet Tim Congdon, with the moral advantage of having predicted the arrival of 10% inflation, disagreed in his evidence. He said that the “globalisation idea” is very wrong and that
“this three-equation new Keynesianism … is a catastrophic set of ideas”.
The noble Lord, Lord King of Lothbury—I add my congratulations to those of the House on his election yesterday as president of the MCC—hit the nail on the head when he said in the evidence sessions that we looked in vain for references for money and lending in the reports of the Bank. Inflation did not happen everywhere around the world: it happened neither in Switzerland nor Japan, for example. The difference was in their monetary policies, so it is good news that the Bank will pay greater attention to money volumes. We look forward to hearing in further detail on how it proposes to take account of money volumes in future.
Secondly, the report offered valuable recommendations for enhancing the Bank’s risk management. The committee’s report was thoughtful and valuable. It asked the right questions and came to good conclusions, which I hope will be implemented. The committee called, as did my noble friend Lord Bridges this morning, for diversity of viewpoints so that more scenarios would be offered to the Bank. It suggested that better fallback plans could be created. An example would be creating a plan to deal with the risk that the Bank had apparently identified some years earlier: that the leveraged LDI funds would fall over. My noble friend Lord Wolfson of Aspley Guise had warned the Bank about this back in 2017.
It is also arguable that the Bank might take into consideration the dangers of oversharing information with the market: for example, by communicating up front a hard end date to a stabilisation programme, which in itself would destabilise the markets. The Bank could also consider stepping forward to communicate to the Government any concerns that were raised by both the Bank and the committee in evidence regarding the inherent risk that has been created by the Bank being required by the Government to attend to what my noble friend Lord Bridges called in the evidence sessions the “rambling rose” of no fewer than 25 government-imposed “have regards”.
Finally, on the value of the Government and the Bank aligning and co-ordinating better, most of us agree that the Bank of England must be independent. But, as a former Chancellor pointed out during evidence, it also has a further requirement, which is to support the Government’s economic policy. How to reconcile these two requirements? It is easy when the Government and the Bank are agreed on a proper economic approach, but more difficult when they differ. That is a conundrum whose answer may lie in the Bank not seeking to be too doctrinaire—for example, in deciding to embark on an aggressive QT programme. If the Bank is opposed to a Government’s policy or thinks that its actions might upset that policy, then arguably it should take great care to discuss with that Government any honest and honourable differences in economic viewpoint as soon as possible. In particular, it should consider possible changes in its timing of any planned major announcement which might otherwise accidentally coincide with any equally major but opposing government announcement.
I am close to overrunning, so I bring my remarks to a close. I thank your Lordships for their forbearance and attention. I hope my words might have some impact in reinforcing some of the poignant thrusts of the committee’s report.
Lord Hannan of Kingsclere (Con)
My Lords, I think we just heard a flavour of why at least one former Prime Minister was in the habit of publicly saying that my noble friend Lord Moynihan was a far more reliable forecaster than the Treasury. It is a great privilege and pleasure to follow his maiden speech.
I hope I can say this as an ex-politician among other ex-politicians: if you have been close to government, you can see how far a politician can go by just saying the right things and voting the right way but making barely a dent on the real world. That option is not open to the entrepreneur. My noble friend has gone through life making a tangible and benign difference in field after field. Most obviously, in business he has turned around hundreds of companies, perhaps most spectacularly the firm PA. I speak not of the wire service, I should say in this place, but of the technological and scientific consultancy, which was effectively bankrupt when he took it over and which he left with a valuation of $2.5 billion.
He has done the same thing as president of the Albert Hall. Look at the outside next time you are there and see the transformation made possible by the £11 million surplus that my noble friend created as president. He did the same—I am conscious that I may be queering his pitch with a great many of those in the Chamber now—as the chairman of the committee of Vote Leave, taking over with a deficit and leaving with a victorious outcome.
He is very hands-on. He has most recently been not just purchasing and supplying ambulances for Ukraine but driving them across the border himself in quite difficult conditions. As much for his cheerful and infectious optimism as for his keen intellect and focused pragmatism, we are very fortunate to have him alongside us in this place.
We are living through an unprecedented and uncontrolled monetary experiment. Starting in March 2009, the Bank of England began a programme of money printing that would have put to shame a 1970s Latin American junta. Since then we have increased the amount of money in circulation by an almost unbelievable 50%. Nearly half of that increase has been since 2020 as a consequence of the pandemic.
You cannot magic up that amount of currency without deleterious impacts on people’s lives, although people do not always join the dots. A number of the things that people complain about in this country have their root cause in excessively loose monetary policy—most obviously the squeeze on living standards, but also the rise in house prices, the divergence between haves and have-nots in terms of assets, and the public sector strikes that continue to plague us, as noble Lords will know if they travel here by train. They all have their roots in excessive inflation.
We heard about the malign consequences of inflation from the noble Lord, Lord Macpherson of Earl’s Court. I think I would go further than he did. He said that QE exacerbated but did not cause inflation. What else will cause inflation if not such a massive expansion of the money supply? Milton Friedman said that inflation is always and everywhere a monetary phenomenon; it is caused by too much money chasing too few goods—“Milton! thou shouldst be living at this hour: the Bank of England hath need of thee”.
It was quite extraordinary to hear Gertjan Vlieghe, then a member of the Monetary Policy Committee, say in April 2020 that the balance sheet of the Bank would be comparable to those of the central banks of the Weimar Republic or Zimbabwe—his words, not mine. How can we look at that and not consider the consequential impact on people’s lives in the real world?
I have little to add to the brilliant analyses of my noble friends Lord Bridges and Lord Lamont, but let me make a point about accountability. When people complain about rising prices, rising asset values and the difficulties of having to run to stand still, to whom should they direct their complaints if the root causes are independent authorities, which have been put deliberately beyond the reach of elected Ministers? If the vast majority of the decisions that impact on our lives are taken not just by the Bank of England but by a series of other quangos and agencies, from the Climate Change Committee to the European Court of Human Rights and the Office for Budget Responsibility, the act of casting a ballot is devalued.
That is something that this report takes some steps towards addressing. My noble friend Lord Bridges hinted at this, but he could have gone a little further. He talked about the mandates and appointment processes for governors and other senior staff at the Bank of England. If you are in for a couple of terms and then no one will bother you again, that strikes me as a fairly weak form of accountability.
I would also like to see Parliament taking some responsibility for the mandate of the Bank. Specifically, I would like to see its terms of reference tweaked so that this kind of unprecedented monetary expansion cannot happen without approval. I would like to see the terms of the Bank of England changed so that the maintenance of the value of the currency, sound money, is expressly recognised as one of its goals. Whether or not you agree with me, and whether or not you think that is a proportionate policy, surely we need stronger mechanisms of oversight.
Today is local election day. It is one of the few elections that your Lordships are allowed to participate in. The polls are still open, but I will go out on a limb here and say that the election result will be a massive win for the “Can’t be bothered” party. The number of people who took the trouble to register to vote but did not bother to cast a ballot today will be greater than the votes cast for all the other parties put together. Why is that? Is it sheer cynicism or apathy? Is it not that the decisions that most directly touch on people’s lives have been lifted out of the democratic process and placed in the hands of bodies that are invulnerable to public opinion? Changing the mandate of the Bank of England will not solve that problem on its own, but it is part of a process of restoring the supremacy of the elected representative and thereby restoring honour, meaning and purpose to the act of casting a ballot.
Lord Burns (CB)
My Lords, I am also grateful to the noble Lord, Lord Bridges, for introducing this debate. I congratulate the noble Lord, Lord Moynihan of Chelsea, on his maiden speech and his entrepreneurial career. I am sure we will hear much more from him on many of the topics we are talking about this afternoon.
This is an important report. The noble Lord, Lord Bridges, set out its conclusions well. In particular, he described how the monetary framework has been severely tested in recent years. I was not a member of the committee when the report was published, but I am pleased to say that I am now once again a member of it.
It is striking. We must bear in mind that the increase in prices over the past three years has been over 20%—more than three times the target at the time. We should not forget that, on the eve of the Russian invasion of Ukraine, inflation was already well above target. It must also be acknowledged that this is a problem shared with many other major countries, although it has been pointed out that some managed to avoid this—certainly to the extent that we have suffered.
I will limit my comments to some of the issues covered in the report where I have some experience. The first relates to economic forecasts. When the noble Lord, Lord Lamont, introduced the inflation target rating in 1992, we knew that maintaining inflation within a narrow range would not be easy. Interest rates have to be set on the prospects for inflation some time ahead. This inevitably means some reliance on judgments about the outlook over the next two years or even more.
I carry many bruises from my own time in the forecasting business. The evidence is clear that making accurate forecasts for inflation over this kind of time horizon is very difficult. The noble Lord, Lord Lawson, often said to me when he was Chancellor that forecasts work well when the economy is behaving well and you do not need them, but they are at their weakest when the economy is subject to volatile circumstances and you need them the most. I think the experience since the Bank of England’s independence is consistent with this. During the great moderation, as we know, the forecasting record was astonishingly good. It is only when we have come to this time of turbulence that we have seen just how bad it can be.
I remain an enthusiastic supporter of trying to create models of economic processes. There is much to be learned from the discipline of testing hypotheses about behaviour against data from the past. But, if events take us outside our historic experience, it has to be said that these relationships will be prone to error. I fear the Covid lockdown was one such experience. So, although I have some sympathy for the forecasters, especially in a world full of people with perfect hindsight, we also need to ask questions about the lessons that should be learned.
I am concerned that, over the years since the MPC was established, an increasing emphasis has been given to model forecasts, and I worry that the MPC has gone too far in this direction. Forecasts must be used with care, and model forecasts should not be the only guide to decisions. They have to be looked at, as several other speakers have said, alongside a range of other indicators: monetary and financial measures, as well as labour market pressures and, crucially, what is happening in other countries and in world markets generally. It is also advisable to spend time understanding the source of errors in the recent past and whether they have clues to the future.
Reading the Bank’s monetary reports, I have a further worry. The forecasts are presented as the forecasts of the MPC itself. It takes collective ownership of the process and the forecasts, but I am not sure how a group of this size with several part-time outside members can do this effectively. Surely it would be better if the forecasts were owned by an executive forecasting team, and the MPC would then take them into account, along with other forecasts, analysis and insights, in making its decisions.
This leads me to the concern in the committee’s report that there might be an absence of challenge, and the issue of intellectual diversity. I would like to see the minutes include contributions from individual members of the MPC, setting out briefly why, on balance, they have reached their decision and the main factors they have considered. We have the votes but not the reasons for the votes set out in a systematic way.
Recently, I have been looking at some of the published minutes of the monthly monetary meetings that took place between the Chancellor and governor in the pre-independence era. One interesting feature there is the extent of the challenge between the main participants—what came to be known as the “Ken and Eddie show”. At the end of those meetings, first the governor and then the Chancellor would summarise the balancing of the factors and their views on whether to change interest rates. There are some useful ideas here about how this could work for members of the MPC, so that we could hear rather more about the balancing process, rather than this astonishing degree of agreement most of the time.
My final group of concerns is around the issue of operational independence versus policy independence. In its initial form in 1997, the emphasis was very much on operational independence, with the Chancellor setting policy through the remit and the inflation target. With the extension and greater complexity of the remit, and with the emergence of QE and QT, this distinction has become, to my mind, much more blurred. For example, once the inflation rate is outside the normal tolerance band, it seems to me that there is an important question of who should decide the speed for aiming to return inflation to its target. For me, this is as much a policy question as it is an operational question. Surely the Chancellor should be more actively involved in this issue than we have observed.
There is a similar issue about governance surrounding QE and QT, and there is a clear role for both, as temporary measures under extreme circumstances, to occur. We saw the success particularly during the international financial crisis. However, since the onset of Covid, it has been done in a way that has been pointed out by several speakers: it has logged up huge mark-to-market losses and higher debt interest costs. We have still had no answer to the questions: “What account was taken of the potential fiscal costs when the decisions were made, who should have been the decision-makers and who should have been bearing the risk?”
The Bank sees QE as a monetary operation and therefore one for it. But the Treasury, of course, provides the Bank with an indemnity for any losses. This suggests to me that this is a policy question as well as an operational matter, and I am surprised that there appears to be no established or regular mechanism between the Bank and the Treasury for looking at the fiscal risks involved in a policy that is as extensive as it has been.
Finally, the Bernanke report set out many criticisms of the forecasting hardware of the Bank and the failure to monitor and maintain some parts of it. Along with the noble Baroness, Lady Lane-Fox, who mentioned this, I find it deeply disappointing that some of the basics of model building and the handling of digital information should be ignored when the model itself is given such a prominent role. I hope that we will see the kind of investment that is needed there if we are to bring that into the modern age.
Lord Frost (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Burns, in this extremely interesting debate. I too thank my noble friend Lord Bridges for securing it, and all the committee members for their work on this thorough and interesting report. I congratulate my noble friend Lord Moynihan on his excellent maiden speech, with which, as noble Lords will hear, I have a good deal of sympathy in many areas.
I will make two points, one minor and one major. The minor point is one that other noble Lords have mentioned: the committee’s recommendations on the need for intellectual diversity in the Bank. It is still surprising that Bank officials and the MPC missed the significance of monetary policy in 2020 and 2021, and more intellectual diversity would surely have made this less likely. I would use the word “dismissive” rather than “defensive”, which my friend Lord Bridges used. The rather dismissive responses from the Chancellor and the governor suggest that they have not really taken this point on board. Indeed, perhaps they rather missed it by simply reiterating the existing processes and justifying them on the grounds of other kinds of diversity. As other noble Lords have said, since the report we have had the Bernanke review, with its heavy criticism of the modelling and forecasting, which perhaps reinforces the committee’s concerns. Perhaps the Minister, in responding, could indicate whether there is any chance of a rethink in this area.
I move to my major point. Although, like the committee and, I think, most noble Lords, I support Bank independence, one must acknowledge that, over the last couple of decades, central banks have, in practice, come to enjoy great economic powers with rather little accountability, scrutiny or democratic legitimacy. That is not generally because the Government have chosen to give them these powers—in this country at least. The gradual widening of the Bank’s mandate, set out so clearly by the committee, is a consequence rather than the cause of this development. The real underlying cause is the mistakes in global economic policy-making over this period. I will take a moment to spell this out a little more deeply. In doing so, I am in part indebted to the analysis of my friend, the brilliant economist Bernard Connolly, in his latest book.
Central banks and Governments the world over are now in a very difficult position because of policy mistakes over the last couple of decades. In brief, in the late 1990s and early 2000s, the Fed, and other central banks following it, held rates too low for too long and generated an unsustainable boom. When this became obvious, central banks had a choice between creating a recession by raising rates to choke it out or avoiding this by pushing rates down. That was an extremely political choice for a central bank to have to make. There was only one possible answer it could give in a democracy: to push rates down. This in turn generated another bubble, the credit bubble, which fed through to asset prices, which in turn collapsed in 2008. Central banks faced the same political choice, and again pushed rates down, this time to zero or sub-zero.
In 2020, we had the third crisis. The same choice was faced and the same solution was taken. Although there has been much criticism of the Bank for its massive boost to QE in 2020, I do not entirely blame the Bank authorities. I have vivid recollections of the atmosphere of panic and crisis in No. 10 at that time, as the economy came close to having a heart attack. Hindsight is a wonderful thing, and I am not sure the central banks could have taken any other decision at that point. The question is more: how did they handle the consequences and how quickly did they realise that some unwinding was necessary?
The negative supply shocks plus the huge US fiscal stimulus—let us not forget that—meant that there was finally a feeding through to inflation, which has had to be choked off by an effort at normalisation. Of course, we now have a financial structure, as we discovered in 2022, that has become used to very low long rates and is vulnerable if there is a sudden adjustment towards equilibrium. Hence the current situation. What can we do about it?
We can look at our economic performance, and one conclusion that I, and I think others, draw is that western economies generally cannot live with interest rates that would have been considered normal a generation ago, unless there is huge fiscal stimulus. That is a very serious problem, which opens the question of how long central banks generally, and the Bank of England specifically, can sustain the current near-normalisation. The impact of the US stimulus is now weakening and, very soon, central banks will face the same choice once again: will they hold rates relatively high, at the cost of a recession, or bring them back down, as so many are now urging, at the price of sustaining the imbalances and building them up further?
I have set this out at some length to underline just how political the decisions are that the Bank, and central banks generally, have had to take in recent years. Independent central banks may have started off as providers of inflation control services for Governments, but they now do much more than that. The political decisions that they have taken, in each case to defer difficult economic problems, have generated an environment in which we can only avoid liquidation and recession with super-low interest rates. Yet capitalism, as we have come to understand it, cannot function with super-low interest rates. The normal incentives do not work; there is malinvestment; asset holders are enriched and risk takers lose out; and—we are seeing this very much now—support for the system continually erodes, such that we have a whole generation now ready to take a punt on socialism.
Where do we go from here? I think that there are two routes. The first, which I think it is the route cautiously, or implicitly, suggested in the committee report, is to accept this status quo, recognise the broader political power exercised by the Bank and try to give it some enhanced democratic scrutiny from this Parliament. I understand the logic, but I am slightly unconvinced about the constitutionality of such arrangements. It seems to me that it is for the Government to get the relationship right with the Bank. That perhaps will, and ought to, involve more vigorous debate in public, within the framework of bank independence, than we have got used to. Then Parliament should scrutinise the Government on how well they are managing that relationship and its results, in terms of both fiscal and monetary policy.
I also fear the consequences of simply accepting the status quo. It is a palliative, and a fig leaf for a situation that is, as I have said, really very unsatisfactory. If we continue to repeat the cycle of the past couple of decades, we will end up with continued fiscal stimulus, ballooning debt, accelerating inflation once again, greater government control of the economy, greater direction of investment and business efforts and, in the end, very likely a quasi-socialist economic system.
The alternative is to try to roll things back, to limit the Bank to focusing much more narrowly and specifically on inflation control again, and to find a way of dealing with the economic consequences of the normalisation that would follow. This would at least be to deal with causes not symptoms, but to make it work would mean a major effort to raise the productive capacity and potential growth of this economy through a radical programme of, if you like, “recapitalismisation”—an ugly word, but an important reality. That would mean huge deregulation; a determined and sustained effort to get tax and spending down; and an end to the crushing burden of net zero, planning reform, labour market liberalisation and much more. Perhaps we will also get lucky with AI and it will, as so many hope, give us a magic free gift in productivity increase. I suspect, however, at least over our time horizon, that it is unlikely to do more than smooth off the edges of the turbulence of reform. Embarking on such a reform programme would, in my view, be the right thing to do, but it would require careful planning and a Government who were ready to explain it, win a mandate for it and push it through. Noble Lords will have their own views on how likely such an outcome is.
To conclude, formal bank independence is one thing, and it is important, but the most important thing is to discuss, debate and engage with the underlying political and economic reality. No Government, of any political colour, can avoid that, or abdicate their responsibility for managing the economy with the central bank and ensuring proper democratic engagement in the consequences. We have not had that properly for some time, but we have some extremely difficult choices coming, so we will need it in future.
Baroness Liddell of Coatdyke (Lab)
My Lords, I compliment the noble Lord, Lord Moynihan of Chelsea, for a very interesting maiden speech. I am sure that we will hear an awful lot more from him in the months and years that lie ahead.
I must start with a confession: I took the Bank of England Bill through the Commons in 1998 and now, more than 25 years later, I sit on the Economic Affairs Committee. It is good to be able to look and see how the Bank has performed such a dramatic change of role, but particularly at a time when, as the report says, there is a real opportunity for change and to ensure that issues are dealt with in a more modern and inclusive manner.
The decision to give the Bank operational independence had not been announced during the general election campaign. I, as the brand new Economic Secretary to the Treasury—a job that I had not been shadowing, given that I was a comparatively new MP, having come in in a by-election—heard of it for the first time when the Chancellor announced it to the governor and his Treasury civil servants. I overheard one of them say, “This is what it feels like to be governed”. It was quite a dramatic turnaround. Fortunately, I had a background as an economist and economic reporter for the BBC, so I knew a little bit about it, but I had to get up to speed—so I convinced my old friend Alistair Darling to go for a Thai curry that night. The advice that he gave me was, “Watch the DMO—setting up the Debt Management Office is probably the most difficult thing that you will have to do”. I think that he was proved right. I think that I and some of the civil servants who worked on it made mistakes, because we did not fully understand how the market worked. That is my confession.
We nevertheless took the legislation through, and the independence of the Back of England has been a very good success. There have been areas that have not worked out because of changing circumstances but, overall, it has ensured that political interference has more or less gone away—I will come back to that later. The Economic Affairs Committee is united in support for the preservation of that independence. There is, however, a recognition—as our chair, the noble Lord, Lord Bridges, pointed out—that public confidence in the Bank has fallen in the face of global and domestic instability, which has seen the Bank not meet the 2% target for inflation over the past two years. Errors in monetary policy have added to the shocks brought about by Covid, Ukraine and international instability, although the Bank is not the only central bank that is having to deal with these issues.
There are a number of issues that are needed to restore confidence in the Bank, and we outlined some of them, but I want to concentrate on the relationship between the Bank and the Treasury, which the noble Lord, Lord Bridges, mentioned in his opening speech. There are challenges of groupthink. At various stages of my career, I have been part of the groupthink, and sometimes you have to find mechanisms to break out of it. I also want to look at the work of Dr Bernanke, who was commissioned to look at forecasting and whose report was published, as we know, a few weeks ago. I was very interested in what the noble Baroness, Lady Lane-Fox, said about the concentration he put on computers. I am more or less technologically illiterate, but even I knew that any big, world famous institution really had to look at modernising its computer systems, and I am shocked that that did not happen at the Bank and that Bernanke found that the Bank was behind the rest of the world.
When the noble Lord, Lord Macpherson, gave evidence to the committee, he brought along the letter sent to the Bank of England setting out the responsibilities of the Bank by Gordon Brown, as Chancellor of the Exchequer. The letter was one page and about four short paragraphs long; enough to make it clear that, in return for operational independence, the Bank had to meet the inflation target. He then produced the current letter from Chancellor Hunt, which was many pages long and added a list of issues the Bank had to “have regard to”, as we heard earlier. I could be unkind and say that this is virtue signalling, but, frankly, it did look more like a press release than a commitment to monetary and fiscal stability. George Osborne likened the “have regard” issues to a Christmas tree, and he has a point. One of our witnesses pointed out that the structure of DNA is fewer than 900 words—much shorter than the Bank of England letter.
I contend that the “have regard” issue is a diversion from the core work of the Bank. The chair of the Court, David Roberts, when he gave evidence, drew attention to 31 “have regards” that the Bank had to take account of. It is the job of the Treasury to develop fiscal policy and the job of the Bank to concentrate on monetary policy. They should not be jammed together as if it is an unsatisfactory mix and the Treasury is the boss. There has to be an atmosphere, first, of challenge, and, secondly, of putting to the people who know what they are doing one side of the job, and the people who know what they are doing, the other side of the job. That way will give a sense of reality.
There has been a lot of talk about quantitative easing. It has made the Bank and the Treasury much more dependent, blurring monetary and fiscal policy, and that leads to the need for a memorandum of understanding between the two organisations to move forward. Like other noble Lords, I have to ask why the Chancellor has refused to make the deed of indemnity public. It would be very valuable to see that deed of indemnity.
Underpinning this is the risk of groupthink. We know that there has to be a close relationship between HMT and the Bank, but it has to be an arm’s-length exchange of views, rather than a dictatorial one, and it is beginning to look a little like a dictatorial one. I am not necessarily criticising the Treasury: I loved working in the Treasury and I am in awe of some of the officials I worked with—one or two of whom ended up as deputy governors of the Bank—but it is so important that that separation is remembered.
