Speaker’s Statement
Mr Speaker
Before we start today’s business, I want to note that today is Holocaust Memorial Day. I know that the whole House will agree with me about the importance of remembering the 6 million Jewish people murdered during the Holocaust, alongside the millions of other people killed as a result of Nazi persecution, as well as those killed in more recent genocides—Cambodia, Rwanda, Bosnia and Darfur. Members will have an opportunity to make further contributions during the debate on Thursday. For now, I know that colleagues will want to join me in thanking the Holocaust Memorial Day Trust for its important work.
Oral Answers to Questions
(1 day, 7 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Chris Coghlan (Dorking and Horley) (LD)
The Economic Secretary to the Treasury (Lucy Rigby)
Innovation is a key driver of long-term economic growth, higher productivity and improved living standards. That is why this Government are investing more in R&D and why we are committed to maintaining the generosity of R&D tax reliefs. We remain open to new and innovative debt instruments and we review options regularly, but clearly new instruments need to meet a range of criteria, including value for money.
Chris Coghlan
In the 1940s, refugees fled the Nazis and built the atomic bomb; they pioneered a method of public research and development that has powered US economic dominance ever since. The EU Security Action for Europe defence bond fund offers us a similarly transformative opportunity: £20 billion invested in defence R&D could expand our economy by £100 billion. Will we join our Canadian and European allies, end our economic stagnation, and together defend the—
Mr Speaker
Order. I can see that you want to round up your question, but this is more of a statement. You are telling the history, which is important, but I hope there is a question coming now, as there are a lot of other Members to get in.
Lucy Rigby
I am grateful to the hon. Member for his question. Indeed, he and I have discussed this issue previously. We are due to meet to discuss it later this month, and I am very much looking forward to that discussion.
Bill Esterson (Sefton Central) (Lab)
Mersey Care NHS foundation trust has plans for a world-leading mental health research and development facility at Maghull health park in my constituency. Will the Minister meet me to discuss how the Treasury might support investing in such an important research and development project, not least as it is fundamental to the Government’s plans for improving healthcare?
Lucy Rigby
My hon. Friend raises an important point. This Government are investing an extra £29 billion in our national health service. I would be happy to meet him to discuss it further.
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
Emma Foody (Cramlington and Killingworth) (Lab/Co-op)
Elaine Stewart (Ayr, Carrick and Cumnock) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
I am very sorry to see your leg in such a way, Mr Speaker.
We are committed to driving growth everywhere. The Budget ensured that Scottish public services are fairly funded, with an extra £820 million for the Scottish Government through the Barnett formula, on top of a record settlement in June this year. We are also investing in transport for city regions, and investing £5 billion in deprived neighbourhoods through the Pride in Place programme, with some of that money going to Scotland.
Kirsteen Sullivan
I welcome the fantastic news that Edinburgh and south-east Scotland will receive £37.8 million from the new local growth fund, supporting infrastructure, business support and skills development. However, I consistently hear from businesses that they struggle to recruit people with the skill sets needed to grow their operations and fuel economic growth. Can the Chancellor set out how this investment will reach beyond the cities to tackle the acute skills shortages in my constituency of Bathgate and Linlithgow?
Rachel Reeves
I thank my hon. Friend for her commitment to her constituency. It is right that the money is allocated through the regional economic partnerships in Scotland, and I have absolutely no doubt that my hon. Friend will make the case for her local area. The regional economic partnerships have already worked together to deliver the integrated regional employability and skills programme in Edinburgh and south-east Scotland, including helping people in her Bathgate and Linlithgow constituency.
Emma Foody
Ministers will be all too aware of my campaign to unlock improvement at Moor Farm roundabout, which is currently holding back growth across the north-east and causing misery to local people on a daily basis. The Government have rightly taken steps to ensure that my region gets its fair share of investment through changes to the Green Book and place-based business cases, but will the Chancellor meet me ahead of the road investment strategy to ensure that we finally get this long overdue investment in a critical piece of north-east infrastructure?
Rachel Reeves
My hon. Friend has been a tireless campaigner for the Moor Farm roundabout, which holds back both commuters and businesses, and therefore both growth and prosperity. I will continue to work with her on this. I know that the roundabout is now being properly considered for inclusion in the road investment strategy and I would be happy to meet her to discuss that further.
Elaine Stewart
The Ayrshire growth deal, which was allocated £103 million of UK Government funds, has the potential to make a real difference to our economic prospects. Despite its clear potential, though, delivery on the ground remains far too slow in turning around real progress. What action can the UK Government take to drive momentum, sharpen the strategic direction of the deal and ensure that Ayrshire finally sees the benefits of this investment?
Rachel Reeves
This Labour Government are investing more than £250 million in economic development and regeneration in Ayrshire, including but not limited to the Ayrshire growth deal. My hon. Friend is a great champion of Ayrshire, and I look forward to working with her and my good friend Anas Sarwar in the months and years ahead to deliver for the people of Ayrshire and those right across Scotland.
Christine Jardine (Edinburgh West) (LD)
According to a report this morning from the Jobs Foundation, the energy sector in north-east Scotland is on a cliff edge, with Robert Gordon University estimating that 400 jobs will be lost every two weeks. Given the importance of that sector not just to Aberdeen or Edinburgh West but to the Scottish and UK economies, will the Chancellor think about providing the regional development support that the Scottish Government are failing to provide?
Rachel Reeves
At the Budget, we published our North sea oil and gas plan and provided certainty by announcing that the energy profits levy introduced by the previous Government will end at the end of this Parliament. At the same time, we are supporting the transition to new jobs in new industries right across Scotland, including in Aberdeenshire, because the opportunities to transition to jobs in clean energy are very real, and we need to ensure that those jobs come to Scotland.
Mr Gregory Campbell (East Londonderry) (DUP)
I know the Chancellor would say that the Northern Ireland budget was an exceptionally good one, but would she agree that there are extreme circumstances pertaining to three areas in particular—policing, education and health—at the moment? Will she at least get into discussions with the First and Deputy First Ministers in Northern Ireland to see what can be done to alleviate the problems that are coming towards us?
Rachel Reeves
My right hon. Friends the Northern Ireland Secretary and the Chief Secretary to the Treasury are in discussions with the Northern Ireland Executive on some of the additional pressures they are facing. We are working through those plans and will have more to say shortly.
Dr Ellie Chowns (North Herefordshire) (Green)
Regional funding must not come at the expense of local authority funding and all devolved funding must recognise the realities in the places where funding is needed, yet under the so-called fair funding review, in just three years Herefordshire council will see a reduction in UK Government fundings to 78% of current levels. The Government have also removed the remoteness adjustment for anything except social care, but rurality does of course matter for bin collections, school transport and many other aspects. Will the Chancellor look again at the fair funding review, which is unfair for so many places, like Herefordshire, and ensure that remoteness is properly adjusted for in the calculation?
Rachel Reeves
My understanding is that the Ministry of Housing, Communities and Local Government is still consulting on this matter, so the hon. Lady and other colleagues will have a chance to feed into that process. In the spending review, we put an extra £600 million into supporting local authorities after the years of austerity under the Conservative Government. While the previous Conservative Prime Minister said he would take money away from poorer areas and give it to Tunbridge Wells, we are investing more fairly in the areas that need it most.
Richard Foord (Honiton and Sidmouth) (LD)
Paula Barker (Liverpool Wavertree) (Lab)
Sir John Whittingdale (Maldon) (Con)
Olly Glover (Didcot and Wantage) (LD)
Abtisam Mohamed (Sheffield Central) (Lab)
Marie Goldman (Chelmsford) (LD)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
There are a number of questions on this topic, and I am sure there will be more this afternoon when I make a statement to the House on a package of support in relation to business rates, with a particular focus on pubs. As previously announced, we are introducing a support package worth £4.3 billion to support rate payers who are seeing increases in their business rates.
Richard Foord
Joanna Watson runs the Elizabeth hotel and the Kingswood hotel in Sidmouth. She is essentially facing a 20% rise in her business rate costs. Joanna’s bills do not reflect what she earns; they stay high all year round, even though there are months like these in winter when income completely collapses. The Government legislated for a 20p reduction in the business rates multiplier for hospitality, and that created an expectation that it would be used. The Minister said that he will make a statement this afternoon, but will he also consider the plight of hotels such as those in Sidmouth?
Dan Tomlinson
We have considered the challenges that hospitality businesses and businesses on our high streets have been facing. That is why we put in place £4.3 billion of support at the Budget. We recognise that there are concerns as to how hotels are valued for business rates, and that will be one of the items I talk about in the statement later.
Paula Barker
I wish your leg a speedy recovery, Mr Speaker.
I recently visited the wonderful Aura salon in my constituency and spoke to the owners Victoria and Janet, who have owned the business for 24 years and are the hub of their local community. They have invested in and trained numerous young hair stylists but now their business rates and VAT are crippling them, meaning that they can no longer take on apprentices. Victoria and Janet told me that the VAT rate that they pay is unbalanced compared with other sectors that claim back VAT. Will the Minister please advise what can be done to help salons like Aura and others that are part of the Save our Salons campaign, and are there any plans for an affordable apprenticeship scheme in the hairdressing sector?
Dan Tomlinson
I thank my hon. Friend for the work that she is doing to champion salons and the beauty industry in her constituency and elsewhere. She will know that VAT is a broad-based tax; in fact, it is our third largest revenue raiser, raising £180 billion last year. That is vital revenue that pays for our public services. There are lots of issues in relation to VAT, including the differential treatment depending on how salons decide to set themselves up and pay their employees. Those are important issues, and we will consider tax changes in the usual way in the run-up to future Budgets.
Sir John Whittingdale
I recently visited the Ship Inn in Burnham-on-Crouch, which has a few hotel rooms, as well as Peaberries, a tea shop on the high street. Both are looking at existential threats as a result of business rates. Can the Minister say whether the package that he will announce later will benefit them as well?
Dan Tomlinson
I do not think that Mr Speaker would like me to pre-empt the announcements that will be made later, but the right hon. Member has given me the opportunity to reiterate that at the Budget we implemented for the first time differential rates of tax—differential multipliers—meaning that the largest businesses now pay 33% more than the smallest high street businesses. That is a big differential that was not there before but which now exists because of the big reforms that we made at the Budget.
Olly Glover
In my Oxfordshire constituency, pubs including the Fox Inn in Denchworth, the White Hart in Harwell and the Fox and Hounds in Uffington are vital to their village communities, yet they face significant business rate increases from April. Given that the chief executive of the Valuation Office Agency told the Treasury Committee that, ahead of the Budget, the VOA warned that over 5,000 pubs would see their business rates double, will the Minister tell the House why the Government decided to press on and create such uncertainty for our hospitality sector in the Budget?
Dan Tomlinson
The Government will have more to say a bit later today when it comes to pubs and the support that the Government can provide for them. We knew that the revaluations would be implemented from 1 April, and that is precisely why we came forward with a significant package of support for all businesses across the economy. We introduced significant reforms to lower the multipliers for businesses like the pubs that the hon. Member mentioned.
Abtisam Mohamed
Sheffield Central businesses continue to face disproportionately higher pressures, with ever-increasing running costs stacking up and a drop in footfall. Businesses like the Gamers Guide Café and the Dove and Rainbow pub tell me that they need much more to survive the dip in foot traffic, so will the Minister set out how he is reducing pressures on high street cafés and pubs, and will he consider targeted relief to ensure viability for hospitality businesses?
Dan Tomlinson
I thank my hon. Friend for her representations on behalf of businesses and constituents in Sheffield. One of the important things to note about the business rates system is that there are many smaller businesses on our high streets that pay no business rates at all. One in three businesses continue to benefit from small business rate relief and an additional 85,000 benefit from reduced bills as that tapers. At the Budget we announced an additional two years of small business rate relief for those businesses that expand into a second property. This will be helpful for small and independent businesses, and will support them to grow.
Marie Goldman
Chelmsford has a vibrant night-time economy. Just last Sunday, I spent the evening at a fabulous local music venue called Hot Box, right in the heart of my constituency. Venues such as Hot Box represent important cultural and social spaces for smaller cities like mine, but many are at risk due to recent Government changes to the business rates system. New analysis puts the average increase in the hospitality business rates bill in Chelmsford at nearly £23,000 over three years. For many, that is impossible to absorb. Another family-run business in Chelmsford that has been going for 25 years will see its monthly rates more than double from April. It says that it will simply have to close its doors if that goes ahead, resulting in 40 people losing their jobs. Will the Government implement the 20p discount that they have already legislated for and let all businesses in retail, leisure and hospitality get the support that they need?
Dan Tomlinson
I have got the idea, Mr Speaker!
The key thing to note here is that there is a significant difference between the change in the rateable value and the change in the business rates. This year, we have stepped in to cap the increases for bills at £800 for those coming into the system for the first time. For most high street businesses, the increase will be 15%, while the very largest will see increases of 30%. Those are the steps we have taken. When the Liberal Democrats were in government, they chose to increase VAT on businesses up and down the country.
Catherine West (Hornsey and Friern Barnet) (Lab)
I wish you a speedy recovery, Mr Speaker.
Will the Minister say something about music recording studios, such as the Church Studios, where Annie Lennox recorded “Sweet Dreams (Are Made of This)”? Could he give me a sweet dream this evening and tell me that my music recording studio is going to be fine?
Dan Tomlinson
I am very fond of my constituency neighbour, who has the privilege of sharing a part of Barnet with me. There will be news this afternoon—I am just trying to find my words, Mr Speaker.
Dan Tomlinson
I hope the microphone picked that up.
We will make further announcements this afternoon specifically focused on pubs, but I understand that there are businesses across the economy that will have seen increases in their rateable values since the pandemic. That is precisely why we have stepped in with our support package.
Valerie Vaz (Walsall and Bloxwich) (Lab)
Here’s another one: what assessment has the Minister made of the impact on really small independent high street bookshops? This is the National Year of Reading; we want them to stay open, not closed.
Dan Tomlinson
Many really small bookshops up and down the country will not pay any business rates at all because they will be in receipt of small business rate relief. Of course, there will be some that will have seen either their rateable value increase, or—because of the Government’s decision to slowly wind down the temporary pandemic support—an increase in their bills. We are capping those increases in this year and in subsequent years so that transition can be manageable for those businesses. Of course we want to support bookshops on our high streets; they are incredibly important, along with all the other high street retailers up and down the country.
James Wild (North West Norfolk) (Con)
The Chancellor promised hospitality firms that she would lower their taxes, but her business rate raid is hammering every town, village, city and high street. This is not just an attack on pubs; hotels, cafés, music venues and many more are being hit. It is two months since the Budget caused huge worry for these businesses, and we await details of this latest U-turn, but the key question is: does the Chancellor get it? Does she get that it is not just pubs but hospitality, leisure and retail businesses that need support because of her terrible choices?
Dan Tomlinson
Conservative Members do not get it, because when they were in government, they set out plans to remove the temporary pandemic rates relief overnight in 2025. That would have seen an increase of 300% in business rate bills overnight for businesses on the high street. We have taken a different, fairer and more proportional approach, phasing out the pandemic relief over a slower time period and extending it into this year.
Daisy Cooper (St Albans) (LD)
Thank you, Mr Speaker, and I wish you a speedy recovery.
We know that pubs have been badly hit by these business rates changes, but businesses right across retail, hospitality and leisure have made investment and hiring decisions based on the expectation raised by this Government that they would get a full 20p discount on their business rate multiplier. Those businesses—music venues, restaurants, soft play centres and hotels—are the high street shops that communities most love. Do Ministers accept that anything less than the full 20p discount for retail, hospitality and leisure will leave the three-to-five-year business plans of those high street businesses in total disarray?
Dan Tomlinson
We announced a 5p reduction in the multiplier on top of the 7p or thereabouts reduction that was taking place as a result of the revaluation more broadly. That is a £900 million transfer of underlying rates liability away from the smallest high street businesses towards the online giants and the largest properties. When the Liberal Democrats and the Conservatives had the chance, they kept the tax rates the same. We have introduced significant reform, and we started the work of that reform at the Budget. Of course we will continue our conversations in the months ahead.
Daisy Cooper
Businesses up and down the country know that the Government raised their expectations and then dashed them. This whole sorry saga has been an absolute shambles. The question remains: why were Ministers so blindsided, when the VOA has confirmed that it was providing data drops over a period of 12 months? Will Ministers use the opportunity in 90 minutes’ time to answer all the questions that Opposition MPs have asked and to explain what they knew and when?
Jo White (Bassetlaw) (Lab)
The Economic Secretary to the Treasury (Lucy Rigby)
The Government provide a wide range of loan support for SMEs through the British Business Bank. This includes the start up loans programme and the growth guarantee scheme, the latter of which recently supported over 4,000 businesses and over 65,000 jobs right across the country.
Jo White
I recently met Matthew Pendleton, who owns Apawtiser, a high-quality dog treat company. The company grew legs because processed dog food had made his pet dog violently ill. Matthew now needs the finances so that he can continue to expand, employ more staff and get Apawtiser on the national pet food map. I want to see businesses such as these succeed in my area, and Matthew’s small ask is: will the Government step in with the offer of an underwritten loan?
Lucy Rigby
My hon. Friend is a tireless champion of businesses in Bassetlaw, and I wish her a happy birthday for yesterday. In the recent spending review, the Government extended the growth guarantee scheme, enabling £5 billion-worth of loans over the next four years. This will support businesses like the one she mentioned, and I would be more than happy to meet her to talk about how her constituent might access that support.
Wera Hobhouse (Bath) (LD)
First-of-a-kind technologies such as DRIFT Energy in Bath face serious investment challenges and difficulties in accessing grant funding from any Government Department. DRIFT is a groundbreaking renewable energy innovator that could rapidly scale and contribute to the UK’s energy independence. What are the Government doing to ensure that first-in-kind technologies in particular receive the support that they need here in the UK, rather than being forced to go abroad?
Lucy Rigby
The hon. Member may well know that, at the spending review, we increased the financial capacity of the British Business Bank to £25.6 billion. There are a number of ways in which the British Business Bank will support companies like the one she referred to.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
As well as the British Business Bank, the National Wealth Fund plays a crucial part in investing taxpayers’ money. I welcome the Government’s response to the Select Committee’s report on that issue. Will the Minister indicate when the National Wealth Fund will have the ability to borrow from private markets in order to increase its independence, secure funding for infrastructure, and get the taxpayer off the hook?
Lucy Rigby
It is absolutely right that we have increased the amount of funding going into the National Wealth Fund. On my hon. Friend’s specific question, my understanding is that we have not set a date, but I am more than happy to write to her with further information—to the extent that it exists.
Tim Farron (Westmorland and Lonsdale) (LD)
Has the Minister assessed what proportion of British Business Bank grant funding goes to the smallest of businesses? One in four people in my constituency works for themselves or for very small businesses. To what extent is she working to ensure that smaller businesses—those employing 10 people or fewer, which are the very bedrock of our economy in the lakes and dales in Cumbria—know about the availability of those loans and are talked through the difficult process of applying for and receiving them, so that we can invest in rural communities like mine?
Lucy Rigby
On the Government’s policies vis-à-vis businesses as a whole, we support the sort of businesses the hon. Member refers to in a whole range of ways. On businesses in his area, 80% of the recent deployment of the growth guarantee scheme was outside London.
Luke Murphy (Basingstoke) (Lab)
The Parliamentary Secretary to the Treasury (Torsten Bell)
Rising living standards are the ultimate goal of economic policy, and living standards are now rising following the unprecedented fall during the last Parliament. The latest data shows that the average person’s real disposable income is £800 higher than in the final year of the previous Parliament.
Luke Murphy
As the Minister says, the previous Parliament was the worst on record for living standards, so my constituents—for many of whom the cost of living is the No.1 issue—welcome the action taken to freeze rail fares, which will save them £350 on average, and to take £150 off their energy bills, as well as today’s groundbreaking commitment to cap ground rent, which we will hear about later. Will he confirm that the Government will continue to strain every sinew, clear every obstacle and use the power of government to cut the cost of living and raise living standards for my constituents over the course of this Parliament?
Torsten Bell
My hon. Friend is a powerful campaigner on this issue; week after week, he consistently raises the issue of living standards for people in Basingstoke. He is right to highlight the key role of energy bills in that. The Budget took levies off energy bills to save families £150 on average next year, as part of wider measures to directly cut inflation by 0.4 percentage points, further supporting living standards by making it easier for banks to cut mortgage rates and giving businesses the confidence to invest. Energy bills cut, ground rents cut—change promised, change delivered.
Jim Shannon (Strangford) (DUP)
What assessment has the Minister made of the recent trends in household living standards across the United Kingdom, including through discussions with the relevant Minister in Northern Ireland? What steps has his Department taken, in conjunction with regional Administrations, to ensure that the Northern Ireland Executive can support households facing rising costs? I know that the Minister gives lots of answers, so will he give us an answer on this one, please?
Torsten Bell
We will always give the hon. Member an answer—and I mean always, at every single one of these sessions. Government Ministers, particularly at the Northern Ireland Office, spend a lot of time speaking to Ministers in Northern Ireland. He is absolutely right to say that the cost of living crisis affects not just one part but all parts of the United Kingdom. To take just one example, the six interest rate cuts since the general election have already made a big difference to those in Northern Ireland whose mortgage renewal is coming up.
Richard Fuller (North Bedfordshire) (Con)
Persistently high inflation and fears that things will get tougher for their children are top issues for the British public, but the Office for Budget Responsibility’s assessment of Labour’s plans was that:
“Growth in real household disposable income per person is projected to fall… to around ¼ per cent a year… well below the last decade’s average”.
Minister, why is the sum of all this Government’s economic policies condemning the British public to such a despairing prospect?
Torsten Bell
Mr Speaker, that is called leading with your chin. Members on the Conservative Benches were in power in the last Parliament, which saw living standards fall by 2.9%. Living standards have already risen under this Government by 1.5%, because we are turning around their mess day after day after day.
Dave Robertson (Lichfield) (Lab)
Alice Macdonald (Norwich North) (Lab/Co-op)
The Chief Secretary to the Treasury (James Murray)
Investment in our railways is a crucial part of our plan to unlock economic growth in every nation and region of the UK. Earlier this month, my right hon. Friend the Chancellor announced our plans for Northern Powerhouse Rail. That transformational programme is backed by up to £45 billion of investment in the long term, which will be key in unlocking economic potential across the north.
Dave Robertson
People across Lichfield, Burntwood and the villages are delighted that this Government have funded the midlands rail hub project, meaning a doubling of the number of trains from Lichfield to Birmingham every hour. Ministers could go even further, though, by investigating the reopening of the Derby-Burton-Lichfield line, including a stop in Alrewas for the National Memorial Arboretum. Despite warm words from my predecessor, no business case exists for that. Can the Minister confirm that this Labour Government are not done with investing in transport in the midlands, and will he look again at the Derby-Burton-Lichfield line?
James Murray
I thank my hon. Friend for highlighting the value of the midlands rail hub, which we invested in at the spending review. We are determined to invest more in transport in the midlands. Indeed, at the spending review the Government committed to investing £4.4 billion there through transport for city regions funding. My hon. Friend is a great advocate for services that will benefit his constituents, and I will ask the Rail Minister to respond about the specifics of the line that he raises.
Alice Macdonald
I welcome the investment the Government have made in rail, including East West Rail, but there are still several projects that would hugely benefit passengers and the local economy in the east. Those include upgrading the Trowse swing bridge near Norwich and, of course, Ely and Haughley junctions. Will the Chief Secretary to the Treasury meet me and other colleagues from the east of England to discuss how we can advance those key infrastructure projects for the region?
James Murray
East West Rail is a transformational project that will unlock economic growth and housing. Just yesterday, I was glad to host a representative from East West Rail at an infrastructure roundtable at the Treasury with my right hon. Friend the Secretary of State for Housing, Communities and Local Government. My hon. Friend is another powerful advocate for her local area, and I will happily discuss this matter with the Rail Minister and get back to her.
John Glen (Salisbury) (Con)
Last week I met Lawrence Bowman, the chief executive of South Western Railway. I am keen to make sure that all the Government’s changes take positive effect in Salisbury and south Wiltshire, so that tracks, signal and stock can be improved. Will the Minister make sure that there is a suitable reference board along the commuting line into Waterloo, so that when Lawrence Bowman’s business plan is delivered, there will not be any delays when he has to interact with local authorities—a concern that he raised with me last week?
James Murray
I thank the right hon. Gentleman for raising the concerns of the services used by his constituents. I can assure him that I will look into those and get back to him.
Ian Roome (North Devon) (LD)
The Tarka line in North Devon has seen a massive increase in footfall. However, the line is often closed because of the lack of infrastructure upkeep. Will the Minister meet me to discuss various funding opportunities? It is a rural line that is vital for students to get into Exeter and for people’s job opportunities—I know that the Government are all about job growth.
James Murray
The hon. Gentleman is absolutely right: we are all about job growth. I fear I will be quite busy after this set of questions with taking up projects in different constituencies, but that is absolutely right, because we all want to make sure that we have better investment—particularly in transport and infrastructure—for our constituents. I assure him that I will look into the matter and get back in touch with him.
Sally Jameson (Doncaster Central) (Lab/Co-op)
Anna Dixon (Shipley) (Lab)
The Parliamentary Secretary to the Treasury (Torsten Bell)
Energy bills are too high, and Britain is too dependent on the rollercoaster of gas prices. That is why the autumn Budget reduced the cost of levies on energy bills to save households £150 on average from April this year.
Sally Jameson
I am pleased that the Government are sticking to their pledge on reducing energy bills, as the Minister rightly points out, with an average of £150 coming off annual bills this April. Does he agree that that is a good start, but that we must continue to work across Departments to ensure that we make further progress on the cost of living in this Parliament?
Torsten Bell
My hon. Friend is absolutely right: people need to see inflation come down, and that is what the Office for Budget Responsibility and the Bank of England forecast to happen. As she said, from April our plans for energy bills will save households £150 on average, which is something she has campaigned for over the past 18 months. I am pleased energy companies have confirmed that those savings will be passed on to those with fixed tariffs. She asks that we go further, and I should add that we have extended the £150 warm home discount to a further 2.7 million of the poorest households.
Anna Dixon
I warmly welcome the Chancellor’s announcement in the Budget on scrapping the energy company obligation scheme, which will bring down energy bills by £150 on average and support some 5,000 households living in fuel poverty in my constituency of Shipley. The disastrous Tory-designed scheme, ECO4, cost £1 billion per year, yet 98% of the external wall cavity installations were faulty. What further action are the Minister and Chancellor taking to reduce energy bills and ensure that energy companies put people over profit?
Torsten Bell
My hon. Friend is entirely right. The Conservatives did not just leave Britain dependent on the rollercoaster of gas prices; they left families paying almost £2 billion on their bills for their failed energy efficiency ECO scheme. The Chair of the Public Accounts Committee described the scheme’s failings as the “worst” he had ever seen. That fuel poverty scheme cost 97% of those in fuel poverty more than it saved them, and it damaged thousands of homes. We are scrapping the ECO scheme, and cutting families’ bills.
Mr Peter Bedford (Mid Leicestershire) (Con)
A new report by the Prosperity Institute is highly critical of the Government’s net zero policies and their adverse impact on the broader economy, and my constituents’ fuel bills continue to soar because of the Government’s reluctance to use more traditional sources of fuel. Will the Minister commit to raising that with the Secretary of State for Energy Security and Net Zero, because such ideologically driven polices are having an adverse impact on the bills of my constituents?
Torsten Bell
Energy bills are too high because the Tory party left us dependent on the rollercoaster of gas prices. Wholesale gas prices today remain more than double what they were at the start of 2020. If Conservative Members think that is some kind of advert for staying on gas forever, they are living in cloud cuckoo land.
Mark Garnier (Wyre Forest) (Con)
We have already heard this morning that businesses are suffering harm from business rates and national insurance contributions going up, but on top of that, according to the Office for National Statistics, the energy bills of non-energy intensive industries such as hospitality and retail have increased under this Government by up to 10% in the last year. The Conservative are proposing our cheap power plan, which would save small businesses up to £5,000 a year on their energy bills. What is the Minister doing to help small businesses with their energy bills?
Torsten Bell
What this Government are doing is getting on with building the energy infrastructure that this country needs, and we are not going back to the 11% inflation seen under the Conservative party. This Government are supporting small businesses, because the hon. Gentleman is right on one thing, which is that high energy bills are not in the interests of British industry. That is why we are getting on with fixing the energy system that we inherited.
Lillian Jones (Kilmarnock and Loudoun) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
This Government are determined to get back all the money that was lost through covid fraud and corruption. That is why I appointed the covid corruption commissioner when I became Chancellor, and we have already brought in £400 million that the previous Government gave up on.
Lillian Jones
This Government have recouped £400 million in covid fraud and error, with HMRC recovering a massive £1.3 billion, as well as aggressively pursuing the firm linked to Baroness Mone, PPE Medpro. Does my right hon. Friend agree that this Government’s relentless recovery action demonstrates that it is only under Labour that this money is recovered from fraudsters to do what it should do, which is to fund our public services?
Rachel Reeves
Sadly, I cannot comment on any individual cases, but I am absolutely determined to get that money back, because that money belongs in our schools, hospitals and public services, not in the pockets of Tory friends and donors.
Alison Taylor (Paisley and Renfrewshire North) (Lab)
The Economic Secretary to the Treasury (Lucy Rigby)
It is definitely right to say that the FTSE 100 performed strongly in 2025, during which it rose faster than key benchmarks, the United States and the European stock markets, and hit 10,000 points as we entered the new year. The UK is one of the world’s leading global financial hubs, and this Government are committed to the sector’s enduring leadership.
Alison Taylor
Does the Minister agree that cutting paperwork and speeding access to capital will provide a valuable boost to companies looking to list their shares on the London Stock Exchange? Is she hearing that from the companies that she is meeting, because that is what I have been hearing while I have been out engaging with businesses in Scotland?
Lucy Rigby
I can confirm that I am indeed hearing that. Last week’s introduction of the new prospectus rules will mean faster execution, reduced complexity and a simplified route to capital raising. Together with the three-year UK listing relief announced at the Budget, these initiatives will make the UK the most attractive destination for companies to start, scale, list and stay.
Alan Mak (Havant) (Con)
Just one pure technology company is now listed on the FTSE 100 and Budget measures, such as cutting venture capital trust tax relief, discourage companies from listing on the UK exchanges. Why are the Government driving away growth and investment?
Lucy Rigby
The entrepreneurship package in the Budget was incredibly important. The aim of that package, which includes the UK listing relief—the three-year stamp duty holiday that I referred to in response to my hon. Friend the Member for Paisley and Renfrewshire North (Alison Taylor)—is designed to make the UK the best place to start, scale and list a company.
Mark Garnier (Wyre Forest) (Con)
The Chancellor has been very proud that the FTSE 100 has passed through the 10,000-point barrier, citing that as an endorsement of her policies. Does she not realise that that still leaves FTSE 100 on lower valuations than comparable markets and that, in any event, over 80% of the earnings of the FTSE 100 are generated outside the UK? Is it not clear that the FTSE 100 performance is despite this Government’s policies, not because of them?
Lucy Rigby
I could not disagree more with the shadow Minister. He is constantly talking this country down. The package of reforms that this Government are making to our capital markets are strengthening those markets, and they are beginning to bear fruit.
Lincoln Jopp (Spelthorne) (Con)
The Chancellor of the Exchequer (Rachel Reeves)
While the Bank of England has overall responsibility for returning inflation to target, this Government are taking the action that we can: £150 off energy bills from April this year, freezing prescription charges for the second year in a row, and freezing rail fares for the first time in 30 years. As a result, the Office for Budget Responsibility forecast that inflation will be 0.4 percentage points lower in 2026-27 than it otherwise would have been.
Lincoln Jopp
On Friday, I visited Primark in Staines, in my Spelthorne constituency, where the team, led by Luke, is doing a fantastic job in creating a vibrant retail experience. However, the British Retail Consortium has said that the Chancellor’s jobs tax is pushing up prices and raising the cost of living, and that the Employment Rights Bill will also be inflationary. When did the Chancellor stop listening to business?
Rachel Reeves
I was at Primark just ahead of the Budget, where we announced that we were going to take action on low-value imports. That was welcomed by Primark and many other retailers who are undercut by foreign importers that do not pay customs duty on what they bring into the country. Far from working against business, we are working in conjunction with business to grow our economy. Our economy exceeded expectations for growth last year, and I am confident that it will do the same this year too.
Tom Hayes (Bournemouth East) (Lab)
The Conservatives may want to talk down Britain, but Bournemouth is building again, with a £350 million expansion at J. P. Morgan Chase following the Chancellor’s visit, a £100 million expansion planned by AFC Bournemouth, a £50 million airport upgrade, £26 million invested in Bournemouth and Poole College, £500 million provided for the Royal Bournemouth hospital development, and new land at Wessex Fields to build key worker housing and medical research facilities. Will the Chancellor continue to prioritise stability, bringing down costs, and the free trade that we need in our world, so that we can continue to protect and expand these investments into Bournemouth?
Rachel Reeves
I thank my hon. Friend for that question. He did not mention the beautiful Bournemouth pier, which we visited together in August and where we enjoyed a very nice ice cream, but he did mention J.P. Morgan, which has announced record investment in its Bournemouth campus. It is employing a shedload of apprentices on that campus, helping it to grow its business, and after this year’s Budget, J. P. Morgan has announced a new building in Canary Wharf. [Interruption.] Maybe Opposition Front Benchers do not like apprentices, but this Government do, which is why we are backing them.
Paula Barker (Liverpool Wavertree) (Lab)
The Chancellor of the Exchequer (Rachel Reeves)
This Government have a plan to grow the economy and reduce the cost of living, and it is the right plan for Britain. We are cutting the cost of living and the national debt and creating the conditions for growth in all parts of our country. We have had six cuts in interest rates since the general election, reducing typical mortgage costs by £1,200 a year, and have secured record levels of inward investment and trade deals with countries around the world. The FTSE has hit record highs, and while other countries are increasing barriers to trade, I was in Davos talking to allies about how to reduce them. Our economic plan is the right one to build a stronger and more secure Britain, and I am focused on delivering it.
Paula Barker
While I am looking forward to the statement a little later from the Exchequer Secretary to the Treasury, I would like to push him, if I may. I recently visited one of my local pubs, the Masonic Arms on Lark Lane—which is a fantastic venue—and met Guy and Amelia. Currently, the overall sector picks up 2.8% of UK business rates nationally, but has only 0.5% of the turnover of UK businesses. This is clearly not a fair tax for pubs; it is the result of a uniquely skewed business rates system that actively penalises many pubs. What long-term steps can the Minister take to help pubs like the Masonic Arms and the wider hospitality sector?
Rachel Reeves
As my hon. Friend knows, we have permanently reduced the multiplier for business rates for retail, hospitality and leisure, but my hon. Friend the Exchequer Secretary will set out the support for pubs in more detail later today. We are determined not only to support pubs, which are the lifeblood of so many communities, but also to support the whole of our retail, hospitality and leisure sector. We are putting more money in people’s pockets by cutting energy bills and train fares and getting people back to work, so that they have more money to spend on the things they love, not just on the essentials.
Sir Mel Stride (Central Devon) (Con)
Mr Speaker, I begin by associating Conservative Members with the Chancellor’s comments about your leg—we wish it well.
We are waiting with interest to hear the details of the latest U-turn on business rates this afternoon, but if the briefing is to be believed, it will be far too little, too late. The Chancellor simply does not understand the desperate situation so many of our pubs are in. Many pubs are asking why the Chancellor chose to spend billions more on the benefits bill instead of providing proper, permanent business rates support.
Rachel Reeves
Under the previous Government—when the right hon. Gentleman was in government—7,000 pubs closed. We have permanently lowered the tax rate that retail, hospitality and leisure businesses pay. When I became Chancellor of the Exchequer, we faced a situation in which all of the covid support was going to disappear overnight. We have put £4.3 billion of taxpayers’ money into supporting our retail and hospitality sector, including pubs, but we recognise the distinct problems that pubs face. That is why, unlike the previous Conservative Government, we are setting out more support.
Sir Mel Stride
They just do not get it. Of course, it is not just pubs; the whole high street—shops, restaurants and hotels—is seeing massive increases in business rates, some well over 100%. Where is the help for those businesses?
Rachel Reeves
Some of the numbers that are bandied around by the right hon. Gentleman do not reflect the reality, because they do not reflect the £4.3 billion of transitional support that we have put in to taper those increases in business rates. I do not think anyone in this House seriously believes that temporary support during the pandemic should continue infinitely. That would not be the right thing, and it would not be affordable for other taxpayers. That is why we are gradually tapering the support, with a £4.3 billion support package in the Budget and some more targeted support for pubs later today. I remind the right hon. Gentleman that he could have taken action when he was in government. Instead, there was a cliff edge, with no support for pubs or any other sector of the economy.
Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)
The Chief Secretary to the Treasury (James Murray)
As my hon. Friend sets out, there are significant challenges in adult social care, and we have already made available an extra £4.6 billion, including funding to start to implement the fair pay agreement. As she will probably be aware, Baroness Louise Casey is leading an independent commission to build consensus on reform. Its first phase will report this year, with a focus on how to make the most of existing resources.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
Rachel Reeves
I am not sure whether the hon. Gentleman thinks that the Chancellor of the Exchequer should not be in Davos, but I think it is important that the Chancellor is there banging the drum for Britain and bringing investment here. While I was in Davos, we secured new investment and worked with our allies on securing new trade deals for Britain. While the Opposition like to talk our country down, we are getting on and delivering a lower cost of living and higher economic growth.
Alan Strickland (Newton Aycliffe and Spennymoor) (Lab)
Rachel Reeves
I thank my hon. Friend for bringing this matter to the House’s attention. I cannot comment on individual cases of covid fraud and tax, but that person would not be the first member of Reform who took a fraudulent covid loan—[Interruption.] The hon. Member for Boston and Skegness (Richard Tice) is here just in time. I am not sure whether he is still the shadow, shadow, shadow Chancellor or not.
Munira Wilson (Twickenham) (LD)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
When the Liberal Democrats had the chance, what did they do? They put up VAT on hospitality businesses. Now they are coming up with ideas, without the plans to pay for them. They want to increase borrowing over and over again, rather than ensure that we support businesses in a fair and sustainable way over the years to come.
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
Rachel Reeves
I could not agree more with my hon. Friend, and that is why I announced—on the basis of many representations from colleagues, including her—a comprehensive set of measures at the Budget to crack down on illegal high street activity. We want our high streets to thrive, but we must crack down on these illegal businesses selling counterfeit goods and often harbouring more dangerous criminal activity. That is why we put money into that area in the Budget.
Edward Morello (West Dorset) (LD)
James Murray
Let me start by thanking the emergency services in the hon. Gentleman’s constituency for all their work to ensure that people are kept safe, and to respond to the challenges that people face as a result of flooding. We are determined to support public services across the board, and the decisions taken by my right hon. Friend the Chancellor in past Budgets and in the spending review mean that we have sustainable funding for our public services in all parts of the country.
Dame Nia Griffith (Llanelli) (Lab)
James Murray
My hon. Friend is absolutely right. The hon. Member for Clacton (Nigel Farage) is warmly welcoming people who spent 14 years undermining public services, who wrecked the economy, who botched Brexit, and who were booted out by the British people in 2024—and Reform’s latest recruit was so bad that she managed to get sacked by Liz Truss.
Wendy Chamberlain (North East Fife) (LD)
The Parliamentary Secretary to the Treasury (Torsten Bell)
That is an important question, because too many people have been let down by the scheme that was introduced by the Conservatives. I am sure that the hon. Lady noted the Energy Secretary’s announcement last week about the £15 billion warm homes plan, which will ensure that work to upgrade the quality of British homes continues in the years ahead for all households, but particularly for low-income households. She will also be aware that ongoing remediation work will take place as part of that scheme.
Andy McDonald (Middlesbrough and Thornaby East) (Lab)
James Murray
This Government are backing investment in Teesside to create the good jobs that my hon. Friend’s constituents deserve. I know that Teesside is very well placed to lead for our country across a range of sectors. For example, £4 billion is going into the UK’s first carbon capture, usage and storage cluster in Teesside, including the world’s first at-scale gas power station with CCUS.
Bobby Dean (Carshalton and Wallington) (LD)
Ten years ago, this place introduced legislation preventing banks from applying tax deductions after paying compensation for wrongdoing. Now lenders are set to pay out billions of pounds in connection with the motor finance scandal, but they will be able to reduce their tax bills because most of those companies have channelled their money via subsidiaries. Does the Minister agree that that is not in keeping with the spirit of the law, and will the Government do something about it?
The Economic Secretary to the Treasury (Lucy Rigby)
The hon. Member has referred to the motor finance redress situation. As the House would expect, we are monitoring that very closely, and we want to see the issues resolved in an efficient way that provides certainty for consumers and for firms. As the hon. Member knows, seeking to change the rules on corporation tax would mean deviating from our commitment to certainty and predictability in the tax system, as set out in our corporate tax road map.
Kevin Bonavia (Stevenage) (Lab)
I wish you a speedy recovery, Mr Speaker.
I welcome the economic steps that the Chancellor has taken against Russia’s illegal invasion of Ukraine, and I encourage her to go further, but does she agree that the British public can have confidence in our sanctions regime only if those in political leadership across all parties, including the shadow Attorney General, do not have ongoing involvement in advising Russian oligarchs?
Rachel Reeves
Like many, I was staggered by reports that senior counsel appointed by Mr Abramovich in relation to proceedings in Jersey include the shadow Attorney General. I cannot speak for the Opposition—I had many years of doing that—but our focus remains ensuring that there is no further delay in proceeds from the sale of Chelsea football club reaching humanitarian causes in Ukraine. If Mr Abramovich fails to act quickly, this Government are fully prepared to pursue legal action to release the funds. We know whose side we are on: we are on the side of the Ukrainian people, and of Britain’s national interests.
Peter Fortune (Bromley and Biggin Hill) (Con)
More than 80% of households in Bromley and Biggin Hill have at least one car or van—a figure significantly higher than the average in Greater London—so the decision to remove the 5p fuel duty reduction hits them particularly hard. This is the latest in a slew of measures against motorists, including increased congestion charges and the ultra low emission zone charge, which is really hitting them in the pocket. Why does the Labour party continue to use motorists as a cash cow?
Dan Tomlinson
We have extended the temporary 5p fuel duty cut until the end of August 2026, and rates will then gradually return to early 2022 levels. The planned increase in line with inflation will also not take place. That will save the average driver £49 next year, compared with previous plans.
Rachael Maskell (York Central) (Lab/Co-op)
While pubs may have a large lobby, we know that independents power our local economy. I have looked through the spreadsheets showing the business rates for our independent businesses after the relief has been applied. Businesses in my city will see an increase of up to 93% in their business rates. What engagement has the Minister had with small independents to ensure that they are safeguarded through the relief that he is about to announce?
Dan Tomlinson
It is important to note that there is a 40% relief in the system for smaller and independent businesses. It will be phased out over the coming years; we have put in transitional relief protection. As the Chancellor said earlier, that is reasonable. Members from across the House will agree that it would not be right to have temporary pandemic support still in place at the end of the decade.
Rupert Lowe (Great Yarmouth) (Ind)
I will not challenge you to a corridor race today, Mr Speaker, but good luck with your leg.
I wrote to the Chancellor on 8 January, with the support of 7,000 small businesses from across the spectrum—not just pubs. They are concerned about not only rate re-evaluations, and the vicious tax rises that they have had to suffer, but the cost of the Employment Rights Act 2025. When can the 7,001 of us expect a reply?
Dan Tomlinson
I regularly reply to letters and parliamentary questions from the hon. Member and those on both sides of the House.
Antonia Bance (Tipton and Wednesbury) (Lab)
There are many small and medium-sized enterprises in advanced manufacturing supply chains in my bit of the Black Country. Does the Chancellor agree that successfully implementing our industrial strategy is vital to securing the growth, through small businesses, that we need to get British industry back on track?
Rachel Reeves
I thank my hon. Friend for the work that she does to champion small businesses, and all businesses in the Black Country, but particularly those in her constituency. Advanced manufacturing is one of our industrial strategy sectors in which we have huge strengths as a country. We are determined to support such businesses in growing and fulfilling their potential.
Edward Argar (Melton and Syston) (Con)
What does the Minister say to childminders in Melton and Syston who are concerned about potentially increased administrative burdens and cash-flow pressures, as a result of changes under Making Tax Digital for businesses with a turnover of at least £50,000? It is scrapping the blanket 10% wear and tear allowance, and replacing it with a requirement for line-by-line item accounting, with childminders having to pay up front and claim back later.
Dan Tomlinson
This is an important issue that is of concern to childminders. I have replied to correspondence on this topic from the right hon. Member, I think, and from others in this place. I would be happy to talk to Members about it. I think the change is proportionate and reasonable, and we have engaged closely with the sector to make sure that the burden will be proportionate for those who are affected by it.
Sarah Coombes (West Bromwich) (Lab)
Thanks to the policies of the Labour Treasury team, Sandwell will receive £1.5 million to smarten up our towns. Does the Chancellor agree that local people should have a say in how that funding is spent, and will she encourage people in Rowley, West Bromwich and Oldbury to fill in my survey about how we spend this Government cash?
Rachel Reeves
I very much encourage people in my hon. Friend’s constituency to fill in her survey. The Pride in Place money, which we are allocating across some of the most deprived parts of the country, will make a huge difference in regenerating areas left behind by the previous Government. I encourage everyone in all our communities to get involved, and to shape those plans, because those plans can only be improved by direct contact with the people who stand to benefit from them most.
Caroline Voaden (South Devon) (LD)
Link has doubled down on its decision not to grant Totnes a banking hub, despite the Prime Minister telling Members at Prime Minister’s questions that every community that wants one should have one. Will the Chancellor agree to review the criteria for banking hubs, so that people have access to face-to-face banking services, not just access to cash, when the last bank turns its back on its customers and leaves town?
Lucy Rigby
The Government of course recognise the importance of in-person banking services and access to cash, as the hon. Member and I have discussed. As she knows, in-person services are provided through traditional bank branches, banking hubs, post offices and other means, and I will continue to monitor the situation. As she knows, I have listened very carefully to her concerns, and I am happy to do so again.
Callum Anderson (Buckingham and Bletchley) (Lab)
Earlier this month, the House of Lords Financial Services Regulation Committee published a report on private markets, highlighting the potential risks to economic stability, and the Bank of England has also undertaken a stress test of the ecosystem. What actions is the Minister considering taking with regulators to strengthen transparency and oversight of private markets, so that we can mitigate any systemic risks?
Torsten Bell
My hon. Friend is right that the rise in private markets has brought benefits, including to growth and financial stability—we have discussed that many times in the context of pensions—but it does come with new risks. The Treasury and regulators have increased their focus on those risks in the non-bank sector in recent years and, as I am sure he is aware, have played a leading role in the response to emerging non-banks’ risks internationally. In particular, the Government emphasised in the November remit letter to the Bank of England’s Financial Policy Committee that the committee should continue to consider risks in private markets. We are considering the House of Lords Committee’s recommendations, and will respond in due course.
Rebecca Smith (South West Devon) (Con)
At the weekend, Storm Ingrid caused the sea wall at Dawlish to collapse in two new places, and we wait to see the damage caused by Storm Chandra today. Both storms are once again exposing the vulnerability of the main rail line to Devon and Cornwall, which is vital for the local economy. Given the reported lack of a Treasury emergency reserve, can the Chancellor guarantee contingency funding for any urgent and unplanned resilience work required and not covered by a fiscal event?
James Murray
I thank the hon. Lady for raising the situation in her constituency. All Departments across Government have had their budgets set, and they include a contingency for covering known pressures. One of the ways that we have managed spending settlements differently from the previous Government is that all Departments must recognise that unexpected pressures will come along. They need to prepare for that, and should have robust plans for responding when such things occur.
Chris Webb (Blackpool South) (Lab)
Southshore in my constituency has the highest concentration of deprived communities and the most deprived ward in the country. We have developed a local people’s plan for work to regenerate the area. Will my right hon. Friend the Chancellor meet me to discuss this plan, so that we can regenerate the most deprived area in this country?
Rachel Reeves
We were pleased to be able to allocate Pride in Place funding to my hon. Friend’s constituency, in recognition of its levels of deprivation. That comes alongside policies such as getting rid of the cruel two-child benefit cap, which the previous Government introduced, and investing record amounts in social housing. This Government are delivering for the people of Blackpool. I am very happy to meet my hon. Friend.
Dave Doogan (Angus and Perthshire Glens) (SNP)
Constituents of mine have restored the Alyth hotel. It has gone from near dereliction to being an outstanding venue for dining and drinking, and a hotel. However, they are smothered by the compound burden of VAT rates, wage costs, duty increases, employer national insurance contributions, energy costs and the squeeze on spending. That is why there were 8,000 fewer jobs in hospitality in December than in November, and 20,000 fewer than in September. Will the Chancellor consider reducing VAT on hospitality to the 7% it is in Germany, the 9% it is in Ireland, or the 10% it is in Spain and Italy?
Rachel Reeves
I suggest that the people of Scotland ask who was in charge in Scotland for the last two decades, kick them out at the next election, and give Labour a chance.
Commonhold and Leasehold Reform
(1 day, 7 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Before we come to the statement on commonhold and leasehold reform, I once again note, for the second day in a row, my disappointment about briefings to the media before important announcements are brought to the House. As the Public Administration and Constitutional Affairs Committee recently stated,
“making the most important statements in the first instance to Parliament means doing so before they are made to the media and not at the first available opportunity thereafter”.
Those are the Government’s rules in their own ministerial code, and they must do better. I am defending Back Benchers on both sides of the House. They have been elected here to hear it. Hearing it on Sky News and the BBC is not the way we do business. If there are issues of market sensitivity, or indeed any other sensitivities, Ministers are welcome to seek advice through my office or the Clerks on how the best balance of these sensitivities might legitimate the need to update me before the media. We have to work together on this. The message is clear. I am not in charge of the code; the Prime Minister is. He needs to take the code more seriously.
The Minister for Housing and Planning (Matthew Pennycook)
My Department always strives to ensure that the House is updated at the earliest possible opportunity. I note and appreciate fully the points you have made, Mr Speaker, and will ensure that they are passed on to my ministerial colleagues.
With your permission, Mr Speaker, I would like to make a statement on the Government’s draft Commonhold and Leasehold Reform Bill. We made a clear and unambiguous commitment in our manifesto to act where previous Governments had failed and finally bring the feudal leasehold system to an end. We did so on the basis of a firm conviction that it is only by extinguishing fully the historical iniquities on which the present leasehold system rests that we can ensure that the dream of home ownership is made real for millions of households across the country.
Today, the Government have published and laid the Commonhold and Leasehold Reform Bill in draft for pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee. This ambitious piece of legislation will modernise property law, deliver a fair and efficient modern housing market and, most importantly, transform the experience of home ownership for millions of leaseholders across the country.
The draft Bill includes the following key provisions: a new legal framework for commonhold to reform and reinvigorate this radical improvement on leasehold ownership; a statutory restriction on new leasehold flats to ensure that, in future, commonhold is the default tenure; a new process for converting to commonhold from leasehold to make conversion easier, so that more homeowners can enjoy this improved form of ownership; the abolition of leasehold forfeiture and its replacement with a fairer system of lease enforcement; the repeal of draconian powers relating to rent charges on freehold estates; and the capping of ground rent for older leases at £250 a year, changing to a peppercorn after 40 years.
Let me expand briefly on each of these core measures, beginning with commonhold. Commonhold is a modern home ownership structure that is widely used around the world. It is not merely an alternative to leasehold ownership, but a radical improvement on it. At the heart of the commonhold model is a simple principle: the people who should own buildings and who should exercise control over their management, shared facilities and related costs are not third-party landlords, but the people who live in the flats within them and who have a direct stake in their upkeep. Commonhold ensure that the interests of homeowners are preserved in perpetuity. It transfers decision making to them so that homeowners have a greater say over how their home is managed and the bills they pay, as well as the flexibility to respond to the changing needs of their building and its residents.
For a variety of reasons, commonhold failed to establish itself following its introduction in 2004. As a result, there are fewer than 20 commonhold developments in existence today and the 2002 legal framework is hopelessly outdated. The provisions in the draft Bill build on the publication of our commonhold White Paper in March last year, which confirmed the detail of our commonhold reform programme, and responded to the Law Commission’s thorough and expert review of commonhold law. The result is legislation that will reinvigorate commonhold through the introduction of a comprehensive new legal framework that will enable commonhold to be used in the widest possible range of settings.
To ensure that commonhold becomes the default tenure, as our manifesto promised, the draft Bill also includes provisions to ban the use of leasehold for new flats. Once enacted, this will ensure that, other than in exceptional circumstances, all flats are provided as commonhold. The provisions will work in tandem with the ban on the use of leasehold for new houses contained in the Leasehold and Freehold Reform Act 2024.
Alongside the publication of the draft Bill today, we are publishing a “Moving to commonhold” consultation, seeking input from industry and consumers on precisely how we implement the new ban. The feedback we receive will ensure that we can proceed with a smooth transition to commonhold for new developments, while at the same time protecting the supply of new homes and determining whether there is a case for any justified exemptions.
The draft Bill also includes measures to make it easier for existing leaseholders to convert their buildings to commonhold. The existing law already sets out a process for conversion, but it is one that requires consent from everyone with an interest in the block. This sets an unacceptably high bar and means that commonhold is not achievable if even a single unit owner, lender or the existing freeholder objects. The draft Bill will introduce a new process for conversion, one that brings conversion into line with wider enfranchisement processes and will make conversion possible if at least 50% of qualifying leaseholders agree.
The previous Government’s Leasehold and Freehold Reform Act does provide leaseholders with important rights and protections, but on the Labour Benches we have always maintained that it was a distinctly unambitious piece of legislation that left untouched serious problems, including the disproportionate and draconian threat of forfeiture as a means of ensuring compliance with a lease agreement. For too long, outdated forfeiture laws have allowed landlords to threaten people with losing their home and hard-earned equity over small debts of as little as £350, or any amount if left unpaid for three years. The draft Bill contains provisions to abolish forfeiture and replace it with a modern, proportionate lease enforcement system that addresses breaches fairly, with appropriate safeguards and judicial oversight.
Mr Speaker, you will know that before Christmas we launched two comprehensive consultations, seeking views on how best to implement new consumer protections for homeowners on freehold estates and the ways in which we might reduce the prevalence of privately managed estates over the coming years. To further enhance protections for homeowners on freehold estates, the draft Bill will also repeal enforcement powers that apply to estate rent charges on them. These powers, often difficult to find in deeds and poorly understood by buyers, can lead to rent charge owners taking possession of, or granting a lease over, a freehold home as a result of small sums outstanding. That is not just unfair; it creates real barriers to home ownership and property sales. We will remove these wholly disproportionate and outdated remedies for enforcing rent charges by repealing sections 121 and 122 of the Law of Property Act 1925, including estate rent charges.
The Government are acutely aware that the cost of living remains a pressing concern for leaseholders across England and Wales, and that those who remain subject to unfair and unreasonable practices need urgent relief. That is why last summer we consulted jointly with the Welsh Government on strengthening leaseholder protections over charges and services. That consultation included proposals to reform the section 20 major works procedure, increase transparency over service charges, and enhance access to redress through the relevant provisions in the Act. We thank all those who responded to the consultation and will set out details of how we intend to implement the measures in question as soon as possible. However, the Government are determined to go further to alleviate the cost of living pressures facing leaseholders. In our manifesto, we promised to tackle unregulated and unaffordable ground rent charges. The draft Bill honours that commitment.
As the House will know, historically, ground rents, which often entail no service being provided whatsoever, were of low or nominal value. However, over the past two decades a practice has developed of freeholders including high and escalating ground rent clauses in leases. Such clauses are causing leaseholders considerable financial strain and some are unable to sell or remortgage their properties as a result. The draft Bill will cap ground rents at £250 a year initially, changing to a peppercorn after 40 years. This will provide immediate financial relief for leaseholders with high and harmful ground rents, while the longer-term change to a peppercorn cap will eliminate the two-tier market between new and older leases, delivering a fair and efficient modern housing market.
The reforms will necessarily have effects on existing contractual arrangements and investments—something that the Government do not undertake lightly. However, the Government have a clear mandate to tackle unregulated and unaffordable ground rent charges, and our approach has been designed to strike a fair balance between the interests of leaseholders, freeholders and investors, maintaining the reputation of the UK as a safe place to invest.
Finally, as I have made clear to the House on previous occasions, the last Government’s Leasehold and Freehold Reform Act contains a number of specific but serious flaws that prevent certain provisions from operating as intended and that need to be rectified via primary legislation. While not included in the draft Bill, our intention is to rectify those flaws in primary legislation. Among other things, that will allow us to commence the 2024 Act’s enfranchisement provisions, making it cheaper and easier for leaseholders to extend their lease or buy their freehold.
To conclude, the publication of the draft Bill today is an historic moment. It marks the beginning of the end for the feudal leasehold system that has tainted the dream of home ownership for so many. I look forward to working closely with the Select Committee as it performs its invaluable role of scrutinising carefully this draft legislation, and I encourage hon. Members across the House to engage with it and the accompanying consultation on banning new leasehold flats. I commend the statement to the House.
Gareth Bacon (Orpington) (Con)
I thank the Minister for his remarks and for advance sight of his statement. Progress on leasehold reform is to be welcomed. Labour promised that when it stood for election 18 months ago, so it is about time it got on with it, as the previous Conservative Government had started to do.
The previous Conservative Government began the process of fundamental reforms to the existing system of leaseholds by making it easier to extend a lease or to buy a freehold, increasing the standard lease extension time to 990 years, and giving leaseholders greater transparency over their service charges. His Majesty’s Opposition remain committed to giving leaseholders a fair deal, want householders to have security for the future and will continue to hold the Government to account on that.
The Government made big promises to leaseholders at the last election. Do they believe that the Bill is the summit of their ambitions? What about the Leasehold and Freehold Reform Act 2024? What are their plans to implement secondary legislation? There are opportunities to improve leaseholder situations that are available to the Government now. Why have they not implemented those changes? Surely, if they were serious about reform for leaseholders, they would have picked up the 2024 Act and run with it, rather than doing nothing until now. The Minister just said:
“I have made clear to the House on previous occasions, the last Government’s Leasehold and Freehold Reform Act contains a number of specific but serious flaws that prevent certain provisions from operating as intended and that need to be rectified via primary legislation.”
He went on to say:
“While not included in the draft Bill, our intention is to rectify those flaws in primary legislation.”
Perhaps he could tell us what those flaws are. If the Government have already identified them, why are the corrections not included in the forthcoming Bill? Surely now would be the time to rectify them. So if not now, when?
I would be remiss not to comment on one of the central principles of housing reform: there actually needs to be some housing in order to reform it. The Labour Mayor of London is delivering the lowest house building in London since 2009, while Labour’s national housing delivery is nowhere near where it needs to be to meet its 1.5 million homes target. What is Labour doing to ensure that there are strong incentives to build more? Where is the second planning Bill that the Government briefed out to the media that they will need to introduce because of their failure to get the planning reform right first time? The Conservative party is pro-development, which is why we have announced both a plan to review the London plan to improve on Labour’s failings in London and to ensure that national development is done on a brownfield-first approach.
Now, it is true that ground rent is an additional cost to leaseholders, but it is reported that the Chancellor is against capping ground rents because she believes it will deter pension fund investors. What does the Minister have to say to that?
The Government are claiming that these measures will reduce people’s bills, which would of course be welcome, but if leaseholder ground rent bills are simply replaced by soaring council tax bills, with some local councils now facing more than 30% rises in council tax due the Government’s grossly unfair funding review, how will people be better off? In inner London, which has a high proportion of leasehold flats, residents in councils such as Wandsworth, Westminster and Kensington and Chelsea are facing the double whammy of staggering rises in council tax and a council tax surcharge on top. Are the Government in fact claiming to cut a cost on one hand, while knowingly replacing it with even more costs on the other?
I would be grateful if the Minister answered those points in his reply. We will scrutinise the Government’s forthcoming commonhold and leasehold reform Bill, and we will hold the Government to account on their promises on leasehold reform and housing. We look forward to studying the details, and to the debates that will follow.
Matthew Pennycook
I note the initial positive tone from the shadow Minister in welcoming the draft Bill. I am slightly reluctant, on what is usually a matter of cross-party consensus, to be too critical of him, but it is a bit rich to criticise this Government, given that the previous Government cherry-picked reform in a way that was at odds with the Law Commission’s recommendation to treat all three of its reports as a holistic package, and left us with an Act that we will have to make a series of changes through primary legislation to fix so that we can implement the remaining provisions. I will, therefore, not take any strictures on ambition from the shadow Minister when it comes to leasehold reform.
I say plainly to the shadow Minister that we have switched on a number of the 2024 Act’s provisions already. On coming into office, we immediately enacted a series of provisions on rent charge arrears, building safety legal costs, and the work of professional insolvency practitioners. On 31 October we enacted further building safety measures; on 31 January we switched on the two-year qualifying exemptions for leaseholders; in March we switched on the right-to-manage provisions; and we are working at pace to take forward the rest of the significant package of secondary legislation that was required. However, some parts of those provisions require us to make fixes to the Bill—sadly, something that the previous Government left us with.
The shadow Minister mentioned housing supply, but again, I am loath to take lessons from a party that torpedoed housing supply in the last Parliament by making a series of anti-supply changes to the national planning policy framework, including the abolition of mandatory housing targets. The shadow Minister’s criticism could be taken a little more seriously if his colleagues did not come to me week in, week out, objecting to housing applications, telling me how our reforms will make it more permissive in their local constituencies.
We are getting on and taking forward the reforms to the leasehold system that are already on the statute book. Through this Bill, we are bringing forward the wider reforms necessary to bring that system to an end, which will be to the lasting benefit of millions of leaseholders across the country.
Mr Speaker
I call the Chair of the Housing, Communities and Local Government Committee.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I pay tribute to the Minister for his hard work in getting us to this stage. There were a few occasions when he saw me and went the other way, because he knew what I was going to ask him, but we would not be here without his tireless work. I also highlight what the Minister said about this being a cross-party issue, and pay tribute to the former Member for Worthing West, Sir Peter Bottomley, for his work chairing the all-party parliamentary group on leasehold and commonhold reform.
For far too long, many leaseholders up and down the country have been caught up in this medieval system, leaving them with soaring rents and unreasonable fees—people who bought their homes in good faith and have seen a nightmare transpire. It is right that the Government are finally bringing in a change that will help millions of people up and down the country. The Minister has agreed to support the Committee’s inquiry with the necessary evidence. Can he also confirm that he will support us by providing the Government’s response to the 2023 ground rent consultation in the coming days, so that we can get a better understanding on how that underpins the Government’s decision to cap ground rents at £250?
There were some things that we were expecting to see in the draft Bill—yes, I have read it—that are not there, including the Law Commission’s unimplemented recommendations on enfranchisement and the right to manage, and Lord Best’s recommendations on managing agents. Lord Best has called for a regulator with teeth for proper enforcement; can the Minister clarify what work the Government are doing to ensure that this will be in the final version of the Bill, or if it will be addressed elsewhere? The Minister also outlined a rough timeline for implementation. Can we get more clarity on when we expect to see that, so that those leaseholders around the country who have been waiting for a long time will finally get the help that they desperately need?
Matthew Pennycook
I thank my hon. Friend, the Chair of the Housing, Communities and Local Government Committee, for those fair and pertinent questions. I will answer each of them in turn. We published a whole series of documents at 7 am, including a copy of the draft Bill. That also included a policy document setting out our rationale for the £250 per year ground rent cap, but we will make available to the Committee other information, evidence and documentation as needed and at the earliest possible opportunity.
As for the other recommendations made in the three reports from the Law Commission, the Leasehold and Freehold Reform Act 2024 implemented a significant number of the Law Commission’s enfranchisement recommendations, a small number of its right-to-manage recommendations, and none of its recommendations on commonhold. We cannot do everything in this Bill; hon. Members who have had a chance to look will have seen that is has a large number of clauses already. But we are committed to enacting those remaining recommendations relating to leasehold enfranchisement and other things over the course of the Parliament.
On implementation, different provisions will come into effect at different times. For example, we aim to switch on the rent charge provisions I described soon after Royal Assent. Other measures will require secondary legislation. We expect the ground rent cap to be in place in 2028. We will work with the Committee to ensure that it can do the fullest and most robust job possible when it comes to giving the Bill the enhanced scrutiny it deserves.
Gideon Amos (Taunton and Wellington) (LD)
The Liberal Democrats welcome the introduction of a commonhold framework, the abolition of leasehold for newbuild flats, and the end of forfeiture—all these are positive steps in the right direction. Our manifesto has been calling for an end to unfair residential leaseholds since Lloyd George called it “blackmail” in his 1909 People’s Budget. But while I welcome those measures, we should be going much further.
The Housing Secretary this morning called ground rents “money for nothing” and a “scam”, so why should leaseholders continue to pay £250 for nothing? The Government’s proposals need to go further. For freeholders trapped in the fleece-hold of unscrupulous property management companies, the blackmail of the great property rip-off is set to continue. There is nothing that will cap those charges in these proposals. Since residential leaseholds will still be with us for some time, millions of leaseholders need better protection from landlord costs being passed on to them. They need the capping of excessive service charges, like £400 to change a lightbulb and £4,000 to mow the grass. Help is also needed for those trapped in unsafe and defective buildings, hundreds of thousands of which are excluded from the building safety regime.
Will the Minister take forward Liberal Democrat proposals and immediately abolish residential leasehold charges, set ground rents at a peppercorn now, and regulate property and estate-management companies as recommended in the Best report, capping unreasonable service and estate management charges?
Matthew Pennycook
I thank the Liberal Democrat spokesman for those questions. He often mentions Lloyd George, and I share his passion for Lloyd George’s radicalism on property law and other measures. I will address the specific points that he raised. During the passage of the Leasehold and Freehold Reform Act 2024, I was clear that my instinctive preference when it comes to ground rents was for a peppercorn cap, fully eliminating ground rents. The changes that we are making ensure that, after 40 years, that change occurs.
Having considered all the analysis and advice available to me as a Minister, including the evidence gathered in response to the previous Administration’s 2023 consultation, I believe that we have set out the right policy. It is clear that an immediate peppercorn cap would carry significant risks, including some that might impact on leaseholders. The Government also recognise that there is a significant difference between regulating the creation of new leases, and intervening to affect existing contracts and investments.
On the functioning of the cap itself, I want to make clear that it is a maximum cash cap. If someone’s lease is below £250 and does not include escalating clauses, their ground rent will not rise to £250. If someone’s ground rent is over £250, at the point that the measures are brought into force they will see an immediate reduction. That will benefit millions of leaseholders across the country. It is a huge cost-of-living intervention, and I hope the House can get behind it as the most just and proportionate way of addressing unregulated and unaffordable ground rent terms.
The hon. Member for Taunton and Wellington (Gideon Amos) will know that we ran a consultation last year on how we can standardise service charges and increase their transparency to ensure that leaseholders can better challenge the reasonableness of service charges at tribunal. However, we do not intend to bring forward a cap, not least because doing so could harm leaseholders, particularly those in enfranchised buildings, who may need to raise sums beyond the cap to carry out essential maintenance works on their buildings.
Angela Rayner (Ashton-under-Lyne) (Lab)
I thank my hon. Friend for this extremely welcome statement. I know how much work he has put into this. We know, however, that vested interests have repeatedly resorted to lawfare to block such measures, and may do so again; we have already seen the scaremongering begin, with outrageous claims that these changes will impact on lifesaving building safety work. Can my hon. Friend reassure me that the Government will not waver in the face of such threats, but stand firm and ensure that the will of this Parliament prevails? I take exception to objections from those on the Opposition Benches, who did nothing on rent caps in their time in Parliament.
Matthew Pennycook
I thank my right hon. Friend for her kind words. She was an incredible champion of the reform agenda for this legislation when she served as Secretary of State. She raises the matter of vested interests. I hope that the House—and you, Mr Speaker—will take from the Government’s robust defence to the legal challenge brought against the 2024 Act by a group of claimants who are owners of freehold and other arising interests of dwellings that we will robustly defend the legislation. The High Court, incidentally, comprehensively dismissed that challenge, allowing us in due course to take forward the relevant provisions. I simply say to my right hon. Friend—who embodies this herself, so she is well aware—that taking on vested interests that are opposed to change that will bring about improvements in the lives of working people is what Labour Governments do.
Lewis Cocking (Broxbourne) (Con)
As a leaseholder, I understand the issues that leaseholders face, and I look forward to carrying out pre-legislative scrutiny on the HCLG Committee. The conveyancing process also needs to be looked at, as I am not sure that solicitors and managing agents point out considerations such as historical service charges, whether the property has a sinking fund and how much service charges have gone up. Will the Minister assure me and my constituents that that part of the process of buying a leasehold property will also be looked at within this legislation?
Matthew Pennycook
I have a lot of respect for the hon. Gentleman and his service on the Select Committee. He has a lot of expertise in this area. I would say two things in response. First, we published two consultations on the home buying and selling process to try to modernise that process, and we are looking at some of those issues as part of that. Secondly, on service charges, one reason we had to hold quite a complicated and technical consultation on the implementation of the 2024 Act’s service charge provisions is precisely the complexity and the number of factors to deal with. We received incredibly useful feedback in response to that consultation, and that will shape how we take those measures forward. I want to be clear, though, that we are talking about how and not whether we take those measures forward; I want to see them brought forward at the earliest possible opportunity, because we absolutely know the impact that high and rising service charges are having on leaseholders across the country.
Navendu Mishra (Stockport) (Lab)
People in Stockport and Greater Manchester have suffered for many years with poor service and unfair treatment by managing agents. Does the commitment by the Government to protect leaseholders mark a break from years of weak regulation by the coalition and then Conservative Governments?
Matthew Pennycook
We did see a considerable amount of deregulation under the coalition Government and their successors. I will give the previous Government credit, as I have done before, for bringing forward the 2024 Act; it does include some limited relief for leaseholders and some new rights and protections. However, we need to take it forward and finish the job, as I made clear in opposition that Labour would. As I said, we are consulting on changes to increase protections over service charges—incidentally, that same consultation included a number of proposals recommended by Lord Best in his 2019 report, “Regulation of Property Agents”, including the introduction of mandatory qualifications for managing agents. We are clear, though, that that consultation and the measures within it are not the final step in the regulation of managing agents, and we will continue to reflect on the various other recommendations made in Lord Best’s report.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
Unlike the Chair of our Select Committee, the hon. Member for Vauxhall and Camberwell Green (Florence Eshalomi), I have not read the full draft legislation published at 7 o’clock this morning. I can confirm that she did indeed feel a bit unloved whenever she saw the Minister running away from her. On the statement, I think the Minister referred, in a previous answer, to ground rents and the transition from £250 to a peppercorn being effective in 2028. At the point that it becomes effective, will he look to backdate it or will tenants have to continue to pay their bills up until the legislation becomes effective?
Matthew Pennycook
The House can, of course, help us to speed up the progress of the Bill; 2028 is only a rough estimate based on the time it will take for the Bill, once it has passed its draft phase and scrutiny from the Select Committee, to be introduced in its final form and to get through both Houses. We will then also have to switch on the necessary secondary legislation. Up until that point, people will continue to pay their existing ground rents, but, as I say, the cap will apply once we bring those measures into force. For lots and lots of leaseholders around the country—I am sure the hon. Gentleman has many in his constituency—who are paying onerous, high ground rent terms way above £250, that will be an immediate financial relief that will be hugely beneficial to them.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Since I was first elected in 2010, I have seen the misery caused for constituents in Great Park, Moorfields and Grove Park, who suffer high ground rents, hikes in service charges, threats of forfeiture and a total lack of accountability of the maintenance companies. I therefore strongly welcome today’s announcements and truly thank the Minister for listening to calls for change. However, many will still find themselves living in existing leasehold houses and will remain trapped in this old, unfair and very frustrating system. They are asking me what the Government will do next to support them. Could the Minister explain that?
Matthew Pennycook
I am more than happy to have a separate conversation with my hon. Friend about the specific conditions pertaining to leasehold houses. She will know, of course, that the Leasehold Reform (Ground Rent) Act 2022 made a number of changes in that area. In general, we want to arrive at a situation, once our reform agenda is enacted, where existing leaseholders can choose to remain in leasehold ownership but can take advantage of the new rights and protections made available to them, including a cheaper and easier enfranchisement process if they want to extend their lease or buy their freehold, or convert to commonhold. That is why it is so important that the Bill contains an easier mechanism to convert to commonhold, which, as I said in the statement, we are clear is not only an alternative to leasehold ownership but a radical improvement on it.
Mr Lee Dillon (Newbury) (LD)
I welcome the introduction of this draft Bill and, as a member of the Housing, Communities and Local Government Committee, I look forward to scrutinising it. I wonder whether the Minister will make available to the Committee evidence around the peppercorn rent and the 40-year requirement. I suspect is to do with investor confidence, but could that time period be brought forward? My overarching feeling, which I know will be reflected in my inbox when I get back to my office, is that people across the country would have expected to see within the draft Bill action on service charges; we are consistently contacted about managing agents not performing their duties and charging too much for it. The Bill was meant to be presented at the back end of last year and I know that the Government concluded a consultation in September. We want service charges to be addressed as soon as possible. Will we be able to get an additional clause on this issue into this legislation?
Several hon. Members rose—
Mr Speaker
Order. Can I gently say that I want to get everybody in, but I cannot do so if people are going to make longer contributions? I know there is a 40-year clause in the legislation hon. Members are discussing—I don’t want us to hit that today!
Matthew Pennycook
It is clear that this draft Bill cannot do absolutely everything, and it is the Government’s considered opinion that we do not need provisions on service charges in this Bill—not least because, for the reasons I have set out, we do not intend to implement a service charge cap—and that the provisions in the 2024 Act will do the job. Help is on the way, though, and I want to ensure that those provisions are switched on at the earliest possible opportunity.
Mr Clive Betts (Sheffield South East) (Lab)
First, I congratulate my hon. Friend the Minister on the magnificent job he has done with this legislation, as well as the Chair of the Housing, Communities and Local Government Committee, my hon. Friend the Member for Vauxhall and Camberwell Green (Florence Eshalomi), who has pushed him and bothered him all the way down the corridors for months on end!
It is now eight years since the previous Committee looked at this matter and recommended radical reform of leasehold. One of the challenges in my constituency—still—concerns individual householders who try to buy their freehold and find that the freeholders will not even respond to their requests, and then push them through complicated and expensive procedures before they can get their entitlements. Can the Minister give us an assurance that that procedure will now be simplified and cheapened?
Matthew Pennycook
I thank my hon. Friend for his kind words on my role in developing the draft Bill. I can say to him very plainly: yes. If he looks at the consultation on service charge protections that we released last summer, he will see proposals that specifically address non-litigation costs and other measures. However, as I said, it is our intention to ensure that in the enfranchisement process, it is not only cheaper but easier for leaseholders to make use of their new rights and protections if they intend to buy their freehold or extend their lease.
Mr Will Forster (Woking) (LD)
I am pleased that the Government have finally published their plans to reform the leasehold system, and I look forward to scrutinising those plans on the Housing, Communities and Local Government Committee. In my constituency, we have a range of issues with property management companies, whether it be the mismanagement of the Clock Tower in Maybury or the proposed 30% increase in the service charge at Brookwood Farm, and all are unacceptable. Please will the Minister explain why he is not using the draft Bill to end the wild west of unregulated property companies?
Matthew Pennycook
We launched two comprehensive consultations before Christmas, in respect of how we switch on the consumer protections set out in the 2024 Act for those living on freehold estates and, more widely, on how we end the prevalence of private management arrangements of the kind that I think the hon. Member is referring to. The draft Bill does not have to do everything, but relief is on the way through the new consumer protections for those living on freehold estates who suffer from management companies levying unfair charges.
Barry Gardiner (Brent West) (Lab)
I congratulate my hon. Friend on resisting the calls from those who have exploited leaseholders for far too long and on capping ground rent. I welcome the assurance that we are moving from the outdated feudal system of leasehold to a proper commonhold future to give the full rights of ownership to leaseholders, but my hon. Friend will know that those who have taken money for no service or for poor service will resist this with all their might. A loophole may still exist for enfranchisement when developers put up a new building with a proportion of commercial property in its base, so can my hon. Friend address that, specifically in order to stop them using such a loophole?
Matthew Pennycook
My hon. Friend and I both served on the Public Bill Committee when the Bill that is now the 2024 Act was going through the House, and we discussed many of these issues then; I can assure him that we have given consideration to all of them. He is right that we are now on a path to a commonhold future. As I have said, this is a radical improvement on leasehold home ownership. In general, while we will obviously ensure that leaseholders who wish to remain under leasehold ownership benefit from new rights and protections, it is the Government’s intention to try to persuade as many leaseholders as possible to convert to commonhold and to enjoy the benefits that it provides.
Rebecca Paul (Reigate) (Con)
I thank the Minister for his statement, and for all his support with the issues we have had at Park25 in Redhill; I very much appreciate that he has taken residents’ concerns seriously. Which of the changes will be most beneficial for my Park25 residents, and has the Minister given any more thought to my suggestion of mandatory adoption of communal land by local authorities?
Matthew Pennycook
I must say, without getting into the detail of the circumstances of the hon. Lady’s constituents, it is hard to know which of the measures will benefit them most. If they are subject to high ground rent charges, the cap on introduction will benefit them hugely on its introduction. If they have suffered from the threat of forfeiture, which is a draconian and disproportionate means of enforcing lease terms, they will benefit in myriad ways from the legislation.
Darren Paffey (Southampton Itchen) (Lab)
I congratulate my hon. Friend on his statement and thank him for it. Like thousands of long-suffering leaseholders across Southampton Itchen, I warmly welcome this announcement. Residents of the Sapphire Court development have already been paying ground rent that is higher than the cap, and there is a plan to double it, but thanks to the action of this Labour Government that will not happen. How soon will Southampton’s leaseholders will get the rights, protections and securities that they have been waiting a long time for and that they deserve?
Matthew Pennycook
As I have said, it is the Government’s intention to ensure that the draft Bill, and the final product that eventually comes forward after scrutiny by the Select Committee, is made law as soon as possible so that leaseholders can benefit from the new provisions. In general terms, no one will pay more than the ground rent cap that we are introducing, but millions of people will pay less. Approximately 770,000 to 900,000 leaseholders with ground rents over £250 will see savings in this Parliament, and others will see savings in greater amounts in Parliaments to come.
John Glen (Salisbury) (Con)
I welcome the news of the capping of ground rents for existing contracts, and I thank the Minister for the time he gave me last year, but he will recognise that many city centre developments require ongoing investment from pension funds, so could he say a little more about how his announcement will not spook the City and how he will ensure that there continues to be a flow of investment into our high streets?
Matthew Pennycook
I thank the right hon. Member for his fair and reasonable question. The Government consider the intervention on ground rents that we are making through this draft Bill to be a justified and proportionate approach to the specific problems that leaseholders face as a result of high and harmful ground rents. We are introducing the reforms to deliver on specific commitments in our manifesto and in the context of a significant number of wider reforms to the leasehold market. We have carefully weighed the different options to meet our manifesto commitment on ground rents and we have taken investors’ concerns into account when developing the policy, which we believe strikes a fair balance between leaseholders, freeholders and those invested in ground rents. We recognise that the reforms will have a significant impact on freeholders and investors, but we consider this a justified and proportionate response.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I should first declare that I am a leaseholder. I welcome very warmly the Minister’s statement, particularly the measure on commonhold, which is something that we Co-op MPs have been campaigning on for a long time. We also welcome that the cap on ground rents is in sight. There are issues in my constituency relating to the fact that a lot of my leaseholders are shared owners. Could the Minister tell us now—or write to me with the details—how shared ownership might be impacted by the changes? Could he also reassure us, given the complexities, that there will be some Government support, such as an advice hub or something to point people in the right direction, when it comes to how people will move from where they are to commonhold?
Matthew Pennycook
I am more than happy to write to my hon. Friend about the issue of shared ownership specifically. She will know that through our £39 billion social and affordable homes programme, we are making improvements to shared ownership as a tenure model. More widely, I can assure her that the provisions in the draft Bill will benefit leaseholders in her constituency in the way that she makes clear. I am happy to have a further conversation with her about how the reforms will benefit her constituents and what advice leaseholders can draw on, including the Government-backed Leasehold Advisory Service.
Mike Martin (Tunbridge Wells) (LD)
I thank the Minister for announcing this Bill to Parliament, and I broadly welcome the provisions within it, particularly the proposal on conversion from leasehold to commonhold—I think that is excellent. By my count, there are about 4.8 million leaseholders in England. Do the Government envisage driving this process so that people are empowered and encouraged to make that conversion, and when does the Minister think that we will get rid of the last leasehold in England?
Matthew Pennycook
I think that leaseholds will exist for some time to come. Indeed, people in various buildings may not, for whatever reason, wish to convert to commonhold, but it is absolutely our intention to make it easier to do so and to encourage as many leasehold homeowners as possible to make the change, because it is a radical improvement on leasehold ownership, not just an alternative to it.
Ben Coleman (Chelsea and Fulham) (Lab)
Residents in Chelsea and Fulham have experienced years of poor service and unfair treatment from managing agents, so I know how pleased they will be by this Government’s determination to do the right thing by leaseholders after years of, sadly, weak regulation under the Conservatives. May I take this opportunity to tell my hon. Friend how much residents in Chelsea and Fulham are looking forward to the further steps on service charges and managing agents that he has outlined? More, please.
Matthew Pennycook
We are absolutely committed to strengthening regulation of managing agents. Some proposals on charges were set out in the consultation on protections for leaseholders, which we released last summer, but there is more to come.
Charlie Dewhirst (Bridlington and The Wolds) (Con)
Hundreds of thousands of freeholders up and down the country who are locked in financial arrangements with unaccountable estate management firms will be very frustrated by this statement, because it focuses solely on leasehold. Will the Minister very clearly set out the next steps to tackle this enormous travesty, which involves fleecehold and estate management companies?
Matthew Pennycook
I must correct the hon. Gentleman: it does not solely deal with leasehold, as I made clear in the statement. The draft Bill will repeal sections 121 and 122 of the Law of Property Act 1925, ending the disproportionate remedies that give rent charge owners access to a draconian enforcement regime on freehold estates. As I have said, we are doing more, through the two consultations launched before Christmas in particular, to give new consumer protections to those living on freehold estates. I hope the hon. Gentleman will take part in and respond to that consultation.
Dame Nia Griffith (Llanelli) (Lab)
The capping of ground rent at £250 will give certainty and relief to leaseholders in Llanelli, who face unpredictable and unjustifiable hikes in ground rent and for whom the reform simply cannot come soon enough. Will the Minister give us a bit more detail on the timetable for the Bill and assure us that he will do everything he possibly can to ensure that the cap is brought in as soon as possible?
Matthew Pennycook
I agree with my hon. Friend. She, like me, will have constituents who are subject to high, unfair ground rent charges and, in some cases, to escalating ground rent charges, particularly those that are inflation-linked. People across the country see those ground rent charges stack up to significant amounts and they will benefit from the cap once it is implemented. We estimate that the cap on ground rents will take approximately 12 months to introduce after Royal Assent, but that is all subject to parliamentary timings. If, as in the past, there is cross-party support on this issue, we can all work together to ensure that the Bill makes speedy progress.
Carla Denyer (Bristol Central) (Green)
Leaseholders in Bristol Central are being ripped off. I am disappointed that the Minister and the Government will not enforce peppercorn ground rents immediately, although a £250 cap is an improvement and the movement towards commonhold is really welcome. However, there are big problems for leaseholders that are still unaddressed. Will the Minister please commit to tackling the soaring insurance premiums that have left homes unmortgageable and leaseholders trapped, unable to sell and move in the wake of the cladding scandal?
Matthew Pennycook
I detected an unusual amount of support in that question from the hon. Lady, which I welcome. On the specific issue of insurance charges, again, there was a consultation on switching on some of the provisions in the 2024 Act that relate to insurance commissions. I am more than happy to write to her to set out further detail, but we need to bring those into force and it remains our commitment to do so at the earliest opportunity.
Dr Lauren Sullivan (Gravesham) (Lab)
I thank the Minister for the statement. Although, as he has pointed out, this cannot all be fixed in one go and there are other levers that he will put in place for leaseholders, will he give some reassurance to leaseholders in Gravesham who have experienced poor service that this is about rebalancing power so that they are protected going forward?
Matthew Pennycook
All manner of provisions in the draft Bill that we are discussing are absolutely about rebalancing leasehold and freehold interests. To take the example of forfeiture, freeholders have often been in an unassailable position of strength vis-à-vis leaseholders. That is what we are trying to address by introducing the Bill. I thank my hon. Friend for her support.
Dr Kieran Mullan (Bexhill and Battle) (Con)
I hesitate to add to the Minister’s in-tray, but he will know that we have existing protections of some sort for leaseholders and freeholders, as right as he is to want to go further. Residents in the Cooden area of my constituency have been sent letters by a company called Asset Invest Ltd demanding thousands of pounds, which it says is to regularise covenant breaches. That, to me, seems unjustified and has some of the hallmarks of the unregulated charges that leaseholders have faced in the past. This is probably an issue that affects MPs across the House. Will the Minister be so kind as to meet me to explore how we might address this issue as well?
Matthew Pennycook
I will happily meet the hon. Gentleman. As I have said, it is our intention as a Government to end the unjust and discriminatory practices from which leaseholders suffer. As I hope I have made clear, over the course of the Parliament we intend to end—finally, once and for all—this iniquitous system. That will take some time; it cannot happen overnight, but that is our intent. Leaseholders across the country, including those in his constituency and mine, will benefit from that.
Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)
I congratulate my hon. Friend on freeing so many of my constituents from the historical and, indeed, feudal injustice of the leasehold system. I urge him to ignore the clarion complaints of those freeholders who predicated their business model on the continued exploitation of working people through extortionate ground rents. The Minister is familiar with the predicament of my constituents who are unable to extend their leasehold or buy their freehold because of the actions of the St Mary Magdalene and Holy Jesus Trust. What hope can he offer them?
Matthew Pennycook
My hon. Friend is right: there will always be vested interests that resist reform of the nature that we are trying to take forward, just as there will always be naysayers out there for whom nothing we do is ever good enough. This package as a whole, as I have said, will end the leasehold system in its entirety and in a single Parliament. That will be a huge achievement for this Government and we will succeed on that basis where other Governments have failed.
I am aware of the specific issue my hon. Friend raises and we have had many discussions about it. The provisions to address it are not in the draft Bill, but my officials and I are giving serious consideration to how and where we will resolve the matter that my hon. Friend has campaigned on for so many years.
Layla Moran (Oxford West and Abingdon) (LD)
I welcome the Bill, but I take this opportunity to urge the Minister to go further and faster on rip-off service charges. That is the thing that is clogging up my inbox—so much so, in fact, that I will hold a service charges forum in Oxford in a few weeks’ time. One group in particular—social housing tenants—is under-protected. The Minister will know that under the 2024 Act, there is more transparency in their service charges, but they do not have anywhere near as strong a hand as others in seeking redress. Will he meet me following the forum so that I can relay to him the issues that my constituents, particularly the social housing tenants, are having?
Matthew Pennycook
I can feel the glare of my private office as I agree to meetings across the House, but I am happy to do so. The matters that the hon. Lady addresses are in the consultation we brought forward last year. It is an incredibly technical consultation on standardising and making more transparent service charges across the country, which are not uniform in any way as things stand. However, as I have said, we want to introduce those protections as soon as possible.
Josh Dean (Hertford and Stortford) (Lab)
Today, I think of one of the very first constituents I saw at one of my surgeries, who was trying to sell one of her leasehold properties just to help fund the care of her mother. Will the Minister take this opportunity to reassure my constituent that this Labour Government are on her side and are doing all they can to free her and others from what has become a nightmare?
Matthew Pennycook
I say to my hon. Friend that we are on his constituent’s side. It is because so many leaseholders across the country are suffering from unjust and discriminatory practices that we have to overhaul and ultimately end this feudal system.
Josh Babarinde (Eastbourne) (LD)
Eastbourne’s leaseholders are being ripped off. The current leaseholder landscape has bred an industry of property management companies, such as FirstPort and Eagerstates, that prey on powerless leaseholders by charging eye-watering service charges, making opaque calculations of those charges and bullying residents into submission. In failing to cap service charges, and without the 2024 transparency rules in place, today’s reforms still leave thousands of local leaseholders unprotected. When will the Minister finally crack down on exploitative property management companies?
Matthew Pennycook
I have made it clear to the House that we have already set out proposals to strengthen the regulation of managing agents. Those proposals are not the summit of our ambitions; there is more to come. I say to the hon. Gentleman and generally to the House that managing agents will play an even more important role as we progress towards a commonhold future. We must therefore end the abuse and poor service from unscrupulous managing agents that so many leaseholders face.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
I thank the Minister for his diligent work on this issue. I know that we all appreciate his expertise, as will my constituents in Walthamstow who are leaseholders with Clarion and who, in the last year, have seen their ground rents go up from £200 to £650 and now this year to £857, including an admin fee. What can the Minister say to reassure my constituents that there will not be loopholes in the cap and that we will ensure that all charges are included in the £250 limit?
Matthew Pennycook
It is certainly not our intention to allow any loopholes into the legislation. That is precisely why we have brought forward a draft Bill rather than a final product. Such is the complexity and technical nature of the reform we are enacting that the additional and enhanced scrutiny to be provided by the Housing, Communities and Local Government Committee will be invaluable.
Tessa Munt (Wells and Mendip Hills) (LD)
I welcome the Minister’s announcement and I know that it will bring some joy, particularly with the further announcements he is going to make later in the Parliament, to many of the residents in my part of the west country. May I draw his attention to the housing with care sector? I am talking not about those gated communities that have a caretaker or somebody who cuts the grass, but about charities such as the St Monica Trust that provide some affordable rents and shared ownership but mostly provide leasehold purchase with a guaranteed buy-back and resale. This gives them a way of updating their contracts for residents and maintaining affordability. These organisations are really concerned that there will be an unnuanced ban on new leasehold care-led retirement living apartments. What consideration has the Minister given to the housing with care sector having some protection, and his attention?
Matthew Pennycook
The draft Bill, as published, includes exemptions that mirror the ground rent exemptions for new leases entered into since 30 July 2022, based on that previous Act of Parliament, but we will consider through the pre-legislative scrutiny process whether other exemptions would be appropriate for a small number of leases granted for specialist purposes. I can assure the hon. Member that I have given consideration, and will give further consideration, to the matter she raises.
Luke Murphy (Basingstoke) (Lab)
Since I was elected, so many constituents have raised with me the absolute nightmare of being trapped in leasehold and fleecehold, so I wholeheartedly congratulate the Minister on the action he is announcing today, particularly on capping ground rent, ending leasehold flats and the transition to commonhold. On the transition to commonhold, previous Governments have attempted to make this easier. Will he say a bit more about what the Bill will do to ensure that this Government make the transition happen, rather than failing as previous Governments have done?
Matthew Pennycook
My hon. Friend is absolutely right. For various reasons, commonhold failed to take off after its introduction in 2004 and the legal framework is now hopelessly out of date. That is why we have to reform and reinvigorate commonhold as a tenure. We want to put in place an easier conversion mechanism. We have given a great amount of thought to the Law Commission’s recommendations in this area, and we have tried to strike the right balance to ensure that our approach meets those objectives, but my hon. Friend is more than welcome to contribute to the scrutiny process for the draft Bill outside the Select Committee, and I hope that the does so.
Monica Harding (Esher and Walton) (LD)
In my constituency, managing agents are still imposing excessive service charges with very little transparency. Flats in retirement developments often will not sell, even at well below the market value, and families are left paying deceased relatives’ service charges. Restrictive lease terms ban rentals, trapping those families with empty, unsaleable homes. I note the Minister’s commitment to the consultation on service charges, but will he hurry up with the action?
Matthew Pennycook
I can assure the hon. Lady that we are going as fast as we possibly can, but I hope she would not want us to follow the example of the previous Government, who rushed forward legislation that contained serious specific flaws that a future Government—this Government—would have to fix in due course.
Rachael Maskell (York Central) (Lab/Co-op)
Today’s announcement is life-changing for many of my constituents, and this is why we elect Labour Governments. I want to ask the Minister about residents in leasehold complexes, where decisions are often delayed because of absent landlords and Airbnb owners. Will he ensure that when decisions are being made about the transfer to commonhold, those who do not respond do not hold up the decision to make the transfer?
Matthew Pennycook
I very much agree with my hon. Friend that the draft Bill will be life-changing for leaseholders across the country, freeing them from the unjust and discriminatory practices that so many of them face, and from the financial cost of high ground rent terms. I am more than happy to write to her on the specific issue she raises. It is these nuanced points that we want to work through, and that is why we have brought forward a draft Bill for enhanced scrutiny.
Munira Wilson (Twickenham) (LD)
I welcome many of the Government’s announcements today. Across Twickenham, I hear regularly from leaseholders who suffer when service charges are jacked up without any notice or transparency, often for spurious maintenance issues. I note that the Minister has said that he does not want to cap service charges and that help will be on the way at some point, but he has refused to put a timeline on that. Why does he not use this Bill as a golden opportunity to bring forward Lord Best’s recommendations on having a property regulator that can look at this area in a nuanced and sensible way?
Matthew Pennycook
We have given serious consideration to how we will take forward Lord Best’s recommendations from his 2019 report and, as I have made clear, we are taking some of them forward already. This Bill introduces reform in a number of specific areas and, as I have said in response to previous questions, it does not need to do everything. There are other pieces of legislation, not least the 2024 Act, that do lots of the work that hon. Members are calling for, but we want to ensure that the whole agenda is a comprehensive one that benefits leaseholders in the way that the hon. Lady and I both want.
Abtisam Mohamed (Sheffield Central) (Lab)
I pay tribute to the Minister’s work, which I know will bring real relief to many of my constituents. However, leaseholders in the Riverside Exchange development are being blocked from securing their right to manage because of absentee leaseholders. This has left them trapped with eye-watering service charges, which have increased from £1,900 to £5,500. Can the Minister set out how the upcoming legislation will reform and reduce the minimum qualifying threshold for the right to manage, which is currently set at 50%?
Matthew Pennycook
My hon. Friend will be aware that there were very few provisions relating to the right to manage in the 2024 Act. We are committed to enacting the remaining Law Commission recommendations relating not only to the right to manage but to leasehold enfranchisement. I am more than happy to write to her to try to get at the specific issues she raises in relation to the building in her constituency.
Mr Adnan Hussain (Blackburn) (Ind)
I too welcome the Minister’s statement today on leasehold reform, but I must press him and ask him what the Government’s plans are in respect of service and maintenance charges, so that I can provide at least some reassurance to my constituents.
Matthew Pennycook
Hopefully the hon. Gentleman heard my answer to a previous question. We intend to switch on the 2024 Act provisions that standardise service charges and increase transparency around them, so that people can more easily challenge unreasonable charges at tribunal. I will not put a time on that, because I do not have an exact date in mind, but I can assure him and other Members across the House that we are working as fast as possible to bring forward the necessary protections to ensure that leaseholders are protected from high and rising service charges.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I have heard from so many residents across Marton, Guisborough, Skelton, Hemlington Hall and elsewhere about issues with leasehold and fleecehold, so what message does the Minister have for my constituents that he will tackle both of those issues and protect my residents from unfair service charges?
Matthew Pennycook
As I have made clear, there are measures in this draft Bill that will provide enhanced protections for residential freeholders on freehold estates, but we are taking other action, and I refer him—as I have other hon. Members—to the two comprehensive consultations we launched before Christmas, one of which deals exclusively with switching on the consumer protections for those people living on freehold estates.
Claire Young (Thornbury and Yate) (LD)
My constituents trapped in fleecehold schemes—freeholders on privately managed estates—will still be exposed to escalating, unregulated service charges and have no way of ensuring that the work they are paying for is actually done. The Minister has talked about the consultation and promised that help is on the way, but can he promise protection from this exploitation for my constituents in this Parliament?
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
I welcome this statement and congratulate the Minister. Does he agree that strengthening and simplifying the route to commonhold will shift power away from distant freeholders and back to residents, and that for leaseholders in Birmingham Edgbaston, this will mean control over service charges, repairs and management for the first time?
Matthew Pennycook
Absolutely. Commonhold is a purpose-built tenure designed specifically for people to own and manage a shared building without a third-party landlord and without a ground rent. We want to see its uptake grow significantly over this Parliament, and that is what the measures in this draft Bill are designed to provide for.
Jim Shannon (Strangford) (DUP)
I thank the Minister very much for his statement. It is indeed a joy to have some good news in the Chamber for everyone out there, and we welcome that. Thank you for that, Minister, and for the Government’s proposals. The Government have an interest in Northern Ireland, and while homeowners in Northern Ireland have the ability to buy out leaseholds under the Ground Rents Act (Northern Ireland) 2001, that Act does not provide for a cap on ground rent in its calculations. Will the Minister undertake to discuss these proposals with the devolved regions to enable a blanket costing to apply UK-wide at this time of austerity?
Matthew Pennycook
I always thank the hon. Member for his constructive contributions. As he knows, England and Wales can learn lots from Northern Ireland, but, as ever—particularly in relation to our reforms to housing and planning, as well as to leasehold—there are many things that Northern Ireland can learn from our reforms. I can give him the undertaking that the devolved Administrations will be kept up to date with what we are doing.
Steve Race (Exeter) (Lab)
I am delighted that we are moving forward on capping ground rents and abolishing the feudal leasehold system. I have been supporting hundreds of residents across Exeter in fighting terrible practices by management companies, and I know that these measures will put money back into people’s pockets. Does the Minister agree that the age of the exploitative leasehold system—and the ripping off of residents—is finally over, and that it is thanks to a Labour Government?
Matthew Pennycook
My hon. Friend is absolutely right. We are calling time on the abusive practices of unscrupulous property agents and on the leasehold system as a whole. That is down to a Labour Government finishing the job that the previous Government were unable to complete.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
Order. It would be helpful if Members asked very short questions so that I can get them all in.
Olivia Blake (Sheffield Hallam) (Lab)
I thank the Minister for his statement; the measures will radically improve the system. He will be aware that over 170,000 houses in my constituency have had their freeholds purchased by Andrew Milne, who is now demanding that residents pay sums sometimes exceeding £25,000 to buy out the freeholds, and is threatening forfeiture and High Court action if they do not pay up. I welcome the Minister’s commitment to ending forfeiture, but will he set out what additional steps that Government are taking to regulate rogue freeholders?
Matthew Pennycook
I will be careful in what I say in respect of that particular case, but a meeting with my hon. Friend and other Sheffield MPs was postponed because this legislation was being brought forward. I will ensure that that meeting goes back in the diary as soon as possible.
Danny Beales (Uxbridge and South Ruislip) (Lab)
Today’s news is welcome for leaseholders in my constituency, whose ground rents—often of £400 or £500—escalate throughout their leases. The measures will save them thousands of pounds throughout their leases. In my time as an MP, I have been shocked by the behaviour of managing agents. There is strong support in this place and the other place for Lord Best’s recommendation for a proper regulator of managing agents. Will the Minister outline what steps will be taken, and what the timeline is, for action on managing agents?
Matthew Pennycook
We are clear that we need to strengthen the regulation of managing agents. I appreciate the strength of feeling, across the House, on the matter. As I have made clear, we will continue to reflect on the various recommendations made in Lord Best’s 2019 report, and I am more than happy to engage with my hon. Friend on his private Member’s Bill, which I know deals with some of these matters.
Sarah Russell (Congleton) (Lab)
I thank the Minister for his statement, which demonstrates how Labour stands up for people against vested interests—my constituents will thank him for it. On the ongoing problems with unadopted estates, which I have been raising with him since before my election, I would be extremely grateful if he agreed to visit my constituency to see the difficulties that homeowners face.
Matthew Pennycook
I think that I have already committed to ensuring that a visit to her constituency is on the very long list of requests that I have received, but I will bear her request in mind.
Sam Carling (North West Cambridgeshire) (Lab)
I commend the Minister for bringing forward these brilliant measures to protect leaseholders. Constituents across Hampton own the freehold to their homes but pay several levels of service charge—first, to managing agents such as FirstPort, which is supposed to be responsible for unadopted roads, and secondly, to Hampton Estates, which covers lots of the public open space, parks and drainage. As part of our reforms, how will the Government ensure that multi-level service charges like those are addressed, particularly in areas for which they were never supposed to be adopted?
Matthew Pennycook
Again, I refer my hon. Friend to the two comprehensive consultations that we launched before Christmas. We need to establish the new regulatory framework to provide consumer protections for residential freeholders on freehold estates. We are also consulting on how to reduce the prevalence of such private management arrangements, which are at the core of so many of the unjust practices that residential freeholders face.
Jessica Toale (Bournemouth West) (Lab)
I have heard too many horror stories from leaseholders in Bournemouth West. One constituent, Jeremy Green, described feeling like a second-class citizen subject to the total autocratic control of his freeholder landlord and its managing agent. Will the Minister assure me that this Labour Government are getting on with reform and giving leaseholders the protections and dignity that they deserve?
Matthew Pennycook
Given their experience of the leasehold system, it is completely understandable that Jeremy and other leaseholders across the country feel that the dream of home ownership has fallen so short. That is why we have to end the system in its entirety. This draft Bill goes a long way towards ensuring that we do just that.
Peter Lamb (Crawley) (Lab)
This package of measures will transform the lives of thousands of my constituents. On fleecehold, residents in Forge Wood are paying thousands of pounds for services that other constituents receive for free. Can the Minister confirm that he will act as quickly as possible following the end of the consultation?
Matthew Pennycook
We want to act as quickly as possible, particularly to bring in the new consumer protections provided for by the 2024 Act.
Sarah Hall (Warrington South) (Lab/Co-op)
I welcome the statement and the progress that it represents, and I put on record my thanks to the National Leasehold Campaign, which has spent many years campaigning tirelessly on behalf of existing leaseholders, who have been trapped in an unfair and archaic system. For the benefit of Warrington South leaseholders who are trying to understand the 40-year peppercorn cap, will the Minister explain how the 40-year cap was arrived at and whether there is any scope for the transition to be brought forward so that relief is felt sooner?
Matthew Pennycook
I echo my hon. Friend’s remarks about the NLC. I also thank others, such as the Leasehold Knowledge Partnership, Sir Peter Bottomley, who has now left this place, and other champions, including my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders), who has stood up for leaseholders so vocally over many years. The rationale for the ground rent approach that we have chosen is set out in a policy paper that we published this morning. The Select Committee will be able to scrutinise the draft Bill and provide suggestions—that is the whole point of the pre-legislative scrutiny process.
Jim Dickson (Dartford) (Lab)
I welcome the statement and the Minister’s great work. Leaseholders and freeholders across my constituency, in places like Greenhithe, Ebbsfleet and Stone, will hugely welcome the cap on ground rents and the rest of the detail on the draft Bill. May I impress on the Minister the need for us to go further on supporting those who live on unadopted or freehold estates, and to address poor practices by managing agents?
Matthew Pennycook
I am acutely aware of the strength of feeling on freehold estates. It cannot be an either/or when it comes to ensuring that residential freeholders and leaseholders get the rights and protections that they need. I can assure my hon. Friend that we are taking concerted action on both fronts.
Alistair Strathern (Hitchin) (Lab)
This is an historic day for leaseholders, many of whom were let down by a lack of action from the previous Government, which left them on the hook for exploitative levels of ground rent. One 90-year-old constituent of mine was hit with a 9,000% increase in his ground rent—that cannot be right. I am really glad that the Minister has shown such leadership to ensure that we put that right today. I know he agree that we need to go further on unadopted estates, too, so will he meet me to ensure that we bring those protections forward as swiftly and effectively as possible?
Matthew Pennycook
My hon. Friend has been an incredible champion for residential freeholders and leaseholders in his constituency. It is precisely because of ground rent increases of that scale that we are imposing, via this draft Bill, a maximum cash cap. I am more than happy to meet him to discuss the draft Bill and related matters.
James Asser (West Ham and Beckton) (Lab)
I declare that I am a leaseholder. Correspondence from leaseholders in my constituency, which makes up a lot of my inbox, mentions poor service, rising charges and homes that they can no longer remortgage or sell, causing financial difficulty. They will very much welcome today’s announcement, but will the Minister reassure them that the Government will rise to all the challenges that they face, swing the balance of power back towards homeowners, and tackle the real problem of service charges, through which leaseholders are being fleeced for poor-quality services that are often not even delivered?
Matthew Pennycook
I absolutely agree with my hon. Friend. His constituency is just over the river from mine, and is, in many ways, very similar. Day in, day out he will receive, as I do, complaints about service charge increases and onerous ground rent terms. That is precisely why we are taking action, in this Bill and elsewhere, to provide the kind of relief that he seeks for leaseholders. As I said, over the course of this Parliament we will end the system for good.
Mr Connor Rand (Altrincham and Sale West) (Lab)
Since my election I have worked to support leaseholders across my constituency, meeting residents at Maple Court, Budenberg and St James Court. When I surveyed local leaseholders on what they needed from the Government, the most common response was a reduction of the unfair charges that they face. Does today’s announcement not show that we finally have a Government who are listening to leaseholders and putting money back in their pockets?
Matthew Pennycook
That is absolutely right. In this area and so many others, the cost of living and addressing the affordability crisis faced by so many families across the country is the Government’s driving mission. For leaseholders, the reforms in the draft Bill will be transformative, particularly on ground rents, and will also introduce other protections.
Jack Abbott (Ipswich) (Lab/Co-op)
I thank the Minister for his genuinely groundbreaking statement. It feels like a little while ago that he visited Ipswich to talk to local people about the building safety crisis and leasehold. He was a shadow Minister and I was a parliamentary candidate at the time. Now we are capping ground rents, making it easier to move to commonhold, and scrapping leasehold for all new builds. Is this a case of a Labour Government keeping their promises and making a real change for many people up and down the country?
Matthew Pennycook
That is absolutely right, and I can assure my hon. Friend that we have given consideration to building safety remediation in the design of this legislation. I should make it clear that freeholders’ obligations to ensure that their buildings are safe are not related, for example, to the right to collect ground rents. Many buildings already operate a peppercorn ground rent, and they are subject to the same legal obligations as other buildings. We do not want to see the impact that some in the country may be concerned about.
Mr Jonathan Brash (Hartlepool) (Lab)
My constituents in Hartlepool are facing outrageous estate management charges, including a 49% increase in the administration fee by management company Sela just this year on the Marine Point and Longbranch Homes estates, as well as ongoing charges by Praxis on the Wynyard Mews estate. We have heard that time and again from Members today. When will we switch on the protections of the 2024 Act, and give the powers necessary for homeowners to challenge unfair charges, hold estate management companies to account and prevent families from being unfairly burdened?
Matthew Pennycook
I simply say to my hon. Friend: as soon as possible. Through these new consumer protections, we are bringing into force a regulatory framework that takes some time to get right, but I want those protections in place as soon as possible, so that we can provide protection to his constituents and others across the country who are suffering from the set-up that he describes.
Josh Newbury (Cannock Chase) (Lab)
Yet again, we have the wonders of hindsight from the Conservative party. In the immortal words of Beverley Knight, “‘Shoulda woulda coulda’ means I’m out of time”, and the Tories certainly were. I thank my constituents, including Rob from Heath Hayes and Daniel and Rebecca from Brereton, who have written to me to stress the need for these reforms. Like them, I very much welcome the draft Bill. Given that these proposals will not only reform a feudal system but cap ground rents at £250, does the Minister agree that this is another way in which this Government are putting money back into the pockets of families struggling with the cost of living?
Matthew Pennycook
I do not want to be too critical of the Conservative Government, because they did bring forward the 2024 Act, and they did move the dial when it comes to the public conversation about things like ground rents. But ultimately, they did not finish the job, and it will fall to a Labour Government to do so.
Business Rates
(1 day, 7 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Exchequer Secretary to the Treasury (Dan Tomlinson)
This Government want the best for Britain’s high streets. We know how central they are to the strength and vibrancy of our villages, towns and cities. We know how hard small business owners work, and we know how badly they were let down by the previous Government; shops were shuttered, council funding was cut, and business rates were left totally unreformed. We will not let decline continue, and we are already taking steps to arrest it.
We are protecting high street businesses from upward-only rent review clauses, and we are introducing a strong new community right to buy to help communities safeguard valued community assets, such as pubs and shops on their high streets. We are pushing ahead with high street rental auctions, which are helping to bring long-term empty shops back into use. Where premises have been vacant for too long, councils can auction the right to rent them; they can offer one to five-year leases to new businesses and community groups, helping to create more vibrant high streets. We also launched the winter of action to combat retail crime, a nationwide crackdown on crime and antisocial behaviour to protect shoppers and retail workers.
As well as that, we are investing in local communities through the £5 billion Pride in Place programme announced last September, and we are investing to support growth, including through the new local growth fund. Around one in three businesses continue to benefit from small business rates relief and do not pay any business rates at all, and 85,000 benefit from reduced business rates as this relief tapers. At the Budget, we extended the small business rates relief second property grace period for another two years, which is a really important change; it means that businesses expanding into a second property will retain the support as they grow.
We know that there is more to do. Before I turn to today’s announcements, I want to run through the three main components of the changes to business rates that are taking place in April for all businesses, and to explain the steps that the Government took at the Budget last year on business rates. The first change is the underlying, significant reforms to the system that the Chancellor set out as part of our commitment to transform business rates in England over this Parliament. We have implemented permanently lower multipliers for eligible retail, hospitality and leisure properties; the multiplier will fall by around 12p or 25% on 1 April. Some of this is a result of the overall reduction in multipliers between revaluation periods, but the further 5p reduction announced by the Chancellor is, on its own, worth nearly £1 billion for the 750,000 retail, hospitality and leisure businesses that are the lifeblood of our high streets.
We are paying for this support for the high street through higher rates on the top 1% most expensive properties. That includes many large distribution warehouses, such as those used by online retail giants. Let us be crystal clear: before our reforms, a mid-sized high street business faced the same multiplier or tax rate as a warehouse used by an online giant—that was the system we were left with. Now, the mid-sized high street business will pay around 38p in the pound, and the large warehouse will pay around 51p in the pound. That is 33% more. This is a sizeable reform, and it is here for good.
The second component of business rates announced at the Budget was the revaluation. All non-domestic properties are revalued independently every three years for business rates purposes. New valuations will come into effect in April. I thank the independent valuers in the Valuation Office Agency who carry out the work. The Government did not take the easy approach of kicking the post-covid revaluation into the long grass. Instead, we introduced a significant transitional support package, because we knew that some sectors were seeing large increases in their rateable values after the pandemic. We are capping bill increases in each of the next three years for those with the largest rises, and we are spending a total of £4.3 billion on that and other interventions.
The Government recognise that the rateable value of hotels has increased significantly since the pandemic, so our caps on increases are particularly important for them, but it is right that we look at this further. We will therefore review the way that hotels are valued, to ensure that it accurately reflects the market for this sector.
The third important context is the tapering away of the temporary pandemic relief for high street businesses. The previous Government went into the election with plans to withdraw that relief overnight in 2025. That would have been a harsh and sharp removal of support, pushing up bills for independent high street businesses overnight by 300%. That is reckless and irresponsible. Instead, we have taken a different approach. We extended the retail, hospitality and leisure relief this year—it is set at 40%—and we are unwinding it over the coming years. The jumping-off point for any business currently receiving a 40% discount is their current bill, not their bill without relief.
The Budget decisions led to the following outcomes. First, for over half of ratepayers, bills will be flat or will fall next year. Secondly, of the properties whose bills will increase from 1 April, most will see their increases capped at 15% or less, or at £800 for the smallest. Thirdly, bills will adjust to new valuations, but because of our caps, this will happen gradually, and high street businesses will benefit from permanently reduced multipliers for the long term. That is a fair and reasonable approach. As set out at the Budget, in total we are spending over £4 billion in the next three years to limit the scale of bill increases for those who are either losing reliefs or seeing their rateable values increase.
In the coming financial year, because of our interventions, the business rates system will raise the same amount of revenue as it was forecast to raise in spring 2025, before the Budget—not billions and billions more, as Opposition Members seek to claim. The forecast is more or less the same. That is the shape of the policy that we set out in the Budget. I hope you will forgive me, Madam Deputy Speaker, but I wanted to set that out in full, because business rates are rather complicated.
This Government want to go further to support pubs. Pubs are the cornerstone of so many communities, and they are essential to the social and cultural life of so many places across the country. I have heard clearly from Government Members just how important pubs are. I thank colleagues who have engaged constructively and privately with me on this issue in recent weeks. Whether they represent constituencies in coastal or rural communities, towns or cities, their representations have been invaluable. Their constituents should know that most of the politics that they see in the papers is not what matters; it is the conversations and the advocacy of MPs in the corridors of this place that can make the difference. In particular, my hon. Friend the Member for Bournemouth East (Tom Hayes) has been a relentless advocate for businesses in his constituency, as have my hon. Friends the Members for Isle of Wight West (Mr Quigley), and for Redditch (Chris Bloore). I thank my hon. Friend the Member for Warrington North (Charlotte Nichols) for her engagement on this issue, in her role as chair of the all-party group on pubs.
For too long, under the Conservatives, pubs have not had the support they needed. Opposition Members claim to care about pubs, but where were they when the number of pubs fell by 7,000 between 2010 and 2024? They were in government, and they let the number of pubs in our communities fall by a fifth. The Conservatives also allowed the revaluation to go ahead with a business rates methodology for pubs that no longer has the support of the sector. Before the Budget, every pub sector body was broadly signed up to the methodology used for valuing pubs, and lent its support to the principles set out in the Valuation Office Agency’s guide. Since the Budget, the same sector bodies have withdrawn their support. The Government acknowledge their concerns and will therefore carry out a review of the pub valuation methodology. The review will report in time to be implemented at the next revaluation.
While that review is ongoing, and given the challenges that pubs faced over the long term under the previous Government, we are stepping in to provide support for pubs in the next three years. Today, I confirm that, from April, every pub in England will get 15% off its new business rates bill, on top of the support announced in the Budget. Pubs’ bills will then be frozen in real terms for a further two years. That support is worth £1,650 to the average pub next year. It will mean that around three quarters of pubs will see their bills either fall or stay the same next year. This decision—
Madam Deputy Speaker (Caroline Nokes)
Order. I say very gently to the Minister that it was always open to him to ask for extra time, but we cannot find any record of him having done so. He has already got to 10 minutes, and he seems to have three more pages, so I will allow the Opposition spokespersons more time as well. This is an important statement, and I think that the hon. Member wants to finish, but it is very unfair to exceed the time by what I reckon will be 50%.
Dan Tomlinson
Let me apologise profusely for not letting you know in advance, Madam Deputy Speaker. This is the first time I have done one of these statements, and I will not make the same mistake again. I am glad that the same courtesy will be afforded to the shadow Chancellor, and I look forward to hearing a full 15 minutes of remarks from him. I am sure that they will be entertaining for us all. [Interruption.] I will make progress now, and we will hear more from the shadow Chancellor.
This decision will mean that the amount of business rates paid by the pub sector as a whole will be lower in 2028-29 than it is today. This is Independent Venue Week, so it is particularly appropriate that our package will apply also to music venues. Many live music venues are valued as pubs, and many pubs are grassroots live music venues. It would not be right to seek to draw the line in a way that includes some and not others, and I thank MPs who have made constructive representations on this issue in recent weeks. In the meantime, we are pressing ahead with wider regulatory reforms, building on the new licensing policy framework in the Budget, and we are working with the sector to ensure that local authorities are using that to ease licensing decisions on the ground. As part of our ongoing licensing reforms, for home nation games in the later stages of the men’s football world cup this summer, pubs and other licensed venues will be able to open until 1 am or 2 am, depending on when the game starts. We will legislate to increase the number of temporary events notices for pubs and other hospitality venues, whether to help them screen world cup games, or for other community and cultural events.
This Government are committed to helping pubs build sustainable business models over the long term. In the spring we will consult on further loosening planning rules to benefit pubs, helping them to add new guest rooms or expand their main room without planning applications. We will also continue to engage with the sector to ensure that other retail leisure and hospitality premises have planning flexibility—
Mr Speaker
Order. This is not acceptable. I have to be quite honest, because the other Front Benchers need time to respond. When a statement is meant to take 10 minutes, that is meant to be 10 minutes. If Ministers tell me otherwise in advance, I am willing to work with them, but they cannot just carry on speaking. Minister, I take it that you are now coming to the last page of the statement, not the middle pages—[Interruption.] No, I want you to bring it to an end, and quickly.
Dan Tomlinson
May I apologise, Mr Speaker, for not letting you know in advance that the statement would be running over 10 minutes?
Mr Speaker
Can I just ask, gently, have you not been advised that this is meant to be 10 minutes? Departments have people who are meant to advise Ministers on how long they have got. How on earth have you got a speech that is longer? It could be 20 minutes. It is unfair to the Members present, and there is other business. Please, this House should be shown the respect it deserves, and unfortunately we are not getting it. I am here to protect Members, not allow Ministers to take advantage.
Dan Tomlinson
Mr Speaker, I will wrap up very quickly, and I apologise again.
This Government also understand that things are not easy out there. Today’s announcement is about additional support for pubs, but we understand that this is a tough time for other businesses on the high street. We have already taken significant steps to acknowledge that and support businesses, including £4.3 billion of business rates support in the Budget. Over the past decade, consumers have changed their habits and are increasingly working from home and shopping online, and these trends continue to make it harder for high street businesses. I am therefore announcing today that later this year the Government will bring forward a high streets strategy to reinvigorate our communities. We will work with businesses and representative bodies to bring that strategy together. It will be a cross-Government strategy, and we will be looking at what more the Government can do to support our high streets.
To conclude, this Government have already started the work of reforming our business rates system, and any potential changes to business rates will be considered at the Budget in the usual way. Labour Members have the right economic plan for Britain and will back our high streets and our pubs every step of the way.
Sir Mel Stride (Central Devon) (Con)
Mr Speaker, I think the mood of the House is that 10 minutes from the hon. Gentleman is more than enough, although I am grateful to him for having given me advance sight of his statement.
Mr Speaker
You can have some extra time, if you need it, and the same applies to the Liberal Democrat spokesperson.
Sir Mel Stride
That is much appreciated, Mr Speaker.
Mr Speaker, was that it? After all this time, and weeks of telling our local pubs that help was on the way, this is all they get—a temporary sticking plaster that will only delay the pain for a few, while thousands of businesses despair as their bills skyrocket. The Labour party manifesto promised to completely replace the business rates system. Labour Members said that they would create a system that levels the playing field for our high streets and supports entrepreneurship and investment. Well, we are waiting.
So far, what we have seen is the exact opposite of what our local businesses were promised, with business rates soaring across the board. Despite the temporary relief announced today, pubs will still end up, in time, with bills more than 70% higher than they are today. The Federation of Small Businesses has calculated that the business rates of a typical medium-sized shop or restaurant with a rateable value of around £50,000 will increase by 71% over the coming years. For hotels, it will be over 100%.
Ministers expect those businesses to be grateful for some temporary relief, tweaks to multipliers and changes to licensing, but the Conservatives have been clear: support must be permanent. We have to cut business rates for our high streets to give certainty to local businesses. Measures must be far wider than those that the Government have announced today, applying not just to pubs but to the whole of the retail, hospitality and leisure sectors, which bring life to our high streets and town centres. We would not just introduce temporary reductions in rates, but completely abolish business rates for thousands of pubs, shops and restaurants across our country.
These huge tax rises introduced by this Government are a choice, but it does not have to be this way. The Government have chosen to increase spending by vast amounts, including on the benefits bill, with a benefits giveaway of over £3 billion at the Budget to abolish the two-child cap. These choices are why bills are going up, businesses are going under, jobs are being lost and our high streets are being hollowed out.
Let us not forget that this is not an isolated issue. Businesses are having to shoulder not just business rates rises, but a long list of other burdens that are being piled on by a Government who simply do not understand how businesses work. Many of those facing the highest increases in their business rates were among the worst impacted by the Chancellor’s jobs tax. They have already seen their business rates go up by as much as 140% last year, and they face yet more costs and red tape from the Government’s employment rights legislation. Analysis by UKHospitality suggests that, on average, as many as six hospitality venues could close every single day this year. That is a tragedy for our high streets and our communities. It is also a tragedy for our young people, many of whom look for their first job in the local pub or coffee shop, and who will find those jobs simply do not exist any more.
I ask the Minister, where is the help for the wider retail, hospitality and leisure sectors? Does what has been announced today include gastropubs, pubs with hotel rooms, bars, nightclubs and private clubs? Why are the Government happy to stand by and watch while businesses close and jobs are lost? When will the guidance be published for businesses, so that they know whether they will be eligible for this further relief and what their bills will be over the coming year? Why did Ministers not come forward with this relief for pubs at the time of the Budget, when they knew the level of increases that many businesses were facing? No new information has been provided between the Budget being announced and this statement. Can the Minister confirm that because this relief was not accounted for at the Budget, today’s announcements will need to be paid for through yet more borrowing?
The Government have proved today that either they do not understand the damage that they are doing or they do not care. Today’s announcement is far too little, far too late.
Mr Speaker
I appreciate that, but when Madam Deputy Speaker is in the Chair, I expect her to be given the same respect, so that when she says that time is up, you do accept that ruling. She felt that you were not stopping in time. I do not want to get into it now, but I will be speaking to the Chief Whip later.
Dan Tomlinson
It is just not credible for the shadow Chancellor to say that he would scrap business rates. What did the Conservatives do over the 14 years that they were in power? They kept business rates in place, they did not reform the system and, year after year, they introduced temporary reliefs that did not work or last. Some 7,000 pubs closed under their watch, in communities up and down the country, and they expect this House to believe that they were just getting around to it. Well, we do not believe that and we will not stand for it. Instead, this Labour Government will get on with the work of ensuring that we can get our public finances in order, getting borrowing down and continuing to support businesses, as far as we reasonably can, with our £4.3 billion of support.
The right hon. Gentleman asked about the guidance. That guidance will be published today—I hope it has been published already, but if not it will come very soon. Bills will be landing in the inboxes and on the doormats of businesses across the country in the coming weeks, and will reflect the changes that have been announced today. Yes, this will be scored in the usual way at the Budget. He talks about borrowing, but his plans to scrap business rates entirely, funded by made-up savings in other parts of public spending, would mean an increase in borrowing of £30 billion or so, which we could not afford.
The Labour Government have set out significant plans today to support pubs and those businesses that are the heart of our high streets that have been affected by the particular way that they are valued. As I said in my statement, pub business rates valuations are not the same as those for the rest of hospitality: pubs are valued on their takings, whereas other hospitality businesses are valued on their bricks and mortar. Industry bodies have highlighted concerns about how the costs are accounted for in this methodology. The Government want to look at that more closely, which is why we are launching the review and have come forward with this significant package of support for pubs today.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I welcome the support for music venues as well as pubs in my constituency. I also welcome the Minister’s engagement and willingness to speak to the Select Committee and to be questioned by us. I am sure, Mr Speaker, you would agree that it would increase the Minister’s favour in your eyes were he to do that with dispatch and not leave it for too many weeks, so I thank the Minister for his engagement on that.
On the wider issues of business rates, changes have been announced, but will the Minister outline the timeframe within which we will see a significant change? It was a Labour manifesto commitment to change business rates, but it will take time because of the valuation procedure. Does he propose to change that wholesale, and in what timeframe? Businesses of all types, including pubs, need certainty most of all, so that they know the trajectory in good time and can plan.
Dan Tomlinson
The review of the methodology for pubs that we have announced today will be conducted as rapidly as possible, and I hope that it will conclude this year. We also want to look closely at the methodology used to value hotels, which is similar but not quite the same as that used for pubs. I am sure we will get into that in Committee in due course. We want to ensure that those reviews about the changes to the methodology conclude in good time for the next revaluation, which is set to come into operation in 2029. My hon. Friend asks about the Government’s ambition to rebalance the system. As I outlined, last year’s Budget introduced a significant rebalancing, with the largest businesses having a tax rate multiplier that is 33% higher than that of typical businesses on the high street. I look forward to continuing to engage with hon. Members and businesses on business rates in the run up to the Budget in the usual way.
Daisy Cooper (St Albans) (LD)
If the Government are serious about saving the high street, then these measures can only be the start. Since the Government’s first Budget, we Liberal Democrats have been warning that high streets were at risk if the Government did not make the various changes that they have made over the past 18 months.
A number of questions arise from today’s statement. There are 11 pubs in my constituency, not all of which could be described as large, that have a rateable value of more than £100,000 because of the ridiculous valuation system, and they will still see their rates bills go up. There will be such pubs across the country, but is it correct that they will get only half of the percentage relief? Pubs can already have 50 temporary event notices a year, so extending that is simply a soundbite solution without a problem.
I am glad that the Government are looking at hotels, but what is the timeframe? The Samuel Ryder hotel in my constituency tells me that its bill is going up by 157% in the first year alone, and it will not be the only such hotel. Will the new formula for hotels be in place in April, or will they be left in limbo?
The statement still offers nothing for the rest of the retail, hospitality and leisure sectors—the restaurants, soft play centres and high street shops that made business, investment and hiring decisions based on the expectation of the full 20p discount. I welcome the announcement of a high street strategy, which we Liberal Democrats will engage constructively with, but will the Minister start now by heeding our calls to direct the Competition and Markets Authority to look at the energy market, which is blocking hospitality businesses and other sectors from getting the best energy deals? Will he also look at our fully funded proposal to slash VAT until April 2027, to give our high streets a boost?
Over the past few weeks and months, getting answers and data from the Government has been like getting blood from a stone. Just 90 minutes ago, I asked the Minister if he would tell us what he knew and when; he said he would, but he has not.
Finally, on the methodology for pubs, the use of fair maintainable trade—turnover—has long had its day, but may I urge the Minister to allow for parliamentary scrutiny? None of the current legislation relating to pubs or business rates allows for any scrutiny in this House or the other place. I asked the Government about the valuation methodology back in July 2024; it was one of my first written questions after the general election, but it has taken 18 months for the Government to listen. Will they please allow this House to scrutinise their plans so that we can get a long-term fix to save our pubs?
Dan Tomlinson
The 15% reduction will apply to all pubs. As the hon. Member knows, there are different caps for pubs depending on their size, but if bills had been frozen, no bill would have fallen next year. Instead, because we have decided to apply the 15% reduction, around 75% of pubs will see their bills either stay the same or fall. I acknowledge what she says about the very largest pubs, but we will still significantly reduce the increase that they would have expected this year. Their bills will then be frozen in full in years two and three of the period before the revaluation review—I am glad that the hon. Member is able to welcome that review. Its results will be implemented for future revaluations.
The hon. Member mentioned temporary event notices. We are trying to implement the recommendations of the licensing review, which was carried out in conjunction with pubs and other businesses in the sector, so although she may think that changes such as these do not touch the sides or make a difference, pubs themselves told us that—in addition to ensuring that we could support them in the right way fiscally—such changes would be welcome. I hope that pubs that are able to make use of them will do so.
The hon. Member also asked about the 20p multiplier. She is right that we legislated for a reduction of up to 20p, but we have to see these things in the balance. The decision to reduce the multiplier by 5p came with a £900 million price tag; reducing it by the full 20p would cost significantly more. Taken in the round, our package of support has a lower tax rate within the system—a lower multiplier—but also steps in with caps to support businesses if they are experiencing increases in their values or having to adjust to the slow unwinding of the pandemic relief.
The hon. Member asked about VAT. All I will say—she will expect this—is that when the Liberal Democrats had the chance in government, they put VAT up; now, they seem to be calling for it to go down.
Finally, on the question of what I knew and when, as the VOA set out, Ministers were provided with details of the increases in the valuations. However, at that time, we did not foresee—I did not foresee—that after the changes in the rateable values that were published at the Budget, pubs and their representative bodies would want to withdraw their support for the independently and previously agreed methodology. Given that and the Government’s judgment that there are issues, to which the hon. Member has referred, we thought it was right to pause, review the methodology and ensure that it is fit for the future for pubs and hotels.
Several hon. Members rose—
Mr Speaker
Order. We will run this statement to about 3.15 pm, so we can all help each other. Jim Dickson is going to be a good example.
Jim Dickson (Dartford) (Lab)
I thank the Minister for his statement. The pubs in my constituency, from the Growler Stop and Ivy Leaf in Dartford to the Bull in Stone and the Spring River in Ebbsfleet, are the heart of our community. Does the Minister agree that it is crucial that we find ways to protect them as places for people to come together and build communities, and that the package he has announced today—with its 15% reduction on the revalued bill and protection for the next three years—makes a big contribution to that goal?
Dan Tomlinson
I thank my hon. Friend for his question, and for his engagement on this matter on behalf of the businesses in his constituency. We are making a significant intervention for pubs because we understand the concerns that have been raised about the methodology. As we have heard from my hon. Friend, pubs play a central role in his community in Dartford, as they do elsewhere, and they are important to the health, life and vibrancy of high streets, towns and villages in constituencies across the country.
Dame Harriett Baldwin (West Worcestershire) (Con)
Putting up a sticker saying “No Labour MPs welcome here” is obviously a successful strategy if you want to get a change from the Treasury. However, what we have ended up with will lead to real complications on our high streets, because a pub that is helped by today’s announcement will be next door to a restaurant that serves alcohol and occasionally has music, which in turn will be next door to a music venue. Businesses on the high street will now be treated in a range of different ways, so why has the Minister chosen to single out pubs and music venues?
Dan Tomlinson
There is a significant overlap between the pub sector and live music venues. Many pubs serve as grassroots live music venues, with the result that they are often valued in a similar way for business rates purposes. We did not think it would be right to draw the line so tightly that some music venues, which happened to be valued as pubs, received the relief and others did not. We think this is a fair and reasonable way forward that reflects the reality on the ground.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I thank the Minister for this statement—it is welcome news, and many of the pubs in my constituency will welcome it. I received an email from the general manager of the Hampton by Hilton London Waterloo, who outlined that its business rates bill would increase by £296,000 next year and rise to £399,000 by year four. They want additional support, not just for the hospitality sector but for hotels. As the Minister knows, hotels contribute a lot to the local economy—they employ local people, their supply chain is local, and they house many of the people who come to visit our pubs, restaurants and other venues. Many of the hotels in my constituency house many MPs as well. Would the Minister be happy to visit one of those hotels along the south bank and have a discussion with its staff?
Dan Tomlinson
As a London MP, I do not get the joy of staying in a hotel in my hon. Friend’s constituency—instead, I get the joy of the Northern line on the route home. She asks an important question about hotels, which are valued in a different way from some other sectors. Their methodology is well established, but as with pubs, specific concerns have been raised, and the Government think it is right to review how hotels are valued for business rates purposes to ensure their valuations accurately reflect the market for those sectors. I intend to engage with hotel businesses and their representative groups on this important issue. Any future changes to business rates for hotels or other businesses will be considered in the usual way as part of the usual Budget processes.
John Glen (Salisbury) (Con)
Can I respectfully remind the Minister that when Jonathan Russell from the Valuation Office Agency came before the Select Committee, he was very clear that the impact of the rate rises was made known to the Treasury before the Budget? The VOA provided data drops over 12 months, which did not detail the rates for individual properties, but provided a clear overview at a central level and revealed that 5,000 pubs would see their rates double. It is just not credible for the Minister to say that the Treasury did not know what was going to happen, is it? It had a very clear view of the impact of the changes that it was imposing.
Dan Tomlinson
We were aware of the changes to rateable values that were going to be published at the Budget, which is why we came forward with a significant package of support to help businesses adjust to their new values. For example, yesterday, Waterstones came out to express its support for our changes to business rates, because the lower multipliers that we have put into the system will support its business. Businesses across the country are benefiting from those lower multipliers. As I have said, more than half are seeing their bills either flat or falling. We have also put in place significant transitional relief support, with caps this year, next year and the year after. That is because we were aware of the effect of the changes to valuation, although I was not aware of what would happen subsequently with the pubs and their views. I have engaged with them on the methodology, and because of that we are launching this review. We think it is right to look carefully at that methodology.
Samantha Niblett (South Derbyshire) (Lab)
Last Friday, I met Laura at the Malt in Aston-on-Trent. She started as a pot washer, went to university, worked the whole way through and is now a tenanted landlady. She shared the amount of hours she works, and she will welcome the review of the business rates methodology, not least because she feels that she works all the hours God sends and she was due to have to pay a lot more. Will the Treasury look at a couple of key bits of feedback that she gave me? One is about prices for alcohol in supermarkets. She could have longer licensing hours, but she cannot compete with people staying at home drinking. The other was about a cardboard tax. She has to pay for packaging for brewery deliveries, but she also has to pay local councils to pick up the packaging, so she would welcome something where the breweries reuse existing crates.
Dan Tomlinson
I thank my hon. Friend for her engagement on behalf of the businesses in her constituency. She raises some interesting issues on tax, regulation and licensing when it comes to pubs and hospitality. I do not want to pre-empt the work of the high street strategy, which will be a cross-Government effort with the Home Office, the Department for Business and Trade, the Ministry for Housing, Communities and Local Government and the Treasury working together, but we want to hear about these things from businesses on the ground. I look forward to engaging with Members of Parliament from all parties as we work on the strategy in the coming months.
Steve Darling (Torbay) (LD)
This is a baby step in the right direction, but the hospitality, tourism and retail industry in Torbay continues to trade in a hostile environment. One leisure provider in Paignton shared with me that they have a £44,000 gas bill. Will the Minister share what the Government are doing to tackle these high energy prices that many suffer from?
Dan Tomlinson
That is a very good question, and it allows us to reflect on the fact that back in 2009, Nick Clegg, the former leader of the Liberal Democrats, said that we did not need to invest in nuclear power, because it would not come online until the mid-2020s. We are in the mid-2020s now, and we would have benefited from long-term investments in clean and green power, driving down energy bills for consumers and for businesses across the country. We are now taking the long-term steps needed to invest in our energy security and bring bills down. That is incredibly important, and I hope that the steps we have taken on business rates and tax can be welcomed and that businesses in the hon. Member’s constituency and across the country can engage through the various sector bodies with the high street strategy that I have announced.
Lizzi Collinge (Morecambe and Lunesdale) (Lab)
I am sure that pubs and venues, such as the Alhambra in Morecambe, will welcome today’s announcement. The Minister might be aware of my letter to the Chancellor on the wider hospitality sector. On the high street, we know that consumer demand has changed, so businesses must change, too. Will the Minister tell me how the strategy will work with businesses and their representatives, such as the Morecambe business improvement district or Sedbergh economic partnership, to pivot businesses to meet the new market reality?
Dan Tomlinson
We are keen to hear from businesses, large and small, about what more the Government can do to support high streets. We want to engage on lots of issues affecting high streets, including planning, licensing and crime, and the direct investment that we can make in our communities. There is a lot to do, because we had 14 years under the Conservatives where our high streets were in decay and shops were shutting. We had 7,000 pubs closing and businesses struggling across the country. We know that there is work to do, and I look forward to working with my hon. Friend and other Members on it.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
After all the briefing in the newspapers, we were all hopeful of something more significant, but we have a somewhat flaccid statement from the Minister. The statement not only totally ignores the fact that some pubs are having to deal with a threefold increase in business rates, but it does nothing to help high street retailers. Will the Minister be coming back to the House to make another U-turn to help our high street retailers?
Jim McMahon (Oldham West, Chadderton and Royton) (Lab/Co-op)
The support package for pubs is welcome news. The Whitegate Inn in Chadderton saw its value increase from £194,000 to £330,000, and the Halfway House in Royton went from £20,000 to £57,000. The Minister knows that the pressures being felt by pubs are felt by the whole of hospitality. For instance, the Egyptian Room food hall in Oldham will jump from £142,000 to £175,000. It is all part of the same ecosystem. The Government could and should have included that wider package in the announcement today, but I urge the Treasury, even at the second attempt, to get it right and have a wider support package for the whole of hospitality.
Dan Tomlinson
We have implemented a wider support package for businesses across the country as a result of the changes to valuations coming in from 1 April, which unwind the valuations that were last looked at during the pandemic. Some 56% of properties will see their bills fall or stay the same in April. The easy thing to do would have been to kick the revaluation into the long grass and bury our head in the sand, but we wanted to make sure that businesses, particularly those that have seen their valuations fall, got the benefit of having up-to-date values post pandemic. Then, because we were aware of the changes coming down the track, we stepped in with £4.3 billion of support. It means that our net revenue from business rates this year will be broadly the same as was forecast before the Budget.
Sarah Olney (Richmond Park) (LD)
My constituency has a diverse and varied hospitality sector that supports lots of different communities, including those who do not go to pubs, such as parents of young children, people who do not drink, faith groups and—dare I say—people who do not want to watch the football. They have different needs. They want to go to cafés and to soft play centres. Why are the Government focusing this relief just on pubs? Can they not come up with a package that provides better business rates relief for those businesses that will still be struggling with the rates hike?
Dan Tomlinson
The hon. Member may not wish to watch the football, and that is fine—that is her decision—but she will be interested to know that we are consulting on whether we can extend the power over longer licensing hours to other events. She will have to let me know if there are other events that she would like to go and watch in a pub, and that can be part of the consultation.
I have already answered the specific question that the hon. Member raises in a way, but I am happy to repeat myself. It is the case that pubs are valued differently than other sectors on the high street. It is also the case that they have suffered in the past 14 years, with 7,000 pubs closing and significant pressures. More broadly, we have put in a package of support, as I have outlined already.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
I know that many of the businesses in the Walthamstow beer mile that are also music venues, as well as our brilliant Rose and Crown pub and the Wood Street Bear, will welcome what the Minister has said today, and rightly so, because pubs are important. I must take issue, however, with his metric that pubs are somehow the only cornerstone of community life in this country. I join colleagues in asking for further support for the hospitality industry, in particular those small independent venues, such as cafés, community centres and soft play centres. I am sure he does not want to be the Minister responsible for sending toddlers into pubs because the other places that their parents might take them to during the day have closed down. That would not be in anybody’s interest. May I make a plea for him to revisit his exclusion of these smaller, independent chains from the hospitality relief that he is talking about?
Dan Tomlinson
I would not want to be the Minister who caused that to happen. My hon. Friend has made a very good point, and, as the parent of a young child, I can say how much I value soft play, even though it is rather exhausting at times.
I have set out the specific reasons why we have taken this approach to pubs and live music venues, and I am glad that my hon. Friend welcomes that for the businesses in her constituency. More broadly, the Government did come forward with £4.3 billion of support, most of which is coming this year, and we will of course continue to engage with businesses and with parliamentarians on this important issue in the run-up to future Budgets.
Mark Pritchard (The Wrekin) (Con)
I am not sure whether the Minister has volunteered yet for “Strictly Come Dancing”. Today, from the Government of U-turns, we have seen a half turn or a reverse turn or a pivot, as it is known in ballroom dancing circles.
The Minister will recall that I invited him to join me on a pub crawl in Shropshire. So far he has not responded, and perhaps he should not respond, because for many pubs in Shropshire his statement was too little, too late, and they have already decided to close their doors. The independent pub chains have to make investment decisions, and they have put those off. As for the wider business review, may I appeal to the Minister—on behalf of the leisure sector, the retail sector and the hospitality sector—for the timetable to be brought forward from 2029 so that people can plan for their business futures?
Dan Tomlinson
The hon. Gentleman has asked about timing. We have announced this decision today in time for new bills to be issued from 1 April that reflect the changes the Government have proposed, because we have listened and because we have carried out that engagement in recent weeks. I am not sure that I will take the hon. Gentleman up on his offer of a pub crawl just yet, but I hope he will be able to welcome the support we have provided for the pubs that he raised with me in questions earlier this year.
Andy MacNae (Rossendale and Darwen) (Lab)
I thank the Minister for his positive engagement and his willingness to listen. It has made a big difference. His announcement will be a big relief to pubs throughout my constituency, and it shows that the Government are on their side. However, he has rightly recognised the need for more fundamental reform, so I welcome the announcement of the pub and hotel valuation methodology reviews and the high street strategy. Does he agree that this is an opportunity to think further about how the business rates system, and indeed the tax system as a whole, could be used to actively incentivise entrepreneurs to start and grow businesses and create jobs in the places where our communities need them most?
Dan Tomlinson
I thank my hon. Friend for his persistent and powerful engagement on these matters. He is an expert on all things high street and business rates, as I have come to know. Let me point him to the transforming business rates work that the Government have been publishing and advancing. One possibility that we are considering carefully and talking to businesses about is changing the business rates system from a slab system to a slice system. At present, if a business goes over an individual threshold, the new tax rate will then apply to the whole value of its property. Reform is always tricky, but we want to investigate whether changing to a slice system, whereby the tax rate would not involve those big stepped increases, would support investment by businesses on high streets in Rossendale and Darwen and across the country.
Lisa Smart (Hazel Grove) (LD)
William Robinson is the managing director of Robinsons Brewery, on my patch. His is the sixth generation running a brewer, a bottler and more than 250 pubs, inns and hotels across the north-west and north Wales, as well as an important bottling plant in Bredbury. William has written to tell me that the present system is destroying confidence, businesses and future investment, and therefore jobs. Does the Minister accept that repeated changes such as moving from the removal of reliefs to this package, including frozen bills and a temporary 15% discount, have created huge uncertainty and anxiety for pubs as they are making important investment and staffing decisions?
Dan Tomlinson
There is a big picture that we need to move to with business rates: making sure that, permanently, we have differential treatment for retail, hospitality and leisure businesses and those with higher value, particularly the large online warehouses that are causing the economic rebalancing that we do not really want to see and that is harming our high streets. The Government set out the reforms in the Budget in respect of the 5p reduction in the multiplier. As I have explained to Members, that is a transfer of nearly £1 billion in tax away from the high street—less tax—towards the larger online giants. I want to continue to engage on all tax matters that affect the high street in the run-up to the next Budget, and decisions will, of course, be made in the usual way.
Mr Clive Betts (Sheffield South East) (Lab)
I welcome the changes that the Minister is introducing for pubs and music venues. Can he assure me that the changes for music venues will apply to Sheffield arena, which currently, under the proposal, is being treated like an Amazon warehouse? Will he also look at an issue I wrote to him about? Handsworth Junior Sporting Club, a small local voluntary sports club in my constituency, is faced with a 60% increase in business rates. Surely that cannot be right. It needs to be looked at again.
Dan Tomlinson
As I have said, some live music venues are valued in a similar way to pubs, and will therefore be included in the relief. We think it fairest to provide the same level of relief to all music venues. The detail will be set out for the business in his constituency and others to see in the guidance, which I hope, if it has not already been published, will be published at some point today.
Dave Doogan (Angus and Perthshire Glens) (SNP)
It does not say “English Business Rates” up there on the annunciator, so I assume the Minister can confirm that the budget—the departmental expenditure limit—for the Ministry of Housing, Communities and Local Government will increase with the new money, which will mean Barnett consequentials for the devolved nations. What will the quantum of that be, and when will it be delivered?
Dan Tomlinson
The Barnett consequentials of this decision will be set out in the usual way and through the usual process.
Jenny Riddell-Carpenter (Suffolk Coastal) (Lab)
I thank the Minister for his statement, and I give my personal thanks to the Members on both sides of the House who have been advocating very strongly with him, including my hon. Friends the Members for Redditch (Chris Bloore), for Gower (Tonia Antoniazzi) and for Isle of Wight West (Mr Quigley). I also thank the businesses and, in particular, the pubs in my constituency: the Anchor at Walberswick, the Froize Inn, Deben Inns, and many, many more. I welcome today’s announcement, but we can do more and go further, including in the strategy, to look at lowering VAT for hospitality and lowering the alcohol duty, which could perhaps be offset by a higher alcohol duty in supermarkets.
Dan Tomlinson
This year, we are three years on from the changes in alcohol duty that the last Government implemented. I am not sure whether they adopted the same policy position, but we made it clear that it would be reviewed after three years. As part of that usual process, we will be reviewing the reforms that were made in 2023. If my hon. Friend or other Members want to write to me about changes that they think should be made, I will, of course, be happy to receive that correspondence.
Sarah Bool (South Northamptonshire) (Con)
Labour’s response to high street struggles is a strategy later this year to look at
“what more the Government can do to support our high streets.”
Well, I will save them the trouble. They should adopt the Conservatives’ plan, and scrap business rates on those high streets.
Dan Tomlinson
I am not sure what the question was, but the Government have set out a plan that is fair and reasonable and does not engage with the fantasy economics that Opposition Members keep peddling. They still have Liz Truss in their party, and it shows, because instead of having a sensible business rates policy that is affordable and works for the long term, they have made-up spending cuts and pretend that they could afford to abolish a tax altogether. We know that that will not work. We know that they will not deliver it, not least because they had 14 years to make changes of that magnitude and never even bothered.
Alex Sobel (Leeds Central and Headingley) (Lab/Co-op)
As co-chair of the all-party parliamentary group on music, in Independent Venue Week, I thank the Minister for extending the support to music venues. Will it include multi-use venues such as the City Varieties music hall in my constituency, where I attended the Holocaust memorial event on Sunday, and the Howard Assembly Room? Has the Minister considered the impact on music studios, which are also a core part of our creative industries?
Dan Tomlinson
I thank my hon. Friend for his support for the announcements made today. Because I do not know those specific independent venues, it would not be right for me to comment here, but he is welcome to check the guidance and to encourage the venues to check it online. We have made it clear that our policy intent is for pubs and music venues to be covered by these changes.
Adam Dance (Yeovil) (LD)
Many business representatives who met me after the Budget, including Shaun who runs Lanes hotel, will welcome the decision to review the way in which hotels are valued, but their biggest concern is about staying afloat today. A review will not make a difference to the bills that business owners such as Shaun are facing right now. What help will the Government offer rural hotels that are fighting to stay afloat, and does the Minister recognise the uncertainty that all this flip-flopping is creating for the hospitality sector?
Dan Tomlinson
We have set out a package of support for hotels and all other businesses. It is worth around £2 billion this year and £4 billion over the next three years. If there are hotels in the hon. Gentleman’s constituency that are facing significant increases in their rateable values this year, the increases in their bills will potentially be many multiples lower, because bill increases are capped at either £800 for small businesses or at 15% or 30% for the largest. It is really important that we distinguish—I am not saying that he is not doing so, because I am not sure of the detail—between the change in rateable values and the change in bills. That is important, and it sometimes gets lost in this discussion.
Chris Curtis (Milton Keynes North) (Lab)
I welcome the engagement from the Minister and today’s fantastic announcement, and invite him to come and have a pint at the Dolphin in my constituency, where I used to pull pints. Just down the road is William Cowley, a business that has been in my constituency since 1870. It produces the vellum on which much of the history of this nation has been written, including royal weddings, births and deaths; royal patents; freedoms of the city; and many Acts of Parliament. It is worried about its viability going forward, particularly after the revaluation of business rates. Will the Minister agree to meet me to have a discussion about how we can better support heritage businesses going forward?
Dan Tomlinson
One of my favourite things to do is to meet my hon. Friend to discuss a whole range of matters, so I will happily discuss this issue with him too. We have been in correspondence on this business already, so I hope that he passed on the messages from me about the need to check that there is a difference between the increase in the RV—the rateable value—and the increase in business rates bills. I hope to be in one of the fastest-growing cities in the country before long.
Mike Wood (Kingswinford and South Staffordshire) (Con)
This U-turn delivers some much-needed temporary relief for a lot of pubs, but it does not deliver the permanently lower bills that the Prime Minister promised. It also does nothing at all for the other hospitality firms in our constituencies—the cafés, restaurants, clubs and guest houses that are facing crippling rate rises because of this Government’s choices. Mr Speaker, is it not a sign of the incompetence of this Government that they cannot even get their U-turns right?
Dan Tomlinson
I do not think that was a question for me. It was a question for you, Mr Speaker.
Alex McIntyre (Gloucester) (Lab)
I note that Reform Members have already made it to the pub ahead of the statement, perhaps to celebrate the latest defection from the Conservative party, but I thank the Minister for today’s statement. Since I got elected last year, I have been running a campaign to open up our empty shops in Gloucester and show that we are open for business. May I ask him to expedite the high street strategy to make sure that we are capitalising on the fantastic opportunities in my city to turbocharge regional growth in my area and make sure that everyone can be proud of their high street?
Dan Tomlinson
I really look forward to working with my hon. Friend on important matters such as the high street strategy, and I hope that he has been in conversation with his local authority and businesses about some of the other measures that the Government are introducing and the issues that are important to him. High street rental auctions have real potential to be powerful in forcing shops that are being left vacant back into use. The introduction of the community right to buy should also be an effective change, and I hope that we will be able to see it implemented in his constituency and across the country.
Layla Moran (Oxford West and Abingdon) (LD)
Can the Minister understand, from the point of view of a small independent retailer, that the way that this announcement has been done—with the package coming forward late in the day—has led to a perception of unfairness? I was contacted by one owner, who pointed out that her bills have gone up by over £500 a month. She compares herself with Harrods and Selfridges, whose bills have gone down. Although she is pleased that local pubs and hospitality have got some help, her business sits alongside them and is part of the same community. What does the Minister have to say to that independent retailer, who is part of the backbone of our economy? When is the help coming for her business?
Dan Tomlinson
I do not know the details of that individual business owner and by how much her rateable value has increased, but we have implemented the permanently lower multipliers. They are now 33% lower than the tax rate that is paid by the online giants. That is a big change to the system that this Government have delivered, and which previous Governments ducked time and again. We have implemented our transitional relief caps this year, capping increases at £800 or at 15% or 30% for the largest businesses. We will continue to engage with businesses on what more we can do on a whole range of issues.
Mr Jonathan Brash (Hartlepool) (Lab)
Of course this package of support for pubs and music venues is most welcome, and I know it will be welcomed in Hartlepool, but I have been contacted by numerous businesses, including the Marine hotel in Seaton Carew, whose business rates will basically double this year. Hartlepool is a town of entrepreneurs and innovators, but they cannot afford that. Will the Minister look again at the wider support package that we could put in place for hospitality?
Dan Tomlinson
I would be happy to have a further conversation with my hon. Friend about this issue. It is really important that no hotel will see its business rates bill go up by 100% this year. It may be that the Marine hotel has seen a really significant increase in its rateable value, and we will review the methodology because of the large increases. We are aware of those, and we want to work on this issue with the hotel industry. It sounds like the business is probably one of the larger ones, so its increase will be capped at 30%. If it is a smaller business, the increase may be capped at 15%. That is the difference that this Government are making. If it is a business receiving RHL relief, it would have had that relief removed overnight under the previous Government, with a 300% increase in rateable values for businesses in 2025.
Martin Vickers (Brigg and Immingham) (Con)
If the Minister were to visit my constituency and come with me to the George Inn in Barton-upon-Humber, we would go inside and he would immediately recognise it as a typical English pub, yet it is also a hotel—the last hotel in the town. Could the Minister reassure the proprietor at the George? Will he receive early relief, or will he have to wait for yet another review?
Dan Tomlinson
The definition of “pubs” that is used for the changes that have been announced today is the same one that was used when the previous Government implemented a relief. I believe that that was in 2017, so it is a long-standing definition. I encourage the hon. Member to find that on the gov.uk website and send it to the relevant business. I do not know the precise details of the pub that he mentions, but we are sticking with the long-standing definition.
Andrew Pakes (Peterborough) (Lab)
We in Peterborough are fond of a pint, so I thank the Minister and his team for their engagement today and in the months leading up to this decision. We are also proud of our independent beer festival, and we are home to Oakham Ales. Can the Minister reassure us that as he looks at the strategy for the high street and the rules on business rates, he will have due regard to the needs of the community sector—both the pubs that are going into community ownership, and the small businesses and others that provide communities on our high streets?
Dan Tomlinson
That is a really important point. There are many independent pubs up and down the country, as well as bigger chain pubs, and it is right that the support that the Government are bringing forward will support both. Around 75%—definitely above 70%—of independents and chains will receive support this year, ensuring that their bills are either flat or falling. We want to make sure that we are protecting both the independents and the chains.
Sammy Wilson (East Antrim) (DUP)
I welcome the statement. It is a pity that it does not include hotels and restaurants, because the hospitality sector in Northern Ireland is under massive pressure due to taxes and the regulations that have been imposed. The Minister has confirmed that this will be new money and therefore there will be a Barnett consequential. Can he indicate how much that will be? More importantly, can he ensure that the Sinn Féin Finance Minister spends the money for the purpose that was intended, rather than spending it for other purposes, which he has done in the past?
Dan Tomlinson
It is not for me to tell the devolved Administrations how to spend their money, but if the right hon. Gentleman writes to me, I will be happy to write back to him with the details of the consequentials following the decision set out today.
Chris Webb (Blackpool South) (Lab)
As chair of the all-party parliamentary group on hospitality and tourism, I thank the Minister for his constant engagement with me since the Budget, because I have been able to raise concerns directly with him from the industry, UKHospitality and others. This statement will be welcome for many pubs in Blackpool, including our small music venues, such as the Bootleg. You may want to visit it sometime, Mr Speaker, and I hope you get well soon. We know that the hospitality sector has been struggling. It is on life support after a decade of neglect from the previous Government, and it needs more support. Will the Minister continue to engage with me, the APPG and UKHospitality on what the high street strategy can do, so that we get it right this time?
Dan Tomlinson
My hon. Friend is a powerful and strong advocate both for the businesses in his constituency and for the hospitality sector more broadly. I thank him for our conversations; I think we spoke before Christmas as well as in recent weeks. I will of course continue to engage with him and the hospitality sector on tax issues, as is typical for a Tax Minister in the run-up to a Budget, but I also want to talk more about the broader support the Government can provide, working across Departments, as part of the high street strategy we have announced today.
Bradley Thomas (Bromsgrove) (Con)
This is another U-turn that does not go far enough, because as a result of the choices made by Labour, energy bills are up, taxes are up and confidence is down. That is corrosive, and it is having a particularly corrosive effect on cafés, restaurants, hotels and small retail outlets. Will the Minister announce broader support for those businesses to alleviate the pressure of business rates or, better still, scrap them once and for all?
Dan Tomlinson
Over and over again, Conservative Members profess to be paragons of fiscal virtue, yet stand up in this place and say they want to cut taxation, which in effect means more and more borrowing. We have in the past seen the problems caused by Conservative Governments who let borrowing run out of control, cause interest rates to surge for families in our constituencies, send our economy to the dogs and harm living standards. We will not stand for that—we will not make the mistakes they made—and we will come forward with proportionate changes that support businesses, but that make sure we can continue to keep our public finances on a sustainable path.
Rachael Maskell (York Central) (Lab/Co-op)
York is a difficult place in which to trade, and with two thirds of businesses being independents, many will not get the relief the Minister has announced today. I sent through a paper with a spreadsheet of every business in the business improvement district showing that this just is not meeting their needs of those businesses, which will close. Will the Minister look at that detail, and ensure that resilience and support are built in, because York has a very strong retail reputation, but it is about to be challenged unless more help comes its way?
Dan Tomlinson
I am always happy to look at and respond to the correspondence I receive from hon. Members. I am aware of the issue my hon. Friend raises, which she has been consistently raising in this House. We came forward at the Budget with a significant package of support, and many small and independent businesses are small enough not to pay business rates because we have the small business rates relief in place, and we are extending that relief to support businesses that could extend to a second premises.
Helen Morgan (North Shropshire) (LD)
I declare an interest in that my husband works for an independent wine merchant.
Today’s news will be very welcome for the many pubs in North Shropshire that have been pushed to the brink over recent years by national insurance contributions increases, high energy bills and now business rates. However, this will not help shops or hotels such as the lovely Pen-y-Dyffryn in my constituency, the rateable value of which has nearly quadrupled. Will the Minister outline the timeline for his review of hotels in particular, and what other help can be given to retail and hospitality businesses?
Dan Tomlinson
We want to work with the hotel sector on the review I have announced today. We will make sure it reports in time to be implemented by the Valuation Office Agency by the date of the next revaluation. For hotels at the very far end of the distribution of changes in rateable value—with an increase that large, I believe the one the hon. Member mentioned is—that is precisely why we have implemented the support we have. If it is worth less than £100,000, its increase will be capped at 15% this year; if it is worth more, its increase will be capped at 30%. We are aware that that is still an increase, but it is significantly less than it would have been if we had not stepped in to provide that support.
Catherine Atkinson (Derby North) (Lab)
It is understandable that covid-era business rates support needs to come to an end, and the 15% cap on increases for most hospitality businesses is a really important protection. I particularly welcome the Government’s acknowledgment of the central role that pubs—such as the Paddock in Chaddesden, the White Swan in Littleover and so many more across Derby—play in our communities. Will the Government continue to listen to and work with pubs, so that we can ensure they have certainty for the long term?
Dan Tomlinson
Yes, we will continue to work with pubs, because we do value them. I want to be clear, however, that we value all of the businesses on the high street. We value our hospitality businesses, our retail businesses and those that work in leisure and soft play, which I believe was mentioned earlier. All the different businesses that provide life and vibrancy on our high streets are important. I have set out the particular challenges of the rateable value methodology for pubs and the big challenges they have faced over the last 14 years, with 7,000 closing, but we want to make sure we continue to do all we can to support high streets in my hon. Friend’s constituency and across the country.
Ben Lake (Ceredigion Preseli) (PC)
Dozens of small businesses across Ceredigion and north Pembrokeshire will have listened to the Minister’s statement with interest. Could he please reassure me that the consequential funding that he has confirmed will go to Welsh Government will be determined and communicated in time—by 1 April—to allow the Welsh Government to allocate additional support to those small businesses?
Dan Tomlinson
I am sure that the consequentials and their implications will be set out as soon as is practically possible.
Steve Race (Exeter) (Lab)
As I think you know, Mr Speaker, Exeter and Devon have some of the finest pubs, independent breweries and live music venues in the country. I thank Exeter Brewery and the Exeter Phoenix arts venue for their representations to me on these issues. I am pleased that, on top of the support in the Budget, pubs will get an additional 15% off, and that will apply to music venues as well, which is very welcome. Does the Minister agree with me that the £4.3 billion of support in the Budget, and the support today, stand in stark contrast to the record of 7,000 pubs closing under the previous Government?
Dan Tomlinson
I very much agree with my hon. Friend. What happened in the past is in stark contrast to the reform of our business rates system under our Government. We have set out long-term differences in the multipliers—also known as the tax rates—faced by high-street businesses and those faced by the online giants and the largest businesses. Typical businesses on his high street will have a significantly lower tax rate than that faced by the largest online warehouses. I understand that bills may still increase because of the winding down of pandemic relief and the increase in rateable values, but that underlying reform of the system is there, and it is there for good.
Monica Harding (Esher and Walton) (LD)
Tom Duxberry has run Marney’s village inn, a brilliant and much-loved local in Weston Green, for 17 years. Its rateable value is set to rise from £20,000 to £50,000—a 175% increase—and he is facing rent rises; inflation on beer, wine products and energy; and customers with less money in their pocket. Did the Government not see his plight right from the get-go, and what more help can they give him with all those pressures?
Dan Tomlinson
Because of the interventions announced today, the total business rates bill for pubs will fall over the coming years. As the hon. Member mentions, we are giving individual pubs a 15% reduction on their new bills, and then a real-terms freeze for the next two years. That is a significant intervention because of the significant challenges that pubs have faced—7,000 pubs have closed—and the issues with their RV methodology.
Jack Abbott (Ipswich) (Lab/Co-op)
I welcome this really significant additional support for pubs and music venues, on top of the £4.3 billion given to the wider sector at the Budget. I thank the Minister for all the conversations that he has had with me over the last few weeks, and I also thank Dan and Ness from the Greyhound, who have engaged so positively and constructively with me. It is fair to say that the business rates rebound inherited from the previous Government led to a mixed picture across Ipswich, but the Greyhound was particularly unfortunate. Could the Minister lay out his thinking behind the review of this process?
Dan Tomlinson
I thank my hon. Friend for his advocacy on behalf of the pubs and businesses in his constituency. Concerns have been raised about the methodology. We have looked into that in recent weeks, and we think it is right to review it. That review will take place in the coming months. It will definitely report in time for the new revaluation, so that we can have a long-term, sustainable methodology for pubs, making sure that they are valued in the right way for the long term, from 2029 onwards.
Mr Adnan Hussain (Blackburn) (Ind)
The Minister’s statement will certainly be welcomed by many pub owners who have written to me in recent weeks, anxious about rising costs, but what about the rest of the high street? Small businesses are the heartbeat of Blackburn and the engine of our country. Already battered by online shopping and rising costs, they are being squeezed from every direction. Why are the Government making it harder for Blackburn’s independent shops to survive, instead of delivering the permanent cuts that our town centres need to flourish?
Dan Tomlinson
Around one in three businesses will continue to benefit from small business rates relief, and so will pay nothing at all. As for independent shops that are above the threshold and in the business rates system, many just above the threshold will be on the taper, and others will benefit from the support that was set out at the Budget.
Jacob Collier (Burton and Uttoxeter) (Lab)
I welcome support for pubs in Britain’s beer capital of Burton and Uttoxeter. I thank the Minister for his continued engagement with me on this issue; I know that we will continue to speak about measures that could be included in the future, such as draught relief. The Minister will remember that I stressed the importance of hospitality more widely, and of breathing life into our high streets, so I welcome the high-street strategy announcement. How can businesses feed directly into it, so that we hear from those affected?
Dan Tomlinson
My hon. Friend is a proud and strong champion of the businesses in his constituency—the brewers, pubs and all those in the hospitality industry. I am sure that businesses in his patch would do well to feed in via him, as he is such a good representative.
Dr Roz Savage (South Cotswolds) (LD)
There are many fine pubs in the South Cotswolds, such as the Old George Inn in South Cerney and the Rattlebone Inn in Sherston. For many of our small rural communities, these are the only freely available spaces where people—faith leaders and football fans alike—can meet, yet many pubs are really struggling. Although I welcome today’s statement, £1,650 per pub is better than a poke in the eye, but not by much. Would the Minister be kind enough to meet me to discuss how his Department could further support the pubs of the South Cotswolds? Given today’s run-ins with the Chair, I suggest the Trouble House near Tetbury as a suitable venue.
Dan Tomlinson
I hope that I will be out of trouble before too long. We will double the hospitality support fund, providing £10 million of funding over the next three years. That fund aims to help more than 1,000 pubs diversify their business model, improve efficiency and productivity in the sector, and support people who are furthest from the labour market in moving into jobs in hospitality.
Lewis Atkinson (Sunderland Central) (Lab)
I welcome the 15% off business rates for pubs in Sunderland. As we are a music city—live music is core to our identity and regeneration—I particularly welcome the steps that the Minister has announced for live music venues, and his engagement with me and the Music Venue Trust. Could he say a little bit about the methodology for music venues? I know that he will look at the pub methodology, but would he consider discussing the future methodology for music venues? We could perhaps do that at a gig at Independent, or over a pint at the Ship Isis afterwards.
Dan Tomlinson
I thank my hon. Friend for his representations on behalf of businesses in his constituency. The Government are clear that we will look at the pub and hotel methodologies specifically. I would be happy to have a conversation with him about issues for other sectors, but the Government will focus on pubs and hotels. However, I would be happy to meet, to see if I can make it up to his constituency.
Carla Lockhart (Upper Bann) (DUP)
Unfortunately, the Sinn Féin Finance Minister in Northern Ireland has not got the memo on the need to support our hospitality sector, and is pressing on with a rates revaluation that will see a hotel in my constituency experience a 267% rate rise. Will the Minister commit to sharing this Government’s hard learning about rates, and will he go further and reduce the VAT rate for hospitality as well?
Dan Tomlinson
The hon. Member is right that each devolved Government have full control over the structure and level of business rates in their part of the country. They set a business rates policy, retain all the revenues generated, and determine how they are spent.
Jonathan Davies (Mid Derbyshire) (Lab)
When we had an urgent question on business rates last week, I raised the issue of grassroots music venues, so I am pleased that the Minister confirmed today that there will be 15% off business rates for pubs and grassroots music venues. As he seeks to build on the permanently lower multipliers and the excess of £4 billion of support in the Budget with his high street strategy, can I encourage him to keep music and cultural venues front and centre of his thinking? The UK music industry generates more than £8 billion for the UK economy, and these venues are a platform for future talent.
Dan Tomlinson
I will continue to keep those important cultural and social assets in mind as we work on our policy for supporting businesses across the country.
Alison Bennett (Mid Sussex) (LD)
The Minister talks about the definition of a pub. In the village of Hurstpierpoint in my constituency, Morley’s Bistro has a very similar product offering to food-led pubs on the same high street. They are competing for the same customers, and they are, ideally, all employing young people and giving them their first job. How does the Minister justify this?
Dan Tomlinson
We are, in the usual way, using long-standing definitions set out in business rates guidance to define pubs, and similar venues to which the relief will apply.
Mr Luke Charters (York Outer) (Lab)
I thank Gary at the Marcia Inn in Bishopthorpe and Adam at the Wenlock Arms in Wheldrake for meeting me to discuss support for pubs. The Tories created a ticking time bomb on business rates, then walked away, like someone who spilled a pint and left us to mop it up. Does the Minister agree that this Government are determined to back legendary landlords in Britain, like Gary and Adam?
Dan Tomlinson
Very much so. We want to support legendary landlords. I have my own in my constituency, and I look forward to having a pint with them this weekend to discuss the changes that the Government have made.
Freddie van Mierlo (Henley and Thame) (LD)
When it comes to business rates, the Government have delivered a masterclass in giving with one hand and taking with the other, leaving pubs and hospitality businesses worse off, but businesses cannot be fooled. They are on top of their numbers, even if the Government are not. Will the Government consider again the Liberal Democrat proposal for an emergency 5% cut in VAT for hospitality, and can he give an answer that does not resort to political point scoring?
Josh Newbury (Cannock Chase) (Lab)
Yesterday, I visited the Beach Hut, a fantastic independent indoor play venue in my home village of Norton Canes. The owner, Joanne, told me how passionate she and her staff are, but they face particularly acute pressures; they have a relatively large footprint, and therefore higher business rates, but have to keep fees low for families. Indoor play faces a perfect storm of increasing costs, but it offers so much to children and their parents. As the Minister will be working on the high street strategy, will he meet me, people from Cannock Chase venues, and the Association of Indoor Play to discuss what support could be provided to the sector?
Dan Tomlinson
I would be happy to discuss that matter with my hon. Friend. Indoor play is a really valuable and growing part of our economy, but there are challenges. With more free childcare, it may be that fewer people are going in during the day, and I know that many indoor play centres have seen increases in their rateable values. We set out our proposals on business rates at the Budget to support these businesses with significant caps this year, next year and the year after.
Claire Young (Thornbury and Yate) (LD)
When I visited The Play Shed in Yate last year, the reduction in retail, hospitality and leisure relief was already costing it £12,000, even before the more recent changes. This package is welcome for pubs and music venues, but what will the Government do to help other leisure businesses in my constituency that are struggling with business rates?
Dan Tomlinson
We have changed the tax rates, the multipliers, within the system so that a typical high street business may now pay 38p in the pound and an online retail giant may pay 51p in the pound on their rateable values. That is a significant underlying reform to the tax system that is here for good.
Tom Hayes (Bournemouth East) (Lab)
Business rates are complicated, and this new methodology particularly so. Businesses were always going to be in touch with MPs, and in our democracy we were going to talk it through with the Government to get to a better place. Today’s announcement shows that our democracy works and that representation works. I thank the hospitality sector business owners in Bournemouth East who have constructively engaged with me to get to that better place. We also, in this House, need to put party politics aside and recognise that business owners put their hearts and souls, and their blood, sweat and tears, into building something better. We all need to commit to doing something better on their behalf. Will the Minister continue to engage with me, on behalf of all hospitality, so that we can get the very best deal for them, and not just now but for the future?
Dan Tomlinson
I thank my hon. Friend for his engagement, persistence and advocacy on behalf of the businesses in his constituency. I know that he has had many conversations with businesses in his constituency, and he has been able to feed them directly to me as the Minister with responsibility for tax. I am sure that we will continue to have such conversations in the months and years to come.
Gideon Amos (Taunton and Wellington) (LD)
The change in business rates for pubs will be welcomed by the Winchester Arms in Trull in my constituency, but a family hotel contacted me yesterday and the combined impact of Government changes in the Budget will, they expect, as they look to the year ahead, lead to a £250,000 loss next year. Will the Minister meet me, Somerset MPs and hoteliers to discuss how hotels can be helped through the reforms he is proposing?
Dan Tomlinson
Because of the concerns around the methodology to value hotels, today we have announced that we will review that methodology so that, in time for the next revaluation, hotels can have a methodology that more appropriately works for their sector. The hon. Gentleman is right to point out that hotels have seen some of the largest increases in their rateable values. Therefore, they will be some of the biggest beneficiaries from the caps we have put into the system this year.
Electrically Assisted Pedal Cycles
Ms Julie Minns (Carlisle) (Lab)
I beg to move,
That leave be given to bring in a Bill to prohibit the marketing, sale, and supply of electrically assisted pedal cycles that fall outside the class of electrically assisted pedal cycles prescribed under the Electrically Assisted Pedal Cycles Regulations 1983 and of equipment capable of converting a pedal cycle into a such a vehicle; and for connected purposes.
The Bill is without doubt a mouthful, and it may seem technical and dry, but at its core it is about safety, clarity and responsibility. It is about protecting pedestrians, other road users, lawful cyclists, constituents and our communities from vehicles that look like bikes but behave like motorbikes. It is about stopping the sale of illegal e-bikes and the kits that turn ordinary, everyday pedal bikes into illegal monster bikes.
E-bikes, when they conform to the law, are a force for good. They mean cleaner journeys, better public health and less congestion. By law, e-bike motors should have a maximum continuous power output of 250 W and should cut out when the bike reaches 15.5 mph. Going faster than that is perfectly permissible without a motor. Indeed, I am told that for some people it is entirely possible—a fact that I am sure I will see at first hand when the Tour de France travels through my constituency next summer. But those speeds, as those athletes will demonstrate, will be reached without motorised assistance.
The sad reality, as Members know, is that right now, as I speak, there are illegal e-bikes on the streets of our constituencies that are reaching dangerously high speeds. Those e-bikes and the conversion kits used to create them are being sold with batteries capable of reaching speeds far beyond 15.5 mph. A bike seized and tested earlier this month in my constituency of Carlisle found that the bike was capable of 37 mph. Another e-bike seized in my constituency was found to have a battery capable of achieving 56 mph. Nationally, police have seized e-bikes capable of 70 mph.
These are not minor issues. These are illegal vehicles that can, and do, kill. Last year, in Australia, a pedestrian was killed after he was struck by an illegally modified e-bike. Last October, a 60-year-old woman was killed in New York by an e-bike capable of travelling at 30 mph. Last summer, in Greater Manchester, a 70-year-old woman was left in a coma and with life-changing injuries after being hit by an e-bike advertised with a top speed of 47 mph, and in 2024 an 86-year-old man from Lancashire was hit and killed by an illegal e-bike. We cannot continue to let this happen.
These, frankly, are illegal, unregistered, untaxed monster bikes without MOTs. These bikes have become a menace not just on the streets of Carlisle, but in communities across the UK. Their speed and lack of traceability makes them the perfect accomplice in robbery, phone theft and drug dealing. Our local neighbourhood police teams have done a good job of seizing and crushing these illegal machines, but they are fighting a losing battle. Cumbria’s police, fire and crime commissioner, David Allen, who is in the Public Gallery today, believes that the time has come to stop the problem at the source by banning the sale of these illegal e-bikes and the conversion kits that create them. I agree, which is why I am introducing the Bill.
Online marketplaces and overseas suppliers sell high-powered e-bikes and conversion kits with minimal checks, scant safety information and no clear liability. Too often, buyers assume that a product is legal because the website does not say otherwise. We already accept that some dangerous items simply must not be sold to the public. We ban the retail sale of flick knives because they are capable of killing and causing serious injury; we restrict the sale of F4 fireworks to those who are trained to use them safely; and we ban the use, import and supply of asbestos-containing materials, because they can kill. Those bans are about removing from the market products that are known to harm and kill. Monster e-bikes harm and kill.
The Bill is targeted and proportionate. It would continue to allow the sale and enjoyment of legal e-bikes, but it would shut down the sale and marketing of illegal monster bikes and the kits used to create them. It would give regulators and the police powers to seize and destroy non-compliant bikes and conversion kits at the point of sale, and it would create clear offences and penalties for retailers of illegal products. Cutting off the sale and marketing of illegal e-bikes would remove dangerous products before they reach our streets.
The Bill recognises that enforcement must be paired with support. It would give trading standards bodies, the police and other regulators targeted powers to act against sellers and online marketplaces. It would require clear consumer information so that buyers are not misled into thinking that high-powered machines are road legal. It would also help riders who rely on e-bikes for work to continue to access safe, legal e-bikes.
The Bill is a practical, evidence-led measure that is intended to reduce the harm we see in our communities, protect the vulnerable and make our streets safer. As I have set out, it draws on the same logic that led Parliament to ban the sale of other dangerous items. It must be the case that when a product is capable of killing or causing injury, and its sale cannot be reasonably regulated, it simply should not be sold. Let us be clear: lawful, safe e-bikes are part of our future. What the Bill would do it introduce measured, necessary steps to make our streets safer, to protect our constituents, and to stop the sale of monster e-bikes. I commend it to the House.
Question put and agreed to.
Ordered,
That Ms Julie Minns, Luke Akehurst, Liam Byrne, Anna Dixon, Tim Farron, Fabian Hamilton, Tom Hayes, Alex McIntyre, Jim Shannon and Bradley Thomas present the Bill.
Ms Julie Minns accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 27 February, and to be printed (Bill 372).
Medical Training (Prioritisation) Bill (Allocation of Time)
Medical Training (Prioritisation) Bill
(1 day, 7 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Health and Social Care (Wes Streeting)
I beg to move, That the Bill be now read a Second time.
I begin by thanking the Leader of the House, the Chief Whip, their counterparts in the other place, colleagues in my Department and in the NHS, the Bill team and parliamentary counsel, who have moved mountains to prepare this Bill in double-quick time. I once again place on the record my sincere thanks to my counterparts in the Governments of Wales, Scotland and Northern Ireland—as well as the respective Secretaries of State for those nations—for the spirit in which, regardless of party, they have helped us to bring the Bill forward. Last but by no means least, I am enormously grateful to Jackie Baillie, Labour’s deputy leader in Holyrood, for her wise counsel.
The NHS is on the road to recovery, not least because of the herculean efforts and dedication of NHS leaders and frontline staff who, even in the depths of winter, are delivering outstanding episodes of care, hour after hour and day after day. Among the encouraging signs of year-on-year improvement are waiting lists falling at their fastest rate in three years—down more than 300,000 under Labour—and quicker ambulance response times, shorter waits in A&E and speedier cancer diagnoses for more people. December was the busiest month in NHS history for 999 calls, but despite that, and regardless of industrial action and winter pressures, ambulances arrived at heart attack and stroke patients nearly 15 minutes faster compared with last year.
The progress we are seeing is a reminder that nothing positive for the people who use the NHS ever happens without the people who work in our NHS. Our investment and modernisation are starting to restore confidence and renew belief among frontline staff; with that, hope, optimism and ambition are returning too. That is why, outside of the pandemic, staff retention is at its highest in a decade and vacancies are at their lowest since records began in 2017. There is lots done, but, as we know, there is so much more to do.
I will always be honest about the state of our national health service—what is going well and where we need to improve. There is no sugar coating the fact that staff morale is still too low, and the way that some of our NHS workforce is still treated and the conditions in which too many of them still work are nothing short of a national disgrace. Not only is it a stain on our NHS, but it shames us as a country when those who care for us in our hour of need suffer bullying, harassment and racist abuse; have nowhere to rest, go to the toilet or get changed; cannot get a hot meal on a night shift; have limited flexible working options; must book holiday a year in advance; need to log in seven times just to use a PC; spend time form-filling rather than looking after patients; and face basic errors with pay and contracts. Before Christmas, I had a doctor in my constituency advice surgery in tears as she described the way she had been treated by a previous employer. This is no way to treat the people who kept us going when everything else stopped, so we are taking action.
Trusts are now implementing the 10-point plan for resident doctors and my Department, together with NHS England, is developing new staff standards to create better working practices and better conditions.
We have awarded above-inflation pay rises to everyone working in the NHS for this year and last year, which is beginning to recover the pay erosions seen under the last Government. We have begun 2026 with constructive talks with the British Medical Association’s resident doctors committee, as we seek to broker industrial peace. I have also told NHS leaders that they need to step up when it comes to the conditions that their staff face. They cannot expect the Secretary of State to micromanage availability of hot food in their canteen, for example.
However, there are workforce problems that only Government can solve. We have known for years that the treatment of resident doctors is often totally unacceptable and that the very real fears about their futures are wholly justified. Every time I have met a resident doctor, either formally or informally, they have told me without fail how their careers are blocked because there are far too many applicants for training places. Not only do I think that they have a legitimate grievance, but I agree with them.
Dr Kieran Mullan (Bexhill and Battle) (Con)
The Secretary of State is essentially talking about postgraduate training. I wonder what thought he has given to new clause 2 in the name of my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer). I have spoken to students who worked really hard all the way through medical school to get the best exam results and perform highly but then ended up in an allocation system that pays no attention whatsoever to that. Merit has been entirely removed from the system. I think it was wrong for us to make that change. Does he have any sympathy for returning to a merit-based system?
Wes Streeting
I certainly do have sympathy with that argument. We have begun to move the system in the right direction in terms of giving applicants greater preference in placements, but it is not lost on me that the system of rotations, placements and jobs means doctors are moved around the country and families are uprooted. The frictional cost of relocating from one place to another is a challenge that resident doctors in particular face. I do not think that an amendment to the Bill is the right vehicle in which to address that issue, but I am sympathetic to the arguments that the hon. Member makes, and I am sure he will make them again during this afternoon’s proceedings. We will take his arguments seriously and look to work together with the BMA and others to act to improve the experience of training, rotations and jobs.
UK graduates used to compete among themselves for foundation and specialty roles. Now they are competing against the world, because of the visa and immigration changes made by the Conservative Government post Brexit. The situation is compounded by the previous Administration’s total lack of workforce planning, which saw more students going to medical school without the number of specialty training places being increased. That is why we see the training bottlenecks that resident doctors face today.
Several hon. Members rose—
Wes Streeting
I will give way to the hon. Member for Henley and Thame (Freddie van Mierlo) and then to my hon. Friend the Member for Hitchin (Alistair Strathern).
Freddie van Mierlo (Henley and Thame) (LD)
A constituent of mine is studying medicine at Queen Mary University of London but at a campus in Malta. Students at the Malta campus complete the same General Medical Council-approved curriculum, assessments and licensed exams as London-based students, and graduates hold a UK primary qualification. He was given a formal guarantee that he would be at no disadvantage if he chose to study at the Malta campus. Can the Secretary of State reassure me that graduates like my constituent will be prioritised on the NHS foundation medical training programme?
Wes Streeting
Students studying in Malta will not be prioritised in the Bill, but they will still be able to make applications. Queen Mary University’s Malta website is clear that Queen Mary does not administer the UK foundation programme and cannot control whether or on what basis applicants are accepted into the programme, and no one is guaranteed a post on qualification.
Dr Andrew Murrison (South West Wiltshire) (Con)
Will the Secretary of State give way?
Wes Streeting
I will make some progress because, with respect, I have not yet set out the measures that we are to debate today. Let me take the intervention from my hon. Friend the Member for Hitchin, then I will set out the Government’s rationale and take further interventions.
Alistair Strathern (Hitchin) (Lab)
I wonder if the Secretary of State shares my residents’ utter disbelief that the last Government created a system where thousands of UK medical graduates, educated at the cost of billions to the UK taxpayer, were suddenly forced to compete with overseas students, pushing many abroad for their careers and losing a big talent pool that should be powering our NHS and getting it back on its feet.
Wes Streeting
That is right. I have to say, many of my counterparts around the world cannot fathom how we ended up in this situation in the first place. They certainly do not do as we have been doing, investing so much in their home-grown talent only to then see that talent compete on equal terms with anyone from anywhere else in the world.
Let me set out why we need this Bill. There are workforce problems that only Government can solve. We know that the treatment of resident doctors has been totally unacceptable for years and we see the training bottlenecks that resident doctors face today. In 2019, there were around 12,000 applicants for 9,000 specialty training places. This year, that has soared to nearly 40,000 applicants for 10,000 places, with nearly twice as many overseas-trained applicants as UK-trained ones. As a result, we now have the ridiculous state of affairs where UK medical graduates, whose training British taxpayers fund to the tune of £4 billion a year and who want to carve out a career in their NHS, are either being lost abroad or to the private sector. If we do not deal with that, the scale of the issue and the resentment it causes will just get worse. More taxpayers’ money will be wasted, more British medics will turn their backs on the NHS, and patients and our NHS will ultimately suffer.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
The Secretary of State knows that the SNP believes that this is a pragmatic Bill that will have a net-positive outcome for the health service in Scotland. We welcome the Bill and are glad to support it. However, there are specialty fields, such as general practice, which have a high number of international graduates. Because of Government policy, there are significant challenges in supporting the retention of some individuals. For example, the new requirement for settled status is 10 years with some exceptions, whereas training programmes are often only three years long. I am sure that the Secretary of State does not want the UK to be a hostile environment for our vital overseas medical staff. Will he therefore make representations to the Home Office so that it is aware of the anomaly?
Wes Streeting
I will say two things to the hon. Gentleman. This Bill does not in any way detract from the fundamental point that the NHS has always been an overseas recruiter and we have always been fortunate to draw on global talent from around the world who come and give through their service, their taxes and their wider contribution to the national health service and our country. We will continue to welcome that and people will continue to be free to apply. In future, they will apply on terms that are fairer to our own, home-grown talent.
There is nothing in what the Home Secretary proposes that will stop people who come through our universities and have the skills that we need to contribute to our health and care system applying for jobs and settling and making the UK their home. The Bill supports the Home Secretary to reduce an over-reliance on overseas talent and labour, which contributes to levels of net migration that even bleeding-heart liberals like me can see are too high. That is the issue that the Home Secretary seeks to deal with.
Kevin Bonavia (Stevenage) (Lab)
My right hon. Friend is right that we need to deal with this pressing problem and I support the aims of the Bill. However, as he can imagine, as the only current Member of this House with Maltese heritage, I have had representations from all quarters, both in the UK and in Malta, about the impact on Malta of this. Our two countries have a special health relationship, including the affiliation of the UK foundation programme with the Maltese equivalent. I understand that now may not be the time to have Malta in the priority group, but I note that there is a power in clause 4(6) that allows the Secretary of State to amend that in future. Is that something that my right hon. Friend will think about reviewing in future?
Wes Streeting
My hon. Friend is right about the measures in the Bill. He is also right about the importance of our relationship with Malta, which is long-standing and deep, and this Government place enormous value on that. We will, of course, keep the workings of the measures in the Bill under review. He is also right to say that the Bill provides flexibility to the Secretary of State to adjust, as our needs may demand.
Dr Murrison
The Bill is basically a good one, and we all share the intent to encourage home-grown talent to remain in our national health service, so could the Health Secretary explain why he appears to have set his face against British students who for various reasons train at, for example, St George’s in Cyprus or St George’s in Grenada and who then want to come back and practise in our national health service? They want to come back and practise at home. Amendment 9 would deal with that conundrum. Why will he not support it?
Wes Streeting
We set UK medical school places based on future health system needs. We cannot control how many places the overseas campus universities create, whether they are UK-based universities or not. Prioritising those graduates in the way that the right hon. Gentleman suggests would undermine sustainable workforce planning. It would also undermine social mobility and fair access. Those campuses are commercial ventures; they receive no public funding and students are generally self-funded. The nature of prioritisation is that we set priorities, and these are the priorities that this Government are setting out. We must break our over-reliance on international recruitment.
As I have said, I am proud of the fact that the NHS is an international employer, and it is no coincidence that the Empire Windrush landed on these shores in 1948, the very year our NHS was founded. We are lucky that we have people from around the world who come and work in our health and care service. Since Brexit, however, under the last Government, we have begun to see something much more corrosive, with the NHS poaching staff from countries on the World Health Organisation’s red list because their own shortages of medical practitioners are so severe. The continued plundering of doctors from countries that desperately need them while we have an army of talented and willing recruits who cannot get jobs is morally unacceptable. If some Opposition Members want to defend that record and dismiss the morality argument, I would point out that that position is naive on economic grounds. Competition for medical staff has never been fiercer. The World Health Organisation estimates a shortfall of 11 million health workers by 2030. Shoring up our own workforce will limit our exposure to such global pressures without depriving other countries of their own home-grown talent.
Ben Coleman (Chelsea and Fulham) (Lab)
I congratulate my right hon. Friend on his excellent speech and the strong points that he is delivering. I associate myself with the remarks of my hon. Friend the Member for Stevenage (Kevin Bonavia) about Malta. As a member of the Health and Social Care Committee, I have also been approached by Queen Mary University. It seems to me that we should be approaching this with a sense of fairness, and if students have entered into a GMC-recognised course with the expectation of having priority access for foundation status, we should accept that those who are currently in training still enjoy that, even if we change the rules for people who enter those courses in the future. Is that something that my right hon. Friend will consider?
Wes Streeting
As I have said, the position we have set out is founded on fairness. The basis on which people have applied to these universities has made it clear that the universities cannot guarantee places and that overseas applicants studying at UK universities’ overseas campuses can still apply. There is nothing to prevent those people from applying, but when it comes to prioritisation, we are prioritising UK-trained medical graduates from UK-based universities who have undertaken their training here in the UK. I think that is the right priority to draw.
Wes Streeting
I will take an intervention from the hon. Gentleman. I will come to my right hon. Friend in a moment.
Gregory Stafford
The Secretary of State mentioned the need for more medical staff across the world and, of course, in this country as well. At the general election, he pledged to double the number of medical school places by 2030. Is that still a commitment, and how far has he got with it?
Wes Streeting
With respect, I think the hon. Gentleman has got his chronology slightly wrong. As shadow Health Secretary, I proposed that we should double the number of undergraduate medical school places. That policy was poached by the then Conservative Government, who made modest progress with it. We then came into government, looked at their long-term workforce plan and concluded that it was not a particularly long-term workforce plan, and we are revising it as we speak. The number of medical school places will be determined by future need. We will publish our long-term workforce plan in the not-too-distant future.
Wes Streeting
I will give way to the hon. Lady and then to my right hon. Friend the Member for Oxford East (Anneliese Dodds).
Alison Bennett
The Secretary of State rightly notes that there is international competition for healthcare talent. On Friday, I met Dr Osoba, a GP who trains future GPs. She told me how disheartening it is to train future GPs whose intention is to leave the UK. What is the Secretary of State doing to ensure that British-trained medics stay working in the NHS?
Wes Streeting
The hon. Member puts her finger right on the issue at the heart of the Bill. That is exactly the challenge we want it to address. The Bill is not a panacea—it does not solve all the problems—but reducing competition for specialty places from around four to one to less than two to one, as the Bill will do, will make it far more likely that people who have undertaken their training here in the UK will stay here and contribute to our national health service. Of course, there is much more to do on career structure, pay and conditions, but we will go as fast as we can and as far as the country can afford. We recognise that we need to keep the great people we have invested in, because doing so is in their interest and in our national interest.
Anneliese Dodds
My question relates to exactly that issue. The Secretary of State will be aware, because I have written to his Department about it a number of times, that many disabled medics face a particular challenge. They may have had to take time out of their training because of a medical condition. They are told that they can obtain a certificate of readiness to enter specialty training and go into a training specialism, but the computer says no and NHS England is not sorting this out. Will he please get a personal grip on this and fix it for my constituents?
Wes Streeting
I am certainly aware of my right hon. Friend’s concerns. I can give her that assurance and will report back to her on progress.
Without action to prioritise UK medics, we will also make it tougher than it already is for those from working-class backgrounds like mine to become doctors—or, for that matter, to even consider a career in medicine. The odds are already stacked against them: they are less likely to know doctors, their teachers may be less familiar with how to help students into medical school, they will have fewer opportunities to do work experience, and fewer people in their lives will tell them that they should aim high and reach for the stars. The result is that only 5% of medical school entrants are from lower-income working-class backgrounds. Someone’s background should not be a barrier to becoming a doctor, so our job—especially as a Labour Government committed to social justice—is not just to ensure that a few kids like me beat the odds, but to change the odds for every child in this country so that they can go as far as their talents will take them.
Aphra Brandreth (Chester South and Eddisbury) (Con)
It is vital that we address this issue to ensure that UK-trained doctors are prioritised for vacancies over international applicants—the Secretary of State is making important points about that. We need those places to be opened up for UK medics immediately, so will he explain why the Bill will not come into force immediately after Royal Assent but instead includes provision for it to come into force
“on such day or days as the Secretary of State may by regulations appoint”?
Wes Streeting
It is important that the Bill is workable. A number of factors may well interrupt our ability to move at the pace at which I want to open up those places. One of those factors is the ongoing risk of industrial action. We know that the BMA is balloting for further industrial action at the moment. We respect the process that it is undertaking, and we are not closing the door to discussions while it does so. However, we are clear that that is a further disruption risk. I hope that we will be in a position to open up a new application round very shortly for current applicants, but that will depend on our ability to expedite the passage of the Bill through both Houses, and to ensure that the system is ready to implement it. That is why bringing forward the Bill on this timescale has been particularly important.
Dr Murrison
I am grateful to the Health Secretary; he is being generous with his time. Is he saying that he intends to use this as some sort of lever or bargaining chip in his discussion with the BMA?
Wes Streeting
I am clear that this is about whether the system will be ready to implement the measures in the Bill. I must say that I view the Conservatives’ amendment on this issue with a degree of cynicism. Not so long ago, they were accusing me of being too kind to resident doctors when it came to making changes to pay or conditions without something in return. They seem to have completely changed their position. I am sure that that is not remotely cynical and is for entirely noble reasons, but I will wait for the shadow Health Secretary, the right hon. Member for Daventry (Stuart Andrew), to make his case. Let’s just say that I am not entirely convinced.
The Bill implements the commitment in our 10-year plan for health to put home-grown talent at the front of the queue for medical training posts. Starting this year, it prioritises graduates from UK medical schools and other priority groups over applicants from overseas during the current application round and in all subsequent years. For the UK foundation programme, the Bill requires that places are allocated to UK medical graduates and those in a priority group before they are allocated to other eligible applicants.
For specialty training, the Bill effectively reduces the competition for places from around four to one, where it is today, to less than two to one. That is a really important point for resident doctors to hear, not least because in the debate we had on the Government’s previous offer to the BMA, that point was lost amid some of the broader and, frankly, more contested arguments between the Government and the BMA around pay. It is not just the provision of additional training posts that reduces the competition ratio; it is also the measures in this Bill. I hope that that message is heard clearly by resident doctors as they think about their own futures immediately or in the coming years. For posts starting this year, there must be prioritisation at the offer stage, and for training posts starting from 2027, prioritisation will apply at both the shortlisting and offer stages.
In the 10-year plan, we committed to prioritising international applicants with significant NHS experience for specialty places in recognition of the contribution they have made to our nation’s health. This year, we will use immigration status as a proxy for determining those who are eligible, so that we can introduce prioritisation as soon as possible. From next year, under the terms of the Bill, we will set out in regulations how we are defining significant NHS experience.
Wes Streeting
I give way to my hon. Friend with significant NHS experience.
Dr Opher
I commend the speed with which my right hon. Friend has brought this legislation to Parliament. I have been a GP trainer for 25 years. Fifty per cent of GP trainees are international medical graduates, and there has been some disquiet from them. Will he reassure our international medical graduates that they are welcome and treasured in the health service?
Wes Streeting
My hon. Friend is absolutely right about the contribution that international medical graduates make, and I have no doubt that that will continue to be the case for many years to come. I hope it is clear to those going through medical school or aspiring to a career in medicine that, in terms of the future of healthcare in this country, general practice is where it’s at. We are looking to shift the centre of gravity in the NHS out of hospital and into the community, with care closer to people’s homes and, indeed, in people’s homes, with GPs as leaders of a neighbourhood health service. I hope that gives encouragement to GPs serving today about the future of their profession, about which they care enormously. I also hope that that message resonates with people who are thinking about a career in medicine, when they think about what kind of career that might be.
Sarah Pochin (Runcorn and Helsby) (Reform)
I recently spoke to a doctor in my constituency who was concerned about resident doctors going abroad to get a training place in their chosen specialty. We in Reform welcome this Bill. Can the Secretary of State make a commitment that we will prioritise our own UK-trained resident doctors ahead of those trained abroad, and will he assure me that the Bill will help UK-trained resident doctors to secure a training post in their chosen specialty?
Wes Streeting
I can give the hon. Member that assurance—that is exactly what the Bill does. Madam Deputy Speaker, I cannot, however, resist the enormous temptation to say that while I welcome the support of the hon. Member and her party, I hope that her party’s position will not change now that it has adopted so many of the formerly Conservative culprits who landed us with this system in the first place. Whether it is the former Home Secretary, the right hon. and learned Member for Fareham and Waterlooville (Suella Braverman), or the former Immigration Minister, the right hon. Member for Newark (Robert Jenrick), I am afraid that Reform looks rather more like the Conservative party that the country rejected at the last election, which I am sure will not be lost on people when they go to the ballot box in May—[Interruption.] As my hon. Friend the Minister for Care says from a sedentary position, Reform UK are increasingly the teal Tories—it is certainly the most successful recycling project currently taking place in the House of Commons. Anyway, that was totally self-indulgent, and very churlish given that the hon. Member for Runcorn and Helsby (Sarah Pochin) is supporting the Bill, so I will slap myself on the wrist and get back to the serious matters at hand.
As we set out these changes, it is important to note that they will have no impact on doctors working in the armed forces, who will continue to be a priority, and neither does the Bill exclude international talent, as people will still be able to apply for roles and continue to bring new and vital skills to our NHS. The principle here is home-grown talent. It is not about where students are born; it is about where they are trained. What the Bill does is return us to the fair terms on which those home-grown medics competed before Brexit.
Robin Swann (South Antrim) (UUP)
I welcome the Secretary of State’s approach to the Bill, and how he has worked across all devolved Administrations. May I seek his assurance that medical students who reside in Northern Ireland, who identify as Irish and who study in an Irish institution in the Republic of Ireland will not be excluded from coming back to work in the national health service in Northern Ireland, where we very much need all the talent we can get?
Wes Streeting
I absolutely give the hon. Member that assurance—the Bill covers medical graduates from the UK and Ireland, for very obvious reasons. I welcome the broad support that the Bill appears to have across the House, because for the changes to benefit applicants in the current round—for posts starting this August—it must achieve Royal Assent by 5 March. Any delay will risk vacancies in August and disrupt planning in NHS trusts, which rely on their new trainees to deliver frontline care. Doctors also need sufficient time to find somewhere to live, sort childcare and arrange other aspects of their lives before their posts start. I am grateful that Parliament has agreed to expedite the Bill’s progress, and confident that we will be able to work at pace with our majority in this House, and with cross-party support in the other place.
Layla Moran (Oxford West and Abingdon) (LD)
I sense that the Secretary of State is about to reach the end of his remarks. We are keen to start the debate, but it would be helpful to get clarity on one thing before we begin. When will we see the workforce plan? It has been delayed a couple of times. We wrote to the Department in November asking for an explanation as to why it has been delayed and when we can expect it. Can the Secretary of State give us some clarity, because that is the context in which the narrow technical measure that we are discussing needs to happen?
Wes Streeting
That is a fair question from the Chair of the Health and Social Care Committee. We are taking longer than I would have liked with the workforce plan. I hope it reassures the hon. Member and the House that we have taken more time because that is what the royal colleges, trade unions, and clinical and NHS leaders asked us to do. Their strong urging was to get it right, rather than rush according to a political timetable, which I thought was a fair challenge. It will be published this spring.
Alex McIntyre (Gloucester) (Lab)
I welcome this legislation. Does the Secretary of State agree with me that the fact that the Government have listened to the concerns of resident doctors about training places, and have acted at pace to bring forward the legislation, shows that we as a Government are committed to fixing the problems left behind by the Conservative Government? Does he agree that the BMA should consider that when thinking about going forward with any potential further action?
Wes Streeting
I agree with my hon. Friend. For context, I say to members of the BMA and resident doctors that to bring forward legislation in this way and at this pace is not easy. We have a packed legislative programme. The clock is ticking on getting everything through that we want to get through in the time that we have available, and I am grateful to the business managers in both Houses for facilitating the Bill. Cross-party support is going to be important, particularly in the other place, where we have lots of expertise to draw on, including from Cross-Bench peers.
We have introduced the legislation because fundamentally we agree with the case that the BMA and resident doctors have been making. In our discussions with BMA representatives, immediately prior to the last round of industrial action and since, it has been very clear that when it comes to jobs, we are not that far apart. We recognise the problems and we are working together to address the solution. On pay, there remains a gap between the expectations of the BMA and what the Government can afford. All I ask of resident doctors and their BMA representatives is some understanding and a bit of give and take about the range of pressures on the Government and the national health service, many of which require funding, which is why there are choices and trade-offs.
I hope that the BMA representatives know and have noticed that, regardless of the fact that we remain in dispute on these issues and have had a number of rounds of industrial action, I have not slammed the door in their faces and stopped talking—we have continued with good-natured and constructive talks—and I have not thrown my toys out of the pram either, and said “Right, we will not proceed with this Bill.” We have continued to work to enact solutions that we think are good for resident doctors, and therefore good for patients and good for the NHS. I hope that this will be the spirit in which we can work together.
The goal is to be in a place, particularly with the BMA and resident doctors although this applies to other groups in the workforce too, where we can work together and make progress outside disputes, so that we can gather around tables as partners, rather than as opponents. That will take some gear shifting from where we have been to where we want to be, but I know that both the Government and the BMA have entered the new year in that spirit, so we will continue to make progress.
Having stressed the urgency of the legislation, I want to address the commencement clause included in the Bill, which has already been raised. First and foremost, it is there as a failsafe. We are running to an extremely tight deadline. I do not want to be in a position where a law is enacted and we are unable to implement it in a timely and orderly fashion. Secondly, there is a material consideration about whether it is even possible to proceed if strikes are ongoing, because of the pressure that they put on resources and the disruption that is caused operationally, particularly among the people I require to help me deliver the measures in the Bill. Of course, I am keeping my options open. We are in a good place with the BMA, and we have entered the latest round of talks in good spirit, but we do not yet have an agreement on their disputes and we are waiting for the outcome of their ballot, so I am not going to do anything now that unnecessarily makes it harder to end the strikes.
The Opposition amendment to remove the commencement clause is designed to make industrial action more likely, not less likely. It tries to bind my hands and make this job even more difficult. It looks like political gameplaying, at a time when we are trying to save the NHS, and it looks like party interest before national interest. I hope that the Conservatives will consider whether their amendment is really necessary.