Finally, let me say that there needs to be a diversity of thought and culture within the Bank. Stephen King said that the Bank may be independent, but the Treasury casts a shadow over it. There has to be an independent review of how that can be addressed, and there should be, as Bernanke’s report and our report point out, a look at how other public appointments are made, looking for best practice. I think the number of non-executive directors on the Court of the Bank needs to be expanded, because you need challenge. Anybody who has run a reasonably big organisation knows how important challenge is, and there seems to have been an environment that limited the extent to which there could be challenge. I look forward to the future of the Bank. I think the claim for independence that comes out in the report, and came out in our witness statements, make it clear that it was the right decision at the right time.
Baroness Noakes (Con)
My Lords, I was a member of your Lordships’ Economic Affairs Committee when this report was produced last year, and I am delighted that my noble friend Lord Bridges of Headley has been able to secure this debate today.
As we have heard, the Bank of England acquired independence in relation to monetary policy as one of the Labour Government’s first acts in 1987. At the time, I was a non-executive director on the Court of the Bank of England and so had something of a ringside seat as this unfolded. It was hugely popular in the Bank and, I believe, with almost all the commentators at the time.
The Bank of England was not and is not completely independent of the Government. When it was nationalised in 1947, the Bank of England Act gave the Government various powers over the Bank, including the power to appoint the governor, the deputy governor—who was a singleton at the time, but there are now four—and its Court of Directors.
As was common for nationalisation legislation, which we have fortunately not seen much of in recent years, the Act contained a power of direction that can be exercised by the Treasury, although this does not extend to monetary policy. That power has never actually been used but, when I tried, during the passage of last year’s Financial Services and Markets Bill, to get the Treasury to give it up, it was absolutely sure it needed to keep it, so we must regard this power of direction as a live part of the constitution of the Bank of England. My point is that this means that the Bank of England has only qualified independence—but, importantly, the extent of its independence is in the hands of the Government and of Parliament.
Similarly, monetary policy independence is not absolute, either. The members of the MPC are appointed by the Government and statute defines the monetary policy objective—that of price stability. That is then amplified by letters from the Treasury which, inter alia, tell the Bank what price stability means: that is where we get the inflation rate target. This is just a roundabout way of saying that I do not think we should overstate Bank of England independence. It is not absolute but is always bounded by political decisions. I agree with what the noble Lord, Lord Burns, said about QE raising the important issue of whether further political decisions should be taken to change the scope of the Bank’s independence as we define it.
Our report set out to find out how independence was working in practice. In the inflationary turmoil of the last few years, it is easy to forget that the UK experienced a relatively long period of low and largely stable inflation, from the early 1990s until 2020. It would be wrong, however, to give the credit for that to Bank of England independence. First, my noble friend Lord Lamont, as he explained earlier, introduced in 1992 the concept of publicly targeting the inflation rate. By the time the Bank was given independence in relation to monetary policy, inflation was already at its then target rate of 2.5% in terms of RPI. So the Bank did not bring inflation down. Secondly, as evidence to the committee made plain, there were other factors at play—in particular, the impact of globalisation, which created a benign price environment. None of our witnesses claimed that the years of low and stable inflation were down to central bank independence.
We also looked at the strength of the independence model in light of the inflation experience of the last three years, which has clearly been less than impressive. The model appeared to do well for the first 20-odd years, but more recently it has been tested and found wanting. There have been serious misjudgments about whether the inflation spike which emerged was temporary, and we are still a way off the 2% target, as the OECD charmingly reminded us this morning.
As we have heard, the Bank’s forecasting record is not stellar. An independent review within the Bank in 2015 found that, while the Bank appeared to be in the pack with other central banks, its two-year horizon forecast—the important one in bringing inflation down within target—had, to use the bank-speak in which the report was written,
“statistically significant evidence of inefficiency”.
I think that means that the Bank was not very good at it, and its recent experience has raised even more questions.
As we have heard, last year the Bank commissioned an external review by Dr Bernanke, the former chair of the Fed. The Bank should take credit for that. The conclusion of the report was that the models needed a serious overhaul, and that it needed to move towards more scenario analysis and away from fan charts. However, the narrowness of its terms of reference, which has already been referred to, meant that it did not shed any real light on what went wrong.
As has already been referred to in this debate, several of our witnesses drew attention to what was happening to money supply—fuelled by the continuing QE—in the two years or so before inflation took off. But this barely got a mention by the Bank or MPC members at the time. Some serious thought about what was happening would have been useful, but the Bank is part of a global central bank consensus that has largely ignored money supply for a considerable period of time. I was disappointed, but not surprised, to find that the Bernanke report made no comment on this.
The committee’s conclusion that the Bank’s independence should be preserved was in line with that of our witnesses, but I think the conclusion owes more to sentiment than to hard evidence of the success of the model. I am not arguing that monetary policy independence should be done away with, but we need to see it as a pragmatic judgment which suits politicians and central bankers alike, rather than one with a firm evidence base, and we should be prepared to modify what we mean by independence as new facts emerge.
Of course, the key issue becomes whether the accountability framework surrounding the Bank is strong enough to underpin continuing monetary policy independence. I believe that the Bank failed the British people when it let inflation get out of control, but what has happened as a result of that? The governor has had a few uncomfortable appearances before parliamentary committees, and he has had to write a few letters to the Chancellor. Who takes responsibility for the dire state of modelling found in the Bernanke report? Who carries the can for the damage inflicted on the economy from excessive inflation and the resulting interest rate hikes? It seems that no one does.
I believe that there is outstanding business here. The Government have confirmed their commitment to monetary policy independence, but independence cannot exist in a vacuum. The Government need to reflect on whether that independence has sufficient checks and balances built into it, because independence without strong accountability is a recipe for disaster. The modest recommendation in our report is for a five yearly review by Parliament, and that would be a very good start.
Lord King of Lothbury (CB)
My Lords, I too was a member of the committee that produced this report, and I declare an interest, in every sense of that word, as a former Governor of the Bank. In addition to welcoming the noble Lord, Lord Moynihan, I also pay tribute to the noble Lord, Lord Bridges, for his chairmanship of the committee, and the way he brought us all together when assessing the evidence from an impressive array of witnesses.
I want to make just three points. First, I believe that operational independence of the Bank has served the country well. When I joined the Bank in 1991, interest rates could change at any moment, on any day, at the whim of the Prime Minister or Chancellor. They often reflected political considerations. If a Budget was well received by the markets, the Government would reward themselves with a cut in bank rate. If circumstances suggested that a rise in bank rate would be sensible, it was postponed until after an election. I remember a meeting between governor and Chancellor—I stress not the noble Lord, Lord Lamont, but another Chancellor—where the Chancellor began the meeting by saying “I want to make it clear that there will be no rise in interest rates today, but having said that, I’d now like to hear the evidence”.
A much more systematic approach to monetary policy was adopted after our exit from the exchange rate mechanism in 1992 under the noble Lord, Lord Lamont. An inflation target was introduced, and monthly meetings were held according to a pre-announced timetable. The Bank had a genuinely free voice through its new quarterly inflation report. These were very important changes, but it was only with the announcement of operational independence in May 1997 that the risk premium in long-term interest rates fell sharply, as the belief that political motives would influence the degree and timing of interest rates was removed.
Several speakers have referred to the Bank’s record since 1992, and there is no doubt that the noble Baroness, Lady Noakes, is right in stressing that it was not just in 1997 that the good inflation performance began; the Bank’s record between 1992 and 1997 played a role in leading to independence. But in the past few years, that record has clearly been tarnished by the rise in inflation to a peak of 11.1%. That leads me to my second point, stressed earlier in this debate, about the lack of intellectual diversity on the Monetary Policy Committee. Over its lifetime, there has not been a real lack of intellectual diversity on the MPC. We have seen many split votes; I was in a minority on two occasions as governor. More recently, after Covid arrived, at the point when it really mattered, we did not see a good deal of challenge to the prevailing narrative.
There continues to be a good deal of disagreement on the causes of the recent rise and subsequent fall in inflation. But many economists, both here and in the United States, pointed to the likely impact of a very substantial monetary and fiscal expansion boosting aggregate demand, at a time when the measures introduced to counteract Covid were lowering aggregate supply. Too much money chasing too few goods is, and always has been, a recipe for inflation. It is troubling that not just on the Monetary Policy Committee, but also on the Federal Reserve Open Market Committee there were no dissenting voices to challenge the view that inflation was transitory.
This lack of challenge is certainly not confined to the Bank of England. The academic economics profession has essentially jettisoned the idea that, from time to time, one should ask what the growth rate of broad money was telling us, especially at a time when, as in the United States, it was rising at the fastest rate at any point since the Second World War. The excessive reliance on models that ignored money altogether was somewhat foolish.
In 2020-21, when inflation started to rise, there was not a single dissenting vote on the MPC and no mention of the monetary data in the Bank’s reports. Bank rate exceeded its pre-pandemic level only in May 2022. I understand why this groupthink came about—because that had become an academic consensus—but, unfortunately, its impact on monetary policy led to the problems that we are now too familiar with.
Some commentators have concluded that a different way of presenting the Bank’s forecasts might solve these problems—which, I think, was the implicit suggestion of Ben Bernanke’s report—but the mistakes of 2020-21 were not the result of presentation. While the Bank used fan charts and the Federal Reserve used dot plots, it did not make any difference; they both made the same misjudgment. What really matters are judgments about the state of the economy and the way that monetary policy works. Our recommendation is to focus on the need for genuine intellectual diversity and, to meet that point, reform of the appointments process to senior positions in the Bank.
My third point concerns the mandate and remit given by the Chancellor and Parliament to the Bank. Since 2013, the Bank has acquired responsibilities for prudential regulation of banks and insurance companies, and has an even wider responsibility for financial stability through the Financial Policy Committee. It is also the resolution authority for the United Kingdom. Those new tasks have increased the number of staff in the Bank from under 2,000 to over 5,000, with an inevitable reduction in focus on its monetary policy mission. As others have said, the expansion of responsibilities has gone further with the introduction into its mandate of issues such as climate change, the competitiveness of the City and other secondary objectives.
The expansion of central bank mandates makes it more likely that governors will start to behave as politicians and try to cultivate popularity through venturing into areas well outside monetary policy. Trying to keep inflation close to the target and maintaining the stability of the financial system is more than enough for one institution. As many of our witnesses pointed out, climate change policy is a matter for government, and, frankly, it is ridiculous to suggest that central banks can have any major impact on it. Therefore, there needs to be a cull of the additional secondary objectives, remit letters and “have regards to” obligations imposed on the Bank since independence was granted in 1997. Too many responsibilities make it difficult for senior people in the Bank to think strategically.
Concerns about the lack of intellectual diversity and the burden of excessive responsibilities are not arguments against central bank independence. Rather, they are the opposite: they point to reforms that can reinforce independence and restore the mission of the Bank of England to ensure the stability of prices and the financial system. Whichever party forms the next Government, I hope that it will take a careful look at our report.
Lord Blackwell (Con)
My Lords, I welcome the opportunity to contribute to this debate on the report from the committee of which I am honoured to be a member. I am also very honoured to follow the speech by the noble Lord, Lord King, who has a very distinguished record, and the excellent maiden speech by the noble Lord, Lord Moynihan.
Although much in the report is critical of the Bank of England, I will start, as others have, by recognising that the Bank is staffed by public servants who endeavour to do their best in the role that we have given them. The problem is ours, in that we have delegated responsibilities to them with expectations that are beyond what unelected officials can properly deliver.
The actions of the Bank in its control of monetary policy have huge implications for the state of the economy and the welfare of British citizens. Monetary policy has been given the sole target of controlling inflation, but it is an illusion to think that it can just act on inflation in isolation. By acting on interest rates and aggregate demand, the decisions of the Bank can create economic booms or recessions, can inflate or deflate asset prices with resultant changes in the distribution of wealth, and has a huge impact on the daily mortgage costs, interest payments and living standards of everyone in the country. Since independence, those critical decisions have been entrusted to a small group of unelected officials, who, because they are independent, are not subject to significant challenge or accountability from government or Parliament. It is the issue of accountability on which I will focus.
Putting such important economic decisions in the hands of expert officials might make sense if economics were a precise science. Unlike science, where the variables are inert agents that can be reliably modelled, the movement of the economy reflects the decisions and interactions of human beings and their expectations and state of mind, as the noble Lord, Lord Lamont, said. There is no equation that can reliably predict the kinetics of how an economy in disequilibrium will respond to specific policy initiatives or anticipate the impact of unknown world events. The search for a perfect forecasting model is doomed to failure.
In the absence of a perfect forecast, the decisions of the Bank of England require judgments about not just the forecasts but the potential risks and benefits of alternative actions on the population and its standard of living. One would think that such important trade-offs are properly the preserve of democratic institutions that are answerable to the public for their political choices. What is more, it is fanciful to suggest that monetary policy can operate completely independently of government fiscal policy, because, in the short term, the two economic policy levers impact on the same economic variables, either stimulating or contracting the real economy. The Bank of England’s actions can work either with or to counteract the fiscal policy of the Government. If the two are not co-ordinated, we will not get the optimal outcome.
The Bank of England’s decisions are therefore in many respects ultimately political rather than just technocratic judgments. It is not fair to ask unelected officials to take responsibility for political judgments, nor right or proper in a democracy with an elected Government. Government and Parliament exercise power over many other important policy areas, including national defence and the ability to declare war, so it is not clear to me why we entrust our elected Government with those decisions but feel it uniquely necessary to exclude them from this one component of economic policy.
Nevertheless, I accept that the doctrine of central bank independence is now hard to row back from, and I recognise that the idea that independence protects the economy from irresponsible government policies has been welcomed and is baked into the bond markets. Even so, it is not sensible or necessary for the two economic levers of monetary and fiscal policy to be decided at arm’s length. We heard evidence in the committee that working-level engagement between the Bank and the Treasury is carefully controlled to avoid any impression that the Government and the Treasury are seeking to influence the Bank. That is an unnecessary constraint.
During the 1990s, before Bank of England independence, I was fortunate to have been the Prime Minister’s representative in the regular working meetings between the Bank of England and Treasury officials in the office of the then Permanent Secretary to the Treasury, now the noble Lord, Lord Burns. These allowed all the economic issues to be debated openly between the Bank and the Treasury, with all the relevant information. Although, as the noble Lord, Lord Burns, described, the final decision on monetary policy then rested on agreement between the governor and the Chancellor, any attempt to push the then governor, Eddie George, into going along with something he thought was improper would have been halted in its tracks by the threat of resignation, and I am sure the same would have been true of his successor, the noble Lord, Lord King. One step we can take is to break down the unnecessary Chinese walls and recreate sensible, open engagement between the Bank and the Treasury. I hope that my noble friend the Minister will take this on board.
I remind the House that, as the noble Baroness, Lady Noakes, pointed out, the era of low inflation was initiated during this period before Bank of England independence rather than being a consequence of independence. If we are unable to unwind the Bank of England’s independence, we should consider how we can make the appointed officials more accountable to Parliament for their decisions.
As others have set out, the Bank has not had a glorious record in recent years, underlining the need for greater scrutiny and accountability. I argue that, based on the previous governor’s theory of excess global savings, interest rates were kept too low for too long in the years before the pandemic, which, together with a huge increase in money supply through QE, led to unsustainable increases in asset prices. The messaging that low interest rates were the new norm also led individuals to take on borrowings that left them cruelly exposed. As a result, it is arguable that the delayed high-scale increase in rates that the Bank then had to adopt was also more damaging than it needed to be. Like any system, the reaction of the economy to a sudden, large shock is more violent and damaging than a gradual change that gives people time to adjust their finances.
Since the trigger for inflation was the massive increase in external prices from the pandemic and the war in Ukraine, real incomes and aggregate demand had already been depressed. If the inflation was not initially caused by excess demand, although facilitated by the money supply, the conventional theory that a further squeeze on living standards was required is itself open to debate. We no longer include mortgage costs in the favoured consumer prices index, but the rapid, steep rise in interest rates, by contributing to pressures on household incomes, may itself have been a factor in increasing pressure for higher wage increases. In short, the Bank of England’s actions may well have been responsible for a larger, longer and more painful drag on the economy and living standards than could have been achieved with different policies and different judgments.
Since the Government cannot be the judge for the actions of an independent Bank, that task must fall to Parliament. As set out in the report, there is a strong case for more effective parliamentary scrutiny, including a five-yearly review and perhaps a Standing Committee of both Houses, with permanent technical support that can engage in a more timely way and satisfy itself that the full range of options and implications have been properly considered. I would go further and suggest that in holding the Bank to account for its actions, such a committee could have the remit to report to Parliament if it no longer has confidence in the Governor of the Bank of England. The structure of parliamentary accountability may not be within the control of my noble friend the Minister, but I hope the Government will lend their support to such proposals.
In conclusion, I accept that these suggestions may not be welcomed by those who hold Bank of England independence as an act of faith, but the extent of the delegated powers now exercised by unelected officials without proper accountability cannot be right. If we cannot reverse that decision, we must take action to enable it to operate with a framework that provides better democratic control.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the noble Lord, Lord Bridges of Headley, for introducing this debate and thank the Economic Affairs Committee for its report, some of which I agree with and some of which I strongly disagree with.
There are two themes in my remarks, addressing two key elements of the committee’s report: the lack of intellectual diversity in the Bank and its climate remit. I must begin by noting the lack of diversity in the discussions in your Lordships’ House today. I would love to see more noble Lords who focus on poverty, workers’ rights, the environment and the place of small and medium-sized enterprises and regional economies in debates such as this. There has been a high degree of groupthink in our debate today—that is true across our politics, of course, and there is a lack of democracy across all our structures. I acknowledge that I am addressing these remarks to noble Lords who are not in this Chamber rather than those who are here and speaking today.
I want to address the committee directly, because I took a careful look at the list of those who gave testimony to it. One name stuck out—Positive Money—on whose works my remarks today draw, but other than that, I find it curious that no name that leapt out at me was a climate expert or a climate finance expert. I found no reference to the committee consulting with our own Environment and Climate Change Committee. I respectfully put to the committee that in future, if it is going to comment on climate issues and make them a central part of its report, it might want to focus on more diverse testimony.
That is in the intellectual context in which debate on the Bank of England is highly siloed. If we look at much of the commentary around the actions of the Bank in 2021 and 2022, the criticism that we have heard very often today is that, as inflation reached its peak, the Bank was too slow to act. However, interest rate rises cannot address the main driver of the inflation that we have seen—that is, the dependence of our economy on fossil fuels that are priced in a highly volatile way. Much of the criticism and some of what we have heard today has been based on the flawed theory that inflation has been due to a wage-price spiral.
It is too often ignored that rate hikes have highly unequal impacts. They attempt to bring down inflation by reducing spending. The poorest and most indebted are the most affected, while the incomes of those with savings and the profits of the banking sector are increased. Crucially, in the climate context, the rate rises have added to the downside of the investments that we desperately need, because many green projects require a large amount of upfront investment, despite the fact that we will all profit from the cheaper prices of the energy generation of the reductions in bills from insulation, et cetera. Also, we live in a society of crumbling infrastructure—housing, roads and many other issues.
The commentary of the Lords committee, with which I respectfully disagree, suggests that giving the Monetary Policy Committee and the relevant policy committee a remit on climate change risks drawing the Bank into the Government’s wider policy agenda and jeopardises the Bank’s ability to prioritise price and financial stability. It is worth going into the history of this. It is a demonstration that campaigning works that, in 2021, the Government’s target of reaching net zero was included in the Government’s letters to all key policy-making committees for the first time. It was a step signalling the Government’s support for ambitious action to steer the financial flows away from harmful sources such as fossil fuels and towards green and sustainable industries.
Critics will say, and I would entirely agree, that central bank policies alone are no silver bullet for environmental crises, but central banks have a central role. Think of those core priorities—those objectives of price and financial stability. There is no stability on a dying planet. The economy is a complete subset of the environment, 100% dependent on it, rather than on complex equations unattached to the real world or assumptions that all resources are either infinite or replaceable. No, they are not. The practical reality is that the UK financial sector continues to pour money into new fossil fuels despite the reality of the carbon bubble and the huge financial risk that represents, while relying on climate risk models that fundamentally do not accurately translate into the complexity of the financial risk. That is looking only at climate. I would also point to the fact that the Bank needs to look more widely at all the other planetary boundaries that we have exceeded. We are seeing a great deal of focus at the moment on novel entities—pesticides, pharmaceuticals and plastics—and there are huge financial risks in that area as well.
To put this in a broader frame, the UK financial and economic system remains highly vulnerable to “fossilflation” while at the same time the impacts of climate change, such as on our food supply, are already causing “climateflation”. I coin another word, “shockflation”. We are in an age of shocks—the geopolitics are very obviously extremely unstable—and all these things must be considered in the round rather than simply looking at the economy as a set of equations sitting outside this.
We also have too much finance, too much money going into the financial sector rather than the real economy, just as most of the money from quantitative easing went into raising inequality, making the few richer and the rest of us poorer—much as it was needed, at least at the start, to tackle the chaos created by the greed and fraud of the bankers. The Bank, the Treasury and the Government are far too dependent on failed, outdated models and mathematical equations which bear no resemblance to the real world.
I move to the present day and the open letter, dated 16 March, referring to the remarks made by the Governor of the Bank of England to the Lords Economic Affairs Committee, that the Bank has reduced its resourcing for climate emergency work, to which the noble Baroness, Lady Lane-Fox, referred. The timing of these remarks—this action—could not be worse in a world that is on fire, awash and melting. I have a direct question for the Minister and, indeed, the Labour Front Bench. Will they support the calls by so many eminent economists in a letter—I declare that the Green Party’s spokesperson, Molly Scott Cato, was among the signatories—to reprioritise work in the Bank to align the financial sector with the Government’s climate goals, reversing the resource cuts and to reassert the Bank of England as a climate leader, as a matter of urgency?
I shall briefly address the issue of the Bank’s intellectual diversity. It is not independent of failed ideology and a discipline that has simply run out of road. During the 2016 Brexit referendum campaign, I suggested to my now-House colleague, the noble Lord, Lord Cameron, that the remain campaign should stop saying “economists say”, because no believes them, and that is even more the case now. Neo-classical economics is the absolute opposite of systemic thinking; we need systematic, scientific, sociologically and politically literate thinking in the Bank and Treasury and across government. We are in the age of post-growth; not only can we not have infinite growth on a finite planet but we will not have growth in at least the coming decade. To quote the IMF chief, the “tepid twenties” are with us.
On diversity, they will not thank me for this, but I will suggest some names that the Bank of England should start drawing on: Jason Hickel; Kate Raworth; Julia Steinberger; Ann Pettifor; Tim Jackson and Judith Kirton-Darling. All of them spoke at the post-growth conference in the European Parliament last year that was backed by all but the far right group there. I shall hazard a prediction that there were several future economics laureates speaking there, with original thinking that is lacking in what is regarded as the economic mainstream.
I will quickly raise one final issue with the Minister. The New Economics Foundation states:
“The government could save £55bn over the next five years if it limits the amount of money the Bank of England pays interest on to commercial banks … The Treasury will pay out over £150bn to the Bank of England to fund its payments to the banking sector by 2028, this on top of the £30bn already paid out in 2023”.
Surely, this is something that other countries are not doing and that we did not do in the past, which we can reverse?
The Earl of Effingham (Con)
My Lords, I would like to thank my noble friend Lord Bridges of Headley for securing this important debate. I would also like to congratulate my noble friend Lord Moynihan of Chelsea on his excellent maiden speech. I have already enjoyed several discussions with him, and I am very much looking forward to all his future contributions. I should also highlight my entry in the register of interests.