British taxpayers spend £4 billion training medics every year. We treat them poorly, place obstacles in their way and make them fearful for their futures. We are forcing young people, who should be the future of our NHS, to work abroad, in the private sector or to quit the profession entirely. It is time that we protect our investment and our home-grown talent. This Bill will ensure a sustainable workforce, cut our reliance on foreign labour, halve competition for places and give home-grown talent a path to become the next generation of NHS doctors. I commend this Bill to the House.
Madam Deputy Speaker (Judith Cummins)
I call the shadow Secretary of State.
Stuart Andrew
No, I am most definitely not defecting.
In the spirit of being constructive, I will start by saying that the Opposition support the principle behind the Bill. Doctors trained in Britain and funded by the taxpayer should have a fair, clear and consistent route to progress in our NHS. Britain trains some of the best doctors in the world, yet too many are leaving—not because they want to, but because they cannot access the training places they need. That wastes talent, damages morale, and ultimately affects patient care. However, support in principle is not a blank cheque; the Bill must work in practice, not just look good in a headline. We should also be honest about why we are here. Much of what is in the Bill has been promised by the Government since their election in plans, reviews and ministerial statements, and the fact that it is only being brought forward now suggests that this is catching up, not leading.
The first test is delivery. We cannot solve a shortage by changing the queue. Unless the Government deliver the 4,000 new specialist training places that they have promised, including the 1,000 places that are needed early, the Bill will not fix the bottlenecks; it will simply shift frustration from one group of doctors to another. That is why we are proposing constructive amendments to the Bill that we believe are workable and fair.
The next test is clarity. The real impact of this Bill will be determined by the rules that sit beneath it—who qualifies, how experience is assessed, and how decisions can be challenged. We welcome the focus on foundation training; prioritising UK and Irish graduates for foundation training is sensible, as it strengthens the pipeline and improves workforce planning. However, it will only work if there are enough placements and the system is transparent. That is why amendment 8 would clarify that a UK foundation programme must mean a programme in which the majority of training takes place in the United Kingdom. That is a necessary safeguard against loopholes.
Amendment 9 would ensure that from 2027, British citizens on UK foundation programmes are prioritised in a meaningful way. Prioritisation must apply not only at the final offer stage, but at interview, which is where selection decisions are often made. The amendment addresses many of the points that Labour Members have been raising, so I encourage them to support amendment 9 when we divide on it.
We are also concerned about doctors serving overseas with the armed forces. I was pleased to hear the Secretary of State talk about them, since they certainly should not be penalised because part of their training takes place abroad on service. As such, amendment 10 would expand the definition of a UK medical graduate to include those undertaking placements as part of an armed forces posting outside of the British Isles. I hope the Secretary of State will consider accepting that amendment to give reassurance to our armed forces, which I know is something he cares about. These are practical changes that would improve fairness and operability, and we hope the Government will adopt them.
We also support new clause 2, tabled by my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), which would make clear that once priority groups are established, training places should be allocated on merit. That allocation should be based on academic achievement and clinical performance, rather than a lottery or a computer-generated ranking divorced from real performance. Again, I hope the Government will seriously consider the new clause. When the Minister for Secondary Care sums up, will she put on record that merit will remain central to selection?
Another issue that cannot be ignored is the impact on medical schools, especially those that rely on international students. New clause 3 would require an annual report to Parliament on the number of international students at UK medical schools and the financial consequences flowing from the Bill’s provisions. International students pay higher fees and help sustain our universities. If those numbers fall, what funding model would replace them? When she sums up, will the Minister for Secondary Care outline what assessment has been made of the impact on medical school finances? How many international places do the Government expect to fund in future, and on what basis?
The Bill cannot stand in isolation. Workforce planning depends on more than allocating training posts; it requires enough trainers and clinical supervisors, viable rotas that support learning and facilities that make training possible. The revised NHS workforce plan must set out how those needs will be met, and how the extra training places will be staffed and supported. With NHS England set to be abolished in April 2027, we need to hear from the Government who will lead workforce planning and accountability thereafter.
Our approach is straightforward. We will support measures that are fair and practical, that strengthen patient care and that respect staff. We will press the Government where we feel that proposals are rushed, underfunded or left vague. Backing doctors means giving them a route to progress and ensuring that the system is properly planned and properly resourced. I repeat that, in principle, we support the Bill. We want doctors trained in Britain to build their careers in the national health service.
That brings me to enactment. As we have heard, the Government propose that the Bill should take effect when the Secretary of State decides, rather than on the date of Royal Assent. When he said that he wanted to introduce this Bill, and that it would be urgent, I said that we encourage that and support it. However, if this Bill is truly urgent, and if Ministers want it to affect this recruitment round, why would they not commence it immediately? The Secretary of State should not be playing politics with people’s jobs. It is not right for doctors, including those not involved in industrial action, to be treated as bargaining chips, and it is not right for Parliament to be treated in this way to give him the tools that he needs because he did the first set of negotiations so badly. Will the Government support amendment 1, so that the Bill takes effect on Royal Assent? Will they commit to enacting the Bill as quickly as possible?
When does the Secretary of State intend to commence the Bill? If the Minister for Secondary Care cannot give the House a date today, what makes the Bill so urgent that it needs to be pushed through Parliament in a single day? Will the Government proceed with this legislation, even if no agreement is reached with the BMA? If industrial action is paused, will the Government still honour their commitment to prioritise UK medical graduates?
Many doctors took industrial action because they felt that their career progression was blocked. This Bill could play a part in rebuilding that trust, but that will only happen if Ministers deliver, publish the detail and follow through. They must be straight with the House. If this Bill is urgent, it should commence on Royal Assent. If implementation takes time, the Government should publish a timetable and the steps required to deliver it. To do anything else, frankly, would be discourteous to Parliament.
Dr Murrison
I think the Secretary of State has perhaps misunderstood how traumatic the process is for the young medical graduates going through this performance. Does the shadow Secretary of State agree that the sooner this legislation comes into force, the better it is for those young people, some of whom are finding the current situation incredibly difficult? They do not know what the successor scheme will look like, and the delay is adding to that unhappiness.
Stuart Andrew
I absolutely agree with my right hon. Friend. I said right at the outset that we would be constructive, but we have heard from many who are anxious about their future and do not know what will happen. The sooner that we can give them that certainty, the better. That was the premise on which we offered to support the Bill. I am grateful to him for making that point.
I am conscious that others want to speak, so I will end by saying this. Prioritisation without capacity will not fix the workforce crisis. Promises without delivery and headlines without planning will not retain the doctors whom our NHS needs. The Government must fund the extra places, set out the operational detail, and begin this reform without delay, because that was the premise that the Secretary of State identified. When he came to Parliament just a few weeks ago, he said that we needed to get on with this urgently, and that he would encourage business managers to provide the time. Well, if that is the case, let us get on with the job.
Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)
I welcome the Bill. I have long argued that a strong state must be rooted in work, contribution and fairness, and that principle stands behind the Bill. For too long, medical training pathways have drifted away from that principle. Taxpayers invest heavily in medical education, clinical placements and postgraduate training, but we have not been honest about who ultimately benefits from the investment. At a time when the NHS is under immense pressure, that is not sustainable.
The Secretary of State set out the scale of what we are dealing with. The taxpayer invests more than £4 billion every year in medical education, with more than £1 billion invested in undergraduate clinical placements, and more than £3.3 billion invested in postgraduate foundation and specialty training. That is public money, spent so that British patients have the doctors they need. However, since the lifting of visa restrictions in 2020, we have seen a fundamental shift in the way that medical training places are allocated. In the 2025 recruitment cycle, more than 25,000 overseas-trained doctors applied for training posts, and more than 15,000 UK graduates were competing for the same—nearly 13,000—round 1 and round 2 positions. As we heard from the Secretary of State, there are more than 47,000 applicants in 2026. That is a dramatic surge.
The Bill does one straightforward thing. It prioritises UK medical graduates for training posts, both foundation and specialty, where the NHS has already invested heavily. In my constituency, we see this clearly. University Hospitals Birmingham NHS foundation trust is one of the largest NHS trusts in the country. Just under 30% of my constituents work in the health sector. That figure is double the national average. We are home to the University of Birmingham medical school, one of the best in the country. The scale of public investment in training, supervision and infrastructure is enormous, and rightly so. However, the Bill recognises the basic truth that when the taxpayer pays, the public should see the return. Prioritising those who are most likely to work and stay in the NHS is not exclusionary; it is common sense. It is how we rebuild a health service that is resilient, staffed and fair.
Dr Murrison
I entirely agree with the Chair of the Select Committee that we need to keep Brits working in our national health service. Does she agree that we need to add to the priority list British nationals who, for one reason or another, are training in medical schools outside the United Kingdom—in Prague, in Malta, in Cyprus and in the Caribbean? The reasons why they are training in those places are many and varied, but they are British, and their intent is to practise in the national health service. However, they are being deprioritised by this measure.
Preet Kaur Gill
I am not the Chair of the Select Committee, and I think that the Secretary of State set out his position. This is really important. This is about UK taxpayers’ money being invested in training doctors, and we must ensure that UK trainees are able to secure training places once they graduate. That is the issue that we are discussing.
Let me be clear: this is not a criticism of international staff. The NHS would not and could not function without the dedication, skill and compassion of people from around the world, and we should say that plainly and with gratitude. Every day, they hold our system together. However, a mature, confident country can value that contribution while also saying that we cannot replace long-term workforce planning with a permanent reliance on overseas recruitment. That is not fair on British trainees, not fair on source countries, and not fair on the NHS. As we heard from the Secretary of State, the World Health Organisation has estimated that by 2030, there will be an 11 million shortfall in health workers, as every country competes for the same limited workforce. This Government understand that putting British workers first is not something for which we will apologise. It is what the public expect.
The Prime Minister has been clear: a serious Labour Government must align migration, skills and training policy with the national interest. We cannot simply be passive; we must shape our domestic workforce to ensure that the NHS can continue to function. The same principle should apply wherever we are overly dependent on skilled migration because domestic training was neglected for 14 years under the Conservatives. Investing in people in the UK, and expecting that investment to strengthen Britain, is not ideological; it is responsible government.
The powers conferred to the Secretary of State in this Bill are important. The Royal College of Radiologists’ 2024 census found that 83% of cancer centre heads of service in the west midlands were concerned about patient safety as a result of workforce shortfalls. In 2024, only 19% of clinical oncology training places in the west midlands were filled. Will the Secretary of State outline how he intends to use the powers in this Bill and work with the integrated care boards to ensure that access to training matches regional workforce needs and health demands?
Above all, this Bill is about respect—respect for the taxpayer, respect for the NHS workforce, and respect for a health service that must be planned for the long term, not patched up year on year. This is exactly the kind of reform that the public expect from a Labour Government who are serious about work, contribution and the future of our NHS.
Madam Deputy Speaker (Judith Cummins)
I call the Liberal Democrat spokesperson.
Helen Morgan (North Shropshire) (LD)
I am pleased to welcome this Bill, broadly. It seeks to prioritise graduates from UK and Irish medical schools for foundation and specialty training places. On this point, the Liberal Democrats support the Government, but we have some concerns about how that will be delivered, and about the real-world consequences for our NHS, patients and the doctors who keep our health service going.
Taxpayers invest around £4 billion every year in training young doctors, yet far too many are left competing for too few posts. In 2025, around 12,000 UK-trained doctors competed with 21,000 international doctors for just 9,500 specialty training positions. Many highly skilled young doctors, who were ready to serve in the NHS, were left without a pathway into specialist practice. That is clearly unfair and unsustainable. It is hardly surprising that so many doctors decide to leave the country altogether and seek opportunities elsewhere, where their training and wellbeing are valued. This is a tragedy for them and a tragedy for patients, so prioritisation is right, fair and long overdue.
However, reorganising a queue does not shorten it or make it move any faster. The reality is clear: the NHS has a deep workforce shortage, with crises in some specialties, and this Bill alone cannot solve it. A detailed long-term workforce plan, which ensures that training provides the skill mix that the NHS needs for the future, is required as soon as possible. I look forward to the Minister confirming when that will be delivered.
Shortly before Christmas, the Government committed to 4,000 additional specialty training places in their negotiations with the British Medical Association, including 1,000 that were brought forward, but following the collapse of those negotiations, it remains unclear whether those places will materialise. Patients cannot wait for certainty, and neither can exhausted staff. Will the Minister confirm those places, and go further by addressing other issues that have prevented doctors from working in the NHS, such as restrictive rotas, workplace violence and inflexible working? Dealing with such issues might prevent doctors who have secured specialty training places from moving abroad once their training is completed, ensuring that taxpayers’ money is not wasted, and that doctors with local, relevant experience remain in the NHS.
I turn to the details of the Bill. We have concerns about clause 7(1), which allows Ministers to change eligibility for prioritisation through the negative procedure. That will enable sweeping changes, without proper parliamentary scrutiny, to who can access training places. Given the scale and sensitivity of the NHS workforce pressures, such decisions must not be made behind closed doors, or at the whim of a future Health Secretary with less desirable motives than the current one. That is why the Liberal Democrats have tabled amendments that would require Parliament to approve any future changes through the positive procedure.
We are also troubled by the Government’s decision to apply the new rules part of the way through the 2026 specialty recruitment cycle. The Bill allows for prioritisation at the offer stage for medical specialty training places in 2026. I would like the Minister to clarify in her closing remarks whether this means that international doctors already working in our NHS—who have paid for exams, secured visas and maybe uprooted their life and their family—will suddenly be pushed to the back of the queue, mid-cycle. These doctors keep our hospitals running today. They entered the system in good faith, and it seems unfair to change the rules midway through the process.
I would also be grateful if, in the Minister’s closing remarks, she outlined the expected impact on NHS service provision if people who are deprioritised during the application process decide to leave en masse. Will she give my constituents in North Shropshire reassurance that patient safety and patient outcomes will not be impacted? The Liberal Democrats would prefer implementation to begin in 2027, at the interview stage; that would protect both fairness and patient safety.
Would the Minister elaborate on the impact of the Bill on universities that offer medical degrees elsewhere in the world? I think we have all been contacted by Queen Mary, University of London; the implications for the university may be serious if graduates, who have always been considered UK graduates, undertaking NHS training, and a UK medical qualification registered by the General Medical Council, suddenly have their expectations changed.
As I have mentioned, retention is just as critical as recruitment, but unfortunately it is outside the scope of this limited Bill. In the year to September 2023, 10.7% of NHS staff—about 154,000 people—left their role. Burnout is rife, morale is low and too many staff are working in buildings that are crumbling around them. We have been contacted by GP trainers who are worried that the doctors they are training plan to leave for Australia or Canada as soon as they qualify. The promised workforce plan must address this problem.
International comparisons lay bare the scale of the problem. England has just 3.2 doctors per 1,000 people, which is well below the OECD and EU average of 3.9. We would need 40,000 more doctors to meet that benchmark. Prioritising UK graduates is sensible, but it will not on its own deliver the workforce that patients urgently need. That is why the Liberal Democrats have tabled an amendment requiring a specialty by specialty workforce assessment. Shortages are acute in general practice, radiology, cancer care, mental health and more, and transparency is essential if training places are to be directed at where the need is greatest.
It is neither right nor remotely sustainable that, at a time when patients struggle to see a GP, qualified GPs are unemployed, yet that is happening now, with vacancy freezes and financial pressure creating an NHS in which shortages sit alongside unemployment. The Government’s decision to raise national insurance has only exacerbated the problem, forcing some practices into lay-offs or closure. In my North Shropshire constituency, several GP practices have told me that they cannot take on additional doctors because they are constrained by the outdated physical space in which they operate. The Liberal Democrats would fund 8,000 more GPs, ensuring that every patient could see a GP within seven days, or 24 hours if the need was urgent, because we cannot fix the NHS without fixing the front door.
NHS staff are the backbone of our health service, and they deserve better working conditions and a fair career path. We will continue fighting for an independent pay review body, for safe and modern buildings, for flexible working from day one, and for practical support, such as reduced parking charges, so that staff are not penalised for simply turning up to care for us. We will always stand up for our NHS and the people who make it work. While we support this Bill, we will push to ensure that its implementation strengthens our health service as much as possible.
Jack Abbott (Ipswich) (Lab/Co-op)
It is a pleasure to speak in support of the Medical Training (Prioritisation) Bill. This Bill goes to the very heart of the future of our national health service—the doctors on whom our health service depends. It is about fairness, protecting taxpayers’ money, and building a home-grown NHS workforce that is sustainable in the long term. It is about making sure that those who have trained here have the opportunity to become the next generation of doctors working in our health service.
Every year, it is becoming harder for graduates of UK medical schools to find a place on a foundation or specialty training programme. Since 2019, competition for postgraduate training places has increased by a staggering amount. In 2019, there were about 12,000 applicants for 9,000 places, but in 2025 the situation became even more stark. There are now more than 30,000 applicants, and over 12,000 UK-trained doctors and nearly 21,000 overseas doctors compete for fewer than 10,000 places. That is an enormous and unsustainable change. For some specialties, the competition is much fiercer. Aspiring neurosurgeons, for example, had to compete against 26 others to secure a place, and there were 737 applicants for just 10 cardiothoracic surgery training places.
Those are not abstract statistics, and behind every number is a person who has spent years training, often at great personal and financial cost, only to find their opportunities for career progression drying up. Some take time out, some seek experience abroad and some leave medicine altogether. Many do not have a choice. They are forced by a system that has become so congested that getting a training post in something that they are passionate about and trained in is completely unattainable. Every time a doctor leaves the NHS, there is no guarantee that they will come back.
The Secretary of State is incredibly committed to increasing medical school places, and we desperately need more doctors, but we have to be honest with ourselves: we cannot expand medical school places without addressing the growing crisis of competition for training places. It is within that context that the Medical Training (Prioritisation) Bill must be understood. There has been a direct correlation between the lifting of visa restrictions in 2020 under the Conservatives and the dramatic rise in competition for foundation and specialty training posts. Maybe that was one of the Conservatives’ Brexit bonuses that they so eloquently talked about. This needs to be addressed, because otherwise we risk training doctors for a system that cannot support them. We are recruiting doctors from abroad at a time when there is already a substantial pool of eligible applicants who have trained in the UK or are already working in the NHS. That cannot be right.
General practice is particularly reliant on international doctors, with half of first-year trainees having qualified outside the UK in 2024. Let me be clear, because this point matters enormously: international medical graduates have always played, and will continue to play, a vital role in our NHS. Many of our hospitals and services simply could not function without them. The Bill does not diminish that contribution, and neither does it seek to close the door to international talent, but it does ask fair and reasonable questions. When we are spending almost £4 billion every year to train doctors in the UK, is it right that those doctors are increasingly unable to access the very training posts that they need to progress? Is it right that huge amounts of taxpayers’ money is spent training doctors, only for that investment to be lost when doctors are forced out of the system or choose to go overseas or into the private sector? If we are honest with ourselves, how progressive is it that we poach doctors from countries that desperately need them, while we have our own brilliant and willing recruits who cannot get jobs here?
If we are serious about building an NHS that is stable, resilient and fit for the future, we must also be serious about retention and recruitment, so we must ensure that those we train can stay, specialise and build careers here at home. What is the alternative? We train thousands of talented, hard-working young people at significant public expense, only for them to hit a wall, feel undervalued and leave either the NHS or medicine altogether. Every doctor we train in the UK who chooses to leave is an enormous loss for our health service and our country. It is such a waste of talent and money. We cannot afford to lose our next generation of doctors—the future of the NHS depends on it—yet that is where we are headed unless we do something now. It is urgent.
Prioritisation is not about exclusion; it is about safeguarding public investment and guaranteeing the long-term sustainability of our NHS workforce. It is about ensuring that the NHS remains an attractive place for young doctors to build a career, and that doctors in this country feel valued, which the previous Conservative Government failed miserably on. The Bill sends an important signal to young people in this country considering a career in medicine that we want them to build a long and fruitful career right here in the UK, in our NHS. It says to those currently picking their A-level options or deciding whether a medical degree is right for them that their hard work will be rewarded and we want them to succeed.
The Bill is not a silver bullet. It will not solve every workforce challenge facing our NHS overnight, but it is a sensible and necessary reform that will go a significant way towards dealing with a deeply concerning and growing problem. If we care about the future of our NHS, we must care about the doctors in it and the doctors who will sustain it in the years to come. For the sake of the future health and viability of our NHS, I therefore urge all Members to support the Bill.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
I will start with what is now a traditional declaration: I am a non-practising doctor and my wife is a doctor. I thank the Secretary of State for his comments, and for thinking through the content and merits of my new clause 2, on allocation based on merit. I hope that, as the Bill proceeds through this place and the other place, he continues to focus on that, because it is a very important point. For my Second Reading speech, I am not going to focus on the details of new clause 2—I will hold that back for Committee. Instead, I want to make some general comments.
In a sense, the Bill treats the symptoms of what has been happening in the medical workforce. I do not think it is a cure for the fundamental disease or the problems we have had over the years, which are in part down to a creeping de-professionalisation of the medical profession. I also think they are down to the way we have approached doctors’ appointments to placements, and how we assess their skills and CVs, and how that then leads to different appointments and places. Doctors are thrown from pillar to post, subject to the whims of a computer or a training programme. It has been shown time and again that one of the most important things in people’s eyes, or at least what gives most work satisfaction, is autonomy.
Unfortunately, we have sleepwalked into a situation, in pursuit of a weird type of fairness in the allocation of jobs, that works towards equality of outcome as opposed to equality of opportunity. Doctors have found themselves unable to compete or have control over their lives. Where they are allocated to their foundation school or their specialty training has a real, material impact. Crucially, within allocations, the geographical regions are huge. That means uprooting: moving your family and your social network. In the training scheme there really is no power that a doctor can exert in terms of choice or preference. My understanding—I am a creature of the Nursing and Midwifery Council and the Medical Training Application Service, when I was coming through and applying for posts—is that we just used to let doctors competitively apply for different posts and put together a sort of portfolio CV. That has all changed.
There is now the allocation to training programme schemes and national contracts, which is something I have been campaigning about for quite some time. Do not get me wrong: I think the way the BMA has behaved is absolutely appalling. I categorically and unreservedly condemn the approach that it has taken, and not just under this Government but under previous Governments over various disputes concerning junior doctors. But the fact that doctors have found themselves in a situation where they need to have a militant trade union is a consequence of the training schemes, programmes and national contracts not treating doctors as professionals when it comes to applying for jobs.
It also means that the training providers, the trusts and the integrated care systems, cannot provide options that doctors might want to compete for. They cannot say, “Well, we’re a really good research unit, so we’re going to have an offering that pursues a certain type of doctor who wants to go down the academic pathway.” We do not have trusts or regions that can say, “Actually, this is an area where there is quite a lot of social and economic deprivation, so we want doctors who are interested in certain specialties.”
For all sorts of different reasons, there are parts of the country that are oversubscribed and parts that are undersubscribed. We cannot use what we use in every other walk of life, which is changing remuneration to encourage people to go to other places. We cannot say, “You know what? Let’s look at flexible working arrangements.” As part of my medical school rotations, I was in Barnstaple. I can only imagine that if the trust for Barnstaple had recruitment challenges—I do not know if it does or does not—then it could look at whether people are into surfing or ensuring they could get involved in other activities outside of medicine. Dare I say, as a former doctor, that medicine is important but there are more important things than people’s careers, in particular their work-life balance. We have a system that does not enable that to happen. The behaviour of the BMA is, in a sense, a consequence of dismantling the normal human experience in the approach to the selection and allocation of jobs.
That has real consequences locally. Ashford and St Peter’s, my local trust, struggles to recruit because of the proximity to London, which has London weighting. Since we are on the border of London, to look at it purely financially—if that is the main priority—it makes more sense to pop into London and work than it does being employed in my area. Runnymede and Weybridge, by the way, has house prices and a cost of living that are equal to a big chunk of London, but there is no approach to regionalisation.
I am really glad that the Secretary of State is in his place to hear my contribution. I will say to him something that I have said to many previous Secretaries of State. When he is in those difficult negotiations with the BMA and hears from doctors about the workforce experience challenges that they have, would it not be better if we trusted doctors—and, for that matter, anyone who is subject to a national contract—to make decisions for their own lives, and that we devolve decision around pay and terms and conditions to some form of regional unit? For medicine, the obvious solution would be the integrated care systems, but there could be different solutions and ways of approaching it.
I think ICS devolution would make the most sense, but there are other opportunities to do it. That way, it moves from the Government essentially getting stuck in the middle of doctors, who are making difficult decisions about their careers and having to balance and judge different T&Cs of work, and the employers, which are different NHS trusts, being unable to use the normal mechanism that any other employer would use to recruit and incentivise people. If we do not do that, unfortunately the consequence is a Bill like the one we are debating: ever-increasing state intervention to try, in the absence of a market system, to impose a command economy.
The Secretary will have seen the issues dealing with local doctor prices. The fact that we have struggled with high locum payments for so long is because we do not allow the doctor employment market to resolve itself for adjustments in contracts. The system would save a huge amount of money overall if, rather than having a huge amount of money going to locums and a national contract system for doctors, we let the market sort it out. I will support the Bill, but I see it more as palliation than the definitive treatment that we need to solve the workforce problems for the NHS going forward.
Lewis Atkinson (Sunderland Central) (Lab)
I welcome the Government bringing forward this legislation, and not just in response to the significant concerns that doctors currently have about access to training places, but as an important part of a reset, with a longer-term approach, to ensure that we have an NHS workforce that is fit for the future.
I am going to go off script and respond to some comments that the shadow Secretary of State, the right hon. Member for Daventry (Stuart Andrew), made. He rightly pointed out that the Bill is about prioritisation, not immediate capacity. However, in week one or two of NHS manager school, one of the core techniques that is taught is about capacity and demand modelling. A fundamental assumption about the capacity of our workforce going forward is retention—how long they will work over the course of their careers. The GMC is absolutely clear that an international medical graduate will, on average, work for a shorter period of time in the UK than a UK medical graduate—they are more likely to leave.
I suggest that it is entirely sensible that the Government are bringing in the legislation now, in advance of their NHS workforce planning, because the Bill fixes a core assumption of that plan. To give an example, I have managed cancer waiting lists and, knowing that I have a list of patients I am responsible for, feared that the lower gastrointestinal oncologist who is getting on will announce their retirement without a clear succession plan, as lower GI oncologists are in short supply. This Bill is not just the right thing to do but provides the absolute clarity around medical capacity that will allow the Government to do the proper demand work that is necessary to build the NHS of the future.
Turning to the immediate situation, I have heard the views clearly expressed by medical graduates in Sunderland and across the country about the bottlenecks they face when trying to secure foundation and specialty training places. Many are left in prolonged periods of uncertainty, unable to progress despite years of study.
When we talk about trainees, we risk giving the impression that the contribution made by these talented young people will all be in the future, but of course, in reality, people in training positions provide a huge contribution of direct service to the NHS today, forming the core of the medical workforce in hospitals up and down the country. When I was an NHS operational manager, I had to get to know the new rotation of core, foundation and specialty training doctors every time as they rotated around. Meeting those inspiring and motivated young people was not just a lovely thing to do but a hugely important one, as the day-to-day care of the patients in the specialties I was responsible for was largely provided by the people on those training courses.
That experience also highlighted to me how, over a decade under the previous Government, there was a total failure to put in place a proper care framework for those foundation and specialty doctors, which left UK-trained doctors competing in increasingly crowded pools. We have heard some of the numbers already from the Secretary of State: in 2025, there were more than 30,000 doctors competing for just 9,500 training posts. That is not a system that shows proper regard for the commitment of medical graduates or for their wellbeing, let alone a system that is designed to meet the future needs of the country or the NHS. We invest hundreds of thousands of pounds training each medical student, but too often we fail to retain them. That represents a loss not only of talent, but of public investment.
However, I think it is important, as others have done, to put on the record our recognition of the enormous benefit brought by medical professionals who have chosen to come to the United Kingdom and dedicate their careers to the NHS. I know that will continue even after this legislation is passed. As I always say, healthcare is a team sport, and in my experience, when a team is working together under significant operational pressure, the commitment of everyone in going the extra mile, no matter which country they trained in and what nationality they are, is always exemplary. That is the case throughout the NHS that I know.
The contribution of international medical and wider clinical staff to our NHS is invaluable, and it must never be diminished or forgotten. I know that will continue. It is important, therefore, that the discussion of the Bill is not interpreted as a slight on their contribution or commitment.
In aggregate, as I have said, the GMC has been clear that while international graduates are essential to the functioning of our health services, they are statistically more likely to leave the UK workforce within six years of joining compared with those who train here. That reality makes clear the risk of overreliance on a system that is unpredictable and, ultimately, unsustainable. This Bill is about balance, not exclusion; it is about ensuring that the significant public investment we are making in training doctors in this country translates into a stable and sustainable workforce for the years ahead.
Jim Shannon (Strangford) (DUP)
As others will know, I have raised this matter a number of times in the Chamber. In Wales, for example, the health service pays students’ fees and trains them, and students then have an obligation to stay with the Welsh health service for a period of time. One of my constituents, whom I know well, did just that. She went there, received training and stayed there. What happened, of course, is that she met someone in Wales who she fell in love with, and now she wants to stay there, so we will lose her in Northern Ireland. The point I want to make is this: if paying the fees retains the staff in Wales, should we not also do that in Northern Ireland, Scotland and England? We could do so in this Bill.
Lewis Atkinson
There is some merit in the hon. Gentleman’s proposal, not just for medical training but across the clinical workforce. As Members have acknowledged, we pay significant sums of public money training clinical staff, but the graduates incur significant student debt. If a UK-trained undergraduate student decides to work abroad, the UK taxpayer will have invested a significant amount in their training, and that is then lost. It strikes me that there is an opportunity for the Government to think about the sort of incentive that the hon. Gentleman describes as part of wider workforce planning.
That is pertinent to my next point about the importance of the medical workforce reflecting our wider society, particularly the working class communities of the north-east of England. I want to ensure that a young person doing well at a state school in Sunderland has as much encouragement and access as anyone else in the country to study medicine and, crucially, progress through the ranks to the highest grades. We have heard some talk of international medical schools, but I can absolutely assure Members that there are not state school-educated kids in Sunderland thinking that they will pay privately to study in Grenada or anywhere else.
As the Secretary of State rightly pointed out, there have been welcome improvements on diversity in the NHS, but we often fail to consider socioeconomic background in that. The first line of the NHS constitution states:
“The NHS belongs to the people.”
But sometimes it can feel like it is staffed by a pretty unrepresentative slice of the people, particularly in medical roles.
In that spirit, I recognise the excellent work of the University of Sunderland medical school, which has placed widening access at the heart of its mission. Building on a 100-year history of wider clinical training, the school opened in 2019, shortly before the covid-19 pandemic—a period that starkly exposed our over-reliance on overseas recruitment and underlined the importance of growing our own workforce. By 2022, 47% of the University of Sunderland’s intake were local students, and it now ranks sixth in the UK for student satisfaction.
However, it is no good universities like Sunderland in my constituency doing excellent work on widening participation at recruitment stage if when we get to foundation training and specialty training those students are disadvantaged in competition. In my view, the Bill will help to ensure that talent nurtured by institutions like the University of Sunderland is retained and prioritised for the benefit of our NHS.
I highlight that medical schools such as Sunderland are increasingly placing a huge emphasis on training their medical students in a multidisciplinary environment alongside the trainee nurses and trainee pharmacists of the day, so that they are prepared to work in the multidisciplinary environment that our NHS rightly demands. I am not sure that all international undergraduate courses are always so advanced, so it is right to prioritise this UK-based training approach for the multidisciplinary ethos of the NHS in the future.
Other Members have mentioned the wide variation in specialist training fill rates, and GP recruitment has been mentioned as part of that. It is also worth saying that the national statistics about specialty training mask significant regional variations. The GP specialty training fill rate has been as low as 62% in the north-east of England, and as we have heard, over 73% of applicants for GP specialty training in 2023 were international. That has a disproportionate effect in regions like mine. My constituents want to have the confidence that there will be a stable GP workforce as part of our community for the long term. I cannot tell them in all candour that the status quo delivers that, so we must make changes of the type that the Bill sets out.
I hope that by introducing effective, regulated training pathways, the Bill will improve retention and strengthen workforce planning in our communities, including in areas such as women’s health, where training provision has not kept pace with rising demand. When I look at the shape of the NHS elective waiting list, it is no coincidence that some of the trickiest waiting time problems are in specialties such as gynae, where we have had recruitment and training challenges in recent years.
To close my remarks, I re-emphasise the link between capacity and demand, which I hope the Minister will touch on in advance of the workforce plan. Will she also say a little about the medical training review and the phase 1 report for NHS England and how the Government will work with that?
Katie Lam (Weald of Kent) (Con)
The NHS has a deeply unusual set-up when it comes to its workforce. The Government set the rules for who can qualify as a medical professional, decide how many medical training places to offer and control the flow of medical graduates into the NHS. They decide how much to charge medical students and under what conditions and since the NHS is by far the country’s primary employer of medical professionals, the Government also have effective control over the pay and conditions of those who qualify, and are responsible for deciding where medical trainees go and when. As a result, the health service workforce is not subject to the same labour market conditions as other organisations. The Government control both the supply of and the demand for its own workforce.
It is welcome to see this legislation before us, which rightly gives priority to British-trained doctors for NHS training posts, particularly at the early stages of their career. Those who decide to practise medicine in this country should have reasonable confidence that, if they wish to do so, they can build a career here. The Bill goes some way towards addressing the current situation in which British-trained doctors are being squeezed out of the system in favour of overseas recruits, despite the Government’s control of both the supply of new British graduates and the number of training places.
In 2025, 15,723 British-trained doctors were set to compete for 12,833 NHS training posts. This is already a competitive environment. However, the NHS’s focus on overseas recruitment meant that those British-trained doctors were also forced to compete with another 25,257 overseas trainees. It is clearly absurd that the British Government should restrict the number of training places offered, while also increasing demand for those places through a policy of overseas recruitment, having spent hundreds of thousands of pounds to train each medical student in this country.
That is particularly true when we know that doctors trained overseas are two-and-a-half times more likely to be referred to the GMC by their employer than doctors trained here. Many overseas recruits are hard-working and well-meaning, and many are excellent at the work that they do. Yet we must be honest about the fact that relying on overseas recruits instead of training more medical professionals in this country is not always a like-for-like swap.
Both medical trainees and patients would benefit from a system that trains more doctors here and ensures that those British-trained doctors are given a reasonable chance at moving quickly into an NHS training post. The system should also reward ability and allocate training posts based on merit. The current system of random allocation not only fails to reward our most talented medical graduates but creates profound uncertainty for those at the start of their careers.
Last summer, one of my constituents qualified as a doctor. He graduated with one of the very highest marks in the year—he was in the top three—from one of the most competitive medical schools in the country. He is clearly an outstanding student and will make an incredible doctor. In any sane system, he would have been placed immediately and been able to choose his location and specialism to keep him incentivised and happy within the NHS and to make the most of his obviously considerable talents. Instead, because of the mismanagement of places and the lottery system, he was not placed at all in the first round of allocations. He was not placed in the second, the third or even the fourth round. With fewer than four weeks to go, he still had no placement and no sense of where he would spend the next few years of his life, including whether he might be able to live close to his partner, who was also a doctor and graduating with him.
That is an insane way to treat our most brilliant graduates. I hope the Government will change their mind and amid their other good changes accept the amendment tabled by my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), to which I have added my name, to ensure that training places are, in future, allocated on the basis of merit. If the Bill aims to provide certainty to British-trained doctors that they will be able to build a career in this country, which is a noble aim, it should also recognise that the current system of randomly allocating training places is one of the biggest causes of uncertainty in our system. It would be far better for doctors and patients to have a system that instead prized excellence, providing a clear basis on which medical trainees could be allocated and creating a system that rewarded the most talented graduate doctors. It is right that the health service prioritises British-trained doctors. It is also right that, across every area of the public sector, we reward talent, effort and merit.
Ms Julie Minns (Carlisle) (Lab)
I would like to place on record my interest as the mother of an NHS nurse.
It is a privilege to speak in today’s debate and to do so on behalf of my Carlisle constituency, which I am proud to say has recently taken a transformative step with regard to medical training, with the opening of the Pears Cumbria School of Medicine. This new graduate school of medicine is being jointly pioneered by Imperial College London and the University of Cumbria, and I put on record my thanks to Professor Martin Lupton, Professor Mary Morrell and Professor Brian Webster-Henderson, whose vision the medical school is, and to Sir Trevor Pears and the Pears Foundation, whose generosity has made their vision a reality.
As with the Medical Training (Prioritisation) Bill before us today, the Pears Cumbria School of Medicine purposefully prioritises home-grown talent. The school also seeks applications from students from non-traditional backgrounds, encouraging applications from groups that are less well represented in medicine. As part of the school’s commitment to widening access, the four-year graduate programme has no GCSE or A-level requirements. The reason for this approach is simple: it provides the best chance, year in, year out and generation after generation, for Carlisle and Cumbria to produce our own doctors. These doctors will often come from the surrounding communities and, in part because of where they are trained, will be deeply committed to the local area and its people.
In geographically remote areas such as ours, the ability to train and retain our own doctors is critical. It matters enormously. Cumbria faces some of the most entrenched health inequalities in the country. We have struggled for years with recruitment and retention across both primary and secondary care, and our hospital trust relies heavily on locums. We know all too well that the traditional model of medical education, centred on large metropolitan teaching hospitals, simply does not produce or attract the workforce that rural areas such as mine need.
That brings me back to the Bill before us today. The Government are right to prioritise UK graduates for foundation and specialty training places. The Bill represents a significant and welcome step towards restoring confidence in the training pipeline, addressing the growing mismatch between the number of medical graduates and the number of available posts, and ensuring that those who have invested years of training in our NHS are not left without a route on which to progress. It is a sensible, fair-minded reform that will bring much-needed stability to a system that has been under real strain.
For Carlisle and Cumbria, however, the issue is not only who gets priority but where the training posts are located. At present, although foundation training can be delivered locally, it can be delivered only where accredited F1 and F2 posts exist. In Cumbria, the number of those posts is limited. The North Cumbria integrated care trust is able to provide places for some foundation trainees, and others will find F1 and F2 posts in primary and community care settings, but further accredited places will be required at foundation level. I ask the Minister to explain, in her response, not just how the new powers will prioritise UK medical graduates and members of the priority group, but how the powers might be used to widen the availability of accredited F1 and F2 posts in areas such as Cumbria, where there is a shortage of doctors.
Even if we successfully retain Pears medical school doctors in Cumbria for their foundation programme training, the risk of losing them when they come to their specialty training programme is even greater, because doctors will overwhelmingly choose to settle near to where they complete their training, particularly their specialist training, and Cumbria will never be able to provide every specialty training pathway within the county to retain our home-grown talent. We simply do not have the population size or the case mix to deliver all specialisms in our trusts. However, that does not mean that we cannot design a system that keeps trainees connected to Cumbria throughout their training. I therefore urge the Minister to consider how the regulation-making powers granted by the Bill can address that issue.
Pears medical school believes that a new approach to specialist training is the way forward. I recently wrote to the Secretary of State seeking a meeting between him and representatives of the medical school to explore that approach, and I very much hope that he will soon accept that meeting. I also ask Ministers to consider seriously how specialty training can be structured so that trainees who complete F2 in Cumbria are supported to remain based in the region, even if their specialist rotations take them elsewhere for short periods. That could mean funded return-to-base arrangements, rotational models anchored in Cumbria, or formal partnerships between specialist centres in UK cities and community providers in Cumbria. In other words, we need a training pathway that allows people to specialise with Cumbria, not away from it, because if we allow the system to pull trainees out of Carlisle at the very moment they are beginning to put down roots, we will simply recreate and repeat the cycle that has left rural areas like mine short of doctors for too long.
The Pears Cumbria School of Medicine is a once-in-a-generation opportunity to reshape the medical workforce in Cumbria, but it will fully succeed only if training programmes are aligned with its purpose. In welcoming the Bill, I urge Ministers to ensure that its implementation meets the requirements and needs of remote communities. Prioritisation is important, but place matters too.
Madam Deputy Speaker (Judith Cummins)
I call the Chair of the Health and Social Care Committee.
Layla Moran (Oxford West and Abingdon) (LD)
I broadly welcome this common-sense Bill. I am left rather flummoxed that we got to this point, but here we are. It is self-evident that if we pay to train doctors, they should be prioritised and encouraged in all manner of ways to stay in the UK. I understand why we must expedite the measures: talks with the BMA are ongoing and we want to avert strike action. I sincerely hope that the BMA and all resident doctors hear this debate and see that Parliament is listening to them, and that, together, we can avert industrial action, which does nothing to help the recovery of the NHS—fingers crossed that this works.
I will talk about the fears that I have heard about in my postbag. We are here in part because of the lack of a big joined-up workforce plan. We have been talking about such a plan for many years, but the previous one was clearly flawed, no matter which way one looked at it. It is in that context that we are bringing forward this very specific and quite technical point.
However, for resident doctors—formerly known as junior doctors—and for medical students, this is not technical at all; it affects their lives. Marco, an Oxford medical student, wrote to me last year to say that he was
“particularly concerned about the prospect of unemployment from being unable to secure a training position.”
He pointed out that countries such as Canada, the US and Australia already have structured approaches, while England has fallen behind.
Yasmin, another constituent, said:
“I studied for six years and graduated with over £70,000 of debt. I completed my foundation programme in a crumbling district general hospital, where I was routinely overworked and trying to care for patients in corridors under conditions that felt increasingly unsafe. I worked extremely hard to provide the best possible care despite these circumstances. Yet now, after two exhausting years, I find myself unemployed.”
Yasmin told me that many of her colleagues had been forced to take non-medical jobs—in administration, hospitality and other sectors—simply to survive. Some will never return to medical practice at all.
If our brightest and most committed young doctors are worried about unemployment, or are leaving the profession altogether, the system is clearly fundamentally broken and needs reform, so the Bill is a necessary step. Notwithstanding the good reasons to support the Bill, we must be mindful that it may well have unintended consequences if it is not implemented fairly. I am particularly concerned about the impact on overseas doctors who have already made significant life decisions based on the current rules.
Lamia, one of the many medical graduates in my postbag this week, said:
“Over the past two years, I have organised my professional life around the UK’s published requirements, completing examinations, securing GMC registration, and investing significant personal and family savings, even incurring debt. I also declined a stable job opportunity abroad to focus on the MSRA based on the rules at that time.”
She feels that to suddenly change things retrospectively is an injustice. The Government must clarify what “significant experience” means, because this will have an effect on people’s life choices. Perhaps the Minister could indicate that today—are the Government looking at one year, two, five or 10?
There is also the issue of British universities’ overseas campuses, which we have heard about from a number of Members. Graduates of institutions such as Newcastle University Medicine Malaysia, Queen Mary University of London in Malta and St George’s in Cyprus are excluded from the Bill. The vice-chancellor of Newcastle University, Professor Chris Day, wrote to me to say:
“these graduates complete the same medical degree, receive the same accreditation, and the majority then go on to train and work in the UK.”
As these students studied in English to UK standards, they transition into the NHS as quickly and effectively as home-based counterparts. He makes the point that they are incredibly effective very quickly within the NHS.
The Secretary of State explained why these students are being excluded: the Government cannot determine how many overseas campus places these universities will provide. However, to flatter my friend on the Health and Social Care Committee, the hon. Member for Chelsea and Fulham (Ben Coleman)—he is not here, but I know he will appreciate the flattery—he is absolutely right that the Minister could include a tightly drafted exemption for those who have already started those courses. I heard what the Secretary of State said about the fact that the terms and conditions on the website never guarantee a post, but we all know how this works. If we buy a product, understanding that for years and years it has worked a certain way, it cannot suddenly change halfway through. It would only take a year or two for this to wash through the system, so that we do not exclude those who have made the commitment and spent huge amounts of money in good faith, thinking that it would help. There could be some movement here, for a relatively small number of people. I hope the Government are listening to those voices. I am not sure it is a necessary battle, and it could be sorted in future regulations.
The other concern I have, which I have raised with the Minister and with the Secretary of State when he made a statement on the strikes before Christmas, is the signal that the Bill is sending to our overseas doctors. The more that we can all say this, the better: they are absolutely critical to our NHS. The chief executive of the GMC, Charlie Massey, gave evidence to the Health and Social Care Committee last week, and he was clear: doctors who qualified overseas make up around 42% of the medical workforce. Of course, we are not talking about that number, but if even a small proportion now might not want to work in our system, it will leave gaps that we simply cannot fill. Any conversation about prioritising UK graduates should explicitly recognise the immense contribution they make.
I want some concrete answers on this issue. We can keep talking about it, but will any measures be put in place? How will we show our appreciation? We must bear it in mind that these are highly mobile individuals to have come here in the first place. I understand the mantra that this is prioritisation, not exclusion, but if they find themselves excluded from some of the more popular specialisms, they may decide that they would rather leave the country and pursue that specialism elsewhere than stay in this country. We need them. There are potential unintended consequences in the short term. Has any modelling been done of how this might feed through the system? If the impact is negligible, what does that mean in concrete terms? Our Committee’s concern is that losing even a small number could have adverse consequences down the line.
My final point is on the workforce plan. I am confident that the Committee’s letter to the Minister is on her desk, and I hope it will be expedited soon. It would be better to flesh out some of the detail. The Secretary of State set out what the delay is and said the plan will be published in spring. I know that these things change, but we need to know exactly what is happening behind the scenes, so that we can get an understanding of the issues that are now being incorporated that were not there before. I agree we have to get this right. It was not right first time, and we have already had so many workforce plans that I understand why there is scepticism among the Royal Colleges and elsewhere that this one will work. Let us get it right—absolutely—but in the interim, by making such changes without the bigger picture, I fear we will end up doing more damage. England has 3.2 doctors per 1,000 people, but the OECD average is 3.9, and it is 4.5 in countries like Germany. The BMA estimates that we need another 40,000 additional doctors, so the 4,000 places announced by the Secretary of State do not even begin to get there.
The other issue, of course, is the leaky bucket: retention. Every time I meet anyone in the sector they say, “How do you solve the workforce issue?” I understand why the Government focus on training—it is an issue they can dial up when they can—but the thing that really matters is retention. Having a conversation about training places and inputs is essentially turning on the drip of a tap when we have a big hole at the bottom of the bucket. For GPs, we had a session on the shift to community, and if we are going to deliver that, boy do we need home-grown doctors as part of it—I totally get that. According to a survey by the Royal College of General Practitioners, one-third of GPs might leave in the next five years, with stress being the leading factor, and with 44% citing unmanageable stress, and 73% saying that patient safety as a result of the high work load was causing them moral injury. That is mimicked across all the different specialisms, and it is something we need to address. I appreciate that it is not an issue for this Bill, but it has a material effect on whether these measures will solve the problems that the Government say they will.
In conclusion, I welcome the Bill and urge the Government to think again about overseas campuses, even in a short, time-limited, tight way. Let us also say again how much we value our international doctors, and how much we want them to stay. I am looking forward to hearing more from the Minister than just the warm words that I am sure she will provide. What else could we do to ensure that doctors believe that the NHS is a place where their career can thrive, not just make it slightly more bearable than it was before? We all want the NHS to succeed; I am sure they do too and that they want to stay and be part of it.
Jen Craft (Thurrock) (Lab)
People are the backbone of our NHS, and I am incredibly grateful to the healthcare staff who work in it, particularly in Thurrock, and who care tirelessly every day, often in difficult conditions, for my constituents. As a lifelong Thurrock resident, I have experienced their excellent care as a patient, and now as an MP I see at first hand when visiting services in our area that they perform all the time to a high level despite the immense pressure they are under.
This Bill is about supporting our excellent NHS workforce, prioritising home-grown talent to ensure there is a pipeline for the next generation of fantastic doctors and nurses. It is right that it is introduced as emergency legislation, because the former Government left the NHS in a critical condition. The Tories’ botched policies on immigration saw students and junior doctors who study in the UK competing against the world for foundation and specialty roles. Visa and immigration changes meant that thousands more international workers applied for coveted training positions in the NHS. In 2019, there were 12,000 applicants for 9,000 specialty training places. That figure has now soared to nearly 40,000 applicants for 10,000 places, with twice as many overseas-trained applicants as UK-trained ones.
Those bottlenecks mean that we are losing home-grown talent. We are losing people who grew up in our communities, studied at our schools and universities, and know our NHS back to front from personal experience, because they move to jobs abroad or in the private sector. The Bill begins to correct those mistakes. It implements the commitment in our 10-year plan for health to put home-grown talent at the front of the queue for medical training posts, ensuring that UK graduates are prioritised for foundation and specialty training places. It is a signal of this Government’s intent to improve terms, conditions, and opportunities for doctors. It is a downpayment on the tangible progress offered in the deal that the BMA unfortunately rejected in December, and it marks a critical step in supporting long-term sustainable workforce planning for the NHS, ending our—let’s face it—unethical addiction to hiring from abroad. There is also an economic case. Each year, we spend £4 billion on training medical students and doctors, only to not offer those graduates a training place to continue their careers in NHS. By ensuring that we retain that talent, we will ensure that patients in the UK benefit from the investment, which is better for local doctors and the taxpayer.
Retention of staff is particularly vital in Thurrock, where we have a critical shortage of GPs and an acute hospital trust ranked among the bottom in the country. It has always been difficult to recruit doctors to our area, not least because if staff get a job 10 miles down the road—even one mile down the road, in some cases—they can earn significantly more because they will benefit from London weighting. Last year, I held a roundtable with local GPs to ask them why they chose to work in our area and how I could encourage more young doctors to make it their base.
Many young people growing up in Thurrock say that they would like to return home after medical training. They are ambitious to improve our NHS and they want to serve their community. They want to live and work in the area where they grew up. Ensuring that those graduates are prioritised to local places and have local career training, advancing their ongoing professional development, is key to unlocking a sustainable long-term workforce for our area. I urge the Secretary of State to use the opportunity afforded by both this Bill and the upcoming workforce plan to ensure that the right professionals are in the right places geographically, in order to fill historical gaps in provision.
I also urge the Secretary of State to use the workforce plan to ensure that training, recruitment and retention in all professional areas is considered and planned for, particularly in those vital professions that are often overlooked. Allied health professionals, such as speech and language therapists, physiotherapists and occupational therapists, spring to mind and must feature in the plan, particularly those working in paediatric care, where waits for diagnosis are often felt acutely. I add a personal plea for the unique and important role played by learning disability nurses, who are already under strain. The charity Mencap, among others, warns that the role could collapse in three years’ time without urgent Government action. Those nurses are crucial in ensuring that some of the most vulnerable people in our society receive safe, effective healthcare, and in avoiding preventable deaths.
I welcome that the Secretary of State has brought this Bill forward, and the efficiency and speed shown in turning the legislation around at pace. I urge him to use the same efficiency and speed to bring forward the workforce plan, in order to set the right direction of travel to recruit, train and retain home-grown talent. I encourage him to bring forward the workforce plan as soon as possible, to ensure that those gaps in vital provision are addressed and to support our communities through our fantastic NHS well into the future.
Gregory Stafford (Farnham and Bordon) (Con)
At the heart of the Bill is a simple test: does the Bill improve care for patients? Every delay in training, every cancelled clinic and every rota gap caused by workforce instability ultimately lands on the patient. It means longer waits, greater travel distances and, in too many cases, care that comes too late.
I was recently contacted by my Farnham and Bordon constituent, Dr R, as I will call her, who is a UK-trained medical graduate. Like thousands of others, she completed her studies in good faith, expecting a clear and credible pathway into the NHS. Instead, she now finds herself in a system where non-training posts are disappearing, competition ratios for training places are rising sharply and the holding pattern roles that once allowed junior doctors to remain clinically active while reapplying have all but vanished.
This is not a niche concern affecting a handful of individuals; it is a systemic failure that directly impacts patients. When trained doctors are unable to progress, fewer reach consultant and GP level in the years ahead. Services become overstretched, continuity of care is lost and waiting lists grow even longer. That is why I support the intention behind the Bill. Prioritising UK medical graduates, ensuring that the UK foundation programme is genuinely delivered in the United Kingdom and restoring confidence in the medical training pipeline are all necessary steps if we are serious about rebuilding NHS capacity for the benefit of patients.
I have supported amendments to this Bill because they strengthen those aims. They ensure that UK medical graduates are properly recognised as such, that training programmes are UK-based in substance rather than just name, and that allocation of training places is grounded firmly in merit, clinical knowledge, aptitude and performance. Patients, quite rightly, expect their doctors to be selected on ability and doctors expect fairness, and those principles should command support across this House. I also welcome new clause 2, tabled by my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), which addresses growing concern among doctors and patients about the erosion of merit-based progression. When merit is undermined, morale suffers; when morale suffers, retention suffers, performance suffers, and ultimately patient safety suffers.
As such, the context of this Bill matters. Resident doctors have received cumulative pay rises approaching 30% over recent years—among the highest in the public sector. Despite this, industrial action has continued. It is increasingly clear that the BMA is determined to extract every possible concession from the Government, using sustained disruption as leverage. While I do not align myself with some of the Secretary of State’s more inflammatory language, I do share the realisation he has belatedly reached: that repeated above-inflation pay settlements have not brought this dispute to an end, and that further concessions risk rewarding brinkmanship rather than restoring stability for patients.
However, in pressing its case so aggressively, the BMA has inadvertently shone a spotlight on a genuine and serious problem in the system: a broken training and progression pathway that leaves UK doctors without secure routes into the NHS. That problem is real, it affects patients, and it must be addressed regardless of the outcome of pay negotiations. That is precisely why this Bill matters and why it must not be treated as a bargaining chip, yet that is exactly the risk created by the way in which the Bill is drafted. It will come into force only when the Secretary of State gives permission. In theory, that may appear sensible; in practice, it allows a patient-benefiting reform to be delayed, diluted, or deployed as leverage in negotiations.
Before Christmas, Ministers openly discussed this legislation in the context of talks with the BMA. The implication was clear: progress on training reform was conditional. Now, months later, with industrial action ongoing, it appears that the same dynamic may be emerging again. That approach undermines confidence among doctors and, far more importantly, undermines care for patients. If a measure will improve the NHS for patients and doctors alike, it should be implemented because it is right, not because it is tactically useful. That leads me to a number of questions for the Minister to answer when she responds, which are all grounded in patient outcomes.
Patients need capacity and certainty. They need more doctors progressing through training, not further delays and ambiguity. If the Government genuinely believe that prioritising UK graduates will strengthen the workforce, why is the commencement of this Bill discretionary at all? What assurance can the Minister give patients that these reforms will not be delayed indefinitely while negotiations continue? Patients have already endured significant disruption from industrial action—hundreds of thousands of appointments and operations have been cancelled or rescheduled. Without further pay concessions, can the Minister explain how this Bill will reduce the risk of future disruption, or is she effectively accepting that patients may face continued instability?
There is also the question of scale. The BMA itself has said that the Bill does not go far enough to close the gap between applicants and available training posts. What assessment has been made of how many UK graduates will still be unable to access foundation or specialty training even after this legislation is passed, and what will that mean for patient access to care in the coming years? Patients in many parts of the country already struggle to access GPs, psychiatrists and emergency medicine specialists. How will the Secretary of State and the Minister ensure that these reforms do not inadvertently worsen shortages in hard-to-recruit specialties or underserved areas?
Finally, there is the question of credibility. If this Bill is genuinely good for patients, good for workforce stability and good for the NHS, why should its implementation depend on a ministerial decision at some undefined point in time? Why not give doctors and patients certainty by bringing it into force immediately on Royal Assent? This House has a responsibility to put patients first, not leave patient care hostage to industrial negotiations. That is why I strongly support amendment 1, which would ensure that the Bill comes into force at the moment of Royal Assent. It removes unnecessary delays, ambiguity, and the risk that these reforms will be postponed indefinitely while workforce and pay disputes continue. UK medical graduates, hospitals and training bodies need certainty that the rules will apply from day one, so that allocations, protections for those trained on military postings, and fairness measures can begin to operate without delay. The amendment would ensure that reforms designed to strengthen transparency, meritocracy and the workforce will take effect when they are needed most. That clarity is particularly important given the absence of a published NHS workforce plan.
We need certainty for doctors that delivers stability for services, which in turn delivers better patient care and better outcomes. That is the standard by which this Bill should be judged, and it is the standard it must meet.
Lizzi Collinge (Morecambe and Lunesdale) (Lab)
It is a pleasure to speak in support of the Medical Training (Prioritisation) Bill. We all know that our NHS faces workforce shortages in many specialties. In my constituency of Morecambe and Lunesdale, the workforce problem, combined with other factors, means that my constituents are not seeing the improvement in waiting times that other parts of the country have seen. The progress that has been made nationally is astounding, and we Government Members should be proud of that, but there are pockets where that progress has not been made, and that is unacceptable. I would welcome more conversations with Ministers about how we can tackle that, and I will continue to raise the matter with the local NHS.
Alongside the workforce shortages, we have the bizarre situation that doctors who need training places are struggling to get them, particularly those who are UK graduates. Competition for foundation and specialty training places has grown, partly because of a 2020 change to visas that lifted restrictions on overseas applicants applying for those training places. I would like to believe that that was done in good faith to try to increase the NHS workforce and to plug specialty gaps, but because of how it was done, UK graduates ended up competing, not with perhaps one other person, but with six other people for a training place. That is clearly unhelpful, particularly when we have already invested so much in their education.
Doctors have taken on a lot of debt to go through their initial training. Faced with this level of competition, and unable to continue their training in the UK, many medical graduates are being pushed to seek employment abroad or, even worse, to leave medicine altogether. Pressure is uneven across the system; some specialties are heavily oversubscribed, while some are left with unfilled posts. For example, there is a 15% staffing shortfall in oncology. For many years, I was the deputy chair of the Lancashire health scrutiny committee, so I saw Tory incompetence in the health service in real time. That particular example adds to the litany of their failures in health. Over 14 years, they made us poorer, sicker and less able to get early help.
This Bill addresses the failure to provide training places for doctors, in order to ensure that UK graduates can continue to train in the UK. It introduces a system of prioritisation for UK medical graduates, and will deliver this Labour Government’s commitment to a more sustainable medical workforce. It protects public investment, reduces excessive competition and ensures that our home-grown talent can become the next generation of NHS doctors. No disrespect to the fantastic medics who come from abroad to work here—they do such a fantastic job, and our NHS would not have survived without that immigrant workforce—but prioritising UK-trained graduates would bring us into line with international norms. Favouring domestically trained clinicians helps countries to ensure that they have a stable workforce. To be honest, we should not be nicking other countries’ doctors, particularly doctors from countries with underdeveloped health systems. I do not believe that is in line with our values.
UK taxpayers invest around £4 billion every year in training doctors, so the aim of any sustainable workforce policy should be to see all UK graduates in training posts. A fifth-year medical student who wrote to me aptly described this Bill as essential to safeguarding what he calls
“fair access to training opportunities amongst UK graduates”,
and to ensure that the NHS workforce pipeline survives in the long term.
I am glad to see the Government addressing this issue with the urgency it deserves. Doctors, of course, are only one part of the health service. Many professions work together to care for patients, but doctors are a vital part of the NHS, and we need to ensure that UK medical graduates can progress their careers. This goes alongside all the other work that the Labour Government are doing to make us healthier as a nation, whether on controlling tobacco and vapes, helping people to afford healthy food, or enabling earlier access to primary care. I urge colleagues across the House to support this Bill.
Robin Swann (South Antrim) (UUP)
As I said earlier, I will be supporting the Bill. I thank the Secretary of State and the Minister for their engagement with the devolved institutions on the Bill’s intentions, and on expediting its progress. Its implications for Northern Ireland, and for the medical workforce spanning the islands, are crucial.
As has been discussed, the Bill introduces a UK-wide duty on providers of medical training to prioritise applicants who have graduated from medical schools in the UK or the Republic of Ireland. While health is a devolved matter in Northern Ireland, I entirely recognise that this legislation is essential to preserving a joined-up and UK-wide approach to medical training and recruitment. For too long, we have seen increasing pressures on training pathways, with locally trained graduates facing uncertainties and bottlenecks when moving from undergraduate education into foundation and specialty training. I hope very much that the Bill will ensure that those who trained in UK and Republic of Ireland systems have a clear and reliable route into employment in those same systems.
I welcome clause 4, which refers to the terms “UK medical graduate” and “the priority group”, but am concerned about the drafting of amendment 9, which was tabled by members of His Majesty’s official Opposition. If Northern Ireland were excluded from these arrangements in any way, by default, it would face an invidious choice between accepting increased competition for limited training places and withdrawing from national recruitment altogether. The latter would place a significant administrative and financial burden on local bodies, particularly the Northern Ireland Medical and Dental Training Agency, and could risk undermining long-established recruitment structures.
I welcome the fact that the Bill does not impose additional costs on health services in Northern Ireland, given that the system is under unprecedented financial strain. Instead, it simply changes the order in which applications are considered for existing programmes, and by doing so, it helps to protect the investment made in medical education. However, I seek an assurance from the Minister in connection with a graduate-entry medical school that was created at Magee College back in 2021. The first cohort of graduates came through in June 2025—69 second-degree doctors and surgeons. I hope that nothing in the Bill will hinder their progression into the workforce. I am sure that the Minister has engaged with the Northern Ireland Health Minister on ensuring that there are no impediments to that progression.
Ultimately, the Bill supports locally trained doctors and maintains the integrity of national recruitment systems. I therefore fully support it, along with its extension to Northern Ireland through the legislative consent motion process. I genuinely wish the Minister well, and commend her on the constructive approach taken to recognising Northern Ireland’s devolved competences while ensuring alignment across the entirety of the United Kingdom. However, I will support the Opposition amendment regarding the timing. In my view, this legislation is not just the right thing to do. It is the timely thing to do in order to tackle the issue of workforce recruitment, and it should not be used in any negotiations with the British Medical Association to resolve another issue out there. I seek an assurance from the Secretary of State, as other speakers have done, that the Bill will be introduced in the right manner, because it is the right thing to do.
Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
I welcome the Government’s plan to change the law. It was obvious to me and to others that such a change would be needed, and it was one of the matters about which the newly elected doctors spoke to Ministers last year.
Imagine, Madam Deputy Speaker, that you have graduated from a medical school, excited at last to be called a doctor, and looking forward to finally getting to work after years of intense study, uncountable examinations and fierce competition. When this happened to me at Sheffield medical school, our early pre-registration posts were organised by the university. We were simply distributed around the local hospitals. We were in familiar locations, with our classmates and consultants who knew us. We began, rather hesitantly, to work as doctors, but suddenly we had responsibility for life and death.
However, something changed. Now young doctors are simply sent by chance, with little notice, to a region of the country they have never visited. They are far from their friends. Ironically, they are now called resident doctors, but that is the very last thing they are; the residences have long since disappeared. The shift system replaced the on-call rotas, and the doctors’ mess disappeared, so hot food was no longer available. Now, if they are lucky, they have an office chair in which to rest, and a sandwich dispenser in a cold corridor. They have no friends nearby, nowhere to live, and nothing to eat at night. It is not really the best start, and these are the young doctors on whom your life may depend. We really must do something to look after the health workers who look after us—all health workers. That does not just mean paying them properly, although we obviously must do so. Today we are speaking about our doctors, for young doctors face a very uncertain future.
After Brexit, many of our European doctors just left. The deficit was filled, as so often in the past, by doctors from the rest of the world. Especially in hospitals that are remote from medical schools—such as my hospital, the West Suffolk hospital in Bury St Edmunds, and the hospital where I worked for so many years, the James Paget hospital in Great Yarmouth—we have always depended on brilliant doctors from many nations, many of whom have become my long-term colleagues and some of my best friends. Immigration rules were altered after Brexit, effectively enabling applicants from across the world to apply for a very limited number of posts. As we have heard, although competition is healthy, it is certainly not healthy for the ratio of applicants to posts to go from about 2:1 to more than 4:1. As we have also heard, this is absolutely the cause of the bottlenecks. UK graduates simply cannot progress and are obliged to repeat years, often as unstructured and unrecognised clinical fellows. They leave the country or give up medicine altogether. The Government have rightly recognised that this must change.
Medical training is a continuum, and the end result is a general practitioner or a hospital specialist—by the way, I much prefer “specialist” to “consultant”. Doctors have five or six years of undergraduate training, and eight to 10 years of postgraduate training, and it makes no sense to graduate so many students and then fail to accommodate them in postgraduate training. The measure to prioritise the graduates of UK medical schools is simply common sense and I support it, alongside, I understand, almost all Members of the House.
Finally, let me issue a word of warning. The number of new medical schools—I understand that there are many new medical schools, including the one in Cumbria, which I did not know about—means that we have more graduates than ever. That is good, because we have insufficient doctors, but the health system must create additional training posts, more substantive posts for general practitioners and hospital specialists, and incentives to create these posts, especially in general practice, so that our new neighbourhood health centres, which I like to call “Bevan health centres”, can be fully staffed and open late at night, and so that we see an NHS renewed. That is our aim, and we will achieve it.
Dr Beccy Cooper (Worthing West) (Lab)
As always, it is an honour and a privilege to follow my hon. Friend the Member for Bury St Edmunds and Stowmarket (Peter Prinsley), who is a retired ear, nose and throat surgeon. It has been a pleasure to listen to my colleagues in the House debating this Bill. In common with Members from across the House, I absolutely welcome the Bill, and I am glad to see it come forward. I have heard from many of my junior medic colleagues about the issues that my hon. Friend set out so eloquently, and we need to care for our UK graduate workforce.
In recent years, NHS workforce planning has not been done well. There has been an increase in the number of medical students training, which we welcome, but there has not been a commensurate increase in the number of jobs available at the end of that training, which makes no sense. Training is expensive, and UK graduates should be able to access employment at the end of their training. As many Members from across the House have said, there must be recognition that healthcare professionals are part of a global workforce. There will continue to be a natural flow of my medical colleagues heading to other parts of the world to deploy their skills, and there will continue to be a global workforce in our national health service. We should not underestimate the mutual learning that results from this arrangement.
I am chair of the all-party parliamentary group on global health and security. We are undertaking an inquiry with our Global Health Partnerships colleagues on the net benefits to the UK from international recruitment, and at the future reciprocal benefits for both the UK and countries of heritage. The benefits will go both ways; we should not underestimate that. A balance needs to be found, and I think this legislation more than achieves that. We are prioritising UK graduates, increasing the number of placements available, and continuing to recognise international skilled personnel who already have experience of the UK health service, whom we value and do not want to lose. This will of course need close monitoring, alongside implementation of the NHS workforce plan. All that has been said, but I just wanted to reinforce it.
What has not been mentioned in the Chamber this afternoon, and I would like to bring it to the Minister’s attention, is the public health workforce. As a declaration of interest, I am still a public health consultant or specialist on the General Medical Council register. The public health workforce is exempt from the prioritisation in this Bill, because we are very fortunate that public health benefits not only from medical graduates such as myself, but from a non-medical workforce. There are benefits from this mix, and the global nature of public health is reflected in having an international mix, but public health training is hugely oversubscribed in the United Kingdom. So will the Minister give further consideration to this exemption to ensure that UK graduates do not continue to face the issues, which have been so eloquently outlined, currently faced by their medical colleagues?
Dr Simon Opher (Stroud) (Lab)
I will keep this short, because many of my points have already been made. I think that there are two main problems. The first is about priority for our medical graduates. To be honest, I was a little bit surprised when, about a year ago, I found out that they are not prioritised. That clearly is not reciprocated around the world, and we need to change it. The other problem is our training numbers. If we are training medical students up to graduation, we must ensure that the number training fit into our postgraduate training, because otherwise it is crazy, which is the situation we find ourselves in.
I have been a GP trainer for about 25 years, and many of the doctors I have trained as GPS have gone off to Australia. My favourite went to New Zealand and is staying there, although I keep trying to entice her back by saying how great it is that the NHS is improving. GP training is unique. It involves 18 months in general practice in a one-on-one apprenticeship-type system, and I think the system in the UK is one of the best in the world. It teaches continuity of care for patients, and it also teaches the skills that are bringing back the family doctor. This is about the doctor being the gatekeeper to the NHS, and also protecting the patient against the NHS and from over-investigation.
In fact, I always think an MP is bit like a GP, because a GP has to know a little about absolutely everything, which is the same for an MP. I would like to give a shout-out to my Stroud GP trainers group, who visited Parliament last year, and also to the 8,000 GP trainers in this country, who do a fantastic job, often going above and beyond their responsibilities.
I would like to mention international medical graduates—I have had a number of them. At the moment, 50% of those training in the UK are international medical graduates—I understand that in Teesside the figure is 100%—and we are depending on these people to provide some of our general practice. I have had fantastic trainees from India, Spain, Germany and Algeria, who have all become fantastic NHS GPs. As I have said, we must ensure that they are welcome and treasured in the NHS, because they constitute a large body of GPs in our system. Although we need to prioritise UK graduates, we must not put off international graduates from coming and helping us to deliver a new NHS.
I would like to make another point about medical training. Postgraduate medical training goes through a process, and it is important that we recalibrate this so that the number of training spots exactly matches the number of our medical graduates. That is particularly true for anaesthetists. There are bottlenecks in anaesthetics training, and if we could relieve those bottlenecks, we would get more anaesthetists training and could start to bring down our waiting list. However, that will involve a decent workforce plan, which I understand we are developing, and proper planning for the future, so we can get our waiting lists down and deliver a better NHS for everyone.
To conclude, after years of failure and the neglect of our home-grown talent, this Government are taking action so that our doctors can train, stay and serve the communities that need them most. I urge Members to support the Bill.
Jessica Toale (Bournemouth West) (Lab)
This Bill matters enormously in my constituency. The NHS is one of the largest local employers. Our hospitals, community services and care settings are the backbone of our local economy. We also have outstanding institutions—Bournemouth University, Bournemouth and Poole College and the Health Sciences University—ready and willing to provide a strong local pipeline of medical and health professionals. I have met professors at the school of midwifery at BU worried about whether its graduates will get a first placement, specialist nurses unable to progress their careers, and early-career psychiatrists forced to look for work far from home. That is not through a lack of demand for these services in the local area. If we train doctors here, fund their education through British taxpayers and ask them to commit their lives and careers to the NHS, we owe them a fair chance to build those careers within it.
The shadow Health Secretary, the right hon. Member for Daventry (Stuart Andrew), has said that we should not play politics with people’s jobs. I agree, but we must recognise that the situation we are in now is a direct result of the Conservatives’ ill thought-through visa changes in the wake of the mess left by their post-Brexit settlement for the UK. The fact that we now have more than double the number of overseas-trained applicants than UK-trained applicants for a limited position is a consequence of that. Under the Conservatives, we became too reliant on pulling the immigration lever to solve our workforce shortages. Their policies meant that UK graduates are being squeezed out, with too many lost to the private sector or overseas not because of a lack of talent or commitment, but because the system did not work for them. I was proud to campaign on a commitment to train more local young people and to encourage companies to hire locally before looking overseas, and the same should be true for the NHS, so I am pleased that the Bill is doing that.
This is not about blaming or disrespecting migrant workers. International doctors and those from our immigrant communities who work in all elements of our NHS are valued and respected. Immigration has enriched my town. The people who have come to the UK to care for our elderly, nurse our sick and heal our injured are important parts of the vibrant and diverse community that we have in Bournemouth, and I thank them for their service.
We should also be proud that the NHS is a world-renowned employer and a real part of our soft power influence. Countries around the world aspire to the type of universal healthcare offering that we have in the UK, and our specialists train health professionals around the world. For many doctors around the globe, time spent working in the NHS is a badge of honour, but poaching doctors from countries that desperately need them while UK-trained doctors cannot progress is morally wrong. It undermines global health equity and erodes trust here at home. It is right that we prioritise skilling our own people; other countries recognise that reality. The United States, Canada and Australia prioritise domestic graduates for training opportunities.
The Bill is consequential for me, as a Labour MP for a constituency that has never voted Labour before. Bournemouth and Poole are often seen as affluent areas, but they contain real inequalities and serious barriers to social mobility. In places such as West Howe and Alderney, parents tell me that they feel forgotten. They worry that their children do the right things, work hard and get the right grades, but are constantly told that they cannot compete or are locked out. If we want young people from council estates to believe that they belong in medicine, we must back that belief with opportunity. We cannot claim to be the party of social mobility and dignity in work if we do not put the ladders in place.
The Conservative record is clear: expanding medical places without expanding training posts, liberalising visas without the workforce planning and leaving UK graduates to carry the cost. The Bill is a necessary correction. It is fair, responsible and morally right for our NHS, communities and the next generation. To any students or recent graduates considering Australia, I say this: if we get this right, we have beaches that are just as impressive in Bournemouth, even if I cannot always guarantee the weather.
Josh Newbury (Cannock Chase) (Lab)
At its heart, this Bill is about fairness—fairness for the doctors who train in this country, and fairness for the patients who rely on the care provided by our fantastic NHS workforce. Before Brexit, graduates from our British medical schools predominantly competed among themselves for foundation and specialty training posts, but since Boris Johnson’s disastrous visa and immigration changes made under the previous Conservative Government, that picture has changed completely. Doctors trained here are facing huge barriers to progressing their career and caring for patients up and down the country, and many are turning to jobs abroad or within the private sector. That is not because they lack the ability or the commitment, but because of how the system was left to drift by the previous Government until it has got to this point of being set up against our graduates.
We hear a lot about the doctors who train here but then end up going abroad, but we hear a lot less about the concerns of the doctors who remain here in the UK. They are passionate about our NHS and want to dedicate their careers to it. They want to build their lives here, but all too often they find that they simply cannot secure a training post. This is not a new problem; it is a reality that has been behind the flight of doctors overseas for many years. But only now do we have a Government who are committed to tackling it. I commend the Health Secretary not only for bringing forward the Bill, but for committing to bring in changes as swiftly as possible.
Our NHS and our constituents are missing out on our home-grown talent because of the previous Government’s changes to immigration, which led to the so-called Boriswave. As we have heard, international medical graduates contribute hugely and are welcome, but visa changes have had a destabilising effect on British-trained doctors who now face double the competition for every single post. We are training more doctors now than ever before, but we have failed until now to match that ambition with a system that supports them. As we have heard, we spend around £4 billion a year training doctors in the UK, a huge investment of public money, and it is only right that taxpayers see that investment translating into doctors building their careers in our NHS.
The prioritisation to which the Secretary of State referred is about sustainability and keeping things fair for our UK-trained graduates, not about shutting out international talent. The NHS is rightly proud to be a major international employer and people from around the world will continue to bring vital skills to our health service. Of course, anyone who can apply now will still be able to apply. But many countries from which we are recruiting also desperately need their own doctors. We should be proud that people want to come and work here, but it is morally unacceptable to pinch doctors from other countries that need them, meanwhile leaving our brilliant and willing resident doctors unable to get training places.
The Bill builds on action that the Government have already taken to boost the NHS workforce. When the Government came into office, we heard concerns from GPs and patients alike about a dire need for more GP surgery capacity, while many qualified GPs were out of work. Labour removed the red tape around the additional roles reimbursement scheme and more than 1,000 additional GPs have since joined our primary care workforce. When the Government heard from nurses who were just about to qualify and struggling to find work, despite a clear and chronic need for more nurses, they brought in the graduate guarantee. Now the Government are acting again.
Following the Secretary of State’s constructive approach to negotiations with the BMA, he offered a package of support, including quadrupling the number of specialist training posts being created in the coming three years and funding resident doctors’ Royal College exam and membership fees. Despite a rejection of that deal, he is making good on his commitment to put British graduates back on a level playing field, giving them a fair shot at taking the next step in their careers, with competition ratios that are reasonable and workable.
The Bill will ensure that the NHS retains the talent it has developed through excellent medical schools such as Keele University in Staffordshire, rather than losing that talent to overseas recruitment or forcing doctors out of the profession altogether. The BMA has welcomed extending prioritisation to the foundation programme, which the Government expect will significantly reduce the number of placeholder offers faced by final-year medical students. I hope that as their members vote on whether to take further strike action, they will see that the Government do not make pie-crust promises. We are taking the steps we said we would take to fix the issues that they have raised.
I know that the Bill will not fix every workforce challenge overnight, but it is certainly a big step in the right direction. It will reduce competition for training places and, most importantly, send a clear message to resident doctors who trained in this country: if you want to progress your career here, the Government will back you. For those reasons, I am proud to support the Bill.
Danny Beales (Uxbridge and South Ruislip) (Lab)
I thank the Secretary of State and the Minister for the Bill, which delivers on the promises made previously in this place in response to the proposed industrial action a couple of months ago. It is welcome to see the pace with which the Government have moved in progressing these important changes. It shows their commitment to backing doctors and medical professionals in this country.
There is a lot to welcome in the Bill’s provisions. Members have talked at length and with a lot of personal and professional expertise about the challenges of the medical training system. As a member of the Health Committee—alongside the Chair, the hon. Member for Oxford West and Abingdon (Layla Moran), and others who have spoken—we often hear about the need for a proper workforce plan to address the NHS’s long-term issues with training and development, which frankly have failed staff and patients.
It is important to reflect on, as others have, the important and vital contribution that doctors and nurses from around the world have made. That is the case in my constituency at Hillingdon hospital, and in GP and community-based health services. My mum recently had a stroke and, fortunately, recovered from it at University College London hospital in central London. As ever, it was doctors, nurses, speech therapists and allied healthcare professionals from almost every country around the world who helped and supported her to recover. I am sure that they will continue to serve our national health service with dedication and commitment, and I am sure that the whole of this House is thankful for their service.
As we have heard, however, it is absurd that thousands of British doctors trained by our NHS at great expense, funded by the British taxpayer, are currently unable to find jobs in the NHS after graduation. In a time of crisis for the NHS, we do not have a penny to spare, and every pound needs to go even further. It is a great waste of talent and capacity, and it is not fair to young doctors in the system, who are being beaten to entry-level NHS positions by doctors from overseas with decades of experience.
Vikki Slade (Mid Dorset and North Poole) (LD)
I wonder if the hon. Member has given any thought to residents such as George and Dennis in my constituency, who are both British citizens, brought up here, but went to work abroad either because they are dual citizens and wanted to be able to learn in two languages, or because of the covid delays. They will not be included in these measures. Does the hon. Member think they should be included within the second tier of graduates from places like Iceland and Liechtenstein? Does he have any views on whether we should be excluding British citizens?
Danny Beales
I am about to turn to a specific issue about British citizens, so I hope I will pick up on the hon. Member’s points. More generally, there is nothing progressive about a system that promotes a brain drain from some of the most deprived and underdeveloped communities in the world, with significant health needs. To have doctors and nurses come from those systems on an industrial scale, and to take away the resources spent in those systems on education and training for our benefit in a western, developed country, is not progressive. It is important to welcome the provisions in the Bill that address those challenges.
As the hon. Member for Mid Dorset and North Poole (Vikki Slade) raised, I will press the Secretary of State—and the Minister for Secondary Care, who is now in place—on the specific language of the Bill, which seeks to prioritise graduates from medical schools in the United Kingdom, rather than UK citizens who are medical graduates.
Like other Members, I have been contacted by a number of my constituents who will be affected by these provisions. That includes Alisha, a British citizen who was schooled and grew up here; her family live in Ickenham in my constituency, and she is a first-year medical student at Queen Mary University of London’s campus in Malta, which my hon. Friend the Member for Stevenage (Kevin Bonavia) mentioned earlier. When she enrolled last year, she was given a guarantee by the university that she would face no disadvantage compared with students on the London campus.
We have heard that there can never be any guarantees; that there is not a legal contract that this Government make with individuals; and that this House is sovereign, and can make different decisions. But I think there are issues of fairness around the retrospective applications of decisions that we make that can affect people’s lives, particularly at crucial points, such as when studying or getting a job—decisions that have major impacts on someone’s future life chances.
Alisha studies a British curriculum and she will be awarded the same degree qualification as her peers on the London campus. However, if the Bill’s current wording is interpreted strictly geographically instead of institutionally, it would mean that she is categorised as an international medical graduate, despite being a British citizen, studying a British medical degree at a British university.
I ask the Secretary of State to take away this point and, with officials, to look at this specific issue in greater detail and at modelling and sharing the number of UK citizens projected to be affected this academic year by those changes. If, as has been suggested by Queen Mary University, this is a matter of 40 or 50 individuals, I ask the Secretary of State to look at whether further changes could be made to ameliorate the impact on UK citizens, at least in a transitional way, that would not bind us in future academic years. I also ask that officials have discussions with Maltese counterparts about our important and ongoing strategic relationship in health and other key areas.
To conclude, there is much to welcome in this Bill. I know that medical colleges and societies strongly support many of the provisions. I hope that they will be the start of a broader process of a comprehensive workforce plan that will address the many challenges in workforce planning, training and development and the numbers of bottlenecks that exist throughout the workforce system so that we have a training and development system for medical professionals in this country that delivers both positive results for patients and better and fairer outcomes for those applying to study, learn and train.
Neil Duncan-Jordan (Poole) (Lab)
As the final contributor from the Back Benches, I shall try to strike a slightly different tone from the rest of the debate.
Over the past few days, I have been contacted by a number of constituents who are likely to be affected by today’s emergency Bill. One of those is Dr Khan, a resident doctor at Poole general hospital’s emergency department. He trained overseas and has been working in the NHS for almost three years. He also has a young family living in my constituency. As an international medical graduate working in the NHS, he is concerned that the proposed emergency legislation on UK medical graduate prioritisation will have a negative impact on people like him. Although I support a sustainable domestic medical workforce, implementing these changes mid-cycle in 2026, after applications have closed and commitments have been made, is, I believe, a breach of procedural fairness.
My constituent has raised further concerns that I would also like to share. The technical proposal to use immigration status such as indefinite leave to remain or citizenship as a proxy for NHS experience is both blunt and unnecessary. The Oriel application system already specifically collects data on whether an applicant has more than six months of NHS experience, and this existing evidence-based metric should be used to prioritise those already contributing to our health service rather than relying on immigration status.
Many of Dr Khan’s colleagues have relocated to this country and planned their lives based on the rules in force when the applications opened in late 2025. To change the rules now, while we are in the middle of the interview window, will cause immense personal distress and undermine our long-standing commitment to fairness.
There is also a genuine risk to the workforce. Our NHS relies heavily on our international staff, and today’s Bill risks damaging the UK’s reputation as a fair employer. It could lead to an exodus of skilled professionals that the NHS, in my view, cannot afford to lose.
When the Minister responds, will she consider providing clear transitional protections for the 2026 cohort who are already here? Will she further consider that any new criteria should be implemented prospectively for 2027 and that any measure of NHS experience should utilise the data already collected, rather than blunt immigration-based proxies?
A few days ago, I submitted a written question on the impact that the proposed changes to rules around indefinite leave to remain for health workers would have on the viability of the NHS 10-year workforce plan. The response from the Department was that no such assessment had been made. I fear that we are now making the same mistake again. Those who are already here and making a contribution need to be acknowledged for their service. I would welcome any assurances that the Minister could give to Dr Khan and all those like him who are already a valued part of our NHS.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
I am pleased to respond on behalf of the Opposition, but first I should declare my interest as a consultant paediatrician and member of the British Medical Association.
Medicine is a vocation, but it is also an art and a science, and training takes a long time. After, in general, five years as a medical student, new resident doctors need to train further in a specialism such as orthopaedics, ophthalmology or, in my case, paediatrics. Postgraduate training varies in length and structure among the specialties, but in broad principle it is divided into a foundation programme and more specialist training. The foundation programme is two years long and teaches a variety of skills. Specialist training is more specific, and there are well over 60 different specialties that people can choose from. It is those two phrases—the foundation programme and specialist training—that the Bill refers to.
We are in a situation where there has been a huge surge in the number of applications per training post. One reason for that is the substantial increase in the number of medical school places. That was caused by action by the previous Conservative Government to improve the number of doctors in the long term. The previous Government opened five medical schools—at Sunderland, Anglia Ruskin, Kent and Medway, Edge Hill and, very close to my constituency, Lincoln. The first students at those universities graduated in 2023, 2024 and 2025, which increased the number of students looking for posts.
At the time there was also a widespread expansion of existing medical school places—and, of course, there was the pandemic. During the pandemic, students who had applied for medical school and accepted offers found themselves unable to take their exams, and teacher-assessed grades meant that there was a huge increase in the number of successful applicants who got the grades they needed. There were more compared with the number that was statistically expected. The Government lifted the cap, and there was a huge number of medical students in that period. Many of them qualified last summer. That is why there is a huge increase in the number of local graduates.
In response to my hon. Friend the Member for Farnham and Bordon (Gregory Stafford), the Secretary of State talked about his pledge to double medical school places, but there does not appear to have been an increase in the number of medical school places this year, and a statement from the Department for Health and Social Care at the weekend suggests that it is not a Government commitment. When the Secretary of State was asked whether he stands by his pledge, he seemed to say no, so I would appreciate it if the Minister clarified that issue.
In 2024 at a visit to the Royal Derby hospital, the Secretary of State said that that site would be part of delivering the doubling of the number of medical school places that Labour is committed to in order to ensure that the NHS has the staff it needs to treat patients on time. He then encouraged people to vote for that in the 4 July general election. Will he clarify whether he stands by his pledge, and if so, when does he expect to start delivering on it?
UK factors are not the main cause for the rise in numbers. The BMA has published figures from freedom of information requests that show that the number of UK graduates applying for training programmes went up from 9,273 in 2023 to 12,305 in 2025, which is an increase of about a third. Over the same period, the number of international medical graduates applying for specialist training went from 10,402 in 2023 to 20,803 in 2025, which is a doubling of applications.
The surge in numbers has left British graduates facing unemployment. Some may pursue careers overseas and not return. The valuable contributions from international medical graduates are appreciated, but many complete training and return to their home nation, which could leave us with a potential shortage in the long term of consultants and GPs.
The Government are right to step in to prioritise local talent. As such, we support the principles behind the Bill. However, there are some issues that we have questions about. First, the foundation programme applications are in progress. An application window closed on 8 October, and pre-allocation outcomes were due in mid-December. Foundation school applications due on 26 February are also to be delayed. The foundation programme website states that allocations can only occur once the Bill receives Royal Assent. That delay in itself, and the uncertainty associated with it, is difficult enough for young doctors and their families. Yet the Secretary of State creates an extra layer of uncertainty by adding clause 8 and the right to withhold activation of the Bill to a day of his choosing. Why is he doing that?
What are the foundation programme and the people who run it to do? Should they wait, based on, “Will he, won’t he?” and, “When will he allocate it, when will he not?” Should they allocate places anyway, on the basis, as has been said already, that people need to know where they will live and sort out their arrangements? Or will they have to reallocate if the Secretary of State activates it, after it was allocated on the basis that he had not done that yet? That is not the way to treat professional, hard-working people.
As my hon. Friend the Member for Farnham and Bordon said in his speech, this is not just about doctors; it is about patient safety now and in the future. The Conservatives have submitted an amendment that would activate the Bill on Royal Assent. I urge the Secretary of State to do what is right for the country and for patient safety and support it.
Secondly, Labour has forgotten the British people—those we represent and should prioritise. I will say more as we consider the specific amendment, but under Labour’s Bill, foreign nationals completing a primary medical degree in Iceland, Norway, Liechtenstein, Switzerland and the UK are in a priority group. Yet a British citizen who trained in the USA, Canada, France or even the Malta campus of a UK medical school are not.
The hon. Member for Sunderland Central (Lewis Atkinson) talked about the likelihood of international medical graduates leaving the UK after training, but surely that is an argument to ensure that British trainees are prioritised wherever they have trained—if the degree is suitable. The Conservative amendment ensures that British people are always front and centre, and we urge the other Opposition parties to back it. The issue of British citizens was raised earlier too. I want to clarify for the avoidance of all doubt that when we say “British citizens” we mean those from England, Wales, Scotland and Northern Ireland.
There are other clarifications, which I will be grateful if the Minister can address when winding up. On military doctors, what position is in place to ensure that military resident doctors are able to access the posts that they need? What impact will the Bill have on them, particularly if, as the world is more dangerous now, they spend more time overseas in future than at present?
As Conservatives, we believe in meritocracy and, as such, I support new clause 2 tabled by my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer). We all want excellent doctors and—I will say more about this in Committee—a random allocation does not encourage excellence. It produces stress and uncertainty, it does not encourage excellence, so I support the amendment.
We agree with the principle of the Bill, but we encourage the Government to accept amendments that encourage excellence, to think through the detail, to put politics aside and do what is right for the country, to prioritise British citizens and to activate the Bill immediately on Royal Assent.
The Minister for Secondary Care (Karin Smyth)
It is a pleasure to close on behalf of the Government. I welcome the support of the Opposition spokespeople and the Chair of the Health and Social Care Committee, the hon. Member for Oxford West and Abingdon (Layla Moran). I put on record my thanks to them for meeting me in advance of the Bill and for airing their concerns.
From the many contributions this afternoon, there is clearly a broad base of sympathy and support right across the House for the measures in the Bill to support our NHS staff, who have been at the sharp end of every ill-conceived policy of the past 14 years—not least since the previous Government lifted the visa restrictions in 2020, as outlined by my hon. Friend the Member for Bournemouth West (Jessica Toale). The last Government’s failure to do any proper workforce planning has also led to patients struggling to find a GP appointment while GPs struggle to get a job, bottlenecks for resident doctors and an over-reliance on overseas workers and a refusal to foster our own home-grown talent.
Although I welcome the support, I find it slightly ironic that some of the Opposition speeches were around the need for clear and consistent routes and for clarity. That is exactly what we intend to provide to fix the mess. We will bring forward wider issues in the workforce plan, which, as the boss said earlier, will be in the spring. That is as a result of the concerns around training from the Royal Colleges and other stakeholders and making sure that we do that properly. We will bring that forward in due course.
Karin Smyth
I am going to make some progress. Time is of the essence, I am afraid, but we can pick up more in Committee.
When I was a manager in the NHS, I worked alongside many overseas doctors, and I want to make it clear from this Dispatch Box this afternoon that they are, of course, welcome here. The NHS is and always will be one of the most diverse employers in the world. This Bill is about bringing future generations into the health service and giving them the secure future that we all know they need. It is about sustainable workforce planning so that patients are no longer at the mercy of the market. Crucially, it is also about fairness. How is it fair that every year the taxpayer picks up a £4 billion bill to train medics who cannot then get jobs? Those taxpayers deserve a return on their investment. How is it fair that medics in this country put themselves forward to train, make sacrifices, get into debt and work long hours only to find themselves trapped in bottlenecks?
I am going to try to address a number of colleagues’ points. I commend my hon. Friend the Member for Sunderland Central (Lewis Atkinson), for his experience and for outlining the capacity and demand issues that people like him have to face as managers, and also for his important point about our workforce needing to reflect our society. He talked about the great work being done in Sunderland, and I was pleased to meet the leaders there, including Dr Wilkes, to see the work they are doing so that we can take that elsewhere. That is exactly what we want to do.
I also commend my hon. Friend the Member for Carlisle (Ms Minns)—the mum of a nurse, as she told us—for putting on the record the work of the Pears Cumbria School of Medicine and the intention of growing doctors who are steeped in Cumbria. She also mentioned health inequalities, and I would be pleased to meet my hon. Friend to discuss those issues further. My hon. Friend the Member for Thurrock (Jen Craft) was right to highlight the soaring numbers of people we are losing and to recognise that it was all going back to front.
Why do we need emergency legislation? We need Royal Assent by 5 March at the latest to ensure that the change happens this year. We do not want medics to face another year of bottlenecks. Specialty training offers will be made from March, and any delay will risk vacancies in August. This emergency legislation gives the NHS the certainty and stability it needs to carry on bringing down waiting lists and to keep us on the road to recovery. The people applying for those posts need enough time to make decisions about their lives, including deciding where they will move, finding accommodation and sorting childcare, and they deserve enough time to get on with that.
A number of colleagues have raised the definition of prioritisation for training posts. Let us be clear that, for specialty training posts starting this year, we will prioritise UK medical graduates and others, using their immigration status as a proxy for having significant experience of working in the health service. Colleagues might wonder whether there has been some pulling of strings to include Irish doctors in that prioritisation, but I can assure them that that is not the case. Ireland is included because of our special and long-standing relationship with Ireland and very similar epidemiology. I thank the hon. Member for South Antrim (Robin Swann) for the important points he raised about Magee College and working with the devolved institutions. I can assure him that officials have worked closely with officials in Northern Ireland on this. If there are any other issues, he should please raise them, but we have worked closely on that point.
From next year, 2027, immigration status will no longer automatically determine priority. I accept some of the points from my hon. Friend the Member for Poole (Neil Duncan-Jordan) . He perhaps suggested that the proposal was crude, but it is a proxy for this year. Next year we will bring forward regulations to prioritise whether someone has significant experience as a doctor in the health service or by reference to their immigration status. This point was raised by the Chair of the Select Committee, the hon. Member for Oxford West and Abingdon, and many others. We will continue to work with all partners and the devolved Governments to agree those criteria in time for the autumn application round.
On international staff, my hon. Friends the Members for Birmingham Edgbaston (Preet Kaur Gill) and for Uxbridge and South Ruislip (Danny Beales), the Chair of the Select Committee and others raised the issue of foreign doctors. Let us be clear that international staff play an important role in our NHS and they always will. The NHS might be the most diverse public body in the world, and we would not have it any other way, but we are recruiting doctors from abroad—sometimes even from countries that are short of medical staff—when there is already a pool of applicants at home.
As my hon. Friend the Member for Morecambe and Lunesdale (Lizzi Collinge) said, we are not about nicking other people’s workforces. Home-grown doctors are more likely to work in the NHS for longer, and be better equipped to deliver healthcare tailored to the UK’s population, because having been trained in the UK’s epidemiology, they better understand it. It is not fair for British taxpayers to spend over £4 billion training medics every year, as my hon. Friends the Members for Worthing West (Dr Cooper) and for Cannock Chase (Josh Newbury) said. Nor is it fair for doctors who struggled to get into specialty training places. As my hon. Friend the Member for Birmingham Edgbaston said, a responsible Government get a grip on this.
I will refer to the amendments when we move into Committee of the whole House. We are seeing the green shoots of recovery as we repair the NHS following the damage done over the past 14 years. We are turning another page on that decline. However, the decision in 2020 to lift visa restrictions has done untold damage to the system and to staff morale, and contributed to a national mood of cynicism and pessimism, especially among the young, so we need to act. Those points were articulated well by the hon. Member for Weald of Kent (Katie Lam), and expertly, as always, by my hon. Friend the Member for Bury St Edmunds and Stowmarket (Peter Prinsley).
Let me end my remarks by talking about the many young people who will be affected by the changes that we are setting out. As my hon. Friend the Member for Ipswich (Jack Abbott) said, these are not abstract statistics but personal costs. When I speak to those in my family, my constituency and even my parliamentary office who have breached the first barrier of getting to a medical school from a state school, I am disheartened to hear how many of them feel that their careers would be better served by moving abroad. In the 1970s, James Callaghan said that if he were a young man, he would emigrate. I do not want young people to take that path; I would rather say to them, “By all means, travel, see the world and enjoy that time, but there are great opportunities for you all in this country, and we want you to rebuild the NHS with us.” My niece is currently in Australia, and we sometimes call this the “bring Talia home Bill”.
The NHS must play its part in training our young people and keeping top talent in the UK. If colleagues agree that that is worth doing, and if they want to keep our people here, they should join us in voting for the Bill.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).
Medical Training (Prioritisation) Bill
(1 day, 7 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
19:12 - The Committee divided: - Ayes: 91 / Noes: 378 - Question accordingly negatived.
19:26 - The Committee divided: - Ayes: 61 / Noes: 311 - Question accordingly negatived.
19:39 - divided: - Ayes: 88 / Noes: 310 - Question accordingly negatived.
The First Deputy Chairman of Ways and Means (Judith Cummins)
I remind Members that in Committee they should not address the Chair as “Deputy Speaker”. Please use our names. Madam Chair, Chair or Madam Chairman are also acceptable.
Clause 1
UK Foundation Programme
Question proposed, That the clause stand part of the Bill.
The First Deputy Chairman
With this it will be convenient to consider:
Amendment 6, in clause 2, page 1, line 16, at end insert—
“(e) persons within subsection (3),”.
This is a paving amendment for amendment 7.
Amendment 7, page 2, line 6, at end insert—
“(3) A person is within this subsection if they—
(a) were actively employed as a doctor in the NHS or Health and Social Care Northern Ireland on 13 January 2026; and
(b) had submitted a valid application for a UK specialty training programme for a start date in 2026 before the day on which this section comes into force.
(4) For the purposes of subsection (3), “actively employed” includes, but is not limited to, persons on fixed-term Trust Grade, Clinical Fellow or Staff, Associate Specialist and Specialty Doctor contracts.”
This amendment would require applications to specialty medical training in 2026 from those already employed in the NHS to be prioritised.
Clause 2 stand part.
Clause 3 stand part.
Amendment 10, in clause 4, page 3, line 2, at end insert—
“unless that time was spent outside the British Islands as part of a posting with the UK armed forces.”
This amendment would include within the definition of a UK medical graduate anyone who spent all or part of their training on a military posting outside the British Islands.
Amendment 9, page 3, line 3, after “are” insert
“a British citizen or are”.
This amendment would require British citizens to be prioritised for places on UK Foundation programmes and for interviews and places on speciality training programmes from 2027 onwards.
Clause 4 stand part.
Amendment 8, in clause 5, page 3, line 30, at end insert
“,provided that the majority of training for the programme takes place in the United Kingdom.”
This amendment would require a UK Foundation Programme to be a programme for which the majority of training takes place inside the United Kingdom.
Clause 5 stand part.
Clause 6 stand part.
Amendment 2, in clause 7, page 5, line 1, leave out paragraph (a).
This amendment, taken together with amendment 4, would provide that regulations made under Clause 3 are subject to the affirmative procedure.
Amendment 3, page 5, line 24, leave out “section 3 or”.
This amendment is consequential on amendments 2 and 4, which provide that regulations made under Clause 3 are subject to the affirmative procedure.
Amendment 4, page 5, line 40, after “under” insert—
“section 3 (regulations describing persons who may be prioritised for specialty training programmes from 2027 onwards)”.
This amendment, taken together with amendment 2, would provide that regulations made under Clause 3 are subject to the affirmative procedure.
Amendment 5, page 6, line 19, at end insert—
“(6) Before laying before Parliament a draft statutory instrument containing regulations under section 3 the Secretary of State must obtain the consent of—
(a) the Welsh Ministers, if the draft regulations contain provision which would be within the legislative competence of Senedd Cymru if it were contained in an Act of the Senedd;
(b) the Scottish Ministers, if the draft regulations contain provision which would be within the legislative competence of the Scottish Parliament if it were contained in an Act of the Scottish Parliament;
(c) the Department of Health in Northern Ireland, if the draft regulations contain provision which—
(i) would be within the legislative competence of the Northern Ireland Assembly if it were contained in an Act of that Assembly, and
(ii) would not, if it were contained in a Bill for an Act of the Northern Ireland Assembly, result in the Bill requiring the consent of the Secretary of State.”
This amendment would require the Secretary of State to obtain the consent of the relevant devolved government before laying draft regulations under section 3. It is consequential on amendments 2 and 4.
Clause 7 stand part.
Amendment 1, in clause 8, page 6, line 23, leave out from “on” to the end of line 24 and insert
“the day on which it is passed”.
This amendment would bring the Act into force on the day on which it receives Royal Assent.
Clause 8 stand part.
New clause 1—Report on impact—
“(1) The Secretary of State must lay before Parliament an annual report on the impact of the provisions of this Act.
(2) A report under this section must include—
(a) an assessment of the impact of the provisions of this Act on the number of applications for places on—
(i) UK Foundation Programmes, and
(ii) UK speciality training programmes, and
(b) if the assessment under paragraph (a) concludes that there has been a decrease in the total number of applications attributable to the provisions of this Act, an analysis of the potential impact of that decrease on the number of fully qualified doctors working in the NHS and Health and Social Care Northern Ireland, including specific analysis of the impact on the number of general practitioners and on each medical specialism.
(3) The first report under this section must be laid before 31 December 2029.”
New clause 2—Allocation of individual places on merit—
“(1) This section applies to the allocation of individual candidates to specific places on a UK Foundation Programme or a UK specialty training programme, whether that allocation takes place in the course of deciding offers of places or otherwise.
(2) A person who has a function of allocating places on a UK Foundation Programme or a UK specialty training programme must ensure that, once the prioritisation requirements set out in sections 1 to 3 of this Act have been applied, those allocations are based on an assessment of the applicants’ merits.
(3) For the purposes of the assessment of the applicants’ merits, a person may take into account—
(a) the candidates’ educational achievements,
(b) the candidates’ clinical performance,
(c) structured assessments of relevant skills and knowledge,
(d) the candidates’ research, leadership, management, quality improvement, and teaching skills, and
(e) the candidates’ knowledge relating to the place being allocated.”
This new clause would require the allocation of candidates to specific training places to be decided on an assessment of the candidates’ merits, after the prioritisation requirements in clauses 1 to 3 of the Bill have been met.
New clause 3—International students—
“(1) The Secretary of State must report annually to Parliament on the impact of the provisions of this Act on the numbers of international students at UK medical schools.
(2) This report must include an assessment of the financial impact on medical schools.”
This new clause would require the Secretary of State to report to Parliament annually on the impact of the measures in this Act on the numbers of international students studying at UK medical schools.
The Minister for Secondary Care (Karin Smyth)
In the interests of time, I will address the amendments at the end of proceedings, when I have heard from them—I think we have the gist of most of those issues. I restate our firm commitment to the Bill and all clauses.
Let me turn to clause 4 and clarify how we are defining “UK medical graduate” and “the priority group” for the purposes of the Bill. “UK medical graduate” in this context excludes those who have spent all or the majority of their time training for their medical qualification outside the British isles. This means that if a person has obtained a primary UK qualification but has studied mainly overseas, they will not be eligible for prioritisation as a UK medical graduate unless they fall into another group that is to be prioritised under the Bill. While internationally educated graduates from overseas remain an important part of the workforce and can continue to be recruited under the Bill, we are committed to growing home-grown talent, who are more likely to work in the NHS for longer, and to be better equipped to deliver healthcare tailored to the UK’s population.
Clause 8 sets out the territorial extent of the Bill and deals with commencement. The Bill extends to England, Wales, Scotland and Northern Ireland, and we have worked closely with the devolved Governments to ensure that it meets all needs and provides consistency. We are grateful to them for their support in bringing these measures forward so quickly. The Bill will engage the legislative consent motion process, and the devolved Governments have committed to commence this process in their Parliaments.
To ensure that the systems, planning and operational capacity required for successful implementation are in place, the Bill will be commenced
“on such day or days as the Secretary of State may by regulations appoint.”
As the Secretary of State outlined on Second Reading, this is an important fail-safe to ensure that we are not in a position in which a law is enacted that we cannot implement effectively at the time. I am happy to expand on that after we have discussed the amendments, but the key issue is the ability of the NHS and training providers to deliver the measure. That is why we have a fail-safe; we first need to be very clear that the NHS is in a position to deliver. Members have talked about the strikes. Those would be one consideration, and there are many others. We are asking the NHS and training providers to do something very difficult very quickly, and in order to ensure that they have the capacity and capability to do it safely, we are reserving the right to commence the Bill at a later date, rather than at the end of this Session. I will come back to the amendments when I close the debate.
The First Deputy Chairman of Ways and Means (Judith Cummins)
I call the shadow Minister.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
I will speak to the amendments tabled by the Opposition. First, amendment 9 would require that from 2027, priority is given to British citizens on UK foundation programmes, and that they are prioritised for interviews and places on specialty training programmes. Clause 4 defines a UK medical graduate as a
“a person who holds a primary United Kingdom qualification within the meaning of the Medical Act 1983 (see section 4(3) of that Act)”.
However, it does not include
“a person who spent all or a majority of their time training for that qualification outside the British Islands.”
The Secretary of State has stated his intention to prioritise UK medical graduates, but he has failed to protect all British citizens in doing so. Our amendment would ensure that British citizens who study on an eligible medical course overseas were still prioritised in the Bill. There are many scenarios in which we may need to ensure that we protect British citizens. Consider, for example, a spouse, partner or child of a serving member of the UK armed forces who completes relevant training overseas while their relative is posted in Cyprus; a student at Queen Mary University of London who has completed the bachelor of medicine and bachelor of surgery course at its Malta campus but received a UK medical degree; a young British citizen who has studied in the US or France, owing to a family relocation; or, given that the largest bottleneck is not in training places but in getting a place in medical school at all in some cases, a British student who has gone to study overseas because of their fervent desire to become a doctor.
Those are all entirely possible and plausible scenarios in which British citizens have completed their relevant training, and wish to bring their skills back and to relocate in their homeland for the rest of their career, but may not be covered by the Government’s prioritisation model. The Government’s prioritisation model is based on where the degree was taken, rather than also considering who did it. The Secretary of State must ensure that we do not overlook our own citizens if we are to fairly address the competitive landscape for training posts. The Opposition therefore urge the Government to accept amendment 9.
Amendment 10 is a probing amendment to explore the effects of the Bill on military personnel. As a Member of Parliament representing an area with a large armed forces community, I know that medical trainees are an integral part of our serving community. The world is becoming an increasingly dangerous place, and junior trainees may be sent abroad earlier in their career than is currently the case. It is clearly wrong to penalise people who are doing brave work caring for our armed forces. They ought to be provided with optimal opportunities, and the Secretary of State has a duty to ensure that they are not overlooked. I would be grateful if the Minister covered that in her response.
New clause 3 would require the Government to make an annual report to Parliament about the Bill’s impact on the number of international students at UK medical schools, and the financial impact on UK medical schools. We talked about the bottleneck, and the balance between UK and international students training at UK medical schools; clearly, becoming a UK graduate will now come with a significant premium. What impact will that have on British children getting to make their choices and become doctors if they want to? What incentives does it provide to universities to increase the number of international students, and what effect will that have overall on UK medical schools?
New clause 2, tabled by my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), is about places for UK foundation and speciality training programmes, and the importance of allocation on merit, because we all want the very best doctors. When I became a doctor—believe it or not, it was 25 years ago this year, Madam Deputy Speaker—I applied for a job as a junior house officer, as it was called then. I applied for the jobs I wanted, I was interviewed by the consultants who would have been supervising my training, and then I was offered the jobs.
The experience of students today is very different. They are allowed to put in a preference and say which deanery or foundation area they would like to work in, but that is all. After that, the application goes into a computer system, which gives them a single rank that is not based not on anything they have done at university, or on whether they got good results or worked hard, or anything like that. The computer system will do a first pass, and if the first choice is available, it will give the student their first choice. If it is not available because by the time its gets to that student those places have gone, the computer system will miss the student and go on to the next one. When it has completed its full pass of the list, it will start again, and when it comes to that student next time, it will give them the highest preference that is still available.
Once the student has been allocated a foundation deanery, the process starts again within the locality, and I mean “locality” in the loosest possible sense. Take those applying for the Trent rotation; they could be posted in Lincoln, Boston, Nottingham, Derby or Burton. The doctor has no control over where they will go, and very little ability to express a preference. My hon. Friend the Member for Weald of Kent (Katie Lam) spoke about a student in her locality who had not been able to get a place, despite being at the top—third, I think—of their university class. It is clearly not fair to give people no opportunity to control their future. By the way, there is no right of appeal, so having been given their place, the choice for the student is: that place or no place.
The hon. Member for Sunderland Central (Lewis Atkinson) spoke about ordinary children from the north-east. Having once been an ordinary child from the north-east, I agree that it is important that people have opportunity, but it is equality of opportunity, not equality of outcome, that matters. I worry that the system creates equality of outcome. We therefore support new clause 2, tabled by my hon. Friend the Member for Runnymede and Weybridge.
Amendment 1 would require the Bill to take effect on the date of Royal Assent, as opposed to a date at the discretion of the Secretary of State for Health and Social Care. The Bill is deemed necessary emergency Government legislation to prioritise medical graduates in the United Kingdom for places on medical training programmes. When he announced the Bill in an attempt to avert industrial action by resident doctors in December, the Secretary of State told the House that he had been working intensively with his team to
“to see how quickly we could introduce legislation”—[Official Report, 10 December 2025; Vol. 777, c. 430.]
However, the Bill does not commit to a date when these measures will be enacted. Instead, the power lies in the hands of the Secretary of State, giving him a clear bargaining chip for future negotiations. It is clear that the Government intend to pass this legislation urgently, as they have said. However, without a commencement date, there are clear concerns that the Bill is just a negotiating tactic to prevent industrial action by resident doctors, and can be scrapped at a later date. There remains the prospect of further industrial action, despite the legislation being introduced. The Secretary of State should not be asking Parliament to pass a Bill that he has no intention of enacting if the British Medical Association plays ball and holds off on strikes. Either the Secretary of State thinks that this is emergency legislation that we need to get on with and enact, or he does not.
It is vital that the legislation is enacted straight away, because students are due to be given their training programme places now, and they need to decide where they are going to live. They cannot put their life on hold, and measures to prioritise UK doctors cannot be held off, until the Secretary of State has finished dangling a carrot in front of the British Medical Association. The Opposition are clear: while we are supportive of the principles of the Bill, it must be used for offers made this year.
Amendment 8 would clarify that under clause 5, a UK foundation programme is a programme where the majority of training takes place inside the United Kingdom. A foundation programme is defined as
“an acceptable programme for provisionally registered doctors”
in section 10A of the Medical Act 1983. It is vital to clarify that a UK foundation programme is a programme where a majority of training takes place inside the United Kingdom. That is because the General Medical Council can approve foundation programmes overseas. If it is not explicit that a foundation programme needs to be in the United Kingdom, a loophole is created whereby a foundation programme could be approved overseas, creating a back way into the system and circumventing the measures that the Government have tried to put in place. I encourage the Minister to look at that carefully as the Bill progresses.
In summary, we support the Bill, but we have concerns about some of the clauses, so we have tabled amendments that we hope the Government will look at carefully.
Helen Morgan (North Shropshire) (LD)
The amendments in my name raise concerns about the Bill’s impact on fairness, transparency and the smooth functioning of the NHS, notwithstanding the Liberal Democrats’ overall support for the Bill.
Clause 7(1) would allow Ministers to change who is eligible for prioritisation through the negative procedure, meaning that such changes could be made unilaterally, without meaningful scrutiny. In practice, that hands the Secretary of State the power to redraw the boundaries of opportunity, and to decide who gets prioritised for medical training places, without Parliament ever having a say. That is unacceptable for a decision that affects people’s lives and careers, as well as the future capability of our health service. While I do not doubt the intentions of the Secretary of State and the Front Bench team, it opens the door to the risk of political whim or prejudice influencing who gets access to career-defining opportunities in the future. That is why the Liberal Democrats have tabled amendments 2 to 5 to reverse this, and to ensure that any changes must be subject to full parliamentary consent.
On the timing of the Bill’s implementation, the Government intend to apply the new prioritisation rules midway through the 2026 specialty recruitment cycle. Let us reflect on what that means in practice. Doctors already working in the NHS have entered this cycle under one set of rules. They have paid for exams, secured visas, arranged travel, uprooted their families and committed themselves to the NHS. To change the rules halfway through the process would not only be potentially destabilising for services, but very unfair to those individuals, many of whom are plugging urgent staffing gaps right now.
We already face real workforce pressures, so the last thing our NHS needs is a wave of dedicated doctors forced out by uncertainty, or pushed to leave the country because the Government moved the goalposts after applications had already begun. For this reason, we believe that the Bill should come into force from 2027. We must protect frontline services and protect the integrity of the applications process. To address the problem directly, we have tabled amendments 6 and 7 to safeguard those already in the 2026 application cycle, ensuring that they are not deprioritised, because that is a simple matter of fairness.
We have also tabled amendments to improve the transparency and long-term impact of the Bill. Across the NHS, we face severe shortages, not just in general practice but in radiology, oncology, mental health services and many other specialities.
Helen Maguire (Epsom and Ewell) (LD)
Last year, research by the Royal College of Radiologists found that 76% of English cancer centres had patient safety concerns due to workforce shortages. While we welcome the Government’s recent commitment to ending the postcode lottery of cancer care, does my hon. Friend agree that the Government need to publish an assessment of the Bill’s impact on doctor numbers, broken down by speciality, to ensure that cancer treatment is not delayed because of staff shortages?
Helen Morgan
I thank my hon. Friend for her point, which I agree with fully. That is why we have tabled new clause 1. It will require the Government to publish a report on the Bill’s impact on the number of applicants to foundation and speciality training programmes and, crucially, to break that down by speciality. If applications fall as a result of these changes, the Government would be required to assess the impact on the total number of fully qualified doctors entering the NHS. This report would be produced annually after three years, allowing time for a full training cycle to complete. It is a sensible safeguard, one that ensures that we do not inadvertently exacerbate the very workforce shortages that we are trying to address. To return to the core principle that is at stake, we are not opposed to the Bill’s objective. We support the principle of prioritising those who have trained in the UK, but that principle must be implemented fairly, transparently and with proper oversight.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
As always, Mrs Cummins, it is a pleasure to serve under your chairmanship. I rise to speak to new clause 2, which stands in my name and is supported by many other Conservative Members. I declare again that I am now a non-practising doctor and my wife is a doctor.
I believe that ambition should be encouraged, and success should be dependent on the talent and hard work of the individual. However, in a vocation where we really want to encourage and support the brightest and the best, the signal being beamed out by the NHS and its various arms and quangos is unfortunately quite different. We have already seen this over the years in how the NHS treats competence and excellence among doctors—someone could be the best doctor in the world and be treated exactly the same as someone who is just about competent. No other operation would approach employment, and celebrating and supporting success, in that way.
I do not think, though, that I have ever seen as egregious and extreme an example of completely ignoring talent and merit as the preference informed allocation system. The shadow Minister, my hon. Friend the Member for Sleaford and North Hykeham (Dr Johnson), has laid out some of the details behind that system, but I encourage Members across the Committee to read about how preference informed allocation works—about the soulless, computerised, algorithmic method by which it allocates human beings a random number. That random number is then the sum total of those people’s dreams, hopes and ambitions when it comes to placements as they take their first steps into their medical career. To me, PIA looks better suited to the dystopian sci-fi programmes that I enjoy watching—better suited to “Logan’s Run” or “The Prisoner”, in which people are allocated numbers. It is not the way that we should be treating people in this country, and it is outrageous that such a system has been brought into force. We in this House should stand up for merit, and I really hope the Minister will affirm from the Dispatch Box today that the Government will dismantle this awful scheme.
Karin Smyth
I am grateful to Members for their contributions to the wider debate at this hour and for their considered amendments. I will respond briefly to their points and the amendments that have been tabled.
Amendment 6 and 7 would widen the scope of who is prioritised for specialty training starting in 2026 by prioritising applicants who worked as a doctor in the health service on 13 January. Although we welcome the intention to recognise the importance of internationally trained doctors, we cannot accept the amendments at this time. They would mean that the Bill was ineffective in delivering on its intention to tackle bottlenecks and ensure that we have a sustainable medical workforce that can meet the needs of the population.
I remind the Committee again that the Bill does not exclude anyone. In particular, there are likely to be opportunities in specialties such as general practice, core psychiatry and internal medicine, which historically attract fewer applicants from the groups we are prioritising for 2026. International medical graduates also continue to have opportunities in locally employed doctor roles. That could lead to NHS experience that might count towards future prioritisation as we look to make regulations to set criteria for what is considered “significant” NHS experience from 2027.
Amendment 10 would ensure that members of the armed forces are not excluded from prioritisation due to having undertaken medical training while on posting outside the British islands. We cannot accept that amendment as we believe it is not necessary. That is because medical cadets do not spend time outside the British islands as part of their UK medical degree. While cadets undertake their elective with the military, which may be overseas, that is no different from other civilian medical students, many of whom undertake electives overseas. As such, we do not believe that medical cadets are disadvantaged by the Bill.
Amendment 9 would include all British citizens within the priority groups so that British citizens will be prioritised for the purposes of the foundation programme and specialty training from 2027 onwards. It has no effect for 2026 specialty training, as British citizens are already prioritised by virtue of their immigration status. We therefore cannot accept the amendment. To do so would risk a significant increase in the pool of prioritised doctors who would compete with UK-trained doctors. The amendment would incentivise the expansion of the market for overseas medical schools, including medical schools working with foreign Governments to grow the overseas campus sector. That could offset any increase in postgraduate training places and undermine workforce planning. While British citizens will be prioritised for specialty training places in 2026, this is a proxy that is necessary for practical reasons. From 2027 we want to prioritise applications with experience and training based in the NHS.
Again, prioritisation does not mean exclusion. International medical graduates who are not prioritised will still be able to apply and will be offered places if vacancies remain after prioritised applicants have received offers. However, it is important that we do not incentivise actions that will undermine the Bill. This Bill will reduce competition for places for UK-trained doctors so that home-grown talent can become the next generation of NHS doctors.
Amendment 8 would limit the definition of a UK foundation programme in clause 5 to include programmes only where the majority of training has occurred within the UK. Although I understand the desire to do that, the number of doctors on a foundation programme within the meaning of the Medical Act 1983, but where the majority of training occurs outside the UK, is very small. Indeed, we understand that there is only one such active training programme. There are fewer than 25 doctors on that programme this year, of which fewer than five applied to continue their training in the UK. As such, there is no material impact on the Bill, so we do not think amendment 8 is necessary. However, we will keep the situation under review.
Amendments 2, 3, 4 and 5 would change the procedure for making regulations to set additional priority groups for specialty training from 2027. The regulations would prioritise additional groups based on criteria indicating that a person is likely to have significant experience of working as a doctor in the health service or by reference to their immigration status. To be clear on our intention, the Bill sets out the groups of people who are to be prioritised for specialty training from 2027 onwards. The delegated power is limited to adding to that list by reference to their having
“significant experience of working as a doctor in the National Health Service”,
or immigration status. Although I am sympathetic to the desire for more parliamentary scrutiny, as outlined by the hon. Member for North Shropshire (Helen Morgan), we believe that, due to the limited scope of the power, the negative procedure is justifiable. I therefore encourage her not to press those amendments to a Division.
Amendment 1 would change the commencement of the Bill—from being commenced by regulations to being commenced automatically on Royal Assent. As my right hon. Friend the Secretary of State outlined, the commencement clause is important, and I have addressed that point. It is a failsafe that, given the tight timeline for introducing the Bill, will ensure that we are not in a position where a law is enacted that we cannot implement effectively for whatever unforeseen reason.
As I have said, there is also the question of whether it is even possible to implement prioritisation if, for example, the strikes are ongoing, given the strain that they put on resources and the impact that could have on delivery of the Bill. Because our objective is not just to move quickly but to get this right, these considerations are key to the commencement of the Bill, which is why the Government believe that we need to be able to commence the Bill when it makes sense to do so. For those reasons, we cannot accept the amendment.
We do not think that new clauses 1 and 3 are necessary, because the data is already published, or, as we have said, we would be seeking to monitor the impact. New clause 2 would require the allocation of individual candidates to foundation and specialty training places on merit, once the requirements to prioritise certain applicants had been met. We consider the new clause to be unnecessary at this time because existing systems for recruitment to foundation and specialty training already assess the applicants on many of the merits outlined by in it. The Bill does not alter that; it simply ensures that UK medical graduates and other eligible applicants are prioritised.
Karin Smyth
I am coming to the hon. Gentleman’s point. We will keep the current system under review—I think the Secretary of State was clear about that—but we think that any change is best made through established guidance rather than through legislation.
Many Members raised the issue of our relationship with Malta and Queen Mary, and the work that is done there. That relationship is clearly important. We have a great deal of work ongoing with Queen Mary, in the medical field as well as others. We are not excluding anyone. We are making sure that the prioritisation works in the best way possible, and we will of course keep all that under review. I thank hon. Members for their constructive debate on this important legislation.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clauses 2 and 3 ordered to stand part of the Bill.
Clause 4
“UK medical graduate” and “the priority group”
Amendment proposed: 9, page 3, line 3, after “are” insert
“a British citizen or are”.—(Stuart Andrew.)
This amendment would require British citizens to be prioritised for places on UK Foundation programmes and for interviews and places on speciality training programmes from 2027 onwards.
Question put, That the amendment be made.
Karin Smyth
I beg to move, That the Bill be now read a Third time.
I will not use this time to rehearse any of the arguments made today. We have had some good discussions. I want to thank the Leader of the House, the Chief Whip, parliamentary counsel and business managers, the public servants in my Department and NHS England, who have worked so hard to bring this together, and the devolved Governments for their support. They really have worked well together to bring this important measure to this place.
I am also grateful to all colleagues for scrutinising the Bill so thoughtfully and thoroughly during today’s proceedings and, as I said previously, for meeting me last week to go through some of the provisions. It shows that Parliament can put its shoulder to the wheel and get stuff done in the public interest. We act in the public interest because we were elected on a mandate to fix our broken NHS and make it fit for the future, and we will not succeed in that goal without our workforce, who are and will always be our greatest asset.
When I worked in the NHS during the Lansley reforms, I had a front-row seat to see their devastating impact on staff morale. I saw that patients bore the brunt of some of that collapsing morale. When our workforce does well, our NHS does well. That is why we are working to restore confidence and renew belief among frontline staff. The Bill is another step on that journey, and I urge colleagues to come with us and see it through.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Petitions
Pippa Heylings (South Cambridgeshire) (LD)
I am pleased to present this petition on behalf of Elizabeth Spain and the South Cambridgeshire Climate and Nature Group in my constituency. The petition states that peaceful environmental protesters are being criminalised through excessive charges, harsh sentencing and negative media treatment, and that the Public Order Act 2023 has introduced restrictive protest measures that deter people from exercising their right to peaceful protest, undermining the United Kingdom’s long-standing commitment to freedom of assembly, freedom of expression and non-violent civil disobedience.
The petition states:
The petition of residents of South Cambridgeshire,
Declares that peaceful environmental protestors are being treated as criminals, facing excessive charges, receiving prolonged sentences, and enduring unjust treatment in the media; further declares that the Public Order Act 2023 introduced anti-protest regulations that have proven intimidating to those who wish to continue to raise their voices peacefully; and further declares that the UK’s commitment to the fundamental rights of freedom of assembly, expression and non-violent civil disobedience should be reaffirmed.
The petitioners therefore request that the House of Commons urge the Government to introduce a bill to repeal the Public Order Act 2023.
And the petitioners remain, etc.
[P003156]
Brian Leishman (Alloa and Grangemouth) (Lab)
I present this petition on behalf of my constituents from Tillicoultry who have had nowhere to call home for two years now, and for those people from across the United Kingdom who have also had their life impacted by reinforced autoclaved aerated concrete in their homes. This builds on a similar petition circulated locally, which gathered over 200 signatures. That shows the strength of feeling in Tillicoultry and beyond. My constituents deserve answers and accountability. All they ask for is fairness.
The petition requests
“that the House of Commons urge the Government to hold a public inquiry into the handling of RAAC by national and local government, to introduce legislation to require the maintenance of a high-risk building register, to mandate reporting of building defects by surveyors and other professionals and to introduce sixty-year liability for developers for building defects; and to consider compensation measures such as a ban on levying interest on mortgages on homes condemned after the discovery of RAAC, and the restoration of first-time buyer status for affected homeowners.”
Following is the full text of the petition:
[The petition of residents of the United Kingdom,
Declares that many families across the UK face homelessness, bankruptcy and trauma after being forced from homes made unsafe by RAAC (reinforced autoclaved aerated concrete), particularly in former council homes purchased under the right to buy scheme.
The petitioners therefore request that the House of Commons urge the Government to hold a public inquiry into the handling of RAAC by national and local government; to introduce legislation to require the maintenance of a high-risk building register, to mandate reporting of building defects by surveyors and other professionals and to introduce sixty-year liability for developers for building defects; and to consider compensation measures such as a ban on levying interest on mortgages on homes condemned after the discovery of RAAC, and the restoration of first-time buyer status for affected homeowners.
And the petitioners remain, etc.]
[P003158]
East Park Energy: North Bedfordshire
(1 day, 7 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Richard Fuller (North Bedfordshire) (Con)
Madam Deputy Speaker, may I start by thanking you and, through you, Mr Speaker for permitting me to speak on this important constituency matter. I also welcome the Minister. For the benefit of those who may be not familiar with the process, the Minister will probably be very limited in what he can say specifically about the topic I am raising today. The topic is a proposal by East Park Energy for a large-scale, ground-mounted solar plant and battery energy storage system spanning North Bedfordshire and also the constituency of Huntingdon. This proposal is currently under consideration as part of the nationally significant infrastructure project process.
East Park Energy spans 1,900 acres of land—to give some perspective, that is larger than Gatwick airport—on what is currently open countryside. It engulfs the rural parishes of Pertenhall and Swineshead, Bolnhurst, Keysoe, Little Staughton, Staploe and Dean and Shelton in my constituency, as well as the parishes of Hail Weston and Great Staughton in the constituency of Huntingdon. Some 74% of the land is classified as best and most versatile agricultural land, and East Park is one of six nationally significant infrastructure projects impacting North Bedfordshire.
I have called this debate to discuss with the Minister the impact that East Park Energy could have on North Bedfordshire’s local residents and on its landscape and rural character, and to raise with him points specific to the proposal that, in my opinion, warrant serious consideration for its rejection. East Park Energy would permanently and fundamentally change the area’s rural aspect and character and transform open countryside into industrial land. It is important that we stop referring to these installations by the rather cute term of “solar farm”, because the truth is that they are industrialised complexes. This one is made up of 700,000 solar panels, each up to 3 metres high, along with fencing, lighting, CCTV, inverter stations, transformer units, battery storage infrastructure and cabling. That sounds a long way from what we understand a farm to be.
Proposed mitigations to plant trees in order to screen the development are usually insufficient. Even if planting to screen the panels is successful, it would take years for the trees to mature, and even at full maturity, large parts of the site would still be visible because of its topography. The site will be a huge, permanent, unmissable and miles-long change to the local environment of that part of England. It will not blend in with the existing environment; it will crush it.
It is important to say that we in Bedfordshire are not against solar farms in general. In fact, we have 44 solar farms that are already operational or proposed in both Bedford borough and Central Bedfordshire, which are the two local authorities that traverse my constituency. However, this specific proposal is different.
Given my interest in financial matters, I hope that I have the House’s discretion to make a couple of general points about the finance of solar farms, of which I know the Minister will be aware. First, it is important to note that, with large solar plants, we are paying the cost of capacity, not of output. Capital costs are excessive because of the inherent process inefficiencies in solar farms. That is fine as long as it does not end up on the public purse, but ultimately investors look for a return, so it does indirectly end up on us.
Secondly, we are paying for the cost of variability of output from solar plants—the hidden costs of changing the national network to cope with that new factor of energy production. Thirdly, it is important to note that we are paying the cost of buying the energy produced, even when it is not necessarily needed or used—paying essentially for wasted energy.
In addition to those points, which the Minister is aware of and which have already been factored in, the combination of solar-generated energy and energy price arbitrage via battery energy storage systems fundamentally changes the economic case for solar—certainly from a public benefit point of view. Returns to investors will already be supercharged by the addition of new capacity in the form of battery storage—a very significant additional investment. However, that additional investment makes financial sense only when the purpose is to arbitrage energy costs—producing energy at low price points to sell at high price points—but that is not really the intention of trying to get low-cost energy.
As a business person, I say that the overall structure of the contracts, which the Minister inherited from previous Administrations, directly encourages maximum financial leverage—taking on as much debt as possible in order to maximise returns to investors. We have seen in other areas of public infrastructure—particularly with Thames Water—the problems that arise when so much leverage can be put up. Essentially, the returns are privatised and the losses socialised. I would be interested in hearing the Minister’s observations on that.
Will the Minister advise on whether the Government have put in place, or have plans to put in place, a limit on the debt ratios that large-scale solar plant operators can carry? I did a quick check but could not see that such a limit was in place at the moment. I would be interested in the Minister’s thoughts on that. Tied to that point—again, from a financial point of view—is my own understanding about corporate and political risk. In the case of East Park solar, I am concerned about the corporate history and financial viability. I mean no disrespect to the business, but it has no prior experience in developing or operating such large-scale solar projects. There are substantial issues of project failure or poor management, and therefore the risk that the current developer sells the site on to somebody else with a whole new set of investors and objectives.
The Minister may not be able to speak about this, but at least one political party in this House has said that it might cancel such projects in the future, raising the risk of stranded assets. The Government should be considering that, not because they agree with it, but because if there is such a change in Government, it is the people of North Bedfordshire in this instance who will be left with those stranded assets—solar panels stretching for three miles one way and three miles the other way, with no economic return and no financial viability to remove them. The Minister will correct me if I am wrong, but I do not believe there is a requirement for an escrow fund to be put in place for the removal of plants should a business go bust. Can he say what weight is placed on the historical experience of applicants for large-scale plants in installing and operating such plants in the past? Does that factor at all?
I have reviewed a number of these debates, and in many of them the issue of best and most versatile land has come up. The Minister must accept that East Park Energy’s proposal of 74% of the site being best and most versatile land is a pretty high proportion, well in excess of almost every single plant that has been adopted or accepted to date. It is a generational loss of arable land. I am afraid the proposal from East Park Energy lacks any serious demonstration of seeking lower-grade or brownfield land, and it appears to be at odds with national policy, which is to avoid using best and most versatile land.
I will quote the Minister back to him, because what he said was very sensible. In a debate on 15 May 2025, he said:
“I am not going to put a figure on it right now, but we have clearly said that it is important to find the right balance when it comes to best-use agricultural land.”—[Official Report, 15 May 2025; Vol. 767, c. 573.]
The Minister will not give a figure today, but 74%? Come on now! Can he advise whether the proportion of best and most versatile land at 74% and the scale of East Park Energy will be an issue of weight in the appraisal? I do not expect him to say whether it is right or wrong. However, Ministers have said in previous debates that it is important not to use best and most versatile agricultural land and that food security is important, and then they have gone on to say that solar will only take up 1% of land, which implies both that it matters to avoid using the best and most versatile land and that it does not matter. Which is it? With the proposed figure standing at 74%, this seems to be a central point.
I want to make two final points that are of particular significance, to make the Minister aware of the broader issues. We need to consider the cumulative impacts. I want to put on the record the context of North Bedfordshire and the surrounding area that the East Park Energy proposal will be coming into. The first thing he should be aware of is that, for the past decade or more, Bedfordshire’s housing growth has been between two and three times the national average. If he looks at the 2011 and 2021 censuses, and at the number of households in my constituency and that of my hon. Friend the Member for Mid Bedfordshire (Blake Stephenson), he will see that the level of housing growth is between two and a half and three times the national average. As he will know, that is great for the country, but it puts a strain on the surrounding infrastructure.
Secondly, Bedfordshire has six nationally significant infrastructure projects on the blocks right now. That is a huge amount. Let me enumerate them for the Minister. The first is the Black Cat roundabout on the A428, which is in the direct area of East Park Energy. That is the country’s largest ongoing road project, due for completion in spring 2027 or thereabouts. Secondly, East West Rail is the country’s third largest railway project, proposing to drive a line between Bedford and Cambridge, cutting through my North Bedfordshire constituency. Thirdly, Universal Studios is the country’s most significant inward investment. It started under the previous Government, supported by the then Opposition, and it has been brought home by this Government and is supported by the Opposition today. It will mean 10 million visitors a year, with all the movement of people that that entails, and the ancillary development around it.
Further away, Luton airport is expanding to facilitate that, doubling in size from 18 million to 30 million passengers a year. Very specifically, there is a new settlement in Tempsford. As I have said, Tempsford is currently a village of 400 residents and seven sheep. The Government are highly likely this year to take forward the proposal from the new towns commission that Tempsford should be the site of at least 40,000 new homes, going from 400 residents to over 100,000 on land that encompasses, abuts, and perhaps embraces, land for East Park Energy. On that specific point, it seems that we can have one or the other, but we cannot have both.
Blake Stephenson (Mid Bedfordshire) (Con)
I thank my hon. Friend for securing the debate. He is making a thoughtful and important speech. He has spoken eloquently about the cumulative development in both our constituencies, which is putting central Bedfordshire and Bedford borough under significant strain from a planning perspective. Does he agree that it is important for the Government to support our local authorities, so that we think holistically about these developments and ensure that our landscapes are protected, our local communities are listened to, and that we secure the agricultural land that we need for future food security? The reason we have so many farmers in Bedfordshire is because we have fantastic agricultural land. Would it not be a waste to build on all that land, and in the case of East Park Energy, to do so on the altar of net zero?
Richard Fuller
My hon. Friend makes two important points. First, during world war two, London would have starved without agricultural produce from Bedfordshire. More importantly, the Minister must recognise that we are supportive. We know that the Government have a growth strategy—we may have disagreements on national economic policies, but we want to do our bit. Indeed, the people of Bedfordshire are doing their bit, and a lot more. The Minister will appreciate that, with so many projects happening all at once, at some point those things are going to break, and my hon. Friend makes an important point about that.
In East Park Energy’s documentation, it chose not to be comprehensive in the scope of its evaluations, and was insufficient in the depth of its analysis. For example, it completely omitted any reference to Luton airport expansion, the Universal theme park, and any potential new town at Tempsford. It dismissed the need for an assessment of Black Cat roundabout on the assumption that construction would be finished before East Park Energy starts, but there will be consequential effects, including further construction from the change at Black Cat roundabout. It dismissed the need for an assessment of East West Rail on an assumption, but it is highly likely that there will be an overlapping construction period should East West Rail go ahead. It lacked any assessment of medium or long-term effects such as permanent land use change and increased perception of the urbanisation of the area. It provided no consideration of the over-concentration of solar development in North Bedfordshire—my constituency is part of the 1% club, which is constituencies where over 1% of the land area will be covered by solar panels—and it ignored the impact of overlapping construction periods that it would be adding to for two and a half years, or 30 months.
Just imagine all the traffic from building Universal Studios, getting in construction because we want shovels in the ground to start building at Tempsford if the Government decide to go ahead with that, and trying to build East West Rail. East Park Energy completely ignored that, so from the point of view of understanding the impact of what it is going into, the proposal that was presented fell significantly short.
Finally, before I yield to the Minister, I know that he is limited in what he can say about specific projects and that, given his role, the Secretary of State would not be able to comment at all. As I mentioned briefly to the Minister earlier, I am in a small minority of Conservative Members who agree with some of the Secretary of State’s criticisms about past energy policy, even though I may not agree with all of his proposed remedies, so I hope that the Minister understands that my observations come from a positive place.
The role of a Secretary of State or his designated Minister in making a decision is a crucial step in an evaluation process, which the public must trust. They must assess each proposal individually on its merits, not just on overarching goals. There have been 12 solar panel development consent orders for evaluation since July 2024, each of which has been approved. Some of us may be old enough—not you, Madam Deputy Speaker, but certainly me—to remember the musical “Oklahoma!”, in which there is a song, “I Cain’t Say No”. That is a very old reference, but I am very old. I encourage the Secretary of State to avoid any caricature that he “cain’t say no”, because in the case of East Park Energy, my personal view is that there are considerable and specific reasons why he can say no.
The Minister for Energy (Michael Shanks)
I congratulate the hon. Member for North Bedfordshire (Richard Fuller) on securing the debate. Although I disagree with some of what he said, the tone of his remarks is welcome. I will respond to some of his points, but given the time I will not be able to respond to them all.
On a general point, I appreciate that many issues, and planning issues in particular, are contentious. As Members of Parliament, we all know that as such issues are raised regularly. Although we might take decisions as a Government that people will disagree with, I hope that I have always given the impression that I am always keen to hear the points that the hon. Gentleman raises, and that other hon. Members raise, and I want to continue those conversations.
Helpfully, the hon. Gentleman said at the outset that I will not be able to comment on the specific application that he references, and it is worth being clear about why that is: the application will come before my Department for a decision. As the Minister with a policy interest in this area, I personally do not see the papers for such decisions and I am not engaged in that process. My noble friend Lord Whitehead usually makes these decisions, or my right hon. Friend the Secretary of State for Energy Security and Net Zero. It is important that no Minister who has a role in decision making speaks about the specifics, and I know that the hon. Gentleman understands that. However, I can talk in more general terms about how we ensure that solar projects, which are really important, are rolled out sensibly and sensitively, which is at the heart of many of the hon. Gentleman’s remarks.
To start, I will take us back slightly to the bigger picture about why solar power is so important in the first place, and why it is at the heart of the clean energy mission. We know that far too often energy bills are still being set by the cost of gas, and that deploying renewables faster than we have before is a way that we can reduce our dependence on volatile fossil fuels, protecting bill payers now and in the future. That deployment also provides an economic opportunity to create thousands of jobs in communities across the country. In addition, the Government cares deeply about tackling the most existential crisis that the planet faces. I will return to this point, but the effects of climate change, which we see all too often, cannot be put off until tomorrow. It is hugely important that we tackle them now, so this mission is critical.
Solar is at the heart of the mission—and critical to it—because it is one of the cheapest renewable energy sources that we can deploy, and it can be deployed at scale. The aim of our clean power mission is to achieve at least 45 GW to 47 GW of solar by 2030. We are at around 22 GW today, so if we are going to deliver that goal, we need to rapidly deploy a combination of ground-mounted solar and a roof-top revolution, which I will return to. At the same time, we have a commitment to doing that sensitively for the communities that host that infrastructure, and to ensuring that those communities gain a benefit from hosting it on behalf of the country.
I will pick just some of the hon. Gentleman’s substantive arguments. The way in which we balance the need for this infrastructure across the country—the fact that it has to be somewhere—with the adverse impacts, as well as the potential benefits, that communities face from hosting the infrastructure, is exactly what our rigorous planning system is about. The views and interests of local communities are key to that. I know that the hon. Gentleman has engaged in the process in this specific case—he has already made representations, and will obviously encourage his constituents to do the same. That feedback is hugely important; people should feel that it has a serious role in the decision-making process, because it does, and therefore it is worth participating in that process. Making those submissions and turning up to those meetings really does matter.
Obviously, the planning process itself considers many of the issues that the hon. Gentleman has raised, including visual amenity, protected landscapes, land use, food production, safety, and traffic conditions during construction. The system for nationally significant projects requires that considerable community engagement be undertaken before a decision is made. The level and quality of engagement is considered during the decision-making process, and these projects are marked down if that is not taken seriously.
The hon. Gentleman has raised the issue of cumulative impact, which is a really important one for us to wrestle with. I do not pretend that we have a single answer to this, but the idea that we should plan holistically—I think the hon. Member for Mid Bedfordshire (Blake Stephenson) made this point—to make sure communities do not face multiple projects, with all the cumulative impact that comes from that, is something we want to tackle. We are doing that in two ways.
Richard Fuller
The Minister is talking about cumulative impacts from projects. Just so that it can be on the record, the point I was trying to make is that one consideration is the cumulative impacts from solar farms; the other is that there are a lot of other types of infrastructure construction going on. Could the Minister be clear that cumulative impact includes consideration of both?
Michael Shanks
I will come to that point in just a moment. Part of the wider work we are seeking to do across Government is to plan where infrastructure is built holistically and strategically. For example, the land-use work that the Department for Environment, Food and Rural Affairs is doing is about looking at the whole United Kingdom and making sure we have a plan in place for future land use, so that all of those things are taken into consideration.
The legal requirement for a cumulative effects assessment is set out in environmental regulations. The Government have published advice that summarises the process for undertaking that assessment in relation to NSIPs, and the hon. Gentleman’s wider point about the cumulative impact of housing, Universal Studios or transport is also really important. Obviously, my Department has a particular interest in how we plan the energy system, but we are seeking to work much more broadly right across Government. The land use consultation that DEFRA launched closed in April 2025, and the outputs from that and the regional workshops that have been undertaken are now being analysed. That is the first time we have had a national, holistic plan to bring all these things together.
From an energy perspective, which is what I am responsible for, the second point is about the strategic spatial energy plan. For the first time in our history, we will strategically plan the energy system that we need and make conscious decisions about where we site energy infrastructure, so that we are not needlessly building the grid infrastructure that goes with it—so that we are building it next to where we need it the most, reducing the impact on communities and taking into account the cumulative impact of those projects. We should have been doing that a long time ago. I do not blame any particular Government for this, but we have rolled out a huge number of renewables projects across the country without doing any of that strategic planning. That has been a huge failure in the past, and as a result, we are now spending huge amounts of money on building the grid to connect that infrastructure. We have to do that. It is a shame that we did not plan it more strategically in the first place, but we start from where we start, unfortunately.
I am conscious of the time, so I will quickly refer to the point about land use and the use of farmland for solar projects. That point is raised regularly, and it is an important one to raise—food security is also our national security, and it is hugely important. Planning policy makes clear that, wherever possible, developers should utilise brownfield, industrial, contaminated or previously developed land. I understand the point that the hon. Member for North Bedfordshire made about this particular site; I cannot comment on that, but he helpfully quoted me to me. I still agree with me—which is not always the case—but I am not going to set a specific figure, for obvious reasons. There is very much a determination in the process that we should be using lower-quality land wherever possible, but that does not mean that we can always do so. We need to realise that for some projects, that is just not possible. However, if we zoom out just a little bit, even in our most ambitious deployment scenarios, only 0.4% of UK land would be devoted to solar in 2030.
There are a number of other points that I do not have time to address, but I will write to the hon. Gentleman with some responses on them. In the context of what we are seeking to do, I am not complacent about the impact that these projects have on communities—I genuinely understand it. I read all of my correspondence from people who write to me about these points, and he is right to raise these issues. We are seeking to build the infrastructure that the country needs in a way that takes into account the local impact. Communities may feel that has not been done, and for that I apologise, but we are seeking to build a strategic system that deals with many of these issues into the future, so that communities feel that energy is not done to them, but is part of their community and is something that they welcome. At the same time, that helps us to deliver our missions as a Government.
Solar power in this country remains hugely popular and, despite a number of issues, the planning process is rigorous. There is not an automatic yes coming out of the planning system; we look carefully at every single one of these applications. They get a huge amount of consideration, and it is important that communities feel that, and that they know that these applications are taken seriously. If they do not feel that, we have to do more as a Government to ensure that people have confidence in the system. As we deliver this clean power mission, solar will play an important role. We want to bring communities with us, and I commit to doing more to make sure that is the case.
Question put and agreed to.
Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026
(1 day, 7 hours ago)
General CommitteesRead Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 11 / Noes: 4 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Chris McDonald)
I beg to move,
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2026.
I am grateful to you, Sir Desmond, and to the Committee for their consideration. The draft order was laid before the House on 16 December 2025.
The UK emissions trading scheme, the UK ETS, was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme contributing to the UK’s emissions reduction targets and net zero goal. The scheme is run by the UK ETS authority, a joint body comprising the UK Government and the devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets.
Under the UK ETS, operators are required to monitor, report on and surrender allowances in respect of their greenhouse gas emissions. While most allowances are purchased at regularly held auctions, operators in certain sectors at risk of carbon leakage are given a number of allowances for free, referred to as free allocations. Free allocations reduce exposure to the carbon price for those sectors at risk of carbon leakage and reduce the risk that decarbonisation efforts could be undermined by production, and the associated emissions, moving to other countries.
Under the UK ETS, an operator is the person or company that has control over an installation. Installations are stationary units at which regulated activities take place. Sub-installations represent operations carried out at an installation in respect of which operators that receive free allocations are required to report activity levels for the purposes of the UK ETS.
We have brought forward this draft statutory instrument to enable important changes and improvements to the scheme. The first change that the instrument makes is to enable operators of installations to be able to notify their regulator that they wish to have their activity data for the 2020 scheme year, or 2020 and 2021 scheme years, excluded from the calculation of their historical activity level for the 2027-to-2030 free allocation period. That is in recognition of the fact that production levels may have been impacted during the covid-19 pandemic. Such operators will be able to notify their regulator during the second stage of the 2027-to-2030 free allocation application, which runs from 1 April 2026 to 30 June 2026, that they wish to have their activity data for 2020, or 2020 and 2021, excluded.
Legal change is needed to the free allocation regulation, because existing legislation would require regulators to calculate historical activity levels using activity data from all five years of the baseline period, or 2019 to 2023. If amendments are not made, there will be no legal basis for regulators to exclude 2020, or 2020 and 2021, data from the historical activity level calculation for any applicant. Using activity data for those years could result in historical activity levels that do not reflect normal activity, meaning that operators would receive fewer free allocations than they would otherwise be entitled to receive.
The second change that the draft instrument makes is gradually to phase out free allocation for sectors covered by the UK carbon border adjustment mechanism, or UK CBAM, starting over the 2027-to-2030 allocation period. That phase-out will be implemented through applying a UK CBAM reduction factor to the calculation of free allocation and will apply at sub-installation level. To do that, operators will be required to report which of their sub-installations serve the production of goods within the UK CBAM, which will enable regulators to apply the UK CBAM reduction factor to the relevant sub-installations. Legal change is needed as operators only classify their sub-installations by a specific benchmark and the corresponding carbon leakage status of that sub-installation. The instrument also requires operators to classify each sub-installation as relevant or not to UK CBAM.
Benchmarks are the efficiency standards used to calculate each installation’s free allocation entitlement. Installations closer to their benchmark have a higher proportion of emissions covered by free allocation, rewarding more efficient installations and incentivising decarbonisation. The third change that the instrument makes is to use current benchmarks for the purpose of calculating free allocation for stationary installations for the 2027 scheme year. The instrument also provides for the ability to update the benchmark values used to calculate free allocation for the years 2028, 2029 and 2030 of the 2027-to-2030 allocation period. Maintaining current benchmarks for the 2027 year will allow time for industrial participants to adjust to the changes.
Legal change is needed to the free allocation regulation because, under existing legislation, there is no provision to update benchmarks during an allocation period. The in-principle intent is to use the updated EU ETS phase 4 benchmarks in the 2028, 2029 and 2030 scheme years. That will be decided once the EU benchmark values are available, and subject to assessment of the impact.
Installations that permanently cease to operate are required to report on their activity in the final year of operation so that free allocation can be recalculated to reflect the cessation of activity. The amendment clarifies that operators are required to report on the activity levels of a sub-installation, whether that is due to permanent cessation, as is currently provided for, or the surrender or revocation of the operator’s permit.
The intended changes follow comprehensive engagement and consultation with stakeholders. The UK and devolved Governments carried out consultations that covered the provisions included in the statutory instrument. The free allocation review consultation ran from 18 December 2023 to 11 March 2024, seeking views on proposals to alter the free allocation methodology for the UK ETS stationary sectors to better target those most at risk of carbon leakage and ensure that free allocations are fairly distributed.
The free allocation review carbon leakage consultation ran between 16 December 2024 and 10 March 2025. It sought views on a draft UK-focused carbon leakage list, compiled by applying UK data to the existing carbon leakage list, as well as the trajectory for phasing out free allocations for sectors that will be covered by the UK carbon border adjustment mechanism. The relevant responses to those consultations were summarised in the authority’s response.
The changes in the draft order will deliver on commitments made by the UK ETS authority, improve the fairness of the scheme and increase certainty for both regulators and operators. They will ensure that free allocation continues to provide meaningful support to UK industry while maintaining the incentive to decarbonise and rewarding efficient installations. The amendments to the UK ETS will support its role as a key pillar of the UK’s climate policy. They demonstrate that we will take action to improve the scheme where necessary. I commend the draft order to the Committee.
Claire Coutinho (East Surrey) (Con)
It is a pleasure to serve under your chairmanship, Sir Desmond. I am sure that Members will have been hanging on to the Minister’s every word, but they may not have made it through the dense forest of governmentitis, so let me be very clear: the measures in the instrument, which will be imposed from 2027, will reduce the supply of free allowances, thereby increasing the carbon tax in this country. That is explicitly stated in the Government’s impact assessment.
Free allowances have been the mechanism that we use to protect businesses such as cement and steel from being undercut by cheaper imported products from countries that do not charge carbon taxes. That has meant that those businesses have not faced higher costs from the tax, and therefore, neither have consumers. Because of the CBAM, the protection is being moved to a tariff placed on imports at the border, which means the free allowances in the domestic UK market are being phased out. Members should be clear that that means the carbon tax will now start to be charged on the production of goods produced for the British market that otherwise had been protected by free allowances, and British consumers will face higher prices as a result.
What does this mean in practice? The carbon tax is paid by industrial businesses such as gas power stations, oil refineries and food manufacturers. The Government make them pay a tax for every tonne of carbon they release during their production. Naturally, those taxes are passed straight through to consumers in higher prices, so if the Government increase the carbon tax they increase the price of basic goods like electricity, petrol and sugar. The Government know that, because in the impact assessment for this legislation they admit exactly that: higher carbon taxes will be passed through to consumers as higher prices—it is in paragraph 18.8 for any Members who are checking. That means higher energy, food and petrol prices.
The Government insist that they need to do this because they have decided to link the UK carbon tax scheme to the EU’s. That was their decision—it was a political choice—and that alone has doubled our carbon tax since the start of last year. We are not talking about a slight increase; we are talking about a tax that has more than doubled in less than a year because of choices made by this Labour Government. Families across the country will have less money in their pockets, not because of an act of God or events outside the Government’s control but because of an active policy choice made by Labour Ministers. Doubling the carbon tax has increased electricity bills alone by £4 billion.
In fact, the carbon tax imposed by the Government now accounts for over £100 per year, or over 12%, of the average electricity bill. The increase is costing the wider British economy an extra £5 billion a year, and the legislation that Labour Members will vote for today will pile more costs on to consumers. The Prime Minister recently said that his priority is the cost of living, but across his Government hundreds of decisions like today’s are raining down more regulations and higher taxes, which are pushing costs up. These are policies that will push rents up, that have driven food prices up and that are landing on people’s energy bills.
The impact assessment accepts that today’s policy will push up energy bills but, extraordinarily for a Government who say that their priority is the cost of living, it does not give a figure of by how much. That is why the Prime Minister will fail and it is why this Labour Government are failing. There is no appetite, or accountability, in his Government for even understanding what these policies will mean for the consumer, let alone trying to act in the consumer’s interest.
Sadik Al-Hassan (North Somerset) (Lab)
Will the right hon. Member give way?
Claire Coutinho
If I am wrong and the Labour party has an assessment for what the order will do to energy bills, perhaps the hon. Member can give us the numbers. I suspect that he will not be able to, but I will happily let him try.
Sadik Al-Hassan
Thank you, Sir Desmond; I appreciate that, and it is a pleasure to serve under your chairship. Paragraph 18.8 says that the figures in the impact assessment
“should be treated with caution”
because they are
“at the upper end of estimates”.
Does that mean we should “treat with caution” everything the right hon. Member has said?
Claire Coutinho
I think what the hon. Gentleman is saying is that the impact assessment makes it clear that consumers will face higher costs. The question I am putting to him is what that will mean for people’s energy bills. I suspect that is something that his constituents would be concerned about. Given that he does not have an answer, he should ask of his Government what it will mean for people’s energy bills.
Claire Coutinho
I will make some progress, unless the hon. Member has an answer on energy bills.
Sadik Al-Hassan
I can answer that quite clearly. The word “can” is written in paragraph 18.8; it does not say “will”. I think the right hon. Member’s assumption that these figures—which, as it is written quite clearly, only may lead to price increases—should surely be one for the Minister to answer in a minute.
Claire Coutinho
It is absolutely extraordinary that the hon. Member does not accept that a higher price of carbon imposed on the production of goods in this country will raise costs. The cost of the carbon tax now accounts for—rather than pointing to the document, it is worth him listening to what I have to say—£100, or 12%, of someone’s electricity bill. That is clearly a cost that has been passed through. If Labour Members cannot understand that taxes on businesses get passed on to consumers, I am afraid I cannot help them in this debate. Make no mistake: this is a massive burden on consumers and businesses.
Why are the Government doing this? Who benefits? The Treasury will see an extra £1.8 billion in tax revenue because it has doubled the carbon tax. Through this legislation, by reducing free allowances, it will rake in even more from ordinary families who are already struggling. That is in fact the entire point. The aim of the carbon tax is to gradually increase costs for British industry until businesses have no choice but to spend hundreds of millions of pounds they do not have at the moment to decarbonise their production, or shut down and move abroad. The fact that companies are choosing to do the latter means that there will be no reduction in global emissions because those businesses are just moving elsewhere. There will be fewer jobs in Britain, and more businesses in countries that have more polluting regimes—so more carbon in the atmosphere overall.
Page 68 of the Minister’s impact assessment says that the carbon tax would be £25 lower by 2030 if the Government did not make the changes we are discussing today. As the Government have admitted, higher carbon taxes feed through to consumers in higher energy bills and higher costs. The Minister is asking us to approve legislation that, by his own assessment, will hurt industry, fuel inflation and make people poorer. When defending alignment, Ministers point to a Frontier Economics report that says that alignment will save £800 million, but that is supposedly saved over five years, and completely ignores the costs that higher carbon prices impose on the wider economy. To be clear, they are imposing a £5 billion tax rise on the economy every year, in the hope of saving just £160 million a year. That is incoherent to say the least.
When I asked the Department how increasing the carbon tax affects consumers and businesses, its response was that the Government were
“not able to comment on current prices and price movements”
because they do not dictate the market. That is total nonsense. They can and should forecast what this will mean for prices, and how much our constituents will pay in extra costs on their bills. All I am asking is for Ministers to be open about the costs, admit they are imposing them on businesses and the public, make the argument as to why they are justified to do so and then let the public decide. I do not think that that is too much to ask.
I ask the Minister these questions: what is his assessment of how many jobs will be lost because of higher carbon taxes? How many more domestic industries will be replaced by foreign imports, which we are already seeing in gas, steel, chemicals and refineries? Does he accept that reducing free allowances through this legislation will increase energy bills? His own impact assessment says that reducing free allowances will increase carbon prices by £25 per tonne, so will he publish an assessment of what that increased cost will add to people’s household bills?
The world is getting more dangerous, and our raw industrial power is hard power. The Government should not be making our industry even less competitive with soaring carbon taxes, and making us more reliant on foreign imports, just as the world is becoming less safe. It is the wrong measure for the wrong time, and for those reasons we will oppose it today.
Sadik Al-Hassan
This order is crucial in ensuring that businesses are not penalised for the extraordinary circumstances of the pandemic. By correcting historical activity levels to account for reduced activity during covid-19 lockdowns, we ensure fair treatment for operators whose operations were disrupted through no fault of their own.
The order updates our efficiency benchmarks to reflect current industry performance and further drive decarbonisation: an essential goal that we must continue to pursue to protect our planet for future generations. The order also enables our carbon border adjustment mechanism to work effectively by phasing out free allocation where appropriate, ensuring a level playing field between domestic producers and imports. This is sensible housekeeping that supports both our climate ambitions and our industrial base, at a time when it is urgently needed.
Harriet Cross (Gordon and Buchan) (Con)
Does it support the ambition of reducing bills?
Sadik Al-Hassan
I think, actually, that when we fix some of the problems around climate change, like investing in energy infrastructure and making sure that we take the true cost of business, that will eventually bring down bills. At the moment, Conservative Members seem to be saying that they do not want to account for the cost of climate change, which is maddening, considering their previous position.
Richard Tice (Boston and Skegness) (Reform)
This is quite extraordinary. We have debates in the House of Commons every week where everybody bemoans the price of electricity, yet we have here an order that will increase bills on businesses significantly. When we reduce the annual allowance for those industries, we are increasing their bills. We have debates about businesses shutting down and having to be propped up by the Government in order to protect communities and jobs. And why are they shutting down? Because of the energy cost—all of them, without exception. This order, and this emissions trading scheme, is driving up bills, and is the sole reason why industries are leaving the country and going overseas.
Richard Tice
I would be delighted to give way to the hon. Gentleman, who I hope will clarify whether he has spoken to any of these industries, and the communities who are having their jobs slaughtered because of this lunacy.
Sadik Al-Hassan
I am sure the hon. Member, as somebody with a great degree of business experience, understands the global trading environment that we sit in, and the energy shocks that come from events like Russia’s invasion of Ukraine. I thank him for his note on talking with businesses in my constituency. I spend a lot of time talking with businesses in my constituency; I do not know whether Reform UK does the same. Would he like to clarify that?
Richard Tice
The reason so many industrial businesses are shutting down, whether it is at Mossmorran, Grangemouth, Immingham or elsewhere, or in the automotive sector, is because of the high cost of electricity. This emissions trading scheme, and the linkage of it to the EU emissions trading scheme, has driven up the carbon taxes, which of course has therefore driven up bills and costs. Therefore, industries are less competitive and, as was previously said, those businesses have to pass the cost on to the consumer.
What this is doing is making our industry and businesses less competitive, and the tragedy of that is that we are therefore destroying growth and jobs. All we are doing is sending these industries overseas, and then the carbon dioxide is produced over there, we have lost the jobs, we have lost the money, and we have become poorer. For that reason, I will vote against the order.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Sir Desmond. I want to make a couple of quick remarks, partly in relation to the ceramics industry—I am a one-trick pony at these events.
The sector is very grateful that it is not included in CBAM, for some of the reasons that have already been discussed. The current arrangements in the sector are quite challenging. I know the Minister is acutely aware of that, and has been a steadfast ally in some of our work to seek long-term support for a sector that is very difficult to decarbonise—it is incredibly difficult to improve on the technology because of the way in which it is set up—but is also producing things that are integral to the Government’s missions, whether that be house bricks for our house building programme or advanced ceramics to support our defence industry, our growing exports, our pharmaceuticals or the factories that we need, because we cannot make steel in this country without ceramics.
Let me put a couple of questions to the Minister. The first is on the allocation of free allowances. I recognise that CBAM will reduce the free allowance allocations that are put to those sectors that will be a part of it. Would it be possible to consider a reallocation of those free allowances to a sector that is not in CBAM and does not necessarily want to be, but for which the decarbonisation programme is most difficult—namely, the ceramics sector? We are still at huge risk of carbon leakage. We work in an unfair market at the moment, not least because of the way in which non-market economy status countries import into this country. The Trade Remedies Authority, which was set up by the previous Government, does not necessarily have the teeth to levy the import tariffs necessary to create a level playing field for consumers.
Secondly, where does the Minister see the cap going in future years? I am aware that a consultation was started by, I believe, the right hon. Member for East Surrey when she was the Secretary of State in the last Government, on how we could incentivise decarbonisation through raising taxation on the most polluting sectors. The Minister will be aware that the ceramics sector is desperately trying to do all that it can to reduce its output of greenhouse gases, but that is really difficult when it has to run a kiln at several hundred degrees for many hours to do the bisque and the glaze firing, and run refractories for 12 to 14 hours at 1,500°C.
Electrification is not available to many of those businesses at the moment, because the capital to invest in those sorts of kilns is simply not available; the profit margins on their products do not allow for it. Hydrogen is not a technology that is yet proven to be viable because of the chemistry that necessarily takes place inside a kiln. We are wedded to gas for the foreseeable future, and therefore wedded to being one of the country’s last remaining polluting industries. What the sector fears is that, as we move at pace to meet some of the decarbonisation agendas and reduce the overall cap through the emissions trading scheme, that will mean that the free allowances also have to come down, which will push the ceramics sector into having to buy many more free allowances. That cost will then simply be passed on to consumers, or—
Gareth Snell
I will not, I am afraid. That will not then allow the sector to put in the investment needed to bring down the factories’ outputs through new technology. When the Minister sums up, will he address those two points? The sector—I think I am meeting them later today—will be glad to hear him do so.
Jim Allister (North Antrim) (TUV)
I will make some general points and then ask a Northern Ireland-specific question of the Minister. I really am amazed that in a debate where the starting point is that free allowances are to be removed, there is any serious dispute about the contention that an inevitable consequence of that is a rise in cost. One inevitably follows the other. If we take away something that is free to business and impose a charge, inevitably there will be something to pass on, which will be passed on to consumers. Indeed, the hon. Member for North Somerset (Sadik Al-Hassan) referred to paragraph 18.8 of the impact assessment, trying to make something out of the fact that the word “can” is used in the context of price increases, but he did not read on, because it continues—
“enabling substantial price pass-through.”
To whom? To the consumers.
What is abundantly clear is that, in liquidating the free allowances, the Government are saying—although it is sure to be hidden in verbosity, the impenetrable wording of this document—is that, de facto, the costs are going to be passed to the consumer. We all know, as has been said already in this debate, that means that businesses will not be able to continue in many cases, or in some cases might move abroad—all the consequences that could flow from that. It is retrograde, not progressive in any sense.
My next point is that within the draft order, it seems to me—the Minister will correct me if I am wrong—that the ultimate destination is to attach ourselves to the EU benchmark without knowing what the EU benchmark will be, without ever being able to have an influence on what it should be. We are signing a blank cheque in pursuit of realignment with the EU, whereby it is the EU benchmark that will in future dictate what the levels are. That seems to me to be the height of madness.
I come now to my Northern Ireland-specific question. I assume I am right in thinking that emissions trading applies generally and therefore obviously includes electricity. If that is right, considering that Northern Ireland is, sadly, in a different emissions trading scheme in regard to electricity, how will the regulations apply, if at all, to electricity in Northern Ireland? Will the Minister please explain that? What are the consequences if the draft order does not apply, or if it does apply to a region whose electricity production is under a different ET scheme? That is a practical question. I would like to get a clear answer from the Minister, because frankly nothing is clear about the 104 pages of impenetrable prose that goes with the attempt to push this order on the British people.
Chris McDonald
I thank everyone for their contributions to the debate, which was considerably more fulsome and energised than is usual for a 4.30 pm Committee. I am incredibly grateful, because Members in all parts of the Committee made a number of points, giving me the opportunity to clarify some details of the workings of the scheme.
The shadow Secretary of State, the right hon. Member for East Surrey, said that it was a very dense report with a lot of governmentitis. I know that she understands the details of this subject well, because she is the former Secretary of State, but I appreciate that it is technical, and it behoves all of us to try to explain as clearly as possible what the draft order means.
I will start by addressing some of the specific points in the draft order and then talk a bit more generally about some of the points that Members have raised. I appreciate the concerns on both sides of the House about the impact on industry and the risk, when we are decarbonising industry, of deindustrialisation. I know that this concern is sincerely felt by everybody in this room, even if we might differ at times on what we think the best approach is. That is why we have been so careful to consult industry on these measures, as I outlined in the long catalogue of dates in my opening speech. We have consulted carefully with industry and made sure we have listened to what they have said.
Some of the issues here run quite broadly around industrial competitiveness. Possibly one of the main points to recognise is that it is important through the whole decarbonisation process that industry manages to maintain access to its key markets, and clearly one of the key markets is the EU. That is where we come to the discussion about linking the EU ETS and the UK carbon border adjustment mechanism with the EU to enable our UK industries to continue to trade there. Negotiations with the EU started in November, but I want to be clear that they will only conclude in this way if it is in the UK interest to do that. We will continue to consult with UK industry on that matter too.
In relation to points made by my hon. Friend the Member for Stoke-on-Trent Central, the ceramics industry made three specific requests during the consultation. We managed to adopt requests to include ceramics on the carbon leakage list, no tiering of free allocations, and greater engagement with the ceramics sector, which is why we set up the UK ETS working group. My hon. Friend asked me specifically if we could reallocate free allocations from other sectors to ceramics. That is not possible within the current rules, but that does not mean that I am not aware of the issues surrounding the ceramics sector. We can use the UK ETS group to look at ETS issues, but we should also look more broadly at the concerns of the ceramics sector. I look forward to starting that conversation over dinner with my hon. Friend and the ceramics industry later this evening.
On the question of power and the impact of the instrument on energy bills, the important point is that the ETS applies to power that is produced from fossil fuels, not renewable energy. This Government’s policy is to pursue our clean power mission by 2030, which involves investing in the cheapest forms of power available, in onshore and offshore wind, solar power and nuclear energy. The purpose of the ETS is to incentivise that. The carbon price incentivises investment; it provides the incentive in power and in industry to invest in new green technologies.
Claire Coutinho
Originally, the choice was between coal and gas, but there is no coal in the system anymore; there is only gas. Even in the Minister’s clean power plans, gas is the dispatchable power in the system—there is no other choice; nothing else will keep the lights on when the wind does not blow and the sun does not shine. Even in his plans, gas will set the price 50% of the time. He is needlessly imposing a tax that inflates that price of gas to the consumer when there is no other choice available. Will he at least come up with a forecast for what this will mean for energy bills and consumers in this country, considering that they do not have another choice, even in the Minister’s plans, apart from using gas power?
Chris McDonald
I think what the shadow Secretary of State has outlined is exactly the success of this policy—it has driven coal out of the system in favour of cheaper power. That is exactly the point of the ETS and the industrial investment. Of course, as we said, we are pursuing our clean power mission for energy security and to lower energy bills, as well as to ensure that we also have green energy.
Steve Barclay (North East Cambridgeshire) (Con)
Can the Minister explain why his impact assessment says opposite things on the same page? In respect of the £92 million direct net cost to business, on the one hand, it says:
“our working assumption is that all costs are incurred to business, with no indirect impacts to households.”
In the very next paragraph, it says:
“we estimate that cost-pass through for most sectors could feasibly be at 80-90%”.
Both those things cannot be true, can they?
Chris McDonald
What can be true is that there are both costs and savings for industry, particularly the savings for industry associated with being a member of the UK carbon border adjustment mechanism, which will come into force in 12 months. If we link the UK and the EU ETS, that will enable UK industry to trade freely within the EU, as it has done in the past.
Chris McDonald
No, no—I have dealt with that.
The hon. and learned Member for North Antrim asked me about the issue in Northern Ireland, which is a separate electricity zone. Electricity generators in Northern Ireland have not historically received a free allocation, and in future, the free allocation rules on electricity generation will apply in the same way for the UK and EU operators, assuming that there is linkage.
I will return to the point about industry that was made by the shadow Secretary of State, among others. Clearly, the drive is to incentivise investment in industry, and that is precisely what the policy does; that is precisely the mechanism of the carbon price. It is a fallacy to assume that the investment in industry will result in less efficient or more expensive industrial products. That is certainly not the case for the steel industry, where investing in green technology results in lower production costs. The Government’s policy framework gives industrial companies a clear investment framework.
Claire Coutinho
I appreciate the Minister’s graciousness in understanding our concern for industry. His priority is decarbonisation, but I am sure he will understand the very real risk that it is not the case that the UK is decarbonising, because those industries are not remaining in the UK and cutting their emissions; instead, UK businesses in those industries are going abroad, often to countries that have more polluting regimes than the UK—which has some of the cleanest electricity of anywhere in the world—including places that are still powered by coal. Rather than reducing global carbon emissions, we will actually increase emissions by moving our businesses from the UK to countries that have more polluting regimes. That will mean fewer jobs in Britain for more carbon in the atmosphere. Do the Government plan to monitor whether that is happening, and if it is, will the Minister change course? Surely he would agree that such a scenario would not count as decarbonising well; in fact, it would not be decarbonising the planet at all.
Chris McDonald
The shadow Secretary of State and I are clearly both concerned about the same thing. I know that that concern is shared across the House, but deindustrialisation and decarbonisation need not be in competition. Sadly, under the previous Government, there was a 30% reduction in UK cement production, a nearly 50% reduction in automotive production and a 30% reduction in chemicals production. That is why, alongside the ETS policy, we published our industrial strategy; it is why I introduced the British industrial competitiveness scheme to reduce energy costs for 7,000 manufacturing businesses; and it is why we increased the supercharger to 90% for energy intensive industries.
Clearly, we recognise that energy costs have been too high in the UK for industrial businesses as well as consumers. That is primarily a result of the policy of the previous Government to leave us at the mercy of petrostates and fossil fuel dictators, on the rollercoaster of fossil fuel prices. The shadow Secretary of State said that my priority is decarbonisation. I happen to be in a place where there is a happy coincidence between energy security, decarbonisation and the lowest cost of energy. That is recognised by industry, and that is why it is Government policy.
Chris McDonald
I feel I have detained the Committee for too long, so if the right hon. Member will excuse me, it would be a good idea to draw the debate—and we have had a good debate—to a close.
The statutory instrument will give certainty to the industry around benchmarks and free allocations. The free allocations reduction is specifically for those sectors that are part of the carbon border adjustment mechanism, so some other sectors will not be affected. The legislation needs to be in place for applicants to apply for their free allocations for the period to April 2026. The statutory instrument will implement the proposed improvements to the scheme.
Chris McDonald
These changes have the support of the four Governments of the UK. That consensus on advancing carbon pricing policy adds to the strength of the UK ETS. I therefore commend the draft order to the Committee.
Question put.
Finance (No. 2) Bill (First sitting)
(1 day, 7 hours ago)
Public Bill CommitteesRead Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 2 / Noes: 10 - Question accordingly negatived.
The Chair
Good morning, everyone. We are now sitting in public and the proceedings are being broadcast. Before we begin, I remind Members to please switch electronic devices to silent. Tea and coffee are not allowed in the room. Members may remove their jackets if they wish to do so.
We will now consider the programme motion and the motion to enable reporting of written evidence for publication. In view of the time available, we will take these matters formally, without debate.
Ordered,
That—
1. the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 27 January) meet—
(a) at 2.00 pm on Tuesday 27 January;
(b) at 11:30 am and 2.00 pm on Thursday 29 January;
(c) at 9.25 am and 2.00 pm on Tuesday 3 February;
(d) at 11:30 am and 2.00 pm on Thursday 5 February;
(e) at 9.25 am and 2.00 pm on Tuesday 10 February;
(f) at 9.25 am and 2.00 pm on Tuesday 24 February;
(g) at 11:30 am and 2.00 pm on Thursday 26 February;
2. the proceedings shall be taken in the following order: Clauses 11 to 43; Schedule 3; Clauses 44 to 45; Schedule 4; Clause 46; Schedule 5; Clause 47; Schedule 6; Clauses 48 and 49; Schedule 7; Clause 50; Schedule 8; Clauses 51 to 54; Schedule 9; Clause 55; Schedule 10; Clause 56; Schedule 11; Clauses 57 to 61; Clauses 70 to 82; Clauses 87 to 100; Schedule 23; Clauses 101 to 136; Schedule 14; Clauses 137 to 140; Schedule 15; Clauses 141 to 148; Schedule 16; Clause 149; Schedule 17; Clause 150; Schedule 18; Clauses 151 to 220; Schedule 19; Clauses 221 to 241; Schedule 20; Clauses 242 to 247; Schedule 21; Clauses 248 to 252; Schedule 22; Clauses 253 to 279; any new Clauses or new Schedules relating to the subject matter of those Clauses or those Schedules; remaining proceedings on the Bill.
3. the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 26 February. —(Lucy Rigby.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Lucy Rigby.)
The Chair
Copies of written evidence that the Committee has received will be made available in the Committee Room.
We will now begin the line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room and on the parliamentary website. It shows how the clauses and schedules have been selected, and amendments have been grouped together for debate. Let us be clear about this, because I suspect that there may be Members present who have not been on a Public Bill Committee before, or any Committee before. The lead amendment is the first amendment in the group. That is the only one that, at the start of that debate, will be moved. All the others will be debated but moved later, if necessary. In clause stand part debates, the Minister will be called first. Other Members are then free to indicate if they wish to speak in the debate by bobbing. It would help if Members bobbed when they want to speak; we are all quite good at this but we do not have second sight.
The decision on clause stand part is usually taken at the end of the debate on each clause. You can either have a stand part debate at the end or during the debate on the amendments, but you cannot have both. I am fairly relaxed about this; other Chairs may take a different view. Sometimes it is more convenient to have a fairly wide debate on the clause at the start of the debate about amendments to the clause. That is perfectly in order as far as I am concerned, but you cannot do it twice. The Chair—in this case, me—will judge whether or not the clause then warrants a stand part debate. That is my decision, not yours, and it is final. Basically, that ball is in your court.
At the end of the debate on amendments and new clauses, I shall call the Member who moved the lead amendment—the one at the start of the group—or new clause. Before they sit down, it would be helpful if they could indicate whether they wish to move the amendment or withdraw it. It would also be helpful to whoever is in the Chair for there to be an indication if anybody wishes to force a Division on other amendments in the group.
The amendments are grouped by the Clerks, who are very expert in this, but in some cases they may relate to matters that come much further on in the Bill. People may say, “Hang on a minute! Why haven’t we voted on that?”—the answer is, we will when we get to it, if you want to. If any Member—the Minister, shadow Minister or anybody else—is speaking to an amendment that they want to move, it would be very helpful for the Chair to have an indication early on, so that when we get to that point we have a marker down that you want to force a Division. Within reason, we shall allow that.
If there are any queries at any time during the process—which is fairly arcane—do not be shy. None of us has a monopoly of wisdom, so just ask. I probably won’t know the answer either, but the Clerks will.
Clause 11
Charge and main rate for financial year 2027
Question proposed, That the clause stand part of the Bill.
The Economic Secretary to the Treasury (Lucy Rigby)
I am very pleased to be opening the first debate in this Finance Bill Committee. Clause 11 sets the charge for corporation tax for the financial year commencing in April 2027 and sets the main rate at 25%. Clause 12 sets the small profits rate at 19% for the same period.
The Government are committed to a stable and predictable tax system for businesses, and we are supporting businesses by creating the economic stability and fiscal sustainability needed for future growth. That is why we are delivering on our commitment, set out in the 2024 corporate tax road map, to cap corporation tax at 25% for the duration of this Parliament. The changes made by clauses 11 and 12 will establish the right of the Government to charge corporation tax for the financial year beginning in April 2027.
Mark Garnier (Wyre Forest) (Con)
Thank you for your guidance, Sir Roger. I am very grateful that you are in the Chair, because although I have been doing this for 15 years, as you know, and this is about my fifth Finance Bill, I do not have a clue how any of it works.
Mark Garnier
It is of course standard practice—as with income tax—for the Government to legislate the charge for corporation tax every year. These rate levels have remained unchanged since Labour came into office. As my hon. Friend the Member for Grantham and Bourne (Gareth Davies) pointed out last year, Labour promised to cap the corporation tax rate at 25% for the whole of this Parliament. That has not been done in legislation, although we have had an indication from the Minister that that is still the Government’s intention.
I will make just one small political point. The Government did promise that they would not increase taxes on working people, but we have seen national insurance contributions increase—that was obviously in a different Bill. None the less, the more the Minister can say about capping corporation tax at 25%, the more confident businesses and our economy will be that something will not be slipped in during the next three and a half years before the general election. We have no other objection to this measure.
Lucy Rigby
I am grateful to the hon. Member for Wyre Forest for his comments and for highlighting the fact that we have kept our manifesto commitment on tax. This is part of that: we are capping corporation tax at 25% in line with our corporate tax road map.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Clause 12 ordered to stand part of the Bill.
Clause 13
Enterprise management incentives: thresholds and period for exercise
Lucy Rigby
I beg to move amendment 37, in clause 13, page 7, line 37, at end insert—
“( ) In section 169I(7D)(b) of TCGA 1992 (material disposal of business assets)—
(a) for ‘tenth ’ substitute ‘specified’;
(b) at the end insert ‘(with “specified anniversary” having the meaning given in section 529(2A) of that Act)’.”
This amendment to TCGA 1992 would reflect the changes made to section 529 of ITEPA 2003 by clause 13 of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendment 38.
Clause stand part.
New clause 24—Report on impact of section 13 (Enterprise management incentives: thresholds and period for exercise)—
“(1) The Chancellor of the Exchequer must, within two years of the coming into force of section 13, lay before the House of Commons a report on the impact of that section.
(2) The report under subsection (1) must, in particular, assess the impact on—
(a) the recruitment and retention of skilled employees in qualifying companies,
(b) high-growth and innovative companies, and
(c) the Exchequer finances.”
This new clause would require the Chancellor of the Exchequer to report to the House of Commons on the impact of section 13 on recruitment and retention in qualifying companies, on high-growth and innovative businesses, and on the Exchequer finances.
Lucy Rigby
Clause 13 significantly expands the enterprise management incentives scheme eligibility to allow greater access for scaling companies. Specifically, the changes made by the clause will expand the EMI company eligibility limits to maintain the world-leading nature of the scheme.
Government amendments 37 and 38 are consequential to the business asset disposal relief legislation, updating it to align with the EMI maximum holding period expansion provided by the clause. The change will significantly expand the EMI limits and expand access for scale-up companies.
New clause 24 would require reports to the House of Commons on the impact of the clause on recruitment and retention in qualifying companies, on high-growth and innovative businesses and on the Exchequer finances. The Government have published a tax information and impact note setting out the impact of the EMI expansion. That showed that the measure will cost £585 million in 2029-30. The expansion is expected to support an extra 1,800 of the highest growth scale-up companies over the next five years, allowing them to reward an estimated 70,000 more employees.
The Government keep all taxes under review, and monitor and evaluate tax policy changes on an ongoing basis. We have also launched a call for evidence to gather views from founders, entrepreneurs, scaling companies and investors on tax policy support for investment in high-growth UK companies.
James Wild (North West Norfolk) (Con)
It is a pleasure to serve under your chairship, Sir Roger, and on the Committee considering this 536-page doorstop of a Bill. We are grateful for the written contributions and evidence provided to the Committee, but I think the usual channels should consider having oral evidence sessions for future Finance Bills, so that people can make important representations on significant pieces of legislation.
I will turn to clause 13 and new clause 24 tabled in my name. We need to have an enterprise economy that incentivises investment. The tax regime clearly has an important role to play in helping to achieve that, and in doing so, backing much needed growth in the economy. Clause 13 amends the Income Tax (Earnings and Pensions) Act 2003 to expand the enterprise management incentives scheme. That scheme helps attract, keep and motivate staff by allowing employees to buy shares in the company with tax advantages. That includes no income tax or national insurance contributions at the time of grant and exercise, with gains eventually being taxed under the more favourable capital gains regime, rather than as income tax.
The changes in the clause should make it easier for start-ups and growing companies to use the enterprise management incentives scheme, helping them reward staff and link employees’ success to the company’s growth. That is something that we support and the British Private Equity and Venture Capital Association has also welcomed the change. The clause increases the company options limit from £3 million to £6 million, raises the gross asset limit from £30 million to £120 million, and doubles the employee limit from 250 to 500. It also extends the exercise period to 15 years. These are all welcome changes.
However, one important element that is not due to change under these provisions is that the scheme allows qualifying companies to grant employee share options up to a maximum value of £250,000 per individual. Has the Minister considered going further and raising the cap beyond £250,000 to attract the brightest and best to grow businesses?
In its report on competitiveness, published yesterday, TheCityUK states that,
“the UK’s tax schemes such as…Enterprise Management Incentives (EMI) offer lower relief thresholds and tighter eligibility than international equivalents such as the Qualified Small Business Stock regime in the US, weakening incentives to scale and retain activity domestically.”
I have tabled new clause 24, which would require the Government to assess and report to Parliament on the impact that the changes have on the recruitment and retention of skilled employees in qualifying companies, on high-growth and innovative companies and on the Exchequer.
The Minister referred to the tax information and impact note, but clearly that is a forecast of what the Government hope will happen, not a review of what has actually happened. I think that will be a debate that we have many times as we consider the Bill: a TIIN is not a review of what has actually happened. The numbers that the Minister gave may be higher or lower, but we need to have a post-implementation review.
According to the Budget 2025 policy costings, the objective is to increase eligibility to allow scale-ups, as well as start-ups, to access the scheme. That is, of course, something we support. Will the Minister commit to keeping the scheme under review to ensure it is delivering on its aims to support high-growth firms and to consider whether further action, such as on the individual threshold, is needed?
Given the substantial investment, can the Minister clarify what behavioural assumptions underpin these projections? How many companies just above the existing threshold are expected to utilise these expanded limits? The BVCA has said that the enterprise management incentives scheme is
“long overdue for reform: high growth companies are often unable to grant EMI options due to the constraints of the £30m gross assets and 250 employee limits.”
Does the Minister have figures showing how much these limits have actually restricted growth?
Mr Joshua Reynolds (Maidenhead) (LD)
It is a pleasure to serve under your chairmanship, Sir Roger, on what is not only my first Finance Bill Committee, but my first Bill Committee—a nice, simple one to start me off. The Liberal Democrats welcome the changes made by clause 13. We need to support our British start-ups and British start-up culture to grow and develop.
We would of course like the Government to go further than clause 13 in what they promise. We need to ensure that we have a British start-up culture where start-ups do not, after five or 10 years, head off to the United States, taking that capital and leaving the UK with a brain drain. I have only one question to the Minister: how can we go further to ensure that once we have implemented the Bill, we will be in a position to say that fantastic UK companies will not head overseas, taking that capital and culture with them?
Lucy Rigby
The hon. Member for North West Norfolk made a series of important points. I come back to the fact that the Government have opened a call for evidence on tax in this area. The Committee will come to the enterprise investment scheme and venture capital trusts scheme, which the call for evidence also covers. Importantly, the call for evidence covers the changes we have made to the enterprise management incentives scheme. All of those changes, as well as the clauses we are about to discuss, are important to the Government’s objective of making sure that the UK is the best place in the world to start and grow a business, and I encourage any views to be fed into that call for evidence.
The hon. Member referred to an important report from TheCityUK and PwC; I attended its launch yesterday. I am pleased to tell him that the Government’s objectives on the growth of financial services very much align with that report. Our objectives and the report have much in common, but most importantly, we share the sense of urgency and ambition that it outlines.
The hon. Member for Maidenhead referred to his desire to see more companies remain in the UK. That is imperative, and it is behind the Government’s reforms to a series of tax incentives in this area. We believe that the UK is already the best place in the world to start a company, and we have to make sure that it continues to be, but it must also be the best place to scale and to list a company. That is why the reforms are so important—so that companies stay.
Amendment 37 agreed to.
Amendment made: 38, in clause 13, page 7, line 38, for “(7)” substitute “(8)”.—(Lucy Rigby.)
This amendment is consequential on the addition of a new subsection by Amendment 37.
Clause 13, as amended, ordered to stand part of the Bill.
Clause 14
Enterprise investment scheme: increase in amounts and asset requirements
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Amendment 29, in clause 15, page 10, line 23, leave out subsection (2).
This amendment would maintain the rate of income tax relief for investments into venture capital trusts at 30 per cent.
Government amendments 3 and 4.
Clause 15 stand part.
New clause 1—Report on the impact of section 15—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 15 on—
(a) early-stage investment volume,
(b) investor participation, and
(c) international competitiveness.”
This new clause would require the Chancellor of the Exchequer to report to the House on the impact of section 15 on early-stage investment volumes, investor participation and the UK’s international competitiveness.
Lucy Rigby
Clauses 14 and 15 double the maximum amount that a company can raise through the enterprise investment scheme and venture capital trusts scheme, as well as the gross assets limit for companies using the scheme. The VCT income tax relief will also be reduced from 30% to 20%.
The changes made by clause 14 will mean that, from April 2026, the EIS annual company investment limits will increase to £10 million, or £20 million for knowledge-intensive companies. The lifetime company investment limits will increase to £24 million, or £40 million for knowledge-intensive companies. The gross assets test will increase to £30 million before share issue, and £35 million after. Likewise, clause 15 will mean that from April 2026, the VCT company investment limits and gross assets test will increase to the same levels. Alongside that, as I said, the VCT up front income tax relief will decrease from 30% to 20% from April 2026.
Government amendments 3 and 4 fix wording in clause 15 so that the annual and lifetime investment limits consistently apply to “the relevant company”, removing any ambiguity in how the VCT limits should be interpreted.
James Wild
Clauses 14 and 15 are a story of two halves. As the Chartered Institute of Taxation rather adeptly put it—we are grateful for its support in scrutinising the Bill—these changes give with one hand and take with the other. We support clause 14, but we have doubts about clause 15.
Both clauses deal with our risk capital schemes—the enterprise investment scheme and venture capital trusts. EIS was introduced in the UK in 1994 to stimulate economic growth and, along with VCTs, these Government-backed schemes encourage individuals to invest in smaller high-risk trading companies by offering tax reliefs on their investment. As a former adviser in the Department for Business, Innovation and Skills, I helped to develop these schemes, as well as the seed enterprise investment scheme. I recognise their importance.
As the venture capital industry has noted, these are essential tools in unlocking private capital for early-stage, high-growth UK businesses, which we all support, particularly in the knowledge-intensive sectors such as life sciences, clean energy and deep tech; however, companies now routinely require £20 million to £30 million in funding before they start to sell their products. The previous limits had prevented UK investors from following their initial investment with more capital, forcing businesses to turn to overseas capital too early. That is a problem I think we all want to fix.
The main difference between the schemes is that with EIS an investor buys shares directly in an eligible company, whereas with VCTs the investor buys shares in a listed fund-like vehicle, which then spreads their money across a portfolio of qualifying companies. These clauses increase the annual and lifetime investment limits for the EIS and VCTs in Great Britain and raise the gross asset thresholds for qualifying companies.
Clause 14 increases the annual and lifetime investment limits for the EIS and VCTs, and raises gross asset thresholds. These limits have not been uprated since 2018 for knowledge-intensive companies and 2015 for other companies. Now, all limits are being doubled, which is welcome. As we have heard, for both schemes, the limit will rise from £10 million to £20 million. The total amount that can be raised over time will increase to £40 million for those knowledge-intensive firms. The gross assets yield for qualifying companies will go up to £30 million before a share issue and £35 million thereafter. TheCityUK has said that schemes such as EIS remain vital for crowding in early-stage finance and these changes are welcomed by the industry.
Clause 15 heads somewhat in the opposite direction. This clause reduces the rate of income tax relief for investment in VCTs from 30% to 20%. This is where our doubts begin to grow. The 2025 Budget policy costings reveal a calculated trade-off. The increased limits in clause 14 will cost the Exchequer £60 million in 2027-28. Meanwhile, the reduction in VCT income tax relief will raise £125 million in the same year, delivering a net yield of approximately £65 million. The policy costings state that this rate reduction is intended to
“better balance the amount of upfront tax relief…and ensure funds are targeting the highest growth companies”,
but the costings’ own assumption that
“investors alter or reduce the way they invest into VCT”
is an acknowledgment that the relief cut will dampen investor appetite.
I am concerned by how much that tax increase will reduce investment in these high-growth companies that we all support. The British Private Equity & Venture Capital Association has been explicit about its concerns, warning that this reduction
“could lead to a decline in fundraising that would impact the high growth and high-risk investments that the Government is looking to encourage”.
VCTs are a key part of the UK’s capital mix, providing one of the few consistent sources of long-term equity for early-stage and scaling companies. Any reduction in their ability to raise funds would directly affect the pipeline of innovative businesses that the UK needs to grow.
The reduction in VCT relief to 20% creates a fundamental risk to venture capital funding, precisely when scale-ups face capital constraints. For early-stage companies dependent on VCT funding, the reduced relief translates directly into a higher cost of capital and reduced funding availability. The Budget relies heavily on revenue raising from less visible and more complex parts of the tax system. This VCT change exemplifies that approach, shifting costs to venture investors rather than implementing transparent broad-based taxation.
New clause 1 would require the Chancellor to report on the impact of the cuts to VCT allowance on early-stage investment volume, investor participation and international competitiveness. Given the Government’s own admission that this will alter investment behaviour, such reporting is essential, and I reiterate that a TIIN does not review what actually happens in practice. Amendment 29 would simply remove the provision in clause 15(2) that reduces the rate relief from 30% to 20%, keeping the relief at its current level to support investment in high-growth firms. I believe both amendments would be supported by industry and, subject to what the Minister says, I intend to press amendment 29 to a vote.
The Government are expanding VCT investment limits while simultaneously cutting the relief to 20%. How would the Minister address the concerns of the investment sector that the combined changes will dampen investor appetite for venture capital trusts at the very moment we need to encourage them?
Lucy Rigby
I welcome the shadow Minister’s welcoming of the majority of the changes that we are making. To address his criticism of what we are doing in relation to the venture capital trust income tax relief, I come back to the impetus behind this package of reforms as a whole on EMI, EIS and VCT, which is to make sure that the UK is the best to start, scale, list a company and to ensure that companies stay.
The specific change to VCT to reduce the income tax relief from 30% to 20% is to help rebalance the up-front tax reliefs offered across the schemes, where the VCT scheme offers tax relief on dividend income, which the EIS scheme investors do not get. VCTs tend to invest in larger, less risky, scaling companies compared with EIS scheme investors. The reduction in income tax relief therefore reflects the overall reduction in investment risk that comes with investing in later-stage companies.
It is important to bear in mind that the VCT scheme remains very generous with, as I said, 100% tax relief on dividend payments and 100% capital gains tax relief on the sale of shares, alongside that 20% income tax relief. I know that the shadow Minister does not like TIINs in general—he has made that point in the Chamber—but they do contain the full details of the assumptions and impacts, and indeed the policy rationale. I therefore commend clauses 14 and 15 and Government amendments 3 and 4 to the Committee, and ask that amendment 29 and new clause 1 be rejected.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Clause 15
Venture capital trusts: rate of relief and amounts and asset requirements
Amendment proposed: 29, in clause 15, page 10, line 23, leave out subsection (2).—(James Wild.)
This amendment would maintain the rate of income tax relief for investments into venture capital trusts at 30 per cent.
Question put, That the amendment be made.
Lucy Rigby
Clause 16 will enable the existing enterprise management incentives scheme and company share option plan contracts agreed before 6 April 2028 to be amended to include a sale on the private intermittent securities and capital exchange system—known by its much more catchy acronym of PISCES—as an exercisable event, without losing the tax advantages. The legislation will have retrospective effect from 15 May 2025. In the interim, His Majesty’s Revenue and Customs will be able to use its collection and management powers to not collect tax on exercise.
That means that this change will benefit PISCES trading events that happen before the Finance Bill receives Royal Assent. The change will therefore support more employees of growing UK companies to access the tax advantages of EMIs, and ensures that the tax system keeps pace with innovation in the wider economy. It also, of course, supports the launch of PISCES, which will provide a key stepping stone for public markets, supporting our world-leading capital markets. I commend clause 16 to the Committee.
James Wild
As the Minister says, clause 16 addresses a specific but important matter by permitting employers to amend existing company share option plan and enterprise management incentives option agreements, to allow PISCES trading events to serve as exercisable events without sacrificing the valuable tax advantages. Employers frequently offer share options to employees in recognition of their service and commitment, and to grow their businesses, and when employees exercise such options, they naturally face income tax and national insurance consequences. To encourage this form of employee ownership, successive Governments have introduced tax-advantaged schemes, including CSOP and EMIs, that provide relief from those taxes when certain conditions are satisfied.
Lucy Rigby
The Government delivered the regulatory framework for PISCES in May 2025, and the shadow Minister has, fairly, asked for an update. I am pleased to tell him that the Financial Conduct Authority has since approved, as he may know, two PISCES market operators: JP Jenkins and the London Stock Exchange. We are hopeful that the first trading events on PISCES will take place soon.
I understand the impetus behind the shadow Minister’s other points. PISCES can, of course, be written into new contracts when they are agreed, meaning that those contracts should not need to be amended to include PISCES, because it can be there ab initio. However, it is fair to say that companies might not yet be aware of PISCES, as it was only recently introduced. That is exactly why we have the April 2028 extension, to allow PISCES to become more embedded and therefore more standard in EMI and company share option plan contracts. As I said, I understand the impetus behind the suggested change; I just do not think it is necessary.
Question put and agreed to.
Clause 16 accordingly ordered to stand part of the Bill.
Clause 17
Employee car and van ownership schemes
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clauses 17 and 18 will bring employee car ownership schemes into the benefit-in-kind regime from 2030, with transitional arrangements until 2032. Clause 19 will ensure that the introduction of new emissions standards does not lead to a sharp increase in benefit-in-kind tax for plug-in hybrid electric vehicles.
On clauses 17 and 18, the costing, published alongside the Budget, accounts for a behavioural response whereby a significant number of taxpayers switch towards alternative vehicles or move away from using company cars altogether. That has been updated since the 2024 autumn Budget, taking into account further evidence on the impacts of the measure provided by the sector.
Private use of a company car is a valuable benefit, and it is right that the appropriate tax be paid on it. This measure will ensure fairness to other taxpayers, reduce distortions in the tax system and reinforce the emissions-based company car tax regime, which incentivises the take-up of zero emission vehicles. To support the automotive industry and provide employers with more time to adjust to the changes, the Government have delayed implementation of the measure to 6 April 2030 and have introduced transitional rules.
On clause 19, new emissions standards being introduced in the UK reflect the higher real-world emissions of PHEVs. It is important that a car’s official emissions figures reflect real-world emissions, but that can lead to tax increases where tax is linked to emissions levels. The Government recognise that although it is right that higher-emitting vehicles pay more tax, lower-emission company cars such as plug-in hybrid vehicles continue to play an important role in supporting our transition towards zero emission vehicles and the decarbonisation of transport. The changes made by the clause will introduce a temporary benefit-in-kind tax easement for employers providing, and employees being provided with, PHEVs as company cars. I commend clauses 17 to 19 to the Committee.
Mark Garnier
I thank the Minister for her comments, but we are concerned about the unintended consequences of the three clauses.
We are concerned about how clause 17 will affect automotive industry jobs and vehicle sales. Approximately 76,000 workers use ECOS, across 1,900 medium-sized and large businesses. Those workers have utilised ECOS for essential, affordable and reliable personal transport. We believe that the clause risks making ECOS vehicles unaffordable for the workers who currently use them. In fact, using the scheme arrangements and paying tax from 2030 to 2032 onwards means that such workers face, in effect, a pay cut. That is especially unfair because those people who most use the schemes rely on a vehicle for their job much more than those in most other industries. There is a risk of further knock-on effects on the automotive industry if workers abandon ECOS completely.
The chief executive of the Society of Motor Manufacturers and Traders, Mike Hawes, who is one of the leading voices in the automotive industry, has expressed strong disapproval of the Government proposal to change ECOS. That is because 100,000 cars are provided through the schemes each and every year, which alone amounts to 5% of the new-car market in the UK. The SMMT predicts that changing the schemes will endanger 5,000 manufacturing jobs in the UK; it claims that that will bring about a loss of half a billion pounds a year due to fewer sales, lost VAT and lost vehicle excise duty receipts. That more than outweighs the £275 million in revenue that the Treasury predicts it will take within the first year of the tax changes taking effect.
We do not feel that clause 18 adequately protects the automotive industry and its workers. Under current ECOS arrangements, employers can sell a vehicle to an employee below market value, at a discounted price. For many employers, that has acted as an additional benefit to form a competitive employee recruitment package and has helped to improve staff retention. These criteria effectively stipulate that vehicles must be sold on the same terms as in the open market. Although exempt employers will not pay benefit-in-kind tax, they will inevitably have to pay a higher price for the vehicle itself. The SMMT estimates that that could become unaffordable for its members’ staff and automotive workers. The knock-on effects outlined in the discussion of clause 17 will remain. Fewer employees will be attracted to purchasing a vehicle. That will lead to fewer employers purchasing vehicles from car manufacturers, and the risk to manufacturing jobs and lost revenue will therefore still apply.
Clause 19 aims temporarily to ease the benefit-in-kind tax treatment for plug-in hybrid electric vehicles. We understand the intention behind this legislative change. We want people to take up low-emission electric vehicles, and the taxation system is an effective tool to encourage that. We are also conscious that stricter emission tests will be implemented over time. That could push plug-in hybrid emission vehicles into higher emission bands, and more tax will therefore be paid on them in the future. The knock-on effects on electric car manufacturers and the environment could be stark.
Clause 19 is part of the same package that endangers jobs in the automotive manufacturing industry, which will lead to a loss of about £500 million in VAT and vehicle excise duty receipts. Automotive News has reported on the progress of electrified vehicle registrations: it says that in October 2025 PHEV registrations rose by 27.2%, and that electrified vehicles represented the majority of new car registrations, at 50.8%. The SMMT says that in 2025 the new car market reached 2 million units for the first time since 2019. It predicts that the removal of ECOS could undo the progress that electrified vehicles, including PHEVs, have achieved by denying workers affordable access to new and increasingly zero emission vehicles.
CBVC Vehicle Management has said that these measures continue to make PHEVs look attractive in the short term, but the chief executive, Mike Manners, has advised people considering a PHEV to look at the benefit-in-kind tax implications and avoid their lease running into the tax year 2028-29. The benefit-in-kind easement is temporary until 6 April 2028.
Anthony Cox of RSM UK says that manufacturers do not expect that the reforms will push people into using electric cars. He states that employees of manufacturers and retailers could instead seek out older or less clean cars to purchase, outside any employer or employee management arrangements.
The point is that there are unintended consequences to the clauses. Although we will not oppose them, we want the Minister to take into account the fact that the Government may not get what they want out of them.
Mr Reynolds
The Liberal Democrats share the concerns of the SMMT. Given that the sector is struggling with severe uncompetitiveness across the country, anything that undoes the progress that the Government are seeking to make would not be welcome. Nissan tells us that its plant in Sunderland is the most expensive for electricity of any of its plants worldwide. That is not good for British business or for British car manufacturers. The SMMT worries that these proposals will not be good for British car manufacturers either.
On clause 18, we would like some draft guidance on proposed new section 116A to be published this year and consulted on. A number of the definitions could be clarified to give the industry some certainty about what will and will not be included.
Lucy Rigby
On the points made by the shadow Minister, the hon. Member for Wyre Forest, we have listened very carefully indeed to the sector’s concerns and have responded. That is exactly why we are delaying the proposed changes to employee car ownership schemes until 2030. That is the reasoning behind the delay.
The Government are firmly committed to our modern industrial strategy, and specifically to the automotive sector. That is why in the past year we have committed £2.5 billion to automotive investment and research and development, increased flexibilities in the ZEV mandate, funded the roll-out of more charge points and announced plans to cut electricity costs for energy-intensive manufacturers. Various points have been made about the tax incentives, but underpinning all of them is our commitment to support the automotive industry in a challenging fiscal environment.
We will publish in due course the guidance that the hon. Member for Maidenhead requests.
Question put and agreed to.
Clause 17 accordingly ordered to stand part of the Bill.
Clauses 18 and 19 ordered to stand part of the Bill.
Clause 20
Employment income: miscellaneous exemptions
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clauses 20 to 23 relate to other employment income. Clause 20 will simplify the rules on common workplace health and equipment costs, reducing administrative burdens for employers and giving greater clarity to the tax treatment of these costs. It will exempt reimbursements for accommodations, supplies or services used in performing employment duties, such as homeworking equipment; it will extend the existing exemptions for eye tests and corrective appliances to cover reimbursements; and it will introduce a new exemption for both the direct provision and the reimbursement of flu vaccinations. Uptake will depend on employer practice, but these changes will make the rules simpler and fairer for those affected. The Exchequer impact is negligible, but this change will allow employers to support staff without having to handle the sourcing and provision of minor items themselves. This will reduce time and resource costs.
Clause 21 relates to homeworking expenses. It will remove the process by which employees can claim an income tax deduction from HMRC if they have incurred additional household costs when required to work from home. The changes introduced by the clause aim to address concerns around non-compliance and to ensure fairness across the tax system.
Clause 22 will introduce changes that confirm the income tax treatment of payments made by zero-hour or similar limited-hour workers for a cancelled, moved or curtailed shift. This measure will put the tax treatment of such a shift beyond doubt. These tax changes will have an impact only on a small subset of workers, as the vast majority of such payments are taxable under existing legislation. The measure confirms that payments received in the event that a shift is altered at short notice are taxable in all scenarios, including in relation to agency workers and workers employed under umbrella companies.