I count myself extremely lucky to have worked in financial markets for 25 years, during which time I have had the privilege of working with some of the brightest individuals in the country, including a former employee of the Bank of England. It was essential in my role to understand and be able to explain currency forecasting in both the short, medium and long term. As anyone who has been involved in currency forecasting, or indeed any other type of economic modelling will know, it is notoriously difficult. Alan Greenspan, when he was chairman of the Federal Reserve in the 1990s, set his researchers the task of examining foreign exchange rates and, having number-crunched 30 years’ worth of data, they concluded that it was impossible to predict. It was therefore of interest to me that the committee report suggested that a lack of intellectual diversity at the Bank contributed to a misdiagnosis of recent inflationary pressures, as well as inadequate forecasting and modelling techniques. I agree with the report wholeheartedly: it is incredibly important to have a diverse range of personalities, backgrounds and experiences of both women and men that runs true in any business and board of directors.
However, as I hope I have demonstrated briefly to your Lordships, economic forecasting is challenging at the best of times. Even if you did have a different membership make-up, which is a key recommendation of the report and should happen regardless, the likelihood of forecasting outsized shocks to the system may increase only marginally.
It is a fact that many central banks other than the Bank of England did not see inflation coming as aggressively as it did. That is confirmed by Ben Bernanke’s review, published last month, when he said:
“A comparison of forecasting performance shows that virtually all forecasters—both in central banks and outside—failed to anticipate in a timely way the dramatic economic consequences of the post-2019 shocks”.
Therefore, on the basis that it is extremely difficult to forecast economic outcomes correctly, it would be highly beneficial if the Bank could provide the public with regular and alternative scenario analyses, aside from its main forecast, potentially as well as a dot plot. Primarily, it would demonstrate that the Bank is aware of and preparing for a variety of different shocks and, as a result, is sparking diversity of thought within the organisation and addressing preventive measures. Additionally, given that financial markets hate uncertainty, it provides those participants with the necessary information to apply a more balanced approach to their own potential future exposure models in different asset classes. Lastly, it encourages a more regular two-way dialogue and relationship between the Bank and its external stakeholders, which is critical. It is essential to build that relationship, communicate openly and challenge constructively where appropriate.
I will also briefly highlight stress testing within forecasting. Last Wednesday, the headline on the front page of the Financial Times read:
“Lenders are in the dark over private equity risk, Bank of England warns”.
The article continued:
“Exposure stress tests lacking … BoE regulator … said yesterday that lenders should routinely stress test their exposure but ‘hardly any banks do it well’”,
referring to private equity exposure. It is of course entirely correct to say that firms should routinely stress-test their exposure; it is best market practice. But it is also essential because so-called black swan events are no longer a rare occurrence. Since the global financial crisis, we have seen the ensuing Eurozone crisis, the unpegging of the Swiss franc, Brexit, the pandemic, the war in Ukraine, the September 2022 fiscal event and heightened geopolitical risk in the Middle East. Financial risk is omnipresent.
However, the Economic Affairs Committee report referred to Dr Bernanke, who found that:
“Some key software used in preparing the forecasts is out of date and lacks important functionality”
because
“insufficient resources have been devoted to ensuring that the software and models underlying the forecast are adequately maintained”.
If we follow the Bank’s premise that everyone must stress test well, which we should, it is vital that the Bank itself allocates sufficient resource and headcount to guarantee that it is employing up-to-date software and models.
Finally, the Bank plays a crucial role for every person in this country. That is an extremely powerful office of authority. It is right that it should be independent to ensure financial stability and confidence in the UK economy, which has multiple ancillary benefits to the population. However, as the report notes, that power is concentrated among a small group of individuals. I suggest that the Bank is as powerful as and has more responsibility than any of the largest listed companies in the UK, but they are answerable to shareholders. In this case, the shareholders of the Bank are the people of the UK who are, in turn, represented by elected government officials. While we must retain the independence of the Bank in setting monetary policy, we must also ensure that it is accountable to its shareholders.
I therefore ask my noble friend the Minister whether the Government will encourage the Bank, as a matter of urgency, to replace its out-of-date software and functionality for forecasting and stress testing. Will they ensure that the Bank allocates resource internally to provide the public with both more regular and supplementary forecasting scenario analyses? Lastly, will they encourage the Bank to complete, within an agreed fair and reasonable timeframe, the recommendations that came out of Dr Bernanke’s review?
Lord Turnbull (CB)
My Lords, I thank the noble Lord, Lord Bridges, for his skilful chairmanship of the committee and the support we had from the start. I congratulate the noble Lord, Lord Moynihan, on shoehorning so many interesting insights into the conventional constraints of a maiden speech.
In many ways, this was a difficult investigation. Serious criticism was made of the Bank’s performance by many serious people, particularly for the period 2020 to 2022. The focus of concern was that inflation, which had been kept close to 2% for over 20 years, suddenly took off and the Bank appeared to have lost control. By contrast, virtually no one advocated withdrawing operational independence or dropping or even recalibrating the inflation target. At least for now, the priority for the Bank was seen to be to rebuild its credibility by getting inflation back to 2% before looking at anything else.
What concerned the EAC was that we were repeatedly told by people in the Bank that there was always robust debate in the MPC, and alternative views were expressed. In March 2020, the Bank rate was reduced to 0.1% and no change was made to interest rates for 18 months, until December 2021, and at that time all votes were unanimous. During this period, inflation rose from 1.5% to around 5%, on its way to a peak of 11%, before the Bank reacted, and even then it reacted only cautiously. Where was the robust debate? In economics there is the concept of revealed preference: look at what people do rather than what they say.
The dominant narrative was that, after Covid, the economy was teetering on the verge of recession and inflation was likely to stay low. The forces that had pushed prices up were labelled as transitory: once the initial hit had ended, inflation would return naturally to its previous level. What this narrative missed was that there was a different story to be told: the sharp rise in inflation reduced the incomes of families and companies, and they would be anxious to try to recoup these losses, although in doing so they would perpetuate inflation. Also, during the Covid lockdown, people’s and companies’ bank balances—that is, broad money—increased substantially, so as soon as they were released to do so, households and companies started to spend again and had the money to do so. This was before supply chains could be fully restored. The result was a sharp rise in inflation which is taking time to be brought under control.
What we have seen would be regarded as groupthink. Was there enough diversity within the MPC to explore different scenarios, raising questions about the process by which members are selected? They say nostalgia is not what it used to be, but has the inaugural MPC appointed in 1997 ever been bettered for its range of experience?
In his memoirs, the late lamented Lord Lawson regretted the fact that, in 1988, he had underestimated the strength of the recovery and the upward pressure on prices. He particularly regretted the use of the word “blip”. Did the present Governor of the Bank of England make the same mistake with his use of the word “transitory”? How was it that there was so much focus on the narrative that interest rates needed to be kept low and so little attention to an alternative scenario in which, with supply lines disrupted, this sharp increase in spending would lead to a sharp increase in inflation?
The answer may be found in the report the Bank commissioned from Dr Bernanke on its forecasting. In it he drew attention to the excessive focus on a central forecast and the lack of investigation of alternative narratives. We should bear in mind the maxim of George Eliot: prophecy is the most gratuitous form of error. Dr Bernanke’s recipe for this was that alternative scenarios should be looked at more, as the Bank had failed to realise that we were in a different world and that it was not in Kansas any more.
In mitigation, the Bank has claimed that it did no worse than other central banks. This may tell us that there was groupthink within not only the Bank of England but the community of central banks, all of which bought in heavily to the idea of a transitory inflation increase, while their economies were teetering on the edge of recession.
One of the issues addressed in the EAC report was the way the remit letters of the MPC, FPC and PRC expanded, with a proliferation of secondary objectives to be taken into account and have regard to. The danger of this was that the focus on the primary objective—containing inflation—would be diminished, and management of resources would be spread more thinly. We therefore recommended that these remit letters should be pruned—in particular, that the references to the Government’s objective of net zero should be taken out. A number of our witnesses argued that the Bank had no instruments that could be brought to bear on the net-zero objectives, and that this should be left to the Government. In response to our report, the Chancellor agreed with this recommendation, although this has brought howls of protest from environmental interests—more of which we heard only two or three minutes ago. In our session with the Chancellor, we urged him to go beyond a light trim of the remit letters, and to see whether more radical pruning could be undertaken.
One of the trickiest issues we encountered, and to which we were unable to develop a conclusive response, was the relationship between fiscal and monetary policy. In 1997, it all looked remarkably simple; the Treasury was responsible for fiscal policy, and as a result took over responsibility for debt management, and the Bank was responsible for the operation of monetary policy and decisions on interest rates. In retrospect, this clear separation was an oversimplification. As the noble Lord, Lord Blackwell, has pointed out, monetary policy has effects on the economy similar to fiscal policy, and vice versa.
The use of QE has muddied the waters further. Although decisions on the quantum of QE were ostensibly taken by the Bank as extensions of its responsibility for monetary policy, this has had a major impact on the distribution of income and wealth in society, normally regarded as concerns of fiscal policy. QE raised the value of assets for those who possessed them, and increased the cost of acquiring assets for those who did not have them, such as first-time buyers. QE has had major effects on the structure of UK debt, making it much more vulnerable to movements in short-term interest rates. The long length of UK maturities had always been regarded as a major advantage of UK debt management. As QE is unwound, there will be major losses, the cost of which will fall to the Government. We need better information on what those costs are.
I was surprised that both the Treasury and the Bank clung so vehemently to the doctrine that fiscal policy was the Treasury’s domain and monetary policy was the Bank’s domain, despite the fact that the policy of each had implications for the other party. Looking again in history, I am reminded that in 1993 the then Chancellor, now the noble Lord, Lord Lamont, consciously undertook an exercise of rebalancing, because it was felt that our membership of the ERM had forced us to hold interest rates higher than the economy required, and that at the same time fiscal policy was too loose. There was a conscious effort to ease monetary policy while tightening fiscal policy.
The process of looking to find the optimum balance of policies will be more difficult to achieve if each party sticks rigidly to its own domain. Maybe what is happening is that the Chancellor wants to avoid any possible submission that he is leaning on the Bank to keep interest rates low in order to reduce the Government’s own debt servicing costs. But this pursuit of value has the disadvantage that collaboration between the two institutions is made more difficult. As I said, the committee was unable to resolve this conundrum, so it remains in the to-do box of both institutions.
Lord Northbrook (Con)
My Lords, I warmly welcome the report of my noble friend Lord Bridges’s Economic Affairs Committee. I will first look at the recommendations, and the Bank’s and the Government’s reactions to them. I will then consider the review by Dr Bernanke into the Bank’s forecast process, and finally give some thoughts of my own on recent years’ inflation and interest rate rises.
As the report states, the then Chancellor, Gordon Brown, set up this new operational independence after the 1997 general election. This had worked well up until 2021, and inflation and interest rates had been kept low.
The committee focused first on the interaction of monetary and fiscal policy. I agree with its recommendation that there should be
“clear lines of responsibility and effective communication between the Bank and HM Treasury”,
especially that HM Treasury should promote
“a fiscal stance which supports the inflation target it has set the Bank”,
particularly when interest rates are close to zero and the Bank has limited space to loosen monetary policy further. I especially support the committee’s view that quantitative easing had
“blurred the lines between monetary and fiscal policy”.
The report states that although QE was undertaken as a monetary policy decision, it had consequences for the management of public debt, so I endorse the report’s suggestion that the Bank and the Debt Management Office
“should draw up and publish a memorandum of understanding which clarifies how the interaction between monetary policy and debt management should operate”.
With regard to the Bank’s remit, I agree with the committee’s conclusion that it had been at risk of being asked to do too much. It should not, as the report says, need to expand it to government policy on climate change. I am completely supportive of the report’s view that giving the Bank’s Monetary Policy Committee and Financial Policy Committee multiple secondary objectives to consider risks drawing the Bank
“into the Government’s wider policy agenda”
and
“jeopardises the Bank’s ability to prioritise price and financial stability”,
which are the primary objectives of the MPC and FPC respectively.
I will move on to the topic of diversity of thought. It is interesting that the committee highlights evidence from witnesses who suggested that a lack of “intellectual diversity” at the Bank contributed to the misdiagnosis of inflation being transitory as it rose from 2021. I approve of the recommendation that
“it is imperative that its membership comprises people of different backgrounds and economic perspectives. The Bank must be pro-active in encouraging a diversity of views and a culture of challenge. This should be reflected in its hiring practices and its appointment procedures”.
I highlight the committee questioning that HM Treasury leads the process for appointing members of the MPC and that many of the appointees have a Treasury background, which
“does not strengthen the perception of independence”.
I approve of the recommendation that HM Treasury and the Bank’s Court of Directors commission an independent review of the appointments process to consider how public appointments are made, what best practice was for other central banks, and to propose measures which ensure that the appointments process is transparent.
Moving on to the subject of forecasting, the report also highlights the role of inadequate modelling techniques in misdiagnosing the rise in inflation. It suggested that this error, made by other central banks as well as the Bank of England, may have reflected a general reliance on dynamic stochastic general equilibrium models. Witnesses argued that, because these models assume that “inflation expectations” play a significant role in determining inflation and that central banks are assumed to be able to effectively influence those expectations through their actions, they tend to predict that inflation will return to its target role over the forecast period. However, although these underlying assumptions may hold in times of economic stability, witnesses suggested that they were unlikely to be valid during periods of significant economic change, leading central banks to underestimate the strength and persistence of inflationary episodes.
Turning to the subject of accountability, I do not agree with the report’s recommendation that the Bank’s actions should be regularly scrutinised by Parliament. The danger of this is that short-termism could re-emerge in its actions. However, I am content with the proposal that
“Parliament conducts an overarching review, supported by expert staff, of the Bank’s remit, operations and performance”
every five years.
The Bank of England’s response of February to the report is very disappointing. The governor, Andrew Bailey, seems to brush aside most criticism or advice, except emphasising that the Bank does focus on its primary objectives.
The Government’s response contained two interesting reactions. The Chancellor said that monetary policy and debt management
“remain distinct areas with separate mandates, responsibilities, and decision-making processes”.
He said that the framework for debt management
“has not changed as a result of developments in monetary policy”
over recent years, such as the introduction of QE. However, he noted that the Government and the Bank were “mindful” of the potential for quantitative tightening to interfere with the debt issuance programme conducted by the Debt Management Office. He noted that the Bank was liaising with the DMO to minimise this risk, in line with a commitment made to the governor in a public letter to the then Chancellor in 2020. Secondly, the Government seem to have taken on board the report’s recommendation that the Bank should not need to focus on subjects such as climate change.
I now move on to the review by Dr Bernanke of the Bank’s forecast process. The review found that the accuracy of the Bank’s economic forecast had
“deteriorated significantly in the past few years”
and noted that
“forecasting performance has worsened to a comparable degree in other central banks and among other UK forecasters”
over the same period.
The review made criticisms in three areas. First, it found that some of the Bank’s key forecasting software was
“out of date and lacks important functionality”.
Secondly, Bernanke suggested that the Bank relied on human judgment to
“paper over problems with the models”,
given the Bank’s bias towards
“making incremental changes in successive forecasts”.
He argued that such an approach was slowing
“recognition of important structural changes in the economy”.
Thirdly, he said that the Bank relied too much on its central economic forecast in communicating its outlook and policy decisions to the public. Fourthly, and most importantly, he recommended that the use of
“fan charts to convey the range of uncertainty”
in the central forecast should be dropped. We await the response of the governor to the review.
Finally, these are my thoughts on what is not in the report and is overlooked by the review. I am afraid that the MPC and the governor were asleep at the wheel. At the Society of Professional Economists dinner in September 2021, when inflation was at nearly double its target, the governor said in his speech that the rise was transitory. I note the special circumstances of Covid and the Ukraine war, but why did the MPC not consult the regional offices to see what was going on on the ground? I was doing a building project at the time and suddenly realised that the cost of bricks, plaster, glass and render was rising in an extraordinary way and they were difficult to get hold of. While I am not an economist, I feel that QE was kept on for too long. As many noble Lords have said, the governor should have paid more attention to the money supply increase that presaged the major inflationary climb in the late 1980s and raised interest rates earlier, which would have limited the rise in inflation.
Baroness Kramer (LD)
My Lords, first, I congratulate the noble Lord, Lord Moynihan of Chelsea, on his maiden speech. He speaks with great expertise. I suspect that occasionally we will agree, but frequently we will disagree, but that is the purpose of the House.
I was privileged to be on the Economic Affairs Committee when it developed the report and so this is my opportunity to thank our chair, the noble Lord, Lord Bridges of Headley, for his outstanding leadership on this and other issues. I miss participating in the EAC.
I will speak later about accountability and the lessons that we have to learn that are embedded in this report and the Bernanke report. But to my surprise, I think it is very important that I first state clearly and unwaveringly the support of my party for an operationally independent Bank of England. It seems to me that in the debate today that has been called into question—along a spectrum, perhaps with the noble Lords, Lord Frost and Lord Blackwell, at the more extreme end—but it is crucial if we are to have credibility in domestic and international public markets and with the public at large. If there is one body that the public mistrusts more than the Bank of England, it is certainly politicians. I thank the noble Lord, Lord King, for giving us in great detail examples of how it is just impossible for anyone at a senior level in politics not to seek to manipulate issues such as interest rates and inflation when there is electoral and political victory at stake.
As I said, the report contains many recommendations that I hope will be taken up. The one that captures me the most, and this was picked up by virtually every speaker, is the issue of groupthink. The noble Earl, Lord Effingham, quoted Ben Bernanke, whose observation that the Bank’s
“deficiencies were characteristic of the central banking community in general rather than the Bank alone”
speaks to the broad groupthink that affected the whole central banking community globally.
I fully endorse the recommendations in our report for more diversity of thought at the Bank and the proposal that the Court of the Bank should play a stronger oversight role. Back in 2016 I opposed the Government’s decision to reduce the number of non-executives on the court and abolish its oversight committee. It is now vital that challenge be brought back into the system, at both court and monetary policy level. I will talk about accountability later, but the element of challenge is vital. It is just improbable that people of sufficient calibre and expertise, across a variety of thought, cannot be recruited into the various and appropriate bodies within the committees of the Bank.
I turn to the Bernanke report. Like the noble Baroness, Lady Liddell—and the noble Lord, Lord Lamont, may have said the same thing—I was shocked to realise just how out of date the tools are that underpin economic forecasting at the Bank. For those who have not read the report, the phrases include:
“Some key software is out of date and lacks functionality … insufficient resources … makeshift fixes … unwieldy system”.
That is really quite damning. How we got here I do not know, but I suspect that everyone in the House would agree that it needs to be changed quickly, and the noble Baroness, Lady Lane-Fox, is certainly someone I would turn to for advice in this arena.
Once we got a grip on the fact that the forecasting is inadequate at present, I began to have some understanding of why neither the Bank nor the Treasury seems to capture and understand the risks of continuous quantitative easing, including the fiscal implications of, in effect, swapping nearly half the public debt overnight from long-term fixed rates to volatile rates, halving duration and aggravating asset inflation. We have to recognise that quantitative easing was a vital tool in dealing with liquidity problems, certainly after the 2008 crash and in the early days of Covid, but it is not an elixir to drive forward economic growth. That issue should have been caught if we had had much better forecasting and ranges of scenarios as well as diversity of thinking.
We now face quantitative tightening at a time when the Treasury is also issuing high levels of public debt and one of the major purchasers of gilts, the DB pension funds, have far less appetite for those instruments. We are in a difficult place, and it is going to take some time to unwind all this. I go back to the argument that these issues need to be resolved by the Bank objectively looking at the economy, not by political interference.
As well as fixing the system at the Bank, we have to ensure that the Treasury and the Bank can at least communicate properly with each other, without compromising the Bank’s independence, to ensure that fiscal policy and monetary policy are made with an understanding of what is happening in each arena. As our report says, that co-ordination responsibility falls primarily with the Government; they set the inflation target for the Bank and control fiscal policy. However, as we took evidence, I could not see any clear lines of responsibility or clear communication mechanisms. It seems to me that the issue is handled largely informally, and I think we would all ask for more clarity. I strongly endorse the report’s recommendation that the Bank and the Debt Management Office of HM Treasury should publish an MoU on the interaction between monetary policy and debt management. Like the many others who have said this, I simply do not understand why the Treasury does not publish the deed of indemnity—that is completely beyond me.
Our report—this is where I probably differ from some others on the committee—focuses quite strongly on the remit of the Bank, which has of course expanded significantly in recent years, and recommends far more transparency and debate around that remit, especially in Parliament. I agree with that process of debate and transparency, but I think this issue is getting seriously overplayed. Staff and resource the Bank properly and, it seems to me, it can cope with more than a single remit. In terms of shaping our economy to tackle climate change, I would be very worried to see the Bank of England step out of that arena in the crisis that we face.
Let me close on the issue of the accountability of a body as central as the Bank is to the functioning of our economy. Independence is not in conflict with accountability; for that reason, I believe that aspects of the work of the Bank should be looked at by our new Financial Services Regulation Committee. That committee is a significant step forward, but the Bank could make that work, and parliamentary scrutiny, easier if it effectively ensured a flow of information to us. Information seems to come out in unquestioned bites or has to be extracted through very brief committee evidence sessions. I would like to see a much more open and constant flow of information. For example, in the case of quantitative easing, it could have helped Parliament greatly had we had a detailed discussion of the economic risks from significantly expanding the Bank’s balance sheet. To do that, we have to have a committee that is properly resourced and powerful.
I very much agree with the noble Lord, Lord Bridges, that Parliament has a responsibility, as a whole, to step up its level of oversight. I hope we will seize on that. I hope indeed that the Government, and all sides of this House, will provide support to the proposal from the noble Lord, Lord Bridges, and the committee that we have a detailed five-year review, so that this discussion is regularly in front of us. Also, there should be no no-go areas. Why should we not discuss issues such as the inflation target? Discussion and challenge are very different from political interference and taking over control. Because we know that there has been a failure to provide diversity in appointments, it also seems to me that somehow bringing Parliament into some element of a confirmation process makes a great deal of sense.
I believe that there is a lot we can do and lessons that we can learn. I very much endorse the support of the committee and I am pleased we have got the Bernanke report. I wish it was all being taken a bit more seriously by both the Bank and the Government. Again, I thank the committee for the privilege of allowing me to have been one of its members.
Lord Livermore (Lab)
My Lords, I congratulate the noble Lord, Lord Bridges of Headley, on his opening speech. I thank him and the Economic Affairs Committee for their report into an independent Bank of England. It is a pleasure to speak in such an illustrious debate today, alongside so many distinguished and genuinely expert noble Lords. It was a particular pleasure to listen to the noble Lord, Lord Lamont of Lerwick, whose reforms as Chancellor laid some of the groundwork for independence. I join others in also congratulating the noble Lord, Lord Moynihan of Chelsea, on his maiden speech.
This report from the Economic Affairs Committee marks the 25th anniversary of Bank of England independence, which the committee described as an appropriate time to review the operation of the framework first set out in the Bank of England Act 1998, taken through the House of Commons—as her excellent speech reminded us—by my noble friend Lady Liddell of Coatdyke. I consider it a privilege to have worked in the Treasury for the Chancellor who introduced operational independence with respect to monetary policy. The committee quotes Gordon Brown’s reasoning for this move:
“we will only build a fully credible framework for monetary policy if the long-term needs of the economy, not short-term political considerations, guide monetary decision-making. We must remove the suspicion that short-term party-political considerations are influencing the setting of interest rates”.
Those words, as the noble Lord, Lord King, made clear, have proved to be correct.
As a result, there is now a broad consensus in favour of retaining independence, and it has become one of the most enduring reforms of the new Labour Government. Indeed, in the Government’s response to this report, the current Chancellor stated that he remains
“fully committed to monetary policy independence”.