Clause 23 puts beyond doubt the answer to whether earnings for duties not performed should be treated as UK earnings or overseas earnings for non-UK residents. The clause will establish a general principle to determine the tax treatment of earnings that relate to duties that have not been performed. It will also make a consequential amendment to foreign employment relief, commonly known as overseas workday relief, to ensure that this clarification also applies to UK residents who claim it. I commend clauses 20 to 23 to the Committee.
Mark Garnier
Clause 20 will introduce specific exemptions for minor expenses incurred by an employee on behalf of their employer. The Opposition particularly welcome subsections (3) to (6). As the Institute of Chartered Accountants in England and Wales says, it is a positive step that focuses on prevention rather than cures. It is also about the trade-off between tax relief and reduced future healthcare spending.
As the Association of Taxation Technicians has asked, will the Minister consider whether the covid-19 vaccination could be included in this provision? The Government’s explanatory notes state that corresponding changes to NICs for influenza vaccines and homeworking equipment will be made through separate regulations. Will the Minister provide more detail on when we can expect those regulations to be introduced?
On clause 21, the Government’s policy paper suggests that there will be no direct impact on business. However, there may be an indirect impact, as employers feel pressured to change their policies on reimbursement. As the Chartered Institute of Taxation points out:
“This creates an uneven situation in which two employees with identical working arrangements and costs are treated differently for tax purposes solely on the basis of their employer’s reimbursement policy.”
It also seems to follow our party’s scepticism about solely remote working. During the passage of the Employment Rights Act 2025, the Government said repeatedly that the right to work from home boosts productivity. Clause 21 seems to go against that by making it more difficult to work from home. It also seems to be a further attack on private sector employees, despite the fact that in 2024 HMRC spent £82 million on remote working devices for its workers, while the Home Office spent £53 million. Is this another example of the Government hitting the private sector while protecting the public sector?
Clauses 22 and 23 confirm that payments received in Great Britain for cancelled, moved or curtailed shifts are subject to income tax. In the explanatory notes, the Government state that this would also allow for
“the introduction of regulations to ensure that payments are also subject to National Insurance contributions”.
We think it would help to provide fairness in the tax system to support the clarity that the clause provides, so can the Minister confirm when the Government will seek to introduce those specific changes?
More generally, I want to make a point that my hon. Friend the Member for Mid Buckinghamshire (Greg Smith) made on the Employment Rights Bill Committee. While the clause provides fairness in the system between employees, the Government are still providing little support for businesses if they have to cancel, move or curtail shifts in circumstances that are unexpected or out of their control. Will the Minister commit to working with her colleagues in the Department for Business and Trade to assess how they can better support businesses when such situations arise?
Oliver Ryan (Burnley) (Lab/Co-op)
As ever, Sir Roger, it is a pleasure to make a short contribution while you are in the Chair. On clause 20, I will not echo the point that has just been made, but the Minister will have seen the written evidence submitted by the Association of Taxation Technicians, which discussed potentially widening the new initiative of including flu vaccinations in expenditure deductible from employment income, so that it also includes covid vaccinations. Has the Minister given that any thought?
On clause 22, it is a pleasure to see the Employment Rights Act being enacted and to address shifts being missed by people on zero-hours contracts, such as those in my constituency. It probably takes us into a wider debate that the Opposition have raised about having oral evidence sessions. It is clear from the evidence pack that the Chartered Institute of Taxation, the Association of Taxation Technicians and other taxation professionals have quite a lot of comments to make. If submissions on the clause were opened to my constituents, I am sure that there would be mass evidence from the public saying how much of a good thing it is. Does the Minister have any comments on that?
Mr Reynolds
Clause 21 will increase unfairness. Those required to work from home are currently divided into two groups: one group who receive reimbursement for costs without incurring income tax but are not reimbursed by their employer, and another group who take that via a taxation route. This measure will exacerbate that split and create a greater divide between the two. Where two employees hold exactly the same position or role, but in different companies, one may receive the payment and the other may not. The figures suggest that about 300,000 people will be affected by this measure. Can the Minister comment on how we can be in a position whereby two employees in the same job, but with different employers, are treated differently for tax purposes?
Lucy Rigby
The shadow Minister, the hon. Member for Wyre Forest, and my hon. Friend the Member for Burnley referred to vaccinations and asked about the extent to which covid vaccinations might be part of the scheme. We are limiting relief to flu vaccinations because employers have consistently highlighted them as a common relief in relation to which reimbursement would be helpful. Flu vaccinations are low in cost, seasonal and widely offered by employers as part of routine health support to employees. By contrast, other vaccinations vary significantly in cost and frequency. Importantly, however, many of them can be accessed free through the NHS.
As you might expect, Sir Roger, I completely reject the shadow Minister’s assertion that any of these measures is an attack on private sector workers. Not at all—far from it.
It is important to be clear that clause 21 will not impact employers’ existing ability to reimburse employees for costs relating to home working, where eligible, without deducting income tax and national insurance contributions.
The question of national insurance was raised in relation to clause 22 on payments for cancelled shifts. These payments will be subject to national insurance. My hon. Friend the Member for Burnley was entirely right to refer to the Employment Rights Act and its significance. I think I am right in saying that a question was also raised about the taxable nature of payments for cancelled shifts. I can confirm that payments received for short-notice shift cancellations or changes are regarded as earnings. They are paid in lieu of the payment that workers would have received had they completed the shift, and as such they are taxable in all relevant scenarios, irrespective of the arrangement or the employment structure.
Question put and agreed to.
Clause 20 accordingly ordered to stand part of the Bill.
Clauses 21 to 23 ordered to stand part of the Bill.
Clause 24
Umbrella companies
Lucy Rigby
I beg to move amendment 5, in clause 24, page 28, line 25, at end insert—
“61Z2 Disclosures to liable persons
(1) Subsection (2) applies where an officer of Revenue and Customs considers that a person is, or may be, jointly and severally liable to pay an amount as a result of this Chapter.
(2) The officer may at any time disclose to the person such information as the officer considers appropriate (whether or not such a disclosure would otherwise be permitted under section 18(2)(a) of CRCA 2005 or any other enactment) for the purposes of informing the person about that liability (‘the joint liability’) including—
(a) the identity of any person who is an umbrella company, a purported umbrella company or the worker in relation to the arrangements to which the joint liability relates, and
(b) information about the nature and extent of the liability of an umbrella company or a purported umbrella company that (by virtue of this Chapter) results, or may result, in the joint liability.
(3) Information disclosed in reliance on subsection (2) may not be further disclosed without the consent of the Commissioners for His Majesty’s Revenue and Customs (which may be general or specific).
(4) Where a person contravenes subsection (3) by disclosing information relating to a person whose identity—
(a) is specified in the disclosure, or
(b) can be deduced from it,
section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation to the disclosure as it applies in relation to a disclosure in contravention of section 20(9) of that Act.
(5) In this section ‘CRCA 2005’ means the Commissioners for Revenue and Customs Act 2005.”
This amendment permits disclosures (whether or not permitted as a result of provision elsewhere) to persons who may be jointly and severally liable as a result of new Chapter 11 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003.
The Chair
With this it will be convenient to discuss the following:
Government amendments 6 to 8.
Clause stand part.
Lucy Rigby
Clause 24 will make changes to ensure that recruitment agencies are responsible for accounting for pay-as-you-earn on payments made to workers that are supplied via umbrella companies. Many umbrella companies operate diligently and support their employees, but a significant number are used to facilitate non-compliance, including tax avoidance and fraud. Clause 24 is intended to encourage increased due diligence among businesses that choose to use umbrella companies to engage workers. It will do so by introducing joint and several liability for the PAYE taxes that umbrella companies are required to remit to HMRC.
Government amendments 5 to 8 will ensure that the legislation works as intended by making a small technical change. This will ensure that HMRC is able to recover underpayments of tax from businesses that are within scope of the new rules because they purport to be umbrella companies, in the same manner that underpayments will be recovered from the other businesses that are within scope of the new rules. Amendment 5 will ensure that HMRC is able to keep taxpayers informed about its investigations concerning sums to which they are jointly and severally liable. That will help taxpayers to take action to mitigate their exposure to unpaid liabilities.
I commend clause 24, together with Government amendments 5 to 8, to the Committee.
Mark Garnier
Back in 2023, the Conservative Government opened a consultation on how to tackle non-compliance in the umbrella company market, because there was evidence of widespread non-compliance that deprived workers of their employment rights, distorted competition in the labour market and led to a significant tax loss to the Exchequer. In the 2024 autumn Budget, the Chancellor announced that she would follow up the consultation, hence this clause.
The Government state in their explanatory notes that the clause seeks
“to drive behavioural change among businesses that use umbrella companies in the supply of workers by giving them a financial stake in the compliance of the umbrella companies that they use.”
I think there is broad agreement about the need for this measure in tackling tax non-compliance in the umbrella company market. However, the Chartered Institute of Taxation has raised two particular issues, and I would be grateful for the Minister’s comments on them.
First, there seems to be an absence of safeguards. Currently, HMRC can transfer liability to the agency regardless of its circumstances. When an agency has done all it can to ensure the integrity of the supply chain, but has been the victim of fraud by the umbrella company, we think there should be safeguards in place to prevent the transfer of debts.
Secondly, there is some concern that the definition of “purported umbrella company” is too wide. The clause defines such a company so as to include any entity supplying an individual with services where that individual has a material interest in the entity. That means that, for instance, personal service company arrangements could fall within the definition. Is it the Government’s intention to include personal service company arrangements within the definition of a purported umbrella company? I should declare an interest: I have a personal service company. Can the Minister expand on what discussions on the clause have taken place with industry organisations such as the Freelancer and Contractor Services Association, which provides accreditation for many umbrella companies?
Lucy Rigby
On the shadow Minister’s final question, I am afraid that I do not know what discussions have taken place with the organisation he referred to, but I can write to him and let him know. Ultimately, whether to use an umbrella company when supplying a worker to a client is a commercial decision for agencies. That commercial decision has been incentivised not just by the ability to outsource administration to umbrella companies, but by the shielding from exposure to tax risk that that model provides. It is good to hear the shadow Minister welcome the impetus behind the changes in that regard.
The current legal framework provides few incentives for agencies to ensure that the umbrella companies they use are compliant. We think it—and it sounds like the shadow Minister agrees—that that has contributed to the proliferation of non-compliance in the umbrella company market. It is important that agencies take steps to ensure that their labour supply chains are compliant, and some agencies already do. HMRC has published guidance on how to undertake checks.
The shadow Minister asked about which agencies may be treated as umbrella companies, given the breadth, or otherwise, of the definition. We are, of course, aware that some agencies engage workers as employees, and where that is the case, and they meet the other conditions of the legislation, they will be treated in the same way as umbrella companies and this measure will apply. Employment is a fundamental characteristic of how most umbrella company workers are engaged and is the key aspect in determining when this legislation will apply. I think that will be the key legal test.
Amendment 5 agreed to.
Amendments made: 6, in clause 24, page 29, line 31, leave out
“a ‘relevant party’ for the purposes”
and insert
“jointly and severally liable to pay an amount as a result”.
This amendment makes sure that HMRC can use their power to make determinations about PAYE income in relation to persons who are jointly and severally liable to amounts of PAYE income under new section 61Z1 of the Income Tax (Earnings and Pensions) Act 2003.
Amendment 7, in clause 24, page 29, line 32, leave out from “ITEPA” to end of line 33 and insert “(umbrella companies)—”.
This amendment is consequential on Amendment 6.
Amendment 8, in clause 24, page 29, line 34, leave out from first “to” to “as” in line 35 and insert “that amount”.—(Lucy Rigby.)
This amendment is consequential on Amendment 6.
Clause 24, as amended, ordered to stand part of the Bill.
Clause 25
Loan charge settlement scheme
Lucy Rigby
I beg to move amendment 9, in clause 25, page 30, line 21, at end insert “, or
(ii) a director or shadow director of such a person.”
This amendment expands the persons to whom the Commissioners are not required to make a loan charge settlement offer so as to include directors and shadow directors of a promoter or introducer.
The Chair
With this it will be convenient to discuss the following:
Government amendment 10.
Clause stand part.
Clause 26 stand part.
Government amendment 11.
Clause 27 stand part.
New clause 25—Report on fairness and scope of the loan charge settlement opportunity—
“(1) HM Revenue and Customs must, within 12 months of the passing of this Act, lay before the House of Commons a report on the operation and impact of any loan charge settlement opportunity established under section 25 of this Act.
(2) The report under subsection (1) must in particular consider—
(a) whether the terms of the settlement opportunity are available to individuals who have previously settled or fully paid liabilities arising from disguised remuneration loan arrangements,
(b) whether the terms of the settlement opportunity are available to individuals with disguised remuneration loan arrangements falling outside the loan charge years specified in Part 7A of the Income Tax (Earnings and Pensions) Act 2003,
(c) the extent to which any differences in treatment between these groups and those eligible for the settlement opportunity affect perceptions of fairness, and
(d) the potential impact of such perceptions on future tax compliance and trust in the tax system.
(3) The report must include—
(a) an assessment of whether extending more favourable settlement terms to the groups described in subsection (2)(a) and (b) would improve fairness and consistency, and
(b) any recommendations HMRC consider appropriate in light of that assessment.”
This new clause would require HMRC to report on the operation and fairness of the new loan charge settlement opportunity. It would consider whether more favourable terms are, or should be, available to those who have already settled or fully paid liabilities, and to those with arrangements outside the loan charge years.
New clause 26—Report on the treatment of disguised remuneration arrangements outside the loan charge years—
“(1) HM Revenue and Customs must lay before the House of Commons a report on the treatment, under any loan charge settlement opportunity established under section 25 of this Act, of disguised remuneration arrangements falling outside the 2010/11 to 2018/19 tax years.
(2) The report under subsection (1) must in particular consider—
(a) the extent to which disguised remuneration income from tax years outside the loan charge period is excluded from the settlement terms,
(b) the number of taxpayers with disguised remuneration arrangements which HMRC consider to fall outside the loan charge but within Part 7A of the Income Tax (Earnings and Pensions) Act 2003,
(c) the interaction between settlements pursued in respect of such arrangements and those relating to the loan charge, and
(d) whether excluding factually linked arrangements from the settlement opportunity may prevent taxpayers achieving a full and final resolution of their tax affairs.
(3) The report must include—
(a) an assessment of whether including disguised remuneration arrangements that are factually linked to the loan charge period (whether arising before, during or after that period) would improve the effectiveness, fairness and finality of the settlement process, and
(b) any recommendations HMRC considers appropriate.”
This new clause would require HMRC to report on the exclusion from the new loan charge settlement opportunity of disguised remuneration arrangements outside the loan charge years, including arrangements which HMRC considers to fall outside the loan charge but within the disguised remuneration rules.
Lucy Rigby
Clauses 25 to 27 provide for the Government to create a settlement opportunity in line with their response to the independent review of the loan charge, and to encourage those who have not yet settled with HMRC to come forward and do so.
Clause 25 sets out some of the main features of the scheme, including how the new settlement amount will be calculated. Clause 26 will ensure that inheritance tax is not charged as part of any settlement where it relates to disguised remuneration arrangements in scope of the loan charge. Clause 27 makes supplementary provision for the settlement scheme to ensure that it can operate as intended.
In some places, the Government have gone further than the review recommended. In addition to removing late payment interest and inheritance tax, and allowing for generous tax deductions to represent amounts assumed to have been paid to promoters, the Government will also write off the first £5,000 of each individual’s liability. Because of these changes, around 30% of people within scope of the review could see their liabilities removed entirely, while most other individuals will see their liabilities reduced by at least half.
Turning to Government amendments 9 to 11, HMRC is aware of a number of promoters who have made use of their own disguised remuneration schemes and would be within scope of the settlement opportunity. I am very clear that it would be wrong for those individuals to be able to access the generous settlement terms on offer rather than paying every penny that they owe. Clause 25 makes provision for the exclusion of tax avoidance promoters from the settlement opportunity. Amendments 9 and 10 tighten those provisions to ensure that HMRC is able to prevent the controlling minds behind promoter companies from inappropriately accessing the settlement opportunity, in line with the Government’s announcements at the Budget. Amendments 9 to 11 also clarify that where an employer still exists, it can enter into a settlement on behalf of its employees who used disguised remuneration schemes.
New clauses 25 and 26, which would require HMRC to publish a report on the operation and scope of the loan charge settlement opportunity and a report on the treatment of disguised remuneration arrangements falling outside the scope of the loan charge, are unnecessary. The Government published a comprehensive response to the review, setting out our position, at the Budget. That outlined the decisions the Government made to help draw this matter to a close for those impacted, and explained why the scope of the review had been set as it had. It explained that the settlement opportunity will apply to disguised remuneration use between December 2010 and April 2019, because that is the period to which the loan charge applies. While people who used tax avoidance schemes outside that period will not be able to access the scheme, HMRC will work sensitively and pragmatically to help people to resolve their cases, including by taking account of people’s means and offering generous payment terms where appropriate.
I am sure that everyone will be aware that the loan charge is already subject to significant parliamentary scrutiny. HMRC officials and Treasury Ministers routinely provide updates on their work to the Treasury Committee and the Public Accounts Committee, and the Treasury Committee asked the HMRC permanent secretary about this topic just last month. I therefore urge the hon. Member for Maidenhead not to move his new clauses, and commend clauses 25 to 27, and Government amendments 9 to 11, to the Committee.
Mark Garnier
The Conservatives welcome the independent review and the thrust of clause 25. If we were to have a criticism, it would be to do with fairness, on which we had concerns shared with us by the Low Incomes Tax Reform Group. A key objective of the McCann review, which the Minister referred to and which was set up by the Government, was to ensure fairness for all taxpayers. However, by not extending the more generous settlement opportunity to those who have already fully settled and/or paid the loan charge, the provision arguably does not achieve fairness for all taxpayers. It will effectively put those who chose not to comply with their tax obligations in a better position than those who did. That could create perverse incentives, harm future tax compliance and damage trust in the tax system. Could the Minister provide a little more detail as to why the Government have excluded those who have already settled their claims?
Mr Reynolds
New clause 25, which I hope to press to a Division, would require the Government to undertake a report to consider a number of issues pertinent to the loan charge settlement scheme outlined in the Bill. The Liberal Democrats are clear that the settlement opportunity should be fair to everybody affected, including those who have already paid or settled, so as to ensure that people outside the loan charge years are not treated differently without clear reason. Unequal treatment can create the perception of unfairness, even if the policy is technically and soundly legal. It seems to us that if perceived unfairness in the system could be reduced, we should strive to do so, in order to protect the public’s trust in HMRC and the wider tax system. Is it right that someone who has already settled should be ineligible for the loan charge settlement? Surely, that tells people that in future they should just hold off and not settle or come to agreement, because that will leave them in a better position.
James Wild
We will look sympathetically on the hon. Gentleman’s new clauses if he chooses to press them to a vote. I have constituents who were heavily pressured by HMRC and ended up settling, which left them at a considerable financial loss, so I share his concern that those people, who were effectively bullied by HMRC, will now not get the same support as people who held out.
Mr Reynolds
The hon. Gentleman is completely correct. The place we are in now is that someone who settled and came to an agreement with HMRC is excluded from the opportunity laid out in the Bill. That means that when something like this happens again—and we all know that it will—those individuals will not want to come to an agreement with HMRC. They will know that if they hold off, a better solution and a better agreement will come through.
The report required by new clause 25 would outline a range of things, including whether the loan charge settlement opportunity is available to individuals who have settled, which is really important and something that we need to ensure; whether the settlement opportunity applies to individuals with disguised remuneration outside the loan charge years; and the extent of the impact of differential treatment between those two groups and those who are eligible. The extent of the impact is the most important thing, because for those individuals it will be severe. The report would also include an assessment of whether extending more favourable settlement terms to excluded groups would improve fairness and consistency with HMRC overall.
Lucy Rigby
The purpose of the review, as I think is well known, was to bring the matter to a close for those who had not yet settled and paid their loan charge liability to HMRC. That by its very nature meant focusing on open cases and outstanding liabilities. The Liberal Democrat spokesman, the hon. Member for Maidenhead, referred to something like this happening again. I think we would all agree that we hope it does not. However, we would probably also agree that it is crucial that any resolution to this issue is fair to the wider tax-paying population that has never avoided tax.
The Government believe that this settlement opportunity is the most pragmatic solution to draw a line under the issue for as many individuals with outstanding liabilities as possible. The settlement opportunity being provided is substantially more generous than any opportunity HMRC has previously offered and will substantially reduce the outstanding liabilities of people who have yet to settle with HMRC, particularly those with the lowest liabilities. Most individuals, as I said, could see reductions of at least 50% in their outstanding loan charge liabilities. We estimate that 30% of individuals could have their liabilities written off entirely.
James Wild
In her opening remarks, the Minister referred to promoters of disguised remuneration schemes not being eligible for this settlement scheme, which I welcome. Perhaps she could update the Committee on whether HMRC is proactively pursuing such individuals, who caused such distress to my constituents and, of course, to people across the country who were sold schemes, advised that they were legitimate and had been agreed with HMRC, and then discovered they were not and have lost their homes and their life savings as a result.
Lucy Rigby
I managed to give way just before the end of my speech. The shadow Minister raises a good question and a fair point. Through the new measures and existing rules, HMRC will have powers that can result in criminal prosecution of promoters of tax avoidance, including the new universal stop regulation proposal, which will ban the promotion of the most fanciful schemes outright and allow the HMRC commissioners to ban by regulation the promotion of other arrangements that HMRC thinks will not work. We will consult on further measures to target promoters in early 2026—indeed, it is 2026 already, so the shadow Minister may assume that that will happen soon.
Amendment 9 agreed to.
Amendment made: 10, in clause 25, page 32, line 12, at end insert—
“‘shadow director’ has the meaning given by section 251 of the Companies Act 2006.”—(Lucy Rigby.)
This amendment inserts a definition for the purpose of Amendment 9.
Clause 25, as amended, ordered to stand part of the Bill.
Clause 26 ordered to stand part of the Bill.
Clause 27
Loan charge settlement scheme: supplementary
Amendment made: 11, in clause 27, page 33, line 15, at end insert—
“(da) adapting provision made under section 25(6), in cases where a settlement offer is made to a person who is not an individual, about the calculation of settlement amounts (including provision for the calculation to be different to what is required by section 25(6));”.—(Lucy Rigby.)
This amendment clarifies that the loan charge settlement scheme can provide for the calculation of the settlement amount to be adapted where a settlement offer is made to a person who is not an individual.
Clause 27, as amended, ordered to stand part of the Bill.
The Chair
Mr Reynolds, I heard you say you wanted to press your new clauses to a vote. New clauses, for general consumption, are always taken at the end of the Bill, so many weeks from now you will get your chance to have your vote.
Clause 28
Main rate of writing-down allowances for expenditure on plant or machinery
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 29 stand part.
New clause 2—Report on the impact of section 28—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 28 on—
(a) business investment levels,
(b) capital-intensive sector employment,
(c) the manufacturing sector,
(d) small and medium-sized enterprises, and
(e) the public finances.”
This new clause would require the Chancellor of the Exchequer to report to the House on the impact of section 28 on business investment, employment in capital-intensive sectors, the manufacturing sector, small and medium-sized enterprises and the public finances.
Lucy Rigby
Clause 28 will reduce the main rate writing-down allowance for corporation tax and income tax, and clause 29 introduces a new first-year allowance available for expenditure on plant and machinery. As I am sure all hon. Members are aware, capital allowances allow businesses to write off the costs of capital assets, such as plant or machinery, against their taxable income. The UK continues to offer one of the most generous capital allowances systems globally and ranks top among OECD countries for plant and machinery capital allowances.
Clause 28 will reduce the main rate writing-down allowance from 18% to 14%, starting on 1 April 2026 for corporation tax and 6 April 2026 for income tax. That allows the Government to fund a new first-year allowance while also fairly raising revenue to protect the public finances. Clause 29 will introduce the new 40% first-year allowance, which will support future investment. The new allowance is available for expenditure on plant and machinery, including assets bought for leasing and assets bought by unincorporated businesses, from 1 January 2026.
The changes made by clauses 28 and 29 will raise approximately £1.5 billion per year by the end of the scorecard. The changes are UK-wide and will impact businesses with pools of historic main rate expenditure, which predate the introduction of the super-deduction or full expensing regimes for companies, as well as historic expenditure or future main rate expenditure that does not qualify for first-year allowances, or where first-year allowances were not claimed. We have heard the calls to expand full expensing to more assets and businesses. Although the fiscal climate limits what we can do now, the new first-year allowance moves us closer to that goal in a responsible way.
New clause 2 seeks to mandate reporting the impacts of clause 28 to the House. The Government have published documents much loved by the shadow Minister, the hon. Member for North West Norfolk—tax information and impact notes—setting out the impact of the reduction to main rate writing-down allowances, alongside the introduction of the new 40% first-year allowance. I therefore reject new clause 2 and commend clauses 28 and 29 to the Committee.
James Wild
I want to get on the record that I do not have a problem with TIINs, but they serve a different purpose from reviewing legislation after the event. I would not want any Treasury officials to feel that the Opposition do not value TIINs.
I will speak to clauses 28 and 29 as well as new clause 2, which is tabled in my name. Capital allowances are one of the primary mechanisms through which our tax system supports business investment. They enable firms to deduct the cost of purchasing plant and machinery from taxable profits, thereby reducing their tax liability and helping them to invest and grow, which we all support. The annual investment allowance is perhaps the most straightforward example. It allows businesses to deduct the full cost of most plant and machinery up to £1 million annually, in the same the year that the expenditure occurs.
Beyond that, there are the first-year allowances with no annual cap. The most generous of those is full expensing, which the Minister referred to, which provides a 100% deduction for qualifying main rate assets and a 50% allowance for certain special rate assets. Those measures were introduced by the previous Conservative Government in order to stimulate faster investment and drive up what have been, I think it is fair to say, historically low levels of business investment throughout all parties’ periods in government. I think that we are all committed to try and address that.
Where businesses cannot or choose not to utilise those more generous allowances, they rely on writing-down allowances. They spread tax relief over several years by permitting a set percentage of the remaining pool balance to be written off annually, with assets allocated to either a main rate or special rate pool, depending on their classification.
Clause 28 reduces the main rate from 18% to 14% a year, while the special rate remains at 6%. The relevant date is 1 April 2026 for corporation tax purposes, and 6 April 2026 for income tax. For periods straddling that change, a hybrid rate will apply. New clause 2 would require the Chancellor to produce a report that examines the impact of those reductions on business investment levels, capital investment sector employment, the manufacturing sector, small and medium-sized enterprises and public finances.
The 2025 Budget policy costing document presents that as a part of capital allowance reform, but the reduction in the main writing-down rate will alter the cash flow position of capital-intensive businesses, slowing the rate at which they can recover investment costs through tax relief. Businesses with substantial brought-forward main pool balances will see their tax relief decelerate, with corresponding impacts on cash flow and the overall tax benefit. For companies planning significant investment, timing has now become more important. This is yet another structural tax increase on businesses with large asset bases, which will now recover their investments more slowly.
Make UK has described this Budget as
“a case of two steps forward one step back for manufacturers.”
The 4% in reduction in the writing-down allowance is undeniably bad news for business. It is little wonder that polling by the Institute of Directors reveals that four in five business leaders view this Budget negatively, and I think that those findings were replicated across the Federation of Small Businesses, the CBI and many other business organisations. The delayed recovery of capital costs will constrain reinvestment in modernisation and automation, precisely when UK manufacturers are already facing strong headwinds, not least from the very high energy costs that they face in this country. The reduction from 18% to 14% will diminish the speed at which businesses can recover these costs. Has the Treasury assessed the impact on business investment intentions, particularly for small and medium-sized enterprises in manufacturing and logistics? If not, I am sure that the Minister looks forward to supporting new clause 2.
Clause 29 is an attempt to balance the changes made in clause 28. It introduces a new 40% first-year allowance from 1 January 2026 for new, unused main rate plant and machinery. The new allowance expands relief to unincorporated businesses and firms that buy assets to lease out, which do not qualify for full expensing or the 50% special rate allowance once they go over the £1 million annual investment allowance. The explanatory notes highlight that this new allowance represents an expansion to include leasing, which we welcome—those activities that have traditionally been excluded from such reliefs. The allowance is not available for special rate expenditure, second-hand or used machinery, expenditure under disqualifying regimes or general exclusions.
We support the expansion set out in this clause. While these measures may have good aims, introducing an additional rate adds some complexity to the system. There is also the length of the Finance Bill that we are considering—536 pages of dense text—and that we expect businesses and individuals across the country to comply with, else HMRC will come after them. I urge the Government to monitor closely the impact on business investment and to look at options for a more streamlined or neutral capital allowances structure in future. What steps are being taken to tell businesses about these new allowances and freedoms they have to invest in leased assets—for example, by working with business organisations to get the word out? Opposition Members will certainly do that with businesses in our constituencies.
The new allowance will provide some up-front support for qualifying new investment, partly offsetting the impact of reducing the main writing-down rate to 14%. Once again, the Government are giving with one hand and taking with the other. The uplift will be of use for unincorporated and leasing businesses, but for most other businesses with historical or non-qualifying assets, there is no uplift at all. They simply face a slower rate of relief, going down to 14%, stretching allowances over a longer period and affecting their cash flow.
The Minister referred to Office for Budget Responsibility forecasts that suggest these combined measures will cost businesses more than £1 billion in 2026–27, rising to around £1.5 billion a year thereafter. That is a significant burden at a time when companies are grappling with weak investment and, to put it bluntly, the higher costs imposed in the first Budget. The £20 billion jobs tax has had a big impact, as we saw in the data earlier this week and as we see in the number of graduates who are struggling to find jobs.
As I say, the inclusion of leasing is welcome, but we do think there is benefit in reviewing those measures after the event and coming back to Parliament to explain what has happened.
Lucy Rigby
The shadow Minister referred to the new 40% first-year allowance, which is bringing forward relief for the leasing sector and unincorporated businesses, which have historically been carved out of the first-year allowance. In doing so, it allows for immediate relief on a significant amount of their investment from their corporation tax or income tax bill in the year in which they make that investment.
As the Chancellor has repeatedly made clear, the fiscal environment is challenging. We cannot make unfunded commitments on tax. The shadow Minister referred earlier to being an adviser to the previous Government, which is not, I suspect, to suggest that he had a role in creating the fiscal environment that we unfortunately inherited from the previous Government. We have heard the calls to expand full expensing to more assets and businesses. When the fiscal climate allows us to do so, we will look into that.
Oliver Ryan
The Minister makes a very good point about the expansion of exemptions and the fact that the Government are minded to look at this in future Budgets. I welcome clause 29, which talks about the leasing of plants and machinery and affects many businesses in my constituency. I think it will have a genuine impact and, much as the Opposition might say, “This is a very good thing,” and welcome it, I hope they will vote with us today. However, the question has to be asked why, after 14 years in government, they did not bring this in. For various businesses in my constituency that lease large equipment, this would have made a massive difference. Unfortunately, it is being brought in by us later in the day because it was not done by the Conservatives.
Lucy Rigby
My hon. Friend makes a very good point.
The shadow Minister asked about working with businesses to get the word out. We have been working closely with industry on the expansion to leasing and we are consulting businesses on guidance to ensure that understanding of the new rules is as full as possible. The TIINs beloved of the shadow Minister, we now hear, make it clear that the OBR’s “Economic and fiscal outlook” sets out that the measure is not expected to have significant macroeconomic impacts, and for future investment the present value and cost of capital for businesses that claim the new first-year allowance remains broadly the same following these changes. For all those reasons, I maintain the view that new clause 2 should be rejected.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Clause 29 ordered to stand part of the Bill.
The Chair
As an old hand, Mr Wild will know that a decision on new clause 2 will come at the end, if he wishes to press it to a Division.
Clause 30
Expenditure on zero-emission cars and electric vehicle charging points
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 3—Review of the impact of section 30—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of the expiry in 2027 of the 100% allowance made under section 30.
(2) The report under subsection (1) must assess the case for long-term capital allowance support for zero-emission cars and electric vehicle charging points to maintain UK competitiveness in green technology.”
This new clause would require the Chancellor of the Exchequer to review and report on the impact of the expiry in 2027 of the 100% allowance made under section 30, including the case for ongoing capital allowance support for zero-emission cars and electric vehicle charging points.
Lucy Rigby
Clause 30 will extend the 100% first-year allowance for qualifying expenditure on zero emission cars and plant or machinery for electric vehicle charge points by a further year to April 2027. More specifically, it will extend the availability of these capital allowances to 31 March 2027 for CT purposes and 5 April 2027 for income tax purposes, ensuring that investments in zero emission cars and charge point infrastructure continue to receive the most generous capital allowance treatment.
New clause 3 would require the Chancellor to review and report on the impact of the expiry in 2027 of the 100% first-year allowances made under clause 30, including the case for ongoing capital allowance support for zero emission cars and electric vehicle charging points. Alongside the 2025 Budget, in which the extension was announced, a policy costings document and a TIIN were published that set out the expected economic, business and other impacts of the changes, including impacts on incentivising businesses to purchase zero emission vehicles. Those documents are of course available online.
The Government annually review the rates and thresholds of taxes and reliefs to ensure that they are appropriate and reflect the current state of the economy. For that reason, new clause 3 is unnecessary. I commend clause 30 to the Committee, and ask that new clause 3 be rejected.
James Wild
As we have heard, clause 30 will extend the 100% first-year allowance for expenditure on zero emission cars, including EVs, and EV charging points. As the Minister said, the extension runs for a year to March 2027 for corporation tax and April 2027 for income tax purposes. Our new clause, consistent with other amendments that we have tabled, would simply ask the Chancellor to come back and report to Parliament, and to the public, on the impact of her measures. I do not really understand this reluctance to understand the actual impact of the measures. As part of the Government’s broader regulatory reform approach, they seem keen on post-implementation reviews, but the Treasury holds out alone against its homework being scored, it would seem. We want to consider whether long-term support should continue to be provided to maintain UK competitiveness in green technology. It is, in essence, a call for evidence that could make a difference to business confidence and investment.
The allowance was first introduced in 2002 for low emission cars, and the threshold was tightened over time, reaching zero emissions from April 2021. The extension continues that policy, but only for a year, and the Government’s own costings suggest that the extension will cost £145 million. Businesses planning multi-year fleet transitions and charging infrastructure investments face repeated cliff edges. Each year, a one-year window does not help a company planning to electrify its fleet in two years’ time; it simply rewards those who are able to accelerate the investment within the next 12 months.
Does the Minister recognise that it creates a stop-start approach that could discourage investment, undermine industry confidence and, ultimately, slow the UK’s transition to clean, green technology? That is odd when, in many ways, the Government are accelerating full throttle towards 2030 electrification across the grid. Members may have pylons and other pieces of grid infrastructure being dumped in their constituencies, with no public recourse, in the name of the Energy Secretary’s net zero goals. It is worth asking whether their policy is joined up if it includes these incremental extensions.
In that spirit, I have tabled new clause 3 so that hon. Members can judge whether the Government have a coherent approach. It would require the Chancellor to assess, transparently and on the record, whether a long-term support system is justified to keep Britain competitive in the global race for green manufacturing. A formal assessment would give Parliament and businesses the information they need to plan ahead.
In the debate on clause 11, the Minister referred to the long-term certainty provided by committing to a 25% corporation tax rate for this Parliament. Of course, that is not actually in the legislation, but we welcome that commitment and the greater certainty, and similar certainty could be given in this area. A formal assessment could also ensure that public money is being used wisely and that policy provides the certainty to unlock the investment we all want to see.
Given their 2030 obsession, why have the Government again chosen a one-year extension that provides limited certainty for fleet operators or for the charging infrastructure sector? I see that the hon. Member for Banbury is getting ready to dive into the debate. Will the Minister support new clause 3 and commit to a proper assessment of the lasting framework that is needed to secure Britain’s place in the green technology economy of the future?
Sean Woodcock (Banbury) (Lab)
The shadow Minister talks about a stop-start approach from this Government. I find that a bit brass neck, to be frank, considering the record of the previous Government, who shifted the dates and forced all sorts of investment with regard to EVs.
I welcome the measure. As part of the just transition, it is important to encourage the roll-out of EV infrastructure and charging points, particularly in rural constituencies such as mine where that is a significant challenge. Members will not be surprised to hear that I do not support the official Opposition’s new clause, but there is an important debate about how we ensure that investment is rolled out more equitably into constituencies such as mine. I ask the Minister to comment on how the Government see the roll-out of EV infrastructure in areas where there are issues with the electricity grid and network, so that the just transition can happen in those areas as well.
Mr Reynolds
The Liberal Democrats wholeheartedly support electrifying our vehicle fleet. It is a shame that some other political parties and politicians have stopped at a red traffic light when it comes to electrification. [Hon. Members: “More!”] I will not make any more traffic jokes—apologies.
That is why it is quite concerning to see the 2027 expiry date for the capital allowance. When potential EV owners are surveyed, their biggest concern is charging their vehicles, and it is the same for big employers. We all know that businesses need long-term security and a long-term commitment. That is why businesses were not doing well under the last Government, and why they retreated when the 2024 Budget brought in so many changes for businesses.
Long-term security is clearly what businesses need to invest. One-year extensions on top of one-year extensions do not give the certainty that businesses need to invest in the electrification of fleets—they need to do it this year or not at all. Once we take away that capital bid, it is very difficult to get back, so I would like to see that changed.
James Wild
The hon. Member and I agree about the importance of long-term certainty. People who are watching the proceedings may wonder why we did not just table an amendment to extend the scope to 2030, but due to the narrowness of the measures passed by the House, we are unable to do so. As I weigh up whether to push my new clause to a vote in a few weeks’ time, will the hon. Member consider supporting it?
Mr Reynolds
We can look into whether to support new clause 3 in a few weeks’ time. There seems to be very little in the new clause that we as Liberal Democrats would not support. Let us face it: we need to review the impact of the 2027 expiry date. We do not believe that the allowance should expire in 2027; it needs to be extended significantly further, so we would certainly consider supporting a review of whether 2027 is the right place.
That is my question for the Minister, really: why are we saying that the expiry date will be in 2027? Will we all be sitting here excitedly after the next Budget, looking at a 2028 expiry date, and so on for 2029 and 2030?
Lucy Rigby
On new clause 3, I think I have been as full as I can. The Government annually review the rates and thresholds of taxes and reliefs to ensure that they are appropriate and reflect the current state of the economy. We therefore do not need the review that is suggested in new clause 3.
On the broader points made by the shadow Minister, the hon. Member for North West Norfolk, we are, as I say, fully committed to supporting our automotive sector. On the suggestion that we might look further ahead, the Chancellor makes decisions on tax policy at fiscal events in the context of the public finances. My hon. Friend the Member for Banbury is right that support for infrastructure in this area is critical; indeed, that is the wider policy of the Government. On the suggestion from the hon. Member for Maidenhead that we might go beyond one year, we need to balance support for the industry with the impact on the public finances.
In our debate on clause 30, we have had “stop-start”, “accelerate”, “full throttle” and “red light”. I now encourage the Committee to greenlight the clause.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
The Chair
As we are nearing the end of the sitting, let me make three brief housekeeping announcements.
First, for operational reasons, the central door has been locked during the sitting. It will be opened very shortly before we adjourn so that Members may leave through it if they so wish.
Secondly, it has been drawn to my attention that, since the start of the sitting, the temperature has dropped dramatically, presumably because of the weather. Whether we can do anything about it during the lunch hour I do not know, but we will try.
Thirdly, the doors will be locked between now and the afternoon sitting. Given the weight of papers that everybody has been given, those Members who wish to leave them in the room may do so.
Clause 31
Payments for surrender of expenditure credits
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clause 31 will make changes to clarify the tax treatment of payments made by companies in return for receiving expenditure credits. The changes made by the clause will set out a treatment for companies to follow. Payments made in return for credit must be ignored for corporation tax purposes, both by the surrendering company and by the recipient company.
Clauses 32 and 33 will introduce technical amendments to the legislation on video games expenditure credit and audiovisual expenditure credit. The changes made by clause 32 will add a new transitional rule to modify the video games expenditure credit calculation so that it accounts for both European and UK expenditure. The changes made by clause 33 will prevent incorrect amounts from having an impact on the intended generosity of special credit. They will do so by preventing some incorrect amounts from occurring and by setting out how to resolve others when they arise. Noting that clause 32 will close a loophole, I commend clauses 31 to 33 to the Committee.
James Wild
As the Minister said, these clauses are mainly technical, tidying-up measures, but they are worthy of debate none the less.
Clause 31 clarifies the corporation tax treatment of payments made in return for the surrender of research and development expenditure credit, audiovisual expenditure credit or video games expenditure credit for payments made on or after November 2025. This technical clarification ensures that, when companies sell or surrender tax credits, the accounting treatment is consistent and correct.
R&D expenditure credit has been in place since 2013 to support companies carrying out R&D, and these creative industry expenditure credits will fully replace the old film, high-end TV, animation, children’s TV and video games tax reliefs from April 2027. At the moment, there is no agreed approach between tax authorities and companies on how to treat payments received when these credits are surrendered for corporation tax purposes, which has created uncertainty.
Clause 31 will hopefully put that beyond doubt by setting out a clear tax treatment in law, and HMRC will update its guidance manuals to reflect the new rules. Does the Minister have any figures—I do not have the TIINs to hand on this one—on whether that uncertainty has cost companies, or cost the Government, in lost revenue?
Clause 32 corrects transitional rules between the video games tax relief and the video games expenditure credit to ensure that the new expenditure credit works fairly for games that are moving over from the old relief. It corrects how the expenditure credit is calculated for transitional games—those that already have tax relief claims and then opt into the new scheme—so that companies do not get too much or too little relief, simply because the old regime used European expenditure while the new one uses UK expenditure.
In effect, clause 32 ensures that companies switching schemes do not get double relief or under-relief. Can the Minister provide an estimate of how many video games development companies will be affected by this transitional correction, and whether any have suffered financial detriment under the previous rules?
Clause 33 makes changes to the special credit for visual effects, which is part of the audiovisual expenditure credit, as the Committee will be aware. It prevents the calculation for additional credit from producing incorrect results, correcting anomalies in the visual effects credit calculation. The explanatory notes explain that, without this fix, certain combinations of expenditure could generate incorrect credit amounts or negative values, so clause 33 ensures that the scheme operates as intended and that the special credit scheme is neither more nor less generous than intended. Does the Minister have any figures on how many production companies have experienced calculation errors as a result of the previous rules?
Matt Turmaine (Watford) (Lab)
It is a pleasure to serve under your chairmanship, Sir Roger. I will speak briefly on clause 32, as a member of the all-party parliamentary group for video games and esports, to say to the Minister that I welcome the closing of this loophole. Does she agree that the change will support the British video games industry, which is industry-leading across the world, and deliver the best for our economy?
Lucy Rigby
I wholeheartedly agree with my hon. Friend the Member for Watford about the impact of these measures.
In relation to clause 31, if only the shadow Minister, the hon. Member for North West Norfolk, had the TIIN to hand; if he did, he might have been aware that we estimate that the payments for the surrender of expenditure credits will have an impact on roughly 12,000 claimants of R&D expenditure credit, audiovisual expenditure credit and video games expenditure credit.
The shadow Minister asked about the impact on video games companies: I think it is fair to say that if a company has a game that switches from the video games tax relief to the video games expenditure credit, it simply needs to make sure that it uses the modified version of step 2 when calculating how much credit it is entitled to. This will affect only games that are already in development and need to switch reliefs. There are no figures available to show the impact on companies; it is normally in the tax line, so it is not treated as taxable by most companies. I think that answers all of his questions.
Question put and agreed to.
Clause 31 accordingly ordered to stand part of the Bill.
Clauses 32 and 33 ordered to stand part of the Bill.
Clause 34
R&D undertaken abroad: Chapter 2 relief only
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clause 34 makes a minor legislative amendment to the R&D tax relief rules to put beyond doubt that the overseas restrictions apply to R&D expenditure credit claimants with a registered office in Northern Ireland. The Government are making this amendment to provide clarity to businesses and ensure that the legislation aligns with the original policy intent of the Finance Act 2025. I commend clause 34 to the Committee.
James Wild
Clause 34 will amend the Corporation Tax Act 2009 to clarify restrictions on relief for overseas R&D applied to companies across the entire United Kingdom, including Northern Ireland and Great Britain. It applies retrospectively on claims made on or after October 2024. It puts beyond doubt that the geographical restriction on R&D expenditure credit relief applies uniformly across all jurisdictions. Can the Minister confirm that, notwithstanding this clarification, exemptions under the enhanced R&D intensive support scheme still apply to firms based in Northern Ireland?
Lucy Rigby
I thank the shadow Minister for his question. The Government are committed to supporting R&D investment across the UK through R&D tax reliefs; they of course play a vital role in supporting the mission to boost economic growth, which he will know is this Government’s No. 1 priority.
The legislation clarifies that the rules are the same for all R&D expenditure credit companies across the UK. The overseas restriction was introduced in regulations in 2024 before being included in the Finance Act 2025. It was always intended to apply to R&D expenditure credit claimants across the UK, so the change is purely to clarify the Finance Act 2025 to put that position beyond all doubt.
Question put and agreed to.
Clause 34 accordingly ordered to stand part of the Bill.
Clause 35
Restriction of relief on disposals to employee-ownership trusts
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 28—Implementation of section 35 (Restriction of relief on disposals to employee-ownership trusts—
“(1) HM Revenue and Customs must, as part of the implementation of the provisions of section 35, make an assessment of the potential benefits of establishing a digital application process for taxpayers seeking to pay capital gains tax by instalments under section 280 of TCGA 1992 in respect of disposals to employee ownership trusts.
(2) The assessment made under subsection (1) must consider potential guidance on eligibility criteria and processing timescales.”
This new clause would require HMRC to assess the potential benefits of establishing a digital application process for taxpayers to pay capital gains tax by instalments in respect of disposal to employee ownership trusts as part of the implementation of section 35.
New clause 29—Report on the impact of section 35—
“The Chancellor of the Exchequer must, within 12 months of this section coming into force, lay before the House of Commons a report assessing the impact of the changes made under section 35 on small and medium-sized enterprises, including—
(a) the number of EOT transactions completed compared to the previous three-year average,
(b) any administrative costs and burdens reported by businesses and tax advisers,
(c) the incidence and value of dry tax charges arising, and
(d) recommendations for any modifications to the instalment payment regime under Section 280 of TCGA 1992.”
This new clause would require the Chancellor of the Exchequer to lay a report before the House of Commons on the impact of section 35 on small and medium-sized enterprises.
Lucy Rigby
Clause 35 reduces the amount of capital gains tax relief available on disposal of company shares to the trustees of an employee ownership trust. The Government are committed to building on the success of the existing scheme so that the UK remains a leader in the field of employee ownership. However, the Government have to consider the public finances and the important issue of fairness in our tax system.
The current regime allows business owners to dispose of valuable shareholdings for significant capital gains without paying any tax at all. The cost of the CGT relief alone reached £600 million in 2021-2022, and forecasts suggest that it could rise to more than 20 times the original costing to £2 billion by 2028-29, if action is not taken. The changes made by clause 35 will restrict the amount of CGT relief available to company owners who dispose of shares to the trustees of an EOT. For disposals on or after 26 November 2025, half of the gain on disposal to the trustees of an EOT will be treated as the disposer’s chargeable gain for CGT purposes, and charged to tax according to the usual applicable rules. The remaining half of the gain will be not charged to tax at the time of disposal.
Overall, this means that disposals to an EOT will benefit from a rate of tax that is broadly equivalent to half of the usual rate, which will still constitute an effective incentive to encourage company owners towards employee ownership.
Finance (No. 2) Bill (Second sitting)
(1 day, 7 hours ago)
Public Bill CommitteesRead Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 3 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 10 - Question accordingly negatived.
The Chair
With this it will be convenient to discuss the following:
New clause 28—Implementation of section 35 (Restriction of relief on disposals to employee-ownership trusts—
“(1) HM Revenue and Customs must, as part of the implementation of the provisions of section 35, make an assessment of the potential benefits of establishing a digital application process for taxpayers seeking to pay capital gains tax by instalments under section 280 of TCGA 1992 in respect of disposals to employee ownership trusts.
(2) The assessment made under subsection (1) must consider potential guidance on eligibility criteria and processing timescales.”
This new clause would require HMRC to assess the potential benefits of establishing a digital application process for taxpayers to pay capital gains tax by instalments in respect of disposal to employee ownership trusts as part of the implementation of section 35.
New clause 29—Report on the impact of section 35—
“The Chancellor of the Exchequer must, within 12 months of this section coming into force, lay before the House of Commons a report assessing the impact of the changes made under section 35 on small and medium-sized enterprises, including—
(a) the number of EOT transactions completed compared to the previous three-year average,
(b) any administrative costs and burdens reported by businesses and tax advisers,
(c) the incidence and value of dry tax charges arising, and
(d) recommendations for any modifications to the instalment payment regime under Section 280 of TCGA 1992.”
This new clause would require the Chancellor of the Exchequer to lay a report before the House of Commons on the impact of section 35 on small and medium-sized enterprises.
The Economic Secretary to the Treasury (Lucy Rigby)
Turning to the non-Government amendments, new clause 28 asks His Majesty’s Revenue and Customs to assess the potential benefits of establishing a digital application process for taxpayers seeking to pay capital gains tax by instalments following disposals to employee ownership trusts. The facility to pay CGT in instalments is a long-standing feature of the tax code and is well understood by both taxpayers and HMRC. The process for applying to pay by instalments is clearly set out within HMRC guidance and applications are dealt with swiftly once they have been received by HMRC. My officials have met representatives from the employee ownership sector to provide bespoke guidance on how these instalment payment provisions apply to disposals to EOTs. That engagement continues. I therefore ask the hon. Member for Maidenhead to withdraw new clause 28. In any event, it should be rejected.
New clause 29 asks the Chancellor to lay a report before the House within the next 12 months assessing the impact on small and medium-sized enterprises of the changes made under clause 35. The Government monitor the impact of all changes made to existing tax reliefs. However, publishing a report on the change introduced by clause 35 within the next 12 months would not be reasonable as the first full tax year of these changes is the tax year 2026-27, so HMRC will not have complete information to assess their impact. New clause 29 should therefore be rejected.
In addition to rejecting new clauses 28 and 29, I commend clause 35 to the Committee.
Mark Garnier (Wyre Forest) (Con)
Clause 35 introduces a 50% chargeable gain on shares sold by a company to an EOT. That will have a direct effect on trustees’ ability to benefit company employees. The 2014 Conservative Government introduced 100% capital gains tax relief to incentivise companies to transition to EOT models. EOTs have benefited employees by rewarding and motivating them—for example, by distributing annual tax-free bonuses of up to £3,600 a year to each employee. These tax changes would hurt employees most of all.
The Office for Budget Responsibility’s “Economic and fiscal outlook” from November 2025 forecasted that this will raise just £900 million a year on average from 2027 to 2028. However, the OBR also gave this measure a “very high” uncertainty ranking. The OBR highlighted the fact that these tax changes could have a behavioural effect: company owners would instead hold on to their shares for longer before realising gains. That means that company owners will slow the flow of shares they sell to trustees, so trustees will receive far fewer shares and, as a result, less value will be passed on to employees.
It is worth mentioning the commentary from other organisations. The Financial Times reported that tax advisers have warned against this measure and are concerned that entrepreneurs would have to cover the tax bill before they receive the proceeds of the sale. Chris Etherington of RSM UK is concerned that these changes will slow the pace of change to EOTs. The Centre for the Analysis of Taxation stated that this was a “good reform” and supports withdrawing relief entirely. This is not very popular, and there is a high uncertainty of it even raising any revenue.
Mr Joshua Reynolds (Maidenhead) (LD)
New clause 28 in my name would require HMRC to assess the potential benefits of establishing a digital application process for taxpayers to pay capital gains tax by instalments in respect of disposal to employee ownership trusts. The digital application process would make it far easier for taxpayers to apply to pay capital gains tax by instalments, reducing delays and administrative burden. The Government aim to make tax digital—this digital application process would be a small way to help to get there. It would help to ensure that the new relief works in practice, not just in theory, smoothing the implementation process and ensuring that taxpayers know where they stand. The digital process could help improve speed, accuracy and the consistent handling of instalment applications. Including this requirement in the Bill would promote modernisation and better taxpayer services and would signal that HMRC should consider practical delivery as well as policy. I hope the Minister will support it.
New clause 29, also tabled in my name, would require the Chancellor to lay a report before the House on the impact of clause 35 on small and medium-sized enterprises. It is fairly simple. It would explain whether clause 35 is achieving the policy goal by tracking the number of employee-ownership trust transactions compared to previous years. Not until we are in the process will we actually know what the impact will be. By tracking the numbers, we can see whether the policy the Government are undertaking has been a success. I hope the Minister will support it.
Lucy Rigby
To the comments from the shadow Minister, the hon. Member for Wyre Forest, it is important to bear in mind that on the changes we are making to EOTs, even post these changes, the relief that will be on offer remains more generous than for many other options and deeds, such as business asset disposal relief. Of course, the fiscal climate is relevant to the changes we are making. He referred to the point at which the last Government introduced this relief, but as I said, the cost of the relief as a whole is projected to rise to £2 billion by 2029-30 without the action that we are taking. As I said, the fiscal climate is extremely relevant when looking at £2 billion of relief.
Importantly, the Employee Ownership Association has stated that the changes we are making are not such as to alter the fundamental strength and purpose of the employee ownership trust model, while also recognising that the previous level of relief, or the level of relief as it stands, was hard to sustain when set against the rapidly escalating fiscal cost. On the comments made by the Liberal Democrat spokesman, the hon. Member for Maidenhead, I set out the reasons why we reject new clauses 28 and 29. I maintain the position of rejecting those and maintaining clause 35 as it stands.
Question put and agreed to.
Clause 35 accordingly ordered to stand part of the Bill.
Clause 36
Anti-avoidance: collective investment scheme reconstructions
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clauses 36 to 38 make changes to the CGT anti-avoidance provisions that apply to company share exchanges and reconstructions, or the reconstruction rules, as they are known. Clause 36 revises the collective investment scheme reconstruction anti-avoidance rule to align with modern provisions with a similar purpose. Clause 37 revises the share exchanges and company reconstruction anti-avoidance rule to align with modern provisions with a similar purpose, too. Clause 38 does exactly the same. The changes made by these clauses, which take effect from Budget day, modernise the anti-avoidance rule so that it focuses directly on arrangements where the purpose, or one of the purposes, is the avoidance of tax.
The amendments introduced by the clauses will allow HMRC to address situations where arrangements have been added to otherwise commercial transactions that reduce or eliminate, rather than just defer, a tax charge, allowing them to be more effectively challenged. The rule has been updated so that it affects only the shareholders who benefit directly from the avoidance. Where HMRC agrees that there is no avoidance and the reorganisation is carried out within 60 days of the Budget announcement or if HMRC’s decision is later, the current legislation will apply. For those reasons I commend clauses 36 to 38 to the Committee.
Mark Garnier
On clause 36, we support tougher measures to tackle tax avoidance and close the tax gap. Under the previous Government, the tax gap of the total theoretical tax liabilities fell from 7.5% in 2005-06 to 5.3% in 2023-24. But it is crucial that legislation is not so broad to the extent that people entering into arrangements for legitimate commercial reasons face the brunt of HMRC’s enforcement powers. The scale of genuine tax avoidance as a proportion of the total tax gap is important to note.
According to HMRC, in 2023-24, avoidance behaviour as a share of the tax gap was just 1%. It was also 1% in the 2022-23 tax year and was 2% in 2021-22, 2020-21 and in 2019-20. Avoidance ranked lowest among the behaviours that contributed to the tax gap. Contrast that with 31% due to failure to take reasonable care, 15% due to error and 12% due to legal interpretation. What those behaviours have in common is they involve genuine mistakes being made, so pursuing the route set out in clauses 36 and 37 risks hurting those who enter arrangements for solely commercial purposes who may have simply made honest mistakes.
With regard to clause 37, we support tougher measures to tackle tax avoidance to close the tax gap. The methods of deferring tax for general company reconstructions and share exchanges are identical to each other’s and to that for collective investment schemes. The key difference between clauses 36 and 37 is the business practice to which the anti-avoidance measures apply when arrangements are made to avoid tax liability. Clause 36 applies to CISs, and clause 37 applies to share exchanges and company reconstructions, so the argument pertaining to the general principle and practicality of the Government’s new anti-avoidance measures also applies to those clauses.
With regard to clause 38, we support tougher measures to tackle tax avoidance to close the tax gap. The clause seeks to change the no gain/no loss rules if HMRC suspects that a transfer of business has taken place to secure a tax advantage. Those rules have been instrumental in the process of transferring a business. They are especially useful for arrangements between complex structures. No gain/no loss rules can ensure fluidity throughout the transfer process, and they stave off cash-flow issues during the process itself.
While we support tackling tax avoidance, we must also recognise the role that no gain/no loss rules play during delicate business practice. We understand that there are already safeguards in place from HMRC, such as the general anti-abuse rule. Nevertheless, we must also ensure that no business that utilises no gain/no loss for legitimate commercial purposes is penalised or hung out to dry through denied relief claims.
Lucy Rigby
I welcome the support that was expressed, on the whole, by the shadow Economic Secretary to the Treasury. I suspect that that support is born from a recognition that we really do need to make the changes. Recent court decisions have shown that the rules as they stand, which date back to the ’70s, do not work as intended, especially when the avoidance carried out is a smaller part of a larger commercial reconstruction.
The main effect of the rules will be to discourage the minority—and it is very much a minority—who would otherwise seek to avoid tax. It is about protecting our tax base from abuse for the benefit of the majority of taxpayers who apply the rules correctly. For those reasons, I truly believe that the clauses strengthen the protection against avoidance and will catch tax avoiders.
Question put and agreed to.
Clause 36 accordingly ordered to stand part of the Bill.
Clauses 37 and 38 ordered to stand part of the Bill.
Clause 39
Incorporation relief: requirement to claim
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clause 39 makes a change to incorporation relief for CGT, requiring taxpayers to make a claim for relief and, as a result, improving the data available to HMRC to undertake analysis and compliance activity. Specifically, the change will mean that taxpayers need to make a claim for incorporation relief on their self-assessment return. That will apply to transfers of a business on or after 6 April 2026, and it will allow HMRC to monitor the relief and tackle avoidance more effectively, protecting revenue and helping to close the tax gap, with an additional £225 million expected to be collected over the scorecard period.
Mark Garnier
Clause 39 requires taxpayers to claim incorporation relief or pay CGT up front. It is key that sole traders and other eligible people understand the changes the clause makes. What concerns us is whether enough awareness has been made to affected people, and that is crucial as claiming incorporation relief has always been a passive process because it happens automatically. Soon, people who have been accustomed to this passiveness must acutely manage their relief claims. We do not want anybody who has been conducting legitimate business to suddenly be hit with an unexpected tax bill. Landlords, for example, are a common entity who claim incorporation relief. They do so by transferring their rental property portfolio into a limited company. Should a landlord undertake that process and then find themselves receiving an unexpected tax bill, that could add significant pressure on their investments, which in this case involve houses occupied by tenants.
Mr Reynolds
This is a small administrative change but a significant one. I share concerns about awareness on this topic and how the public will know that this has changed. For individuals who have been doing this for a significant period of time, the change will be quite significant for them. I would like to know how the Government will communicate that change to the public—what advice will be put forward, and how people will be made aware of it—rather than them being expected to know that the Government have made changes. I am pretty sure the public have not read all the pages of the Bill and understood them precisely—even though I know we all have. We would all like to how the public will be made aware of this.
Lucy Rigby
While it is important to be clear about the fact that the additional data is being collected, the details required from taxpayers are brief, and that goes to the question of the additional burden or, indeed, lack thereof. They are brief details of the type of business, the tax calculations for the assets disposed of, and the value of the shares received for the business. The information HMRC requests will be used in analysis and compliance activity, which will tackle abuse of this relief for the benefit of the majority of taxpayers who apply the rules correctly.
The point on awareness was fairly raised. I can confirm that new guidance will be provided alongside the self-assessment return.
Question put and agreed to.
Clause 39 accordingly ordered to stand part of the Bill.
Clause 40
Non-residents: cell companies
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clauses 40 and 41 make various changes to the capital gains rules that apply to disposals of UK land and property by non-UK resident persons.
Turning first to clause 40, the changes that are being made have been in effect since Budget day and ensure that, for the purposes of the non-resident capital gains legislation, each cell in a cell company is looked at individually for the purposes of the property richness rules. That will prevent the use and ongoing exploitation of such entities to avoid the non-resident capital gains rules and will protect the tax base.
Clause 41 makes changes to the rules for non-resident capital gains in respect of double taxation treaties and the requirement to claim double taxation relief, and it also clarifies some unclear terminology. The effect of the changes made by clause 41 is that investors are not required to make or deliver a return in order to claim relief in respect of a particular disposal. In fact, the clause reduces administrative burdens by clarifying when non-resident companies and individuals have to notify HMRC of a disposal. I therefore commend these clauses to the Committee.
Mark Garnier
Clause 40 tackles the use by UK non-residents of protected cell companies to avoid paying non-resident capital gains tax. We agree that corporate structures should not be exploited to shelter people from paying their fair share of tax. However, we must consider the practicalities of how an audit of one cell may affect other cells and the PCC itself.
PCCs have their benefits. For example, the ringfencing of assets and liabilities can ensure that any issue with one cell does not spread to others. In that sense, PCCs can be more robust and durable. Audits, of course, are absolutely necessary to ensure compliance and legality. However, they can also prove costly and stressful for a company owner who is simultaneously running a business. Cells do not have full autonomy; much of that resides in the core of the PCC.
Different cells may behave differently from each other or have differing risk appetites—therein lies the risk. A situation where one cell is investigated by HMRC, and the audit process proves frustrating because that cell’s conduct is aggressive or inappropriate, risks tarnishing the entire PCC in the assumption that the other cells behave similarly. Subsequent audits could then become more aggressive and difficult. As I said, we support measures that tackle any exploitation of the corporate structure to avoid paying tax. The Government must ensure that the implementation of clause 40 protects innocent parties that may be affected.
Clause 41 focuses on non-UK residents, individuals and companies in collective investment vehicles who sell UK land or property connected to CIVs under double taxation treaties. Under the clause, non-UK residents in CIVs will no longer be required to register for corporation tax or claim capital gains tax relief if the double taxation treaties fully cover the gains they have made. The Government’s rationale for that is to streamline paperwork and reduce redundant filing—hurrah! I cannot begin to explain my happiness about trying to reduce red tape. It is fantastic to get rid of it where we can. Our tax code is 22,000 pages long and has 10 million words. Anything that makes that easier is hugely welcome.
Lucy Rigby
I welcome the “hurrah” from the shadow Minister. On his latter point about double taxation treaties, as he will know, many of the agreements were negotiated before the introduction of the non-resident capital gains regime. As treaties come up for renegotiation, as they do, or as we negotiate new treaties, we will seek to include a provision in the capital gains article to allow the UK to exercise our domestic taxing provisions in full.
On the shadow Minister’s point about cell companies and the extent to which they are used to avoid tax, there is anecdotal evidence that such structures have been created to help individuals avoid paying tax on gains made through the disposal of UK land and property, and the changes to the rules seek to cure that.
Question put and agreed to.
Clause 40 accordingly ordered to stand part of the Bill.
Clause 41 ordered to stand part of the Bill.
Clause 42
Abolition of notional tax credit on distributions received by non-UK residents
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clause 42 abolishes the notional tax credit available to non-UK residents on UK company dividends. That credit no longer serves a purpose, under the modern dividend taxation system, and the change brings non-UK residents in line with UK residents, who do not receive the notional tax credit. It will impact fewer than 1,000 non-UK resident individuals who have UK dividend income and other UK income, such as property or partnership income, a year. The clause removes the outdated notional tax credit for non-UK residents receiving UK dividends, aligning their position with that of UK residents. I commend the clause to the Committee.
James Wild (North West Norfolk) (Con)
As the Minister says, clause 42 abolishes the notional tax credit that non-residents have historically been able to claim on their UK dividend income. Under the current system, non-domiciled individuals can offset that notional credit against other UK income streams, such as rented income or partnership profits. However, from April, that arrangement will no longer apply. Non-residents will no longer be treated as having already paid UK tax on dividends received from UK companies, meaning that they will lose the ability to reduce their overall UK tax liability from using the credit.
It is worth noting that UK residents lost access to the notional dividend tax credit back in April 2016, so in one sense the clause simply removes what is perceived as a potential unfair advantage enjoyed by non-UK residents. The disregarded income regime will continue to operate, providing some limitation on the tax paid by non-residents in specific circumstances.
We need to look at the clause, and the ones coming up, in the broader context. It represents a shift in how UK tax dividends flow to foreign investors and, in practice, it will effectively increase the tax rate burden on dividend recipients who are non-UK residents. At a time when the UK needs to attract international capital, we need to look at the measures in the Budget as a whole and whether they strengthen or undermine our competitive position. Attracting capital to be invested was a topic that we discussed this morning. International investors might be forgiven for concluding that the Chancellor is creating a tax and regulatory environment that feels increasingly unpredictable compared with some of our international competitors. Stability and certainty matter enormously in investment decisions. [Interruption.]
The Chartered Institute of Taxation has also raised concerns about the figures underlying this policy. The Treasury estimates in the famous tax information and impact note, which was referred to by the Minister, that fewer than 1,000 resident individuals will be affected. The institute has questioned whether that can be accurate, given what its professional members are seeing on the ground. There is particular uncertainty about whether non-resident trust taxpayers have been properly included within those calculations. I welcome a response and assurance from the Minister either way on that. That said, even the institute agrees that those impacted will represent a small minority of the overall non-resident taxpayer population. We concur that this charge brings a welcome simplification to tax calculations.
Lucy Rigby
Again, I welcome the shadow Minister’s support for these measures. However, he is absolutely wrong to suggest that these measures and the broader package will discourage foreign investment in UK companies. He will have heard the titter of laughter when he talked about the importance of stability—that not being something that was provided by his party at all when it was in government. The removal of the notional tax credit will not discourage foreign investment in UK companies, as it will not impact the overwhelming majority of overseas investors who remain outside the scope of UK tax.
In order to be affected by the measure, overseas investors will also need to have other taxable UK income, typically rental income or partnership income. If they do not have that, their dividends will not be taxable in the UK while they remain overseas. The shadow Minister is right to refer to my earlier figure that fewer than 1,000 non-resident individuals have taxable UK income in addition to their UK dividends, and that remains the figure that we are working with.
Question put and agreed to.
Clause 42 accordingly ordered to stand part of the Bill.
Clause 43
Non-resident, and previously non-domiciled individuals
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Amendment 2, in schedule 3, page 268, line 14, at end insert—
“Part 1A
Amendment of transfer of assets abroad provisions
7A In section 737 of ITA 2007 (exemption: all relevant post-4 December 2005 transactions), after subsection (4) insert—
‘(4A) In relation to income falling within subsection (4B) which arises to a person abroad on or after 6 April 2025, in determining whether Condition A or Condition B is satisfied, no regard is to be had to any purpose of avoiding liability to taxation for which the relevant transactions or any of them were effected if and to the extent the relevant transfer and any associated operation were effected before 6 April 2025 in a qualifying tax year.
(4B) This subsection applies to income which would be relevant foreign income if it were the individual’s or in relation to earlier tax years was income with a non-UK source in respect of which a non-UK domiciled individual would have been taxable only on a remittance basis (assuming any required claim and other steps had been made) if it had been the individual’s.
(4C) For the purposes of subsection (4A) a qualifying tax year is one for which the individual was not resident in the UK or (for tax years earlier than 2013/14) not ordinarily resident in the UK or, if resident or, as the case may be, ordinarily resident in the UK for that year, the individual was entitled to be taxed on the remittance basis for that year.’”
This amendment modifies the "motive defence" in section 737 of ITA 2007. It ensures that when determining if a transaction had a tax avoidance purpose, no regard is given to avoidance motives for transactions effected before 6 April 2025 if the individual was non-resident or entitled to the remittance basis at that time.
Amendment 33, in schedule 3, page 268, line 19, at end insert—
“TRF available to non-residents
8A Omit sub-paragraph 1(7).”
This amendment provides that the Temporary Repatriation Facility is also available to non-residents.
Amendment 34, in schedule 3, page 268, line 19, at end insert—
“Removal of requirement that individual must have been subject to the remittance basis for a past year
8A Omit sub-paragraph 1(5).”
This amendment would enable offshore trust beneficiaries who have not themselves used the remittance basis to use the TRF.
Amendment 35, in schedule 3, page 268, line 19, at end insert—
“Trustee designation
8A After paragraph 1 insert—
‘Trust cleansing facility charge
1A (1) The Trustees of a settlement may in the tax year 2025/26 or 2026/27 make a claim in relation to any or all of the following (“trust income or gains”)—
(a) a section 1(3) amount of the settlement for any tax year before 2025/26,
(b) an OIG amount of the settlement for any tax year before 2025/26,
(c) a section 1(3) amount in a schedule 4C pool of the settlement for any tax year before 2025/26,
(d) protected foreign source income or transitional trust income of the settlement for the purposes of section 643A of ITTOIA 2005,
(e) any relevant foreign income of the settlement for any tax year before 2025/26 that would, if remitted, be treated under section 648(3) of ITTOIA 2005 as arising only if and when remitted, and
(f) foreign relevant income of the settlement for the purposes of chapter 2 of part 13 of ITA 2007 (transfer of assets abroad) for any tax year before 2025/26.
(2) On the making of such a claim the Trustees shall be subject to the TRF charge and paragraph 1(8) shall apply to the Trustees as it applies to an individual.
(3) The amount of trust income or gains of the settlement for the category or categories in respect of which a claim is made shall be reduced accordingly.’”
This amendment enables trustees to pay a TRF charge on the trust’s past FIG while retaining the funds within the trust.
Amendment 30, in schedule 3, page 271, line 26, leave out from “amount” to end and insert—
“is the lower of—
(a) the value of the amount when it first arose to the individual, or
(b) its value on 6 April 2025.”
This amendment provides that where an investment derived from foreign income has fallen in value, the temporary repatriation facility (TRF) charge is paid on the reduced value of the investment at the point the TRF opened.
Amendment 1, in schedule 3, page 275, line 20, at end insert—
“Disregard of payments or transfers connected with designated qualifying overseas capital
15A After paragraph 13B (as inserted by paragraph 15 of this Schedule) insert—
‘Disregard of payments or transfers made in connection with the remittance of designated qualifying overseas capital
13C (1) This paragraph applies where an amount is remitted to the United Kingdom in a qualifying year in respect of the deemed income of an individual and—
(a) the income is treated as income of the individual under section 721 or 728 of ITA 2007 by reference to income arising to a person abroad in the tax year 2024-25 or an earlier tax year,
(b) the deemed income falls within section 721(1)(a) or section 728(1)(a) and is qualifying overseas capital by virtue of paragraph 2, and
(c) the qualifying overseas capital is designated by the individual.
(2) Subject to sub-paragraph (3), no payment or transfer of assets made in a qualifying year for the purpose of, or in connection with, the remittance of that designated qualifying overseas capital to the individual (whether by the person abroad, or any company or settlement), to the extent that the amount or value of such payments or transfers in that qualifying year does not exceed the aggregate amount of remittances within sub-paragraph (1) for that year, is capable of—
(a) being or giving rise to income which is treated as income of the individual under section 721 or 728 of ITA 2007 or any provision of Chapter 5 of Part 5 of ITTOIA 2005;
(b) satisfying the capital sum conditions in section 729 of ITA 2007;
(c) being or giving rise to income which is taken into account for the purpose of increasing the total relevant income under section 733 of ITA 2007 in relation to that individual or any other individual; or
(d) being or giving rise to income arising under a settlement for the purposes of section 648(1) of ITTOIA 2005.
(3) When making a designation as qualifying overseas capital in relation to deemed income within sub-paragraph (1) for a qualifying year, the individual must specify the amount, the nature and the parties to the payments or transfers of assets within sub-paragraph (2) which have been or will be made during the qualifying year for the purpose of, or in connection with, the remittance of such deemed income.
(4) Where a sequence of two or more payments or transfers is made in a qualifying year for the purpose of, or in connection with, the remittance of the same amount of deemed income in that qualifying year, then for the purpose of determining whether the amount or value of such payments or transfers exceeds the amount of the remittance of such deemed income, that sequence is to be treated as a single payment or transfer with an amount or value equal to the payment or transfer within the sequence with the highest amount or value.
(5) In this paragraph “qualifying year” means any of the tax years 2025-26, 2026-27 or 2027-28.
Disregard of payments or transfers made in connection with the provision of certain benefits
13D (1) This paragraph applies where—
(a) an amount of deemed income is qualifying overseas capital in relation to an individual by virtue of paragraph 6(1)(c), and
(b) the individual designates that income as qualifying overseas capital.
(2) Subject to sub-paragraph (3), no payment or transfer of assets made in a qualifying year for the purpose of, or in connection with, the provision of any benefit to the individual which gave rise to the deemed income within paragraph 6(1)(c) (whether by the person abroad, or any company or settlement), to the extent that the amount or value of such payments or transfers in that qualifying year does not exceed the aggregate amount or value of the benefits provided in that qualifying year, is capable of—
(a) being or giving rise to income which is treated as income of the individual under section 721 or 728 of ITA 2007 or any provision of Chapter 5 of Part 5 of ITTOIA 2005;
(b) satisfying the capital sum conditions in section 729 of ITA 2007;
(c) being or giving rise to income which is taken into account for the purpose of increasing the total relevant income under section 733 of ITA 2007 in relation to that individual or any other individual; or
(d) being or giving rise to income arising under a settlement for the purposes of section 648(1) of ITTOIA 2005.
(3) When making a designation as qualifying overseas capital in relation to deemed income within sub-paragraph (1) for a qualifying year, the individual must specify the amount, the nature and the parties to the payments or transfers of assets within sub-paragraph (2) which have been or will be made during the qualifying year for the purpose of, or in connection with, the provision of the benefits within sub-paragraph (2).
(4) Where a sequence of two or more payments or transfers is made in a qualifying year for the purpose of, or in connection with, the provision of the same amount or value of benefits falling within sub-paragraph (2) in that qualifying year, then for the purpose of determining whether the amount or value of such payments or transfers exceeds the amount or value of such benefits, that sequence is to be treated as a single payment or transfer with an amount or value equal to the payment or transfer within the sequence with the highest amount or value.
(5) In this paragraph “qualifying year” means any of the tax years 2025-26, 2026-27 or 2027-28.’”
This amendment prevents “double counting” and knock-on tax charges when designated qualifying overseas capital is remitted (or where related benefits are provided) during the Temporary Repatriation Facility years, by disregarding connected payments/transfers up to the value of the remittances or benefits in that year.
Amendment 31, in schedule 3, page 275, line 38, leave out “paragraphs 9 to 16” and insert—
“paragraphs 9 to 12 and 14 to 16”.
Amendment 32, in schedule 3, page 276, line 3, at end insert—
“(3) The amendments made by paragraph 13 of this Schedule have effect where the matched capital payment referred to in sub-paragraph 8(2C)(b) Finance Act 2025 (as inserted by paragraph 13 of this Schedule) is made on or after 26 November 2025.”
These amendments provide that a double tax charge created by paragraph 13 of Schedule 3 shall not apply retrospectively.
Schedule 3.
Clause 44 stand part.
Lucy Rigby
Clause 43 makes amendments to the residence-based tax regime that was introduced in the Finance Act 2025. These changes reflect feedback from the Government’s continued engagement with stakeholders to make sure that the regime works as well as possible. Clause 43 and schedule 3 consist of three parts. Part 1 of the schedule makes minor corrections to the foreign income and gains regime and to legislation connected with the ending of the remittance basis. Part 2 of the schedule makes technical amendments to the legislation for the temporary repatriation facility. Part 3 of the schedule amends the temporary non-residence rules by removing the concept of post-departure trade profits from legislation.
Clause 44 makes minor amendments to the residence-based tax regime, as introduced in the Finance Act 2025, to ensure that tax-free or exempt income is taken into account correctly under the settlements and transfer of assets abroad matching rules. The clause ensures that the internationally competitive residence-based tax regime operates as intended in relation to foreign income and gains from non-resident trusts and similar structures.
James Wild
The Minister has skirted over quite a few detailed issues rather briefly. It will reassure the Committee to know that I intend to take a bit more time to go through what are detailed and important principles, and to reflect on questions raised in an earlier clause—how competitive we are, what we want to do, and whether we want to attract wealthy people to the country.
I will initially speak to clause 43, schedule 3 and amendments 30 to 35, which were tabled in my name. Clause 43 introduces schedule 3 of the Bill, and members of the Committee will see that the schedule runs to 14 pages of complex detail, so it is important that we properly scrutinise it. Those pages make various changes to the foreign income and gains regime brought into effect by the Finance Act 2025. On the surface, this may look like a simple tidying-up exercise, but on closer inspection it raises some important questions about the coherence of the Government’s overall approach to taxing globally mobile individuals.
While we support fair taxation, this Government have once again produced needlessly complex legislation that contains retrospective elements and leaves ordinary people potentially facing unexpected tax bills.
Oliver Ryan (Burnley) (Lab/Co-op)
Could the shadow Minister reflect on the fact that this clause has more amendments tabled to it than any we have dealt with so far? It deals with non-resident non-dom individuals who have previously tried to get away with paying certain levels of tax in this country. I know that he will take us through some of the details of that, but I would like to go back to the macro of his party position. If he talks about ordinary people, surely he should agree with the benefits of these changes. They would not only simplify the system but bring in much-needed tax revenue from those previously non-dom individuals who did a good deed for so long under the previous Conservative Government.
James Wild
Well, indeed. I will come on to the detail. On the broader point, we support the initiative behind these measures—to encourage people to bring more of their money to the UK, precisely so it can help fund our public services. Our concern is about the implementation, and I will come on to some of the comments that representatives of the Chartered Institute of Taxation, who are widely acknowledged as experts in this area, have raised about the complexity and the retrospective elements.
As I said, schedule 3 is in three parts. Part 1 relates to relief for new residents on foreign income and gains—FIG. Under the new FIG regime, when someone moves to the UK, they do not pay UK tax on their foreign income for the first four years here. That is very sensible, but the Government have made claiming that relief so complicated that honest taxpayers risk falling into traps simply through lack of awareness.
I hope the Government will take account of the following sensible steps suggested by the Chartered Institute of Taxation: first, to remove the requirement to report every possible element of FIG as part of the claim, and instead making relief from UK tax on FIG the default position; similarly, extending the relief to the personal representatives of a deceased individual who themselves qualified; and finally, simplifying the legislation by aligning the income tax position on trust distributions with the capital gains position. I would be grateful for the Minister’s response on those points when she winds up.
Part 2 relates to the temporary repatriation facility, clarifies how remittances to the UK under that temporary facility should be matched to their original source. For years, non-domiciled individuals could keep foreign money offshore, paying UK tax only if they brought it here. The TRF offers a window until 2028, precisely to encourage people to bring money to the UK at reduced rates of 12% in the next two years or 15% in ’27-28. That is, as I said to the hon. Member for Burnley, a good idea in principle, but the devil, as ever, is in the detail.
Our friends at the Chartered Institute of Taxation pointed out some serious concerns that there are several paragraphs within the schedule—which I see the hon. Member turning to—that do not appear to work as intended or that produce unintended consequences. First, they believe that, as drafted, the new offshore income gains paragraph introduced here leads to an anomaly in the way that trust distributions are matched where a trust has generated offshore income gains. That results in trusts with surplus pre-6 April 2025 capital gains tax being treated differently from those without. We do not believe that to be the Government’s intention; perhaps the Minister can clarify.
Secondly, investments clearly fall in value, but under this legislation, if someone invested foreign income overseas and it is now worth less, they will still pay the temporary repatriation facility charge on the original higher amount. That could mean paying 12% tax on £100,000 even though the investment is worth only £60,000. Do Committee members think that is fair? Do they think it will encourage or discourage the repatriation of funds that this facility is designed to encourage, to help support our economy and public services?
I would contend that the incentive, as a result, is to keep the money out of the UK, which is not what we on the Opposition side—or, I believe, on the Government side—of the Committee want to see. We therefore tabled amendment 30 to remedy this issue, and I encourage Members to support us on it when the moment comes.
Thirdly, the Bill contains retrospective taxation. Let us be clear: retrospective taxation should be reserved for the most egregious tax avoidance, but here, trustees who made payments to beneficiaries in good faith after April, relying on existing law, may now face double taxation because of rules that look backwards. That is not about closing a loophole; it is about changing the rules after people have already acted. Our amendments 31 and 32 would ensure that double taxation does not apply retrospectively.
Fourthly, in this clause and schedule the Government have created arbitrary restrictions so that the TRF is available only to UK residents. Why should someone temporarily living abroad not be able to use this facility? The temporary non-residence rule means that they will be paying UK tax when they return anyway, so why not let them use the TRF? The rules create a situation where someone who wants to pay tax voluntarily is not able to do so. Our amendment 33 would ensure that the TRF is available to both UK residents and non-residents.
Similar concerns have also been raised regarding offshore trusts. The temporary repatriation facility applies a 12% or 15% rate to the personal FIG of individuals who have previously used the remittance basis as well as certain capital payments from offshore trusts. This was to encourage the winding-up of foreign trust structures. Right now, though, the trusts part works only if the beneficiary getting the capital could have used the remittance basis in their own right. That creates an unfair outcome in families where one beneficiary has used the remittance basis but another has always paid full UK tax on worldwide income, because only the former can benefit from the lower temporary repatriation rate if the trust is wound up.
Perhaps I could give the Committee an example to illustrate this point further: a family has an offshore trust for two adult children and one child previously used special tax rules while the other has always paid full UK tax. Under this Bill, only the first child could benefit from the TRF when the trust is wound up. That does not encourage bringing money to the UK but, I would contend, actively discourages it. Amendment 34 would therefore enable offshore trust beneficiaries who have not themselves used the remittance basis to use the TRF. Amendment 35 would enable trustees to pay a temporary repatriation facility charge on the trust’s past FIG while retaining the funds within the trust, without having to make capital payments to the beneficiary.
Amendments 1 and 2, in the name of my hon. Friend the Member for Windsor (Jack Rankin), relate to this issue. The Government refer to the temporary repatriation facility as encouraging wealthy people to stay and invest here, and the Treasury is counting on these measures to raise a significant sum for public services, although I note that the OBR suggests there is considerable uncertainty about that. However, we know that the wealthiest people—the wealthiest investors, the people who are supporting our entrepreneurs and the high-growth businesses that we want to see—are leaving the UK as a result of steps that the Chancellor has taken. By some estimates, 10,000 people have already got on a plane and left—those are figures from Oxford Economics. We can debate whether the number is 10,000 or 5,000, but some figures suggest that the equivalent of 750,000 basic rate taxpayers have left the country. So this is not about ideology; it is about giving certainty and addressing the points that the Bill as drafted does not.
The TRF could become unusable for some because of the risks it exposes them to. There is the double taxation, which I have talked about, as well as the retrospective elements, but in addition, accusations of tax avoidance could arise from using a scheme that Parliament has itself created and lead to potentially lengthy investigations. People are leaving, and the Chartered Institute of Taxation has said that tax rules under the measure make the UK a less attractive destination for people. It should be easier to understand and apply measures aimed at getting people to bring money back to the UK. There is a risk that, as drafted, these measures drive against the Government’s intention.
Amendments 1 and 2 are tabled in a constructive spirit. Amendment 1 would stop the double counting, and amendment 2 is about the retrospective and unfair action. They would provide the certainty that, according to some experts in this field, is currently missing. Without the TRF being attractive, we will not be able to get the money coming into the country. I urge the Minister to respond more fully than she did in her opening remarks and to consider whether, on Report or at a later stage, amendments could be tabled to deliver the clarity that my amendments and those tabled by my hon. Friend the Member for Windsor offer.
Without clear guidance, ordinary commercial transactions could inadvertently be caught. The Government must publish comprehensive examples, or businesses and individuals will be left guessing. When Ministers replaced the long-standing non-dom regime last year, they promised a clean, modern and transparent framework, yet within a year we have a schedule of corrective provisions to make the legislation operate “as intended”. That rather suggests that the original drafting was not as watertight as claimed, and that further tweaks along the lines we have suggested might still be needed before the system settles.
Blake Stephenson (Mid Bedfordshire) (Con)
I will speak to amendments 1 and 2 in the name of my hon. Friend the Member for Windsor. The Government and those of us supporting the amendments are trying to achieve the same outcome. The aim of the amendments is simple: to enable the Government to achieve their goal of raising billions in tax revenues from former non-doms—money that is needed to pay for public services, as the hon. Member for Burnley said earlier.
The Government set out the policy intention to replace non-dom status with a UK residency tax to raise more tax from those with the greatest capacity to pay, while simplifying the system. They introduced the temporary repatriation facility—or, given that we like three-letter acronyms, the TRF—as the central part of that strategy. It is designed to encourage people to remain in the UK, to come to the UK and invest in the UK, and to bring historically offshore capital into the UK tax net. The TRF offers a reduced rate of taxation of 12% on all non-UK assets brought into the country as an incentive to do just that. We all want the same thing: we want the TRF to work, because if it does not, the money does not come here and the Exchequer and the public lose.
The Government are relying on the reforms to raise very substantial sums—about £34 billion overall. The concern I express is not ideological or about the tax rate; it is about legal certainty and deliverability. The problem is that a number of the wealthiest people have left the country, and many more are doing so as we debate these amendments. Why? Odd as it may seem, it is not because they are unwilling to pay more tax; it is because of the legal uncertainty in the Bill as drafted.
Using the TRF as set out in the Bill exposes people to serious legal uncertainty. First, they are subject to double taxation through double counting of the same economic value. Secondly, they are vulnerable to retrospective taxation. Thirdly, they face allegations of tax avoidance simply for using a scheme that Parliament itself has created. Fourthly, they expose themselves and their families to potentially decade-long investigations into arrangements that were entirely lawful at the time they were entered into. That is why they are watching this Bill proceed with their bags packed, waiting to see if it will fix the problems.
The advisers of such people are warning them to leave, but I know that the Government’s intention is not to drive them away. We need their taxes, fairly paid, to fund the renewal of our public services. That is why amendments 1 and 2 were tabled, in a constructive spirit of co-operation, as my hon. Friend the shadow Minister mentioned. Amendment 1 would stop double counting; and amendment 2 would ensure that retrospective and unfair action does not continue. Had amendment 49, which goes further, been selected for debate, I would have spoken to it as well, but I will resist doing so because it has not been selected.
Amendments 1 and 2 would provide the needed certainty and make the TRF usable in practice, not just in theory. I hope that the Minister can give me some assurance that the Government recognise some of the technical problems highlighted by the amendments and intend to resolve them. I noted earlier that the Minister rejected amendments 1 and 2, giving a brief reason why, but given the representations, certainly by the Opposition, a more detailed response as to why the amendments have been rejected by the Government would be worthwhile.
Much careful work has gone into the construction of amendments 1 and 2. Again in the spirit of co-operation, I am sure that Conservative Members would be happy to provide input to the Minister and officials as they consider how best to address the issues. With that, I commend the amendments to the Committee.
Lucy Rigby
A criticism of complexity has been made. The aim of these reforms is, of course, simplicity. I think it is recognised across the House that in matters of taxation, simplicity is better. We are ensuring that the legislation works as it is intended to do. The shadow Minister, the hon. Member for North West Norfolk, referred to the Chartered Institute of Taxation. It is important to note this quote from the institute:
“Moving from domicile to residence as the basis for taxing people who are internationally mobile makes sense.”
As well as being a major simplification, it is a fairer and more transparent basis for determining UK tax. Residence is determined by criteria far more objective and certain than the subjective concept of domicile. Replacing the outdated remittance basis is sensible, and the temporary repatriation facility offers a helpful transition.
Another criticism is retrospection. In this instance, the Government feel that a retrospective change is a proportionate response to protect revenue, which, as the hon. Member for Mid Bedfordshire said, is essential for public services. This change will prevent taxpayers from benefiting from unintended windfalls and promotes consistency in the application of rules, bringing the capital gains position into line with the income tax provision. In most cases, trusts will not yet have made capital distributions, meaning that beneficiaries and trustees will have advance notice and can plan their affairs.
A further topic that that came up is the reporting of every element of FIG. I have a note on that somewhere, so I will come back to it. I will deal first with the suggestion that restrictions on the TRF are arbitrary. The position of someone who is temporarily abroad arose. The TRF is designed to encourage people to be UK-resident and bring funds into the UK economy. Allowing non-residents to use the TRF would let individuals benefit from the reduced charge without living here or contributing to the UK economy, which would reduce the incentive to become or remain UK-resident.
As I said, I reject amendment 1 because there are already measures in place that prevent double counting. I have dealt with amendment 2. I want to deal with the reporting of every element of FIG, which I have a note on, as I said. [Interruption.] That is the wrong note. I will have to come back to that.
Sean Woodcock (Banbury) (Lab)
We have heard from Opposition Members that there are families watching this Finance Bill Committee with their bags packed in case their amendment does not pass. Does the Minister share my scepticism that people who hung around through a botched Brexit, Liz Truss and 11% inflation will leave the country on the basis of whether an amendment passes or not?
Lucy Rigby
I am grateful to my hon. Friend for his intervention. I think it is right to say that the reporting of every element of FIG will not be necessary. I am afraid I shall have to confirm in writing exactly why that is the case.
Question put and agreed to.
Clause 43 accordingly ordered to stand part of the Bill.
Schedule 3
Non-resident, and previously non-domiciled individuals
Amendment proposed: 30, in schedule 3, page 271, line 26, leave out from “amount” to end and insert
“is the lower of—
(a) the value of the amount when it first arose to the individual, or
(b) its value on 6 April 2025.”—(James Wild.)
This amendment provides that where an investment derived from foreign income has fallen in value, the temporary repatriation facility (TRF) charge is paid on the reduced value of the investment at the point the TRF opened.
Question put, That the amendment be made.
Lucy Rigby
Clause 45 and schedule 4 will make changes to the pay-as-you-earn notification process that enables employers to give provisional in-year tax relief to globally mobile employees, including those eligible to claim overseas workday relief.
The majority of changes made by the clause and schedule are minor, technical changes that will help the legislation relating to the PAYE notification process to operate as originally intended, but a few are more substantial. For example, treaty non-resident employees—that is to say, UK residents who are covered by a double taxation agreement between the UK and another country—have been permitted to benefit from provisional in-year tax relief by concession, so they are now being added to the legislation to formalise that treatment. We will also specify that if the employer’s best estimate of qualifying employment income for an employee eligible for overseas workday relief is more than 30%, it must be limited to 30%. That should ensure that in most cases the provisional overseas workday relief received in-year does not exceed the relief that the employee can claim when they file their tax return.
These changes will place the treatment of treaty non-residents on a statutory basis, prevent excessive in-year provisional overseas workday relief and ensure that the PAYE legislation operates as intended. I commend clause 45 and schedule 4 to the Committee.
James Wild
Clause 45 will extend the PAYE notification process to include treaty non-residents and introduce the 30% cap, to which the Minister referred, on overseas workday relief that can be claimed through PAYE. In simple terms, clause 45 and schedule 4 will change how employers operate PAYE for people who move to the UK but are treated as resident in another country under a tax treaty. The clause will let employers agree with HMRC that the part of the employee’s salary that is expected to be exempt overseas be left out of PAYE during the year, and it will formally limit how much foreign employment relief can be given to 30%.
The changes under the clause will require employers to send further notification to HMRC whenever there is a change in the employee’s circumstances that affects the proportion of earnings subject to PAYE. That sounds reasonable in practice, but I want an assurance from the Minister about the potential administrative burden that it will place on employers. It could mean that employers will now be expected to monitor the day-to-day working practices of globally mobile working employees. They will need to track whether individuals are working from home or from a hotel room in Boston, which is not necessarily a simple task. For multinational companies with hundreds of employees, this represents a potentially significant compliance burden at a time when we want to reduce the burdens on business. For smaller businesses venturing into international markets for the first time, it could be a disincentive—indeed, a barrier—to their trying to do so.
The Government must provide clear, comprehensive guidance on exactly what level of review and monitoring employers are expected to undertake not to fall foul of the rules. Without that clarity and guidance, we risk creating a compliance minefield in which well-meaning employers inadvertently break rules that they could not reasonably be expected to follow. Guidance can help employers to comply with the law, as we all want them to do.
The Government like to talk about making Britain the best place to do business and to champion our competitive advantage in attracting global talent—we have just discussed one area in which that may or may not be the reality—but we should seek to avoid introducing measures that potentially add to the compliance burden without giving guidance to employers. I hope that the Minister can assure the Committee that she will look at the case for publishing clear guidance to ensure that businesses are not adversely impacted.
Lucy Rigby
I can confirm that guidance will be forthcoming, and I am absolutely sure that it will be clear. I am also pleased to confirm that there will be no additional administrative burden on employers, because employers already have to enter a percentage figure on the PAYE notification form; as I say, this change will just require them to limit the in-year relief provided to no more than 30%. The guidance will be given to employers in April when the changes go live.
Question put and agreed to.
Clause 45 accordingly ordered to stand part of the Bill.
Schedule 4 agreed to.
Clause 46
Unassessed transfer pricing profits
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clause 46 will introduce a new corporation tax assessing provision for unassessed transfer pricing profits. It will replace the diverted profits tax, a stand-alone tax that will be repealed in its entirety, providing a significant simplification.
The changes made by the clause will make the rules clearer and more straightforward for businesses to implement, and will support access to treaty benefits, including relief from double taxation under the mutual agreement procedure. The removal of the diverted profits tax as a stand-alone tax is a very significant simplification, and bringing the rules into the corporation tax framework will clarify the interaction with transfer pricing and access to treaty benefits. I therefore commend clause 46 and schedule 5 to the Committee.
James Wild
The clause introduces schedule 5, which will repeal the diverted profits tax and replace it with new rules to tax unassessed transfer pricing profits within the corporation tax regime, coming into effect for periods beginning on or after 1 January. The diverted profits tax will continue to apply for prior accounting periods. In effect, the clause creates a higher tax charge on profits that should have been taxed here, but were shifted out of the UK by using non-market prices between groups.
Like the DPT, the new transfer pricing profits rules are intended to target structured arrangements that are designed to erode the UK tax base by omitting profits that are subject to transfer pricing. These unassessed transfer pricing profits will be taxed at a rate that is six percentage points higher than corporation tax. In simple terms, if a global business structures its arrangements to shift profits from the UK in a pricing manipulation, HMRC will be able to bring those diverted profits into UK tax at a higher, penalty-style rate.
In principle, we support that approach. Moving away from the stand-alone tax and bringing diverted profits under corporation tax provides better treaty access and clarity, and clearly the six percentage point charge works as a deterrent, as countries that play games with their transfer policies will risk paying more tax than if they had priced their UK dealings properly in the first place. However, I would welcome the Minister’s response to the concerns that the Chartered Institute of Taxation has raised about the drafting of the clause.
First, the new tax design condition is very broad: it captures transactions designed to reduce, eliminate or delay UK tax liability. There is a question as to whether legitimate commercial decisions made for regulatory compliance or capital requirements could be caught by the condition simply because they are deliberate and happen to reduce tax liability, even when tax planning is not the primary motive. I know that is not the intention behind the drafting, but that point has been raised, so I hope that the Minister will respond in order to avoid any uncertainty as to whether businesses that think they are operating within the law, without seeking to reduce, eliminate or delay tax liability, may be captured.
Will the existing arrangements be grandfathered? Can HMRC revisit settled positions under these broader rules? As the Chartered Institute of Taxation rightly says, it is unsatisfactory to pass legislation with a wide definition and simply hope that HMRC guidance and rules will narrow it down later. That is not how we in Parliament should legislate. We discussed the loan charge during this morning’s sitting; HMRC applied rules in a way that most MPs did not consider reasonable, and we have now had to make changes through this Bill to address that historical issue. The law should be made clear in the Bill, not left to administrative interpretation.
I would be grateful if the Minister confirmed how many multinational companies HMRC estimates are using pricing manipulation to avoid tax. Can she guarantee that legitimate business structures that have previously been accepted by HMRC under the DPT will not suddenly fall foul of the scope of the new rules? Will she also comment on the main purpose test, to provide clarity and certainty for businesses?
Lucy Rigby
I hope that what I am about to say will provide a good deal of reassurance to the shadow Minister. The purpose of the reform was to simplify the legislation and bring the regime into the corporation tax framework. There is no intention at all to change the scope of the regime.
I appreciate that the question as to when the reforms will come into effect is of some importance. I can confirm that they will take effect for chargeable periods beginning on or after 1 January 2026. For prior periods, the diverted profits tax will continue to apply.
The shadow Minister asked how many companies would be affected. I am afraid that I do not have the statistics to hand, but I can investigate and confirm them to him in writing.
Question put and agreed to.
Clause 46 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 47
Transfer pricing reform
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendment 20.
Schedule 6.
Lucy Rigby
Clause 47 will simplify the UK’s transfer pricing rules, which protect our tax base by ensuring that transactions between UK companies and related parties are priced appropriately. The changes made by the clause include the general repeal of UK-to-UK transfer pricing where there is no risk of tax loss. This will provide a meaningful simplification for businesses. Alongside it, amendments have been made to the participation condition, intangibles, commissioners’ sanctions, interpretation in accordance with OECD principles, and financial transactions.
Government amendment 20 will ensure the consistent use of terminology with respect to financial transactions throughout the legislation.
The changes made by the clause will update UK law in line with international standards, will reduce compliance obligations and will address areas of potential legislative weakness. I commend clause 47, schedule 6 and Government amendment 20 to the Committee.
James Wild
Clause 47 and schedule 6 mark an evolution in the UK’s transfer pricing regime. The Opposition recognise the importance of getting this right: it goes to the heart of how multinational profits are attributed and taxed, and therefore how we ensure that companies pay the correct amount of tax in this country. The principle behind transfer pricing is simple, even if it is rarely simple in practice. I believe that these measures flow from a consultation process launched by the last Conservative Government, so they have a good origin. I hope that they will lead to greater certainty and reduce the burden that some companies may face.
Lucy Rigby
I confirm that the shadow Minister is right about the origin of the proposals and the date of the consultation. It is entirely right that we are bringing UK transfer pricing legislation up to date; it was last materially updated in 2004, so it is high time that these rules were updated.
Question put and agreed to.
Clause 47 accordingly ordered to stand part of the Bill.
Schedule 6
Transfer pricing
Amendment made: 20, in schedule 6, page 318, line 41, at end insert—
“(ba) in subsection (4)(b), for ‘issuing company’, in both places it occurs, substitute ‘borrower’,”.—(Lucy Rigby.)
The amendment deals with a missing consequential change to section 154 of the Taxation (International and Other Provisions) Act 2010 (transfer pricing).
Schedule 6, as amended, agreed to.
The Chair
With this it will be convenient to discuss new clause 4—Report on the impact of section 48 (international controlled transactions)—
“(1) The Chancellor of the Exchequer must, within 6 months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 48 on—
(a) cross-border trade, and
(b) administrative burdens on businesses.
(2) The report under subsection (1) must in particular set out the steps the Government intends to take to consult affected businesses and stakeholders on the operation of section 48.”
This new clause would require the Chancellor of the Exchequer to report to the House on the impact of section 48 on cross-border trade and business administrative burdens, and to set out how affected businesses and stakeholders will be consulted.