The committee’s report bears out this consensus, while rightly acknowledging that external factors, such as globalisation, have contributed to favourable conditions over this period. The report states:
“For much of the past 25 years, the enhanced credibility of monetary policy brought about by independence has contributed to a low inflation environment. The absence of political interference is seen by many as a major component of stable inflation expectations”.
The report also confirms that the majority of expert witnesses who gave evidence to the inquiry were clear that independence has been a significant factor in promoting price stability. I am therefore pleased the committee concluded it has a
“strong view that independence should be preserved”.
I regret, however, that this view was not shared by all former Prime Ministers. Liz Truss, who is currently on a book tour, stated in an interview with LBC radio on 15 of April, that interest rate setting is “a political decision” that
“should be in political hands”.
In a world of unparalleled complexity and uncertainty, it is institutions which can provide the stability of direction, co-ordination and appropriate incentives for sustained economic success. For much of our history, the strength of our institutions has bestowed credibility in international markets and underpinned our economic success. Politicians who undermine those strengths play a dangerous game.
As the noble Lord, Lord Gadhia, said, we saw the consequences of exactly that in the aftermath of the disastrous mini-Budget in September 2022, with its programme of unfunded tax cuts, amidst a concerted effort to undermine our independent economic institutions. Markets spiralled, the pension fund industry came close to collapse, and the Bank of England had to step in to restore calm. Those events dramatically altered the economic fortunes of our country. In October 2021, the Bank of England base rate stood at 0.1%. In little over two years, that rose to 5.25%. In October 2021, debt interest was forecast to cost £29 billion this year; that figure now stands at £82 billion.
The last Labour Government introduced Bank of England independence, and the next Labour Government will maintain it. It is Labour’s view that the Bank’s Monetary Policy Committee must continue to have complete independence in the pursuit of its primary objective of price stability. A Labour Government would retain the 2% inflation target, while the Financial Policy Committee will continue with its core objective of financial stability.
The Economic Affairs Committee’s report raises a number of key issues, which it believes need to be addressed. The first of these concerns the interaction between fiscal and monetary policy, where the committee believes clear lines of responsibility and effective communication are required between the Bank and the Treasury. I note that the Bank of England Act sets out that, subject to the Bank’s objectives to maintain price and financial stability, the Bank should support the economic policy of His Majesty’s Government, including their objectives for growth and employment.
With respect to fiscal policy, Bank of England independence reflected an understanding that politics will always present a powerful temptation to pursue macroeconomic policies that may not be in the medium to long-term national economic interest. Similar logic applies to the concept of deficit bias. Politicians may be tempted to put off necessary fiscal decisions or to ignore the long-term consequences of policy choices. It remains true, as Gordon Brown said, that in a modern economy
“the discretion necessary for effective economic policy is possible only within a framework that commands market credibility and public trust”.
That is especially true if the Government are to be able to take urgent, discretionary action when crisis strikes.
Far from wanting to “see the back of” the Office for Budget Responsibility, as some now advocate, the next Labour Government will strengthen the OBR with a new fiscal lock, guaranteeing in law that any Government making significant and permanent tax and spending changes will be subject to an independent forecast from the OBR. We will not waver from strong fiscal rules. In line with the committee’s call for accountability to Parliament, the new fiscal lock and fiscal rules will be put to Parliament to agree.
The second issue identified by the committee’s report concerns the Bank’s remit, an issue raised by many noble Lords today. The committee believes that the widening of the remit to include climate change, for example, risks jeopardising the Bank’s ability to prioritise its primary objectives. I respectfully disagree. Monetary policy and financial regulation cannot stand still in the face of new risks, not least those posed by climate change. The European Central Bank’s Isabel Schnabel has set out the implications of climate change for monetary policy: losses that could translate into the balance sheets of financial institutions and reduce the flow of credit; impacts on labour productivity and health-related inactivity, which could lower the equilibrium real rate of interest and constrain the space for conventional monetary policy; and the impact of supply-side shocks on prices. Given the onus to mobilise investment to achieve the energy transition, those challenges are especially acute.
As the noble Baroness, Lady Lane-Fox of Soho, said, macroeconomic policy has an important role to play in our climate transition. Labour has set out plans to require financial institutions and FTSE 100 companies to publish their carbon footprints and adopt credible 1.5 degrees-aligned net-zero plans. We disagree with the current Chancellor’s decision to downgrade the emphasis put on climate change in the remits of both Bank committees. The next Labour Government will reverse these changes at the first opportunity, because there can be no durable plan for economic stability, and no sustainable plan for economic growth, that is not also a serious plan for net zero.
The committee’s inquiry also examined the possible introduction of a central bank digital currency. Here, Labour recognises the growing case for a state-backed digital pound to protect the integrity and sovereignty of the Bank of England and the UK’s financial and monetary system. We fully support the Bank of England’s work in this area. The committee’s report rightly raises a number of public policy issues that could arise, including issues such as threats to privacy, financial inclusion and stability, which we too want to ensure are effectively mitigated in the design of any such digital currency.
The final issue raised by the committee’s report is accountability, referred to by several noble Lords, including my noble friend Lord Chandos and the noble Lord, Lord Macpherson of Earl’s Court. I very much welcome the Chancellor’s commitment, in his response to this report, to send copies of remit letters to the chairs of your Lordships’ Economic Affairs Committee and the Treasury Committee.
I again thank the noble Lord, Lord Bridges of Headley, and the Economic Affairs Committee for their report. Throughout this debate, we have heard about the damage that inflation can do to family finances. The Bank of England therefore plays a crucial role in our nation’s economy. Some 25 years since independence, this report provides a valuable basis for debate.
The Parliamentary Secretary, HM Treasury (Baroness Vere of Norbiton) (Con)
My Lords, what an outstanding debate. I particularly thank my noble friend Lord Bridges for so skilfully opening it, and the Economic Affairs Committee. So many of its members have spoken today, and I thank them for their contributions, for the thoughtful and detailed way in which they carried out the inquiry and the report on the Bank of England, and for the breadth of witnesses they chose to interview. I am delighted that my noble friend Lord Moynihan of Chelsea chose a Treasury debate in which to make his maiden speech—of course, I am not surprised. He will make a great contribution to your Lordships’ House for many years to come, and we look forward to it.
Price stability is essential for a strong economy and, consequently, strong public finances. It is widely recognised that an operationally independent central bank is the best way to achieve price stability. That is why the UK enshrines the Bank of England’s operational independence in law, with price stability as the primary objective of the Bank’s Monetary Policy Committee. The Treasury and the Government remain committed to not only independence but the objective of price stability, and I am delighted that I therefore agree wholeheartedly with the noble Baroness, Lady Kramer, and the noble Lord, Lord Livermore—not a frequent occurrence in my life—with both Front Benches also wishing to retain the independence of the Bank of England.
My right honourable friend the Chancellor wrote to the chair of the EAC in January this year. It is worth briefly summarising some of the commitments that he made in his letter. At the outset he noted the operationally independent monetary policy, which is so important within the broader macroeconomic framework, and indeed the importance of the separation of fiscal and monetary policy in the effective delivery of monetary policy. The Chancellor noted the negative impacts of inflation on so many elements of society and our economy when it is greater or lower than 2%, and he again resolved not to change the definition of price stability. This aligns with the view of the EAC, but it should also be noted that the Federal Reserve and the European Central Bank have the same inflation targets. The Chancellor also noted the Government’s previous review of the monetary policy framework in 2013, which drew the same conclusions.
The Chancellor went on to note the Government’s commitment to ensuring that fiscal and monetary policy remain aligned to support the Bank’s efforts to return inflation sustainably to 2%. This is in agreement with the conclusions of the committee. This has meant reducing the level of government borrowing in a way that gradually withdraws support from the economy, as demonstrated by the declining path for the cyclically adjusted primary deficit.
On the relationship between the Bank and the Debt Management Office—the DMO, which many noble Lords have mentioned today—the Chancellor noted that monetary policy and debt management are distinct areas with separate mandates and decision-making processes. Given the institutional separation of monetary and debt management policy, in addition to existing public documents clarifying the relevant governance structure, the Government do not consider that an additional memorandum of understanding between the two organisations is necessary to clarify their relationship further.
On the committee’s call—and indeed that of many noble Lords, including the noble Baroness, Lady Liddell, and the noble Viscount, Lord Chandos—for the Government to publish the deed of indemnity, the Chancellor reiterated in his response that the Government would not. The deed contains operationally sensitive information relating to government cash management practices. It is not government practice to release information of this kind, and nor is it in the public interest. However, crucially, the Government are confident that this does not undermine the transparency of these arrangements, given the publication of other relevant reports and accounts, in addition to public comment and costings from the Office for Budget Responsibility, or OBR, on this topic.
Lord Bridges of Headley (Con)
Can my noble friend explain why, then, the Governor of the Bank of England told our committee that the publication of the deed of indemnity would not excite people?
Baroness Vere of Norbiton (Con)
I cannot comment on what the Governor of the Bank of England thinks other people will think about a document that has not been published. If I can get any more information, or encourage the Bank of England to provide more clarity on that, I will—but it remains the position of the Government, and indeed the Chancellor in his response to the committee, that the document will not be published.
I turn to the remits of the Monetary and Financial Policy Committees, which also attracted an enormous amount of attention during the debate. I will come on to them further after this opening section on the Chancellor’s views in response to the committee. The secondary objectives are clearly framed as being subject to the delivery of their primary objectives of price and financial stability. However, the Government have taken steps to simplify and clarify the FPC’s remit to make sure that its role in supporting the Government’s economic policy is absolutely clear.
I heard what the noble Lord, Lord Livermore, said about his party wanting to expand the remit letters once again. I believe that would be unhelpful. I will go on to state exactly why climate remains within the remit letters and the rationale for that. I believe that greater clarity is essential and is something that the Government will continue to focus on in future remit letters.
The report recommends that the Bank’s management structure be streamlined; however, the Chancellor affirmed that the current structure is appropriate. Finally, on the committee report’s recommendation that the Treasury and the Bank commission an independent review of appointments to the Bank, the Chancellor noted that the Government have no plans to commission such a review. However, he did highlight the Treasury’s interventions in relation to ensuring diversity, in its broadest sense, in public appointments.
As part of our support for the principle of the Bank’s independence, the Government do not comment on the conduct or effectiveness of monetary policy, but I reassure all noble Lords that I welcome the many insights I have heard today with regard to monetary policy and the Bank’s performance relating to it. I am sure that those who are responsible for monetary policy and the operation of the Bank of England will reflect on them, too—but I will go no further in my response.
It is the case that we have been living through a period of high inflation. It is too high. In the 20 years prior to independence, inflation averaged over 6%: in the 20 years subsequent to independence, inflation averaged closer to 2% and certainly volatility also declined. But, since May 2021, we have seen a period of particularly high inflation and I am very pleased that, due to the actions of the Bank of England, supported by the Government, it was at 3.2% in March.
I will now elaborate on a few key areas that I believe almost all contributors to the debate focused on: the MPC/FPC remit letters; appointments to the Bank of England; the accountability of the Bank of England; and forecasting. On other matters, I will probably write, because time is always the enemy of the Minister at the Dispatch Box.
Returning to the issue of the FPC and MPC remit letters, which was mentioned at the outset by my noble friend Lord Bridges, but also by my noble friend Lord Moynihan, both the MPC and FPC have complex roles—that is clear—and it is right that their remits reflect this complexity. But that does not necessarily mean that the remits therefore have to be complex in themselves. It is important that the committees’ secondary objectives, on supporting this Government’s economic strategy, are clearly defined, so that they are achievable. Clearly defining secondary objectives does not detract from the hierarchy of objectives for either committee, where the secondary objectives are framed as being subject to the primary objectives of price or financial stability. Moreover, the remit letters provide guidance on how the committees should consider instances where there are trade-offs between their objectives and how their assessment of any trade-offs should be publicly communicated so that they can be scrutinised.
The changes introduced in the 2023 FPC remit letter have improved its clarity and focus, with clearer relevance to the FPC’s specific responsibilities and toolkit. It is more streamlined. I accept that it is not as streamlined as many noble Lords would like, but it is 20% shorter compared with that in 2022. There is, of course, a balance to be struck. For example, it is important that home ownership is listed as a priority, so that the FPC is mindful of wider public policy aims when it is considering policy relating to the mortgage market. A further example is climate change, mentioned of course by the noble Baroness, Lady Bennett, but also by many other noble Lords. It is widely accepted that climate change poses systemic risks to the financial system. As such, the remit continues to emphasise the relevance of climate change to the primary financial stability objective. Delivering net zero is also referenced as a key component of the Government’s economic policy, which the committee has a secondary objective to support.
It is also important to consider the changes to the remit letter in the context of the Government’s wider work to ensure that the regulators are considering the impacts of climate change. For example, through the Financial Services and Markets Act 2023, both the Financial Conduct Authority and the Prudential Regulation Authority are required to have regard to the need to contribute, where relevant, to the Government’s progress towards complying with the Climate Change Act 2008 and the Environment Act 2021.
The climate and environmental components of this apply from August 2023 and January 2025 respectively. So it is not the case that, somehow, climate has been downgraded. The wording has changed but the legal obligation to get to our net-zero targets remains, and we must ensure that the financial system gets there—and that includes the Bank of England. However, the primary objectives of the two committees are very well set out in the remit letter.
In the MPC remit letter, the primary objective, set out in law, is maintaining price stability, defined as a 2% inflation target. The MPC’s remit includes the goal of increasing long-term energy security and delivering net zero. If that is not clear, I am not sure what would be. Specifying the Government’s economic strategy gives the Bank’s policy committees important information on the broader economic policy landscape, given their role in the UK’s macroeconomic framework.
Turning to appointments to the Bank of England and then to accountability, the Government recognise that, to be effective, public bodies need to have the broadest possible mix of skills, experience and backgrounds: diversity in its broadest sense. All appointments are made on merit and follow a fair and open competition process.
The Treasury has taken steps to ensure that a diverse range of candidates are considered for appointments to the Bank of England. To do this, the Treasury promotes vacancies to a wide group of people and, to improve the reach of an advert or opportunity, sometimes uses recruitment consultants.
The Government believe that there is a diversity of thought on the MPC and FPC, although the skill of hindsight remains elusive. The Governor of the Bank of England recently said that, in the last two years, about 25% of the MPC’s meetings have had a split vote among the executive members. I suggest that this demonstrates the intellectual and analytical diversity requested by my noble friends Lord Frost and of course Lord Effingham. The Governor noted that there is a larger proportion of external members of the Bank of England than in other central banks around the world. While the FPC makes decisions by consensus, the diversity of views expressed in the committee’s meetings is captured in published records.
As I have noted, the Bank of England has a unique arrangement compared with other central banks, as it has internal members and a greater proportion of external members on its policy committees. The external members are appointed by the Chancellor, and internal members who are on the Court of the Bank of England are Crown appointments.
Focusing on the MPC, each member has expertise in the field of economics and monetary policy. Members are independent and do not represent particular groups or interests. The MPC’s decisions are made on the basis of one person, one vote, and each member of the committee votes in a way that he or she believes is consistent with the MPC’s remit. A non-voting representative from the Treasury also attends the committee’s policy meetings.
The Chancellor is assisted in his decision-making on appointments by advisory assessment panels, which include internal members from the Treasury and the Bank, but also an independent external panel member. It is for the Chancellor to choose the person they wish to appoint and make a recommendation to the Prime Minister. The Treasury is committed to enabling proper parliamentary scrutiny of the appointments that it makes to public bodies, which is a valuable and important part of the process. The Treasury Select Committee conducts pre-commencement hearings before a successful candidate is appointed to the Bank to start their role.
All noble Lords—far too many to namecheck—have spoken about the accountability of the Bank of England. It is worth discussing this in further detail now, and I am sure there will be opportunities to do so again in the future. I am particularly grateful for the forensic opening remarks of my noble friend Lord Bridges, and of course for the reflections of the noble Lord, Lord Gadhia, who sits on the Court although speaks today in a personal capacity.
The Bank is held to account both by Parliament and by the Treasury. A key role of the Treasury and elected Treasury Ministers is to legislate for and maintain the overall regulatory architecture in a way that allows the Bank to meet its objectives. There are many ways in which Parliament, stakeholders and the public can scrutinise the performance of the Bank of England. Key publications include the Bank’s Financial Stability Reports, which are published biannually, and the Monetary Policy Reports, which are published quarterly. Indeed, a Monetary Policy Report is due to be published this time next week. Executive and external members of both the MPC and FPC typically appear before the Treasury Select Committee following the publication of those reports. The governor also appears in front of the EAC, as he did in February this year.
The Government implemented reforms through the Bank of England and Financial Services Act 2016 to increase the accountability of the Bank and to improve the scrutiny of the Bank in terms of financial stability. Those reforms were made once the expansions in the Bank’s remit had time to bed in properly after the financial crisis. Measures introduced in the 2016 Act included making the FPC a full policy committee of the Bank and creating a clear accountability line to the Bank’s Court of Directors. It also implemented the recommendations of the Warsh review, published in 2014, including to increase the transparency of the MPC’s decision-making by publishing a detailed policy statement as soon as practicable after each policy meeting.
The Bank’s remit letters were commented on frequently in today’s debate. They are published online and laid before Parliament, typically as part of a fiscal event. After a fiscal event, parliamentarians have the opportunity to debate it—it happens in your Lordships’ House and in the House of Commons. Parliamentarians can and do raise concerns about the remit letters during those debates. The issues are then considered as part of the process to update the remit letter the following year. Parliamentary committees offer further scrutiny of the remits by calling bank executives, committee members and government Ministers to appear before them—the EAC’s inquiry is an excellent example of parliamentary scrutiny in action. Given the frequency with which the remits are updated and that there is the opportunity to provide input, the Government do not intend to publish draft letters. However, on many of the report’s other recommendations on accountability, it is for Parliament to decide whether to conduct a review of the remit, and indeed the operations of the Bank outside of existing processes, or to create a standing committee.
The Treasury meets with the Bank of England regularly to discuss its assessment of the economy and financial services. That includes regular meetings between the Chancellor and the Governor of the Bank of England. The Chancellor and governor are also legally required to discuss the FPC’s Financial Stability Report.
Finally on accountability, the Court of Directors is a key element for keeping the Bank’s performance under review and for looking at the way that the Bank exercises its statutory functions.
I note that many noble Lords have made requests for the Government to intervene in the operation of the Bank, particularly on the allocation of resources. Obviously, the Government will not do that to an independent Bank of England, but I am confident that the suggestions and points raised in today’s debate may well be heard by those who are responsible.
I have been given a one-minute warning, so I will try to speak on forecasting and Bernanke within the time limit, because many noble Lords raised this incredibly important issue. All of us who have ever worked in finance—including me—know that forecasting is sometimes a mug’s game, but sometimes it can be incredibly helpful. The review led by Dr Ben Bernanke is incredibly helpful to highlight the areas in which the Bank needs to improve. I think that the Bank is welcoming it, and I note that I will do a full report on its response to the Bernanke review by the end of the year.
As ever, I will write on many of the remaining points that I have not been able to cover. I am again enormously grateful to my noble friend Lord Bridges and his committee for all their contributions, not only to the report but to today’s debate. The Government will continue to support the independence of the Bank of England and will ensure that its remit and the framework in which it operates, including through fiscal policy, create an environment in which it can carry out its duties efficiently.
Lord Bridges of Headley (Con)
My Lords, this has been an absolutely terrific debate and I thank all speakers who have taken part. In particular, I congratulate my noble friend Lord Moynihan of Chelsea on his maiden speech, and I very much look forward to his further contributions. In passing, I would like to congratulate the noble Lord, Lord King, on moving from looking after the MPC to looking after the MCC, where I am sure he will root out groupthink and shoddy forecasting.
We covered an enormous amount of ground and your Lordships will be delighted, given that I am sure everyone wants to get a very late lunch, that I will not try to repeat it all. I will just summarise what I have heard by saying that I can sense broad consensus—I stress “broad”; there is not unanimity—on four key points.
The first is about independence itself. It is clear from this debate that the vast majority of speakers think that independence should be preserved. Some have questioned its contribution more than others, but as far as I can sense noble Lords think that independence should be kept. On the framework for operational independence, here I sense that there is a consensus that that framework is, as our report stated, under quite considerable strain. A number of noble Lords—the noble Lords, Lord Burns and Lord Turnbull, for example—spoke of the blurring of the distinction between operational independence and policy independence. A number of your Lordships referred to the blurring of the lines between fiscal and monetary policy. Why has this happened? Obviously, we debated that: the remit being expanded, QE and QT and the enormous fiscal and economic impact of that. Therefore, there seems to be consensus that there is quite a significant challenge we need to face on the framework.
The second area where there seems to be consensus is, pretty obviously, that the Bank failed to control inflation in recent years. Again, there was consensus on the need for much more focus on intellectual diversity, not just forecasting—although my noble friend Lord Lamont made a very good speech on that. We need to look at both people and process.
Area number three where I sense there is broad consensus—here I stress “broad”—is about what should be done. Let us just try to divide this up. There is performance: issues that need to be tackled to improve performance. I do not think there is consensus on the remit; I sense from noble Baronesses opposite that there is opposition, obviously, to some of the points that were made in our report. However, I stress—I will come back to this in a moment—that those differing views highlight the need for much more debate and scrutiny of the remit letter. That said, there is consensus that a lot more needs to be done on the hiring and appointment processes within the Bank, and again, for different reasons. The noble Baroness, Lady Bennett, has a different view to mine on this, but I think that we would all welcome that and, again, more scrutiny and accountability are necessary there.
The next area where I sense there is consensus is the need for more transparency and more clarity. I am sorry to have intervened on my noble friend, but I am still completely baffled as to why we cannot have the deed of indemnity published. It is an absolutely critical document. Billions of pounds are at stake here, and I find it very odd that we in Parliament cannot be told the details around the deed of indemnity. I find it extraordinary just simply to be told it is market sensitive when the governor told our committee a very different thing. We will have to return to that. Likewise, I think that there is a need for clarity on debt management. I will not repeat the points there, but I want to stress points made by my noble friends Lady Noakes and Lord Blackwell. It is important that, at times, we take a step back and ask ourselves whether we are absolutely clear as to where our responsibility for fiscal and monetary policy lies. As I said, I think this framework is being challenged. We should not see it as pickled in aspic. We should be courageous enough to ask questions about it, as the noble Baroness, Lady Kramer, said. Challenge strengthens independence.
Finally, therefore, I think that there is broad consensus on the need for Parliament to up its game. Indeed, this debate, lasting three hours, shows the value of constructive criticism and challenge. I note what my noble friend Lord Gadhia said. Of course we need to be mindful of the tightrope between independence and accountability, and to be respectful of what operational independence means. However, that is no reason to say that we should not up our game.
Ahead of this debate, I asked the House of Lords Library to look up how many debates have taken place in this Chamber and the other place specifically on issues relating to the Bank’s performance. How many do we think there might have been over the last five years—10? There has been one in this House on QE, one Private Notice Question and none in the other place. I completely agree with what my noble friend said. There are opportunities for parliamentarians to question the operational framework of the Bank, the remit letters and so on. We are delighted to welcome the Governor of the Bank and the Chancellor to the Treasury Committee—or, in our case, the Economic Affairs Committee—but given the magnitude of the topics that we have been discussing today, enormous issues such as climate change and QE, is that really enough?
We may differ on the role and remit of the Bank, or on monetary policy, but surely we all agree that if we are giving these enormous powers to unelected officials, we need more transparency, more scrutiny, more accountability and more action in Parliament. Overall, reform is needed.
EU Imports and Exports: Food and Agricultural Products
(6 months, 3 weeks ago)
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Baroness McIntosh of Pickering
To ask His Majesty’s Government what assessment they have made of the checks on imports and exports of food and agricultural products to and from the European Union, and in particular with regard to the import controls introduced on 30 April.