Lucy Rigby
Clause 48 will create a power for the commissioners of HMRC to issue regulations requiring certain taxpayers to file an international controlled transactions schedule. This measure is expected to have an impact on approximately 75,000 businesses within the scope of the UK’s transfer pricing and related rules. Most of these businesses are part of large multinational groups.
New clause 4 would include a requirement for the Chancellor to lay a report before the House of Commons, within six months of the Act being passed, on the impact of the implementation of clause 48 on cross-border trade and administrative burdens on business. It asks that the report focus on Government steps to consult affected businesses.
Most major economies have similar requirements, and we do not expect the international controlled transactions schedule to have a significant impact on cross-border trade. Rather, this measure is expected to improve fairness, ensuring that multinational enterprises pay tax on profits generated from economic activity in the UK. It is also expected to increase efficiency, meaning that HMRC compliance activity can be more effectively targeted, benefiting compliant taxpayers. I urge the Committee to reject new clause 4.
James Wild
New clause 4 stands in my name and that of my hon. Friend the Member for Wyre Forest. As the Minister says, clause 48 introduces a power for HMRC to implement a new reporting obligation: the ICTS, which will come into force in 2027.
This new power would require businesses engaged in significant cross-border transactions to disclose specified information about their dealings. Rightly, the intention is to give HMRC better tools to identify transfer pricing and international tax risks that could affect the tax take, and to allow it to conduct more efficient and better-targeted compliance activity. I recognise that objective and support it in principle. I agree that the ICTS could help HMRC to identify risk earlier and to avoid wasting the time of the Department and businesses. Chasing down questions and embarking on inquiries can often lead nowhere and can cost businesses time that could be spent on growing their business.
However, it is also important that the Government explain how the system will work in practice and how it will be seen to work. Our new clause 4 would therefore require a report on the impact of these changes on cross-border trade and the administrative burden on businesses.
During the consultation last year, the Treasury acknowledged that more needed to be said about how the data collected through the ICTS system would be used and how it would fit alongside existing obligations such as master and local files. That remains a crucial point of detail that the industry and advisers will be looking for as this measure is implemented. Can the Minister shed some light on those concerns today?
As the Minister rightly says, most major economies already have some equivalent form of reporting, but it should be pointed out that the differences between them are significant. Australia, for example, operates a single transaction-driven disclosure process through its international dealings schedule; the United States of America relies on a more fragmented, relationship-based approach spread across multiple forms. Each system clearly has its benefits and disadvantages. What matters is that each country has a clear, consistent model to which businesses can understand and readily adapt.
What the Government seem to be proposing is a hybrid. That might mean that we have the best of both worlds—let us all hope so—but it might also lead to an approach that is inconsistent with the systems that some multinationals already have.
The Treasury has said that it will consult on detailed regulations in the spring of this year. We welcome that commitment. Can the Minister give an assurance that she will make sure that businesses and representative bodies will be closely involved in shaping how the system is put into practice? With the planned 2027 start date, there is not a lot of time to get the rules in place or for companies to build or modify systems to provide the new data. Can that be done without causing undue cost and disruption to businesses?
Finally, I want to make a slighter broader point on the clause. We clearly understand the importance of robust compliance and the need to protect the UK tax base on behalf of our constituents so that we can deliver public services. However, each new requirement—whether it is the ICTS, pillar two returns or transfer pricing documentation—adds to the cumulative impact on businesses.
We need to see these obligations in the round, not as each one being reasonable on its own terms. What is the overall picture of what we are imposing on companies? If that load becomes too great, the UK will be seen as a less attractive place to invest, which is certainly not what we want. Although we support the principle of better risk assessment, we continue to press Ministers to ensure that we have proportionate and workable solutions that add value for HMRC, businesses and our constituents. New clause 4 would simply require a report setting out those impacts.
I would add that, according to the Budget costings, the reporting duty would raise around £25 million in 2026-27, growing to £350 million a year, helping HMRC to tackle artificial profit shifting. That is welcome, but we should also consider the one-off and ongoing costs for businesses that have to re-engineer their systems. I would be grateful for the Minister’s response to my points about implementation and whether the hybrid model will actually be the best of both worlds.
Lucy Rigby
The ICTS will help HMRC to focus compliance resources, as has been discussed, on the most meaningful transfer pricing risks. We think that it will also lead to greater efficiencies by encouraging up-front compliance and reducing the length of transfer pricing inquiries. Those outcomes will benefit the compliance of taxpayers and HMRC.
Clause 48 gives the commissioners of HMRC the power to issue regulations that will determine the detailed design of the ICTS, including the information to be provided, the format of the schedule and the commencement date of the filing obligation. A consultation was held in 2025, and we will carry out a technical consultation on the draft regulations in spring 2026. The obligation is expected to take effect for accounting periods beginning on or after 1 January 2027, which is designed to allow time for businesses to adapt to what they need to do.
The shadow Minister suggested that the proposal will lead to an administrative burden; actually, it is intended to mitigate additional administrative burdens by requiring the reporting of readily available objective information. We will continue to be guided by these principles as we move into the detailed design phase, working—as one would expect—with affected businesses.
Question put and agreed to.
Clause 48 accordingly ordered to stand part of the Bill.
Clause 49
Permanent establishments
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
Clause 49 modernises and simplifies the UK’s law on permanent establishments, which governs how the UK taxes non-residents who are carrying out business here. Specifically, the changes made by clause 49 reduce uncertainty over how profit should be attributed to permanent establishments under UK law. The greater clarity provided by these changes, in the same way as the previous clause, will assist taxpayers and HMRC by offering greater clarity. I commend clause 49 and schedule 7 to the Committee.
James Wild
Clause 49 and schedule 7 make changes to the rules that decide, where a company has a permanent establishment in the UK, how its profits are then taxed and when they apply. The Minister talked about modernising and simplifying the rules to bring them into line with international best practice.
To clarify, in November 2025 the OECD published new guidance on the definition of a “permanent establishment”. Can the Minister confirm whether the UK’s current approach reflects that updated guidance, as I have been advised that it does not? Some expert bodies have pointed out that the OECD changes are generally helpful and would bring more consistency across countries, so does the Minister agree that it would make sense for the UK to broadly adopt them? Is that the Government’s approach, or have they deliberately decided to have a set of UK rules? If so, what is the purpose of that, considering that we might be dealing with multinational companies operating in multiple jurisdictions that would have to follow separate rules when the OECD has brought together a coherent package?
Lucy Rigby
It important to recognise that, as I perhaps should have explained at the outset, the legislation in this area is 20 years old. The purpose of making the changes that we are making is to update it and to account for the fact that there have been considerable developments in the international tax landscape since it was first drafted, most notably in relation to the attribution of profits to permanent establishments.
The shadow Minister mentioned the OECD. This legislation is interpreted in accordance with the OECD model tax convention and commentary, so it will always be interpreted using the most recently available model and commentary. The OECD council approved a 2025 update in November 2025, which can be found online. The full update will be published in 2026, if it has not been already. I hope that gives the shadow Minister some assurance.
Question put and agreed to.
Clause 49 accordingly ordered to stand part of the Bill.
Schedule 7 agreed to.
Clause 50
Pillar two
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Government amendments 21 to 24.
Schedule 8.
New clause 5—Pillar Two competitive safeguards and review—
“(1) The Chancellor of the Exchequer must, every six months beginning from the day on which this Act is passed, review the implementation of the provisions of section 50 and Schedule 8.
(2) Any review under subsection (1) must consider—
(a) whether other major economies are implementing Pillar Two on comparable timelines and with comparable scope,
(b) any competitive disadvantage to UK-based multinationals from implementation of section 50,
(c) any impact arising from differentiated treatment for the US, and
(d) proposals for remedial measures to address any competitive disadvantage to the UK that has been identified.
(3) The Chancellor of the Exchequer must lay before the House of Commons a copy of any review undertaken under subsection (1).”
This new clause would require regular reviews of the implementation of section 50 and Schedule 8, including consideration of international implementation of Pillar Two, any competitive disadvantage for UK-based multinationals and possible remedial measures.
Lucy Rigby
Just to warn anyone who is not aware, clause 50 and schedule 8 are not the shortest. The changes they make are technical, but very important. Paragraphs 20 to 22 of schedule 8 prevent multinationals from trying to reduce their pillar two liability by entering into favourable tax arrangements to create pre-regime deferred tax assets or liabilities. Paragraphs 24, 25 and 34 ensure that the profits and losses relating to a UK real estate investment trust are excluded from the charge to domestic top-up tax to avoid double taxation. Paragraph 32 allows the UK to recognise the qualifying undertaxed profit rules of other jurisdictions before the OECD inclusive framework has completed a formal peer review.
Paragraphs 36 and 37 provide for a payment for group relief to be treated as a covered tax amount for domestic top-up tax purposes. Paragraph 39 reduces compliance burdens for smaller or non-material entities within a multinational group. Finally, paragraphs 2, 3, 6 to 12 and 16 to 19 update the rules on flow-through entities, permanent establishments, intragroup amounts and cross-border allocations of deferred tax so that the regime operates more smoothly in practice.
Taxpayers can elect for most amendments to apply retrospectively from the introduction of pillar two on 31 December 2023. However, taxpayers cannot select individual amendments to apply retrospectively; one election covers the whole package to prevent cherry-picking of favourable amendments. I should remind Members that, in line with the written ministerial statement of 7 January 2026, the clause does not include any amendments connected with the publication of the side-by-side agreement by the OECD/G20 inclusive framework earlier this month. The Government will introduce legislation to do that in the next Finance Bill following a technical consultation.
Government amendment 23 ensures that the legislation works as intended by making a small correction to legislative references used. Government amendments 21, 22 and 24 temporarily extend the deadline for making elections to give taxpayers more time to bed in the new IT systems needed to meet their filing obligations.
New clause 5 would require the Chancellor to review those technical amendments to the pillar two rules every six months and report on the international implementation of pillar two, among other things. We have already committed to the implementation of pillar two, which, as hon. Members will know, aims to ensure that large multinationals pay their fair share of tax. As a matter of course, the Government keep all areas of tax policy under review, so I reject the new clause.
Taken together, these changes implement internationally agreed changes, respond to taxpayer consultation, and ensure that the pillar two rules continue to be effective and administrable in the UK. I therefore commend clause 50 and schedule 8, together with Government amendments 21 to 24, to the Committee.
James Wild
I rise to speak to clause 50 and to new clause 5, which is in my name. Clause 50 will amend parts of the Finance (No. 2) Act 2023 and implement the multinational top-up tax and domestic top-up tax. As I set out in the last Finance Bill Committee, in October 2021 more than 135 countries signed up to the G20/OECD agreement on reforming international transactions and taxation, which the clause refers to—a major achievement that aims to ensure that multinational groups pay a fair share of tax where they generate profits. Pillar two delivers a minimum global effective tax rate of 15% for large multinational groups in every country they operate in, and the UK has been one of the first jurisdictions to legislate for the changes.
New clause 5 would require the Chancellor to review the changes on a six-monthly basis and lay before Parliament a report assessing three key issues: whether other major economies are implementing pillar two on comparable timelines and with comparable scope, whether any competitive disadvantage is arising for UK-based multinationals, and the impact of differentiated treatment for the United States. Crucially, if that review identified a material competitive disadvantage to the UK and UK businesses, the Treasury would be obliged to provide remedial measures within three months.
In rejecting new clause 5—another new clause that asks for a review—the Minister says that the Treasury is always conducting regular reviews of measures. If it is conducting this work anyway, why not share it with Parliament, and accept that it is a proportionate step to ensure ongoing parliamentary scrutiny in a very important area—a level playing field for British firms? The Minister referred to the length of the schedule. The sheer volume of amendments, coming less than two years after pillar two was first introduced, highlights the extreme technical complexity of the global minimum tax and the challenges for businesses that have to comply with it to keep up to date.
The Government’s aim is to ensure that UK rules remain consistent with the OECD model legislation, and schedule 8 is therefore aligned with the guidance and technical fixes. Those are sensible to maintain international consistency, but throughout last year there was growing international uncertainty about pillar two, the subject of the clause, as political divergence emerged over how it should operate, particularly regarding the treatment of US-parented companies.
The Minister referred to the side-by-side agreement made between G7 Governments last summer—and formalised, I think, this month—allowing certain UK and US multinationals to be exempt from parts of the rules while retaining access to the newly defined safe harbours. The agreement might bring some short-term stability, but it raises questions, and clearly we will be scrutinising it when, as the Minister said, it comes forward in future legislation. The US Treasury Secretary has described the side-by-side deal as
“a historic victory in preserving US sovereignty and protecting American workers and businesses from extraterritorial overreach.”
Will the Minister comment on what pillar two means in that context and on the UK’s position?
The impacts that might flow from that are precisely why new clause 5 is needed. The Government say that the UK is aligned with international developments, but the international landscape is shifting. Other major economies have delayed implementation or have adopted narrower regimes; meanwhile, the US has its own agreement and has not legislated for this framework at all. Without scrutiny, the risk is that UK-headquartered multinationals will find themselves complying with complex and burdensome rules, while their competitors operating elsewhere face a lighter regime. I simply note that the Chartered Institute of Taxation pointed out that it thinks the burdens of pillar two
“continue to appear disproportionate to the amount of tax that will be raised”.
If the Government truly believe that the regime provides a balanced and proportionate approach to a level playing field and that we can be assured that the competitive advantage does not go to other countries, let us have that report, see it set out to Parliament and have the matter resolved. To conclude, international co-operation on tax is essential, but we need to ensure not only that the UK is honouring its commitments, but that other countries are meeting theirs, so that UK companies are not losing out as a result.
Lucy Rigby
I am grateful to the shadow Minister for his comments. International co-operation on such matters, as he said, is extremely important. The side-by-side agreement, as I have made clear, will be the subject of future legislation, which will be the opportunity for scrutiny. However, as I also made clear, that agreement ensures that all large multinationals will pay their fair share of tax through the application of pillar two and pre-existing minimum tax rules, while offering welcome simplification and stability to UK businesses.
We have to be clear that US multinationals, like every other multinational company, are still subject to the UK’s 25% corporation tax on the profits that they make in the UK. They are also still subject to the UK’s domestic minimum tax rate of 15%. We recognise that a degree of complexity is inherent in pillar two, but we must not forget that it applies only to large multinational businesses and that it is needed to stop businesses shifting their profits to low-tax jurisdictions and not paying their fair share of tax in the UK. I think the shadow Minister acknowledges that that is exactly why we need it.
That being said, in relation to the complexity, the UK continues to be a strong proponent of work to develop simplification of the system, including the recently agreed permanent safe harbour. As stated in our “Corporate Tax Roadmap”, the Government will also consider
“opportunities for simplification or rationalisation of the UK’s rules for taxing cross-border activities”
following the introduction of pillar two.
Question put and agreed to.
Clause 50 accordingly ordered to stand part of the Bill.
Schedule 8
Pillar Two
Amendments made: 21, in schedule 8, page 358, line 9, leave out “50” and insert “50A”.
This amendment is consequential on Amendment 22.
Amendment 22, in schedule 8, page 379, line 26, at end insert—
“50A In Schedule 16 (multinational top-up tax: transitional provision), after paragraph 2 insert—
‘Transitional extension to deadline for elections
2A (1) Schedule 15 (multinational top-up tax: elections) has effect in its application to a pre-2026 election as if in paragraphs 1(2)(b) and 2(2)(b) of that Schedule for “no later than” there were substituted “before the end of the period of 12 months beginning with the day after”.
(2) In sub-paragraph (1), a “pre-2026 election” means an election which specifies an accounting period ending before 31 December 2025 as—
(a) in the case of an election to which paragraph 1 of Schedule 15 applies, the first accounting period for which the election is to have effect, or
(b) in the case of an election to which paragraph 2 of Schedule 15 applies, the accounting period for which the election is to have effect.’”
This amendment extends the deadline for making an election to which Schedule 15 of the Finance (No. 2) Act 2023 applies in cases where the election specifies an accounting period ending before 31 December 2025.
Amendment 23, in schedule 8, page 379, line 27, leave out paragraph 51 and insert—
“51 (1) In FA 1989, in section 178 (setting of rates of interest), subsection (2) is amended as follows.
(2) In paragraph (x)—
(a) for ‘51’ substitute ‘33A’;
(b) after ‘Finance’ insert ‘(No.2)’;
(3) In paragraph (y), for ‘51’ substitute ‘33A’.”
This amendment deals with a consequential amendment that was missed when paragraph 33A was inserted in Schedule 14 to the Finance (No.2) Act 2023 by the Finance Act 2024.
Amendment 24, in schedule 8, page 379, line 38, at end insert—
“(3A) The amendment made by paragraph 50A has effect in relation to accounting periods beginning on or after 31 December 2023.”—(Lucy Rigby.)
This amendment provides for the amendment inserted by Amendment 22 to have effect in relation to accounting periods beginning on or after 31 December 2023.
Schedule 8, as amended, agreed to.
Clause 51
Controlled foreign companies: interest on reversal of state aid recovery
Question proposed, That the clause stand part of the Bill.
Lucy Rigby
The clause makes changes to ensure sufficient repayment interest is paid to affected companies following a successful challenge of a European Commission decision. It provides that interest is also paid on the amounts of late-payment interest that were recovered and are now repayable. It will affect a small number of UK companies that had amounts collected and later repaid following the successful challenge of the Commission decision. The changes are expected to have a negligible impact on the Exchequer.
James Wild
As the Minister said, this is a fairly straightforward measure allowing HMRC to pay interest to companies that have had to hand over money under a now overturned EU state aid ruling relating to the controlled foreign company rules. The 2019 ruling was subsequently annulled. My only question for the Minister is: does the clause mark the final chapter in the UK’s compliance with the EU state aid rules relating to the controlled foreign companies regime, or could other outstanding matters give rise to further issues or payments?
Lucy Rigby
The shadow Minister will appreciate that it is a requirement of UK domestic legislation to put companies in the position that they would have been in had the recovery legislation not been introduced, and it is that principle on which the clause is based.
Question put and agreed to.
Clause 51 accordingly ordered to stand part of the Bill.
Clause 52
Legacies to charities to be within scope of tax
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 6—Report on legacies to charities—
“The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 52 on—
(a) charitable giving through estates, and
(b) charity sector income.”
Lucy Rigby
Clause 52, in combination with the other clauses in the Bill, will support the Government’s aims of closing the tax gap by strengthening compliance powers to challenge abusive arrangements by which donors or trustees of charities can enrich themselves. The clauses also simplify the tax rules by equalising the tax treatment of investment types and tax reliefs used by charities. The changes made in clause 52 will bring legacies into the definition of “attributable income”.
New clause 6 would require the Government to report on the impact of clause 52 on charitable giving through estates and on the income of the charity sector. The changes are aimed at those charities and donors who seek to make a financial gain. They will not penalise charities when legitimate donations are received and investments are made. The Government have published a tax information and impact note that sets out the impact of the changes, and it showed that the measures will have a negligible impact on businesses and civil society organisations such as charities. Once the measures have been implemented, HMRC will assess the impact by monitoring tax reliefs claimed by UK charities, so a formal evaluation is not required. I therefore propose that clause 52 should stand part of the Bill, and that new clause 6 should be rejected.
James Wild
Charities are a very important topic. We need to ensure that we give it appropriate scrutiny, given the importance of charities in our society and communities. Clause 52 and new clause 6—which I will speak to—relate to extending the definition of attributable income to include legacies left to charities. In practice, that means that when a charity receives a gift left in a person’s will, it could face a tax charge if that money is not spent on its charitable activities.
How charities use their funds is a topical subject in the context of the Church of England, which is planning to spend £100 million on its fund for healing, repair and justice—effectively a reparation fund for slavery, which many consider not to be an appropriate use of the funds, or what people gave funds to the Church for.
I now turn to the clause. The change will apply to gifts made on or after 6 April this year. New clause 6, in my name—it bears repetition—would require the Chancellor, within six months of the Act becoming law, to publish a report on the impact of the measure on charitable giving through estates and on the wider impact on the charity sector.
Concerns have been raised that expanding rules to cover legacies could have unwelcome implications if charities do not apply inherited funds quickly enough to their charitable purposes, leading to them being taxed. The Institute of Chartered Accountants in England and Wales warns that that uncertainty, particularly around the timing, may discourage potential donors from including charities in their wills. Clearly, none of us would wish to see that.
HMRC has said that it will not set a deadline for how soon money must be used, although that ambiguity creates issues in itself. If the rules are unclear, HMRC could later decide that a gift has not been applied appropriately and withdraw the tax relief, undermining confidence that legacy gifts to charities will remain tax-free. Perhaps the Minister could give the Committee some clarity on that point, and on how HMRC will determine what counts as timely or appropriate application of funds.
There is also a concern about the administrative burden it may place, particularly on smaller charities, which will have to prove that each legacy received has been properly applied to charitable purposes, even when the money is placed in long-term endowments or reserves. The Charity Finance Group warns that the changes could mean more record keeping, compliance checks and bureaucracy, taking money away from frontline charitable activities and towards administration. I do not think that anyone would wish to see that. I do not know whether the Minister has anything more to add on that complexity.
Adding complexity could also make life harder for executors and delay the administration of estates, which could affect the timing of cash flows to charities at a time when finances in the sector are under considerable pressure, and income is critical for them to do their job. There is also a risk that wealthier donors might think twice about leaving legacies to smaller charities, if they think that the charity might struggle to comply with HMRC rules.
I am really asking for the Minister’s assurance that HMRC will take a sensible and proportionate approach, particularly with smaller charities that are seeking to do the right thing in applying these rules. We all want to avoid the potential risk that this measure could deter charitable giving, when that is clearly not the intention. It is important that the concerns raised by the sector are aired in the Committee, and it is our role to do so.
Lucy Rigby
I will start with the principle that, because legacies have received tax relief, it is important that they are spent on charitable purposes, otherwise they will be subject to a tax charge. More broadly, the Government are very much committed to supporting charities and their donors through tax relief, which was worth over £6.7 billion in 2024.
The changes in the clause are aimed at those charities and donors that seek to make financial gain. They will not penalise charities where legitimate donations are received and investments are made. The measures are intended to protect the integrity of the charitable sector by ensuring that donations, investments and charity expenditure are deployed for charitable purposes, not the avoidance of tax.
The shadow Minister fairly referred to any burden that may fall on smaller charities. The Government of course recognise that many small charities are run by unpaid volunteers, and for that reason we have sought to design the new rules in a fair and proportionate way. HMRC will help the sector to understand and prepare for the changes by providing clear communications and guidance.
I also want to be clear, in response to the shadow Minister, that the changes to the attributable income rules mean that legacies received by a charity will become chargeable to tax if they are not spent charitably. The changes reflect the fact that this income may have already received considerable tax relief. We have no plans to stop charities accumulating donations, so there will be no deadline for the spending of legacy funds.
Question put and agreed to.
Clause 52 accordingly ordered to stand part of the Bill.
Clause 53
Approved charitable investments: purpose test
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 7—Report on charitable investments purpose test—
“The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 53 on charity investment strategies.”
This new clause would require the Chancellor of the Exchequer to report on the impact of section 53 on charity investment strategies.
Lucy Rigby
Clause 53 changes the definition of “approved charitable investments”. The Government recognise 12 types of investments for charitable tax relief, but presently only one type of investment is required to be for the benefit of the charity and not the avoidance of tax. The Government are extending this rule to all 12 types of investment, making the rules both simpler and tighter.
New clause 7 would once again require the Government to report on the impact of clause 53 on charity investment strategies. As with clause 52, these changes are aimed at those charities and donors that seek to make financial gain. They will not penalise charities where legitimate donations are received and investments are made. As the shadow Minister may expect, we have published a TIIN setting out the impact of these changes, which showed that these measures will have a negligible impact on businesses and civil society organisations such as charities. I commend clause 53 to the Committee, and I ask that new clause 7 be rejected.
James Wild
I rise to speak clause 53 and new clause 7, which was tabled in my name. My comments will reflect submissions from people involved in the charitable sector and my discussions with them. The clause extends the allowable purpose to all categories of recognisable charitable investment—at present, it applies to only one, but it will cover all 12. The Institute of Chartered Accountants in England and Wales has raised a suggestion that the test be reframed from
“for the sole purpose of”
to “wholly or mainly” to the benefit of the charity. The concern is that there could be increased obligations for compliance on trustees who have to demonstrate that their every investment in, for example, their portfolio was made for the benefit of the charity rather than an ancillary purpose therein. Was that more flexible approach something that the Government have considered, and if so why did they chose to reject it?
Mr Reynolds
As the Minister has outlined, clause 53 extends the purpose test from one category to all 12 categories. What guidance will HMRC provide for charity trustees to determine where the line is to be drawn between a legitimate investment strategy and those that are seen as having an ulterior purpose, because anti-avoidance should not penalise prudent charitable investment strategies?
Can the Minister also confirm exactly which charity sector bodies were consulted on these provisions and how they responded to that consultation, because many charity trustees are volunteers and this seems to place a significantly larger burden on those charity trustee volunteers to determine where to draw the line? It would be interesting to see what the consultation came back with as to where they would see that line and how they would attribute it.
Lucy Rigby
In answer to the comments of the Liberal Democrat spokesperson, the hon. Member for Maidenhead, as in relation to the previous clauses, I can confirm that HMRC will be coming forward with guidance that will make clear the exact scope of the changes and what needs to happen on behalf of charities in order to ensure compliance. The compliance changes apply equally to all charities regardless of size.
I come back to the statement that I recognise I have made repeatedly: these changes, along with those in the previous clause, are designed to protect the integrity of charitable tax reliefs. Although some smaller charities may need to review processes, the measures are proportionate and targeted at preventing abuse—not burdening charities, which in the main do incredibly good work.
The shadow Minister, the hon. Member for North West Norfolk, questioned whether some specific wording had been considered as part of the Bill. I am afraid I cannot confirm that now, and will have to get back to him in writing.
Question put and agreed to.
Clause 53 accordingly ordered to stand part of the Bill.
Clause 54
Tainted charity donations: replacement of purpose test with outcome test
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Schedule 9.
New clause 8—Report on tainted charity donations—
“The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 54 and Schedule 9 on—
(a) legitimate charitable giving, and
(b) prevention of tax avoidance.”
This new clause would require the Chancellor of the Exchequer to report on the impact of section 54 and Schedule 9 on legitimate charitable giving and the prevention of tax avoidance.
New clause 9—Review of outcome test—
“(1) The Chancellor of the Exchequer must within two years of the passing of this Act, review implementation of the outcome test under section 54.
(2) The review must assess whether the outcome test is clearer and more effective than the purpose test.”
This new clause would require the Chancellor of the Exchequer to review the implementation of the outcome test in section 54 and to assess whether it is clearer and more effective than the existing purpose test.
Lucy Rigby
Clause 54 and schedule 9 will support the Government’s aims of closing the tax gap by strengthening compliance powers to challenge abusive arrangements by which donors or trustees of charities can enrich themselves. The changes made in clause 54 tighten the rules on tainted donations.
New clauses 8 and 9 would require the Government to report on the impact of clause 54 and schedule 9 on legitimate charitable giving and the prevention of tax avoidance, to review the implementation of the outcome test in clause 54, and to assess whether it is clearer and more effective that the existing purpose test.
I come back to the same justification as for the previous clauses: these changes are aimed at those charities and donors who seek to make financial gain; they will not penalise charities when legitimate donations are received and investments are made. The TIIN, which was published alongside these changes, showed that these measures would have a negligible impact on businesses and civil society organisations. I therefore commend clause 54 and schedule 9 to the Committee, and urge it to reject new clauses 8 and 9.
James Wild
I rise to speak to clause 54 and to new clauses 8 and 9 tabled in my name. The clause makes significant changes to how tainted donations are treated. At present the donation is considered tainted only if it was made with an improper purpose. This clause replaces the motive-based test with an outcome test. If someone connected to the donor under the new regime receives financial assistance from a charity, such as a grant, guarantee or loan, the donation will be deemed tainted regardless of the donor’s intent. I have tabled new clause 8 to require the Government to publish a report on how the change affects legitimate charitable giving, or genuinely tackles tax abuse.
New clause 9 would require a review of the implementation of the new outcome test after two years and would assess whether it proves to be clearer than the existing purpose test. The Minister and the Government said that this measure is about tightening anti-avoidance rules and the challenge of proving intent. But I have been approached by the Charity Finance Group, which represents over 1,400 organisations and manages one third of the sector’s £20 billion annual income, and it has raised concerns around the change. It warned that the outcome test could unfairly penalise both donors and charities for results outwith their control.
For example, a donor could make a genuine good faith contribution only for a charity months later to make a routine investment or financial arrangement that inadvertently benefits a linked person. That donor could then find themselves caught by the anti-avoidance rules without ever having done anything wrong. That could cause uncertainty and raise concerns about people leaving legacy gifts that the charity sector relies on.
It is not just the charity and that one body. The Institute of Chartered Accountants in England and Wales has warned that donors may have limited influence over the outcome once the donation has been made. It, too, questions the fairness and practicality of shifting from a motive to an outcome test. Indeed, it proposes that the existing rules are not altered for that precise reason. We tabled the two new clauses to introduce proper scrutiny of the measures and ensure Parliament understands the effect on the charitable sector and whether donations continue to be given.
Does the Minister consider there is a risk that shifting to such an approach could have the effect that the charitable sector has set out? If so, will she commit to perhaps providing some practical guidance, with examples that charities and their compliance teams could look at so that they can see that charitable giving is not undermined? None of us on this Committee would want to do anything that would undermine the ability of charities to raise money and disincentivise anyone from giving money for fear that they might be caught inadvertently by rules when they have done nothing wrong.
Lucy Rigby
It is important to recognise that the tainted donations rules ensure that the usual tax reliefs are not available where someone gives money to a charity with the intention to benefit financially from it. Previously, HMRC was only permitted to consider the intention of a donation and whether a donor had received a financial advantage from a donation, but now, with these changes, it will also be able to consider the outcome of the donation and whether a donor had received financial assistance. In that respect, considering the outcome of a tainted donation is a positive step towards challenging abusive arrangements. As I have said in relation to previous clauses, HMRC will come forward with clear guidance on the application of the clauses, and, to the shadow Minister’s point, that guidance might well contain examples.
We are taking a range of steps to ensure that the charity sector and the wider public are aware of the changes, which I hope reassures the shadow Minister. A detailed summary of consultation responses has been published. As I said, HMRC will provide clear and practical guidance in advance of implementation.
Question put and agreed to.
Clause 54 accordingly ordered to stand part of the Bill.
Schedule 9 agreed to.
Ordered, That further consideration be now adjourned. —(Mark Ferguson.)
Railways Bill (Fifth sitting)
(1 day, 7 hours ago)
Public Bill CommitteesRead Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 12 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 12 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we begin, I remind Members to switch electronic devices to silent, and that tea and coffee are not allowed during sittings. The selection and grouping list shows the way in which amendments and new clauses have been arranged for debate. Any Divisions on amendments or new clauses will take place in the order in which they appear on the amendment paper—I remind Members, after Thursday afternoon’s confusion, that new clauses will be voted on at the end of proceedings.
Clause 7
Directions by Secretary of State
Jerome Mayhew (Broadland and Fakenham) (Con)
I beg to move amendment 12, in clause 7, page 4, line 30, after “functions” insert—
“where the Office for Rail and Road, in carrying out its functions under section 69A of the Railways Act 1993 (as inserted by section 74 of this Act), has deemed Great British Railways to be in breach of its statutory functions.”
This amendment would restrict the Secretary of State’s ability to give directions to Great British Railways to circumstances where the Office for Rail and Road has deemed Great British Railways in breach of its statutory functions.
The Chair
With this it will be convenient to discuss the following:
Amendment 11, in clause 7, page 4, line 30, at end insert—
“(1A) A direction under this section may only be given as a last resort, and only if the executive head of Great British Railways has had to be removed because Great British Railways is failing to comply with its key performance indicators as set out in section [Great British Railways: Key Performance Indicators].”
This amendment limits the Secretary of State’s power to give directions to Great British Railways to a last resort.
Amendment 13, in clause 7, page 4, line 31, leave out subsection (2).
This amendment would remove the Secretary of State’s ability to say that Great British Railways can only exercise unspecified functions after consulting the Secretary of State or with the Secretary of State’s consent.
Amendment 14, in clause 7, page 5, line 9, after “publish” insert “and lay before Parliament”.
This amendment would require the Secretary of State to lay any directions given to Great British Railways before Parliament.
Amendment 16, in clause 7, page 5, line 11, at end insert—
“(5A) If the Secretary of State uses the powers in this section to give a direction to Great British Railways about the general level and structure of fares for travel on railway passengers services designated under section 25 or 26, then the Secretary of State must publish the assumptions, criteria, and objectives underpinning any direction.”
This amendment puts a duty on the Secretary of State to publish the assumptions, criteria and objectives used when giving any direction about the level or structure of fares, so decisions can be assessed against passenger growth and affordability.
Amendment 15, in clause 7, page 5, line 12, leave out subsection (6).
This amendment would prevent the Secretary of State enforcing failure to comply with a direction through civil proceedings.
Amendment 17, in clause 8, page 5, line 35, leave out subsection (2).
This amendment would remove Scottish Ministers’ ability to say that Great British Railways can only exercise unspecified functions after consulting them or with their consent.
Amendment 18, in clause 8, page 6, line 4, leave out subsection (6).
This amendment would prevent Scottish Ministers enforcing failure to comply with a direction through civil proceedings.
Amendment 24, in clause 15, page 8, line 21, at end insert—
“(1A) The document set out in subsection (1) must ensure that Great British Railways is focussed on meeting the key performance indicators set out in section [Great British Railways: Key Performance Indicators].”
This amendment would require the rail strategy to be geared to enabling Great British Railways to meet its key performance indicators.
New clause 4—Secretary of State: power to dismiss the executive head of Great British Railways—
“(1) The Secretary of State may dismiss the executive head of Great British Railways.
(2) The Secretary of State shall only exercise the power in subsection (1) if—
(a) Great British Railways is not meeting a key performance indicator set out in this Act,
(b) Great British Railways has failed to act on guidance given by the Secretary of State under section 9 of this Act.”
This new clause gives the Secretary of State the power to dismiss the executive head of Great British Railways if the organisation is failing to perform against its statutory duties.
Jerome Mayhew
It is just as pleasurable to have you in the Chair today as it was last week, Sir Alec.
I remind hon. Members that clause 7 gives the Secretary of State the power to issue and publish directions to Great British Railways relating to its railway activities. It also outlines how the Secretary of State must obtain consent from Welsh and Scottish Ministers before giving directions relating to their devolved services, except where powers are used in relation to the access regime. The clause further outlines how GBR will be required to comply with directions, which are mandatory and binding, and intended to be used as a so-called
“responsive tool for necessary course correction, rather than as a proactive tool to set requirements on GBR,”
or, as further clarified in the explanatory notes, as “a last resort”.
Interestingly, although the explanatory notes state that a direction by the Secretary of State is a mechanism of last resort, the clause itself gives no indication to substantiate that. Instead, it suggests that the Secretary of State can act independently of their Welsh and Scottish counterparts’ views, especially as there is a reliance on non-legislative measures. My first question to the Minister is, therefore: why is this supposed last-resort requirement not on the face of the Bill?
When dealing with matters relating in particular to the interpretation of devolution, the risk is that any decision taken by the Secretary of State may be disputed by the devolved nations and end up as a political football, which only increases lawyers’ profits. Would it not therefore be prudent to set out in the legislation exactly what is meant? Without a clear breakdown of the procedures and directions, surely we run the risk of granting the Secretary of State a large degree of power with very limited oversight.
The clause gives the Secretary of State unrestricted power, other than for operations in Scotland and Wales, to intervene in the running of GBR. That is a step too far. While it is justifiable for the democratically elected Government of the day to set and agree GBR’s strategic objectives, key performance indicators and business plans, after those are set out, the Government’s role should be to hold GBR to account for the delivery of the targets, objectives and strategies, and not to tell it how to do so on a day-to-day basis.
A question arises on clause 8(4), and I would be grateful if the Minister could provide clarity on the oversight system outlined in clauses 7 and 8. Subsection (4) states:
“Before giving, varying or revoking a direction under this section the Scottish Ministers must consult the Secretary of State.”
Presently, GBR must decide whether a decision directly affects devolved services, but the Bill provides no statutory test, which leaves a delivery body making politically sensitive judgments, further increasing the risk of challenge by devolved nations. Clarity for Members, especially those from the devolved nations, will be extremely helpful, so I would be grateful if the Minister would address that directly.
Under subsection (5) of both clauses 7 and 8, directions must be published, but there is no requirement for them to be laid before and scrutinised by Parliament—the old trap of creating transparency without consequence. A reporting or laying requirement, perhaps through the Select Committee, would turn publication into genuine accountability. However, I am interested to hear what rationale the Minister has not to allow greater scrutiny of GBR in Parliament. Again, perhaps he will address that directly in his response. That is the rationale behind our suggested amendments to require the Secretary of State to lay directions before Parliament, in order to allow us to scrutinise the decisions in greater detail.
There is a fundamental question about leadership and who is the key decision maker. We are told repeatedly by the Minister and others that GBR is the directing mind, but will that really be the case if the clause goes through unamended? If GBR really is the directing mind, what is the necessity for the clause? It is a recipe for decision paralysis, with GBR, given the decision-making structures, undermined by guidance—we will come on to that when we discuss clause 9—and by directions from the Department for Transport in the name of the Secretary of State.
Clause 7 really does risk creating the worst of both worlds. We will have the cost of GBR and its oversight structures—we are told in the recently published job application for the part-time chair that GBR will have more than 100,000 employees; it will be an enormous organisation, with its own senior management team—and then we will have the same again, with an overactive Department for Transport second-guessing GBR’s day-to-day working and being able to give guidance and directions as a result of clauses 7 and 8.
Joe Robertson (Isle of Wight East) (Con)
As my hon. Friend describes the growing size of the Department for Transport and Great British Railways, I am slightly reminded of the Department of Health and Social Care, and NHS England. The Government talk of doubling up and so are winding back by abolishing NHS England, but here they are doubling up in the Department for Transport over Great British Railways. I wonder whether he has any reflections on that analogy.
Jerome Mayhew
It is not a perfect analogy, because GBR is at least intended to be more akin to a business—a nationalised business—but my hon. Friend is entirely right that where we have two organisations in competition, each one thinking that it runs the railways, that is a recipe for confusion at the least, and disaster at the worst.
This is not an idle concern, because it has happened before. We all remember the Virgin West Coast franchise debacle in 2012, when the slightly arm’s length process of franchising did not go well, causing a communal panic in the Department for Transport. The phrase, “Something must be done to prevent this from ever happening again,” was no doubt repeated many times. The result was that more and more micromanaging took place by the Department for Transport in the setting of franchises. The Department no longer talked only about outcomes that needed to be achieved, leaving how companies went about that entirely up to them, which is the appropriate way to draft a franchise agreement. Instead, that devolved into mechanisms of how a franchise should be operated.
We had that mission creep, and I fear that under the Bill we might get exactly the same approach with GBR. It will be set up with the best of intentions, and perhaps in the first two or three years all will run smoothly and the directing mind in practice might well be GBR, but then something will happen, because something always does happen in the real world, with lots of people doing their best but sometimes making mistakes, and there will be a collective gasp from the Department of Transport, because it will feel like it is on the hook, so “Something must be done to ensure that this doesn’t happen again.” We have designed into this mechanism a structure that allows the removal of GBR’s operational independence, and it does so without any reference to actions of last resort by the Government—the Bill is silent on that.
We talk about the Secretary of State, but we all know that officials in the Department for Transport will be advising the Secretary of State on what he or she should be doing in a particular circumstance, and there will be a power grab. Without amendment, the clause will absolutely allow for that. We should be alive to the real-world experience that we all have and take this opportunity to strengthen its wording in order to design out that issue and ensure that there is proper accountability—with GBR accountable to the Secretary of State and, through the Secretary of State, to Parliament—and that operational independence stays with what will be a nationalised business, rather than creating a railway version of NHS England, as my hon. Friend the Member for Isle of Wight East mentioned a moment ago.
I have tabled two amendments to address this issue. Amendment 12 would limit directions to circumstances in which the Office of Rail and Road assesses GBR to be in breach of its statutory functions. It could be argued that the Secretary of State should have an emergency lever; that is fair enough, because bad things happen. One of our great complaints before the election, although I am beginning to hear it from Labour Ministers as well, was, “We pull the levers but they’re not attached to anything—we have no power.” When we form the Government after the next election, we will want to have levers that are attached to something, and I accept that it is necessary to have an emergency lever to pull should a significant unforeseen event occur—another pandemic, perhaps—and an intervention be required.
However, amendment 12 would still allow the Secretary of State to intervene in emergency scenarios, as the ORR would deem that such events make it impossible for GBR to conform to its business plan targets. Clause 74 sets out the ORR’s power to monitor GBR’s performance. Elsewhere in the Bill, we shall argue that the ORR needs more teeth to hold GBR to account, and this provision limiting the potential for the Secretary of State to intervene until such time that an independent regulatory body has recognised that GBR has not been able to fulfil its functions will be an important safeguard.
Amendment 11 would put the words “last resort” on the face of the Bill, and would provide that a direction may be made only after the removal of GBR’s chief executive officer. The intention behind the amendment is to treat GBR as a business, which I think we all agree is what it is intended to be—albeit a nationalised one. Where there is a board of non-executive directors, they can question the executive team, and they can challenge decisions and require the chief executive to explain and defend the direction of the company. However, when push comes to shove, and the decision is made that the organisation is moving in the wrong direction, the weapon available to the chairman is the removal of the chief executive officer.
If GBR is operating on a day-to-day basis with oversight from the Department for Transport—the Secretary of State—and concerns arise as to its direction or performance, the sequence of severity of the response should not start with guidance from the Secretary of State and then mandatory directions. They might be the final requirement, because we all need those levers, but surely they should come only after the chief executive has been challenged and then removed, just as in the private sector with an arm’s length majority investment.
Olly Glover (Didcot and Wantage) (LD)
I certainly see what the hon. Member is trying to do with these amendments, and the Liberal Democrats share some of his concerns about the balance between holding GBR to account and GBR’s autonomy. However, does he not feel that amendment 11 may go a little too far? Laudable though the KPIs that he has set out are, I am not sure that any railway in this country has ever achieved them all at once, and if the amendment were made we may very well go through a revolving door of chief executives before the Secretary of State can give any direction.
Jerome Mayhew
That is a perfectly fair challenge, but amendment 11 would not require the CEO’s removal by the Secretary of State if those KPIs are not met; it would be a necessary first step to demonstrate that the KPIs are not being met, and then there would be a discretion. I suppose the hon. Member is really arguing that my safeguard is not quite as strong as it could be. Nevertheless, it would be a step in the right direction, and it would not require the removal of the chief executive.
New clause 4 would give the Secretary of State the power to dismiss the CEO of GBR on the grounds that a KPI has not been met and—this is an important bit, which the hon. Member for Didcot and Wantage might recognise gives the new clause some weight—GBR has failed to act on guidance that has been issued by the Secretary of State under clause 9. It is sequential. First, the chief executive is given guidance from the Secretary of State. Most chief executives worth their salt would take notice of official guidance given by their 100% shareholder, but if for some reason they fail to act on the guidance and they are still missing their KPI, then the power to dismiss would be exercisable. In my submission, that is a good approach.
Clause 7(2)—the “interference clause”—anticipates minor direction changes, which is exactly the kind of direction that should not be issued and is contrary to the explanatory notes. We are told that the powers in the clause will be used only as a last resort, but subsection (2) states:
“A direction under this section may provide, in particular, that a function is only to be exercised—
(a) after consulting the Secretary of State, or
(b) with the Secretary of State’s consent.”
The clause is not an emergency lever. It is quite clear from the drafting that the circumstances in subsection (2) cannot apply to a last-resort emergency lever. It is saying, “You can carry on doing things, but we need to have oversight in the nitty-gritty.” It is truly an interference clause.
Is it the Government’s intention that directions issued under clause 7 will be, as described in the explanatory notes, used as a “last resort” emergency brake, or do they intend—this is the case as the Bill is drafted—that the Secretary of State will give himself or herself the power to intervene in day-to-day management, even down to the level that individual decisions will not be taken until there has been consultation with the Secretary of State or the Secretary of State has consented to them?
Clause 7(5) needs improvement. It requires publication by the Secretary of State, but anticipates no role for Parliament in that oversight. The organisation Rail Forum said:
“We agree that this is desirable to ensure GBR remains arm’s length and is allowed to manage its own affairs.”
That is important. The industry itself is saying that GBR needs to be operationally independent and to manage its own affairs. Amendment 14 would correct that issue. It would require the Secretary of State to lay any decision before Parliament—the right place for primary scrutiny. Rail Forum supports the amendment. It says:
“This is essential to ensure that normal Parliamentary process is not bypassed.”
Amendment 16 would mean that decisions on fares imposed on GBR by the Secretary of State can be assessed against passenger growth and affordability. Such a direction would have a huge impact on the financial position of GBR, because decisions on fares and passenger growth and affordability are central to revenue. It is crucial that decisions are made on proper evidence and in line with the objects of GBR.
Rebecca Smith (South West Devon) (Con)
I do not want to stop my hon. Friend’s flow, as I believe he is probably coming to the end of his remarks. On listening to his eloquent speech, it strikes me that these amendments point directly to the fact that if Parliament had more of a role under the Bill, we would not even get to such places. Ultimately, if there is scrutiny throughout the process and an ability for Parliament, once GBR exists, to hold the Secretary of State and GBR to account, we should avoid the need for a civil proceeding, because a lot of the issues could be nipped in the bud before getting to that stage.
Jerome Mayhew
My hon. Friend is entirely right. That will be a theme of our comments on and challenges to the Bill throughout the progress of our scrutiny: accountability without responsibility is no accountability at all. Time and again, we see an unwillingness from those who drafted the Bill to trust the role of parliamentarians as scrutineers.
As a former businessman, I know—I have not made this one up; it is not unique thinking—that, in any organisation, you get what you measure. That will have been the case in any organisation that hon. and right hon. Members may have worked in in the private or public sector: the NHS has targets because it gets what it measures. At the moment, the Bill measures very little on GBR’s performance, and where it does, that disappears off to the Department for Transport and is reported to other civil servants.
As parliamentarians, we know our value in holding not only GBR to account but the Government of the day, which will not always be a Labour one. That is our important role, which is done through the Select Committee process and more widely. As parliamentarians, we should seek to improve the Bill. I recognise that we will have a number of Divisions during this process and I am unlikely to win a single one, but I urge the Government to listen—perhaps to the private comments of its own Committee members; they do not have to tell me about it—because these are genuine areas of improvement that we as parliamentarians should be encouraging the Government to add to the Bill. On that note, I will stop.
The Parliamentary Under-Secretary of State for Transport (Keir Mather)
It is a pleasure to see you back in the Chair, Sir Alec. I thank the shadow Minister, the hon. Member for Broadland and Fakenham, for this group of amendments, which are primarily about the direction powers in the Bill.
Amendments 11 and 12 would each limit the use of the Secretary of State’s direction power, requiring that the power can be used only as a last resort, after dismissing the head of GBR and if GBR has breached its functions. I understand the intention here, which is to ensure that these direction powers are used proportionately. I assure the hon. Member that the Government agree with that aim—we absolutely must empower GBR to be the directing mind of the railway—and I agree that the railway will not work if Ministers are forced to keep meddling in it in the way that they do today. That said, this power is not the problem that he thinks it is.
The new direction power is common in relationships between the Secretary of State and arm’s length bodies. Other examples in the transport sector that are not limited to last resort use include the power in the Infrastructure Act 2015 for the Transport Secretary to direct National Highways. Hon. Members will note that these types of powers are not frequently used. These amendments would create restrictions that undermine the principle that the Secretary of State should retain the ability to respond to persistent, urgent or unforeseen issues where rapid intervention is required.
Jerome Mayhew
Where is the reference to persistent, urgent and unforeseen incidents in the Bill?
Keir Mather
The Government have made it clear what the provisions within these clauses are designed to implement. I ask the shadow Minister to look at legislation passed under his own Government that contain direction powers that are remarkably consistent with those found in the Bill, and at the directions provided in other pieces of legislation. Does he feel that they represent mission creep when it comes to Secretary of State responsibilities? He will note that these type of powers are not used frequently. We believe that these amendments would create restrictions that undermine the principle that the Secretary of State should retain the ability to respond as required.
Critically, a direction should come before there has been a serious impact. The removal of an executive or the ORR deeming GBR to be in breach of its statutory functions would suggest that a serious failure has already occurred. In the latter case, it is unclear in what situation the hon. Member would consider a breach of a statutory function to have occurred, which would introduce ambiguity into the system.
Restricting the direction powers by limiting their use to only the most serious of instances would mean that any directions were more likely to be more prescriptive and severe. I am sure that the shadow Minister would not wish to see the public or industry seriously impacted before the Secretary of State acted. The new powers also recognise the GBR board as the railway’s directing mind while enabling Ministers to intervene to support GBR to deliver or correct course.
Amendments 13 and 17 would remove the ability for the Secretary of State and Scottish Ministers, respectively, to say that GBR can exercise unspecified functions only after consultation or with their consent. I do not think that these amendments are helpful. They would effectively remove the clarity on the directions power, but would not restrict the legal scope of it. They would simply lessen the legal transparency around the use of the direction.
There are circumstances where requiring GBR to consult the Secretary of State or Scottish Ministers before taking a specific action would be entirely reasonable, and maybe even desirable for GBR. For example, where GBR needs to address a specific risk or situation as part of a wider national co-ordination or cross-industry response, the Secretary of State may need to ensure that actions are in line with national responses. The ability to revoke a direction allows Ministers to ensure that they operate in a proportionate and rational way in response to time-sensitive issues.
Amendments 15 and 18 would prevent the Secretary of State and Scottish Ministers, respectively, from enforcing GBR’s failure to comply with a direction through the civil courts. The Government need to retain the right to independent enforcement with fixed remedies that compel GBR to act across a range of mechanisms, to ensure a pathway to protecting taxpayers’ money and the delivery of the Government’s objectives. I hope the hon. Member would agree that it is completely undesirable to remove any ability for Ministers to hold the executive to account.
I also politely say that the hon. Member cannot have it both ways: either GBR is an organisation that could exercise mission creep and is too independent of scrutiny, whether from Parliament or anywhere else, or the powers in the Bill place too many strictures on it from the perspective of Government. That point of clarity is required in the Opposition’s overall perspective on the Bill.
Jerome Mayhew
As I have set out in my series of amendments, the appropriate oversight and control is to remove the chief executive. The Minister must accept that, if the Secretary of State thinks that the organisation is going in the wrong direction, is not listening to guidance or has gone rogue in some way, they have the unfettered power to remove the chief executive officer at any stage. If he does not think that is the case, he should say so now, because if the Secretary of State has the power to remove the chief executive officer and put in place someone who will do his bidding, then none of this is needed, is it?
Keir Mather
I will turn in a moment to the specific points that the shadow Minister raises around the chief executive, but I think I share his views on the importance of GBR’s compliance with its fundamental functions and with the law. That is why amendments 15 and 18 are peculiar—they do not recognise GBR needing to be able to have enforcement through that particular route.
Amendments 14 and 16 both relate to the transparency of directions. Amendment 14 would require directions to be laid before Parliament, but we believe that is unnecessary as provisions in the Bill already require directions issued under this power to be published, and Parliament has the power to call the Secretary of State to account should it take the view that more information is required.
Baggy Shanker (Derby South) (Lab/Co-op)
It is a pleasure to serve under your chairmanship again, Sir Alec. The Minister is quite eloquently setting out why some of these amendments are not needed. The shadow Minister, the hon. Member for Broadland and Fakenham, set out earlier why they were needed, but also referred to problems that may happen in the future. It is difficult to write a Bill while trying to tackle problems that may or may not happen in the future.
The fact remains that rail reform failed to happen during 14 years of Conservative Government. The previous Rail Minister admitted that the Government failed to bring in the necessary reform. We had 10 Rail Ministers, I think—correct me if I am wrong—in 14 years. That was not just a failure to bring in a Bill; it failed passengers, railways and our workers who support the railways. Is it not time that we crack on, pass the Bill and deliver the improvements that this industry so greatly needs?
The Chair
Order. I remind Members that interventions should be short and punchy. If Members would like to make a longer intervention they have the opportunity to catch my eye.
Keir Mather
I agree with my hon. Friend’s sentiment that it is unwise to hypothesise about what potential eventualities could befall GBR in specific instances, as the shadow Minister encourages me to do. What is important—my hon. Friend made an important point around consistency, both in our legislative work and the work of the Government more broadly—is to ensure that the bedrock upon which GBR sits is legally sound, and that all eventualities that may arise are catered for through provisions within the legislation that offer sufficient breadth. That is why amendments 15 and 18 do not serve the legal accountability purposes that the shadow Minister seems to want to stress.
Keir Mather
I will give way one final time and then I want to make some progress.
Jerome Mayhew
I am grateful that the Minister is being very generous. In my opening remarks, I asked him to give me some real-world examples of when injunctive relief might be required. Could he not forget to provide those?
Keir Mather
I had not forgotten the shadow Minister’s request for me to provide specific examples. In a sense, though, I do not believe that it would be wise to do so. I do not think that the purpose of this Committee is to speculate about what GBR may or may not do in future; it is important that we develop a suite of measures that create the accountability that is required.
Keir Mather
I will give way one final time, and then I really do want to make some progress.
Laurence Turner
I will not test the wisdom of speculating about future legal circumstances, but is it not the case that when Railtrack was in a state of advanced collapse, that particular case did end up in court?
Keir Mather
I defer to my hon. Friend’s expertise on that particular matter, but my overall point is that, rather than create events in our heads about when this enforcement power may be required, it is important that we give GBR, and the Secretary of State in exercising accountability in relation to it, a full suite of measures to ensure that it remains compliant with the law. Actually, specific duties outlined in the Bill encourage GBR not only to be compliant with the law but to deliver for passengers, including those with disabilities, and to make sure that we have a long-term infrastructure strategy for the railway and unify it in a way that serves the interests of passengers.
Amendment 16 would require the publication of the assumptions, criteria and objectives used when giving directions about fares. The Government have been clear that GBR will have a greater level of autonomy and flexibility over fare setting than train operating companies do today; however, given the need to balance passenger and taxpayer contributions to funding the railway, that freedom will be within strategic parameters and guardrails set by the Secretary of State.
While it is possible that the directions power could be used to set strategic parameters and guardrails for fares, there are alternative routes, most notably the ability for public service contracts awarded to GBR to contain fare parameters and guardrails. Nevertheless, it is crucial that the Secretary of State retains the powers to direct and give guidance to GBR on fares. It is necessary that the Government and GBR alike can respond to exceptional circumstances. Beyond that, the Government are committed to interacting with GBR clearly and transparently, and the refreshed role of the Secretary of State on fares is no exception.
Finally, I turn to two additional amendments, which relate not to directions but generally to the accountability of GBR. Amendment 24 would require the long-term rail strategy to be geared towards enabling GBR to meet the key performance indicators set out in new clause 2, tabled by the hon. Member for Broadland and Fakenham. New clause 4 would allow the Secretary of State to dismiss the head of GBR were it not meeting the key performance indicators proposed in new clause 2. We have already discussed new clause 2, so I will not repeat my arguments, but in relation to amendment 24, the long-term rail strategy is clearly meant to be just that—long term. The amendment would make the strategy a document focused on short to medium-term performance indicators, which could change much more frequently.
Rebecca Smith
I would argue that my hon. Friend the Member for Broadland and Fakenham has tabled a key amendment, which relates to something that came up in the scrutiny of the Bill in the Transport Committee; indeed, I asked a question of the noble Lord Hendy about it when I quizzed him on how we as MPs are supposed to hold the Government to account for the delivery of the long-term rail strategy. I appreciate that it is long term, but we have to get from the short term to the long term, and if nothing is set out in the Bill about what delivery is supposed to look like on the route to the long-term delivery, we effectively cannot do our job. The Minister in the other place rightly said, “It’s going to be an amazing railway system. It’s going to be perfect,” but he could not answer me on how we hold people to account on getting from A to B. I would be interested in the Minister’s response to that if he is not prepared to accept amendment 24.
Keir Mather
It puzzles me that with all the other transport bodies that have been set up—National Highways is an interesting example—I do not recall a series of concerns having been outlined that one of the most robust systems of parliamentary democracy in the world was in some way, shape or form incapable of—
Jerome Mayhew
I am grateful to the Minister, though I remind him that we do have 14 sessions; we are not cantering to the last fence. He prays in aid National Highways. We are all constituency MPs. We all know how frustrating it is trying to deal with National Highways. I do not want to make a headline unnecessarily, but my personal view, as a constituency MP, is that trying to deal with National Highways in the interests of my constituents is almost impossible. Why would he choose that as the example to follow when designing accountability for GBR?
Keir Mather
In a spirit of cross-party contrition, I agree with the shadow Minister’s point; it is a fair one, and perhaps that was a poor example.
In the setting out of the long-term rail strategy, through the Secretary of State, there are myriad means of Parliamentary accountability to ensure that process is done in a way that reflects the long-term interests of the railway and of passengers. There are robust means of scrutiny through this House and other means of which Parliamentarians can avail themselves of, and of which the hon. Member for South West Devon has availed herself multiple times through the passage of this Bill.
I would like to conclude on this grouping and so I want to speak to new clause 4. As the hon. Member for Broadland and Fakenham will be aware, with bodies of this nature the Government’s long-standing policy is that the Secretary of State of the sponsoring Department has responsibility for appointing the non-executive chair of the board. The executive team is then accountable in the first instance to the organisation’s non-executive board, and it is right that trust is given to the expertise and experience of the executive and that there is appropriate distance between the Secretary of States and those tasked with the day-to-day operational management of the organisation. That is one of the benefits of the GBR model.
Legislating to dictate a process whereby the chief executive is dismissed directly by the Secretary of State for failure to meet a single KPI is not appropriate and it cuts across all guidance and understanding of effective partnership between Government Departments and their arm’s length bodies. For those reasons, I cannot accept these amendments and urge the hon. Members to withdraw them.
Jerome Mayhew
I am wholly unconvinced by the explanation the Minister has given. On many of the clauses and amendments I have put forward, and those put forward in the names of other Members, one can see both sides of the argument; on this one, I think the Government are entirely wrong. They are setting up a structure using another arm’s length non-governmental body, National Highways, that is a byword among us constituency MPs for a lack of accountability and for being a frustrating body to deal with. That is not the right direction for the Government to be going in and I will push the amendments to a Division.
Question put, That the amendment be made.
Keir Mather
I beg to move amendment 166, in clause 7, page 5, line 4, leave out
“operation of a GBR-provided Scottish service”
and insert
“exercise by Great British Railways of functions—
(i) on behalf of the Scottish Ministers in accordance with arrangements made under section 4, or
(ii) under a contract awarded under section 31(3)(b)”.
This amendment broadens the circumstances in which the Secretary of State must obtain the consent of the Scottish Ministers, where giving directions to GBR.
The Chair
With this it will be convenient to discuss the following:
Government amendments 167 and 168.
Clause stand part.
Clause 8 stand part.
Keir Mather
The amendments will improve clarity and ensure that the Railways Bill works as intended. Clauses 7 and 9, as drafted, set out that the Secretary of State must obtain consent from Scottish or Welsh Ministers when issuing a direction and guidance to GBR
“in a manner that directly affects the operation of”
a GBR-provided Scottish or Welsh service. That definition could unintentionally exclude scenarios where Great British Railways is exercising functions delegated by Scottish or Welsh Ministers that do not directly affect operation of railway passenger service functions, such as in relation to branding. The amendments provide a clearer and more precise approach. Consent will now be required whenever GBR is acting on behalf of Scottish or Welsh Ministers under formal arrangements enabled by clause 4, or contracts awarded under clause 31. That is a better way of defining where consent is needed as it reflects the responsibilities devolved to Scottish and Welsh Ministers under the Bill.
The amendments remove ambiguity from the Bill without changing its core purpose. They ensure that devolved Governments have a clear and consistent role in decisions affecting services devolved to them, while maintaining the Secretary of State’s ability to protect the network as a whole. That approach has the support of both Scottish and Welsh Ministers because it provides certainty and transparency. I therefore urge the Committee to support the amendments.
Clause 7, to which the amendments apply, provides the Secretary of State with the power to issue legally binding directions to Great British Railways. Clause 8 replicates that power for Scottish Ministers when GBR is exercising functions relating to Scottish railway services in Scotland. Such powers are common in relationships between Government and arm’s length bodies and used only when absolutely justified and in a proportionate way. For example, the Oil and Gas Authority has received only one ministerial direction in its 10-year history.
Clause 7 is a normal, standard accountability provision that follows established precedent. It is a type of power that is always used sparingly. It is not a new and extraordinary means of interfering with the railway that the Government are trying to decentralise to GBR. The powers are necessary to reflect the overall democratic accountability of the Secretary of State and Scottish Ministers for the performance of GBR within the areas of the country that they are responsible for and fund.
To protect GBR’s day-to-day operational independence as the directing mind, the powers will be used only where there is strong justification, in consultation with the ORR and after agreed processes have been followed. For Scotland, those processes include following a series of procedures and controls that will be set out in the memorandum of understanding between the Secretary of State and Scottish Ministers that is required under clause 23 of the Bill. They also include consulting the Secretary of State before using the power.
To ensure appropriate transparency, the clauses require that the Secretary of State and Scottish Ministers must publish any issued directions, including when they are amended or revoked. As GBR may also provide services on behalf of Scottish or Welsh Ministers, clause 7 requires the Secretary of State to secure the consent of Scottish or Welsh Ministers to issue directions to GBR relating to areas that fall under the devolved responsibilities of Scotland or Wales.
Finally, to avoid a scenario where GBR receives contradictory directions from Ministers or where directions issued by Scottish Ministers appear to go beyond their responsibilities, clause 8 provides the power for the Secretary of State to revoke Scottish Ministers’ directions. We have agreed with Scottish Ministers that that provision is necessary to protect the overall network as a whole.
The clauses are essential to provide a clear and proportionate route for intervention while still enabling GBR to deliver as the directing mind in the interests of its customers, taxpayers and the public. I commend the clauses to the Committee.
Jerome Mayhew
The Committee will be pleased to hear that I am not going to reheat my arguments on clause 7, but we have not yet discussed clause 8. The arguments inevitably mirror each other to a degree, because clause 8 in the main seeks to extend the provisions of clause 7 to Scottish Ministers.
Clause 8 will grant Ministers in Scotland the power to issue and publish directions to GBR—so far, so similar—and GBR will be required to comply with those directions. However, the Secretary of State has ensured that they will have the ability to remove a direction of Scottish Ministers where it is inconsistent with her directions. The clause requires the Secretary of State to consult Ministers in Scotland before revoking and must publish any revocations.
The clause suffers from the same issues as clause 7, as I have already intimated: granting the Secretary of State, and then by extension Scottish Ministers, the ability to direct GBR, which is meant to be operationally independent. That is the first confusion. I will not rehash the arguments, but hon. Members should take it as read that I repeat them here.
As the Minister just mentioned, clause 8(7) will allow the Secretary of State to revoke a direction given by Scottish Ministers under that clause. That is confusion No. 2. We anticipate circumstances in which GBR has a direction of travel—that is not meant to be a rail pun—with which the Scottish Minister disagrees; the Scottish Minister issues a direction for GBR to go in a different direction, and then the Secretary of State disagrees with that direction and issues a revocation. What a recipe for confusion, delay and poor governance that creates!
Who is really in charge of the railways in Britain? It is certainly does not sound as though it is GBR, which is being second-guessed on the one hand by the Scottish Ministers and on the other by the Secretary of State. It does not sound as though Scottish Ministers are in charge even in Scotland, because they can suffer a revocation from the Secretary of State. Yet the consultation document tells us, as the Government have told us time and again, that
“GBR will be operationally independent, staffed by experts and professionals from the rail sector…who will be empowered to deliver for passengers and freight customers without government interference in day-to-day decision-making.”
When did that change? Perhaps the Minister can let us in to the secret. Clause 8 not only prevents GBR from being independent—as clause 7 does—but prevents devolved Ministers from acting within their own devolved settlements without being second-guessed by the Secretary of State.
I accept that the Scottish Cabinet Secretary for Transport, Fiona Hyslop MSP, when speaking about clause 8 during the Transport Committee evidence session, seemed not to oppose that oversight, as she recognised that certain aspects, such as access and freight, remain reserved. It seems that Scottish Ministers are content to accept the clause as drafted because a further memorandum of understanding will create firebreaks between non-devolved powers, in which the Secretary of State may intervene, and devolved powers. That could be okay, but we as a Committee do not know, because we have not seen the memorandum of understanding, even in draft.
We are going to come back to this issue again and again. There are a plethora of documents designed to support the operation of GBR—to support this skeleton Bill—and yet we have not seen them. How can this Committee do our job of scrutinising this Bill line by line, seeking to improve it and to ensure that it achieves the objectives that the Government say it does, when 19 documents and counting—documents that are crucial to the actual running of the railway both in Scotland and in the United Kingdom as a whole—are absent, even in draft?
Bill Reeve, the director of rail reform for Transport Scotland, when invited to add further to the remarks from the Cabinet Secretary, said:
“An awful lot will rely on the memorandum of understanding to flesh that out and give examples.”
There is a question for the Minister surrounding this memorandum of understanding for Scottish and Welsh Ministers. A lot of the powers in the Bill seemingly rely on a document that is not part of the Bill. Will the Minister provide details of the memorandum of understanding prior to the passage of this Bill? If not, why does he refuse to let us know what the memorandum of understanding is likely to stay? Why does he believe that Parliament should approve a working arrangement between the devolved Governments on which no consultation has been undertaken?
I will speak further in detail on the memorandum of understanding when we reach clauses 23 and 24, but it is important that Ministers note that the current framework of the Bill relies on a document that has little oversight or clearly defined objectives, and which we have not seen.
Keir Mather
On memorandums of understanding, I point the shadow Minister to the fact that the heads of terms for the memorandum of understanding with the Welsh Government have already been published. On the overall principle on the development of memorandums of understanding, the stakeholders who gave evidence to the Committee were very clear that the process is being carried out in close consultation with devolved Governments and that it is very common for such operational documents to be developed in consultation in this way.
We are creating an operational framework by which GBR can function as an organisation. It is very important that that platform exists before the devolved settlements that will dictate the operational reality of how the railway works are layered on top.
On the shadow Minister’s point about direction powers, these are the same direction powers that exist, almost like for like, with Great British Energy, Great British Nuclear and the North Sea Transition Authority. They are there to respond to urgent and pressing matters. His points on overreach should have applied to the creation of those organisations as much as to the creation of GBR.
The factual reality of how the direction power has been used in the case of oil is that only one direction has been issued in 10 years. It is the Government’s intent—we have been very clear in saying so—that this direction power must operate in a similar way and only respond to urgent, pressing and persistent matters.
On the issue of direction from Scottish Ministers, the Secretary of State cannot revoke a direction if it pertains purely to a devolved matter, but Scottish Ministers did agree that revocation powers are necessary when there are conflicts in directions. Speaking from my perspective on how this Bill puts the devolved settlement at the centre of how the railway functions, there are sufficient methods to create accountability, mutual working and shared recognition of priorities and ambitions across devolved Governments, the UK Government and GBR, so that I do not envisage a revocation of a direction being used regularly. It is only there to ensure the smooth function of the railway.
Amendment 166 agreed to.
Amendment made: 167, in clause 7, page 5, line 8, leave out
“operation of a GBR-provided Welsh service”
and insert—
“exercise by Great British Railways of functions—
(i) on behalf of the Welsh Ministers in accordance with arrangements made under section 4, or
(ii) under a contract awarded under section 31(4)(b).”.—(Keir Mather.)
This amendment broadens the circumstances in which the Secretary of State must obtain the consent of the Welsh Ministers, where giving directions to GBR.
Amendment proposed: 14, in clause 7, page 5, line 9, after “publish” insert “and lay before Parliament”.—(Jerome Mayhew.)
This amendment would require the Secretary of State to lay any directions given to Great British Railways before Parliament.
Question put, That the amendment be made.
Olly Glover
I beg to move amendment 143, in clause 9, page 6, line 30, after “statutory functions” insert
“, but only in respect of strategic or financial matters where such guidance is necessary and does not interfere with the operational exercise of those functions.”
This amendment limits the guidance that the Secretary of State can give to Great British Railways.
The Chair
With this it will be convenient to discuss the following:
Amendment 19, in clause 9, page 6, line 30, at end insert—
“(1A) The Secretary of State may only give guidance under this section if—
(a) the Secretary of State has drawn to Great British Railway’s attention that Great British Railways is not meeting a key performance indicator set out in section [Great British Railways: Key Performance Indicators], and
(b) Great British Railways has not, in the opinion of the Secretary of State, taken action to remedy this failing within the period of two months.”
This amendment would restrict the Secretary of State’s ability to issue guidance to GBR to circumstances where GBR was failing to meet a key performance indicator as specified in NC2.
Amendment 20, in clause 9, page 6, line 37, at end insert—
“(5A) If the Secretary of State uses the powers in this section to give guidance to Great British Railways about the general level and structure of fares for travel on railway passengers services designated under section 25 or 26, then the Secretary of State must publish the assumptions, criteria, and objectives underpinning any guidance.”
This amendment puts a duty on the Secretary of State to publish the assumptions, criteria and objectives used when giving any guidance about the level or structure of fares, so decisions can be assessed against passenger growth and affordability.
Amendment 21, in clause 10, page 7, line 4, at end insert—
“(1A) The Secretary of State may only give guidance under this section if—
(a) Scottish Ministers have drawn to Great British Railways’ attention that Great British Railways is not meeting a key performance indicator set out in section [Great British Railways: Key Performance Indicators], and
(b) Great British Railways has not taken action to remedy this failing within the period of two months.”
This amendment would restrict Scottish Ministers’ ability to issue guidance to Great British Railways to circumstances where Great British Railways was failing to meet a key performance indicator as specified in NC2.
Olly Glover
It is a pleasure to serve under your chairship, Sir Alec. This amendment relates to some of the clauses in the Bill that will enable the Secretary of State to give guidance, as opposed to direction, to GBR. Amendment 143 is, in my humble opinion, a very modest and reasonable attempt to simply clarify some of the clear intentions that the Minister has expressed for the Bill. Our amendment would mean that the Secretary of State could only provide guidance to GBR on its statutory functions in respect of strategic or financial matters, where such guidance is necessary and does not interfere with the operational exercise of those functions.
The reason for tabling this amendment alludes to things I have said previously in this Committee room, and in other locations—there have been many examples in the past of the Secretary of State as proxy for the Department for Transport, getting involved in far too much of the fine detail of the running of our railways, whether that is the intricacies of timetable specification, whether certain types of rolling stock are upgraded or not, and whether they are equipped with wi-fi and tables, or not. There are many other examples that I could give and I have given before. The amendment is intended to strengthen the Government’s clear intent that the direction and guidance given by the Secretary of State should be strategic and high level. The guidance should be about providing a clear overview of what the Government of the day wishes the railway to achieve and deliver, and about empowering GBR—with appropriate regulation to hold it to account, as we have been debating—to get on with it.
I hope the Minister will view the amendment rather more favourably than he has others, although my powers of clairvoyance feel particularly strong this morning, and I suspect that will not be the case, in which case we will wish to press it to a vote.
Jerome Mayhew
I will deal briefly with amendment 143 and develop some arguments on the other amendments. I congratulate the hon. Member for Didcot and Wantage on tabling amendment 143, which pushes in exactly the same direction that I have been pushing today, and also last Thursday, in developing the concern about increasing micromanagement by Department for Transport officials in the name of the Secretary of State, which will undermine the independence of GBR as a tactical organisation.
The culture is already there: the Department has been micromanaging the railways to an increasing extent since 2012 at the latest. This Bill needs to change culture. It is not a steady-state Bill; it is a once in a generation opportunity to change the culture not just of GBR, moving it away from Network Rail, but of the Department for Transport, which is as necessary as the other cultural change. If this Bill is to achieve what it is meant to, the Department’s relationship with the railways should properly be changing. Amendment 143 is a modest but important proposal that would go some way to facilitating that.
Dealing with the group as a whole, and continuing the theme of the exercise of functions and guidance by the Department, the Opposition once again note the contrast between the supposed independence of GBR and the various mechanisms that the Department and the Secretary of State have managed to wheedle into the Bill to grant themselves extra powers, whether as a last resort or, as I fear, to create a micromanaging charter, and where that last resort, as it has been described, has no qualifying criteria—although as we have heard from the Minister, that is seemingly of little consequence.
The clause enables the Secretary of State to “issue and publish guidance”, with notable devolved exceptions, which will allow the Secretary of State to
“clarify policy intentions to GBR.”
The explanatory notes acknowledge that
“in most cases requiring course correction, guidance would be used before directions,”
although I note that it is not required. The Government anticipate that they could move straight to directions if they wish to. However, subsections (1) and (2) are very clear:
“The Secretary of State may give guidance…or revoke guidance”
without any qualifying criteria at all.
What is guidance? It is a steer short of direction, and an application for an injunction against GBR—which we have just voted in favour of—destroys the myth of GBR operational independence. It will be taking orders from the Department for Transport, because that is the status quo ante. Without strengthening this clause and some others, we will confine the relationship between the Department for Transport and the newly created GBR to “more of the same”. That is the fear that we should collectively be fighting against.
The guidance will be not just on the strategic direction or the business case, but on delivery decisions, at the whim of the Department. We can say, “Well, it’s the Secretary of State. This will be done under advisement,” but we all know that in practice it will mean officials micromanaging GBR in the name of the Secretary of State, who will provide the rubber stamp. I fully expect the Minister to reassure me that that would never happen, and that the provision is only for course corrections. Now, if I was in the passenger seat of a vehicle and kept telling someone how to drive, I suppose I would call that a course correction, but they might call it backseat driving. That is the problem: the Bill is designed for backseat driving by the Department for Transport. Will the Minister explain how the clause is nothing short of backseat driving?
I obviously wish GBR the best of luck, and I hope the Minister’s enthusiasm and optimism is fully justified, but I fear that the disastrous consequence of forcing it to walk on eggshells will be constant second-guessing. I have been involved in an organisation in which there was second-guessing—no one was sure who had the decision-making power—and it was a disaster. If there is second-guessing, the organisation as a whole does not know when a decision has been taken. Does the power lie with the board? Does the board have to get clearance from a second board in a wholly different organisation, which might have a different view? Should people in GBR wait for the nod from the Department for Transport before taking action within the organisation, particularly if it is a decision with which its sub-department may not agree?
Rebecca Smith
My hon. Friend’s argument highlights the challenge that a lot of the independent retailers, open access users and, potentially, freight users will face if the Bill remains as drafted. Ultimately, they are the people outside the walls of the castle who will struggle to understand who is making what decision and which decision is final. It is a bit like a child going to one parent, getting an answer they do not like, and going to the other parent to get a different answer. Should there be more clarity in the Bill specifically for that reason?
Jerome Mayhew
I completely agree with my hon. Friend. When one’s children come and ask for something, the wise answer is always to ask first, “What did your mother say?” If we were able to apply that common sense to this situation, I would not be so concerned. What we have instead is stakeholder management culture seeping into the core aspects of GBR functions.
Laurence Turner
Will the hon. Gentleman acknowledge that progress has been made on the cultural issues and the micro-management that he describes? I note in passing that he dates that culture from 2012 onwards, which was, of course, entirely under the Government of which he was part. In the Transport Committee, we heard that until the election, Network Rail had to seek Treasury permission to do as much as put up a passenger footbridge. Is it not welcome that that has now come to an end?
Jerome Mayhew
It is certainly welcome, but we are still in the position in which an improvement to a line—something as small as the Haughley junction improvement, which costs roughly £15 million to £20 million—still needs ministerial sign-off from the Treasury before it can be authorised. The Government have some way to go to improve the situation.
This will leave us with a stakeholder management culture. My hon. Friend the Member for South West Devon is entirely right that many organisations in the 60% of the railway that is not being nationalised as part of GBR will be intimately and hugely impacted by GBR’s decisions—or will they? Will they, too, have to wait for the all clear from the Department for Transport? If GBR gets on the wrong side of Ministers or the Department, its course is going to be corrected to all manner of different ports.
The combination of clauses 7 and 9 removes almost any semblance of operational independence from GBR. Clause 9(5) states that GBR
“must have regard to guidance given under this section.”
That sounds soft, but in practice it creates a standing expectation of compliance and makes it impossible for GBR to make dynamic tactical decisions that are free from day-to-day second guessing by departmental and ministerial intervention.
That brings me to amendments 19 and 21, which would help defend the operational independence of GBR. If the Secretary of State is concerned about an aspect of GBR’s performance, they may instead issue guidance to inform GBR of its failure to meet the key performance indicators. Additionally, under clause 10, the Secretary of State may give guidance only if
“Scottish Ministers have drawn to Great British Railways’ attention that Great British Railways is not meeting a key performance indicator…and…Great British Railways has not taken action to remedy this failing within the period of two months.”
As a result, the amendments would apply to GBR in both England and Scotland.
Finally, amendment 20 repeats the argument made about directions or guidance given by the Secretary of State on the general level and structure of fares, and it would introduce new subsection (5A), which states:
“If the Secretary of State uses the powers in this section to give guidance to Great British Railways about the general level and structure of fares for travel on railway passengers services designated under section 25 or 26, then the Secretary of State must publish the assumptions, criteria, and objectives underpinning any guidance.”
That is self-evidently sensible, and I look forward to the Minister agreeing with me.
Keir Mather
May I begin by addressing the point about backseat driving? Following the shadow Minister’s remarks, I identified that this is something that we want to avoid not only in future but because it is the existing scenario that we inherited. Right now, under the old system, the Secretary of State is the only person who is really accountable for driving the system forward, and private operators spent more time employing people to decide who was to blame for failures on the railway than ensuring that the railway actually ran in the interest of passengers.
Interference in access and timetabling is another issue that has been raised. The reason why we have diffuse responsibility and muddled accountability in that space is because Network Rail and the ORR, which are two separate organisations, both have responsibility there but they cannot do it in a unified way, and therefore they cannot serve the interests of passengers. That is exactly what the creation of GBR as a directing mind for the railway seeks to avoid, and guidance within that system plays a very important role in removing one of the shadow Minister’s key concerns: an overbearing Secretary of State issuing direction to GBR. Guidance has been designed to create an iterative process by which GBR can enter into a dialogue with the Secretary of State to talk through and deal with common challenges.
The amendments seek to limit the ability of the Secretary of State and Scottish Ministers to issue guidance to GBR under clauses 9 and 10. I am clear that the new system established by the Bill does not intend to involve the Secretary of State or Scottish Ministers in ongoing or individual operational decisions. That is for GBR’s board and the thousands of employees working on the railway. Instead, the guidance power provides a mechanism through which Ministers can respond to overarching issues that might emerge. For example, if the ORR identified persistent failures in GBR’s performance against its business plan, it may suggest guidance from the Secretary of State that could help to support GBR to course correct, and to clarify the desired outcome without requiring more stringent action, such as a direction.
Further, it is not all one-directional guidance. Guidance will be a flexible tool designed to support Great British Railways. For example, there may be instances where guidance is requested by GBR and is issued in a collaborative manner to provide clarity on the policy direction or shared objectives. I also remind members of the Committee that GBR must have regard to the guidance—in other words, it must consider the guidance and weigh it against its other duties and obligations. It is not required to blindly follow the guidance in all cases.
Let me turn to the specifics of each amendment. Amendment 143 would limit the issuing of guidance to solely financial or strategic matters. In seeking to establish a hard line between types of decision making, the amendment would create a false dichotomy. Strategic and financial decisions are likely to have operational implications. The amendment could therefore inadvertently prevent the Secretary of State from being able to issue guidance where there is any operational impact at all, which is clearly disproportionate, given the potentially collaborative and helpful nature of the guidance.
Similarly, amendments 19 and 21 seek to prevent the Secretary of State and Scottish Ministers from issuing guidance unless GBR is not meeting a key performance indicator under the Opposition’s proposed new clause 2. I have already explained why that proposed new clause is nonsensical. I reiterate that KPIs would be better designed and included as part of GBR’s business plan.
Jerome Mayhew
You are kind to call me to speak again, Sir Alec; I realise that I did not speak to clause 10 earlier. Briefly, I recognise that clause 10 mirrors clause 9, which we have debated substantially, but it is important to note that Scottish Ministers are given a guidance function, whereas Welsh Ministers are not. That reflects the devolution settlement, whereby Scotland funds and controls its rail system in its entirety, whereas Welsh responsibilities are substantially limited to the core valley lines. I repeat our previous arguments about the express need for operational independence for GBR, without constant second-guessing by Department for Transport officials, which my amendment 21 addresses, and about fares, which I discussed in relation to amendment 20. I will press a selection of the amendments to a Division.
Question put, That the amendment be made.
Keir Mather
Clause 9 provides a power for the Secretary of State to issue non-binding guidance to Great British Railways, which GBR must have regard to. Clause 10 provides Scottish Ministers, as funders of the railways, with the same power.
Guidance provides the Secretary of State with a proactive lever to hold GBR to account, while preserving its operational independence as the directing mind. Scottish Ministers will be able to issue guidance to GBR on the exercise of its statutory functions in Scotland, in so far as they relate to Scottish railway activities.
These powers will be used by the Secretary of State and Scottish Ministers to help to develop a better common understanding of an area or to encourage a strategic focus on a specific issue to support GBR in carrying out its functions in the interests of its customers, taxpayers and the public.
To ensure appropriate transparency, the Secretary of State and Scottish Ministers will be required to publish any issued guidance, as well as any amendments or revocations. Further, where the guidance relates to functions that Scottish or Welsh Ministers have delegated to GBR or to services that they have contracted GBR to provide, the Secretary of State must secure their consent before the guidance is issued, reflecting devolved accountability for those services.
This is a sensible and proportionate provision that allows for direct and unambiguous communication between Ministers and GBR, and is intended to support the proper management of the railway.
Jerome Mayhew
We have debated these two clauses. We have made clear our concerns about the current drafting and have tried our best to improve the Bill through a number of very sensible amendments, the majority of which were supported by the Liberal Democrats. We in our turn have supported some sensible amendments proposed by the hon. Member for Didcot and Wantage. I recognise that to vote against the clauses would potentially put a difficult hole in the armoury of the Secretary of State for GBR, so it is with a heavy heart that I do not oppose these two clauses.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
Clause 10 ordered to stand part of the Bill.
Clause 11
Licensing
Question proposed, That the clause stand part of the Bill.
Keir Mather
On a point of order, Sir Alec. Before turning to the clause, I would like to correct the record. My Department’s commitment has always been to publish the draft GBR licence during the Bill’s passage, rather than before the Bill leaves the Commons, as I had said in oral evidence on 20 January. Before publication in draft, my Department will undertake engagement with stakeholders to inform the draft. That engagement will start before the Bill leaves the Commons, and I will ensure that hon. Members are involved in it if they would find that beneficial.––[Official Report, Railways Public Bill Committee, 20 January 2026; c. 97, Q180.]
Keir Mather
Clause 11 introduces schedule 1, which will amend part I of the Railways Act 1993 to set out GBR’s licensing regime in a way that broadly mirrors the existing licence provisions in the 1993 Act. I will deal with schedule 1 in more detail later, but for now I commend the clause to the Committee.
Rebecca Smith
I do not think I said this earlier, because I was merely intervening, but it is a pleasure to serve under your chairmanship, Sir Alec.
I appreciate what the Minister just set out in correcting the record from last week, because a lot of what I was going to say had to do with the lack of the licence. In spite of what he said, I still think that it is a problem for us to be debating clause 11, and later schedule 1, without that detail in front of us. It is very generous of him to say that we can be part of the consultation process, but given that we are encumbered with being here for 10 hours a week, I am not quite sure when would be able to do that. With all due respect, I still want to put on record how disappointing it is that we do not yet have the licence. Ultimately, Great British Railways is entirely premised on that licence: it does not operate without it, cannot deliver its functions without it, and will not create this supposedly amazing utopia of perfection for passengers and infrastructure deliverers alike without it.
Debating the clause without that context feels like a completely wasted opportunity—indeed, I fear that this debate will be incredibly short. This is something that I have seen happen with other Bills. The Minister will say that this is what the Opposition would also have done, but we were not in the position to set up Great British Railways, which—next to the NHS—will be the biggest Government-funded and backed body in this country. Without the scrutiny of hon. Members this morning, we cannot do our job properly.
Such scrutiny is in the interest of all the stakeholders—the public, the staff who work for all the railway companies that are to be brought into Great British Railways, and all the other stakeholders that provide services through open access or freight. Whether it is the coffee shop in a station or the trolley service on the train, all these people need this information, and I am disappointed that we cannot provide that scrutiny at this stage in the debate. I would welcome the opportunity to see the draft as soon as it is out, but it is disappointing that has not come in time for debate in Committee. No doubt similar comments will be made on Report and, hopefully, in the other place.
Edward Argar (Melton and Syston) (Con)
I am grateful to the Minister for his clarification. When I asked the question and he, with alacrity, answered, I did catch the expression on one of his official’s faces; I have to say that I have, on occasion, found myself in that position in the past, so I sensed what might have been coming.
I have to say that I am deeply disappointed. Although it is important that stakeholders are engaged, this legislation has been some time in the making. The licence is at the heart of how GBR will operate, so the fact that not even a skeleton draft will be made available to hon. and right hon. Members as the Bill continues its passage through this House is deeply concerning. I will speak at greater length when we get to schedule 1, but we are effectively being asked to give the Government a blank cheque, based on assurances of intent, without actually seeing the detail of the legislation.
Joe Robertson
It is a pleasure to serve with you in the Chair, Sir Alec. My right hon. and hon. Friends have already spoken at length and I agree with them, but I will add just a couple of short points to place my disappointment on the record that not even a draft of the licence has been presented.
It is good that the Minister has clarified that it will be coming forward sooner than he suggested previously, but the reality is that it is already too late, as we heard from stakeholders last week during evidence. I urge him not to delay any further. Even an outline draft of the licence as soon as possible, rather than a more detailed one, would be clearly better than nothing. He should also bring forward the other 19 documents identified by my hon. Friend the Member for South West Devon—again, in draft form as appropriate—as soon as possible. As I say, it is already too late for this Committee today, as we debate this very clause and schedule. I wish to place that on the record.
Jerome Mayhew
I echo all the comments made by my right hon. and hon. Friends. I also thank the Minister for facing up to it with a point of order. It was obvious last week that a point of order was on its way. None of us on the Opposition Benches will hold him to his initial, rather quick, response—no doubt I will do something similar during the passage of the Bill—but that does not let the Government off the hook.
This is not business as usual for a Department bringing through a Bill of this nature. My right hon. Friend the Member for Melton and Syston, an experienced former Minister, gave two examples of primary legislation that also relied on secondary documentation. In those circumstances, the departmental teams did provide skeleton outlines for Parliament, which is what we are, to consider and do our job properly. I do not want the Minister to rush out a quick affirmative like last week, so I ask him to take time to consider, perhaps discuss with his officials, and reply later today on whether he and his officials are able to commit to some form of briefing—some skeleton outline—on the nature of the licence, at a time when we can collectively discuss and debate it, and see whether it points in the right direction.
Clause 11 simply enables GBR’s licensing to be set out in schedule 1, which we will come on to in a moment. That schedule amends part 1 of the Railways Act 1993 and sets out the detailed process by which the GBR licence will be issued and maintained. Both the Secretary of State and the Office of Rail and Road will retain the ability to grant licences to railway bodies other than GBR—for example, open access operators, freight operators and other infrastructure managers such as the core valley lines in Wales. I know we will discuss the contents of schedule 1 and the detail of the licence extensively.
Keir Mather
Although we have had an opportunity to discuss some of the provisions regarding the creation of the licence—it being enforced by the ORR with powers that include giving GBR directions to escalate issues to its board, requiring GBR to create and publish improvement plans and issuing enforcement orders— I have heard Opposition Members’ points that they would like an opportunity to discuss those matters more closely and in further detail.
We believe that developing the licence in this way will ensure that what is published for statutory consultation is informed by the development of a stable legislative framework in which to scrutinise the licence—as we are doing now—and can be meaningfully refined and enhanced by a wide range of views. However, I take the point that the shadow Minister and other right hon. and hon. Members have made, and I am sure that we can have further discussions today. I commend the clause to the Committee.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Schedule 1
Licensing of Great British Railways
Jerome Mayhew
I beg to move amendment 109, in schedule 1, page 55, line 10, leave out from “may,” to “grant” and insert—
“at the recommendation of the Office of the Rail and Road in relation to matters related to safety and standards and, after consultation with the Passengers’ Council,”.
This amendment would require the Secretary of State to get a formal recommendation from the Office of the Rail and Road that the GBR licence adequately ensures that licence obligations related to safety and standards are not compromised or undermined.
Schedule 1 contains the meat of what we have been talking about. It amends part 1 of the Railways Act 1993 to set out how GBR will be licensed. Paragraph 2 confirms that GBR should never be exempt from holding a licence, and paragraph 3 inserts new section 7B, which will enable the Secretary of State, following consultation, to grant GBR a written licence to operate specified railway assets. The licence must be in writing and will remain in force unless revoked or surrendered. Surrendering the licence will require the Secretary of State’s consent.
Paragraph 3 also sets out the process for granting licences to persons other than GBR. The Secretary of State and the Office of Rail and Road will continue to be able to grant licences to persons other than GBR to operate railway assets. The ORR may grant such licences only with the Secretary of State’s consent or under a general authority issued by the Secretary of State. Licences must be in writing and will remain in force unless revoked or surrendered. Surrendering the licence will require the ORR’s consent, much in the same way as it previously required the Secretary of State’s consent.
Proposed new section 8A sets out the requirements for the granting of licences by the Secretary of State or the ORR. It provides that a notice must be published outlining the intention to grant a licence, the reasons for doing so, and allowing at least 28 days from the date of publication for interested parties to make representations or objections. There is a duty to consider representations or objections made within the period specified in the notice.
Proposed new section 8B gives the Secretary of State the power to set rules for how licence applications must be made. Among other things, that includes the format of the application, the fee payable—different fees may apply—and the requirements for publishing the application. Before making any regulations, the Secretary of State must consult the ORR. Any fees collected by either the Secretary of State or the ORR in connection with licence applications must be paid to the consolidated fund.
Paragraph 4 clarifies that a licence granted to GBR may specify when the authorisation it provides takes effect. It allows the licence to include a start date or a mechanism for determining it. Paragraph 5 provides that the licence granted to GBR may include a condition requiring it to comply with the provisions set out in separate document that is prepared by the ORR and approved by the Secretary of State. It might be something such as a code of practice—one of these operating documents that we have been talking about so much—and it may relate to the sale of tickets by GBR or third parties, or to services that GBR provides to the rail industry to facilitate railway operations that are of particular interest to the independent retail sector. The paragraph makes it clear that an approved document may be used to regulate GBR’s behaviour in relation to the sale of tickets by parties other than GBR, in the independent retail sector.
Paragraph 6 provides that, before making modifications to a GBR licence, the Secretary of State must publish a notice explaining the proposed modifications and the reasons for them, and must allow the usual period of 28 days for interested parties to make representations. There is a duty on the Secretary of State to consider representations or objections to the notice made within the period specified.
Paragraph 7 clarifies that the ORR must consult the passengers’ council before making any amendments to passenger or station licences that relate to functions of the council. The ORR must also send a copy of the modifications to the council as soon as practicable. Paragraph 9 clarifies that any licence under section 8 of the Railways Act 1993 that was in force immediately before the changes made by the schedule come into force will remain so, per the conditions and periods set out in the licence, unless it is revoked or surrendered.
Here is the mystery of the missing licence: where is it? We have explored this at some length, and the Minister is going to go away and see what he can rustle up in the Department’s cupboard to point us in the right direction, or at least to give us the direction of travel of the missing licence. In oral evidence to the Transport Committee, Ben Plowden, chief executive officer of the Campaign for Better Transport, said:
“I think the licence will be critical. There are various references in the documents that the Government published to a ‘streamlined licence’, so I would be quite interested to see what that means relative to the current licence that applies to Network Rail. I think the Government are going to consult on the draft licence, so we will all have a chance to look at it.
The other point I would make is one I made earlier, which is that the licence will be one of many documents the Government will produce in the next year to 18 months. There is the long-term rail strategy and GBR will produce its business plan. There will be the access and use policy; the new periodic review process; and MOUs with Ministers in Scotland and Wales. There will be guidance on partnerships with mayoral combined authorities, and guidance on the right to request full rail devolution. There is a huge amount still to come.
Understanding how the licence intersects with those other documents and processes is going to be critical, because between them they will add up to the set of arrangements that determine whether GBR is successful or not for passengers. We have to see the licence in the context of all the other things that will be guiding, directing and shaping what GBR does, how it invests, and what it does operationally.”
That is the experts in the industry repeating what the Opposition have been arguing repeatedly today and last week. More accurately, it is the other way around: we have been listening to the industry in a way that the Government have not, and have been expressing the deep concerns in the sector that the current proposals are half cocked. Huge chunks of the direction, guidance and memorandums are simply missing, including the licence that the schedule is designed to address.
Rebecca Smith
The Minister spoke earlier about the consultation. It is worth restating that it is not the final draft but a consultation on the draft that is going to happen. We will have sight of the final version of the licence way down the road of the Bill’s progress, and ultimately the final licence may not be ready before scrutiny of the Bill is complete. Does my hon. Friend agree with me that that is something that we need to address? Hopefully the Minister will reassure us.
Jerome Mayhew
My hon. Friend is absolutely right. We have made that point as forcefully as we can. I trust the Minister when he says that he will take it away and do his best with his ministerial and departmental colleagues, but it is not just a matter of saying, “We kind of understand that licences already exist. Licences have been issued by the Office of Rail and Road. It will not be some kind of copy and paste, but taken from what already exists and we are going to get something similar here.” As Ben Plowden said, there are various references in the documents that the Government have published to something very different: a streamlined licence. That begs all sorts of questions about what is anticipated to be removed from the licence. The Department for Transport has got as far as saying it is going to be smaller, perhaps significantly smaller because it is streamlined, but this is critical.
The licence of ORR is a mission-critical document that anyone who works in the industry would acknowledge, yet we are told it is streamlined, and therefore elements of what is traditionally considered to be a licence under the current system are anticipated to be removed. Is the Minister able to tell us what parts are likely to be removed? What is it? Because the Government documents refer to a streamlined licence, he can tell the Committee what that means. The Department says it is going to be streamlined, but what does it intend to remove to justify that description? It must be somewhere within the Department; otherwise those words would not have been used in the supporting documentation. There is no excuse for the Minister not to describe the definition of a streamlined licence and what is anticipated.
My hon. Friend the Member for South West Devon made the point that the Minister has corrected the record on when the draft licence will be provided during the passage of the Bill through both Houses, but in the next breath he said there will be consultation on that document, which has not yet started. How can that consultation be anything other than a paper exercise? The Minister seems confident that he can go through a consultation process that has not yet started, that the Department can then properly consider the contributions and come to a considered view and redraft the licence, taking into account all the comments, good, bad and ugly, that the consultation came up with, and then produce the draft licence in the two or three months that the Bill has to run through both Houses. That is an extraordinary position. It suggests either that the Minister will have to come and make a second point of order in a couple of months’ time, or that the consultation to which he refers is an absolute farce, because the Government have already decided what they want to do. They are going through the performance of a consultation, but they have already made up their mind. Perhaps the Minister will tell us which one it is.
Amendment 109 would constrain the Secretary of State’s ability to modify GBR’s licence without first seeking consent from the ORR and the passengers’ council. It is part of a series of amendments including amendments 110, 112 to 116 and 233, to which I will speak later. The Government strategy is that the Bill will be the legislative shell for the creation of GBR. Crucial matters of detail, such as the licence under which GBR will operate and important long-term strategies, business plans, targets and so on are separate and, at this stage, missing. Such details matter and deserve proper scrutiny.
We know that other plans and targets are unlikely to be set until after the Bill is enacted, so it is important to include strong checks and balances. That is the purpose of amendment 109. At present, the Bill merely requires the Secretary of State to consult the Office of Rail and Road. Legally, that is weak; after consultation, the Secretary of State may simply ignore whatever the ORR comes up with. The amendment and those linked to it would require the Secretary of State to obtain the Office of Rail and Road’s agreement for the licence to be issued. Subsequent amendments would require the Office of Rail and Road’s agreement for the licence to be modified.
Modification of the licence requires consent from the new passenger watchdog. If the passenger watchdog is to be as powerful in championing the interests of passengers as the Government claim they want it to be, it requires proper powers that go beyond an invitation to be consulted. For that reason, I propose that we put amendment 109 to the vote.
The Chair
I note that debate on amendment 109 has included discussion of schedule 1 more generally. In order to use the Committee’s time more efficiently and if the Committee is content, we could debate schedule 1 more broadly now. That would mean that group 20 is not debated; there would just be a formal decision on schedule 1 and debate on group 19 would be unchanged. As that is the will of the Committee, we will take that approach.
Keir Mather
I thank the hon. Gentleman for the amendment, which is intended to prevent the Secretary of State from granting a licence to GBR unless the ORR gives a formal recommendation that licence obligations related to safety and standards are not compromised or undermined. The amendment does not specify what the ORR’s recommendations would need to contain or how it would operate in practice. The Government recognise the importance of effective regulation in the rail sector, particularly in relation to safety. The safety of our railways is a priority, and we will ensure that it is central to GBR, so that our railways continue to rank among the safest globally. The Bill makes no changes to the existing safety regime, which has proved to be exemplary.
In practice, amendment 109 would give an approval role to the ORR on matters relating to safety and standards ahead of the GBR licence being granted by the Secretary of State. It would confuse the clear accountabilities that the Bill establishes, which place responsibility for drafting, consulting on and granting the GBR licence with the Secretary of State, with the ORR then enforcing against its provisions. That aligns with the Government’s approach to regulation: Ministers set policy and strategy, and regulators provide validation and reassurance to the industry.
The Bill already requires a consultation on the contents of the GBR licence and specifies that the ORR and the passenger watchdog must be consulted as part of that. That will ensure that any concerns about safety and standards can be raised and considered appropriately ahead of the GBR licence being granted. The amendment would confuse accountabilities and add additional processes where they are not needed. I therefore urge the hon. Member to withdraw the amendment.
Jerome Mayhew
I am grateful for Minister’s explanation, but I am not persuaded by it and seek to put amendment 109 to a vote.
Question put, That the amendment be made.
Railways Bill (Sixth sitting)
(1 day, 7 hours ago)
Public Bill CommitteesRead Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The House divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 1 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Chair
We are now sitting in public and our proceedings are being broadcast. Before we begin, I remind Members to switch any electronic devices off or to silent, please, and that tea and coffee are not allowed during the sittings—there should be ample water at your Benches. The selection and grouping document shows the way in which the amendments and new clauses have been arranged for debate. Any Divisions on amendments or new clauses take place in the order in which they appear in the amendment paper, of which you should all have a copy.
Schedule 1
Licensing of Great British Railways
Jerome Mayhew (Broadland and Fakenham) (Con)
I beg to move amendment 233, in schedule 1, page 55, line 10, leave out “consultation” and insert “agreement”.
This amendment limits the Secretary of State’s powers to set GBR’s licence unilaterally.
The Chair
With this it will be convenient to discuss the following:
Amendment 110, in schedule 1, page 55, line 25, leave out “consultation” and insert “agreement”.