Baroness McIntosh of Pickering (Con)
My Lords, I am delighted to have secured this timely debate and look forward to hearing contributions from other noble Lords. I welcome my noble friend the Minister to his place and look forward to his response.
The purpose of the debate is to evaluate the extent to which that elusive level playing field of parity of access to imports and exports on both sides of the English Channel and the North Sea has been achieved. I will look at border controls in the round, and in particular developments this week. I seek to assure parity of treatment across UK ports, whether goods are coming into Dover, Hull, Grimsby, Immingham or Holyhead, and between the UK and EU ports. This week the Government introduced the second phase of controls on EU imports, following the health requirement certificates in January this year. I congratulate all involved on achieving this—the Government, the ports, the importers and the traders. These are important measures of food safety and food security.
Will the Government review the operation and effectiveness of the border control posts and the new parallel border IT process, particularly for entry via Dover, before the next stage is introduced in October this year? Will they commit to treating the short straits as one entity to ensure that the critical supply chain of food imports functions well and for supermarket shelves to remain full—a point made by the Dover Harbour Board in its consultation response? Many of the controls introduced this week would have been pre-empted by a phytosanitary agreement with the EU. I seek to explore whether we are any closer to achieving such an agreement.
The risk levels and frequency of controls appear to be greater for those exporting from the UK to the EU than those entering the UK. It begs the question whether it is inherently unfair and unequal that it is easier for imports to enter the UK than for UK food and agricultural exports to enter the EU.
Is it still the case that there are no border control posts in the EU to permit the export of UK breeding stock? In effect, this means that there is a trading embargo on the export of live animals for breeding purposes to the EU mainland that damages UK livestock production. Are we seeking to help British farmers to access what remains their largest export market, namely the EU? These measures were promised to assist farmers to meet these challenges, as set out in the Agriculture Act.
The Food Standards Agency welcomes the measures introduced this week yet remains concerned about the continued threat of personal imports of animals, plants and foods, as well as potential food fraud. How do the Government intend to address this threat—a concern shared by farmers and the NFU, which notes that the danger of potentially infected meat entering through personal imports remains? What resources will be made available, particularly to address the risk through personal imports?
We are heavily dependent in this process on the availability of environmental health officers and trading standards officers to oversee the safety of our meat and other food products. They play a vital role in protecting against diseased plants and infected animals entering the UK.
The Food Standards Agency notes that when we talk about border controls and the BTOM, we are referring to commodities imported commercially through regular trade routes. The BTOM and associated controls are not targeted at illegal imports of food that are typically brought into the UK posing as personal imports or where goods are passed off as something that they are not—I remember the horsemeat scandal at this point. Illegal imports of food are targeted at ports of entry, with Border Force the main agency responsible, supported by port health authorities, and this will not change with the BTOM. I pay tribute to the FSA’s National Food Crime Unit, which targets organised food crime by taking action to disrupt the impact of criminal networks in this area.
The figures for imports into the UK speak for themselves and demonstrate a huge imbalance in trade. In 2023 the UK exported 167,000 tonnes of poultry meat to the EU with a value of nearly £225 million; the UK imported 673,000 tonnes of poultry meat from the EU with a value of £3 billion. To clarify, it is £225 million in exports versus £3 billion in imports—that is quite an imbalance. The absence of a sanitary and phytosanitary agreement in this regard is regrettable.
The CLA briefed me ahead of the debate on what increased costs the new border controls brought in this week will bring. That is to be expected because although food exports to the EU have stabilised, the costs associated with exporting have increased substantially. As a result of increased paperwork, through the need for health certificates, an increase in vet checks and the use of customs agents, costs have increased by £170 million since 2019. In 2023 export costs for food products increased by £58 million. Increased costs for exporters lead to a reduction in export volumes and, regrettably, a reduction in the number of businesses exporting to the EU.
The aim of the Government since the UK left the EU in 2021 has been to implement the target border operating model, which means that checks on certain products entering the country from the EU have now been introduced. The NFU states that the EU continues to be the UK’s largest market for live animals and agri-food exports, accounting for 67.9%, valued at £10.7 billion, in 2023 alone.
A breakdown in biosecurity is one of the most serious threats that we face as a nation and I am pleased that the Government are addressing this through these controls. However, it should not be easier for EU producers to export to the UK than it is for UK producers to export to the EU.
I will address the issue of perishable products such as plants, flowers, fruit, vegetables and fish. As time is of the essence, can my noble friend give the House an assurance that checks will be timely and effective to control just-in-time delivery, mindful of the nature of these deliveries in terms of transport and packaging?
In conclusion, I will briefly address a number of questions to my noble friend. In welcoming the measures introduced this week, in addition to those that were introduced in January and those expected in October, we need to take a wider view of the progress being made towards achieving a phytosanitary agreement with the EU and on border posts opening in the EU to facilitate UK exports, particularly of breeding stock. I understand that a review was scheduled for April this year, with products such as composites and some fruit and vegetables classified as low risk. Have the Government undertaken such a review? Will they undertake to do so and communicate any changes to industry with a sufficient lead time of, say, six months?
The border checks introduced this week will go some way to equalising the level of checks, which have hitherto seen an asymmetrical application of the trade and co-operation agreement with the EU. They are therefore to be welcomed. Some known unknowns, such as the cost ratios for controls at various ports of inspection, need to be addressed. Will the Government use the opportunity of next year’s review of the trade and co-operation agreement to re-evaluate the level and cost of checks in the flow of trade between the UK and the EU?
Lord Howarth of Newport (Lab) [V]
My Lords, this is a wretched affair and, I will argue, an unnecessary one. A mass of our businesses are unable to plan because they simply do not know what the compliance requirements or timescale of the new system of import controls will be. They know only that the bureaucratic burdens and costs will be onerous, especially for SMEs, to the point that not a few will go out of business.
I was talking to a florist friend, who told me that there is already an extra 24-hour lead time for orders. The price that he has to pay for lisianthus, for example, has almost trebled and everything imported from Europe has gone up. He foresees only the rich being able to give flowers. The dead hand of this Government is even withering romance—an outcome that the noble Baroness, Lady McIntosh of Pickering, surely desires no more than I do, or perhaps even the Minister secretly does. People running delicatessens, importing from niche suppliers in the EU, are already unable to replenish their shelves. Why are the Government killing off small businesses? Why are they exacerbating food inflation?
Can the Minister tell us why the Government consider that they have to inflict this policy on us at all? I can imagine three possible reasons, none of which seems to me convincing or satisfactory. Maybe they have been persuaded by vets and our own food producers that, without a great apparatus of import controls, we are vulnerable to animal and plant disease, and food fraud. To this I say that, while we were in the single market, we were entirely comfortable to rely on EU-level sanitary and phytosanitary controls. Why should we not continue to rely on them? Or maybe the Government have been railroaded by our domestic agricultural lobby arguing that it is not fair that there are strict controls on UK exports to the EU and no equivalent controls on our imports from the EU. To this I say that raising the cost of imports is bad for consumers and their interests should come first.
The third argument I can imagine is that the Government are nervous that if we do not control imports from the EU in the same way as we control imports from other trading partners, we could be deemed to be giving the EU unjustified preferential treatment and thereby be in breach of World Trade Organization rules. I am not persuaded by that argument, either. If the Government really believed that, they would have imposed the full range of import controls to match the EU’s on 1 January 2021, the day the EU applied its third-country customs and regulatory regime to goods imported from the UK. But they did not, and they have proceeded at a most leisurely pace.
The UK could have made a strong case that preferential treatment for EU imports was justifiable. Our trading relationship with Europe is special, by virtue of centuries of history, geographical proximity and inextricable entanglement. If we remind ourselves of the foundational principles of the WTO, we see that we did not have to conclude that there was a need to introduce new import controls. Our response to the most favoured nation principle of trade without discrimination could have been to reduce trade barriers for the other countries against whose imports we have obstacles in place. That would be a great thing for us to do for the developing world, particularly given the reduction in our aid budget and the amount of it that has now been diverted by the Government to footing their bill for asylum seekers. The WTO states that it is opposed to the raising of trade barriers. Just because the EU has put up protectionist shutters, we did not have to do the same.
It is a shame to have taken all this trouble to come out of the EU only to saddle ourselves gratuitously with a whole lot of new bureaucracy and constraints on trade.
Lord Redesdale (LD)
My Lords, I thank the noble Baroness, Lady McIntosh of Pickering, for initiating this debate today; it is incredibly topical. The only problem with being quite so topical is that it is so close to the start date that it is quite difficult to see what exactly will happen in the next few days. It is only a couple of weeks since we had the debate on the report from the House of Lords Horticultural Sector Committee, which I had the pleasure of chairing. The major concern raised with that committee by people in the industry, and going on certain information from Defra, was that the whole system was going to crash from the first day, and that does not seem to be happening so far.
At this point, I take the unusual step of not being highly critical of the Government but welcoming the hard work of the Minister and the Defra team, who are often criticised even though they undertake a great deal of hard work on this. I congratulate them on bringing about a scheme that so far seems to work, although, from my discussions, the administrative burden is hard and snagging is still going across. I make myself a hostage to fortune by making that statement if it crashes tomorrow.
However, I will now get back to normal and start criticising the Government again. There are a lot of concerns about the new controls and their implications, especially for those in the horticultural community, given the financial and administrative burden of the new checks and considering that so many of those companies are small. They will have a really adverse effect on their ability to conduct business.
I start by regretting the need for these controls in the first place, as raised by the noble Lord, Lord Howarth. As a strong remainer—indeed, I personally would advocate for rejoining the EU as soon as possible—it is hard not to see the real damage being done to the UK economy by these trade barriers, especially to individual sectors, with horticulture being particularly hard hit at the moment. I believe that there is a majority in the country today who would happily re-enter the EU—the Minister might not agree with that but I think a referendum would be really interesting, and perhaps we should have another one. The real issue is that our leaving the EU has led to enormously high costs for business, by the creation of those barriers. I do not think this Government will do it, because of the ideology of the Conservative Party, but I hope that the next Government will start a new chapter with the European Union, by introducing an SPS regime that would help the entire sector. I am sure that Europe itself would welcome such a move. However, that is perhaps a debate for another day.
I should move on to another four points. The first is the issue raised by Logistics UK and others around the potential for considerable delays for trucks, especially those not first off the boat. A real problem is not just the issue of our produce spending long periods of time waiting to be processed but the hours spent by the truck drivers themselves waiting to get the produce processed. There was an example given that some truck drivers might have to wait 10 hours. Of course, if you are a haulage company, that is a really difficult issue to deal with, considering that that truck driver then might be working 10 to 20 hours in the day. There is a shortage of truck drivers, and haulage companies are working on razor-thin margins. This could have a real implication, not too far in the distance, of a shortage of truck drivers, and therefore a shortage of trucks.
My second point is around costs. We now finally have the charges coming in at £29 per commodity and £10 for low-risk produce, but there is a real issue here. Although the Government have said that this is an acceptable cost, 81% of businesses, especially SMEs, have said that this will really hit them. One issue that must be raised is this: the projections that the Government put forward of 0.2% do not match up to the recent work done by Allianz, which suggested a cost of £2 billion, and a survey by ITV, which put the cost at £2.9 billion.
I have run out of time, but I am really looking forward to seeing how this goes forward. Will the Minister come forward with a Statement about the scheme, on a set date within the next three or four weeks, because not much has been talked about the scheme as it is so late coming forward?
Lord Trees (CB)
My Lords, I congratulate the noble Baroness, Lady McIntosh, on securing this debate, and declare my interests as a veterinary surgeon and co-chair of the All-Party Parliamentary Group for Animal Welfare.
The introduction of these risk-based checks on imported medium-risk and high-risk animal and plant products from the EU is to be welcomed. As noble Lords might imagine, I will focus particularly on the import of animal products. These checks simply create parity with imports from all other third-party countries, and parity with the checks that the EU carries out on our exports to it in the absence of a sanitary and phytosanitary agreement. In that respect, it creates a level playing field for our farmers, and should help rebalance, to some extent, a very distorted trade balance, to which the noble Baroness, Lady McIntosh, has already referred. In spite of that, as she also mentioned, the EU remains the UK’s biggest market for agri-food exports.
Apart from fairness, the real importance of these checks is biosecurity. These checks, particularly the physical checks, in a risk-based approach, will reduce the risk of importing to the UK infectious diseases in plants, animals and indeed humans. Since imports from the EU constitute such a large proportion of all the food products of animal origin imported into the UK—80% of all the animal-origin foods in 2022—it is critical that the EU is included in biosecurity checks. Despite the relative sophistication of EU animal disease control and surveillance, a number of animal pathogens occur in continental Europe that we want to exclude from the UK animal population. There are also potential public health threats that we want to exclude from food.
Delays in introducing these checks—there have been five since they were announced in 2021—have, historically, created a vulnerability in our UK biosecurity. During that period we have seen, for example, an outbreak of disease in over 200 people in the UK caused by salmonella, likely to have been imported in frozen poultry products from Poland. The new checks should prevent such issues and, much more importantly, reduce the likelihood of major outbreaks of infectious disease in the UK, such as African swine fever, a highly fatal disease of pigs that is spreading westward in continental Europe and can infect a wildlife reservoir—the wild boar. The UK Government estimate that an outbreak of African swine fever in the UK would cost £570 million-odd per annum. Since we import nearly 1 million tonnes of pigmeat every year, mainly from the EU, and the African swine fever virus will persist for many weeks in pig products, African swine fever poses a potent threat to the UK pig population.
With regard to the new checks, I note there is to be a reduction in physical and identity checks on medium-risk products from the rest of the world. This is of some concern, particularly with regard to diseases of global distribution, such as foot and mouth, the outbreak of which in the UK in 2001 cost £8 billion, which equates to £12.8 billion in 2022 prices. Will the Minister assure the House that this will not increase our vulnerability to globally distributed epidemic diseases such as foot and mouth? I should add that an epidemic of infectious disease in UK animals would not just cause colossal direct losses in animal welfare, our farming economy and food security, but lead to international trade restrictions on our global exports, which rely on our freedom from disease status.
Of course, as has been mentioned, there are costs to the implementation of these controls. Logistical challenges include the time-critical nature of some imports, particularly plant products. Furthermore, despite the Government assuring us that the impact on food and drink businesses will be only 0.2% over three years, other organisations predict larger costs and impacts, as the noble Lord, Lord Redesdale, mentioned. However, in the context of the vast costs of epidemic disease control and eradication, and in the absence of an SPS agreement with the EU, the costs of these checks to industry, and ultimately to the consumer, are relatively small. I suggest they should be viewed as an insurance premium to reduce the likelihood of much greater potential losses, which could affect animal and human health, and the whole UK economy.
Lord de Clifford (CB)
I thank the noble Baroness, Lady McIntosh of Pickering, for bringing this topic to the Chamber. I draw attention to my entry in the register, as I work for a veterinary practice.
The veterinary industry and some in the farming industry welcome the introduction of these controls and the increase in the number of inspections on imports of plant and animal products. In January, in the debate on biosecurity tabled by the noble Lord, Lord Trees, I raised the issue of African swine fever, which the noble Lord just mentioned again. In September 2023, there was an outbreak of African swine fever in wild boar in Sweden, many hundreds of miles away from any previous outbreak. The source was unknown. After the debate, a statement on Defra’s website stated that the source of the infection was found to be infected meat in a rubbish dump, found at the epicentre of the outbreak.
Some vets in the pig sector have concluded that this devastating disease for pigs will reach the UK at some point in the near future. The most likely source of this infection will be contaminated meat, just like the outbreak in Sweden. There is real concern and high uncertainty within the sector regarding the changes made this week. With the launch of the second stage of the border target operating model on Tuesday, I hope we will see an increase in the number of physical inspections on medium-risk animal and plant products and high-risk foods at some of the newly established border control posts, such as Sevington. These inspections are welcome, as they will improve the country’s biosecurity if importers comply, or attempt to comply, with these regulations.
With the move of the border control to Sevington, 22 miles from the Port of Dover, there could now be fewer physical inspections at the Port of Dover, so individuals intending to bring illegal or possibly infected meat products into the country and to ignore the regulations will be less likely to be intercepted. The possibility of fewer inspections in Dover has been reinforced by Defra reducing the funding of Dover Port Health Authority by £2.1 million this year. Last weekend, Dover Port Health Authority seized 3.4 tonnes of illegal meat products, the largest haul this year, taking seizures since the new ASF control measures came into force in September 2022 to 85 tonnes. A National Pig Association spokesman said:
“The situation is concerning because, as of the end of April, there is still no clear indication of how Defra intends to tackle the problem of illegal meat imports, which, of course, pose a huge threat to the UK pig industry”.
The National Farmers’ Union has also raised concerns about this.
What plans does Defra have to ensure that the number of random inspections at the Port of Dover does not fall in the coming months? Secondly, what measures does Border Force have in place to track vehicles that are required to stop at Sevington? What actions and resources are in place to track vehicles that should have stopped but do not? Which agency will handle the tracking of these vehicles and the seizing of imported goods? As the noble Baroness, Lady McIntosh, asked, when will we have a review of this scheme before the implementation of the next stage?
Finally, will the Minister update the House on whether there have been any further negotiations with the EU regarding the opening of border control posts in our nearest European neighbours? If border controls could be reopened, that could enable the export of high-quality breeding livestock to recommence. It has ceased since we left the EU, other than by a very long journey via the Republic of Ireland. It would give farmers an opportunity to trade their highly bred animals, benefit from the investments they have made in their herds and maximise their income.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the noble Baroness, Lady McIntosh, for securing this debate. I am going to focus my comments on the second part of her question on the border target operating model. In part, that is because on Tuesday morning, purely by chance, as the model was going into operation, I was joining an official from the Horticultural Trade Association on a visit to Rochford nursery in Hatfield, so I heard live, first-hand reports that were coming in from the environmental horticultural sector about what was happening as the controls came into place. I should declare that I was making that visit as part of my fellowship with the Industry and Parliament Trust.
One of the things I was hearing that morning was that many companies had pre-ordered to make sure they beat the deadline or had delayed orders for a couple of weeks. Is the Minister aware of just how much the Government are putting into operation now? Many companies in the horticultural sector, and I have no doubt in the broader sector as well, have ensured that there is a much slower flow now, but it is going to ramp up over coming weeks. Are the Government ready for that ramp up?
I also heard that, even before the model officially came into operation, there had been considerable confusion with the paperwork. If customs agents ticked the wrong box, they were being precharged for the inspections before the inspections had actually started. More than that, the cost of the inspection was being charged to the customs agents, when it should have been charged to the companies. They were then going to add 10% to those charges as a handling charge. That gets to the complexity that small and medium-sized enterprises in particular are facing when dealing with this.
I shall focus primarily on the environmental horticultural sector, which is vital to greening our urban areas, expanding our agroforestry and generally contributing to public health. More than 90% of our tree and plant growers, members of the HTA, import plant products. Many of those are plug plants, some of which I was shown during my visit. They are tiny and extremely prone to drying out, but I am told that the warehouse in Sevington, and the other warehouses, have no temperature controls. Sometimes the plants are moved in temperature-controlled trucks but, if they are held up at a border control post, they can quickly die and become worthless.
There are other issues in terms of handling. Members of the HTA have been told that there is only forklift handling in the warehouses, so the warehouses can handle only palletised loads. Some of the plants being imported, certainly the higher-value ones, are too large to go on pallets, which are carefully packed into lorries by expert packers at the European end, and to unpack and repack them is an extremely skilled job. There was a general feeling that the Government were just going to have to ignore those loads because they do not have the capacity to deal with them, but obviously that is a biosecurity risk.
I have a question for the Minister, although I understand if he needs to write on this matter. The information that I received was that, if a lorry is directed to go to Sevington for an inspection and it simply does not go, at the moment no one knows what the penalty is. No one knows what will happen if the driver confuses their instructions or does not follow them. What happens then? There seems to be a total blank on that in the industry—which is a bit of a hole, given that the whole process has started.
I shall pick up on points made by the noble Lords, Lord Trees and Lord de Clifford, about biosecurity, particularly in the animal area. We are in a situation where there is now significant concern in the US about H5N1, a highly pathogenic avian influenza that is now widespread in cattle herds and has been detected in one in five samples of US milk. Just this week, the US started testing beef to see what incidence it finds. My understanding—I am relying on a report in the Telegraph here—is that a special unit has been established in Defra to look into this issue, but there are no plans to test milk, beef or cattle in the UK. I have to ask the Minister, especially in the context of biosecurity that we are talking about, why we are not taking the obvious precautionary approach of doing that testing. I echo the remarks made by both noble Lords that any reduction in tests or inspections, particularly of animal products, is a grave concern.
Viscount Waverley (CB)
My Lords, ensuring that essential food items reach shelves without delay has significant implications for our economy and food security, yet the potential for disruption due to increased border checks, leading potentially to shortages of essential food and agricultural products, is real. New checks, procedures on imports and exports, the impact of import controls, supply-chain disruptions, the maintenance of food safety standards, staffing capacity, the level of collaboration between UK and EU authorities and the impact on farmers and producers mean that long-term solutions on both sides of the Channel are imperative. The challenge, particularly for SMEs, is adapting the regulations and required targeted support measures to navigate the complexities to ensure their continued competitiveness.
With time not on our side this afternoon, but in wishing to establish whether the Government’s approach is on track and addressing the many issues before us, I have this week taken the liberty to place 12 far-ranging Questions for Written Answer that I hope will clarify all, possibly beyond the response from the Minister this afternoon. External observers may care to note that they range from HL4184 to HL4189 and HL4250 to HL4255.
I will not replicate the many points that have been drawn attention to. However, I have been in discussion over the past two years with Enigio, an advanced tech company from Sweden, on its solution for creating fraud-safe digital original documents. In declaring that I have nothing to declare, but building on the provisions of the Electronic Trade Documents Act, its software is used to create documents, and then documentary checks can be performed in such a way that any type of fraud and/or manual mistake is detected and prevented, with a process of both electronic and paper documents that will fully meet security requirements. Its digital trace original, with next-generation PDF, will be the fastest way to universal digitalisation with interoperability built in. This can play a crucial role in the readiness of our border infrastructure and staffing to handle the increase in import controls and prevent disruptions in the supply chain.
I instigated yesterday the formation of a politically balanced fresh produce network APPG which Sir John Hayes, a senior Lincolnshire Member of Parliament who fully understands the issues, has agreed to chair, supported by colleagues from both Houses. The Minister may wish to be informed that I am also hosting fresh produce producers and associated industries in this House on 21 May. He would be most welcome to join the discussion, in order that participants can hear directly from the powers that be on what discourse has taken place with EU counterparts; and with what outcomes to ensure the upholding and integrity of our shared food market, working together to ensure a resilient, efficient and sustainable environment that serves all our peoples.
While these are all important questions, involving faraway states such as Poland—its national television station questioned me yesterday on the many issues covered in this debate, and I note the reference made to Poland just now—I could not conclude, however, without placing credit where credit is due. I have been drawn into this subject over time due to the persistence of Tammy Dawson-Doughty of the UK Fresh Produce Network, which recognises the state of play and ongoing consequences of where we now find ourselves. She has agreed to perform the secretariat role of the APPG with the ukFPN, encouraging a collaborative relationship for positive solutions—and be counselled, Minister: she was world junior martial arts champion, to boot.
The Lord Bishop of Lincoln
My Lords, I am grateful for this time to say two things about Lincolnshire. One is that 24% of jobs there depend on the food chain, so are deeply impacted by our import and export arrangements. One of the things that has been brought to my attention is that the Grimsby Fish Dock receives its fish from Iceland over the weekend, for auction and distribution on Monday and Tuesday. Will there be enough environmental health officers on duty over the weekend to ensure that these auctions and distribution can take place under these new rules?