This amendment, along with Amendments 111 and 112, would limit the Secretary of State’s ability to unilaterally set GBR’s licence and require instead agreement from the ORR and the Passenger’s Council.
Amendment 111, in schedule 1, page 55, line 30, leave out “consultation” and insert “agreement”.
See explanatory statement for Amendment 110.
Amendment 112, in schedule 1, page 55, line 34, leave out “consultation” and insert “agreement”.
See explanatory statement for Amendment 110.
Amendment 118, in schedule 1, page 56, leave out line 6.
This amendment would strengthen the ORR’s right to grant a license to a non-GBR operator.
Amendment 113, in schedule 1, page 57, line 20, leave out “consult” and insert “obtain the agreement of”.
This amendment, along with Amendments 114 to 116, would require the Secretary of State to gain the consent of the ORR for making regulations about GBR’s licence.
Amendment 114, in schedule 1, page 58, line 20, leave out “consultation” and insert “agreement”.
Amendment 115, in schedule 1, page 58, line 21, leave out “consultation” and insert “agreement”.
Amendment 116, in schedule 1, page 58, line 23, leave out “consultation” and insert “agreement”.
Amendment 126, in schedule 2, page 62, line 17, leave out “advice” and insert “agreement”.
This amendment would require the Secretary of State to obtain the ORR’s agreement for GBR’s business plan instead of seeking its advice.
Jerome Mayhew
Thank you, Mr Western, and for agreeing to be in the Chair this afternoon. We are part-way through consideration of the schedule, with a degree of overlap: amendment 109 was selected in a separate group to this one, although its wording is intricately linked to that of amendments 110 to 116. I shall try to minimise the degree of repetition for all concerned.
The amendments in this group seek to constrain the Secretary of State’s ability to modify the licence of Great British Railways without first seeking consent from the Office of Rail and Road and the passengers’ council. The Government’s strategy is for the Bill to be the legislative shell for the creation of GBR. Crucial matters of detail, such as the licence under which GBR will operate, together with important long-term strategies, business plans, targets and so on, which we have mentioned more than once in our deliberations so far, are separate from the Bill.
That detail matters and deserves proper scrutiny by this Committee and elsewhere in the Houses of Parliament. When the Rail Minister and his officials appeared before the Transport Committee on 7 January, Members took several attempts to secure an assurance that the draft licence would be published before Parliament completes scrutiny of the Bill, albeit without a specific date set. It is therefore important to include in the Bill stronger checks and balances than exist now, and that is the purpose of amendments 110 to 115.
At present, the Bill merely requires the Secretary of State to consult the ORR. Legally, that is of course very weak and, after such consultation, the Secretary of State may simply ignore whatever it is that the ORR comes up with. Amendments 110 to 112 therefore require the Secretary of State to obtain the Office of Rail and Road’s agreement for the licence to be issued, and amendments 113 to 115 require the Office of Rail and Road’s agreement for the licence to be modified.
In addition, modification of the licence requirements would need consent from the new passenger watchdog. If the passenger watchdog is to be as powerful in championing the interests of passengers as the Government claim they want it to be, it requires proper powers that go beyond an invitation to be consulted. That leads me to amendment 118, which would leave out line 6 on page 56 of the Bill and would strengthen the right of the ORR to grant a licence to a non-GBR operator.
The schedule contains important powers for the Office of Rail and Road to issue licences to operators other than GBR to operate services on the network. However, proposed new section 8(5)(a) in paragraph 3 of the schedule gives the trump card to the Secretary of State, who must consent to the granting of such a licence. Why is that power of veto required? Perhaps the Minister will explain when he responds.
If the Government wish to reduce their involvement in the day-to-day running of the railways and the Office of Rail and Road deems that an application from a non-GBR operator meets all the requirements and conditions set out in the Bill, why do the Government think it necessary to have that overriding power? It does not appear to make sense. Amendment 118 would remove that power of veto. The group of amendments, together, would require the Secretary of State to obtain a formal recommendation from the Office of Rail and Road, and would require that the GBR licence adequately ensures that licence obligations relating to safety and standards are not compromised or undermined. The amendments would ensure that, as GBR is granted new responsibilities by the licence, it continues to be subject to safety standards obligations that are in the licence issued by the Office of Rail and Road to the current infrastructure manager, Network Rail.
Such licence obligations go beyond obligations under the Railways and Other Guided Transport Systems (Safety) Regulations 2006—which are called ROGS for obvious reasons—and would require Great British Railways to participate in the industry’s collaborative structures around collective decision making, managed by the Rail Safety and Standards Board, and comply with safety and interoperability standards set collectively by the sector, including for freight and supply chain.
For those reasons, this group of amendments, taken as a whole, would provide important strengthening of the role of the ORR. I look forward to hearing the Minister’s response.
The Parliamentary Under-Secretary of State for Transport (Keir Mather)
May I begin, Mr Western, by saying what a pleasure it is to serve under your chairship? I thank the hon. Member for Broadland and Fakenham for tabling this group of amendments. I shall discuss amendment 233 with amendments 110 to 112, which I believe all share the same intent. Provisions to require the agreement of the ORR and the passenger watchdog before the Secretary of State issues the GBR licence would add an additional and unnecessary level of bureaucracy. If the amendments intend to ensure that the ORR and the passenger watchdog can constructively input into the licence, I assure the hon. Member that the Bill already requires the Secretary of State to consult the ORR and the passenger watchdog, and to invite representations more widely, before the licence is issued. If the amendments were accepted, it would no longer be clear who had the right to determine the terms of the licence. It is only appropriate that, following full consultation, the Secretary of State, as the licensing authority, has the sole final sign-off of the licence. The ORR will then, of course, enforce that licence. That is consistent with the clear accountabilities that the Bill establishes. We therefore cannot support the amendments.
On amendments 113 to 116, GBR will not need to apply for a licence, therefore the amendments’ provisions would apply only in relation to non-GBR licences. In any case, the amendments would add unnecessary complexity to the process for making licence application regulations. The amendments also intend to give an approval role to the ORR and the passenger watchdog in relation to modifications of GBR’s licence. The Bill already requires those bodies to be consulted before the Secretary of State modifies GBR’s licence. Again, requiring approval rather than consultation would risk confusing the clear accountabilities that the Bill establishes.
Amendment 118 seeks to strengthen the ORR’s ability to grant non-GBR licences. Under the Railways Act 1993, all licences are granted by the ORR with the consent of the Secretary of State. In practice, that consent is normally given in advance through a general authority, avoiding the need for case-by-case approval. The Bill does not change that aspect of the licensing regime. Removing the provision for specific Secretary of State consent, as the amendment intends, would not meaningfully strengthen the ORR’s ability to grant non-GBR licences. Non-GBR licences could still only be granted within the scope of a general authority approved by the Secretary of State.
In fact, the amendment would remove a useful route that enables the ORR to issue a licence outside the scope of a general authority or in circumstances where amending a general authority would not be practical. Far from strengthening the ORR’s ability to issue non-GBR licences, the amendment would instead likely weaken it.
Finally, amendment 126 would require the ORR to agree to GBR’s business plan before it is approved. I agree that the ORR provides invaluable input as an expert, independent regulator and it must have a robust role in the determination of GBR’s business plans. That is why the Bill gives it an explicit role to run the funding process, provide advice on the business plan and validate the costs within it, and independently publish its advice, whether that advice is supportive or critical of GBR.
However, it is not appropriate for the ORR, an unelected body, to decide how public money is allocated to the railway. Public spending decisions at this level should sit with elected Ministers who are responsible for funding the railway. I hope the hon. Member for Broadland and Fakenham can see this Government’s commitment to a robust and independent role for the ORR, but it is clear that the ORR can fulfil its role assuring the business plan without needing to be a funding approver to do so.
Further, the ORR will have an expanded monitoring role though the powers in the Bill, being able to monitor all GBR’s activities against its business plan. If GBR does not deliver on its plans, the ORR will be able to publish its findings, as well as escalating the matter to the Secretary of State. The ORR will be a trusted expert adviser to the Secretary of State, combining the strengths of an expert regulator with the need for the Government to control taxpayer money.
I encourage the hon. Member for Broadland and Fakenham to withdraw the amendment, and not to press the others in this group to a vote.
Jerome Mayhew
I listened with interest to the explanation the Minister gave and his request that the amendment be withdrawn. I was particularly interested to hear him describe the role of the ORR as a “trusted expert adviser”. In my submission, when we have GBR as the player and referee in many of the areas it will be active in, with a designed-in conflict of interest, we need more than a trusted expert adviser to hold the Government and GBR to account; we need an independent regulator. That is exactly what the ORR currently is.
I intend to press amendment 233 to a vote and, dependent on the outcome, I will not proceed to press amendments 110, 111, 112, 118, 114 and 115 as they address similar wording in other parts of the Bill. However,but I will seek to press amendment 126 to a vote if we get the opportunity to do so this afternoon.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
New clause 26—Great British Railways: funding review—
“(1) Thirty months after the commencement of any five-year period covered by a funding settlement for Great British Railways, the Secretary of State must publish a review of Great British Railway’s funding.
(2) The review set out in subsection (1) must include figures for—
(a) funding allocated to;
(b) ticket revenue raised by;
(c) amount of government subsidy received by;
Great British Railways.
(3) A copy of the review must be sent to the Transport Committee of the House of Commons.
(4) References in this section to the Transport Committee of the House of Commons—
(a) if the name of that Committee changes, are references to that Committee by its new name, and
(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, are to be treated as references to the Committee by which the functions are exercisable.”
This new clause adds statutory transparency to rail funding cycles.
New clause 34—Great British Railways: Certainty of Funding—
“(1) Within 12 months of the passing of this Act, the Secretary of State must publish a funding certainty framework for Great British Railways (‘the Framework’).
(2) The purpose of the Framework is to establish and maintain terms for the funding of Great British Railways.
(3) The terms of the Framework must include provision that—
(a) The Secretary of State may not vary, reduce, or reopen the funding settlement for an active Control Period, unless either—
(i) a statutory provision made after this Act amends Great British Railway’s duties requiring funding revision, or
(ii) an emergency has been declared within the meaning of section 1 of the Civil Contingencies Act 2004;
(b) the Secretary of State must publish—
(i) the confirmed funding determination,
(ii) the assumptions underpinning it, and
(iii) any exceptional circumstances to justify any adjustments,
within an active Control Period;
(c) the Secretary of State must agree the funding for the next Control Period not less than two years before it is due to start;
(d) when determining the funding settlement for a Control Period, the Secretary of State must take into account—
(i) the Long-Term Rail Strategy,
(ii) Great British Railway’s duties, and
(iii) whole system planning considerations across infrastructure, passenger services and freight;
(e) The Secretary of State must work with Scottish Ministers to align as far as possible funding determinations so that Great British Railways receives a single, coherent, funding determination no less than two years before the relevant Control Period starts.
(4) The Secretary of State must lay before Parliament a report on—
(a) any funding determination for each Control Period;
(b) any exceptional revisions of the funding determination for a Control Period within that Control Period;
(c) whether the Office of Rail and Road, or any other relevant body, has met any relevant deadline to confirm funding for the next Control Period, and where it has failed to do so, the reasons for that failure.
(5) Nothing in this section amends or removes the ability of Office of Rail and Road to carry out Periodic Reviews for each Control Period.
(6) The Secretary of State must annually lay before Parliament a report on—
(a) the stability of Great British Railways’ funding;
(b) the effect of any instability on—
(i) the efficiency of,
(ii) delivery of services by, and
(iii) management of risks associated with projects run by, or associated with,
Great British Railways.
(7) For the purposes of this section, ‘Control Period’ has the meaning given in any final decision taken by the Office of Rail and Road which concludes each periodic review of access charges as described in Schedule 4A of the Railways Act 1993.”
This new clause would require the Secretary of State to prepare a Funding Certainty Framework, with funding for each Control Period set two years before it is due to start, to enable Great British Railways to plan effectively.
New clause 39—Great British Railways: financial duties—
“(1) Great British Railways has a duty to ensure that its operating expenditure does not exceed its operating income in each financial year (‘the duty’).
(2) The duty does not apply to capital expenditure aligned with national infrastructure investment and enhancement pipelines.
(3) Within 12 months of the passing of this Act, the Secretary of State must provide guidance to Great British Railways about its duty under subsection (1).
(4) This duty must include guidance about—
(a) operational income, including fare revenue, access and charging functions, commercial income, and non-fare revenue streams;
(b) operational expenditure, including staffing, operations, support, maintenance, rolling stock operation, management and renewals; and
(c) the exclusion of capital expenditure aligned with national infrastructure investment and enhancement pipelines.
(5) Great British Railways has a duty to ensure its business plan and operational decisions have as a priority its long-term fiscal sustainability within the objectives set out in the rail strategy.
(6) In meeting its duty under subsection (5) Great British Railways must seek to increase its revenue.
(7) For the purposes of subsection (6), ‘revenue’ includes—
(a) fare revenue through passenger growth,
(b) commercial retail income,
(c) income from property, station and land commercialisation,
(d) freight access revenue, and
(e) market expansion.”
This new clause puts duties on Great British Railways to ensure its operating expenditure does not exceed its income, and to deliver long-term fiscal sustainability. It makes further provision relating to those duties.
New clause 40—Great British Railways: non-reliance on taxpayer funding—
“(1) Within its first operational Control Period, Great British Railways must set out a transition plan towards ending any reliance on taxpayer funding.
(2) The transition plan under subsection (1) must identify—
(a) any efficiency improvements Great British Railways can make, and
(b) any cost-reduction measures necessary for Great British Railways to operate in such way as does not rely on taxpayer funding.
(3) For the purposes of this section, ‘Control Period’ has the meaning given in any final decision taken by the Office for Rail and Road which concludes each periodic review of access charges as described in Schedule 4A of the Railways Act 1993.”
This new clause requires Great British Railways to set out a plan towards ending any reliance on taxpayer funding.
New clause 41—Great British Railways: annual statement of financial performance—
“(1) Great British Railways must publish an annual statement of its financial performance, including—
(a) its operating income and expenditure,
(b) whether it achieved operating cost self-reliance,
(c) the reasons for any failure to achieve operating cost self-reliance,
(d) where it has failed to achieve operating cost self-reliance, any actions it will take in the next financial year to achieve it, and
(e) an assessment of its compliance with its duties under section [Great British Railways: financial duties].
(2) The Secretary of State must lay the annual statement before Parliament.
(3) The Office of Rail and Road must review Great British Railway’s performance as set out in the annual statement, and publish an assessment of whether Great British Railways is meeting its efficiency and revenue targets.
(4) Where the Office of Rail and Road concludes that Great British Railways has not met its duties under section [Great British Railways: financial duties], a Minister of the Crown must make a statement to each House of Parliament setting out—
(a) the reasons for Great British Railways’ failure to meet its duties, and
(b) any corrective action to be taken by—
(i) the Secretary of State, or
(ii) Great British Railways.”
This new clause requires Great British Railways to publish an annual statement on its financial performance, and for the Office of Rail and Road to assess that performance.
New clause 44—Great British Railways: savings target—
“(1) The Secretary of State must publish a savings target for each financial year for Great British Railways.
(2) The Secretary of State—
(a) must keep the target under review,
(b) may revise or replace the target, and
(c) must publish any revision or replacement to the target.
(3) Great British Railways must, when exercising its statutory functions, have regard to the target set by the Secretary of State under this section.”
This new clause requires the Secretary of State to set a savings target for Great British Railways.
Keir Mather
Clause 12 establishes a new funding process for GBR that takes what we have learnt from the successes of the periodic review process today and applies them to the new GBR world. That new funding period review will not only provide GBR with five years of funding to carry out its job of operating and maintaining the railway network, but will create a structure through which GBR will develop and own integrated business plans, across track and train, that reflect its role as the directing mind for the railways. That five-year funding certainty will help to drive the best price for Government and the taxpayer, through lower risk and the benefits of economy of scale. It will also generate consistent, longer term work for private partners in the rail supply chain, keeping good, well-paying specialist jobs alive and thriving.
Jerome Mayhew
Clause 12 is an enabling clause. It is very short and merely refers to schedule 2, so I make no representations to change it and shall not seek to divide the Committee on it.
Olly Glover (Didcot and Wantage) (LD)
I want to make a few remarks about the Conservative new clauses, on which we have mixed opinions. New clause 34 perhaps has some merit in terms of its intention to strengthen protections for the five-year funding review period process. My hon. Friend the Member for West Dorset will speak to our new clause 26 shortly.
We feel that some of the other Conservative new clauses have not necessarily been fully thought through or recognise the reality of how railways work. For example, new clause 40 seeks to end GBR’s reliance on taxpayer funding. Of course, in an ideal world we would love all public services to end their reliance on taxpayer funding—that would be paradise because we would not need taxation—but the reality is that extremely few railways in the world are entirely independent of taxpayer funding. We invest public money in railways because they are significant enablers of all sorts of economic and social benefit, so we have some concerns about new clause 40.
Some of the other Conservative new clauses have good intentions. For example, new clause 41 seeks to require the publication of data on financial performance. But it also seems to be over-fixated on GBR needing to reach a self-financing state, which seems somewhat unlikely.
I have said enough. I look forward to hearing the comments of the hon. Member for Broadland and Fakenham on his new clauses and of my hon. Friend the Member for West Dorset comment on ours.
Edward Morello (West Dorset) (LD)
I wish to speak briefly to new clause 26, which was tabled by my hon. Friend the Member for Didcot and Wantage. In simple terms, the new clause would ensure that Great British Railways’ funding is reviewed, published and scrutinised by Parliament halfway through each funding cycle, so that there is transparency and accountability on public money and it is spent effectively.
Any long-term rail strategy, particularly one that involves large sums of public money, must be open to proper scrutiny, regularly reviewed and accountable to Parliament. This is especially important as the Bill in its current form gives the Secretary of State a significant concentration of power over the future, shape, funding and direction of the railways. If Parliament is to be asked to confer that level of authority, accountability should increase alongside it. New clause 26 provides a sensible and proportionate mechanism to do exactly that without dragging Ministers or officials into day-to-day micromanagement.
As currently proposed, Great British Railways risks becoming the rail equivalent of NHS England—a fear raised previously in Committee—a large, centralised body distant from accountability and with blurred lines between ministerial direction and operational responsibility. Transparency is the safeguard to protect against ending up with another unaccountable arm’s length body.
The new clause would require a statutory funding review halfway through each five-year settlement. That review would set out, in clear figures, exactly how much funding GBR had been allocated, how much revenue had been raised from fares, and how much Government subsidy had been received. Crucially, it would also be sent directly to the Transport Committee, thereby ensuring proper parliamentary scrutiny. That matters because taxpayers are funding the railway twice: once through general taxation and again through ticket prices. Passengers and taxpayers alike deserve to know where their money is going, how it is balanced between subsidies and fares, and whether it is being spent evenly and effectively across the funding cycle, not just all at the start or at the end.
A mid-point review would also allow us to see what is working and what is not, particularly given that GBR will be a new organisation. It would give time to correct course when things are failing, and to continue or scale up when results are delivered. Above all, it is about hardwiring trust into the railway system, with clear information, published transparently and scrutinised by Parliament, with a focus on passengers. We believe new clause 26 would strengthen the Bill and hope the Government will give it due consideration.
Jerome Mayhew
Thank you, Mr Western, for allowing me a second bite at the cherry. I misdirected myself in dealing just with clause 12 in itself, rather than the new clauses in the group.
A forward view of funding certainty is key to stopping the stop-start approach to infrastructure funding. The Committee has received plenty of evidence from the industry—both in written evidence and in the oral evidence we heard on Tuesday last week—that this is a major concern. The date in schedule 2(1)(d) is therefore important, and needs to be a minimum of two years prior to the start of the next five-year funding period. That is because, given that we currently have five-year control periods, funding certainty decreases in the run-up to the end of one control period and the beginning of the other and, as a result, the amount of work undertaken and committed to by Network Rail decreases proportionately. We therefore get a wind-down of activity, with specialist staff being laid off by the supply industry, before it all grinds up a gear at the beginning of the next control period. We end up with a bell curve of activity.
We have heard strong evidence—I will read some out in a moment—about how that uncertainty disrupts the ability of the supply sector to service Network Rail and its infrastructure development plans efficiently. It does two pretty terrible things: first, it drives up costs for Network Rail and therefore for the taxpayer, and secondly, it means that less work gets done per pound. It is expensive and it takes longer.
In written evidence to the Transport Committee, the Rail Forum states:
“The Bill states in Schedule 2 Part 1 that the SoS can ‘vary the financial assistance’ previously agreed as part of the GBR five-yearly settlement during the five-year term. This flies in the face of providing the stability that the Transport Committee was seeking to address through the ‘Rail investment pipelines: ending boom and bust’ inquiry earlier this year. Re-opening of the settlement should only be allowed in very exceptional circumstances that should be explicit in the legislation.”
Why has the Minister moved away from the position that was previously articulated? Why is the sanctity of the funding settlement within a five-year control period—which has been, albeit imperfect, so valuable for the industry—actively removed by schedule 2? To put it another way, why is the Secretary of State being granted new powers to vary the financial settlement without notice?
The Rail Industry Association, which represents the supply sector for the railways, states:
“The railway, and rail supply businesses, need stable funding to be able to plan effectively and be efficient. Changes to the Control Period style five-year infrastructure funding settlement (Schedule 2) undermine this and amplify the uncertainty already faced by suppliers.
RIA and our members are very concerned the current Bill drafting allows the Secretary of State for Transport to remove railway funding mid-period, at no notice and with very limited transparency over the impact, for example, on safety, performance or efficiency.
We disagree with the principle that the Secretary of State should be able to remove funding mid-period. Stable multi-year funding settlements are a longstanding principle for infrastructure networks because short-notice funding changes reduce the efficiency of spending and make it harder for suppliers to plan ahead with any confidence.
Supply chain confidence in the UK rail market is already historically low with 64% believing the rail market will contract in 2026 and 62% freezing recruitment or reducing headcount (over one in three business leaders plan to lay off staff in 2026), according to a RIA-commissioned Savanta survey of rail business leaders.
There is…currently already a lack of full work visibility to the end of the current Control Period, which completes in March 2029, and companies are now repositioning themselves away from rail to target other industrial sectors in the UK and overseas rail markets—the ability for the Secretary of State to remove funding would clearly exacerbate this situation…Concerningly, even on its own terms Schedule 2 does not require transparency over the impacts on efficiency, performance and safety if there are changes within a funding period and longer-term.”
Mr Western, you cannot tell me you agree that that is a very troubling statement from the industry, but I am sure you do agree, or are likely to. The difficulties with the current system are only going to be exacerbated by the proposed changes under schedule 2.
The statement of funds will indicate what the Secretary of State
“reasonably considers may be…available”.
That gives no certainty of funding, which is a key concern of the sector. It would be a backward step from the status quo. Paragraph 4(3)(c) of schedule 2 contains no focus on minimising the cost for the taxpayer, but merely refers to
“how Great British Railways proposes to meet those costs.”
Paragraph 4(5)(b) refers only to “good value for money” and not to good value for money for the taxpayer.
Under paragraph 4(7)(a), regarding the business plan, Great British Railways could retain a huge amount of information from potential open access operators, thereby preventing a level playing field.
Finally, paragraph 7(3) removes the whole point of funding periods, which is to provide funding certainty for five years. On its own, that provision removes that funding certainty—which is obviously a backward step. The RIA has stated:
“The railway has benefited from 5-year funding settlements for infrastructure for over 30 years, but the legislation proposes that the Transport Secretary will be able to reopen these at any time without consultation. Any deviation from 5-year funding stability risks increased future costs for taxpayers and a deteriorating experience for passengers.”
Laurence Turner (Birmingham Northfield) (Lab)
I appreciate what the hon. Gentleman is saying, but we have to consider the new clauses before us as drafted. Does he accept that almost no railways in the world run without subsidy on a net basis and that, where they do, there are unique geographical circumstances? The railways in Great Britain have operated with subsidies under all models since the early 1950s, and the effect of the hon. Gentleman’s new clauses, if they were to be implemented as written, would be Beeching on steroids.
Jerome Mayhew
I agreed with the hon. Gentleman until that last sentence, because new clause 40, which I will come to in a moment, would require not the removal of subsidy but looking towards it—it is aspirational. It would set GBR’s sights on minimising its costs to the taxpayer, not through penny pinching if that would be the wrong decision, but through growth in its revenue by becoming efficient and doing more for less. Those are all good incentives that a private business inevitably has because of the challenge of competition.
New clause 39 would require Great British Railways to focus on other opportunities for funding and on minimising operational costs, just like any other business. The areas of focus under subsection (7) are the revenue opportunities.
New clause 40, on non-reliance on taxpayer funding, would make the direction of travel for GBR clearer. It may be—in fact it is almost certain—that it will never achieve it, but it is a noble objective. It should be clear that GBR should aspire to reduce the need for the taxpayer to support the rail sector by making it as efficient and attractive to passengers as possible, thereby attracting more passengers and freight on to the railways. That would create a virtuous circle, rather than the opposite. We should start thinking about that, which is what new clause 40 is intended to achieve.
New clause 41, also tabled in my name, would require Great British Railways to publish an annual statement of its financial performance. The new clause builds on the theme, forcing Great British Railways to focus on its financial performance and reduce its reliance on the taxpayer. It may be the skimmed-milk version of new clause 40 that the hon. Member for Birmingham Northfield might find more palatable.
It is important that we do everything we can to design into a nationalised structure, where there is no competitive tension, incentives for GBR naturally to seek to achieve efficiency and productivity enhancements. There is a very real need for that, because the taxpayer’s pound can only be spent once, and funds are needed in many areas of Government. Apart from anything else, we need to reduce the tax burden, which this Government have raised to the highest on record, so anything we can do to build a structure that incentivises GBR to reduce its dependence on the taxpayer is a good thing. It also forces public accountability.
Finally, new clause 44 would require the Secretary of State to give GBR an annual savings target. Taking all the new clauses together, the intention is to allow GBR to focus on providing genuine value for money for the taxpayer, not just in abstract terms, and to cut away some of the existing inefficiencies in the infrastructure commissioning and decommissioning process, to provide a longer period of certainty for the supply chain so that it can pass on the resultant efficiencies to the taxpayer. That money can be either reinvested in accelerated infrastructure roll-out, rather like the ability of ScotRail electrification to do more for less, or—heaven forbid—used to produce tax cuts for the hard-pressed taxpayer. I hope the Minister will be bowled over by those suggestions, and look forward to hearing his response.
Rebecca Smith (South West Devon) (Con)
It is an honour to speak with you in the Chair, Mr Western. I will touch on three of the new clauses—one at greater length than the others—to follow up on the words of my hon. Friend.
For me, new clause 39 highlights something that is clearly missing from the Bill: what actually happens when these currently franchised, privately run rail services come into public ownership across the board. Over many years, unions have fought hard for terms and conditions for staff and railway companies, but these are not uniform across the board. There is a huge differential in the terms and conditions that staff are subject to.
I pay huge tribute to the men and women who work on the railway; they are a brilliant group of people. I am obviously on a train every week, coming up and down from my constituency. However, it is really important that we have this conversation about what the Bill will actually mean. As my hon. Friend pointed out, value for money is mentioned only once in the Bill. We are, in effect, writing a blank check for GBR to spend whatever it wants on bringing all these staff into its employment.
We were told very clearly when the Committee began that this is not a civil service; it is the public sector, so there is a difference there, but it is effectively a private body as well. I would be interested to hear the Minister’s comments about how staff are being brought across—obviously some franchises have been brought into Government control already—and about the Department’s plans going forward, because time and again, we see pay going up for public sector workers without that necessarily reflecting any changes in performance.
Laurence Turner
The 1992 White Paper that preceded the Railways Act 1993 said that, at the time, British Rail had the second highest workforce productivity of any railway in Europe. What does the hon. Member think went wrong in all the years under privatisation that followed?
Rebecca Smith
That is a very long time ago. Under privatisation, the unions have done a very good job. In my constituency in the south-west, there are no seven-day contracts, for example. If I want to get a train up from my constituency on a Sunday, those trains are cancelled quite regularly, because the service relies on the good will of the staff to do overtime to make the train even come up to London.
Whatever we do, we need to look carefully at the terms and conditions that will be brought forward into this new public body. Up to this point, it has been down to each individual company to negotiate. That has been done with highly professional and competent union representatives, but we are not on a level playing field at the moment. As a member of the public, I want to be sure that those public sector staff are not receiving undue recompense for what they are doing, which would not be in accordance with other public sector bodies.
Private companies have been expected to give their staff a huge amount of benefits—quite rightly; that is their choice as private companies. If the staff become public sector, things like free rail travel need to be on the table. We must at least acknowledge those issues and make a decision to continue them, rather than assuming it is a given, which is down to unions to negotiate.
There is no conversation in the Bill about that TUPE-ing across of staff members. Value for money is really important. We do not want inequality being built into our public sector workforces simply because we are renationalising something.
Subsection (7) of new clause 39 provides that we should be showing where revenue comes from. That is absolutely justifiable. The private companies that will continue to operate in the railway system will have all that information available to their shareholders—to the people they are reporting to. If Great British Railways does not show that information, there is, again, no opportunity for scrutiny. If commercial retail income is flopping because GBR is not doing a very good job, we have no way to hold it to account for that. I do not see why it should be frightened to share that revenue information. It should instead see this as an opportunity to show good practice and how things could potentially progress under GBR.
I have one more point, which came up right at the end of the Select Committee hearing—I managed a question to the Minister, Lord Hendy, but have not seen a response. There is a huge amount of land and value that belongs to these railway stations, currently run by private companies, in some cases, including for things such as parking. What happens with all that income and all the opportunities for Great British Railways to potentially make some money? How will we know about that money and where it is coming from? New clause 39 seeks to bring that information to the fore and ensure that it is transparent and in the public domain.
Turning to new clause 40—this might be something of a segue, but I am going take the opportunity to put it on the record anyway—there is something about the aspiration to move from heavy taxpayer-funded reliance that speaks to the devolution conversation that we have been having. We have had multiple conversations, and I am sure we will have more, but ultimately GBR is being set up to give more powers to certain local authorities and local areas if they wish it, which is great—we want those communities to be able to control more of what happens. However, as we have been discussing, we are effectively developing a two-tier system, whereby anyone who is not in a mayoral authority will effectively be paying into the railway company and GBR, but not necessarily getting the levers to effect change locally. The Minister has reassured me that that will be done through business units and so on, but given that we do not know the scale of those business units or which regions and communities they represent, it is important that we know how that taxpayer money is to be used for funding across the country.
There has been a huge amount of storm damage in the south-west this weekend. Where will the funding come from under the new GBR? The south-west is not a mayoral strategic authority. Will we get our fair share of funding through the set-up for GBR? New clause 40 sets out the aspiration to move away from taxpayer funding and would surely create a more equitable system for the future.
Finally, new clause 44 would introduce a savings target. My hon. Friend the Member for Broadland and Fakenham has been alluding to the point about the costs we currently see in the system, particularly around infrastructure. That has certainly come up in the Transport Committee, in terms of how much it costs to build a bridge or a new station and the lack of competition and challenge. The new clause would create an opportunity to ensure that we pay as little as possible for the best outcomes. We have had lots of evidence in the past few months to show that other parts of the world can produce the station infrastructure that we need for a lot less than we are paying for it. I believe that is down to how the system currently works, and new clause 44 would force us to look at how it could work under GBR.
Keir Mather
I thank Members for tabling amendments on GBR’s funding and financial framework. In this chunky group of important amendments and new clauses, I first turn to new clause 26, tabled by the hon. Member for Didcot and Wantage, which would require the Secretary of State for Transport to publish a mid-funding period review of GBR’s funding, and new clause 41 from the shadow Minister, which seeks to create a GBR annual statement of financial performance.
In my view, the Bill already creates sufficient transparency about how GBR is funded. Further process could constitute unnecessary bureaucracy. Under paragraph 7(2) of schedule 2, the Secretary of State is already required to publish details of the financial assistance given to GBR using the funding period review funding power. Under paragraph 5 of schedule 2, GBR must publish its business plan and keep it up to date throughout the five-year period. Between those two commitments, the Transport Committee of the House of Commons will already have key information about how much funding the Secretary of State is providing to GBR, and the details on GBR’s business plan to understand what GBR is doing with its money. It would be unnecessary and inefficient to conduct an extra review.
New clause 34 would require the Secretary of State to set funding two years in advance of the funding period. First, I believe that it is misplaced to require that funding be committed two years in advance. There will inevitably be changes to economic circumstances over a five-year period, and new projects will surface. That was well acknowledged by all the witnesses at the oral evidence sessions, including those representing the railways supply chain. If there is no practical discretion, a settlement agreed two years in advance will be redundant before it even starts.
I can also assure the hon. Member for Broadland and Fakenham that the Bill already accounts for the need to provide the railways with certainty, and ensures that the funding process completes before the start of the next five-year funding period. The ORR, which will run the process, intends to set deadlines so that funding is committed in time for the industry to prepare. Secondly as with new clause 26, new clause 34 seeks to introduce additional reporting requirements that are unnecessary, given the transparency requirements already provided for in the Bill.
I now turn to new clauses 39 and 40. New clause 39 would create a duty for GBR to achieve value for money and long-term fiscal sustainability. New clause 40 would require GBR to develop a transition plan toward ending any reliance on taxpayer funding within its first operational funding period. I agree with the hon. Member for Broadland and Fakenham that GBR must deliver as efficiently as it can, ensuring good value for money and reducing costs to the taxpayer, and I assure him that the Bill is already very specific about GBR’s achieving value for money. Clause 18(2)(f) includes a specific legal duty on GBR and the Secretary of State to take into account
“the costs that will need to be met from public funds and the need to make efficient use of those funds”.
The ORR must also provide advice to the Secretary of State on whether GBR’s estimated costs in GBR’s draft business plan represent good value for money, with a requirement to publish a summary of that advice as part of the funding process. That is before the Secretary of State signs off on the business plan. Therefore, the hon. Member’s intent is already achieved by the Bill, and the amendment would only create extra bureaucracy and inflexibility without adding to transparency or financial sustainability.
A statutory transition plan to eliminate taxpayer funding would be unrealistic, and would undermine the railway’s ability to achieve its social goals. The reality is that taxpayer subsidy will always be needed for some parts of the railway. For example, while we aim to have the most profitable and efficient network possible, there will always be some lower-population regions of the UK in which rail travel will not make a profit and will need taxpayer subsidy. Clearly, it would not be appropriate for the Government to withdraw funding and neglect connectivity in those important rural regions, whether that be in Devon, Dorset or elsewhere—constituencies represented by Members across the Committee. Rapidly forcing GBR to operate without public support would be devastating for the economy and for the mobility of the public, not to mention reducing efficiency and the long-term capacity of the network.
Finally, new clause 44 would require the Secretary of State to set and publish an annual savings target for GBR. Introducing a statutory savings target risks creating a rigid measure that might not reflect the operational realities of the railway. Efficiency is already embedded in the Bill’s framework and will be a key consideration when GBR publishes its business plan and sets out how to meet its objectives, including on efficiency. Statutory targets are therefore not required to drive performance.
Edward Argar (Melton and Syston) (Con)
In the context of efficiency and cost, I want briefly to pick up on a point made by my hon. Friend the Member for South West Devon. What assessment have the Government made of the financial cost of bringing together a whole range of diverse terms and conditions and salary structures, from multiple train operating companies, into GBR?
Keir Mather
When it comes to setting up the operational structure of GBR, including questions about workforce and staffing, it is fair to say that no piece of railway legislation for 113 years has specified in statute what the operational decisions will be. Those conversations are ongoing, as they have been while rail companies have been taken into public ownership through DfT Operator, and they are always held, I am pleased to say, in close consultation with the workforce and trade unions.
On the overall principle of cost, I would point out to the right hon. Member that the Department’s view is that establishing GBR is set to cost £200 million to £400 million overall—which is 1% to 2% of a single year of operating budget—but could unlock up to a billion pounds-worth of efficiencies across the rail sector. Value for money is not only baked into the legal duties under this legislation, but is part of GBR’s operational ethos.
Laurence Turner
I again draw the Committee’s attention to the fact that I am a member of Unite the union. Does the Minister agree that changes to terms and conditions, if they happen at all, often take place on a very long-term transitionary basis? Indeed, that is my understanding of what happened the last time that the railways came under public ownership, when many people remained under pre-1948 terms and conditions for several decades. I would not wish to make assumptions or pre-judge future discussions, but can he confirm that nothing in the Bill would prevent similar transition arrangements in future?
Keir Mather
As my hon. Friend rightly highlights, questions about the operational structure of GBR have been left outside the framework of this Bill. That is precisely to allow those conversations to continue and so that the legislation can be fit for the creation of a railway system that works for the long term.
I thank hon. Members for their contributions, but would encourage them not to press their amendments.
Question put and agreed to.
Clause 12 accordingly ordered to stand part of the Bill.
The Chair
I remind Members that decisions on new clauses are usually taken after decisions on existing clauses and schedules, even though we may have just debated them—one for a future day.
Schedule 2
Funding Great British Railways
Jerome Mayhew
I beg to move amendment 119, in schedule 2, page 60, line 2, at end insert—
“(1A) The date specified in section 1(d) must be at least 24 months before the start of the funding period.”
This amendment would ensure the Secretary of State has to notify the ORR and GBR of the amount of financial assistance for the next funding period at least two years before that funding period is due to start.
The Chair
With this it will be convenient to discuss the following:
Amendment 216, in schedule 2, page 60, line 39, leave out sub-paragraph (3) and insert—
“(3) The objectives set out under sub-paragraph (1)(a) must include objectives relating to passenger rail services.
(3A) The objectives set out under sub-paragraph (1)(a) may include, in particular, objectives relating to—
(a) the carriage of passengers or goods, save as already provided for under sub-paragraph (3);
(b) the railway network or railway assets (including objectives relating to the provision of the railway network or railway assets after the end of the funding period);
(c) fares;
(d) the accessibility of railway services to people with disabilities;
(e) the protection of persons from dangers arising from the operation of railways.”
This amendment would align funding of designated passenger train services with the five-year funding cycle for infrastructure.
Amendment 129, in schedule 2, page 63, line 26, at end insert—
“(6A) The Secretary of State may not, however, vary the financial assistance provided to Great British Railways”
This amendment would prevent the Secretary of State from varying the financial assistance provided to GBR.
Amendment 147, in schedule 2, page 64, line 1, leave out sub-paragraph (3) and insert—
“(3) The Secretary of State may not vary the financial assistance to be provided under paragraph 6 unless—
(a) the Secretary of State has consulted the Office of Rail and Road on the propsed variation, and
(b) the Office of Rail and Road provides written consent that the variation does not undermine the approved business plan required by paragraph 4.”
Amendment 215, in schedule 2, page 69, line 25, at end insert “including passenger services”.
This amendment, along with Amendment 216, would align funding of designated passenger train services with the five-year funding cycle for infrastructure.
Jerome Mayhew
Our amendments in this group develop the theme that I spoke about in the debate on the last group. We have tabled two small probing amendments to challenge the stop-start nature of funding under the current control period. Amendment 119 would insert the following new paragraph (1A) into schedule 2:
“The date specified in section 1(d)”—
which, to paraphrase, refers to the funding agreement for a control period—
“must be at least 24 months before the start of the funding period.”
Amendment 129 would insert the following new subparagraph (6A):
“The Secretary of State may not, however, vary the financial assistance provided to Great British Railways”.
Olly Glover
May I correct an earlier omission, Mr Western, by stating that it is a pleasure to serve under your chairship?
First, I want to make some general comments about this part of the Bill, which appears to be based largely on the existing five-year control period framework for rail industry planning and funding. Overall, that is a system that has been felt by the sector to work reasonably well. I had intended not to bore the Committee too much with war stories from my own time on the railway, but perhaps the only drawback of the system is that there tends to be an enormous consultant bonanza halfway through each control period, when the planning starts for the next one even while some of the plans and good intentions of the current control period gather dust on a shelf without necessarily being reviewed. That applies not so much to infrastructure enhancement, but more to process improvements for making the railway better.
First, I will say a little about our amendment 147, and then I want to speak, at perhaps rather more length than usual, about amendments 216 and 215. If there is one hill that I would be willing to perish on when it comes to this Bill and its design, it is probably the decision to not include funding for passenger services as part of the five-year funding settlement.
Our amendment 147 is basically intended to support what the Government are planning to do on five-year funding settlements, but to strengthen and protect them by simply creating a mechanism for the Secretary of State to reopen their funding should a major eventuality arise. The examples that the hon. Member for Broadland and Fakenham gave are pertinent; it is a bit of an extreme example, and hopefully we will not be there, but I think it would be reasonable to review the five-year funding of the railway in case of the outbreak of war. Our amendment would not stop the Secretary of State doing that; all it would do is require them to consult the ORR and make sure that the ORR gives written consent. It is a simple step to provide that little bit of extra governance and peer review.
I agree with the hon. Member’s comments on the shortcomings of his own amendment 129 in this area. I admire his honesty and the reflective nature of those comments—that is commendable, and something to which we can all aspire. Compared with his amendment, which would prevent variations entirely, perhaps ours is a compromise. I agree with his amendment 119, which shows good intention to make sure that the planning and funding happens in advance of the next five-year period.
Before I talk about our amendments 216 and 215, which I really do feel are critical, I want to read a couple of extracts from the policy paper on how the Government plan to fund GBR, which was published on 5 November 2025 as part of the series of factsheets on the Bill, because it will set the context for what I am about to say. The first thing that the factsheet explains is how passenger services—now known as train services—are currently funded. It states that passenger services
“run by government contracted train operating companies, such as Thameslink, are funded differently to”
Network Rail. It continues:
“The overall money available for passenger services is set at the Spending Review and then allocated via an annual business planning and funding process. Train operating companies also receive money from other sources, such as ticket fares. The train operating companies set out what they intend to deliver in annual business plans, then they seek approval from government. When approved, the contents of these plans are reflected in service agreements with the government.”
That is what the factsheet says about how things work today. It goes on to explain how things will work in future and in relation to the five-year funding review periods for other things. It states:
“Given the greater uncertainty of passenger services spend and income, due to changes in passenger demand which are difficult to predict, Passenger services will not be included within this commitment at this point. Passenger services and other activities outside of infrastructure operations, maintenance and renewal will be funded using existing powers, which will be updated to account for GBR. As these powers already work well in allowing the government to provide transparent and flexible funding to the railway industry, we have decided to keep them and continue to use the Spending Review for these aspects of GBR funding.”
Why does this matter? My real issue with the exclusion of funding for passenger services from the five-year funding review periods, and the failure to align it with infrastructure funding, is what the Rail Minister in the other place, the noble Lord Hendy, says about the objectives of the Bill. He has said it on the record on many occasions, including in front of the Transport Committee and when speaking at the Rail Industry Association reception a couple of weeks ago. He says that one of the key aims of the Bill is to properly enable the alignment of track and train—of infrastructure and train operations. He is absolutely right about that; I agree with him very much. Having worked on both sides of the fence, for Network Rail and for train operating companies, I have seen the endless misaligned objectives, budgets and ways of working and can say that he is absolutely right in his diagnosis and his prescription. However, the omission of passenger services from the five-year funding period runs the risk of undermining that. Let me explain why.
The key issue is that critical elements of the running of the railway are included in passenger services funding. Those include staffing on stations, in rolling stock maintenance depots and, critically, of train crew—drivers, guards, conductors and so on—as well as train crew training, which for many train operators has been a complete mess since the pandemic. Often, the temptation is to paint those train operators as evil private sector ogres and figures of terror from whatever fantasy franchise one wishes to quote, but in reality, since the pandemic, they have been subject to very tightly prescribed contracts by the Department for Transport, and that has led to some very poor short-term decisions about train crew training that have, at times, led to serious service cuts. We are thankfully recovering from some of that, but not wholly: for example, CrossCountry is still running at a significantly lower level than before the pandemic.
There is also the key question of the impact on Network Rail delays. A figure is often cited by those who like to bash Network Rail—having worked there, I know that there are plenty of reasons for doing so, but this one is a bit spurious—that 60% of delays are caused by Network Rail and only 40% by the train operators. Therefore, they say, aren’t the train operators wonderful and isn’t Network Rail terrible? The problem is that, partly because of the way that train crew operations and train operators are funded, a lot of the delays counted in that 60% are fundamentally train operator delays—delays that they have the most ability to influence.
Very sadly, from time to time, people commit suicide on our rail network. That is of course terrible. It initially causes very significant delay and passengers are generally sympathetic to that. Generally speaking, the benchmark for clearing and reopening the line in a way that is safe for everyone, having done the scene of crime investigation and so on, is 60 to 90 minutes. Passengers are understanding of that. They are not understanding when 12 hours later the service is still in complete meltdown because the trains are in one place, the drivers are in another and the guards are in yet another.
A few months ago I was travelling from Didcot to Cambridge via London, because we still do not have East West Rail—maybe one day we will, but that is one for another time—and many hours after a fatality between Reading and London, Reading was a trainpark. Every platform was strewn with Great Western inter-city trains or commuter trains, because its train crew and rolling stock diagrams are so complicated that it is not able to recover during disruption. That has happened partly because there is not a whole-system focus on the alignment between infrastructure funding and train crew and train operations funding.
There has been a lot of pressure, through the franchising process, to cut back on train crew costs, and therefore to diagram—forgive the jargon; I am trying to avoid using it. Diagrams are the daily allocations of instructions as to which trains drivers, guards and others work on. The way to reduce train crew costs, particularly given that there have been above-inflation pay increases, is to tighten those diagrams and squeeze every bit of productivity out of them. When the train service is working normally, it is fine if the train does one thing, the guard does another and the driver yet another.
Edward Argar
The hon. Gentleman is making a very good point, in the context of infrastructure and operating companies coming together—although it also applies more broadly—about the tightness of those diagrams and that scheduling. On East Midlands Railway, although normally the trains are short-formed, we regularly see a 10-car train that is packed in the front five carriages because the back five have to be locked, completely empty, and travel to London with no one sitting in them because there is not a member of staff to staff them. That is because the diagrams are so tight that there is no contingency to put extra staffing in place at short notice when someone does not turn up.
Olly Glover
The right hon. Gentleman gives another good illustration of the problem, and of the foolishness of our current obsession with ordering five-coach inter-city trains, which no other serious western European country does. So often, they are either short-formed as five coaches or the other half is unavailable—or even, when it is available, no one knows, because they cannot walk all the way through and access the other half of the train. We should not be doing that anyway, but he makes a very good point.
There are many other examples of what I am talking about, but I hope that underlines why I really do think that amendments 216 and 215 are critical, and why the objectives in schedule 2 should include passenger rail services, which should be subject to the five-year funding period so that they are not subject to the short-term whims of the Treasury—dare I say that it has any influence on this—and so that the fulfilment of the Bill’s key objective of properly integrating track and train is fully enabled. We will press amendments 215, 216 and 147 to Divisions. I look forward to the Minister’s comments.
Edward Morello
As always when following my hon. Friend, I find myself with little to add. All of the very good points have been made, but it is probably worth reinforcing why we think amendments 216, 147 and 215 are important.
Amendments 216 and 215 speak to an absurd anomaly. I am probably unusual in this Committee in that I am not a rail expert—far from it—but the absurdity of not having aligned funding cycles for passenger and infrastructure strikes any outsider as madness. As somebody who regularly travels on the Salisbury to Exeter line, which is in need of electrification and new rolling stock, I ask any Minister who is responsible to tell me when the operator should make a decision on whether to buy new rolling stock, when they do not know whether electrification is going to happen. Do they wait for the electrification and then buy the rolling stock, having just spent all this money extending the life of diesel carriages? Having the two interoperable is just common sense. I would hope that making the two funding cycles run simultaneously would be a non-contentious idea.
On amendment 147, my hon. Friend the Member for Didcot and Wantage gave the example of the outbreak of war, which is definitely an extreme one, but we must also insulate any piece of legislation against future politicians—Ministers—wanting to meddle and perhaps not adhering to the desire that it was designed around. The amendment is intended to make sure that Ministers, whether in the Department for Transport or the Treasury, cannot rip the funding carpet out from under the rail operators. If the Bill really is about long-term planning, then there has to be long-term security of funding as well, and amendment 147 is about making sure that there is an additional safety net should any future Government, of any make-up, not want to adhere to the spirit of the Bill. For those reasons, I hope the Government will give consideration to our amendments.
Keir Mather
I thank the hon. Member for Broadland and Fakenham for tabling amendment 119, which would require the Government to commit funding for a five-year funding period at least two years before the period starts. I can appreciate and identify with his desire to provide certainty to industry, and agree with the ambition that the amendment presents to generate a stable operating environment for the railway. However, as I said in response to new clause 34, I believe that the desire to require funding to be committed so far in advance is misplaced. There will inevitably be changes to economic circumstances and new projects will surface. If there is no practical discretion, a settlement agreed two years in advance may be redundant before it starts.
I can assure the hon. Member that the Bill already accounts for the need to provide the railway with certainty and ensures that the funding process completes before the start of the next five-year funding period.
Jerome Mayhew
I heard what the Minister said, but it flies in the face of the evidence that the industry itself gives him and all of us about the need for certainty towards the end of a control period. All that the amendment seeks is certainty for two years at the start of a control period. How is he going to address that particular issue?
Keir Mather
It is of course our obligation as the Government to meet the concerns of stakeholders, whether raised in the oral evidence session or elsewhere. It is also incumbent on me to point out that we want to abolish boom and bust in the rail system. On the fear about cliff edges, as was acknowledged by the ORR in its oral evidence, in reality there is not a cliff edge when funding always tends to run over the five-year period. Five years is the basis for the decision process by which funding allocations must take place. It is important to take the oral evidence in the round. It is also important to note that the ORR, which will be running the process, intends to set deadlines so that funding is committed with time for the industry to prepare. The amendment is therefore unnecessary.
Amendments 129 and 147 both seek to prevent or restrict the Secretary of State’s ability to vary the agreed funding settlement. I assure Members that the intention of providing a five-year funding commitment is that it lasts for five years. The Government are signed up to that principle. I also agree that certainty for GBR and industry is beneficial. More funding will mean we can get the best out of the railway and encourage investment, innovation and value for money.
Putting a hard restriction on all change, as amendment 129 suggests, would not be proportionate, as the shadow Minister acknowledged. As he noted, there may be unforeseen circumstances that require changes to funding, either to provide more or to reduce the amount. For example, GBR may outperform expectations and need less than is awarded, in which case Ministers will need to recoup the costs for the taxpayer, and can choose to do so in whatever way they see fit.
Keir Mather
Indeed! The operating environment may also change and GBR may need more funding than is committed. It is right that elected Ministers are able to make decisions on public spending and allocate resources as needed, balanced against the clear benefits of certainty.
Amendment 147 would restrict Ministers’ ability to vary funding by adding a requirement that the ORR must provide written consent. Although the Office of Rail and Road will have an important advisory role, it would not be appropriate for it to entirely determine changes to funding. Responsibility for decisions of public expenditure must remain with the Secretary of State, particularly where changes may be required due to wider fiscal circumstances. The amendment would also result in ORR consent being needed for increases in funding and immaterial changes.
The Bill provides assurances. If the Secretary of State considers that the impact of a funding reduction could be material, the Bill requires her to notify the ORR, giving it an opportunity to comment publicly on the likely effects on the railway. That balances the need for the Government to retain control over Government funding with the opportunity for independent evaluation and, if needed, public pressure, to protect certainty for the railway.
On amendments 215 and 216, I thank the hon. Member for Didcot and Wantage for so ably setting out, based on his practical experience, and far better than I ever could, the need for a single guiding mind for the railway. His explanation was buttressed by the right hon. Member for Melton and Syston. I thank the hon. Member for Didcot and Wantage for his amendments, which seek to align passenger service funding within the five-year infrastructure funding cycle. I support that intention. The Government agree that many benefits are derived from integrated funding streams. However, I do not agree that the amendments are necessary.
It is important to note that passenger services are already fully considered under GBR’s statutory duties and through the integrated business plan, in which GBR will plan all its activities on a five-year basis across track and train. The Bill requires GBR to deliver safe, reliable and efficient services, taking passenger needs into account.
Jerome Mayhew
GBR may plan on a five year basis, but it is not the same five years, is it?
Keir Mather
The shadow Minister is right to point out that allocation of funding for passenger services, as opposed to other GBR activities, initially takes place through the spending review funding process. I am about to address his point, but I should say that the Bill contains the ability for Ministers to extend the five-year funding process to passenger services once GBR is set up and prepared to manage that. It would not be responsible to do that from the outset when GBR is still in the transition and set-up phase. Ministers need to feel confident that GBR is financially mature enough before they can consider integrating funding further. I hope that addresses both the shadow Minister’s point and the contribution from the hon. Member for Didcot and Wantage.
Olly Glover
I understand what the Minister is saying, but I am sure that in his line of work he has already encountered many instances where, despite noble intentions for something to perhaps happen at some point in the future, it ends up being years, if not decades, before it does. That is why it would be rather more sensible to enshrine the requirement in legislation.
Keir Mather
Respectfully, I believe it is more sensible to be prudent and cautious regarding the funding of passenger services, rather than risk creating a situation that a newly created GBR might not be in an immediate position to sufficiently accommodate within its operating structure. Erring on the side of caution, I encourage Members to withdraw their amendments.
Jerome Mayhew
As I intimated earlier, amendments 119 and 129 are probing and I will not press them to a vote.
I was interested to hear the Minister’s apparent position that there is no boom and bust, that the current situation for infrastructure funding is fine and that the evidence from the industry appears not to be—
Keir Mather
For the record, I said that we shared the aspiration to abolish boom and bust as it exists within the rail system. That applies to our infrastructure as much as it does to any other part of the railway’s operation.
Jerome Mayhew
I am grateful for that clarification, but although the Minister may share that ambition, he is not choosing to do anything about it. Having said that, I said I was not going to press the amendments to a vote and I will not. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Jerome Mayhew
I beg to move amendment 120, in schedule 2, page 60, line 36, leave out “may” and insert “must”.
This amendment would require the statement of objectives to contain standards to be achieved when carrying on activities in relation to railways and railway services.
The Chair
With this it will be convenient to discuss the following:
Amendment 121, in schedule 2, page 60, line 39, leave out “may” and insert “must”.
This amendment would require the Secretary of State’s statement of objectives to include objectives relating to the list in sub-paragraph (3).
Amendment 122, in schedule 2, page 60, line 41, after “(a)” insert “increasing”.
This amendment would require the Secretary of State to set the objective for GBR of increasing passenger and freight journeys.
Amendment 123, in schedule 2, page 61, line 7, at end insert—
“(f) delivering improved productivity and efficiencies.”
This amendment would require the Secretary of State’s statement of objectives to include an objective of delivering improved productivity and efficiencies.
Amendment 206, in schedule 2, page 61, line 7, at end insert—
“(f) customer experience and satisfaction.”
This amendment expands the objectives the Secretary of State sets for railways funding settlements to include customer experience and satisfaction.
Jerome Mayhew
Amendments 120 to 123 aim to strengthen GBR’s value for money and wider performance duties. As drafted, paragraph 2(2) in schedule 2 only gives the Secretary of State the option of tying performance objectives to granting public funds. The performance objectives should be at the core of the granting of funds, so amendments 120 and 121 seek to change the wording of the current drafting by replacing “may” with “must”. In other words, they would make it clear that it is not an option but core to the application of the process, and should therefore be mandatory.
Amendment 122 would make it clear that Great British Railways should aim to increase passenger services. I do not know why this has become such a hot topic; I would have thought it would be obvious—I was about to use unparliamentary language for a moment there. Increasing passenger services should obviously form part of the functions and aspirations of GBR, and that should be included on the face of the Bill. It should be clear that GBR aims to increase passenger services, not just freight. In addition, the list of objectives in the schedule is missing a specific objective on productivities or efficiency, which amendment 123 would add.
This series of simple amendments seek to perfect the currently imperfect drafting, to put performance at the heart of the Bill and to recognise that the pursuit of increased passenger numbers should be a key objective of GBR, in addition to its focus on growing rail freight, which we all agree with.
Edward Morello
I wish to speak briefly to amendment 206, which was tabled by my hon. Friend the Member for Didcot and Wantage. The amendment goes to the heart of what we Liberal Democrats believe the Bill should be about: putting passengers first. It would expand the objectives that the Secretary of State sets for the rail funding settlement to include customer experience and satisfaction explicitly. In other words, it would ensure that when decisions are made about money, priorities and trade-offs, the people who actually use the railways are not an afterthought.
Making customer satisfaction central to GBR would help to rebuild trust in the railways, which many people currently feel have stopped working for them. If we are serious about encouraging people to shift away from the convenience of cars and toward more sustainable public transport, customer experience has to be central. People will not make the switch because they are told to; they will do so because trains are easier, more comfortable and more reliable.
The creation of customer satisfaction targets and objectives that are tied to rail funding settlements will create the incentives for change. It will make it more likely that investment decisions will focus on what actually improves journeys for passengers, rather than just on what is cheapest in the short term. It will find the balance between what is affordable and what is best for users.
Keir Mather
I thank the shadow Minister and the hon. Member for West Dorset for their amendments, all of which look to amend the Secretary of State’s statement of objectives.
First, amendment 120 would require that the statement of objectives contains standards for GBR to meet when conducting its railway activities. I agree that we need to measure GBR’s performance against clear standards to ensure high-quality delivery. However, the statement of objectives, which is a document to set direction and inform the funding process, is not enforceable, and consequently it is not the right place to require standards.
The original drafting provides flexibility, letting the Secretary of State specify what standards should be achieved by GBR when delivering against the objectives in the statement. This allows for circumstances in which providing a standard helps to better articulate the strategic vision for GBR over the five-year funding period.
However, it may not always be appropriate for an objective in the statement of objectives to be accompanied by a standard, particularly when an objective is straightforward or high level, such as a requirement to have regard for security threats or to support economic growth. The Bill contains other mechanisms, including the business plan and the licence, to ensure that there are robust and enforceable measures against which to hold GBR to account.
There is a similar case to be made on amendment 121, which seeks to set a structure for the statement of objectives, and amendment 123, which proposes to expand the list of potential objectives to include a section on productivity and efficiencies. The amendments would change the list from illustrative objectives to a set of requirements. It would fundamentally not be appropriate to impose such a structure on the statement of objectives, which needs to be able to take a different approach each time it is made, in response to wider environmental concerns and socioeconomic circumstances. The intention is that the list serves as a guide to future drafters, and I believe that the flexibility to allow adaptation to circumstances that we cannot predict will ensure that this legislation remains fit for purpose into the future.
Joe Robertson (Isle of Wight East) (Con)
I understand, although I do not agree with, the argument the Minister is making on amending “may” to “must”—he says it would be unenforceable—but he seems, unless I have misunderstood, to have conflated that argument with his point about amendment 122, which seeks not to make a discretionary provision a mandatory one but to expand the considerations. The explanatory statement says:
“This amendment would require the Secretary of State to set the objective for…increasing passenger and freight journeys.”
Perhaps I have misunderstood.
Keir Mather
To my knowledge, I am not conflating the two amendments. My point is that setting objectives that are so closely tied to discernible and prescriptive standards would, in effect, contravene the original intention of the schedule, which is to provide flexibility in setting objectives over the five-year period. If, in the hon. Gentleman’s view, I continue not to meet that intention, I will happily give way again.
Jerome Mayhew
The Minister wants flexibility, and he says that is why amendments 123 and 206—tabled by myself and the hon. Member for Didcot and Wantage respectively—should not be agreed to. Will the Minister set out the circumstances in which he thinks it would not be appropriate for the organisation to focus on
“delivering improved productivity and efficiencies”
or on
“customer experience and satisfaction”?
Why does he need flexibility to ignore those objectives?
Keir Mather
No, I am not willing to say that those objectives, in principle, should not be pursued as a result of this legislation. The question is where within the Bill these things reside. If we are talking about short-term objectives relating to GBR’s operational efficiency as an organisation through, say, a key performance indicator, that is best placed within the business plan. If we want legal duties to ensure that we improve passenger experience or the reliability of train services, they are best placed as legal duties. There is a question about where we apportion the responsibilities and accountability mechanisms within the Bill. I do not believe that schedule 2 is the right place to be as prescriptive as the shadow Minister intends with those specific requirements.
On amendment 123, there is already a mandatory requirement in the Bill for the Secretary of State to obtain advice from the ORR on whether the activities that GBR is to undertake represent value for money. Unlike the list of potential objectives, that is mandatory. I also direct the Member to the assurances that are already in the Bill: there is a duty on GBR to make efficient use of public funds when exercising its functions, and a clear role for the ORR to assess the value for money of GBR’s proposed plans and to publish that assessment.
Edward Argar
Will the Minister confirm that the advice it will be obliged to seek will be published? If it is private advice, it has no teeth whatsoever, because the Secretary of State could accept it or refuse it, as could GBR, and no one would ever know. Would that advice be public?
Keir Mather
The purpose of issuing advice is so that we can enter into an era for the railways where these discussions happen in a way that is far more commonplace than the broken-down patterns of accountability that currently exist. I therefore envisage the sort of adversarial situation that the right hon. Member suggests occurring less than it does under the existing rail system.
The ORR and the Secretary of State are both required to consider value for money when they advise on and approve the business plan. I hope that the relevant measures will show the hon. Member for Broadland and Fakenham that we are serious about getting the best out of GBR and provide him with enough reassurances to seek to withdraw his amendment.
Amendment 122 would specify that the Secretary of State’s statement of objectives may include an objective on increasing passenger numbers and freight. It would narrow the wording of the objective in paragraph 2(3)(a) of schedule 2 from relating to passengers and freight to just increasing the numbers of those things. I do not think it would be wise to require ever-increasing passenger numbers as an objective in itself. Different objectives—such as increased reliability, improved passenger experience or references to spare freight paths—might contribute to that overall outcome while being more important in the moment. Again, that should be for the Government of the day, not inflexible legislation, to decide. I urge the hon. Member for Broadland and Fakenham to withdraw his amendment.
Finally, amendment 206 proposes to expand the list of potential topics that could be covered in the statement of objectives, with the hon. Member for Didcot and Wantage suggesting the inclusion of a section on customer experience and satisfaction. The current list in the Bill is purely illustrative, so Secretaries of State may in future add to the list of topics, and include just some of the topics or slightly different ones in their statement of objectives. I invite the Committee to note that the illustrative objectives already included in the Bill contain reference to the carriage of passengers or goods, as well as to fares and accessibility—all matters that are important to passenger experience—so it is unclear what more would be achieved through the amendment, which would simply add a further example to the list.
Furthermore, the Bill contains a duty for the Secretary of State and GBR to exercise the functions in the manner best calculated to promote the interests of the users and potential users of railway passenger services. Unlike the list of potential objectives, that duty is intended to be mandatory. I hope that demonstrates to the hon. Member for Didcot and Wantage that we consider passenger experience to be absolutely central to GBR’s objectives, and provides him with enough comfort not to press his amendment.
Jerome Mayhew
We have heard with interest what the Minister has to say, but I am wholly unpersuaded that he is adequately reflecting the needs of the industry, so I will seek to press amendment 120 to a Division.
Question put, That the amendment be made.
Jerome Mayhew
I beg to move amendment 124, in schedule 2, page 62, line 9, at end insert—
“(d) measurable performance indicators for each statutory duty listed in Section 18.”
This amendment would require the business plan to include measurable performance indicators for GBR’s duties.
The Chair
With this it will be convenient to discuss the following:
Amendment 125, in schedule 2, page 62, line 9, at end insert—
“(3A) The plan must set out how Great British Railways will ensure its activities minimise costs to the taxpayer.”
This amendment would require GBR to consider how to minimise costs to taxpayers.
Amendment 127, in schedule 2, page 62, line 22, at end insert—
“(c) whether carrying on those activities will be done in such a way as to minimise costs to the taxpayer.”
This amendment would require the ORR to provide an assessment of whether GBR will minimise taxpayer costs before the Secretary of State approves the business plan.
Amendment 128, in schedule 2, page 62, line 27, leave out from “publish” to the end of line 28 and insert—
“the approved business plan in full, apart from any sections which it considers to contain commercially sensitive information, and”.
This amendment would require GBR to publish its full business plan saving any sections which are commercially sensitive.
Jerome Mayhew
We now turn to paragraph 4 of schedule 2, which deals with the business plan and approval by the Secretary of State.
To receive public funding under paragraph 4, GBR is required to include in its business plan an explanation of how it will meet the objectives set by the Secretary of State. Amendment 124 seeks to strengthen this obligation by requiring GBR to set meaningful KPIs against which its performance and meeting its statutory duties—as set out in clause 18, which we will come to in a bit—can be measured. We had the saga of the missing licence; now we have the saga of the missing KPIs—and 19 other documents. This is important, given the absence of any direction from the Government on KPIs, despite being repeatedly requested on the Floor of the House over a number of months. The only response from the Government as a result of that probing is that they will be “robust”, whatever that means, hence the need for amendment 124.
Amendments 125 to 128 would strengthen GBR’s focus on minimising the cost to the taxpayer and increasing the role of the Office of Rail and Road to make sure that that happens. Amendment 125 would require an express focus on how plans will minimise costs to the taxpayer, which is too often overlooked—the Bill makes hardly any reference to value for money. The taxpayer is ignored entirely. This amendment would make it a legal requirement to address that and would—under the maxim that “you get what you measure”—drive behaviour.
Amendment 127 would require the Office of Rail and Road to provide an assessment of whether GBR’s plans to minimise costs to the taxpayer are, in fact, likely to do so. That would be undertaken before the Office of Rail and Road approves the business plan. Again, this is about driving behaviour through focus and making sure that the taxpayer is not forgotten in the deliberations between nationalised Great British Railways and civil servants at the Department for Transport.
Finally, amendment 128 would require GBR to publish its full business plan, save for commercially sensitive sections, which they should of course have a carve-out from displaying to their potential competitors—although most of their competitors have been designed out under the wording of the Bill. Amendment 128 would welcome transparency, which—given the huge amount of public funding that the organisation currently requires and no doubt will continue to require—is necessary, so that the public can see how their money is being spent, and whether the organisation is focused on driving down the cost to the taxpayer and driving up value for money.
I commend all the amendments to the Minister.
Keir Mather
I thank the hon. Member for the amendments, which seek to add requirements to the production of GBR’s business plan and the ORR’s advice on that plan. However, on the subject of the publishing of advice, I briefly return to a question that was put to me by the right hon. Member for Melton and Syston. I feel that I was unnecessarily circumspect in the answer that I gave him, and it did not reflect the incisive nature of his question, which was about a mandatory requirement that exists in the Bill for the Secretary of State to obtain advice from the ORR on whether the activities of GBR represent value for money, and whether or not that advice can be published. I tell him that the ORR must publish a summary of that advice, and it can publish the advice in full. Although I do not wish to predict the future, I expect that it will likely to so, as part of its work in holding the Government to account. I hope that that is a full answer for the right hon. Member.
Edward Argar
I thank the Minister very much. I cannot imagine where that flash of inspiration and recollection came from, but I am grateful to him for the clarification.
Keir Mather
Committees move in mysterious ways—that is all I will say.
I will take each amendment in the group in turn, starting with amendment 124, which would require GBR to develop key performance indicators for each of its statutory duties. I am sure the hon. Member for Broadland and Fakenham will agree that KPIs should be realistic and measurable, so they would also need to be grounded in the specific proposals for what GBR intends to deliver over the next five years. They also need to be allowed to evolve over time, to ensure that they are most relevant to GBR’s planned delivery and can be effectively used to track GBR’s progress.
The way an indicator is set out can influence how an organisation behaves, and we should be able to refine them over the course of several funding periods, to get GBR to deliver in the way that it needs to. Therefore, a more flexible process works better than fixing the nature of the indicators in legislation—and I give way to the hon. Member.
Jerome Mayhew
The Minister is a mind reader; I was just about to ask him to give way. He says he cannot agree to amendment 124 because we need flexibility in the future, but he will see that it refers to
“measurable performance indicators for each statutory duty listed in Section 18”,
so that flexibility would only run so far as any alteration to the statutory duties set out in his own clause 18, which GBR has no ability to change. The Government do not intend for there to be flexibility, so why does the Minister say he needs it?
Keir Mather
I respectfully disagree with the shadow Minister’s interpretation. This is about how GBR discharges those legally binding duties, and whether we should be overly prescriptive about the means by which it does so. It is important to have flexibility. Given the amount of technological change that we have seen in railway processes over recent decades, as well as socioeconomic factors and the need for GBR to balance those duties, we cannot be overly prescriptive about how we ask it to meet them—apart from the fact that it is legally required to do so.
I assure the hon. Member that GBR’s business plan will have not just a robust but a comprehensive set of KPIs against which it will be held to account. Progress against them will be tracked, and GBR will publish updates in line with the requirements in the Bill. The ORR will also monitor GBR and its business plan, and provide advice to the Secretary of State.
Rebecca Smith
I am thinking through the schedule. Forgive me if I am wrong, but ultimately, it is GBR’s business plan. Effectively though, there are going to be wheels within wheels, in terms of each of the business sectors, the different mayoralties, and the operators that are doing different things in different countries. To me, it feels overly simplistic: we have got one plan, which is the plan for the funding of the entirety of GBR, but if there are no KPIs at all, how are we supposed to even compare parts of the country against each other? Surely there will be different funding streams and business cases for different things. To me, it just feels like one overarching plan. How on earth are we supposed to hold the Government to account for delivering that, let alone ensuring parity and equality across the country, and making sure that funding is going into the right places, where it is most needed?
Keir Mather
That is a very important point. While the hon. Member points to a system that is simple in the objectives that it sets out for the railway overall, I see one that provides sufficient breadth to allow the organisation to develop over time and offer a system of operation that is closer to the communities it seeks to represent—and which, most importantly, is agile in adapting to changing socioeconomic circumstances and technological innovation.
The need for objectives that are not overly prescriptive, and the place for KPIs being in the business plan, allows a holistic approach to setting objectives for the railway, which can guide work overall for a national organisation, offering a single uniting mind, while at the same time not fettering GBR’s ability to evolve as an organisation in future.
In that sense, I believe we desire the same outcome: to make sure that the railway operates in the most effective way possible. In the light of the measures in the Bill that I have outlined, I hope that the hon. Member for Broadland and Fakenham will withdraw the amendment.
Amendment 125 would require GBR to include in its business plan information about how it will minimise costs to the taxpayer, while amendment 127 would require the ORR to advise the Secretary of State on this. I agree that it is important for GBR to deliver in the most efficient way that it can. That is why GBR, the ORR and the Secretary of State—all the people involved in the railway, and in the business plan—are all subject to a cost and efficiency duty, which is applied by clause 18. That will ensure that GBR aims to be cost-efficient at all times, which aligns with the intent of amendment 125.
Adding additional requirements for GBR in this space could create perverse incentives. For example, a focus on minimising costs, without other checks and balances, could drive GBR to cancel unprofitable lines even if they are important to local communities because doing so will save money. Clearly, it would not be appropriate for GBR to neglect connectivity in those important rural regions. GBR will also be robustly scrutinised from a value-for-money perspective by the ORR, and the Secretary of State will need to consider the ORR’s advice before approving GBR’s business plan. I hope that is enough to assure the hon. Member for Broadland and Fakenham that the Bill can deliver the outcome he seeks without amendment, while allowing GBR the autonomy necessary to plan in the way it sees as most appropriate.
Finally, amendment 128 seeks to limit the information that GBR could redact from its approved business plan. I agree that GBR’s activity must be transparent, and that will be an important part of how we hold GBR to account. That is why the Bill already requires GBR to publish its business plans. The Bill provides for slightly more discretion for GBR to redact sections of the business plan than amendment 128 proposes. That is because it is important that all types of sensitive data, not just the commercially sensitive, are able to be protected. Personal data, security-sensitive information about stations or anything legally privileged are all examples of content that may need redaction from the final plan. A flexible requirement can be better used to navigate these nuances. However, let me be clear that GBR’s public law duties and wider accountabilities framework will ensure that GBR will not be able to hide information that is important and relevant to public scrutiny.
In the light of these considerations, I ask the hon. Member not to press the amendments.
Laurence Turner
On amendments 125 and 127, I have full sympathy with the ambition of reducing costs to the taxpayer wherever possible. However, the word “minimise” is important here, because a natural reading would be to bring that cost to a minimum.
Each Government have recognised that there is a balance to be struck between the charges raised against the taxpayer, fare payers and other users of the railway. We heard evidence from Richard Bowker, the former chief executive of the Strategic Rail Authority, who has contributed what is sometimes known as Bowker’s law—there are only two sources of income to a railways: passengers and taxpayers.
I fear that if these amendments were incorporated into the Bill, the natural outcome would be that fares would rise, as indeed may charges levied upon freight users of the railway. For that reason, I hope they are not supported.
Jerome Mayhew
Mr Western, you get what you measure. We on this side of the Committee are very keen that we measure the level of involvement for the taxpayer and that we do our best to look after the taxpayer in the design of this structure, so I intend to press all the amendments.
Keir Mather
Schedule 2 will establish a new funding process for GBR that takes what we have learned from the successes of the periodic review process and applies them to the new GBR world. The new funding period review will provide GBR with five years of funding to carry out its job in operating and maintaining the railway network, and will create a structure through which GBR will develop and own integrated business plans across track and train that reflect its role as the directing mind for the railways.
The schedule retains the role of the ORR in testing and scrutinising the plans, ensuring they are ambitious but deliverable, and providing confidence to the Government. The new funding process, with the five years of certainty it provides, will help to result in the best price for Government and the taxpayer, and generate consistent, longer-term work for private partners in the rail supply chain—keeping good, well-paying, specialist jobs alive and thriving in the United Kingdom.
The schedule will also give greater representation to devolved Governments and mayoral strategic authorities, providing them with a real opportunity to advocate for the countries and places they serve at the national level. The funding period review will provide GBR with the structure it needs to set out how it will make our railways reliable, offer better value and be more accessible. I therefore commend schedule 2 to the Committee.
Edward Argar
I will not detain the Committee for long. As ever, I am grateful to the Minister for his succinct explanation. However, I have two concerns; while he may be able to reassure me on these, I certainly think they need an airing. First, how does he propose to ensure that the funding period is properly aligned with a spending review period? I have seen the challenges faced in government when there is a misalignment, or where one period overlaps the other.
I was only very briefly Chief Secretary to the Treasury, but I have also been a Minister in a spending Department, and I have seen the challenges that occur when there is a misalignment, because the Treasury is very clear about non-commitment beyond an existing comprehensive spending review period. How will the Minister ensure alignment and certainty? Without alignment, although there is the impression of certainty, we all know the all-powerful hand of the Treasury if one, as a spending Minister, cuts across its bow on such matters.
The other challenge has been raised by my hon. Friend the shadow Minister a number of times in various contexts. Although I take the point about the five-year period—and the Minister referenced seeking to bring greater certainty to investment decisions with that—I am still not quite clear. I may have missed it, but I do not think I have heard a clear explanation of what steps are being taken to iron out the peaks and troughs that my hon. Friend the shadow Minister mentioned, because it is still a five-year period.
Unless the budget is set for the next five-year period in, say, year two or year three, well ahead of its coming into force—I would posit that the Treasury would be highly unlikely to agree to that—it still does not get around the problem: year one is scaling up, we might see spending in years two and three, and possibly in a bit of year four, but then that spending will drop off again due to a lack of certainty about what is coming in the next year one. I would be grateful if the Minister could clarify how what he sets out in the schedule will help to address the peaks and troughs that my hon. Friend the shadow Minister so ably highlighted to the Committee previously.
Keir Mather
I thank the right hon. Member for Melton and Syston for his contribution. He is right to note that the five-year funding process has a different period from that of the spending review. It is tested in the sense that the funding process for Network Rail works similarly now. As was acknowledged in the oral evidence from the ORR, there is not in reality a cliff edge through the five-year funding settlement, as funding always tends to roll over the five-year boundary, but five years is the envelope through which those decisions take place.
That is my assessment of how the process works; if I have failed to answer any of the right hon. Gentleman’s questions, perhaps he will illuminate me on what they are and I can provide him with a more fulsome response later on.
Question put and agreed to.
Schedule 2 accordingly agreed to.
Clause 13
Charging and terms and conditions
Jerome Mayhew
I beg to move amendment 22, in clause 13, page 7, line 22, leave out “as it thinks fit” and insert “as are reasonable”.
This amendment would ensure Great British Railways only charges what is reasonable for provision of services in circumstances where it is a monopoly supplier.
The Chair
With this it will be convenient to discuss amendment 23, in clause 13, page 7, line 28, at end insert—
“(3) A person aggrieved by a charge, or terms and conditions issued under this section, may appeal to the Office for Rail and Road.”
This amendment allows appeals against the charges and terms and conditions issued by Great British Railways under section 13.
Clause stand part.
Jerome Mayhew
This afternoon is turning into a marathon session, and the only people who cannot take a comfort break are the shadow Minister and the Minister, so far as I can work out; I have my legs crossed.
Clause 13 allows GBR to charge people to whom it is providing a service relating to its functions—this is the important bit—“as it thinks fit”; there is no qualification there. The clause will allow GBR to charge for services that it provides that are currently chargeable under the existing rail regime, such as the back-of-house services currently provided by the Rail Delivery Group, from which all passenger operators, private and public, including open access operators, benefit.
There is a very significant problem with the wording of the clause, because the difference between now and then is that GBR will be a monopoly provider of those services. If we add the two factors together—first, the fact that it is a monopoly provider and secondly, that it is allowed to charge as it thinks fit, with no qualifying criteria—the result is at least the opportunity for GBR to abuse its position to inflate charges and kill competition. GBR will be in direct competition with competitors that can only buy those services from GBR. We know that that will cause a huge issue for open access operators because they have told us so, as GBR will once again be acting as a player and as the referee. That is a clear conflict of interest designed into the structure that the Bill creates. The clause needs to have much greater protections on the calculation of access charges.
The Government use the example of the back-of-house services currently provided by the RDG to explain what would be applicable under the clause. The Rail Delivery Group is a membership organisation consisting of train operating companies, owning groups and Network Rail. The key services they provide are journey information, reservation systems, railcards and working to improve performance, safety and accessibility.
The language in the clause as drafted gives Great British Railways carte blanche where no alternative provider of those key services is allowed—a conflict that will lead to abuse and is contrary to the direction of the Competition and Markets Authority, which expressly said that there needs to be a level playing field when dealing with matters of this kind. That is the Government’s Competition and Markets Authority, so who is right here—the CMA, or the Bill as drafted?
Rebecca Smith
I want to briefly speak to the proposed new subsection added by amendment 23, which would offer anybody given conditions by GBR the opportunity to appeal that decision to the Office of Rail and Road. The issue of accountability and the unequal playing field faced by those on the outside compared with those on the inside came up in the Transport Committee’s evidence sessions and last week. Having heard a lot of that evidence, the amendment appeals to what I think is the right way to do things. We must ensure that organisations engaging with the railway, or offering services to the railway—even if they are being paid separately for them—have the opportunity to appeal a decision that affects or impacts them. I feel that not having such an opportunity is particularly onerous. I support amendment 23 and concur with everything that the shadow Minister has said.
Keir Mather
I thank the shadow Minister for tabling amendments 22 and 23 and the hon. Member for South West Devon for speaking in their support. Amendment 22 seeks to require GBR to set reasonable charges for the delivery of its functions, and amendment 23 seeks to require the ORR to provide an appeals role for anyone who considers the charges set by GBR to be unfair.
On amendment 22, we clearly agree that GBR must act reasonably when setting charges and there is no suggestion that it will not do so. In fact, safeguards to ensure that GBR cannot levy unreasonable charges already exist in the Bill. Clause 18 requires GBR to act in the public interest and to ensure that railway service providers, such as devolved operators, freight operators and open access operators, can plan, invest and make decisions about their own businesses. When setting charges, GBR must therefore do so in a manner consistent with those duties, and it must not set charges that undermine operators’ ability to run viable and successful businesses.
Jerome Mayhew
The Minister refers to clause 18(2)(e), which states:
“They must exercise the functions… in the manner best calculated to be in the public interest”.
Can the Minister not see that GBR’s assessment of what is in the public interest could very well be what it considers to be in its own interest, because it is a public body? The provision would allow GBR to prioritise its own interests, such as the increased receipt of revenue from third-party operators, at the expense of the competition. That is not the safeguard that the Minister says it is, is it?
Keir Mather
I disagree with the shadow Minister’s interpretation of how the duties function in this regard. GBR cannot take a wholly self-interested, cynical interpretation of what constitutes “best use” under clause 60, which we will turn to in due course. GBR has to make a best-use decision that takes into account the needs of open access and freight. Also, under GBR’s duties, it must take account of promoting the interests of users and potential users of the railway, some of whom—even though open access constitutes a small proportion of the railway network usage overall—will be people using open access operators. Further, the duty in clause 18(2)(d) says,
“so as to enable persons providing railway services to plan the future of their businesses with a reasonable degree of assurance”.
Such persons would not be able to do so if they were being levied unreasonable charges.
There are supplementary safeguards that I will turn to. Existing competition legislation will also require GBR to ensure that the charges it sets are fair, non-discriminatory and not anti-competitive. The ORR will retain its enforcement role in consumer and competition law, concurrent with the Competition and Markets Authority, so it will be able to ensure that GBR is treating the private sector fairly. It is also important that, as a public body, GBR must be able to recover appropriate costs from those who benefit from the services that it provides. If it were prevented from doing so, the burden would ultimately fall on taxpayers and passengers. The Government’s ambition is to have a successful rail industry that attracts investment and can support its own costs, rather than unnecessarily relying on the taxpayer.
Amendment 23 would introduce an appeals role for the ORR on these charges. Again, we fully support the principles of fairness and transparency that underpin the amendment. For significant charges, such as charges for access and the use of infrastructure, the Bill already provides an appeals route to the ORR. However, an appeals route to the ORR for every possible charge that GBR may levy in relation to its statutory functions is clearly disproportionate. The amendment would require an appeals route to be provided even when those charges may be small, such as contributions to cover a railcard cost.
Clause 13, in its sum, simply ensures that GBR can recover the costs of managing and delivering services, such as back-office retailing services, by charging those who use GBR services, such as non-GBR operators or retailers. It is essential that GBR should have a clear statutory right to recover costs from users of its services. That supports the sustainability and efficiency of GBR’s operations, and ensures that taxpayers and GBR customers are not subsidising the operations of others. Importantly, it replicates how those cross-industry functions are paid for today. The Bill and existing competition law already provide adequate protections for third parties and a route of redress, should that be required. I urge the hon. Member for Broadland and Fakenham to withdraw his amendment and commend clause 13 to the Committee.
Jerome Mayhew
The Government’s defence is pretty extraordinary. What they are saying is that GBR should be free to charge unreasonable amounts—otherwise there would be no objection to the wording of the amendment, which simply seeks to put the word “reasonable” into the requirement. The Government say that even though this monopoly provider can charge as it thinks fit, there should be no specific right of appeal and that the other operators should rely on the CMA taking an interest or on wider competition law—in other words, after-the-event litigation.
We all know that in a business environment we can argue about the chaos at the end, but a business can already have been destroyed by a decision from a monopoly provider—on which there is no right of appeal and which could not be held back until an appeal has been heard. This is an absolute charter for GBR to run roughshod over independent retail operators, open access operators and even rail freight. It is with no hesitation at all that I seek to push for a vote on both the amendments.
Question put, That the amendment be made.
Keir Mather
In today’s system, the ORR can require Network Rail to pay a fee to cover some of the costs of the ORR’s railway activities; that is done via Network Rail’s licence. The clause will ensure that, in the future system, the ORR will continue to have the independent funding it needs, by allowing it to require a similar fee from GBR. That ensures that the ORR will continue to operate in an impartial and independent way—a crucial part of enabling it to provide high-quality advice to railway funders and to conduct its role as the access appeals body fairly. I commend clause 14 to the Committee.
Jerome Mayhew
So here we are: this is the eminently sensible approach to providing funding for the ORR to continue its operations as a safety regulator. Clause 14 allows the Office of Rail and Road to require GBR to pay a levy to the ORR for performing its non-safety railway functions. That provides the ORR with a legally guaranteed funding source independent of the Secretary of State or Government. The provision aims to provide the ORR with a stable and predictable funding stream that will enable it to plan and carry out its activities. Those were remarkably similar words to the ones used by the Minister—I wonder why!
What I have described replaces the current system under which the ORR requires Network Rail to pay a fee for it to perform its non-safety functions via the process set out in the Network Rail licence. The ORR, as we all know, is an independent regulator, so decisions on its funding should be kept separate from organisations that have a vested interest in its decisions, which is why GBR, despite paying the levy, will not determine the amount. The amount is agreed between the ORR and the Treasury and then provided by GBR through this levy.
This is one of the few clauses through which the Bill is not actively diminishing the role of the ORR. Instead, it provides the ORR with a legally guaranteed funding source, independent of the Secretary of State or Government—save, obviously, for its negotiations with the Treasury. The aim of that is to provide the ORR with a stable and predictable funding stream that will allow it to plan and carry out its duties successfully. That duty already exists in the Network Rail obligation, as I have already mentioned.
I am glad to see from the Government’s explanatory notes on the clause that GBR will not determine the amount of the levy, which will be agreed between the Treasury and the ORR. It seems that the Government do understand the concept of partiality and bias, but are prepared to admit that only when it comes to certain clauses in the Bill.
Keir Mather
I thank the shadow Minister for his support—slightly barbed support, but support nevertheless. I have nothing further to add. I commend the clause to the Committee.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Clause 15
Rail strategy
Olly Glover
I beg to move amendment 134, in clause 15, page 8, line 18, at end insert
“for the next 30 years for”.
This amendment would ensure that the rail strategy set out in Clause 15 must cover a 30-year period.
The Chair
With this it will be convenient to discuss the following:
Amendment 137, in clause 15, page 8, line 21, at end insert—
“(c) the support given to rural communities in accessing rail travel, and
(d) the co-operation with relevant local and regional transport authorities for greater integration between trains, buses, trams, cycling, walking and other active travel options.”
This amendment would require the rail strategy to set out the long-term strategy for supporting rural communities in accessing rail travel and co-operating with transport authorities to integrate travel options.
Amendment 207, in clause 15, page 8, line 21, at end insert—
“(c) the consideration of the national rail network as a whole, and
(d) the development of national and regional integrated timetables including—
(i) any infrastructure enhancements necessary to facilitate such development,
(ii) strategies at a local or regional level to deliver these enhancements in line with the 5-year funding periods; and
(iii) a system of prioritisation of connections between services, taking into account interchange times and overall end-to-end journey times resulting from those connections.”
This amendment introduces a requirement for the rail strategy to consider the rail network as a whole, and the relationship between integrated timetables and infrastructure enhancement to enable such integration.
Amendment 224, in clause 15, page 8, line 21, at end insert—
“(c) the development of rail freight network usage.”
This amendment would require the rail strategy to include developing rail freight.
Amendment 25, in clause 15, page 8, line 21, at end insert—
“(1A) The document issued under subsection (1) must be in force for a minimum of three control periods.
(1B) A control period as set out in subsection (1A) must be no shorter than five years.”
This amendment would require the rail strategy to remain in place for three control periods at a minimum.
Amendment 260, in clause 15, page 8, line 23, at end insert—
“(2A) The rail strategy must include a strategy for level crossings (‘the level crossings strategy’).
(2B) The level crossing strategy must set out an assessment of the impact of level crossings on the economy and community of the area in which the level crossing is situated, for the purpose of reducing disruption caused by level crossings.”
Amendment 261, in clause 15, page 8, line 23, at end insert—
“(2A) The rail strategy must include an assessment the ability of passengers to change between—
(a) main line rail services and branch line rail services, and
(b) rail services and other modes of public transport.
(2B) An assessment under subsection (2A) must consider how to reduce delays and disruption to end-to-end journeys involving a change between rail services, or between rail services and other modes of public transport.”
Amendment 135, in clause 15, page 8, line 25, at end insert—
“(3A) The rail strategy must include an international rail strategy to—
(a) support the development of new international routes,
(b) support operators in introducing and operating any such new routes, and
(c) support new and existing operators in using the Channel Tunnel and London St Pancras High Speed.
(3B) In meeting the objectives under subsection (3A), the international rail strategy must—
(a) consider options to increase rail depot capacity at, and to supplement, Stratford Temple Mills;
(b) consider any enhancements that may be required to conventional rail network in the Southeast of England for the purpose of enabling international rail travel;
(c) consider options for electrification, changes to gauge clearance, and any other alterations to rail infrastructure as may be necessary to increase the potential for increased rail freight to travel via the Channel Tunnel.”
This amendment would require the Secretary of State to include an international rail strategy as part of the Government’s long-term rail strategy. The international rail strategy would specifically look to support new routes and operators, and increase Channel Tunnel and London St Pancras High Speed rail capacity.
Amendment 136, in clause 15, page 8, line 25, at end insert—
“(3A) The rail strategy must include a network electrification strategy to—
(a) require that any new rail lines are electrified, and
(b) set criteria for determining which existing rail lines should be fully electrified, based on current and potential operation of those lines, and set a timetable by which electrification should be completed.
(3B) In preparing the network electrification strategy under subsection (3A), the Secretary of State must take into account the current and potential future—
(a) maximum operating speed of,
(b) average number of trains in an hour using,
(c) average volume of freight transported on,
(d) maximum potential reliability of rolling stock using, and
(e) acceleration requirements of
trains using the relevant lines.”
Amendment 225, in clause 15, page 8, line 32, at end insert
“, and persons wishing to operate services for the carriage of passengers or goods on Great British Railways’ infrastructure.”
This amendment requires consultation with freight operators during the preparation of the rail strategy.
Amendment 213, in clause 15, page 8, line 35, at end insert—
“(8) The Secretary of State must lay before Parliament an annual report setting out any progress on the rail strategy.
(9) The report under subsection (8) must be sent to the Transport Committee of the House of Commons.
(10) References in this section to the Transport Committee of the House of Commons—
(a) if the name of that Committee changes, are references to that Committee by its new name, and
(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, are to be treated as references to the Committee by which the functions are exercisable.”
This amendment requires regular reporting to Parliament and the House of Commons Transport Committee on delivery of the rail strategy.
New clause 27—Great British Railways: national rolling stock strategy—
“(1) Within 12 months of the passing of this Act and every subsequent 12 months, Great British Railways must publish a national rolling stock strategy.
(2) Each strategy under subsection (1) must set out rolling stock requirements by operating region and route.
(3) Great British Railways must align each strategy to the infrastructure capacity plan in section 60, the rail strategy in section 15, and each funding period as set out in Schedule 2.
(4) Great British Railways must set out how the strategy is used to inform procurement, leasing and allocation decisions.”
This new clause would require GBR to publish a national rolling stock strategy each year, setting out the expected rolling stock requirements per operating region and route, aligned to current and future planned infrastructure, and aligned to the long-term rail strategy and 5-year funding periods.
New clause 28—Great British Railways: cyber security and technology strategy—
“(1) Great British Railways must publish a cyber security and technology strategy (‘the strategy’).
(2) The strategy must set out how Great British Railways will—
(a) use emerging technologies, including artificial intelligence, to innovate in respect of its operations and services,
(b) develop resilience for rolling stock and critical systems in line with industry and international standards, and
(c) increase the use of technology to improve passenger experience and services including—
(i) WiFi access,
(ii) digital ticketing,
(iii) real time information systems, and
(iv) accessibility for passengers with sight or hearing loss.
(3) Great British Railways must publish an annual report describing progress that has been made against the strategy and any challenges that have arisen in delivering the strategy.”
This new clause would require GBR to publish a cyber security and technology strategy, as well as an annual report on progress.
New clause 29—Railway services: Sunday working arrangements—
“(1) Within one year of the passing of this Act, Great British Railways must publish a report on demand for railway services on Sundays.
(2) The report must set out—
(a) current figures for use of railway services on Sundays, and
(b) projected figures if services on Sundays were increased.
(3) The report must identify and set out actions that can be taken to increase demand for railway services on Sundays.
(4) When setting out actions under subsection (3), the report must have due regard to five-year funding periods for Great British Railways.”
This new clause would require GBR to publish a report on current Sunday demand, suppressed Sunday demand, and identify actions to be taken to increase demand for railways services on Sundays in line with the 5 year funding periods.
New clause 54—National signalling strategy—
“(1) Within 12 months of the passing of this Act and every subsequent 12 months, Great British Railways must publish a national signalling strategy.
(2) Each strategy under subsection (1) must set out expected signalling renewal requirements by operating region and route.
(3) Signalling requirements as set out in subsection (2) must be informed by the principle that new or renewed signalling will be digital and based on standards set by the European Train Control System.
(4) Great British Railways must align each strategy to—
(a) the infrastructure capacity plan in section 60,
(b) the rail strategy in section 15,
(c) each funding period as set out in schedule 2, and
(d) current and future planned infrastructure including electrification and rolling stock changes.
(5) Great British Railways must set out how each strategy is used to inform procurement, leasing and allocation decisions.”
This new clause introduces a national strategy for digital signalling rollout to create an approach to signalling renewals, enhancements, and interfaces with rolling stock, and to realise signalling safety, capacity, and performance benefits of digital signalling.
Clause stand part.
Olly Glover
We have reached a rather long group of amendments at this point in the afternoon. I would generally have liked to have used that as an opportunity to be concise. However—[Laughter.] No, no, the substance is too severe for that to be the case.
Let me start off on a positive note: this rail strategy is perhaps the strongest element of the Bill. It is absolutely what our railways need to hopefully get us out of the endless cycle of decision, indecision, dither and delay: “Yes, we’re doing it,” then, “No, we’re not,” or committing to things that are undeliverable before they have been properly planned, thought through, funded and so on.
In this part of the Bill, we even have the potential to put ourselves on as glorious a footing as Switzerland and its approach to its rail network. Somehow, I have managed to avoid talking about Switzerland so far in this Bill Committee—
Olly Glover
Oh right—okay. I seemingly stand corrected. Well, there we go; this probably will not be the last mention either.
It is good that an element of the Bill enables us to have some hope of reaching the glory of the marvellous rail network in Switzerland, which genuinely merits admiration. We so often assume, lazily, that railways in Europe are better than those here. Some of them are in some respects; others are not. However, Switzerland’s railway is pretty much better than ours all over.
I turn to our amendments. Generally speaking, the intention behind them is either to strengthen or enhance what is already in clause 15 regarding the rail strategy. New clause 2 proposes to expand the number of factors that should be considered in developing the strategy, to ensure that critical elements that have not necessarily been well-planned or managed on our network hitherto are better stewarded in the future.
I turn first to amendment 134. It would very simply put what is currently in an accompanying piece of commentary on the Bill into the Bill itself, including the clarification that by “long-term” we mean “30 years”. The problem is that at the moment “long-term” can mean many things to many people, depending on their own particular agenda. We could include in clause 15 the words “for the next 30 years”. That would make it very clear what the rail strategy was focused on, but would not preclude its being changed in the future. That is important, because any strategy should be regularly reviewed and refreshed in the light of changing circumstances. However, the amendment would enshrine the idea that the strategy is intended to get GBR to engage in long-term thinking in its future planning of our network.
Amendment 137 would add a couple of elements to clause 15. First, it would ensure that the long-term rail strategy considered the support that rural communities need to access rail travel and the need for
“co-operation with relevant local and regional transport authorities”
and GBR. That is so we can have a real focus on
“greater integration between trains, buses, trams, cycling, walking and other active travel options.”
I hope that is welcomed by the Government, given their own commitment to introduce an integrated transport strategy at some point in the future.
Amendment 207 intends to ensure that the rail strategy considers the rail network as a whole and the relationship between the integrated timetables that we need to move to and the infrastructure enhancements necessary to enable those timetables. Let me explain that a little further. The historic focus of development on our rail network has been, with some exceptions, an obsession with reducing journey times to and from London on major inter-city routes. In and of itself, that is not a flawed goal. However, tens of millions of pounds will often be spent on cutting a couple of minutes from journey times.
A particular example of that was removing an avoiding line at Stoke-on-Trent as part of the modernisation of the west coast route. It was for the 7 am Manchester to London inter-city train, which has been the subject of so much controversy recently in relation to ORR decisions. That passing loop was taken out just to save 30 seconds from the journey time for one train a day, which does not even stop at Stoke-on-Trent. That shows the extent of the obsession with reducing journey times to London, which I have just alluded to.
What there has not been is an accompanying focus on trying to improve connection times between trains at Birmingham New Street, for example, or at Manchester Piccadilly or in Leeds. That is important, because there is very little point in cutting some time off inter-city routes if that time saving is negated by having a longer connection and waiting time at a regional hub. What puts a lot of people off using trains is the lack of decent connections and having to wait for their next train at stations that might not have particularly amenable environments.
By contrast, that is what has been done so well in Switzerland. It began in 1987, when a national referendum approved what was a 20-plus-year plan, to upgrade the country’s rail network around connections. That led to a nationwide investment in infrastructure improvements designed to enable a nationwide inter-city timetable, so that at all the key hubs—such as Zurich, Berne or Basel—trains would arrive within a 10 or 15-minute window and passengers could easily change from inter-city train to inter-city train, or from a local train to an inter-city train. Such integration is not just limited to the rail network; it is applies to other public transport. Anybody who has travelled extensively in Switzerland by public transport knows that the same level of timetable integration exists for buses, cable cars, mountain railways and so on.
Amendment 207 would create the framework for that kind of thinking: we would have to think hard, in the long-term strategy, about what sort of timetabling we want to see on our network in the future and what infrastructure enhancements are needed to get end-to-end journey times down.
Our amendment 135 would ensure that the rail strategy considers international rail. For the purposes of the Bill, that is not the Dublin to Belfast Enterprise service, which is of course the subject of entirely different legislation—a very good train it is, too, and not just because it is named after that series of wonderful flagships from “Star Trek”—but international rail through the channel tunnel. The amendment would simply require that the rail strategy includes an international rail strategy to support the development of international routes and consider some of the key challenges in increasing capacity, particularly rail depot capacity, to the channel tunnel and beyond, as well as options for upgrading the existing rail network so that we can get far more rail freight directly through the channel tunnel, which is currently not possible because of limited gauge clearance on the existing network.
Our amendment 136 would require the rail strategy to include a network electrification strategy, which another amendment alluded to. Something that has so far been absent from this Government’s thinking, as it was from that of most previous ones, is clear criteria for electrification, of whatever type—including the current fetish for discontinuous electrification with batteries. The amendment would create a framework for us to be very clear about the criteria that will be used for each electrification type, including maximum operating speeds, which lend themselves far more to full electrification than to batteries, the intensity of traffic, whether there is freight, and so on. It is a very strategic amendment that would help to focus the output of the long-term strategy on things that need to be addressed.
I have a bit more to say; I am attempting to be concise, Mr Western, and I thank you for your forbearance, as I thank the rest of the Committee for theirs. Amendment 213 would require the Secretary of State to update Parliament annually on progress on the rail strategy. This is not intended to hamper the strategy or bog it down in bureaucracy; it would merely involve updating Parliament, from time to time, on the development and delivery of the rail strategy. The key purpose is to ensure that the Transport Committee can carry on the great review and scrutiny that it does of so many things—that is not a comment on my contribution, but on that of all Transport Committee members, past and present.
New clause 27 would require the strategy to incorporate a national rolling stock strategy. I understand from remarks made by the Minister and by the noble Lord Hendy in the other place that that is very much the intention anyway. Perhaps we will have another of those debates where they say that that is the intention anyway but for some reason we cannot possibly put it in the Bill. Nevertheless, I will press the new clause, because it is so important.