Secondly, on food security and the protection of animal species in particular, I was recently in a pig unit in Lincolnshire which is almost carbon zero in how its waste is turned into power and dry fertiliser, and where the pigs have decent enrichment. This business is undermined by not only this tough security but cheap imports relying on carbon prodigality. I would be keen to hear what the Minister has to say about that.
Baroness Hayman of Ullock (Lab)
My Lords, I thank the noble Baroness, Lady McIntosh of Pickering, for introducing this debate, and I thank everyone who has taken part. I declare my interest as set out in the register as president of the Rare Breeds Survival Trust.
As we have heard, it is important to the UK economy to ensure that we maintain efficient trading with the EU. We have heard about the introduction of these important checks on sanitary and phytosanitary imports that have come in just this week. It is important to have controls that are effective, biosecure and efficient. The contribution from the noble Lord, Lord Trees, about the importance of the checks in stopping future outbreaks of disease in the UK was incredibly important. He particularly mentioned African swine fever, as did the noble Lord, Lord de Clifford. We strongly support his request to the Minister for assurances on these matters. If we are to bring measures in, they have to work effectively, because we have heard a number of concerns.
The noble Baroness, Lady McIntosh, talked about the short straits and the goods that enter through the Channel Tunnel or the Port of Dover. They will face a common user charge of £29. Our concern is that this will be imposed by Defra per consignment to recoup the operating costs of the border facilities. Compare that with the French system, which requires payment only on consignments from the UK which are selected for SPS checks. We are worried that this charge will have a significant and disproportionate impact on perishable goods coming in through the short straits, because it effectively adds a levy on to all food and plant imports that come in via this route. I ask the Minister: is this fair on our producers and our businesses? The noble Baroness, Lady McIntosh, asked this question as well.
I also mention Getlink, which manages and operates the Channel Tunnel, and thank its staff for meeting with me and for their briefing. Getlink is concerned because some of its customers have said that they intend to stop trading with the UK due to increased costs, or will have to pass on the full costs to consumers. Yet the Government are apparently saying that the new measures will increase food inflation by only 0.2% over three years. Why has the Cabinet Office not published the modelling behind this figure? The FSB, customs professionals and different businesses have all warned that there will be higher costs and a bigger increase than this Government forecast.
The noble Baroness, Lady Bennett of Manor Castle, talked about the impact on small businesses, particularly horticulture. A number of examples have been in the media recently. The owner of a flower company, Tom Brown Wholesale, predicts that his business will face costs of between £200,000 and £225,000 per year. He warns that his prices will have to go up for consumers. He was also concerned about how the checks will take place, on the basis that the products have already been checked in Holland. Defra says that it will use a light-touch approach. I ask the Minister exactly what this means. Can he explain what “light-touch” is all about? My noble friend Lord Howarth of Newport spoke of the need for more clarification on some of these issues. The Fresh Produce Consortium says that the Government have
“single-handedly created the world’s most inefficient and expensive border”.
I wonder if the Minister agrees.
The consortium said that it has heard that inspection staff would not be at border controls after 7 pm, despite 95% of goods arriving later than that. Is that correct? The right reverend Prelate the Bishop of Lincoln asked about staffing in Grimsby. What impact could this have on queues or processing time if the people are not there when they are needed to inspect the goods?
The EFRA Select Committee has also expressed concerns about reported delays due to checks as well. The British Meat Processors Association said that there has not been enough clear explanation about the new checks, so it is difficult to look at the impact. The British Poultry Council said that there has been a 56% drop in poultry meat exports since 2020 and the system will erode business viability and push up production costs in the UK. These are all very legitimate concerns.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Douglas-Miller) (Con)
My Lords, I thank the noble Baroness, Lady McIntosh of Pickering, for securing this important debate, and all those who have spoken for their thoughtful and constructive comments. There have been a great number of questions and I have a very short period of time to address them, so I will push on and see how many I can get through. I will of course write to those whose detailed questions I do not manage to answer.
The second phase of the border target operating model was implemented on 30 April, reflecting a long period of intensive work across government. I am pleased to report to the House a smooth and successful implementation. I am also extremely grateful to the noble Lord, Lord Redesdale, for his continued support. All the necessary digital systems have been deployed and the documentary and physical checks have begun successfully at the points of entry across the country. Defra will, of course, continue to monitor the BTOM’s impact and effectiveness on a very regular basis.
Contrary to the point raised by the noble Lords, Lord Howarth and Lord Redesdale, and in support of the comments made by the noble Lord, Lord Trees, I say that introducing these biosecurity controls on imports is very important. Now that we have moved away from the EU’s rigid biosecurity surveillance and reporting system, we are responsible for protecting our own biosecurity from threats such as African swine fever and Xylella. These threats would devastate UK industries and cause significant damage to the environment, public health and the wider economy. We remember the impact in 2001 of foot and mouth, which cost British business nearly £13 billion in 2022 prices and of course caused massive disruption to many industries, as well as emotional and financial distress to many of our farmers.
Biosecurity controls are also essential to protect our exports and international trading interests. Our trading partners want to be reassured that we maintain the highest biosecurity standards. The overall ambition of the border target operating model is to introduce robust risk-based controls that protect biosecurity while reducing administrative and cost burdens for importers.
I will take this opportunity to address some of the questions raised. The noble Viscount, Lord Waverley, and the noble Baroness, Lady McIntosh, asked about the Government’s assessment of our readiness to implement these controls. The Government have worked with port and airport operators, traders, port health authorities and the Animal and Plant Health Agency to make sure that we have the right infrastructure, systems and resources in place. In recent months, this has culminated in an intensive period of operational testing and collaboration with several ports, port health authorities, APHA and traders. We have used these tests to identify and resolve any remaining operational issues.
We are confident that BCP infrastructure has sufficient capacity and capability to handle the volume of checks expected under border control operating models. This was raised by the right reverend Prelate the Bishop of Lincoln, and I hope that satisfies him. I should add that the port health authorities’ staffing is designed to be very much in line with demand. We are confident that our systems are robust, dynamic and effective, and we are confident that inspection authorities are appropriately staffed and trained. This is reflected in the successful first few days of implementation.
The noble Baroness, Lady McIntosh, and the noble Lord, Lord Redesdale, spoke of the impact of border controls on domestic food producers, and I am confident that the border target operating model will strike the right balance between safeguarding biosecurity and reducing friction on trade. The National Farmers’ Union has welcomed the new regime and its protection of our biosecurity. These checks are also vital for maintaining access to export markets by assuring our trading partners of our high biosecurity standards.
I turn to some questions raised by the noble Baroness, Lady McIntosh, and again support the comments made by the noble Lord, Lord Trees, on the comparative regulatory advantages enjoyed by EU businesses exporting to Great Britain. Although the focus of the border target operating model is on imports, I note that it substantially reduces the asymmetry in the regulatory burden between GB-EU and EU-GB trade. It introduces new controls on animal and plant products imported from the EU, ensuring that they meet our high biosecurity standards.
The noble Lord, Lord Redesdale, and others questioned the assessment made by the Government of the impact of these controls on business. We have been clear from the outset that, in developing this new model, we aim to achieve the lowest regulatory obligation for businesses, consistent with the need to protect biosecurity and to safeguard the UK’s reputation for high regulatory standards. I believe that this is what we have achieved. All costs and operational procedures will be kept under review and, if they appear either disproportionate or excessive in other ways, we can and will alter them.
The noble Lord, Lord Howarth, spoke on the impact that these controls will have on inflation. Indeed, it was a point raised by other noble Lords as well. For consumers, the implementation of the BTOM should have minimal impact on food price inflation. Initial analysis—I take the point that the noble Baroness, Lady Hayman, made about where that information comes from and whether it can be published; I will write to her on that—is based on peer-reviewed methodology and has indicated that the policies introduced under BTOM will lead to an approximate increase in consumer price inflation of less than 0.2 percentage points over a three-year period.
The noble Lord, Lord de Clifford, seemed to suggest that the Government are refusing to talk to the Dover Port Health Authority. I can assure him that nothing could be further from the truth. We have been engaged in dialogue with the Dover Port Health Authority for a number of months now. The current funding package that it enjoys was put in place to cover a range of tasks that are now moving to Sevington. We are looking to negotiate a new package with the Dover Port Health Authority to reflect the reduced number of checks that it has been doing over a wide range of issues. This does not mean that we will be reducing checks for African swine fever. To be clear, the authority that is responsible for stopping and checking for illegal imports is Border Force, not the port health authority.
The noble Baroness, Lady Bennett, asked how the Government intended to enforce the attendance of goods called to Sevington for a BCP check. Consignments called to Sevington for inspection will have completed the necessary customs declarations and pre-notifications. These goods will not be legally cleared for sale or use within the UK until they have been attended to and cleared prior to BCP. Where the BCP has concerns due to non-attendance, the goods will be referred for inland controls by the local authority, enforceable through the data collected through those customs declarations and pre-notifications.
Another point raised by a number of noble Lords was around horticulture. The Government are most grateful to the HTA, which has provided extensive and constructive feedback during the development of this model. Indeed, I have held a number of meetings and round tables with the chairman, chief executive and quite a number of its members. Officials in Defra and the Cabinet Office have worked closely with the HTA and a number of its members on operational tests of systems and the BCPs of most significance to their sector. This has allowed government and BCP operators to refine systems and processes to ensure that the new regulatory system works smoothly for this sector.
This brings me on to another point that was raised by a number of noble Lords about the pragmatic approach that we are taking. When you are introducing an entirely new system—I am very aware; I have been in business and know how this works—it is good practice on day one to go quite slowly. That is entirely what we have attempted to achieve here. My clear instruction to all the port health authorities is that we do not want to go from nought to 100 miles an hour on day one. We have targets in terms of the quantity of products per risk category that we want to check. We can build up to that; we do not need to go from nothing to everything on day one. I hope that that pragmatic approach is very much a part of the successful start that we have seen to this process.
I am very conscious of the time, so I will pause there and again thank all those involved in today’s debate. It has been extremely helpful and valuable. If I have missed any points, I will ensure that I write to noble Lords.
Homecare Medicines Services (Public Services Committee Report)
(6 months, 3 weeks ago)
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Baroness Morris of Yardley
That this House takes note of the Report from the Public Services Committee Homecare medicines services: an opportunity lost (4th Report, Session 2022–23, HL Paper 269).
Baroness Morris of Yardley (Lab)
My Lords, I am very pleased to introduce this debate on homecare medicines on behalf of the Public Services Committee. In opening, I thank all the witnesses who appeared before our committee for their time, expertise and co-operation with us. I thank the team who served us so well: Sam Kenny, Tom Burke, Claire Coast-Smith and Lara Orija. I personally thank all the committee members, who worked hard on this report and, I think, are pleased with it and determined to see it through.
I know that committee members will understand when I thank the noble Lord, Lord Blencathra, because without him, we would never have looked at this issue at all. I was aware of homecare medicines, I knew what an important service it is, but I had no idea of the challenges it was facing or how ineptly people were dealing with those challenges. We are grateful to him for that, but the problem that emerged was that we were not the only ones who did not know about the challenges: it seems that nobody running the service knew about the extent of the challenges either.
This is an important issue: it is a picture of how the NHS should be. It is a forward-looking service. It offers patients the opportunity to have medicines and treatments in their own home, to have choice and flexibility around their lives. It saves money for the NHS and patients, and it is something that needs to work, because it could be a vision of the future. It has increased in recent years. There are 500,000 prescriptions now, 2.8 million deliveries a year and, over the last 15 years, on average, a 10% increase in those using the service each year.
However, if you read our report, or you look at the evidence, there is one overriding conclusion that you are left with, and that is the difference of opinion between the different witnesses who appeared before us. What was frightening, almost scary, was that that difference was split into two clear groups: the clinicians and those who use the service, who talked about the many problems; and those who manage, run and regulate it, who did not seem to see any problems at all. How that lack of observation and communication has arisen must be something that the department sorts out before it can move forward.
Having said that, I feel it is a strange report. Of all the reports I have been involved with during my time in both Houses, I do not think I have ever seen an issue that I am more confident can be solved. We are not asking for more money; it is not politically contentious; it is not backward-looking, it is forward-looking; we just need somebody to grab hold of it, make the difference and make it work. This is not something that is an aspiration or something that has a 10-year forward look; this is something that can be done now. We can get it right and make life better for patients and for the NHS. In essence, homecare medicines is a market, and the hospital trusts, each trust individually, are the purchasers holding the money. They contract with two elements. One is the drug companies, the pharmaceutical companies; and the second is the homecare providers which deliver medicines and appliances to people’s homes.
What is perhaps unusual, but never mind, is that the contracts themselves are between a chief pharmaceutical officer in each trust and a large pharmaceutical company. Some 80% of the trusts have no contractual arrangements at all between themselves and the service provider, they just have a service level agreement. But that is not unusual; they are not the only part of the public sector that puts out a tender, monitors its performance, makes adjustments and gets on with it. However, if you look at what we know about the effective delivery of public services or private services, some elements have to be in place. You need information about what is going on. You need to agree performance indicators. You need to know how an organisation is performing against them. You need to know who is holding them accountable and you need to know who to go for when things go wrong. Not one of those things is in place in homecare medicine, and it is a service that is relatively small compared with many of the big public services that we run.
First, there is data, but—believe it or not—none of it is in the public domain; nor is it available to clinicians when they are advising patients on what to do. The National Homecare Medicines Committee, one of those which manage the service, collects 27 key performance indicators and passes them to the NHS, but they are never published or made available to anyone. Then there is a completely different set of KPIs between the pharmaceutical companies and the homecare companies which deliver the medicines on their behalf. There is no standard template across the country; every single one of those contracts can take a different shape. They are not published, the trusts and clinicians do not know what is in them, and they never know whether they have been achieved.
If that was not a big enough mess, on top of all of that—believe it or not—all the data is self-reported. That is not only a recipe for a service that does not work well but it means that no comparisons are possible when the NHS trust is spending money to place its contract. It has no information against which to judge either the performance of its present contractor or anyone else. Almost more important than that is that no information is therefore collected about how seriously patients suffer from service failure. No one in the NHS or anywhere else collects information about the impact on patients served by this poorly run service.
Secondly, there is no effective system of regulation. There are three regulators: the Care Quality Commission, the General Pharmaceutical Council and the Medicines and Healthcare products Regulatory Agency. They all inspect a different tiny part of the system; there is no one with overall responsibility. The problem is that this is not a high priority for any one of these regulators.
The Care Quality Commission does about three inspections a year. It does not collect complaints; there is no section in its books or charts for complaints received about homecare medicines. It has never chosen to do a thematic review and there is no evidence that we could find of a prosecution it has initiated. Whatever people who work at the CQC think about when they get up in the morning, it is not, “I wonder how homecare medicines is getting on”. When we asked those three regulators about the gaps in between the bits they inspect, they all said, “That’s fine, we don’t overlap—but there are no gaps in between”. That is not an effective system of regulation, and it helps nobody.
Thirdly, in a system such as that there would have to be infrastructure and support to go with it. Chief pharmaceutical officers in each NHS trust are busy people. They have a very demanding job, and the responsibility of sorting out the contracts with the big pharmaceutical organisations falls to those men and women. Everybody who came before has admitted that this requires specialist knowledge and that there is a huge amount of effort involved in managing the contracts and being aware of the impact on patients. The support and expertise that they would need to do that job is just not there.
Procurement hubs serving NHS trusts often have no homecare medicines specialists. Each provider has developed a different system, with no single NHS system for providers to interact with. On prescriptions, they have to re-read the evidence to make sure that somebody is not making it up. Some 6,000 paper prescriptions go into the system every day on more than 1,000 different templates—it is no wonder that nothing that comes out makes sense. It is beyond belief that in 2024, some of those prescriptions are still sent by post.
That is the environment in which we expect trusts and clinicians to make decisions about a key service, on which they are spending public money and on which clinicians need good-quality advice to advise their patients on the decisions they should take. They are not faced with any KPIs that they can monitor; they do not know how one provider performs against the other; they know that there is no effective regulatory system, that there is an inadequate infrastructure to support them, and that no one is holding the ring to keep it all together. At the end of the day, there is no one in overall charge for them to turn to for help and advice.
It is not surprising that this leads to a system that fails everyone it seeks to serve. First and foremost, it fails patients. There is no complaints system and nowhere for people to go if something goes wrong. The things that can go wrong go very wrong and are very serious: the medicines do not turn up; the wrong medicines turn up; the medicines turn up at the wrong time; the medicines turn up, but the person who was showing the patient how to inject them does not turn up; or the medicines are out of date. The catalogue of what happens in an NHS service that puts safety at the top of its priorities is frightening.
The impact for the patients is also serious: they miss medicines, become more ill and need to go back to hospital and have operations. Because no data is collected about how much harm is done, I cannot stand here with certainty and say that people lose their lives—no one can—but what we can say with certainty is that people do not recover as quickly, and they are given extra burdens to deal with because the system does not work as it should.
It also has an impact on each NHS trust. If you are not getting the service from the homecare provider—and if you have no one to complain to because the providers do not have good phone systems with somebody who picks up the phone at the end who knows you—you will go back to hospital. You will go back to the consultant who gave you the prescription or to A&E, and you will ask for help. That means that every hospital in this country, which have already paid taxpayers’ money at a time of reducing budgets to the provider to deliver the service, will have to pay again to remedy the defaults in the service.
If you talk to any of the groups representing clinicians or patients, they will tell you the horror stories of how much they have to do to mitigate the weaknesses in the system. Crohn’s & Colitis UK told us that 10% of specialist nurses spend one day a week on the consequences of an inadequately delivered homecare service. The British Society for Rheumatology told us of one clinic where a nurse spends a quarter of their time chasing after homecare services. In Leeds, people have set up their own infusion unit so they can teach the patients how to inject the drugs. They provide the drugs out of their budgets to start them off, because it takes eight weeks for the provider to get their act together.
The other losers are the NHS and the country, because it is money wasted. It is the case that the NHS, the department and Ministers do not know how much money is spent on homecare services. We had four different estimates, between £2.9 billion and £4.1 billion, and I am still sure that no one knows exactly what it is.
Yet I remain an optimist. All that can be solved; it is a tragedy, but it is solvable. Part of the anger or frustration is that it has not been grabbed hold of and solved already. We might get somewhere if we put a system in place that has comparable data, if we get the regulatory system sorted out, if we put in support for procurement, if we move more to electronic prescriptions and if we put a named person in overall control, who wakes up every morning knowing that their job is to make sure this works all right.
I say to the Minister that we have been very pleased with the support and response that we have had from his department; it has been helpful throughout. They have not spelled it out, but I think that both he and the Minister who is no longer in the department were surprised at the lack of awareness of this service and the state that it is in. That is why I am an optimist: I know that we await a further report in the summer.
However, there is a tendency in government to turn to the existing structure and people to create something that is better—which is what I have worried about most. There is a lack of trust between those who have been shouting for a long time that things are badly wrong and those who have not heard them and have not done anything about them. My request to the department and the Minister is not just to do all these things but, most of all, to consult those who have the best experience of what has gone wrong and the best ideas about what could be done to make it better.
I very much hope that our report helps not just the department and the NHS to get this better but all the clinicians and patients who have not been treated as well as they should and have not had the support that they should for many years. That is the goal, and I think that it is achievable. I promise that my committee is absolutely determined not to let this go, by whatever means we can. I have no doubt that we will be back at this again. I thank the Minister and the department for the support so far and offer our every help in their future work.
Lord Blencathra (Con)
My Lords, I am delighted to participate in this important debate, and I regret that it is tail-end Charlie today when the report deserves much greater prominence. The only credit I can take for this excellent report is that I suggested the topic. I pay tribute to our brilliant chair and her devastating summary today, and to colleagues on the committee and to the officials, who did all the probing and heavy lifting and concluded that this is a major opportunity lost.
My personal interest is that I get two different medicines for multiple sclerosis delivered to my home. The one which sparked this inquiry is called fampridine. Most people with MS cannot lift their feet and they drag on the floor; I can trip over a dead fly on the carpet. Fampridine enables us to lift our feet by as much as 5 millimetres—that is all—but it is the difference between walking and not walking at all. To me and others, that little fact makes it a miracle drug, and I was lucky enough to get in on the trials when they started. As an aside, NICE will no longer approve it for new patients, but all those of us in the trials can keep getting it. That is grossly unjust—like many other NICE decisions.
I had excellent service until 2017, when the delivery contract was allocated to a new company; it is named in the report and I will not name it again, but it began to fail abysmally in getting the deliveries to me before the last pills ran out. I complained on many occasions and it came to a head in July 2021, when I had no delivery and no pills for 10 days. I was unable to walk—or stagger, in my case—from where I park my Ferrari at the Bar of the House even to get to this Front Bench here.
I looked up the company in Companies House, found the names of the main directors, tracked down their addresses and sent them a stinking note with my full rank and titles and a draft of my letter to Sajid Javid, the then Secretary of State, calling for the company’s contract to be terminated. The net result was that, two days later, some poor chap was dispatched on a 500-mile round trip to deliver on a Saturday my fampridine to Penrith in Cumbria.
I looked further into this company and found that the Care Quality Commission—a thoroughly useless body if ever there was one—had just published a report in May 2021 showing that over 9,885 patients had also failed to get deliveries of their drugs, and some had to be hospitalised. The CQC report gave the company an overall rating of “inadequate”. On patient safety it rated it “inadequate”, and on “Are services well led?”, it rated it “inadequate”. Therefore, with all these negative ratings, what did the CQC do? It listed all the regulatory breaches and asked the company to kindly send it a report on how it would behave better in future. As Bob Geldof might have said, “Is that it?”
That is one reason why I say that the CQC is a useless regulator, which our report also suggests—or hints at, in very strong terms. By the way, a month after the scathing CQC report, the company changed its name and pretended to be a completely different supplier altogether.
I wrote to the Secretary of State calling for the contract to be removed, but that did not happen because he was not properly in charge of it and he was not sure quite who was. I now get Rolls-Royce service from this company because of who I am and because I created a big stink, but the other 9,884 victims, who have conditions far worse than mine, might not be so well served.
When I joined the Public Services Committee, colleagues were looking for a short-term inquiry to fill a gap as we looked at suggestions for a longer inquiry. I suggested investigating the delivery of medicines at home and supplied details of my own experience. I think that initially my colleagues thought that I was perhaps exaggerating the shambles I had described, but when our excellent clerk, Samantha Kenny, looked at it, she thought that it deserved a deeper look.
My colleagues thought that there may be a bit of a mess here, and then the evidence started to come in from various patient groups such as Crohn’s & Colitis UK, and the superb report from the British Society for Rheumatology which suggested that the system was a complete shambles and cited countless examples of failure to deliver medicines on time. I think colleagues then concluded that old Blencathra was not so barking after all.
We have called the report An Opportunity Lost and that is true, but we could easily have called it “A Complete Shambles”. Those are not just our words; the Chief Pharmaceutical Officer for England told us that our inquiry had unearthed,
“a complicated picture that is quite hard to understand even when you are working in the area”.
That is a nice way of saying “a complete shambles”.
The then Minister for Health and Secondary Care, Will Quince MP, stated:
“It is certainly complicated. That is an understatement”.
That is, again, a nice euphemism for “a complete shambles”. As the noble Baroness said, the NHS has not a clue how much it costs. The National Clinical Homecare Association told us that the Treasury spends £4.1 billion per annum on homecare medicines, but the NHS told us it is only £3.2 billion. We asked the Minister—he said it was £2.9 billion. As we say, it is utterly shocking that no one in the NHS can give us an accurate figure for the billions spent on home deliveries, but then the NHS does not have a clue about how bad it is and how many patients have suffered. KPIs are a mess, as the noble Baroness explained.
We said in our report:
“Different sets of performance data are available to manufacturers and the NHS. This creates confusion and prevents effective monitoring … NHS England must develop and implement one consistent set of performance metrics”.
Performance data must be published.
The National Clinical Homecare Association told us that
“98.8% of deliveries were delivered on the day they were intended to be delivered on”.
That is a very clever form of words but quite misleading. Yes, 98.8% were delivered on the dates that the delivery company decided they were to be delivered on, but those were not the dates the doctors prescribed, which were always much earlier and before the medication for patients ran out. Part of these failures are delays in the NHS prescribing system and delays by the delivery company.
Chapter after chapter of our report highlights the failings of the system. Thus we say:
“No one—not the Government, not NHS England, not patient groups, not regulators—knows how often, nor how seriously patients suffer harm from service failures in homecare”.
Let no one misconstrue our conclusions as an attack on the private provision in the NHS. While we found myriad flaws in the provision at all levels, God help us if the NHS tried to run a courier delivery service, since that would be infinitely worse. Delivering medicines at home by couriers is eminently sensible but has to be better managed at all levels. The problems that we identified all relate to the fact that there is not one single person or NHS body in charge. Different people and organisations negotiate different contracts. There is no quality control or negotiating competence, there are no consistent KPIs to measure performance and the various regulators are all fairly useless. It seems there is no one with the power to sanction failure or cancel contracts. Worst of all, I got the feeling that the NHS rather likes it this way because when things go wrong there is no one individual or organisation to blame. They can all carry on presiding over a shambles but carry no personal responsibility for it.
I get exceptionally good medical care from the National Hospital for Neurology in Queen Square, the Royal Marsden and the Lakes Medical Practice up in Penrith, but if you want to see the general bureaucratic incompetence of the NHS and why it is failing so badly in so many areas, the bureaucratic shambles that we are reporting on here is a perfect microcosm example.
However, in the report we did not just criticise but offered solutions. Theoretically, there is a Minister in charge, but he or she has no say in the running of the system, which is delegated to the NHS. The Minister should be charge and have a very senior person reporting to them. We say:
“NHS England should designate a senior, named person with responsibility for the homecare system. That person should be given sufficient powers and resources to discharge that responsibility”.
That person’s responsibilities should include:
“Setting clear national KPIs for organisations commissioning and providing homecare medicines services … Collecting data on those KPIs, and publishing data on those KPIs in a way which supports public scrutiny of the homecare medicines system … Holding relevant bodies such as individual providers, Chief Pharmacists, the National Medical Homecare Committee and pharmacy teams to account for work on homecare medicines services … Responsibly using new powers to issue appropriate penalties to under-performing providers”.
That is essential; there must be sanctions.
The fifth recommendation is:
“Ensuring trusts or hubs procuring homecare medicines services have access to sufficient financial and expert procurement advice and information, including template legal agreement frameworks, so they are able to effectively deliver value for money services and influence the homecare medicines services market”.
As in every government department I have served in and witnessed over 40 years in Parliament, the lawyers employed by the outside commercial contractors are infinitely better than government lawyers trying to negotiate contracts; they outwit and outmanoeuvre us every time.
Finally, we said that:
“Achieving value for money and increasing transparency on homecare funding”
should be another part of their individual duties.
As the noble Baroness said, the government response accepted about 90% of what we say—that is jolly good. On that basis, let us have urgent action to implement those proposals and the remaining 10% as well.
Lord Evans of Rainow (Con)
My Lords, I remind the House that there is an advisory speaking time of nine minutes.
Lord Shipley (LD)
My Lords, I was going to offer some of my time to the noble Lord, Lord Blencathra, because his contribution was so very important. It was a pleasure to listen to what he said because he has personal experience of the service, and I pay tribute to him for pointing the committee in the direction of this inquiry based on that personal experience. I also thank our chair, the noble Baroness, Lady Morris of Yardley, for her leadership of this inquiry and her forthright explanation of the problems we encountered.
This report shows the value of House of Lords committees, and I have rarely seen so much acknowledgement of a committee’s work in a government response. In this case, the words “We accept the recommendation” appear so often that the committee has clearly done something not just right but very important. There are some points of difference with the Government in their two responses, but often these are points about process or about the need to secure further information or consultation. The dialogue has been important, it will go on being important, and it is encouraging that the department is engaging positively on this and is clearly keen to do so.
As the noble Baroness, Lady Morris of Yardley, said, half a million NHS patients receive hospital-prescribed medication at home through private sector homecare medicines services. It avoids travel for the patient and is much more convenient for them, but it has to work properly since there are clear safety risks that must be avoided.
Indeed, the CQC said it had found evidence of missed deliveries and had concluded that some patients had suffered “avoidable harm”. But it seems that the Government still do not know the extent of that harm, and clearly more data is needed on how many patients have suffered a worse illness or other harm as a consequence of a service failure.
It has puzzled me why information cannot be made available on this before the summer; why does it take so long to gather the information on patient harms? It is an important matter, and it has not been helped by the Minister of State’s reply on 25 March, which seemed to hint at a problem. It said that individual supplier submissions on aggregated performance data will be collated to show aggregated market performance and that this will be in addition to existing and continued contractual reporting of performance data to relevant NHS contracting authorities, whether by local trusts or via regional framework operators. I find that very complicated; I am sure it may all be true, but it sounds very complicated. There are a lot of communication links and reporting, which it can be easy to break. It ought to be better, and it ought to be possible for the Government and the NHS to simplify that structure.
I am very glad that the Government did a desktop review via NHS England. It was urgently needed. As the noble Baroness, Lady Morris of Yardley, said, there has been no individual with overall responsibility for performance, so there is a lack of data on performance. There have been problems with regulation, on which we await further proposals in the summer update. We urgently need a consistent set of performance metrics, but I am pleased that the Government have agreed to one set. We said that the Government need to know how much is actually spent on homecare medicines services but, as the noble Lord, Lord Blencathra, pointed out, we got three different figures. It is important to know which is correct, because these are large sums of money.
I am glad that the National Audit Office will be involved in defining costs, assessing whether commercial confidentiality is justified and establishing whether the Government can be confident that the money is being spent well. We also ought to acknowledge that there is a lack of competition in the market and that, as the service expands, greater competition is needed. That should in turn lead to a reduction in costs.
I shall just address the commercial sensitivity of services by manufacturers which, as we have heard, account for 80% of the homecare medicines service. It is quite difficult to understand what value for money is being achieved because of commercial sensitivity. I just point out that we are talking about public money and the 80% of the homecare medicines service that we are talking about is a for-profit service for NHS patients.
I found the Government’s reply, in paragraph 8 of their second letter on 25 March, to be very strange. What exactly is commercially sensitive? How do we know that we are getting best value? Is it not possible to unbundle contractual matters that are genuinely confidential from those that are not? I hope that the Government will look at that and look forward to the NAO giving us advice on it.
In conclusion, the noble Baroness, Lady Morris of Yardley, was absolutely right to say that we are optimistic. There now has to be an optimism about some of the problems that we have identified, in a service that is clearly going to expand. Things have been learned about the way it has operated, but we can have optimism about it. As the noble Baroness, Lady Morris, rightly said, it is essential that those who are using the service, those who manage it and the clinicians involved all need to be consulted. Patient groups have a great deal to say, so we need and would benefit from their time and evidence.
I see this report as a trigger for action. The Government have committed themselves to delivering improvements and, if this is got right, it will improve care for a large number of people with fewer pressures on the NHS estate. But a lot of work needs to be done. If it is done properly, homecare medicines services can be a growing pillar for our future health service.
Lord Carter of Coles (Lab)
My Lords, it is a pleasure to serve on the committee that undertook this revelatory review, under the sure-footed guidance of our chair, the noble Baroness, Lady Morris of Yardley. I add my thanks to the support we had from the team and to the noble Lord, Lord Blencathra, for drawing our attention to this issue. As others have noted, the horror of it was hidden until he shone a spotlight on it. My interests are those as declared on the register.
Rereading our report was profoundly depressing. On the other hand, when we got the Government’s response in the letter of 25 March, my spirits began to rise because, like other noble Lords, I saw that there could be a way out. There are really two key questions. How did this mess occur? It is a spectacular own goal by the NHS. More importantly, can we be convinced that the NHS is going to do something about it? How do we get through the fine words? My questions are more about the details.
We found a casually overseen service—it was sloppy—which spends over £3 billion a year. Is it £3 billion, £4 billion or £4.1 billion? Who knows, but it is a huge amount of money. To put it into perspective, Defra spends about £2.5 billion on the whole of support for agriculture in this country. I have to say that, if this was a Defra debate, there would be a lot more people here. The point is that it is really significant, and it does not get the attention it needs. It looks after 500,000 patients, many of whom are vulnerable and have experienced appalling care, high levels of distress and, frankly, very confused financial oversight to the system.
Why did this happen? It is obvious: it was caused by a lack of organisational clarity. Who was responsible? Nobody knew. What was the accountability and effective management? There were two failures: one of the management of operations and one of regulation.
Looking forward, in a modern healthcare system, caring for the patient in the right place at the right time is important in that continuum of care, and therefore it is axiomatic and vital that getting homecare services working is central to the future of the NHS. This is not a policy matter—it is good practice: you want to get the patient into the right place. It is not a high-level policy or strategy thing; this is about operations and operational excellence. That must lie with NHSE, and it would be good to hear the Minister confirm whether that is where he thinks the first level of responsibility lies. It would also be nice to hear whether he agrees that this important service would have continued to languish had it not been for the intervention of this committee of your Lordships’ House.
Although the report is succinct, I shall focus on three things: transparency, information technology and accountability. On transparency, any good system that focuses on quality and cost must have data. That is the key to it. The Government’s response was very encouraging. It was nice to read—I think that they understand the issue and they are getting people to work on it. Let us just hope they can come up with something effective.
However, on recommendations 7 and 8 and the question of debundling that other noble Lords referred to, I could not quite understand the response—the point about commercial confidentiality. As other noble Lords commented, this is public money; we should get access. Also, it is remarkable that we cannot get anonymised data setting out these things hierarchically. I cannot understand it, so perhaps the Minister might do that. I encourage him to get his department to look at the P&L accounts of the pharmaceutical manufacturers and those of the people who provide the service. The balance of power seems to lie at the back end with the manufacturers, rather than focusing where the service needs to be at its best. The money should go at the front end where it hits the patient. I think he will be as surprised as I was when I looked at those accounts. Some 80% of homecare is delivered in this bundled fashion, which impedes direct management. If we have intermediaries for various sources, particularly the pharma companies, contracting here and subcontracting there, we have to get a direct accountability framework. I shall come back to that in a moment.
On digital, electronic prescribing has been really slow, and if you cannot get the information out, you cannot get the drugs to the patient. You cannot plan or do these things properly. It is absolutely fundamental. Instead, we have pieces of paper flying around—these are decades-old systems. The key to this is getting the IT to work for electronic prescribing, but also getting that data back into the integrated care record. These patients are not stuck just in homecare; they go back into the acute hospital and the community, and they have comorbidities. The question is: how do those servicing them look across the care spectrum with one record of care? Can the Minister tell us when he thinks we might find some integrated care record so that all those phases can become apparent to support patients?
The nub of the problem is accountability. This was chaos; everybody we spoke to had no idea who was responsible. It was most remarkable, as other noble Lords have noted, and I have never been in a situation like it. But we are where we are. Clearly the Government accept this situation, and clearly our report has been a catalyst for change. How do we get clarity of roles, responsibilities and decision rights, if we are to unwrap this whole shambolic situation? I hope the Minister can tell us whether, when these reports come forward—possibly in the summer, ahead of the recess—he will be able to publish an accountability framework. Until we see that, and see how the pieces fit together, although we might have a lot more words we cannot focus on who we can go to, in the operations particularly. Where will this famous SRO sit? To whom will it be accountable? Who will be accountable to it, and what decision rights will it have? Unless we get that right, all our aspirations will not be met.
As regards regulation, one might say, as the noble Lord, Lord Blencathra, noted, that the CQC has failed in this respect. Light-touch regulation is one thing; dereliction is another. We must be sure of two things. First, there can be only one regulator—multiple regulators always fail. We need a super-regulator, which has to be the CQC—we have not got time for legislation. Secondly, the CQC has to be made effective and has to come to an arrangement with the two other organisations that underwrite quality.
The NHS is in a most difficult position; it is under unprecedented pressure on every front. As the noble Baroness, Lady Morris, noted, this is not about money; this is about organisation, management, detail and covering that ground. We are encouraged by the fact that the Government have accepted, or nearly accepted, so many of these recommendations, but the fact remains that this has to be about access and getting things right as we go forward. I hope that the Minister can tell us with some confidence what next steps he intends to take in order, when this comes back in the summer, to tell us that the way forward is there.
I end by saying this. It is clear that the Government have found this report quite useful. Since our committee is always looking for interesting things to do, maybe the Minister will point to one or two other things we could look at in order to help him.
Lord Willis of Knaresborough (LD)
My Lords, I begin by thanking again the noble Baroness, Lady Morris of Yardley, for her excellent chairmanship of a challenging inquiry. I echo her thanks to the committee clerks and staff for their inspirational work in assembling pertinent witnesses and materials for the committee.
The fact that the Government have responded positively gives hope that we will see not only significant changes to the current organisation but an opportunity to build a home medicine service that will make a profound difference to millions of future patients. I must confess, having listened to the noble Lord, Lord Blencathra, for 27 years, that when he sought the support of the committee for the inquiry, I was somewhat sceptical that this was an area of significant concern. I apologise. Not only was he right in exposing a major challenge to the NHS but, midway through the inquiry, I became a recipient of homecare medicine services, when diagnosed with pulmonary fibrosis—a serious, chronic, life-changing disease. What is more, I discovered, via the Cystic Fibrosis Trust, that 87% of its members in receipt of homecare medicines had experienced problems with home delivery. I understood then the concerns of the noble Lord, Lord Blencathra, and of the leading charities whose members are involved in the service.
I wanted to know a little bit about the service. It began in 1995, and I suspect that the noble Lord, Lord Carter, might even have been around at that time in the Government. I came across a most interesting publication by the Department of Health, which produced in 2011 a detailed review of the service entitled Towards a Vision for the Future. It is worth reading again. I am sure the Minister will have read that review, and he will be embarrassed by its conclusions, because it made exactly the same conclusions about the state of the service in 2011 as our report has done now. Thirteen years later, despite a 300% increase in patients and costs, nothing had changed or improved. I recognise that both the Minister, in discussion, and the Government, in response to the report, have accepted several of our key recommendations, but so much remains to be dealt with.
Can noble Lords imagine any business with half a million customers not knowing how much money is being spent or where it is being spent, particularly when sums from £2.9 billion to £4.1 billion are involved? Yet that remains the case. An initial response was that the service cost £3.2 billion, and then, according to the National Clinical Homecare Association, £4.1 billion, which was then reduced to £2.9 billion. The Government then said £3 billion in their response. The confusion comes because there is no accurate way to measure the cost of delivery, which prompted the committee to seek an in-depth explanation, only to be told, as Members have clearly stated, “commercial sensitivity”. In actual fact, the real reason is that there are no clear requirements to meet nationally agreed criteria for service delivery and component costs. Therefore, the critical breakdown does not exist.
The Government have accepted the need for national key performance indicators, but the idea that the National Clinical Homecare Association and the homecare providers should provide all the criteria for identifying costs is unacceptable. Could the Minister say whether the statement coming in the summer will include the National Audit Office to certify expenditure? Given that 80% of expenditure is on drugs and medicine, will the Royal Pharmaceutical Society be the lead adviser on the core national priorities to the new home medicine service leader? Speaking of the leader, could the Minister explain why, given the overwhelming role of the pharmaceutical services, the chief pharmacist was not considered as the key person to lead this service? If not them, who will it be? We would like to know.
One of our key recommendations, which was supported by the Government, is an end to the antiquated method of handwritten and fax-delivered prescriptions between consultants and providers. However, it was disappointing to read that the data systems, which are absolutely crucial to the future of the service and which are so appallingly absent at present—an issue fully accepted by the Government—will be provided by a sub-committee of the National Homecare Medicines Committee. That is not acceptable. We are in this mess because that committee, which is in league with commercial providers, failed to provide the data required to build the service in the past.
The absence of core national data seriously affects patients, who all too often have to cope with missed deliveries of drugs, sometimes forcing them back into hospital and perhaps even causing unfortunate premature deaths. We asked the NHS for statistics to see how serious this was. What was the answer? “Sorry, they’re not available”. The same answer came from the Care Quality Commission. I will not repeat what the noble Lord just said, but I plead with the Government not to get this wrong. Data is absolutely essential. What is more, if homecare is to be expanded substantially to reduce burdens in the NHS on primary and secondary care, then getting leadership, data and finance right is crucial.
This leads me to regulation, which other Members have spoken about. I know, having worked for some 10 years as a consultant to the NMC and the RCN, and having chaired the York and Humber applied research collaboration for five years, that regulation in the NHS is a major challenge, and not one that can be easily sorted out. However, we must be given a structure that integrates its work far more effectively. I totally agree that there should be a single consultant and that it should be a powerful voice. The idea that that will happen soon is, quite frankly, not realistic.
An immediate solution would be to create a lead regulator with the authority to insist on requirements from other regulators without having to seek the approval of the Secretary of State. If the CQC is to be given that task—and as the protector of patients, it should be—it must be empowered and encouraged to conduct in-depth reviews. It told us it could not do in-depth reviews unless the Secretary of State told it to do them.
That leads me finally to the patients themselves. The 2011 report concluded that,
“moving forward, patients and patient representatives should have a much greater role in design, operation and monitoring of homecare … services … Patients are at the heart of homecare medicine and should be listened to”.
Crucially, our report sought an assurance from the Government that patients and key organisations involved would at least be asked for their advice and be involved with any future policy changes, because nowhere in the Government’s response or, quite frankly, in the evidence from officials do patients take a prominent role—which is exactly the same as in the 2011 survey.
In her letter to the Minister, the chair made a special plea for this anomaly to be changed. I admire and appreciate the fabulous service that the leading charities give to patients and their families. They deserve our utmost thanks, but the Government must do more. Now is the time to put patients at the heart, not the periphery, of future discussions. I sincerely hope that, when the Minister produces what I trust will be a ground-breaking response before the Summer Recess, we will all be able to cheer from the rooftops. I live in hope.
Lord Mott (Con)
My Lords, it is a pleasure to take part in this debate on homecare medicine services. I thank the noble Baroness, Lady Morris of Yardley, for opening this very important debate. I also thank her for being incredibly supportive since I joined the Select Committee in January. As a new member of the Public Services Select Committee, I take this opportunity to thank noble Lords who I sit on the Committee with for such a warm and supportive welcome when I first joined. I also thank Crohn’s & Colitis UK for the briefing before today’s debate.
As we have heard, homecare medicine services could transform patient care, but currently the service is not working for the majority of patients. We often hear large numbers given in speeches, and I may use some today, but we must never forget that public services are used by people who may not have access to tech or the knowledge of how to use it and who are often living in difficult and challenging circumstances. Our focus must always be on how we improve the lives of those who rely on our public services. We should embrace change and ensure that all partnerships are explored in the pursuit of excellence. Public sector, private sector and not-for-profit collaboration will allow us to achieve excellence.
I will focus on the problems in the first part of my remarks, although I fear I may be repeating some that have featured in noble Lords’ contributions, and I will end with the positives. Homecare medicine services can transform patient care, and I have confidence in the Minister to deliver. It is a surprise that, although thousands of people depend on medicine delivered to their home, no one has any idea how often patients suffer from service failures. It is not just the Government who are unsure about how many patients are involved, but NHS England, patient groups and regulators, as has been mentioned already today. This lack of knowledge, data and information is a real concern. Without data, you cannot set KPIs or manage the service efficiently.
We have some data, but I am not sure whether it currently paints a positive picture. IT systems have been developed with no single NHS system for providers to interact with, which means, as has been mentioned by the noble Baroness, that around 6,000 prescriptions are written in the UK every single day on more than 1,000 different templates.
One provider reported that, between October and December 2020, 9,885 patients had medicines missed or delayed. We do not know how much money is spent, as has been highlighted in this debate. It could be £4.1 billion, £3.2 billion or £2.9 billion—the truth is that we simply do not know. It is important that we get that figure quickly. We cannot accept the Government always hiding behind confidentiality and contracts as reasons why we cannot see some of the data; in the end, this is taxpayers’ money, and we need to make sure that it is being spent in the correct manner. The lack of transparency is a worry, as are failures in procurement and the reluctance to enforce standards, as my noble friend highlighted in his usual way at the beginning of the debate. The report makes clear that this is a difficult market with poor infrastructure.
I mentioned earlier that public services are about people. Many people with Crohn’s and colitis rely on homecare medicine services. When it works well, homecare offers people with inflammatory bowel disease the opportunity to receive treatment in the comfort of their own home, reducing the cost of travelling back and forth to hospital and the impact of treatment on their work or education. It can also reduce pressures on NHS services by allowing people to receive their medication at home. Unfortunately, delays, cancellations and incorrect deliveries of homecare medicine services are jeopardising people’s health and causing significant stress and worry for people living with Crohn’s and colitis, for example.
A Crohn’s and Colitis UK survey in 2023 found that nearly two-thirds of people with IBD had experienced problems with homecare in the previous six months, including delays or cancellations. Those failures led to nearly half experiencing a flare, one in nine ending up in A&E and one in 20 requiring surgery. One lady living with Crohn’s disease told the organisation:
“Every month continued with missed and delayed deliveries and being unable to contact the home care company. My hospital team had to intervene every time. On top of the daily challenges that my condition presents, the stress, anxiety, and time spent making sure I got my drug became unsustainable. It was too much”—
far too much. Sadly, her story is not unique. When IBD medication is delayed or missed, there is a strong risk that it loses its effectiveness and no longer helps to manage symptoms, which can result in a flare-up. A Crohn’s or colitis flare can lead to bleeding, abdominal pain, fever, joint pain, mouth ulcers, fatigue and mental health deterioration. Careful monitoring and control of IBD is vital for people to be able to work, study, socialise, maintain relationships and live life the way that they want to. Unreliable homecare medicine services jeopardise this.
It is currently unclear exactly how many people have been harmed by homecare failures, how much money is being spent on these services and who is ultimately responsible for them. We need to make sure that homecare medicine services are monitored and governed far more effectively, as we have heard today. Perhaps the real point is that no one seems to own these key services. As noble Lords will know, when a service is an orphan, progress is limited, accountability is lacking and patients suffer.
The report is an opportunity lost—for now—but it is clear that, if we can make some changes, homecare medicine services could be transformational. Reliable homecare medicines can change patients’ lives, improve quality of care and quality of life and start to make a real difference. This would allow NHS resources to be redeployed.
I am heartened by the substantial progress that has been made since the report was launched. The NHS England review to establish the facts is fundamental to ensure that we are starting from a position of fact that will allow the transparency required, start to allow patients and providers to understand the marketplace and allow patients to have the confidence to improve their health and to start to take the pressures off the NHS.
I thank the Government for their work in this space and their commitment to take the issues raised with them by the committee seriously. Having read both the Government’s letters to the committee on this topic, it is evident to me that good progress is being made here. It is reassuring that the Government accepted a large number of the recommendations in the report and are fully engaged in productive work to return a final position on some of the others.
I note that, importantly, NHS England’s desktop exercise is now complete, and I was delighted that stakeholders, including patients, had been involved in that. I look forward to reading it once it is published. I was also heartened to read that NHS England will now move to focus on and take action in the most pressing areas of patient experience and performance, and continue to engage with key stakeholders as its work moves forward.
Lastly, I note the fact that NHS England will appoint a senior responsible owner for this work, which is incredibly good news for this sector. I look forward to hearing more details about the position and the appointment to it, and to reading the Government’s summer update to the committee on homecare medicines services. I know that my noble friend the Minister is a strong advocate of using data to drive up standards and performance. This gives me confidence that we will see the change required. I am looking forward to his response today. It is worth remembering that it is the little things that mean a lot.
Lord Allan of Hallam (LD)
My Lords, I am grateful to the committee for looking into this service, which is important to so many people, as we have heard, and involves significant if not fully understood public expenditure. I think we have it to the nearest penny on national insurance; we appear to be in that kind of rounding on this form of expenditure.
As someone who is still learning about many aspects of the NHS service, I am also extremely grateful to the noble Baroness, Lady Morris of Yardley, who gave us a masterclass in how to present a problem very efficiently and concisely and then describe possible solutions to it. Anyone can just pick up the report or her speech and understand what is going on in short order, which is extremely appreciated.
I am also especially pleased to be taking part in a debate with my noble friend Lord Willis. We shared an office for eight happy and productive years at the other end of the building, but we very rarely get to speak in debates with each other. It may be a decade or two since this last happened.
The Minister will not be surprised at the area I wish to focus on in my remarks, which is the gap between how the NHS works and the state of the art for other services in our lives. I encourage the Government to be perhaps even more ambitious than the report says. I hope that I am pushing at an open door with this particular Minister.
Homecare medicines are of course more complex than other products delivered to the home, so there is no simple comparison with an Amazon-like service, but some of the tools used in these other services are certainly relevant and provide a benchmark for what is possible, if you are trying to deliver the best possible service in 2024. As we work through the report’s recommendations and the Government’s response, I want to look first at recommendation 3 on KPIs, which many participants in the debate have mentioned.
What we see increasingly in other areas is real-time performance data rather than periodic collection of performance indicators. Real-time data is more useful and certainly less prone to the kind of gaming that can be done with KPIs. We see that in the NHS where people work to get to their quarterly target; they rush the drugs to the noble Lord, Lord Blencathra, because they want to tick that one off to meet their target, but you cannot cheat real-time data in the same way. I hope that the Minister will consider that. Certainly, if I were the owner of a contract I would want to know in real time whether the thing that I contracted for was actually being delivered.
When someone visits a home to deliver a product, or if they are going to provide a service, it is very easy these days to log that using commonly available tools. This does not have to be a big bureaucratic exercise. It can be a click or two, and then that data goes to the person who contracted with the service so that they know it has been delivered. We all experience this in our daily lives. I will use the comparison that when I order drugs for my cat, which I do, I am told when they are going to arrive. When they arrive, the button is clicked and the person who supplied those drugs knows that they have been delivered. If it is good enough for my cat, it is certainly good enough for half a million people who receive these services.
That is especially important if it is a market in which a buyer is paying a main contractor—in this case, the medicine manufacturer—who then subcontracts the delivery part of the service. Once it gets more complex, that is no reason not to have real-time data but a reason to prioritise having it, so that you do not end up playing pass the parcel. The noble Lord, Lord Blencathra, said he wondered if people sometimes do not want to know the breakdown, because they do not have to own it. No: someone needs to own this. If I were a clinician or a manager in an NHS trust and I had 500 or 1,000 patients dependent on the homecare service, I would want to know in real time what they were getting. I would expect everybody in that chain to pass the data back, so I could see whether it was working or whether something had broken down.
Here, I think about another initiative that the Minister is keen on, which is virtual wards. We do not send people home and ask them to tell us in three months whether the service on the virtual ward was delivered. The clinician is there with real-time data about what is happening to that person at home. I do not see why the homecare medicine service should be any different. If you can easily collect the data, it should be going back to the clinicians so that they can see whether there is a breakdown and, as other noble Lords have said, plan to fill the gap if they need to. This is critical for the patient interest. This kind of visibility of real-time data is possible. It is even more ambitious than the KPI recommendation, but I hope that the Minister will commit to looking at how it could be built.
The other piece of transparency that has been referred to, particularly by the noble Lord, Lord Carter, is the transparency of costs in recommendation 5. I was also struck by the government response citing commercial confidentiality. That did not work for me, frankly. There should absolutely be commercial confidentiality at the point at which you award a contract, before somebody has signed the deal. However, there is no reason for a high degree of commercial confidentiality to continue after the deal has been signed unless it is because of the imbalance of lawyers. The noble Lord, Lord Blencathra, spoke about that. If I were a lawyer for a company, I would say to the NHS, “You have to keep it all secret once I have signed the deal”. The NHS does not have to agree to that. The NHS can say: “As a condition of the contract, we want this data to be put out there and we are not going to agree a contract that has commercial confidentiality in it beyond that which is strictly necessary”.
The report rightly talks about competition in this space. The way to encourage competition is to let the market have as much information as possible so, when the next round of contracting comes up, you can draw on what the cost base was for the previous contractors. That is not in the contractors’ interests, but it is in the public interest. I would expect to see that filtering through. I hope the Minister will look again at this. The block use of commercial confidentiality was in the government response, but we need to get much more granular and find out if there are real reasons or if it is simply for the convenience of the contractor or because it had better lawyers when doing the negotiation. We should be able to take that out.
I now want to speak to a favourite theme, which is the stubborn persistence of paper-based systems in the National Health Service; they are lurking around way beyond their sell-by dates. We have excessive tolerance for this. It is flagged in recommendation 11. It really hurts to see that inefficiency persist when we have actually already paid for the electronic system; we are just not using it. If you have not built the system, that is one thing, but we have built an electronic prescription system yet this important service has somehow just not bought into it; that is really painful.
The government response did not have any timeline for when this will be delivered. It expressly said that the Government cannot give a timeline. I know the Minister will be uncomfortable about the persistence of the paper-based system and I hope he can give us additional assurances on that today. Can we please be less tolerant about people not using the electronic system? It benefits everyone, including the contractors. They will save money if they move over to the electronic system. They may have inertia, but I think we can be insistent, given that it is for everybody’s benefit.
I would like us to be more ambitious. We need to be mammals about this and not be overly sensitive to the fate of dinosaurs who choose not to evolve. In saying that, I am not talking about the service users, many of whom are really familiar with the technology. I am talking about the service providers, some of whom are not moving on. If they do not want to move on, I worry about why they are still in this business. We need people who are willing to move on and use the latest tools.
It is a very useful report. There are many other recommendations to which I hope the Minister will respond positively. I hope he will particularly pick up three areas that I and other noble Lords have highlighted. First, NHS service managers should have real-time access to performance data for homecare medicine services, just as they would for the other services that they are delivering. It is reasonable to expect providers to offer this capability. Secondly, there are benefits in being much more open about the costs of service delivery. We should not use commercial confidentiality inappropriately to stop this. Thirdly, we should be aggressive—I would use that adjective—in moving everything on to the electronic prescription service. We have paid for it, and we should use it.
I again thank the committee and the noble Baroness, Lady Morris, in particular for her introduction to this. I echo the positive note and the fact that, as she said, these are things that can be done now—that is critical. We do not want a response that says things will be done in a year or two years; we want things that will be done in 2024.
Baroness Wheeler (Lab)
I too congratulate my noble friend Lady Morris on her usual thoughtful, thorough and robust introduction to this excellent report. I commend the whole committee for shining a laser-like spotlight on such a vital service, upon which half a million people with chronic health conditions living at home depend. Homecare medicines services are some of many services provided to NHS patients that are not publicly well known or understood by the majority of people accessing the NHS, but, as we have heard, they provide and utilise huge NHS expertise and physical and financial resources—over £3 billion per year, as the Government now estimate.
The forensic, in-depth reviews that Lords and Commons committees undertake of such services—which range across NHS provision and underpin the importance of providing quality patient care and safety across the NHS as a whole—are an essential part of parliamentary scrutiny. Today, we have heard support and insight from other committee members across the House—I note my noble friend Lord Carter and the noble Lords, Lord Blencathra and Lord Shipley—and I welcome their perspectives and reinforcement of the committee’s work. I particularly thank the noble Lord, Lord Blencathra, for suggesting the topic in the first place.
The report provides a very thorough analysis of what homecare medicines services cover, their strengths and the significant problems encountered by service users, as well as the recommended ways forward to improve the provision of high-quality care to patients in their homes, which can reduce pressure on hospitals and other NHS services that have to pick up the pieces when delivery services fail.
Since the committee members have stressed that they are open to suggestions, I say that I personally hope that the committee can in the future undertake similar important work on other vital services that are often out of the spotlight. One such service is the continence service, which impacts across major conditions such as heart failure, stroke and dementia, costs the NHS similar sums of billions of pounds a year and involves home delivery of medicines and supplies to patients and hospitals. I realise that this is an issue for another day, so I will leave these thoughts with the committee.
The important starting point on homecare medicines services, heavily underlined by speakers today, is addressing accountability and who is responsible for the whole service. I welcome the DHSC’s and NHS England’s willingness, in the Government’s response to the committee, to recognise the disjointed complexity of the current system, which has largely evolved over the years without a coherent overview and strategy. I also welcome their recognition of the need to come to grips with how HMS operate today and move forward in the future.
Appointing the NHS England senior responsible officer responsible for HMS nationally is just the first step—a crucial point well reinforced today. When appointed, that senior officer, working with the national HMS committee, will face huge challenges identified by the committee and acknowledged in the Government’s response. These include developing consistent performance metrics and updating and rolling out new KPIs, with regular publication of performance data in standardised form to ensure that comparisons can be made and lead to better scrutiny, transparency and improved patient care. All these are promised for a report back to the committee in the summer.
The committee also underlined the importance of ensuring that homecare medicines services are part of, and included in, the NHS long-term workforce plan, or the social care equivalents when they are finally developed. It is astonishing that these two strategies do not include HMS. I look forward to the Minister telling us how this happened and the steps now being taken to address this significant oversight. How is the work on the vital information and data—so essential, as we heard, to assessing the patient experience and identifying the harm that delays, errors and misdeliveries cause patients—progressing under the desktop exercise, in advance of the promised summer report back to the committee on what data is available to assess patient harm?
The Government’s response also accepts that significant improvements must be made in the HMS procurement process to achieve value for money, in developing experts who understand the service and in the support offered to NHS trusts on drawing up and managing procurement contracts. My noble friend Lord Carter, as we know, has huge expertise in this area, working with NHS trusts on productivity, contract development and operational management across NHS trust operations. He has raised a number of key areas on this important aspect of the report, and I look forward to the Minister’s response, particularly on how we move forward towards operational excellence and integrated care records. The committee’s recommendation for government to start work now with the National Audit Office and the CMA to identify barriers to effective procurement makes sense in the light of the current disjointed and impossible-to-navigate system—another summer report-back item. Perhaps the Minister can explain why this work cannot begin now to help NHS England assess future options.
Today’s contributions have all drawn heavily on the crucial evidence of service failures from key patient groups. I join noble Lords in paying tribute to them and to the British Society for Rheumatology for its leading, co-ordinating role in gathering and presenting patients’ first-hand evidence to the committee. We have heard many examples today. The comments from two Cystic Fibrosis Trust respondents sum up what patients can experience. One says:
“It’s terrible … the times are a nightmare and missed deliveries can take ages to rearrange … it’s a horrible system”.
The other says that
“it is a massive burden and on top of everything else we need to do and have to deal with”.
The latter is a familiar sentiment from patients and their carers across many health and social care services.
As my noble friend Lady Morris underlined today, the committee fully acknowledges the “irreconcilable gulf” between the views of clinicians and service users and the leadership and governing bodies of the homecare sector on how well the service is performing. But it rightly underlines that it is
“persuaded by the weight of evidence from service users that there are real and serious problems in the sector”,
despite HMS being a complicated system with multiple variables. The example from the noble Lord, Lord Blencathra, regarding the delivery of his medicines and the testimony of the noble Lord, Lord Willis, clearly demonstrate this. Indeed, one of the most stark conclusions from the committee—the noble Lord, Lord Blencathra, referred to it, but it is worth repeating—is that:
“No one—not the Government, not NHS England, not patient groups, not regulators—knows how often, nor how seriously patients suffer harm from service failures in homecare”.
It is this and the complexity of the system that need to be urgently addressed. It is so important to have accurate and consistent performance data across providers and the services involved to measure the impact of poor performance on patients in the public domain. What are the expected timescales for the newly appointed senior HMS officer and the National Homecare Medicines Committee to develop a strategy and implementation plan for HMS, and how will service users be consulted and involved?
The failure of the regulatory model for homecare comes in for equally heavy criticism from the committee, which describes it as
“failing to ensure the safety and quality of patient care”;
having
“a limited understanding of the sector”
and “no appetite” to find out more; and having only “feeble”—indeed, “toothless”—enforcement action against providers, even where avoidable harm has occurred. The Government recognise that more work has to be done before deciding on undertaking the thematic review called for by the committee—that will be one more summer update to the committee.
Can the Minister confirm that meaningful discussions have begun between the CQC, the General Pharmaceutical Council and the MHRA? Are they just focused on identifying
“opportunities for strengthening collaboration, communication and transparency”,
as referred to in the Government’s response, or will they include more structural issues, including a leading regulator where providers are underperforming and overall responsibility for a patient complaints system? How will the role undertaken by the CQC for its—currently relatively few—HMS provider inspections be levelled up to the much tighter approach taken in inspecting small residential care homes?
With noble Lords’ indulgence, I refer lastly to a related but non-HMS issue: medicine blister packs for people living at home, which are assembled by pharmacies and either collected by patients and carers or delivered to their home. The Minister and I always seem to talk at cross-purposes about this. When I raise the issue, he stresses that they are not suitable for everyone, which I fully agree with, but I always emphasise how essential they are in the delivery of domiciliary personal and social care for people living in the community or in care homes. Care workers often administer these drugs to the client in their homes. This process ensures that the drugs are taken properly and safely and are not missed. Care staff can do this only using blister packs. They would not sort out the daily doses from multipacks, which I as a carer was recently offered. Our local Boots chemist, a large chemist, has stopped providing this essential service. Where it is not provided or where the chemist closes down, the task would again fall back to the carer. This is an important issue related to our discussions on HMS and it needs to be recognised as an essential part—where appropriate—of safe care in the community. I hope I have provided food for thought in the context of today’s debate.
Finally, this has been an excellent debate and I once again congratulate the committee on its searching report and very practical recommendations on ways forward. There has been a good start made on addressing the key problems, and optimism, in the Chamber at least. But, as the British Society for Rheumatology has stressed, both NHS England and the DHSC still have a long way to go to demonstrate that they understand the scale of the problems that need to be tackled if HMS is to achieve its full potential.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
My Lords, I am a bit slow in getting up. I will blame my son Xavi, who is in the Gallery. I was playing with him a bit too much this weekend, so I apologise. Now I am up, I will be fine.
I start by thanking noble Lords, and particularly the noble Baroness, Lady Morris. This is a very important area about which, I freely admit, 10 days ago I knew very little. I guess it was my noble friend Lord Blencathra who raised awareness in the first place, but I think this has been an excellent example of what the House of Lords does really well, which is to realise that there is an area that needs looking at.
On the question from the noble Lord, Lord Carter, about whether we found a report useful: yes, definitely. I have a couple of ideas and I think the noble Baroness, Lady Wheeler, has some good ideas on some of the next steps. I thank all noble Lords on the committee for their contributions and I am pleased that it is felt that the department has responded positively. I must admit that, in briefings, you can always tell when officials get it, are keen and have the bit between their teeth—and that is definitely the feeling I got here.
I will spend a few minutes unpacking something that impressed me: it really came home to me just how important this is, not just in terms of patient treatment today but for how we all want to deliver the service in the future. I call it the four Ps, on why I think this is important. First, there is prevention. I think we all agree that more prevention needs to begin at home, with home treatments and home testing services, to create a fantastic service in this area.
The second P is primary care: we want more care in the community and that is going to happen only if we have these sorts of services working really well. Noble Lords have heard me say it many times, but Bromley-by-Bow is a perfect example: they are treating patients with type 2 diabetes and CBT patients in their home rather than in hospital. But that can happen only if we have a really gold-plated homecare service, which they are able to provide in that very small instance. What we are really talking about today is the professionalisation of that type of service, so we can offer it much more widely.
My third P is of course patient care, brilliantly described through his own personal experiences by my noble friend Lord Blencathra, and the effect that that had on him, but also with the Crohn’s disease example set out by my noble friend Lord Mott, and the realisation that, as annoyed as we all often are when we wait all day for a delivery that does not turn up, in these cases we know that there are real-life consequences. Those consequences do not impact only the individual involved; they have knock-on consequences for the rest of the health service if patients have to go into hospital for that treatment instead.
Fourthly, I see the future in the area of precision medicine. I have started to understand that, by seeing what the likes of BioNTech and Moderna are doing, using mRNA to fight cancers on your behalf. This is personalised treatment, which moves away from the model of mass manufacturing in big pharma factories to a point-of-care delivery of services. That is why it is so vital to get this right.
The report’s title, An Opportunity Lost, is a perfect way to capture what we are trying to do here. We all understand that it is a complicated area, and there are very clear reasons why a lot of it is delivered through the pharmaceutical industry. It makes sense to have that service connected to it all, particularly as a lot of their treatments become more complex.
I think all noble Lords would agree with the point of the noble Lord, Lord Blencathra, that we do not want the NHS to deliver on these areas, and that it has enough on its plate already. As the noble Baroness, Lady Morris, said, we need someone who is going to grab hold of this. Leadership and management 101 is that you need someone to lead a business, and that is clear here. We will be appointing and announcing that person very shortly. I cannot say it yet but, from some of the comments made today, I think that noble Lords will agree that it is a logical appointment. I probably should not go further than that. NHSE and its service delivery will be included in all of this. To the point of the noble Baroness, Lady Wheeler, all of this should absolutely begin now. A lot of this job is to make a fragmented service coherent.
As to what their job list should be, noble Lords set this out very clearly, and it is set out very clearly in the recommendations. I hope that that is clear in some of our responses, but I shall try to add some flesh to those bones. Number one on the job list is clearly data, and a common set of KPIs is fundamental to this. I was completely unclear on the sentence that the noble Lord, Lord Shipley, read out—it was probably more than one sentence. I was none the wiser, so there is definitely a mark of “could do better” there. As the noble Lord, Lord Mott, said, we need clarity, a common system of measurements and complete transparency all the way through, accompanied by a clear complaints system. No business in the world would get anywhere without that fundamental data, in as close to real time as possible.
Secondly, I completely understand why the regulatory lead has evolved in this way. It is natural that the MHRA looks after the medicines aspect, such as efficacy and any side effects. It makes sense that the General Pharmaceutical Council looks after some of the dispensing aspects, but at the core of these homecare services is the delivery of treatment. As the noble Lord, Lord Willis, suggested, that is why the CQC is the natural lead for doing that. I will not comment on the assessment of noble Lord, Lord Blencathra, on its involvement in this to date, but it is about making it very clear that it is a priority. That is key: what we have tried to do will be the future, so it should be a priority.
On the question from the noble Baroness, Lady Wheeler, my understanding is that meaningful conversations have begun towards that. It is quite clear that the CQC would be the natural lead because this is mainly about treatment and the delivery of healthcare services.
The third important thing on the job list is digital. It is amazing just how basic things are there. I am completely with the noble Lord, Lord Allan, that we should expect an Amazon-style delivery. We are all very used to that these days, where you get a message that your delivery is on the way. Providing that sort of information is not rocket science. We should definitely look at that, so that the service is at least as good as his cat’s service, if not—I hope—a lot better.
The fourth job is to provide clarity on the costings. As the noble Lord, Lord Willis, and others have said, the commercial confidentiality aspect should not be an issue. All we are saying is that, if they are charging £100 for an item, which includes both the medicine and the service delivery, there is an element—£20 or whatever it is—associated with the service delivery. My suspicion is that the power is with the pharma company here—that goes to some of the points raised by the noble Lord, Lord Carter. Often, the service is the tail-end Charlie in the whole set-up. As the noble Lord, Lord Carter, said, this is just basic operational and service delivery. We need to make sure that it is a very clear part of it in the contractual sense that the noble Lord, Lord Allan, referred to.
We need to do some training with our contractual negotiators. This is not just about driving down the price of the medicine—which I think we would all guess is the primary part of the negotiation—but, where there is a treatment component, is about making sure that the delivery is key. If the noble Lord, Lord Hunt, were here, that is exactly what he would say about value-based procurement. Small things going wrong with that can have huge consequences not just for the patients, as we have seen with the examples raised today, but through knock-on costs for the rest of the service.
For what I hope will be a constructive way forward, I propose that the senior responsible officer—the leader for all this—will be appointed soon. With noble Lords’ permission, I would like to invite him or her and the relevant NHS people to a round table with the noble Baroness’s committee. With them having had a bit of time to get their feet under the table, but not so much that they have already gone down the path too much, it would be excellent to have a hopeful round-table conversation. I hope that will be a constructive way forward to make sure that they are setting off on the right track.
As ever, when we finalise this all, I will write on any points that I have not covered, particularly on blister packs. We probably have been talking at cross purposes, so I will make sure that the point is understood and taken back.
In conclusion, this is definitely useful. As I say, I will come back to the committee with more thoughts, but one thing off the top of my head is that in the whole area of precision medicine there is just such an opportunity there for a whole new way of treating cancer—I hope that one day it will replace chemo, which we know is a blunt tool. There is a whole mechanism there for delivering which we will need to build on in these homecare-type areas, and that could be a very interesting area for the committee to look at.
I have learned a lot from this area, and I thank your Lordships for shining a light on it. I hope that noble Lords feel that we are getting the right attention paid to all of it. However, we absolutely need to continue to hold feet to the fire, and I know we can rely on all noble Lords, quite rightly, to make sure that we do that.
Baroness Morris of Yardley (Lab)
My Lords, I thank everyone who has contributed to a very good discussion built on a very good report. I do not want to keep us long because I do not think there is a lot else to say at this point.
We have been through a number of hurdles, and I absolutely understand where the Minister is coming from—10 days ago, he was not aware of the problems, but that is a description of us all, apart from the noble Lord, Lord Blencathra. The first hurdle to jump was to get people in key positions aware of the problem, and that has been achieved. Secondly, I think there is a joint determination to do something about it and a feeling that it cannot wait. Thirdly, there is some agreement on some of the things we can do, and a willingness to have an open discussion on how we might do some of the more problematic things. I am particularly grateful to the noble Lord, Lord Allan, for stretching my mind and knowledge on what might be possible in terms of digital technology—things I had not even thought of.
The other thing that has been important today, which I was very keen that we do, was to get a next step. These good ideas fall between discussions, and things happen and no one picks them up again. I am therefore absolutely confident that I can speak for the committee in accepting the invitation to attend a round table after the announcement is made. I think that, from our point of view, that is a very good next step, along with the announcement of the person in charge and the further letter expected from the Minister’s department in the summer. Therefore, that is our next step, and I am sure that there will be more steps after that.
I just want to say one thing, which is a note of caution —it was referred to, I think, by the noble Lord, Lord Willis. The Minister will have to make his own judgment, but I think the overriding impression in our committee was that it was really hard work to get those already managing the system to accept that there was a problem. It was really tough to get them to that stage, and I am not sure that they got there; they might have got there in their own minds, but they did not acknowledge that to us. Because of that, the committee has a concern as to how much they are going to push this forward, but, more than that, the clinicians and the patients have concerns as well. The Minister may want to reflect on that and do what he can in whatever decisions he takes.
My last sentence is this. All those things are good, but we have absolutely raised expectations of those who use the service, the clinicians and the trusts, and we cannot let them down because they do not deserve that. I finish by thanking everybody for their contributions, and I look forward to further discussions. I beg to move.