New clause 28 would require GBR to set out a cyber-security and technology strategy. Technology is changing all the time, and the railway has not always been the fastest at embracing it. There is a particular issue with cyber-security. A couple of months ago, I attended a forum in Parliament, which was well attended by representatives from the rail industry. There are real issues about how software on rolling stock is kept up to date, and the funding for that. The new clause is intended to ensure that proper thought is put into a framework for cyber-security.
New clause 29 would require GBR to publish a report on demand for railway services on Sundays and the current arrangements for staffing of the railway on Sundays, which in my opinion and that of many of my constituents simply does not align with the 21st century nature of the Sunday economy.
Finally, new clause 54 would require GBR, within 12 months of the passing of the Act and every subsequent 12 months, to publish a national signalling strategy. The reason this is so important is that we have been slow to embrace digital signalling and the European train control system in this country. That is starting to improve, with ETCS currently being introduced to the southernmost 100 miles of the east coast main line, but those in the industry are clear that the current fragmented structure makes it hard to introduce ETCS and digital signalling, because open access operators, particularly freight operators, are not necessarily incentivised to align their driver training and locomotive upgrades with the plans to introduce digital signalling.
Jerome Mayhew
Clause 15 requires the Secretary of State to publish a document that sets out the long-term strategy for the railway, which we welcome, after consulting with Welsh Ministers and the passenger watchdog. The Secretary of State must keep the strategy under review and publish any revisions.
The clause does not provide any detail, which is part of the problem. The industry is in the dark now, and it will still be in the dark if the Bill ever becomes law. There is no draft prepared. There is no indication of the direction of travel. There is just subsection (4), which is very limited. All it says is:
“(4) The Secretary of State—
(a) must keep the rail strategy under review, and
(b) may revise or replace it.”
Well, with what and when? We are in trouble here, with no direct reference to even the development of rail freight, which we have seen in other parts of the Bill is apparently in the Government’s mind. Amendment 224 would serve to correct that by making specific reference to rail freight.
More widely, the Government have missed an opportunity to set clear targets for the strategy to achieve. Colleagues will know from the debate on clause 3 that we have already tried to amend the Bill to assist with that. Our purpose clause, new clause 1, would have set a clear direction, and new clause 2 would have set KPIs for what the strategy should achieve. That would have helped to inform our set of amendments to clause 15.
We are told that Great British Railways should be the guiding mind, so our approach is that GBR will implement the long-term strategy for rail, based on the Secretary of State’s long-term priorities for the railways. GBR is intended to be the stand-alone expert implementer of the development of the railway. The priorities are set out by the Secretary of State through the licence in schedule 1, access to funding in schedule 2 and the long-term rail strategy. All recognise that the political cycle and control periods are far too short for rail infrastructure projects. The industry really needs more predictable forward views. There is inevitably an uncomfortable fit between the needs of democracy and the political cycle—political views change with general elections and sometimes even between them—and the long-term investment certainty that large projects need. There is currently no indication of how long term the strategy will be, or even what it will seek to achieve.
Amendments 24 and 25, which we debated with clause 13 but would also affect clause 15—I do not seek to repeat the debate, but I wish to mention the impact that they would have—seek to address those failings by requiring the rail strategy to be geared towards enabling GBR to meet its key performance indicators. Without the amendments, the clause will set out a long-term strategy that includes no requirement to set clear growth targets for passenger numbers or freight use, meaning that there will be no measurable outcomes or performance metrics. I intend to seek to divide the Committee on those amendments when the time comes.
The Liberal Democrats’ amendment 134 would ensure that the rail strategy covers a 30-year period. That is logical given the infrastructure life cycle, and any timeframe is, by its nature, arbitrary, but I have to say that 30 years feels on the long side, given the political cycle of four or five years. I wish the hon. Member for Didcot and Wantage well and we should be having a stab at setting out what long term actually means, but that is why we have tabled an amendment that would set the period at 15 years. That would be long enough to show the direction of travel, as he has in mind, but short enough to have some sense of connection between the political cycle and the objectives of the strategy. We may have a difference of opinion, but we are pointing in the same direction.
Olly Glover
I understand the shadow Minister’s point, but I put it to him that the fact that our Parliaments tend to be four or five years long is precisely why the strategy needs to be very long term, so that we avoid subjecting our railway to the political cycle and the whims and whimsies of the Government of the day. But perhaps the key point is that the Government’s own guidance on the Bill, in the section entitled, “What is the Long-Term Rail Strategy?”, states:
“It will set out strategic objectives for the railway over a 30-year period.”
Would it not be coherent to put that on the face of the Bill?
Jerome Mayhew
From the Government’s perspective, yes, it would be, but we have recent experience—this is a slight tangent, but I hope the Committee will bear with me—of Governments passing key objectives to achieve long out in the distance. I am thinking of the Climate Change Act 2008 and its objective of achieving net zero by 2050. That all sounds good in 2008, but in my view it does not achieve the objective of balancing democratic accountability with a long-term direction. Look, we are slightly arguing about how many angels can dance on the head of a pin. Both parties agree that we want a long-term strategy, but should it be 15 years or 30 years? In a sense it does not really matter, but it needs to be significantly beyond the current five-year control period.
Amendment 137, also in the name of the hon. Member for Didcot and Wantage, would require the strategy to set out a long-term strategy for supporting rural communities in accessing rail travel and co-operating with transport authorities to integrate travel options. It is a worthy objective, although we would want to go further if extending clause 15(1) beyond the railway network and railway services—the catch-all descriptors. The amendment is slightly a halfway house, but it nevertheless points in the right direction, and in so far as it makes progress, we are happy to support it.
Amendment 207, again in the name of the Liberal Democrat spokesman, would introduce a requirement for the rail strategy to consider the rail network as a whole, and the relationship between integrated timetables and infrastructure enhancement to enable such integration. There is perhaps a better solution tabled in the name of my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), who is engaged somewhere else as we speak—there may be a better way to achieve that outcome.
Amendment 224, which I tabled, would add paragraph (c) to clause 15(1). As drafted, the provision requires the Secretary of State to
“prepare and publish a document that sets out”
her
“long term strategy for…(a) the development and use of the railway network in Great Britain, and…(b) the railway services that the Secretary of State wishes to see provided in Great Britain.”
This important amendment would add a focus on “rail freight network usage”. Rail freight does, in a sense, come under “railway services”, but we need to give it particular focus, and the amendment offers a good opportunity to do so.
Amendment 25, which is also in my name, would require the rail strategy to remain in place
“for a minimum of three control periods”,
which would be 15 years. We have already debated whether it should be 15 or 30 years, but the provision would provide the industry with a genuine long-term strategy and mean that that strategy is less likely to be used as a political football when Governments come and go. The period of 15 years is short enough to have political weight, but long enough to give the certainty that the industry also seeks.
I will briefly mention amendment 260, which was tabled by my hon. Friend the Member for Runnymede and Weybridge. I know that the subject is close to my hon. Friend’s heart because he has told me so, multiple times.
Jerome Mayhew
Yes, repeatedly, which is great, because my hon. Friend is absolutely fighting for his constituency and his constituents. He has told me of a repeated trouble that communities experience when a level crossing closes very frequently and for long periods with no regard to the economic impact of that on the town in which it is based. That can cause long periods of tailbacks, but there is no consideration of that when the usage of the piece of line is set, and the Bill, as drafted, makes no provision for GBR even to take that problem into account. Amendment 260 would insert clause 15(2A), which states that the
“rail strategy must include a strategy for level crossings (“the level crossings strategy”)”,
and clause 15(2B), which states:
“The level crossing strategy must set out an assessment of the impact of level crossings on the economy and community of the area in which the level crossing is situated, for the purpose of reducing disruption caused by level crossings.”
That is actually a very sensible point, because it recognises that the railway does not impact just trains. If a level crossing temporarily closes arterial routes, there is an impact on other modes of transport, so it would be sensible for a strategy to take into account the full impact of the changes that the Secretary of State has in mind.
Amendment 261, which my hon. Friend the Member for Runnymede and Weybridge also tabled, would insert an alternative subsection (2A) in clause 15, stating:
“The rail strategy must include an assessment”
of
“the ability of passengers to change between…main line rail services”
and from rail services to
“other modes of public transport.”
The amendment would also provide that the
“assessment under subsection (2A) must consider how to reduce delays and disruption to end-to-end journeys involving a change between rail services, or between rail services and other modes of public transport.”
This is, again, my hon. Friend the Member for Runnymede and Weybridge standing up for his constituents and the particular issues that they face with the co-ordination of services. Having heard the experience of Mayor Burnham with the Bee Network in Greater Manchester, the Committee could argue that the increased integration of all modes of transport should properly be a focus of GBR, and the amendment would apply that integration to areas that are not mayoral combined authorities. Later in Committee, we will consider an amendment that seeks to extend the same courtesies to local transport authorities as the Bill extends to mayoral combined authorities, and I know that my hon. Friend the Member for South West Devon will be keen to speak to that.
Liberal Democrat amendment 135, which was tabled by the hon. Member for Didcot and Wantage, would require the Secretary of State to make an international rail strategy part of the Government’s long-term rail strategy. That would specifically look to support new routes and operators, and increase channel tunnel and London St Pancras high-speed rail capacity.
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UK Bus Manufacturing
(1 day, 7 hours ago)
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Euan Stainbank (Falkirk) (Lab)
I beg to move,
That this House has considered UK bus manufacturing.
It is a pleasure to serve under your chairship, Dr Murrison. I draw attention to my entry in the Register of Members’ Financial Interests and my role as co-chair of the all-party parliamentary group for British buses, alongside the hon. and learned Member for North Antrim (Jim Allister).
There were 694 more zero emission buses registered in Britain in 2025 compared with 2024, a 38% rise in the number on the road in one year. There were 167 fewer built in the United Kingdom in 2025 compared with 2024. When we need more zero emission buses, when operators and local authorities are buying more buses but there are fewer orders going to factories in Falkirk, Ballymena, Scarborough, Aldershot and across the country, we know there is a problem, and it did not start yesterday.
I applied for this debate, first and foremost, having been born and raised in a community that has seen immense benefit from the UK bus manufacturing industry. The goliath industrial site, which stretches across a large section of Glasgow Road in Camelon, has been the origin of Scottish-built buses for decades. A stone’s throw away is the sleek, relatively new modern site at Larbert, which hosts the global headquarters of Alexander Dennis. I had a welcome visit to Alexander Dennis’s “meet the fleet” exhibition last week for prospective bidders to Transport Scotland’s ScotZEB3 scheme. I tentatively await the outcome of that exercise and welcome Fiona Hyslop MSP, Cabinet Secretary for Transport, writing to me earlier this month to confirm when the announcement of successful bids is to be made. I hope for an objective outcome that supports Scottish manufacturing.
Members of Parliament will recognise the inherent pride when they spot something built in their community when out and about elsewhere in the country. When the Mayor of Greater Manchester’s fantastic Bee Network was launched, I was proud to note that there were more buses built by workers in Falkirk than from any other place in the world.
Paul Waugh (Rochdale) (Lab/Co-op)
My hon. Friend is making a powerful case. Mellor, a bus manufacturer in Rochdale, does a superb job of producing the buses that Greater Manchester needs. Andy Burnham was the first in more than 40 years to retake control of our bus network in Greater Manchester, showing that with a publicly controlled local bus network, we cannot only improve facilities for passengers but secure contracts for local workers and British-built buses. Does my hon. Friend agree that is the way forward, particularly when we are considering Chinese-built buses?
Euan Stainbank
Franchising is certainly an opportunity for our British bus manufacturing sector. I will speak later about procurement and the opportunities it presents for us to go even further, and potentially correct some of the examples that are not as great as the fantastic work done by the Mayor of Greater Manchester in that regard.
This debate is unlike the last one held in Westminster Hall prior to the election in 2024. This is not a debate about the virtues of the current push to decarbonise transport. It is an immutable fact that the shift in demand from both operators and public subsidy is towards cleaner and quieter transport. For the UK manufacturing sector, we need to recognise that the transition to zero emission buses and away from diesel is happening. A business selling horses and carts at the beginning of the 20th century could have continued to sell the carts and might have done well in the short term, but eventually, if it did not transition to automobiles, it would have gone out of business.
Chris Vince (Harlow) (Lab/Co-op)
I thank my hon. Friend for his powerful speech on a topic about which I know he is particularly passionate. He will be aware that Alexander Dennis has a base in my constituency of Harlow. Would he agree that the move towards zero emission buses is a massive opportunity to increase the skills base of our communities? We should welcome the opportunity that young people have in our constituencies to work on these revolutionary new vehicles.
Euan Stainbank
My hon. Friend goes to the heart of the issue we are debating today. This is an opportunity for our country to enable our manufacturers to compete within the market.
What British industry needs is not to see its renowned prowess for making diesel buses become a sentimental memory in communities such as Falkirk, but policy certainty and support to scale up and properly compete in the zero emissions market as we move towards the implementation of the ZEB mandate. International competitors have been able to scale up to meet the global market through state subsidy and clear procurement ambition. It is up to us to gather the political will to do the same, which I am sure we will hear articulated today.
Through both the mandate and voluntary targets for new registrations, operators are moving to prepare for new additions to their fleet to be fully zero emission by 2030, at the earliest. As that date approaches and diesel buses concurrently become a diminishing part of manufacturers’ order books, we must acknowledge that there is a short window before every new bus in the UK market will be zero emission. The year 2027, proposed by some during the passage of the Bus Services Act 2025 as the date for the ZEB mandate to come into operation, would, without thought, drastically narrow that window, and I was glad to see those amendments defeated.
However, the message we are hearing from our manufacturers is clear. If we now fail to get this right, we will not be talking about a British-led transition and we will not be talking just about a 35%, and rising, Chinese market share. We will be talking about transitioning to reliance on other places in the world to build the vehicles we need on our roads. We will be facing the reality of the long-term consequences of the price and security of supply being increasingly elsewhere and not here. We will have lost control.
That is why this debate is urgent. The Government, in my view, have the political temperament to deliver a new generation of British-built buses, and they have the proven ability to be bold on industrial policy, but too many missed chances by previous Governments and increasingly imminent deadlines for our industry mean that we need to be bolder. Sadly, taxpayer-funded schemes have contributed, rather than aiding a solution, to the problem of diminishing market share for UK manufacturers.
The initial ZEBRA—zero emission bus regional areas—scheme, touted proudly by Prime Minister Johnson’s Government, committed to 4,000 British-built buses by the end of the last Parliament. The scheme delivered just 2,270 buses, of which about 46% were built abroad. There was a material and harmful chasm between political rhetoric and delivery for UK manufacturers.
Scottish manufacturing fared worse recently in phase 2 of the Scottish Government’s zero emission bus challenge fund, the outcome of which was sending two thirds of ScotZEB2 orders to Yutong in China, while less than 20% went to Scottish manufacturers. That created an existential threat to 400 jobs and the Scottish bus manufacturing sector last year, with the First Minister being informed by the company in August 2024 that the outcome of the scheme appeared to show little regard for Scottish manufacturing, with unprecedented action being required in September to prevent the two factories from closing for good.
In addition, 130 jobs were lost in 2024, in part because of the aggravated issue of conditions being placed on Scottish Government funding, compelling adherence to advanced Fair Work First standards for employee remuneration, welfare and safety, while no such requirement was made of foreign manufacturers. I am all in favour of fair work standards being applied. The problem here is that they were not weighted in the procurement exercises, despite their being required only of British manufacturers. That created an unlevel playing field, tilted in the wrong direction.
We have heard testimonials to the origin of London’s public transport system in the labour of Scottish, English and Northern Irish workers, who now contend with, and are contradicted by, the rapidly increasing portions of Transport for London infrastructure coming from elsewhere in the world.
It does not have to be this way. For example, as my hon. Friend the Member for Rochdale (Paul Waugh) alluded to, the Greater Manchester and Liverpool City Region combined authorities, when franchising their bus networks, bought nationally. They chose to weight properly when buying buses, with procurement teams looking at what could be achieved when social value is appropriately weighted.
These successes and failures are largely down to how the schemes are set up. It seems entirely right to me that, because many are funded wholly with our constituents’ tax money, we should maximise the muscle of the state to make sure that as much of it as possible ends up benefiting our constituents, within the limits of our World Trade Organisation obligations.
Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)
In the Doncaster East part of my constituency, franchising kicks in next year. At the moment, routes are about profits, not the people who use them. With this being about buying British buses, I think we have an amazing opportunity also to think about accessibility on our buses and to make sure we are also thinking about people who have disabilities or need extra help when we build our British buses.
Euan Stainbank
For Members of Parliament, accessibility on our public transport network is always a key factor. At the “meet the fleet” exhibition, I was glad to see some of the new models coming out from Alexander Dennis—hopefully to be built at the Larbert and Camelon sites—which will provide greater accessibility for customers. It is important for all bus manufacturers to make that feature a key selling point when they are going out to the country.
Other countries have been able to do this and follow WTO or even EU free trade obligations. The German Government have recently started enforcing a 50% rule for contract value in procurement from the EU or countries with a free trade agreement, putting a cap on market growth of foreign competitors and, in practice, protecting jobs in the German automotive industry. The US’s Build America, Buy America scheme, introduced by the Biden Administration, mandates 70% local content for all rolling stock, and final assembly in the USA. Canada, while engaged in several free trade agreements, has introduced a Buy Canadian procurement policy framework that prioritises domestic industries.
If other countries can do it, so can we. When I have put to the Government the case for greater policy support for UK manufacturers, the very welcome forum of the UK Bus Manufacturing Expert Panel and the 10-year bus pipeline are often cited as the answer. The panel and the imminent 10-year pipeline will offer welcome certainty about the volume and source of upcoming demand, but we need alignment of policy to support our industry or we are in danger of providing just as much certainty to foreign competitors as to our own manufacturers.
The Government’s recent consultation on procurement reform is very welcome. I hope it did not escape the notice of my hon. Friends on the Front Bench and in the Cabinet Office that substantial submissions were made by Alexander Dennis, Wrightbus and supply chain businesses that rely on the primary UK manufacturing sector. The UK manufacturing sector is clear on a way forward that supports it without significant structural legislative change. We need a stronger emphasis on social value, and I believe Ministers must now consider a 30% social value weighting and clearer local economic benefit expectations.
Social value criteria should be directly linked to key performance indicators that provide evidence of growing industry; job creation and retention; skills and metrics, including economic impact; taxes paid in the UK; supply chain spend; and UK gross value added to UK plc. Simply setting social value at 10% would continue to risk it being immaterial to scheme outcomes, as we saw in Scotland, and would be an inadequate tool to deal with rapidly diminishing British market share.
Will the Minister confirm in his summing-up what further action is being considered to encourage contracting authorities to maximise their portion of the 10-year bus pipeline through domestic content when it is published? In addition, what conversations has he sought with Cabinet Office colleagues on procurement reform to amplify the views of the manufacturing sector and supply chain businesses when the time comes to legislate?
The necessity to retain and grow our domestic capacity is increasingly essential when serious concerns are being raised across Europe about the security of some Chinese-built buses. Following concerns raised by myself and the hon. and learned Member for North Antrim, there is currently a National Cyber Security Centre and Department for Transport investigation into the risk of remote deactivation in some Chinese-built buses. I understand, through subsequent reports in the media, that the possibility of remote deactivation exists for 700-plus buses currently active on British roads.
Although the risk may appear abstract to some, this issue raises important long-term security, autonomy and dependability concerns for my constituents, operators and passengers. Our manufacturers currently comply with security regulations 155 and 156, verified by the Vehicle Certification Agency, which ensures that vehicle manufacturers implement comprehensive cyber-security measures throughout a vehicle’s life cycle and ensures that software updates happen safely and securely. Approval certificates, however, can be sought from other countries’ approval authorities through mutual recognition arrangements for non-UK verification.
I raised written questions prior to the interim reports of the investigation being reported in the media. I will repeat them here, considering the new information. Have the Government considered requiring UK VCA verification for any non-domestic manufacturers in the UK following those concerns? Following that, will the Government accept that national industrial security could and should be factored into any subsequent taxpayer-funded procurement exercises? If there is any degree of fallibility in security that cannot be adequately mitigated, the Procurement Act 2023 surely provides the powers for contracting authorities to disregard bids from non-treaty state suppliers.
Is that a power the Government would consider encouraging or mandating contracting authorities to use, if they are not satisfied with the security of buses coming from abroad? Although that would certainly be significant action, buses are the most used form of public transport in the country and are essential national infrastructure. We know that there are sufficiently credible risks to warrant Chinese-built buses being investigated. Without prejudicing the outcome of the investigation, which I understand is still on track, will the Minister provide us with as much of an update as possible on when we should expect the investigation to be concluded? This concern reinforces the need to move urgently to tilt the market away from increased reliance on Chinese manufacturers and towards self-sufficiency.
With 400 jobs and the very existence of a century-old bus manufacturing sector put in jeopardy in my community in Falkirk last year, the state of the UK bus manufacturing sector is a real and present issue, not only for my community but for our national industrial security and how we effectively execute a just transition, as we move towards the zero emission bus mandate for 2030 at the earliest. The transition towards clean transport has been, and will be, backed by billions in additional funding from this Government, who have shown the ability to be bold on industrial policy. We have a valued, well-paid and skilled workforce. At the same time, we have an existential challenge from foreign competitors. Too much taxpayers’ money goes abroad, and too many self-imposed targets were missed by previous Governments.
If we do not adopt creative policies from elsewhere to support our British industry, we risk losing those jobs permanently to Chinese manufacturing, and if that is done, it cannot be undone. If UK bus manufacturing fails, for as long as this country is subsidising buses we will be sending taxpayers’ money abroad, so we cannot afford the cost of doing nothing.
Deindustrialisation is not an inevitable process—a reaction to the UK sector losing market share. We have policy levers. We can increase social value weighting expectations nationally and locally to 30%; we can give clear guidance to contracting authorities on how the muscle in the Procurement Act can best be strategically deployed; we can clearly state the risks that kill switches could present; and we can back British buses.
My constituents and I hope to see buses being built in Falkirk for a long time to come. I want the same for communities in Ballymena, Scarborough, Aldershot and beyond. I believe this Government can make that hope a concrete reality, but to do that we need to make the right choices. We need to make bolder choices, and we need to make them now.
Several hon. Members rose—
Dr Andrew Murrison (in the Chair)
I will call the Front Benchers at 10.28 am. There are about half a dozen Members seeking to catch my eye, so they will have five or six minutes each. Colleagues should reflect on keeping their remarks brief—a copybook example of which will be provided by Graham Leadbitter.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
It is a pleasure to serve under your chairship, Dr Murrison. I congratulate the co-chairs of the APPG, the hon. Member for Falkirk (Euan Stainbank) and the hon. and learned Member for North Antrim (Jim Allister), on securing the debate.
I like to think I have a bit of an affinity with buses. For my entire time at high school—three years at Oban high school and three years at Biggar high school—every school day started and ended on a bus, as it does for many living in rural communities. At the age of 15, I volunteered at Biggar’s Albion works as part of a Duke of Edinburgh’s award, and helped to restore an Albion lorry. Albion was, of course, one of Scotland’s first vehicle manufacturers, and that included the manufacture of many buses. I do not know whether anybody here is old enough to remember that.
Although Albion is sadly no more, Alexander Dennis has been manufacturing buses in Scotland for more than 100 years and provides significant skilled employment. In Scotland, we recognise the importance of bus travel. The SNP has put in place a number of measures to boost bus use, including an extensive bus pass system, which includes free bus travel for under-23s. It has had positive social impacts and gives young and old people access to vital services and to education, employment and social opportunities. Increased bus use means steady demand for new buses to replace or expand existing fleets, and higher demand means greater opportunity for manufacturers.
In my former role as council leader in Moray, I had the pleasure of being a signatory of the Moray growth deal, which included the m.connect scheme—a combination of massively expanded on-demand bus services and expanded scheduled services over a large geography. It is well supported and well liked by the public and, again, more services mean more buses.
However, there are serious challenges for bus manufacturers—notably from cheap foreign imports, especially from China—and that raises questions about the current procurement rules. The UK-wide Subsidy Control Act 2022 has prevented the Scottish Government from directly procuring from a single supplier, which puts avoidable strain on domestic bus manufacture.
Protecting skilled manufacturing in Scotland is critical to building our transition to a green industrial economy. That is why the Scottish Government committed £4 million to retain more than 400 manufacturing jobs at Alexander Dennis through a furlough scheme to protect crucial skilled workers until work can recommence. It was because of that collaboration and determination, and a shared belief in the value and the future of domestic manufacturing, that the Scottish Government and Alexander Dennis were able to negotiate that deal. But the obvious preference for the company, the Government and, most importantly, those workers is to have a steady stream of orders and no requirement for such a scheme.
There are several key things the UK can do to support bus manufacturing. The Subsidy Control Act needs reworking. As the hon. Member for Falkirk said, social value weighting needs to be ramped up. As a councillor, I argued very strongly for that for a wide range of contracts, and I continue to do so today. It is perfectly reasonable to place weighting on local supply chain content, quality assurance, apprenticeships and much more.
We also need to significantly tighten up certification of buses to ensure consistently high standards, especially on issues such as cyber-security. There have been multiple investigations in various countries into so-called kill switches in imported vehicles and other technologies, so that is clearly of critical importance.
There is a particular irony in trying to grow an electrically powered bus fleet in the UK by shipping buses in large numbers halfway around the world using heavy fuel-powered cargo ships. The green credentials of such procurement arrangements are highly questionable. The whole carbon impact of manufacture and delivery needs to be considered. Work also needs to be done by the Government and power distribution companies to ensure that grid connections for new charging installations are carried out in a timely way. Bus operators will not procure modern EV buses if they have nowhere to plug them in.
In conclusion, there are several actions the Government can take to support bus manufacturing and manufacturing more generally. That would also give public authorities and Governments across these islands more tools in the box to support procurement that drives growth and skilled jobs in our manufacturing sector, and ensures a future for these well-known, well-liked companies.
Dr Andrew Murrison (in the Chair)
I call the co-sponsor of the debate, Jim Allister.
Jim Allister (North Antrim) (TUV)
It is a pleasure to serve under you, Dr Murrison. I declare an interest as the co-chair of the APPG for British buses.
As the representative for North Antrim, I have the privilege of having Wrightbus as the key manufacturing company in my constituency. It is remarkable that, having started in a domestic garage just after the second world war, Wrightbus is now one of the world leaders in technology, skills and innovation. Ballymena in my constituency will forever be grateful to Sir William Wright for his innovative foresight, which led to where we are today.
It was not always an easy road. Just a few years ago, after substantial problems, Wrightbus rose like a phoenix from the ashes under new ownership, generating 2,300 jobs and producing many, many hundreds of buses, with the ambition to produce more than 3,000. I recently visited the site again, and saw the most modern of the company’s buses, which thankfully take care of all the accessibility needs one could think of. I was encouraged by the enthusiasm of the new chief executive, who certainly has ambitious plans for the site.
It is important that we as a nation grab hold of the opportunity here. The industrial strategy talks about advanced manufacturing as a strategic growth sector. If we mean that—I certainly believe that the sector has that potential—we must twin it with the approach we take on procurement. There is no point saying that advanced manufacturing is a strategic growth sector if our procurement policy is letting it down.
Mr Gregory Campbell (East Londonderry) (DUP)
Given that we have a growth policy that aims to support UK bus manufacturing, does the hon. and learned Member agree that it seems totally counterproductive that we subsidise overseas bus manufacturers to bring buses into the United Kingdom? We have such magnificent manufacturing bases in Northern Ireland, Scotland and England.
Jim Allister
Indeed, and the Chancellor is on record as saying that
“where things are made, and who makes them, matters.”—[Official Report, 11 June 2025; Vol. 768, c. 979.]
That is correct, and the Government need to get that message embedded in their soul.
I want to speak directly to the mayor of this great city—our capital city. In recent times, 479 Chinese buses have been put on our streets, with another 160 to follow—that is China, with the kill switches. I ask the mayor and TfL: where is the national pride in our capital city if we arrive and discover that the bus we are likely to get on was made in China rather than the United Kingdom? Other mayors seem to have had the vision and the desire to promote British-made products. That desire needs to catch flame here in the capital city, and I trust that it will.
Our procurement must be assertive and bold. There are the social value tools to make our procurement effective in assisting the production of home-made buses. We should be unashamed to do as other countries do when it comes to productivity. I hope that one outcome of this debate will be that those in a position to order buses reflect on where they order them from, and that we will see an interest in and accentuation of orders from within our United Kingdom. We have the means. We have the product. Let us build on it and make it even greater.
Finally, I want to raise a particular problem with production and exports in Northern Ireland. Sadly, under the Brexit arrangement, we are still under EU state aid rules. We see that in clauses 13 to 15 of the Finance (No. 2) Bill, which increase the level available for enterprise management incentives, enterprise investment schemes and venture capital trusts in Great Britain, but hold it down for companies in Northern Ireland. Why? Because of EU state aid rules. We also see it in the Industry and Exports (Financial Assistance) Bill, which again caps us under the EU state aid limits. How can we have a level playing field for UK production if, quite outrageously, one part of the United Kingdom is subject to a cap under EU state aid rules, which would not be there at all, of course, if we were properly part of the United Kingdom and had properly achieved Brexit? For Wrightbus, the workers in my constituency and the commonality of this United Kingdom, we must have that level playing field. That will then unleash opportunities for this great industry. It is time for the Government to liberate the bus building industry so that it can grow, including in Northern Ireland.
Brian Leishman (Alloa and Grangemouth) (Lab)
Good morning, Dr Murrison; I am delighted to serve under your chairship. I bring attention to my membership of Unite, and I record my appreciation for the hon. and learned Member for North Antrim (Jim Allister) and for my constituency neighbour, my hon. Friend the Member for Falkirk (Euan Stainbank), for securing this vital debate.
My hon. Friend and I both have Alexander Dennis sites in our constituencies, and we have campaigned together, representing the interests of the AD workers from Larbert in my constituency and Falkirk in his. Of course, being MPs from central Scotland, we are sadly no strangers to big industrial issues. Scotland’s only oil refinery operated in Grangemouth for a century until last year, when it was closed by its owners—a combination of a multinational company owned by a billionaire and a company controlled by the Chinese Government.
Eight miles along the M9 from Grangemouth is Larbert, which is my Alexander Dennis site. It is a huge local employer, and it is feeling the adverse effects of Chinese influence.
It is a well-known fact that Chinese buses and batteries currently have a substantial share of the market. Alexander Dennis workers and trade unionists have laid out the realities and issues that British bus manufacturers are facing. As is the case in many different industries, China is now able to overpower more established economies, and the position of European nations in a global trade context has dramatically changed.
Let us be clear: as a Government, we are not without power. Things can be done to help British business. The Government must be willing to intervene, impact and change the circumstances for British industry. It can be done. It was done, in December last year, when the Labour Government stepped in and saved the British chemical industry at Grangemouth. Our intervention saved 500 skilled and well-paid jobs on site, reversed the town’s industrial decline and boosted the local and national economy. That is the good that Government intervention does for British industry, British workers and British working-class communities.
I say to the Minister that, sadly, Labour Governments do not come around all that often, so it is up to us to be assertive and to create, at the very least, a level playing field. In fact, why not make it more advantageous for British companies to do business? Where things are made matters, and “Buy British” and Britain being “Britain’s best customer” have to be more than political slogans.
Things must be changed to make it easier for our companies to be competitive, and we know that the SNP will not do it. It is easy for them to duck responsibility and point the finger at Conservative Governments of the past who treated working-class Scots and Scottish industry with utter contempt. But we have had 20 years of SNP Government with zero industrial strategy. Equally bad has been their public procurement policy. If it is not buses ordered from China, it is ferries built in Turkey or Poland; it is NHS Scotland contracts going to France; it is Scottish Government cyber-security services being outsourced to the United States. Over £7.7 billion of Scottish Government expenditure—public money—has gone to foreign companies. Stronger for Scotland? The treatment of Scottish workers, including the bus industry, which we are talking about today, is a national scandal.
In finishing, I say to the Minister: go back to the Department and be bold, be transformative and put our workers, our communities and our businesses at the heart of everything that we do.
Andrew Rosindell (Romford) (Reform)
Good morning, Dr Murrison. As always, it is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Falkirk (Euan Stainbank) and my good friend the hon. and learned Member for North Antrim (Jim Allister) on securing this important debate. Today we gather to discuss British bus manufacturing. We are here to highlight not only skills, the economy and transportation but, I believe, the integral role of all those dimensions to the security of our entire nation.
This industry is woven into every facet of our national life. It is part of the fabric of our island story, and I believe we must defend it. This is not just about vehicles; rather, it is about our British heritage, our skills and the future of our country. There are more than 4,150 highly skilled individuals directly employed, and more than 13,000 indirectly employed, in the supply chain of bus manufacturing throughout the United Kingdom. Bus manufacturing is a powerhouse of skilled jobs that trains and employs local people across 90 local authorities. Those jobs are not only skilled but more highly paid than comparable occupations, with salaries 20% higher than in other parts of the supply chain.
Sadly, we do not manufacture buses in my constituency of Romford, but local people are employed in all parts of the supply chain, and many more depend upon it.
Every day, local people in Romford, which is part of Greater London, rely on buses supplied by great companies like Ulster’s Wrightbus keeping our communities connected. In my borough of Havering to the east side of London in Essex—where my constituency is located—almost a quarter of journeys are made by bus, and across the whole of the Greater London region, buses enable more than two thirds of journeys.
Buses are an essential lifeline for so many of our constituents. I use buses all the time; I jump on the 103, or possibly the 499, from my home down to Romford station on the way to Westminster. We have two very good buses in my community. They are provided by Transport for London, which comes under the Mayor of London. I entirely endorse the hon. and learned Member for North Antrim when he talks about the absolute failure of pride that the Mayor of London shows in our part of the country. British buses could be purchased and procured for use in Greater London, and yet Mayor Khan is going to China: shame on him. That is one reason why people in my borough would love to have the opportunity to not be under Greater London and be fully part of Essex as we have historically always been.
While our buses are essential for both the economy and transportation, that is only part of the picture. We ought not to forget that many British buses are made in Northern Ireland. That is a stark reminder of the severe damage being inflicted by the Windsor framework—a shameful betrayal of the people of Northern Ireland that is creating barriers between British people and businesses, and creating two internal markets in one United Kingdom. That is a national disgrace and must be brought to an end. We are one United Kingdom and all British people should be treated the same. The rules should apply throughout all parts of our great nation; we should not be separating Northern Ireland from Scotland, Wales and England. I look forward to the next Government—and I hope it will be a Reform UK Government—reversing the Windsor framework and implementing Brexit as the people voted for.
It is also a reminder of the continuing avenues for growth and job creation across the Union. Wrightbus is a prime example; the Ballymena company produces dozens of buses every year, employing hundreds of local people and supplying a quarter of buses across Greater London. That means roughly a quarter of bus journeys taken by my constituents are made possible by the entrepreneurial spirit and work ethic of the good people of Ulster. That is an incredible testament to the importance of the Union and showcases Britain at her very best.
By backing British bus manufacturing, we are not only calling on the Government to protect transport networks, the economy or even the Union, but also asking that they live up to their central responsibility to defend our national security. Under the zero emission bus regional areas scheme, which ended in 2024, 40% of buses were procured from abroad, increasing foreign influence in this native industry and divesting from the domestic skills base. Worse still, publications such as The Times, The Guardian and others have reported extensively on kill switches present in foreign-made buses, inserted by international competitors or adversaries of the United Kingdom, such as the People’s Republic of China. The very real risk of foreign disruption has been permitted for too long by successive—I am afraid to say—Conservative and Labour Governments and must be brought to an end. Keeping our bus manufacturing in British hands is no longer a patriotic preference or an economic luxury, but a national necessity. I call on the Government to keep our bus network in British hands, protect our people and create jobs across the kingdom that showcase British excellence. Let us ensure that we have the skills, investment and political will to back British industry making British buses: British made for generations to come.
Several hon. Members rose—
Dr Andrew Murrison (in the Chair)
I appeal to colleagues to be brief in their remarks so that we can get everybody in.
Kenneth Stevenson (Airdrie and Shotts) (Lab)
It is a pleasure to serve under your chairmanship, Dr Murrison. I thank my hon. Friend the Member for Falkirk (Euan Stainbank) and the hon. and learned Member for North Antrim (Jim Allister) for securing this important and timely debate. I also say “happy birthday” to my hon. Friend the Member for Falkirk—I know that he says he is 25, but I am not so sure about that. Bus manufacturing is a significant sector in both Members’ constituencies, through Alexander Dennis and Wrightbus. I commend my hon. Friend the Member for Falkirk and the hon. and learned Member for North Antrim for their dedicated efforts to support a highly skilled sector that employs more than 4,000 people across the United Kingdom and a further 13,000 in the supply chain.
The United Kingdom has a proud industrial heritage. It was known for its ability to build and build well, and companies such as our bus manufacturers keep that reputation alive. Engineering has been critical to our country’s success, and small steps, such as including engineering in the name of the current Science, Innovation and Technology Committee, would show this Parliament’s collective determination to highlight the role that engineering has to play in our future. That is a pet peeve of mine and something that the Tories and failed Reform have no idea about—in the past and in the future.
The United Kingdom can have a booming, home-grown economy at its centre once again. As an engineer and former lecturer, I am passionate about the future of UK manufacturing and innovation, but I am well aware of the need to harness potential through timely investment and the right strategies. A modern industrial strategy is required, but it must not be in name only. Any strategy must have the creation of a skills-based economy at its heart. It must be cognisant of the impacts of deindustrialisation in constituencies such as mine in Airdrie and Shotts, and it must commit to utilising skills that exist here in the UK to get Britain building and to ensure that major employers such as Alexander Dennis have a role to play long into the future.
This Government are committed to securing the future of industry and supporting bus manufacturers in their move to electric, but we must collectively go further.
Jen Craft (Thurrock) (Lab)
Ensignbus, which operates in my constituency, is not a bus manufacturer per se, but it repurposes buses and is looking to get into the repowering of buses that have finished their natural life, usually in London, which will aid the switch to zero emissions. Will my hon. Friend join me in encouraging and supporting it in that endeavour, and in urging the Minister to look into what we can do as a Government to support enterprises such as this?
Kenneth Stevenson
Yes, of course I would. There is a major move towards making sure that cars in the future, such as Beetles etc, move to electric power. There is a move towards that in America, and we should make that move in the UK towards taking cars and buses that can be improved and moving them to batteries or even hydrogen—to non-fossil fuels.
In Scotland, the Scottish Government’s procurement is so deeply flawed that contracts are handed to Chinese bus manufacturers when the skills exist in our central belt. Investing in British bus manufacturing by supporting companies such as Alexander Dennis will not only get state-of-the-art buses on the road, but bolster national security, given the serious and widely held concerns surrounding where Chinese manufactured buses are controlled from and whether an action taken in China could bring electric buses here to a halt.
Too many fossil fuel-powered buses—more than 36,000—remain on our roads. Bus manufacturers here in the United Kingdom are prepared to meet the demand to replace them. Manufacturers are calling for certainty and security, and they are asking for Government buy-in. To think that a company such as Alexander Dennis was at risk of going under, and that the jobs of people in my constituency were threatened, when such potential exists to invest in and grow the sector is deeply worrying. Words must quickly turn into action in every part of the United Kingdom to get this industry back on its feet and contributing to our economy in the way we know that it can. That is why net zero emission bus funds, whether in Scotland or across the United Kingdom, must be accessible to British businesses. The potential to grow our economy through investing in British bus manufacturing is clear to see, and I hope to hear from the Minister how we will embrace that potential, deliver for UK industry, and protect and create jobs for years to come.
Jim Shannon (Strangford) (DUP)
It is a real pleasure to serve under your chairship, as always, Dr Murrison, and I say a special thank you to the hon. Member for Falkirk (Euan Stainbank) and the hon. and learned Member for North Antrim (Jim Allister) for highlighting this topic and securing the debate. There is a potential for UK-wide investment, which will pay UK-wide dividends. I am pleased to see the Minister in his place, and I wish him well in his role. I know that he will give very confident and positive answers to our questions.
The constituency of the hon. and learned Member for North Antrim encompasses Ballymena and is strongly linked to buses. He will be aware that I have supported and cheered on Wrightbus for many years and will continue to do so because, as he rightly said, bus manufacturing is a UK-wide project, which Strangford plays her part in. While primary assembly is done in Ballymena, the Northern Irish manufacturing sector is highly integrated. It is common for precision engineering firms in the Strangford constituency to act as tier 2 or tier 3 suppliers, providing specific components such as metal fabrications or electronic systems to larger manufacturers. As Members in this Chamber know, we need the small cogs as well as the big ones for the engine to power up, so there is a role for us all to play across many of our constituencies in relation to that.
The fact is that the reputation for Northern Ireland crafted vehicles is top class; it is no exaggeration to say that we are world leaders in the field. The hon. Member for Falkirk said that his bus companies are leaders in the field, and they are. It is a collective goal that we are trying to achieve. That we are world leaders is undoubtedly down to the investment and support of local bus makers such as Wrightbus. The hon. and learned Member for North Antrim set the scene in relation to Wrightbus. He set out how it has advanced to where it is today, and told us of the key role that it plays. Its submission to the Business and Trade Committee made it abundantly clear how supporting the manufacturing sector can help others in the United Kingdom.
I find it so interesting that the global bus market is worth around $21 billion and that some 3 million buses are used for public transport. To meet global net zero goals, all buses—or at least the vast majority of them—will need to switch to zero emission alternatives by 2050. There is a great desire for the new, green-friendly electric buses. If a bus is going to last for 15 years, that commitment needs to be made now, so maybe the Minister can give us some idea of what is going to happen in relation to that.
As Members may know, the average lifespan of a bus is 15 years, which means that bus operators and local authorities are now making investments in the decarbonisation of their fleets. According to those projections, global sales of zero emission buses are due to rise from 112,000 in 2022 to 670,000 in 2027. That is massive—it would be a growth of six times in a period of five years. As a result, there is a major export opportunity for the UK bus manufacturers to sell zero emission buses in a growing global market.
To do that, Wrightbus needs Government support, not simply financially but promotionally. The Government must ensure that firms throughout Europe can order with confidence from this very niche but very successful firm. I believe that more can and must be done by the Government to provide that security, and that begins with investment in the facility. I am confident that every investment of time and money will pay dividends throughout this United Kingdom of Great Britain and Northern Ireland.
I thank hon. Members for the motion and give my wholehearted support once again, knowing that a rising tide lifts all ships. Northern Ireland has historically carried out high-level manufacturing in the air, in the sea and on land, and each of those industries has potential for so much more. I hope that, from today, we begin to realise that potential.
Alison Taylor (Paisley and Renfrewshire North) (Lab)
It is a pleasure to serve under you, Dr Murrison. I thank my hon. Friend the Member for Falkirk (Euan Stainbank) for leading on such a critical issue for his constituents. As of the third quarter of 2023, the UK manufactured only around 17% of UK buses, employing around 4,400 people while also supporting supply chains. That is undoubtedly an economic benefit, but it is also less harmful for our precious planet.
Transporting large goods from as far away as China obviously has a detrimental environmental impact. Britain should be at the heart of manufacturing electric buses for our own use, driving forward the green transition to halt climate change. In my constituency, which covers part of Glasgow, improving air quality has undoubted health benefits. Driving change does not happen by accident; it needs a strategy, a plan, hard work and investment.
The demand for electric buses will only continue to grow. I hope we can ensure that domestic demand is primarily met here. Alexander Dennis has faced significant issues over the last few years, and I hope they are temporary and resolvable. The future of bus manufacturing in the UK should be strong and positive, build on the existing manufacturing base and be supported by a strong domestic pipeline of orders.
There is no shortage of existing sites for the expansion of bus manufacturing in Scotland. Bus manufacturing companies seeking new sites need look no further than the advanced manufacturing district for Scotland at Glasgow airport in my own constituency, which has an ample supply of land, access to the White Cart river for water, good motorway connections and a developer and a local authority poised to construct low-carbon buildings at a reasonable cost.
Communities like mine in Paisley and Renfrewshire North need more and better buses, including slicker, smaller buses that can wind through our housing estates. The reliability and availability of buses and their routes comes up frequently on the doors of my constituency, particularly in Gallowhill, Ferguslie Park, Erskine, Renfrew, Penilee and Cardonald, where they are a lifeline to doctor’s appointments, work and seeing families and friends. My constituents need to know that more buses will be coming very soon.
Tracy Gilbert (Edinburgh North and Leith) (Lab)
It is a pleasure to serve under your chairship, Dr Murrison. I congratulate my hon. Friend the Member for Falkirk (Euan Stainbank) and the hon. and learned Member for North Antrim (Jim Allister) on securing this important debate. My contribution will be short; it will focus on the Government’s approach to securing the manufacturing jobs we have already in the UK, and how we can expand that number further.
My hon. Friend will be very happy that my Edinburgh constituents ride on buses manufactured in his constituency every day, so much so that since 2018 Lothian Buses has purchased 180 buses from Alexander Dennis. In 2018, Lothian Buses and Alexander Dennis unveiled a brand new 100-seater double-decker bus. Even stepping on these buses today, they feel state of the art, with increased driver safety and passenger convenience. In 2021, Lothian Buses started testing four Enviro400EV double-decker buses, which were the result of an electric vehicle partnership between Alexander Dennis and BYD UK. This kind of partnership demonstrates the work and innovation already under way in manufacturing to decarbonise the transport that we use across our cities every day.
Lothian Buses is the largest municipal bus company in the United Kingdom. It will come as no surprise to many of us that a municipal bus company, working with the same procurement policies and constraints as other bus companies, has supported local manufacturing. Ownership matters, and Lothian Buses demonstrates that municipal ownership leads to positive economic benefits for the people such companies serve. I am keen to hear from the Minister whether the Government have further plans to support or encourage municipal ownership to ensure that the decisions on services, standards and operations are always made for the benefit of passengers.
John Milne (Horsham) (LD)
It is a pleasure to serve under your chairmanship, Dr Murrison. I, too, thank the hon. Member for Falkirk (Euan Stainbank) and the hon. and learned Member for North Antrim (Jim Allister) for bringing this important industry to the attention of the House.
The latest figures tell us that just 17% of buses used in the UK are manufactured here, which of course means that 83% come from abroad. Those figures are very much the wrong way round. What can we do to reverse them?
A number of trends have come together to make what was always a challenging market much more difficult. In particular, we have seen the shift to low emission vehicles on environmental and pollution grounds. That has created a major inflection point in the market. It is an opportunity for companies if they can get ahead of the curve—a chance for them to displace established players—but potentially a major setback if other companies get there first. In this sector, the competitive advantage clearly lies with Chinese manufacturers.
Research published in 2024 by the professional services firm KPMG on the economic impact of local bus services found that the sector invests over £180 million each year in UK buses. KPMG also estimates that around 53,000 people are indirectly employed through the industry’s supply chain, including those working for manufacturers, fuel suppliers, maintenance, parts companies and technology providers. That amounts to a major contribution, both to the economy and of course to employment.
However, the only solution to a long-term strategic problem lies in a long-term strategy. Under the previous Government, there was no industrial strategy worthy of the name. One arm of Government did not seem to know, or care, what another was doing. The need for environmentally friendly forms of public transport was clear a long time ago, but the move towards such transport and the subsidies to support it seems to have been carried out in isolation from policy relating to UK manufacturing. The Liberal Democrats welcome the present Government’s move to a more strategic approach, and I hope the Minister will tell us more about those plans today.
As Liberal Democrats, our approach would be, first, to establish a comprehensive industrial strategy in partnership with business, civil society, including trade unions and academia. Secondly, we would ensure that the principles of tackling the climate emergency, boosting living standards, spreading prosperity everywhere in the UK and growing the economy are at the heart of that strategy. Thirdly, we would seek to provide a strategic framework for effectively addressing the needs of economically disadvantaged remote or rural areas by collaborating with local, regional and devolved authorities in England, Scotland, Wales and Northern Ireland.
Fourthly, we need to work towards four key business priorities: a positive business climate; leveraging technology to supercharge the green economy; empowering small businesses to create prosperity in local communities; and boosting trade. Finally, we need to enable businesses to achieve these priorities by enabling the workforce of tomorrow with a training and apprenticeship programme, investing in key infrastructure, scaling digital innovation and technology adoption, and creating financial markets that work for all businesses.
Although the solution has to be long-term, there is the short-term challenge of keeping the bus industry that we already have afloat in the meantime. The businesses at Wrightbus and Alexander Dennis play a key role in their local economies, as we have heard from the local Members. I hope that the Minister will give us an idea of how we can bridge the gap between what has worked until now and how we need to operate in the future. We have a fantastic workforce and an amazing history in automotive manufacturing. Let us make sure that the industry continues to prosper in the future.
Mr Richard Holden (Basildon and Billericay) (Con)
It is a pleasure to serve under your chairmanship, Dr Murrison. The debate comes at an apposite time. I was particularly glad to have heard from the hon. Member for Falkirk (Euan Stainbank) and the hon. and learned Member for North Antrim (Jim Allister), who both made excellent speeches. Whether someone is in Ballymena, Aldershot, Falkirk, Scarborough or indeed anywhere that bus manufacturing is based in Britain, we want to see a thriving and successful UK bus manufacturing sector, because it is critical to local communities. I was glad to have visited Alexander Dennis when I was the buses Minister.
However, at the very top level across the country, we are seeing real damage being caused by the Government’s complete mismanagement of the economy, with rising national insurance, increases in business rates and self-created economic uncertainty. Those problems have been doubled down on when it comes to our bus manufacturing sector, but it is important to set out the fundamental issues affecting businesses right across the country.
As hon. Members have mentioned, the UK bus manufacturing sector directly employs about 4,200 people, with about 13,000 more in the supply chain. It is vital that we retain and grow that workforce. My fear is that the bus sector, and what is happening to it, is the canary in the mineshaft for manufacturing generally, and particularly vehicle manufacturing, in the UK. As the hon. Member for Horsham (John Milne) noted, in the past year, just 17% of buses with new registrations were made in the UK. There has been a significant and rapid reduction over the past couple of years.
Buses are the most popular form of public transport, so we know that we will continue to need new buses in the UK well into the future, but many companies in the sector are facing huge challenges from increased overseas competition alongside technological change, so we must take the opportunity to ensure that we have companies that are able to compete in an increasingly challenging marketplace. It is not always a competitive marketplace—that point was made clearly by the hon. and learned Member for North Antrim and the hon. Member for Falkirk—but it is a challenging one for many bus manufacturers.
We also need to ensure that UK companies continue to innovate, so that they are at the forefront of technological change. We must examine the hard work of many companies, but especially Wrightbus and Alexander Dennis, the two companies mentioned by the proposers of today’s debate. Those companies have been through challenging times, but they have taken enormous steps to become technological leaders in the sector. Wrightbus in particular has announced enormous growth over the past few years. In 2019, it had fewer than 50 employees and went into administration, with 1,200 jobs being lost. It now provides more than 2,000 jobs in County Antrim, which shows the opportunities for UK manufacturing when there is growth.
At the same time, I recognise the issues noted by the hon. Member for Falkirk, which AD and Wrightbus both referred to in their respective financial announcements. The UK bus industry is facing huge financial challenges. It is vital that we understand the challenges those companies face and ensure that the business environment for them and other companies in the sector is as friendly, financially viable, pro-British business and pro-British worker as it can feasibly be. That means creating a sector that has the opportunity to grow, with technology that can rival that of any company around the world.
During my time as buses Minister, there was exceptionally strong growth in the bus sector, with a 44.6% increase in new registrations. That was driven most strongly by British-built double-decker buses, registrations of which increased by 173.6% during that time. We also became the largest market in Europe for electric and hydrogen-powered buses, under a scheme that was Government supported but local-authority led. None the less, councils have sometimes chosen foreign manufacturers over UK ones. Councils in Leicester, Nottingham, West Yorkshire, the north-east of England and Newport, and now, as the hon. Member for Romford (Andrew Rosindell) mentioned, the Mayor of London have chosen to buy foreign-made buses. That issue was raised today by Members on all sides, and it is one that I battled with when I was Minister. We want to ensure that existing companies in the UK can prosper. Creating the conditions for that is vital.
We must consider not only the work of UK companies but the challenges they face in the international context. Bus manufacturing is a global industry with manufacturers around the world, which is why the Minister is probably facing some of the issues that I faced when I was Minister. Clearly, one of those is social value, which we must do much more about. It is interesting that the hon. Member for Falkirk mentioned the figure of 10%, and I am sure that he is right. We must reflect on that, especially in the international context, and consider how to increase it. That is in the context of something that has only emerged in the past few years: increasing and broader concerns about cyber-security, technology and kill switches. When we put those two things side by side—social value and the security of our bus network, which provides the most popular form of public transport—we see that we have to ensure that we end up in the right place. I ask the Government to commit to reviewing their policies so that matters such as the regulation of equipment, the evaluation of security risk, and trade policy do not enhance the prospects of manufacturers from other countries to the detriment of British manufacturers, especially when taxpayers’ money is being used.
Chinese manufacturers are becoming a dominant force in multiple forms of transport. In 2025, BYD overtook Tesla to become the largest seller of electric vehicles, and Chinese electric bus manufacturing has been significant for some time. The International Energy Agency noted that in 2024, just under 50,000 of the 72,000 electric buses sold globally were sold in China, and that Chinese manufacturers have increasingly looked at exports to exploit the available overcapacity in domestic manufacturing. In 2024, more than 15,000 electric buses were exported from China—a 25% increase on 2023 alone.
Yutong, a Chinese company that is the largest bus manufacturer in the world, grew to take an 8.4% UK market share by the third quarter of 2025. It is clear that, while Chinese providers are present, we must ensure that all relevant trade practices are fair and that the technology being used does not create security risks. I am aware of the worrying reports before Christmas that, following an investigation in Norway, the Department for Transport was working with the National Cyber Security Centre to assess whether Yutong’s remote access to vehicle control systems, for software updates and diagnostics, was a security concern. I would be grateful if the Minister provided details on whether that issue has been looked into and, if so, what the results were.
We need to confront such difficult questions as we do not want to be in the position of enabling bus manufacturers from abroad to take advantage of our policies while making our own manufacturers uncompetitive. There is a risk of the situation worsening, given the Government’s enthusiasm for raising taxes on domestic businesses and particularly on domestic employment.
Will the Minister also consider other Government schemes that send money for manufacturing abroad? I am thinking particularly of the electric car grant: 90% of the vehicles covered by that scheme, and 100% of motorcycles, are built in other countries. This is British taxpayers’ money going abroad to subsidise manufacturing in other countries. We are talking about billions of pounds, so it is really important that we look at the issue. Earlier, it was good to hear Labour Back Benchers make strong points about British taxpayers’ money being sent abroad. The hon. and learned Member for North Antrim (Jim Allister) quoted the Chancellor of the Exchequer saying that
“where things are made, and who makes them, matters.”—[Official Report, 11 June 2025; Vol. 768, c. 979.]
The Government as a whole need to consider that; they would certainly have Opposition support if they wanted to address the matter more forcefully.
Overall, we know that the British public want comfortable buses that serve the public well. I am not going to dwell on the 50% bus fare increase, from £2 to £3, under this Government, as this debate is about UK bus manufacturing, but that manufacturing is driven by consistent growth and by what the people want: comfortable, clean buses, with people feeling safe on public transport that has a reliable and affordable model. I am confident that British manufacturers on both sides of the Irish sea can rise to the challenge of delivering what people want in our bus sectors.
As technology improves, we want to ensure that our manufacturers are not just protected as the best in the world but encouraged to compete right across the board, offering the jobs critical to local economies up and down the country. To do so, we must support businesses and their workers and ensure that our regulations and taxes do not place a burden that drags businesses down. I believe that that is the best way to ensure that British bus manufacturing remains competitive in the modern world. I really hope that the Minister reflects on some of the issues raised today, particularly the security concerns that have emerged forcefully over the last year, so that he sees what more can be done to support British bus manufacturing.
The Parliamentary Under-Secretary of State for Transport (Simon Lightwood)
It is a pleasure to serve with you in the Chair, Dr Murrison. I thank my hon. Friend the Member for Falkirk (Euan Stainbank) and the hon. and learned Member for North Antrim (Jim Allister) for securing this debate, and Members on both sides of the House for their passionate contributions. I wish my hon. Friend the Member for Falkirk a wheely good birthday—[Interruption.] I was particularly proud of that. Look on the bright side: he is one year closer to his bus pass.
It is clear from this debate that the UK bus manufacturing sector matters to our communities, our workers, our supply chains and our shared ambitions for cleaner, more inclusive transport across the country. I want to say at the outset that the Government share hon. Members’ commitment to ensuring that the UK remains a world leader in bus design and manufacturing.
We have heard today about the proud heritage and continued innovation of two major UK manufacturers: Wrightbus in Ballymena, which I was very pleased to visit, and Alexander Dennis in Falkirk, Larbert and Scarborough. Their names are woven into the fabric of our industrial story. They produce buses that serve communities the length and breadth of the UK and increasingly showcase British engineering abroad. I pay tribute to the workforce across the UK—the engineers, apprentices, designers and technicians—whose skills sustain the sector. It is precisely because we recognise the importance of that workforce that the Government are taking decisive, practical action to support the long-term health of the industry.
Last March, we established the UK Bus Manufacturing Expert Panel because we are clear that we need a new kind of partnership—one that brings together manufacturers, operators, local leaders and central Government. Over the past year, it has worked tirelessly, focusing on three central objectives: supporting the growth of UK bus manufacturing, developing a clear pipeline of future orders to give manufacturers confidence to invest, and prioritising passenger-centric bus design to ensure that the future bus is fit for the people who rely on it.
As that work draws to a close, I can already see the tangible difference it has made. For years, manufacturers have told us that the biggest barrier to growth is lack of visibility of future demand. There are too many peaks and troughs and too much uncertainty to justify investment in new production lines, skills and research and development. The bus order pipeline is well advanced in development, aggregating likely industry demand for the next decade. I understand Members’ desire for it to focus on UK bus manufacturing. I intend to publish the pipeline shortly. It will offer for the first time a national forward look at the buses that we expect local authorities and operators to need. That degree of certainty can be transformational, giving our domestic manufacturers the confidence to hire, innovate and compete globally.
Members have also raised the essential role of zero emission buses in supporting UK manufacturing. Let me be clear: we are committed to the transition to a zero emission bus fleet. Zero emission buses bring real, lasting benefits: cleaner air, quieter journeys, lower running costs and more reliable services for passengers. Through ZEBRA 1 and ZEBRA 2, the Department has supported the roll-out of 2,500 zero emission buses and the infrastructure that they need. That real investment is already translating into orders, the majority of which have been won by UK manufacturers.
In April 2025, we provided a further £38 million to fund an additional 319 zero emission buses, again providing real opportunities for UK manufacturers. Alongside that, we have announced £15.6 billion over five years to improve local transport across some of the biggest city regions, and given local leaders the ability to allocate funding to upgrade and decarbonise their fleets. That is a long-term commitment to cleaner bus travel and, crucially, the domestic jobs and skills that go with it.
We introduced the Bus Services Act to deliver on our commitment to better buses up and down the country. Encouraging bus operators to upgrade, modernise and decarbonise their bus fleets is a huge part of that work. The Act will introduce a requirement that new diesel buses cannot be used on local bus routes in England, which will come into force not before 2030. We will confirm the precise date in due course, but of course we will consult manufacturers and other stakeholders. Right now, that measure is sending an unambiguous signal to the entire sector that the future is zero emission. It gives manufacturers time to plan the shift, it gives operators breathing room to prepare, and it supports the longer-term case for investment in the UK.
Understandably, Members want to see UK taxpayers’ money supporting UK jobs, and I note their ask for a target for UK-built buses purchased using taxpayer funding in this Parliament. Although I cannot mandate the purchase of British-built buses due to the Subsidy Control Act and our international trade commitments, we can do more to help UK-based suppliers compete.
When I launched the expert panel last March, social value was a key theme that emerged—how we could get best support for jobs, skills and local economic growth. UK manufacturers reported that bus procurements typically had just a 5% weighting for social value criteria and that the procurement design did not sufficiently secure social and economic value in the way we would expect. I took two actions in response to their concerns.
First, in an extraordinary meeting of the expert panel in July, I secured broad agreement from mayoral authorities that they would make social value criteria at least 10% of weighting—so far. I am pleased to say that that is now happening. Secondly, I challenged the expert panel to focus on meaningful social value, ensuring that procurement is designed in a way that best delivers real social and economic value that supports the Government’s missions.
A report is due to be delivered in February at the next expert panel meeting, which I will chair, detailing best practice and recommendations. I will strongly encourage mayoral authorities to apply that best practice consistently. Although I cannot legally require authorities to buy British, we absolutely can and are helping them take into account the full value that British manufacturers offer. I assure Members that we are working with Cabinet Office colleagues to ensure that the views of the UK bus manufacturing sector are represented as they consider changes to public procurement. We want that work to help deliver the Government’s industrial strategy and foster a resilient economy that supports British businesses and creates good jobs in communities across the country.
I also want to address the concerns raised today about the potential remote deactivation of Chinese-made electric buses. As the Prime Minister said in his Guildhall speech in December 2025, we will never compromise the UK’s national security. We will take tough steps to keep the UK secure while also pursuing secure economic opportunities when they are in the UK’s interest.
The use of terms such as “kill switches” is alarmist. It is a fact of life that modern vehicles, regardless of where they are from, are increasingly using software to support safer driving, improve diagnostics and provide a host of other services. Updating that software remotely is effective and efficient, as well as a key mechanism for rectifying security vulnerabilities. But we are not complacent. The UK has already implemented two new UN cyber-security regulations, requiring manufacturers to strengthen cyber protections, rigorously oversee software updates, and maintain real-time incident monitoring. We will continue to lead internationally on cyber standards, ensuring that wherever buses, British-built or otherwise, are running on the roads, passenger safety, data security and operational integrity remain paramount. Parliamentarians will understand that some of our response is sensitive and that it would not be wise for us to broadcast details. Rest assured that we will act to manage any risks.
I turn to other hon. Members’ comments. We talked about repowering, which I absolutely support. I was privileged to officially open the Wrightbus bus repowering plant, NewPower, in Ballymena. I see the potential of that as a stepping stone to decarbonising our fleets.
A few hon. Members raised the issue of bus procurement in London. My understanding is that more than 50% of ZEBs that entered service in London in 2025 were manufactured or assembled in the UK. To be very clear, TfL does not purchase buses—the operators purchase buses, and TfL sets the specification for them. However, TfL has absolutely committed, as did other mayors at the UK Bus Manufacturing Expert Panel, to explore the social value commitments that I mentioned. Other items will include price, reliability, the quality of build, delivery times and, crucially, after-sales service.
Today’s debate has shown what Parliament does at its best: coming together across parties to stand up for British industry, British workers and British ingenuity. Let me close with this message: this Government are absolutely committed to ensuring the long-term success of the UK bus manufacturing sector. We know how important the sector is to communities, from Falkirk to Ballymena and far beyond, and the pride that British manufacturers feel when they see their buses on our roads. With the right support, the UK can remain at the forefront of bus manufacturing for decades to come. I thank all hon. Members for their contributions today. Above all, I thank the thousands of skilled workers who keep this industry moving. I look forward to continuing this work together in the months ahead.
Dr Andrew Murrison (in the Chair)
Given that it is his birthday, the hon. Member sponsoring this debate has quite a long time to wind up. He does not have to take the full 10 minutes.
Euan Stainbank
Thank you, Dr Murrison. I may take the full time; I may not. I thank all hon. Members from all four corners of the United Kingdom for coming to support our British bus manufacturing sector, which shows how important this industry is to many of us here today, especially those from Scotland. It was very apt, considering where the political focus has been, that two Scots kicked off today’s debate.
The hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) used his experience as a worker at Albion, and then as a council leader, to demonstrate the value of bus services to our community. His point on the Subsidy Control Act was fairly made, as the Minister said. I appreciate his tacit admission, which I have not heard in many corners of Scotland, that social value is a way to correct these problems. I will be looking very attentively at the ScotZEB3 scheme to see how that is addressed compared with the ScotZEB2 scheme, which, from our constituents’ perspective, was substantially inadequate.
The hon. and learned Member for North Antrim (Jim Allister) has an extensive history as a champion for Wrightbus. It was good to hear support for both Alexander Dennis and Wrightbus in relative parity throughout the debate from two corners of our great United Kingdom. I share his frustration about the conduct of some franchisees. However, I was rather glad to hear in the Minister’s response that social value is being doubled to 10%.
My hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) brought his characteristic fire and worker-led perspective to the debate. He championed our community over the summer through some of the darkest times it has experienced up to the very welcome resolution in September, with the delivery of furlough. He has been a strong champion for the workers’ perspective.
The hon. Member for Romford (Andrew Rosindell) powerfully made the point about the value of jobs. He reminded us that for every four jobs directly within the bus manufacturing sector, 13 are created further out in the supply chain. I welcome that perspective. My hon. Friend the Member for Airdrie and Shotts (Kenneth Stevenson), who always brings to bear his wealth of experience in engineering, rightly raised the point that contracts and skills are incredibly valuable. I know that there are workers from Alexander Dennis and supply chain businesses in his constituency, and I hope for growth further down the line for him.
I welcome the contribution from the hon. Member for Strangford (Jim Shannon). There is a strong presence from our friends in Northern Ireland today, which reflects the importance of Wrightbus to his constituents. My hon. Friend the Member for Paisley and Renfrewshire North (Alison Taylor) made a strong environmental case for buying British.
As a regular attendee at Murrayfield on match day, I am very well-acquainted with Lothian Buses. I recognise the orders they have made from Alexander Dennis, but, as for all franchisees, my hon. Friend the Member for Edinburgh North and Leith (Tracy Gilbert) will be unsurprised to hear me say that when they come to buying new parts for their fleet, they should look closer to home.
In conclusion, I still wish to raise the point about social value and recognise the urgency of where we are at. A lot of comments were made about the market share, but the point I made at the top of the debate is that we are buying electric and zero emission buses to a greater extent—which is quite right; they are cleaner, quieter transport—but less of those orders are going to every corner of the United Kingdom and less of them are being built in this country, despite a rising demand. It is important to recognise our constituents’ unhappiness with that. One of the most common complaints that I receive from constituents in Falkirk is that despite the effort, labour and history of bus manufacturing within our community, it is not British-built or Scottish-built buses that are picking them up and taking them from our communities into the centre of Falkirk. That is an important matter to address for our industry.
Today’s debate has been a call for ideas, and I will reiterate a few that I put forward. I restate my ask for a 30% social value metric, on the basis that it would be a material intervention both from national and local funding to procurement. I am aware that the Minister has managed to secure substantial progress, which I recognise and welcome, but I will not stop asking.
On the Procurement Act, I recognise the concerns and comments made about remote deactivation by the Minister. I recognise there is a limit to what will be publicised on that, but I will look diligently at the outcome. There is a sense of frustration that what we have at this stage is interim rather than confirmed. Although remote deactivation has utility, there are clearly grounds for investigation, which could perhaps be shared within proportionate boundaries. We have the muscle in the Procurement Act, which was introduced by the Labour party to address non-treaty state suppliers. If a credible risk of remote deactivation is established, I would like to see an official Government response.
I look forward to the publication of the 10-year bus pipeline. Both that and the UK Bus Manufacturing Expert Panel are signs of tangible progress from the Government, in recognising and listening to the perspectives of the UK manufacturing sector. It is important to have a sustained pipeline and a clear road map that can be met by British industry. I am aware that Alexander Dennis and Wrightbus are prepared to meet the demand of the British sector.
Sadly in the last few years, too many of our constituents have seen market share going in the wrong direction, especially in the ZEB market, because of medium-term and long-term decisions taken by the previous Government. They did not stand up for the sector, creating a problem that we have inherited. I think that is a good round of the doors in the 10 minutes I had, and I have nothing further to add. I thank all hon. Members.
Question put and agreed to.
Resolved,
That this House has considered UK bus manufacturing.
Rural Broadband: Installation
(1 day, 7 hours ago)
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Sir Ashley Fox (Bridgwater) (Con)
I beg to move,
That this House has considered the impact of the time taken to install gigabit capable broadband on rural communities.
It is a pleasure to serve under your chairmanship, Dr Murrison. Broadband is now an essential part of daily life. Families, businesses and communities all rely on a good connection. The fact that most of us managed without it for most of our lives is irrelevant; times change, and we change with them. I recall family friends talking, when I was a child, about electricity coming to their village in the 1940s. We would not now think it tolerable for any village not to have a reliable supply of electricity, because the provision of electricity is a basic service—a utility that underpins almost everything in daily life. In many ways, that is what broadband is becoming.
I represent a beautiful Somerset constituency that is part rural and part urban. I can see the different issues that persist in different areas, and the gap in service between those who live in the town and those who live in the countryside. Last year, I conducted a survey of the rural areas in my constituency and asked residents to rate the quality of their broadband service. I asked them to give scores out of 10 across customer service, internet speed, reliability and value for money.
Jim Shannon (Strangford) (DUP)
I commend the hon. Gentleman for securing the debate. Under a previous Government, the DUP had funding from the confidence and supply arrangement, and we were able to boost the broadband in Northern Ireland exceptionally. Does the hon. Gentleman agree that, by their very nature, delays perpetuate the digital divide, causing rural areas to be perceived as lagging behind their urban counterparts in economic growth, productivity and access to essential services, and that in fact this could, and must, be easily remedied by investment and a good delivery strategy?
Sir Ashley Fox
The hon. Member anticipates much of my speech, and I thank him for that intervention.
Unsurprisingly, in my survey those in larger villages reported the best service, and those in the most remote rural areas reported the worst.
Tim Farron (Westmorland and Lonsdale) (LD)
The hon. Member is making a really important speech, and I commend him for the survey he conducted. In Cumbria, many communities and homes that are within the scope of Project Gigabit are still going to be excluded from it because they are deemed too difficult to reach. The majority of those places will be upland farms, where the people are on less than minimum wage. Does the hon. Member agree that the people who produce our food and tend our beautiful landscapes have as much right to be connected to the internet as the rest of us?
Sir Ashley Fox
I agree with the hon. Gentleman, who anticipates a section of my speech on farmers. I am going to make a little progress, if I may.
Those in the most remote rural areas of my constituency reported the worst service. For example, residents of Broomfield rated their service at 2.6 out of 10; in Lyng, it was 2.2 out of 10; and in Durleigh, it was an average of just 1.5 out of 10. When I am out on the doorstep, access to reliable broadband is one of the most noticeable gaps between the experience of those in towns and of those in small villages.
Aphra Brandreth (Chester South and Eddisbury) (Con)
My hon. Friend is making an important speech that reflects what we see in my constituency, where more than 15,000 premises are still without acceptable broadband speeds. I wrote to the Minister responsible before Christmas, and when they finally responded to my letter, there was no answer for the nearly 10,000 premises from Willington to Delamere Park and beyond that are unlikely to be covered by a new framework contract. Does my hon. Friend agree that the Government must consider either reopening the voucher scheme or providing an answer on how those homes and businesses will get the broadband speeds they need for today’s digital world?
Sir Ashley Fox
I thank my hon. Friend for raising that important point. I agree with her and hope the Minister will respond.
We cannot expect businesses to survive, let alone grow, if they are cut off from the digital world that the rest of the country takes for granted. For farmers and small business owners, the issue is especially unfair. They are required to interact with Government agencies, with His Majesty’s Revenue and Customs and with banks almost entirely online, yet many are forced to do so with unreliable connections, painfully slow upload and download speeds, and constant disruptions.
Richard Foord (Honiton and Sidmouth) (LD)
On that point, farmers have been encouraged to diversify their businesses, and Stubbhayne farm in Southleigh has lost countless bookings because people who wanted to stay there found they could not use the internet in the farm’s bed-and-breakfast accommodation. That problem has now been resolved, but does the hon. Gentleman agree that such issues really affect businesses in rural areas?
Sir Ashley Fox
I am grateful to the hon. Gentleman for that point. He is right that time that should be spent running a business is often wasted waiting for files to load, forms to submit or video calls to reconnect.
My constituent Sue Felstead runs a restaurant at Greenway farm in Wembdon. She had ongoing problems with the farm’s internet service, which had a hugely negative impact on her business. She relied on broadband for the card machine, the music system and other devices, but had a download speed of only 2 megabits per second. That meant that customers who were waiting to pay by card could not pay their bill because the internet would crash, and that music would be cut off midway through a song. The issue got so bad that BT told Sue she would be better off using Starlink. That is an extraordinary thing for BT to tell her, and I hope the Minister will comment on that. In the end, it cost her £1,500 to have Starlink installed.
Dr Danny Chambers (Winchester) (LD)
In rural areas, there is often a double whammy. As a vet, I know from driving around in the night trying to find calvings or horses at 2 in the morning that there is also no mobile signal in places with very poor broadband. It is a problem not just in very remote rural areas: in my constituency we have issues in Sutton Scotney, South Wonston and New Alresford—a thriving market town that is in the bottom 10% for connectivity. This is not acceptable for businesses. It is not just inconvenient; it is holding businesses back.
Sir Ashley Fox
I agree with the hon. Gentleman. Problems with internet connectivity and mobile connectivity often affect the same areas. This debate is specifically about broadband, but I would be happy if the Minister chose to touch on mobile signals as well.
The lack of reliable broadband is not just inconvenient; it is actively damaging to business.
Adam Dance (Yeovil) (LD)
One of my constituents runs a company that develops semiconductor technology, but the listed building he is in was recently removed from an Openreach fibre-to-the-premises plan. Does the hon. Member agree that Openreach must be more transparent in decisions not to provide services, and that such delays to gigabit fibre provision risk making rural Somerset a less attractive place to set up cutting-edge businesses?
Sir Ashley Fox
I agree with the hon. Gentleman. He and I have perhaps similar constituencies, in that we have one large dominant town and a hinterland of many small villages and hamlets. Those in the town often have a very good service, while those in the small villages do not.
A lack of reliable broadband limits productivity, increases stress and makes it harder for rural businesses to compete on an equal footing.
Catherine Fookes (Monmouthshire) (Lab)
I thank the hon. Member for securing this really important debate. My broadband survey in Monmouthshire shows that communities such as Trellech, Llangwm and Mamhilad have really big issues with broadband. Will the hon. Member address the issues for people personally, not just for business? A man from my constituency got in touch with me whose wife was disabled. She sadly passed away in May, but he told me that because a lot of the management of her condition was supposed to be online, and online systems were used to get her health sorted out, that made life very difficult for him. I could give countless other examples. Will the Minister address the fact that we must prioritise rural broadband in Wales?
Sir Ashley Fox
I am grateful to the hon. Lady for raising that point.
The lack of reliable broadband discourages innovation and investment, and pushes people towards cities and towns—not because they want to leave their beautiful, rural life, but because they feel they have no real choice.
The hon. Member for Monmouthshire (Catherine Fookes) anticipated my next point: it is not only businesses that suffer. Families struggle to access online education, healthcare services and remote work opportunities. Young people are placed at a disadvantage simply because of where they live.
Alex Brewer (North East Hampshire) (LD)
My semi-rural constituency is less than an hour from London, so people would think the broadband would be tip-top, but it is far from it. In some areas, speeds are less than 1 megabit per second. As we have discussed, this prevents businesses from holding online meetings and so on, but it also means that, for example, students cannot go home in the holidays to stay with their parents because they simply cannot complete their studies. Does the hon. Member agree that high-speed broadband is critical to this country’s infrastructure and that the Government have a duty not to leave rural communities behind?
Sir Ashley Fox
I thank the hon. Lady for raising that point, and I agree with her. That is why I started my speech with a reference to electricity being rolled out to the last few villages in the 1940s. We would think that was extraordinary nowadays. The Government certainly have a duty to roll out broadband to the whole country.
The previous Government had a good record on rolling out gigabit broadband throughout the UK. In 2018, full-fibre coverage stood at 6% of UK households; today, the proportion is 78%, which is a remarkable transformation. But the Minister will be aware that we need that to go up to 100%, and I hope he will outline how this Government will complete the journey.
Helen Morgan (North Shropshire) (LD)
The hon. Gentleman is being so generous with his time. In North Shropshire we were really excited because we were included in Project Gigabit, which was going to roll out fibre broadband for 12,000 properties—mostly easier to reach ones, but it would have been a significant improvement none the less. Freedom Fibre, which had that contract, has handed it back, having connected only around 3,000 properties, and we now have to wait for Openreach to get around to it, despite the fact that, in the meantime, everybody has to pay BT for pretty poor broadband, come what may. Does the hon. Gentleman agree that the Project Gigabit roll-out has been a shambles in some areas, and that the Government need to prioritise those areas that were promised an improvement but have been let down yet again, to make sure that they get their connections sooner rather than later?
Sir Ashley Fox
I think the word “shambles” is harsh; I would say that “patchy” is a more accurate description. Going from 6% in 2018 to 78% today is an achievement, and the hon. Lady should give some credit for that. The Conservative Government made a deliberate and strategic choice about the future of digital infrastructure. We chose a pro-competition, pro-investment regulatory framework that was designed not to crowd out private capital but to attract it, and that choice has delivered real results across the length and breadth of Britain.
Aphra Brandreth
I thank my hon. Friend for being so generous with his time. He is making an important point about the previous Government’s achievements and strategies in this policy area. Since then, communities in Cheshire and Warrington have not seen a single new publicly delivered broadband connection in more than two years. Does my hon. Friend agree that this Government must move faster on this important issue?
Sir Ashley Fox
Yes, I agree. We are waiting for the Government to respond to a consultation. I will now make some progress so that the Minister has time to respond.
The objective of the previous Government was simple but ambitious. It was to reduce reliance on a single incumbent network and instead create the conditions for alternative network providers to emerge, scale and thrive. The results—that transformation from 6% to 78%—speak for themselves, but we cannot be complacent because, if we are serious about closing the digital divide and ensuring that gigabit connectivity reaches all rural communities, we must continue the momentum. That will depend on a stable, competitive regulatory regime that gives investors the confidence to commit capital for the long term. It will also require action to remove the remaining barriers to roll-out, including planning obstacles that can cause unnecessary delays, particularly in rural areas.
In Somerset, we have had particular issues with the roll-out. Airband was contracted to roll out fibre-optic broadband to more than 55,000 homes in Devon and Somerset. In the end, it descoped thousands of properties, committing to deliver only 27,000 homes, which is fewer than half of its initial target. More than 3,000 properties in my constituency were descoped. While Openreach has now taken up the contract for the majority of those properties, my constituents are still being left with unacceptable delays.
Many villages are still looking at waits until 2030 for the roll-out of broadband, and I worry that some might have to wait even longer. Openreach has shared with me its concerns that there is a shortfall in funding from the last spending review, meaning that there is a risk that the Government do not meet their 99% gigabit-coverage target by 2032, which is already an unacceptably long time for my constituents in remote rural areas to wait to be connected. It would be intolerable if it were to be delayed further.
Will the Minister clarify in his response whether he believes he has sufficient funding to meet the 99% target? When will the Government bring forward their statement of strategic priorities for Ofcom, which is a critical step to shape the next phase of the UK’s digital infrastructure journey? The Minister will know that the consultation on this ended in September; we await his Department’s response. This Government are quick to issue a consultation, but they seem rather slower to act.
My constituents in remote rural areas feel let down by this Government. They have had to deal with the family farm tax and the uncertainty that has created. They have had to deal with the sustainable farming incentive being withdrawn without any notice whatsoever by an utterly incompetent Department for Environment, Food and Rural Affairs. As such, this issue of rural broadband is very important if my residents are to have confidence that they can live, enjoy life and run thriving businesses in the remote rural areas in Somerset. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)
It is a pleasure to serve with you in the Chair, Dr Murrison. First and foremost, I thank the hon. Member for Bridgwater (Sir Ashley Fox) for securing today’s debate on the impact of the time taken to install gigabit-capable broadband in rural communities, and for once again drawing to the attention of the House the importance of delivering fast and reliable digital connectivity to them.
I also thank all other hon. Members across the House who have persistently championed the cause of improving rural broadband, and not least for their gift of anticipation when it comes to the speech of the hon. Member for Bridgwater.
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
May I intervene, seeing that we have been so generous on interventions?
Mr MacDonald
We have heard about the 78% and the 99%. In north-east Skye we have 3% gigabit availability, and in south Skye we have 4.5%. We are dealing with enormous levels of depopulation among our young, with the number of children under the age of 15 at school halving in the last 15 years. A large part of that is because the place is an internet desert. Can the Minister reflect on that?
Kanishka Narayan
I thank the hon. Member for making that point, and I am very happy to engage with him both individually and with my colleague, the Minister for Digital Economy, on the particular experience of his constituents.
The contributions we have heard today from across the House again highlight just how essential connectivity has become to daily life. We have heard about its centrality to work, education and, as my hon. Friend the Member for Monmouthshire (Catherine Fookes) said, to healthcare, online banking, farming, running a business or simply staying connected with friends and family.
The Government recognise that delays in broadband delivery can be particularly frustrating for rural residents, who often have fewer alternatives than urban residents, and for whom a slow or unreliable internet connection can have a deep impact on their quality of life and economic opportunities. Our mission is to ensure that 99% of premises can access a gigabit-capable connection by 2032. According to the latest figures from the independent website thinkbroadband.com, over 89% of UK premises already have access to a gigabit-capable connection.
Through Project Gigabit, we are targeting precisely the communities that have been highlighted in today’s debate. Commercial roll-out would not otherwise take place for these communities, and public investment is therefore essential. As at the end of September 2025, over 1.3 million premises in rural and hard-to-reach communities across the UK had been upgraded to gigabit-capable broadband through Government-funded programmes. In addition, over 1 million premises are now included in signed Project Gigabit contracts worth £2.4 billion in total.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
There is a persistent issue in the Stainton and Thornton area of my constituency, which residents have raised with me. Would the Minister commit to meet me to discuss this issue?
Kanishka Narayan
I know my hon. Friend is a deeply committed champion for his constituency, so I would be very happy to meet him—both on my own and with my colleague, the Minister for Digital Economy—to look at the issues in his constituency.
We are making good progress on delivering these contracts. We have already celebrated the completion of the first three Project Gigabit contracts in Northumberland, Teesdale and north Dorset, which marks an important milestone in our programme. These early completions show that the programme is working, and rural communities are beginning to see the benefits of this investment.
The majority of premises receiving Government funding for broadband upgrades continue to be rural. Between April 2024 and March 2025, 89% of the premises benefiting from our interventions in this sector were in rural areas, including proud farming communities. We remain absolutely committed to ensuring that these communities receive the gigabit-capable connectivity they need and deeply deserve.
I also recognise, with honesty, that there have been delays to subsidised roll-out across Devon and Somerset in particular, as a result of premises being descoped from contracts under the earlier superfast broadband programme, including in the constituency of the hon. Member for Bridgwater.
When suppliers encounter financial, operational or technical challenges, I know that rural communities feel the impact the most, and as a proud representative of rural communities in south Wales, I feel it, too. I want to reassure hon. Members that we are closely engaging with Connecting Devon and Somerset, and with suppliers, to establish a clear path forward.
Following the announcement in 2025, descoped premises, particularly in the constituency of the hon. Member for Bridgwater, were made available for suppliers to bring forward proposals under the gigabit broadband voucher scheme. Several suppliers expressed interest, and I am pleased to say that approximately 3,000 premises are now included in approved voucher projects. Around 8,500 descoped premises remain without confirmed commercial or subsidised plans. However, these premises are now being considered for inclusion in the Project Gigabit contract with Openreach. We expect to finalise the amended scope of that contract in the spring. The hon. Member feels that work is urgent, and I do, too.
Approximately 3,100 premises in the hon. Gentleman’s Bridgwater constituency are currently included in the Project Gigabit contract delivered by Openreach, and my hope is that this intervention will deliver gigabit-capable connections to homes and businesses across the constituency, such as those in Nether Stowey, North Petherton and Westonzoyland.
Although 3,400 premises in Bridgwater were descoped from the previous superfast broadband contracts, almost half of those premises have since been connected through a supplier’s commercial roll-out, without the need for public subsidy. The remainder are included within the scope of the current contract change discussions we are undertaking with Openreach.
A healthy, competitive broadband market is fundamental to achieving our national gigabit ambition. Commercial delivery has been and will remain the backbone of the UK’s digital transformation. The majority of gigabit-capable connections have been delivered entirely through private investment. The Government’s role is to create the right environment for such investment to continue at pace. That is why we continue to work in close partnership with both industry and Ofcom to support the roll-out of fibre networks across the UK, including in the most rural and hard-to-reach areas.
Our approach is designed to complement commercial build, not to replace it, ensuring that public funding is targeted only where the market cannot deliver on its own. In July last year, we published a consultation on our draft statement of strategic priorities to Ofcom, setting out the Government’s view on the importance of promoting competition and maintaining a stable regulatory environment that gives investors confidence. A predictable and proportionate regulatory framework is essential for suppliers to continue investing billions in our fibre networks. Ensuring that regulation is not lifted prematurely is central to protecting our consumers, which is why competition must be properly established before we can relax regulatory safeguards. That is the approach needed to deliver long-term benefits.
I know there has been a question about where the Government are in this process. Our draft statement set out our position on infrastructure sharing, which has become one of the sector’s most important enablers of competition. In particular, Ofcom’s physical infrastructure access product has allowed over 100 alternative networks to roll out fibre using Openreach’s ducts and poles, lowering barriers to entry and helping to accelerate competition. We have asked Ofcom to provide greater transparency on how PIA pricing is calculated and set, because transparency is the underpinning driver of confidence for investors.
We are reviewing responses to the consultation on our draft statement of strategic priorities, and we will set out the Government’s conclusions in due course. I of course note the hon. Member’s comments, and we are all hoping for pace as well as rigour in the response to the consultation.
Sir Ashley Fox
I referred to Openreach’s comments to me. It said that it did not believe there is sufficient funding in the spending review for the Government to meet their target of 99% by 2032. Does the Minister believe he has sufficient funding to meet that target?
Kanishka Narayan
Openreach has not made that representation to me. The Government are squarely focused on reaching the 99% target, and we are doing all we can to make sure that all providers are in a place to do so. I am happy to engage with Openreach if it wants to make a representation to me.
To ensure that the commercial market can continue to deliver as fast as possible, the Government remain committed to removing deployment barriers. Whether that is done by reforming wayleave processes, improving access to land and multi-dwelling units, enhancing the co-ordination of street works or accelerating planning decisions, every barrier we remove helps the industry to build networks faster and more efficiently.
Even with the scale of commercial investment and the ambition of Project Gigabit, the expectation is that some remote premises will remain too expensive to reach with gigabit-capable fibre in the immediate term. We are therefore continuing to consider what more we can do to enable high-quality alternatives for those in the “very hard to reach” category. The satellite market is developing at pace. We expect to see more competition in that market imminently, with rapidly improving terminal equipment, higher speeds and falling costs for end users. We continue to monitor and support the development of that market, recognising its role in connecting the most remote communities.
I am conscious of the points made on mobile connectivity, not least those made by the hon. Member for Winchester (Dr Chambers). With increasing 5G coverage from mobile network operators, fixed wireless access is becoming an increasingly viable connectivity option. Ofcom estimates that fixed wireless access delivered over mobile networks is already available to 96% of UK premises, with wireless internet service providers offering fixed wireless access to around 8% of premises.
I thank the hon. Member for Bridgwater for securing this important debate, and I thank all Members who have contributed. In response to the hon. Member for Chester South and Eddisbury (Aphra Brandreth), I want to flag that, since Building Digital UK and Freedom Fibre mutually agreed to terminate the Project Gigabit contract for Cheshire, we have launched a new procurement for Cheshire. We expect it to be in place by the spring, and we will be sure to let her know of its progress.
Let me be clear that, although challenges remain, the Government are acting. We are committed to working at pace with suppliers, local authorities, communities and devolved Governments to ensure that progress continues. Rural communities must not and will not be left behind as we work towards our goal of 99% gigabit coverage. Given that the hon. Member for Bridgwater brought up wider support for rural communities, I put on record that this Government are squarely on the side of rural communities across the UK, which were abandoned by the previous Government on trade negotiations and farming funding and were not given appropriate representation.
Question put and agreed to.
Women’s Safety: Walking, Wheeling, Cycling and Running
(1 day, 7 hours ago)
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Jess Asato (Lowestoft) (Lab)
I beg to move,
That this House has considered women’s safety while walking, wheeling, cycling and running.
It is a pleasure to serve under your chairship, Ms Jardine. Violence against women and girls happens in every corner of life: in our homes, in our workplaces, on the internet and in public. Whether we are commuting or exercising, women and girls across the country risk harm just being out and about. The threat of harm hangs over women’s decisions and moulds them. Those cycling home from work may weigh up whether to take the direct route home or the safer route—the one that is lit and busier, but not too busy.
In preparing for this debate, I was contacted by a woman who led a female running group in Hampshire for more than 11 years. She said:
“During that time, there was not a single week when women in my group, or I personally, did not experience some form of unwanted attention while running…This ranged from so-called ‘micro’ incidents, like sarcastic clapping, comments about our bodies, unsolicited advice shouted from passing vehicles, through to more serious incidents, including being filmed while warming up, having objects thrown at us, and one time being physically assaulted…Unfortunately, these experiences were not isolated or rare—they were routine.”
Women’s fear and experiences of harassment are often minimised—I saw that in the responses to my announcement of this very debate on social media—but when women have to do an unspoken risk assessment of their route every time they want to walk to the shops or take a run, it is a chronic weight around the neck of society. It is a fear that men do not have to live with day in, day out. As one of my Lowestoft constituents put it:
“Would a man, when running in the dusk or dark, every time they saw a member of the opposite sex heading towards them feel a slight fear and feel a sense of relief when they have passed that individual?...Would a man tell their partner or friend in advance of their route and the time they would be back? Would a man cautiously look behind them every few metres to see if they were being followed?”
The threat of harassment and assault is enough to force women to lead smaller, less free lives, withdrawing to the safety of being behind the front door.
Mr Gregory Campbell (East Londonderry) (DUP)
I congratulate the hon. Lady on securing the debate, the timeliness of which should be obvious to us all. She alluded to notifying people of this debate via social media. Does she agree that, particularly among younger males, part of the problem is the internet and the manifestations of unhealthy lifestyles online? We need to tackle that so that young males understand and appreciate that they should aspire to proper relationships between males and females.
Jess Asato
I thoroughly agree. Women are often filmed while running, and girls are put off exercise by the way that men create this material, which can go viral. We have seen recently that men have been using smart glasses to film women in public spaces going about their everyday lives. Those women have then been harassed, with everything that goes with that, simply for being in a public space.
Maya Ellis (Ribble Valley) (Lab)
To build on the point made by the hon. Member for East Londonderry (Mr Campbell), Girlguiding has found that two thirds of girls say they are put off exercising and going out because they fear some of the things we are describing. Given that we are debating potentially removing social media from young people, does my hon. Friend the Member for Lowestoft (Jess Asato) agree that it is even more important to ensure that other activities that we want young people to take part in are equally available to girls and that they do not feel scared? Otherwise, they will face even more inequality and stigma.
Jess Asato
I absolutely agree. I firmly support the idea of a social media ban for under-16s, partly because of the huge impact it has on girls and their body image, which obviously affects the way they think about taking part in sporting activities, often in public. We also know that many of those girls are catcalled and whistled at as they come home from school, not just by boys their own age, but often by grown men. That has a chilling effect on their decision to engage in sport and other activities.
Last year, I was glad to invite Dr Caroline Miles, who researches the abuse of women runners, to meet the Safeguarding Minister, my hon. Friend the Member for Birmingham Yardley (Jess Phillips), to discuss the issue in front of us today. Alongside her colleague Professor Rose Broad, their research found that 82% of the women they surveyed had safety concerns while running, and 68% had experienced abuse while out running, but only 5% had reported it to the police. Of those who experienced abuse, 91% received it verbally, 29% were followed and 10% were sexually flashed—that is illegal. Indeed, very recently, a man exposed himself to a woman on the seafront in Lowestoft when she was out on her daily walking route, which has had a profound impact on her sense of outdoor safety.
The university researchers also looked at the 81 offences recorded by Greater Manchester police and Merseyside police in 2021 and 2022, and they found that more than 40% were sexual offences. They identified three areas where they think the Government could go further: improved space design, police training and challenging societal attitudes.
I am glad to see that the Government’s violence against women and girls strategy, launched just before Christmas, says:
“Well-lit streets, accessible transport, and thoughtful urban design can deter violence and reduce opportunities for harm”.
We now need to see national design guidance reflect the concern about violence against women and girls. The strategy states that tackling VAWG
“must be embedded in the training of every officer as a fundamental requirement.”
Yesterday’s policing White Paper sets out that the College of Policing, with the new national centre for VAWG and public protection, is currently developing a
“programme for frontline officers that focuses on the core skills needed to respond across crime types like domestic abuse, sexual violence, stalking and harassment.”
I hope that includes harassment outdoors. The training should learn from the best practice that already exists across a number of forces, such as the Jog On campaign, as part of which undercover female officers posed as joggers to catch perpetrators. It is vital that we encourage women who are harassed while out running, cycling or walking to report it, and that we ensure that, in reporting it, they feel that they will be taken seriously.
Anneliese Dodds (Oxford East) (Lab/Co-op)
My hon. Friend is making an incredibly powerful case. On the issue of reporting, I raised a written question with the Department for Transport last summer on what it is doing to improve reporting mechanisms for women cyclists who had been harassed or intimidated. At that stage, there was a suggestion that it might be covered by the VAWG strategy. There is an admirable focus on women’s safety on public transport, but does she agree that we need to do more to make sure that reporting mechanisms are amenable to women and girls who suffer abuse and intimidation?
Jess Asato
I absolutely agree, and it is one of the reasons why I took those University of Manchester researchers to meet the Safeguarding Minister. I hope that, given the VAWG strategy is a living, breathing document across a 10-year period, we can make sure this is in future versions of the strategy. It is incredibly important.
The long-term programme of awareness, training and behaviour change at the heart of the strategy aims to drive a societal response that empowers victims and deters perpetrators. In the medium and long term, that will drive the change we wish to see.
Alice Macdonald (Norwich North) (Lab/Co-op)
I thank my hon. Friend for her excellent speech on this important subject. As well as reporting, I am sure she agrees that it is important to gather intel from women about where they do and do not feel safe. Will she, as a fellow East Anglia MP, welcome Norwich Cycling Campaign’s women’s safety audit? It has just been launched to hear from local women about their experiences, whether it be of harassment or of safe cycling routes. I encourage my constituents to take part. Does my hon. Friend recognise the value of such community-led initiatives?
Jess Asato
As a fellow East Anglia MP, I praise Norwich Cycling Campaign for its women’s safety audit. I am sure it is a model that many local areas should follow.
In the medium and long term, of course, we want to see real change. A poll conducted by the Cycle to Work Alliance in 2024 found that safety concerns deter 45% of potential cyclists from commuting by bike. Although this is obviously broader than harassment, there is certainly a gendered element to it given that women are three times more likely than men to fear cycling to work.
Mr Lee Dillon (Newbury) (LD)
I congratulate the hon. Lady on securing this debate. Will she join me in congratulating Newbury Road Club, Newbury Velo and West Berkshire Spokes, which organised a glow ride in October last year as part of Cycling UK’s “My ride. Our right” campaign? If we had segregated cycle lanes, it would help to improve all cyclists’ safety on the roads, including women.
Jess Asato
I would obviously love to congratulate Newbury Road Club and the other organisations that are highlighting Cycling UK’s “My ride. Our right” campaign, and that have been very active in this discussion about women’s cycling safety. I will come on to segregated cycle lanes.
In these dark winter months, safety concerns can often be at their greatest. Research by Sport England’s “This Girl Can” campaign found that 72% of women worry about their personal safety when it is dark and change their behaviour as a result. That has knock-on impacts. As one of my constituents wrote to me,
“if women feel unsafe or intimidated in these spaces, we lose more than just an exercise route—we lose a vital lifeline for our health.”
Indeed, to protect themselves, women are forced into more expensive, less healthy options to get around, such as driving, and the many benefits of active travel, including long-term public health savings, are lost. A study by Finnish researchers found that active travel reduces absences from work, and Transport for London found that people who walk to their high streets spend 40% more in local shops. That is also replicated for those who cycle to our local high streets.
Cycling requires the physical environment to reflect the needs of women and girls to be safe. Cycling UK found that 45% of women say that direct, traffic-free paths to town centres would encourage them to cycle more, and 39% say that physically separated cycle lanes would make the biggest difference. Polling from Cycling UK in 2018 also found that 50% of respondents in London saw a lack of separate cycle lanes as a barrier to cycling. Thanks to large-scale investment in a network of cycling and walking infrastructure in our capital, the same survey in 2025 saw that concern halved. That model ought to be replicated throughout the country.
I therefore look forward to the Government’s cycling and walking investment strategy later this year, and I hope to see that investment in infrastructure explicitly reflect the real barriers that women and girls face, particularly given that the gender gap in cycling has widened since 2018. Nine in 10 female cyclists have experienced abuse while on the road, and 63% said it occurred at least once a month. As a result of these experiences, over 20% of those women said they had given up cycling temporarily or permanently. I hope to see a target and a plan in the strategy to reduce the gender gap in active travel.
There is a wealth of organisations in this space, and I am sure the Minister and her Department will be encouraged to continue to consult meaningfully with these organisations in preparing and implementing the strategy. Like all of us, I want to see my girls, my children, grow up with the freedom to enjoy the outdoors, live healthy lives and travel safely wherever they want.
Our constituents rightly demand that freedom, and we must answer their call. We must be able to live in a society where women do not need to walk down the street clasping their keys in their hands or pretending to be on the phone to someone to protect themselves. Girlguiding’s latest girls’ attitudes survey found that 68% of girls aged 11 to 21 have changed their everyday behaviour in the last year to avoid sexual harassment. Of that 68%, 12% say they have changed where they exercise and 11% say they have changed the type of exercise they do. I will not stop fighting for a society in which that 68% becomes 0%.
Several hon. Members rose—
Christine Jardine (in the Chair)
I remind Members that they should bob if they wish to be called in the debate. At the moment, I advise that there should be an informal time limit of five minutes.
Wera Hobhouse (Bath) (LD)
It is a pleasure to serve with you in the Chair, Ms Jardine.
I am a cyclist. I love cycling; I have always cycled, ever since I cycled to school as a six-year-old. I have cycled throughout my life, including as a university student, and I still cycle today. I see cycling as a means of transport. For me, it is not a sporting activity; it is very much my choice of transport.
However, recently in Bath I was about to cross a road, turning to the right, and I stopped, and the driver next to me pulled down his window and commented on my skirt. Me? I mean—I am a 65-year-old woman, and he was commenting on my skirt. I was so shocked that I wanted to get away, and then I nearly went into a car—I made that mistake because I was so shocked. Cycling is not a very safe mode of transport anyway, but being harassed makes it even less safe.
Women want to cycle, yet today only one in four cycling trips are made by women. That is not because women do not want to cycle. Almost 60% of women limit how much they cycle because of safety concerns. As we have heard today, one in five women have stopped cycling altogether after feeling intimidated by drivers, just as I felt intimidated by that driver in Bath. This is clearly more than just a personal issue; it is a public policy issue.
We must build the infrastructure that makes women feel safe, visible and supported on the road. Too often, women are forced to choose between two unsafe options: dark, isolated roads, or busy roads without protection. If we had built well-lit, segregated and visible routes, especially for evening and night-time travel, far more women would feel sufficiently safe and confident to cycle.
Cycling UK’s “My ride. Our right.” campaign calls for women’s safety to be embedded in all transport and safety strategies, including the upcoming cycling and walking investment strategy, and I echo that call today. The new cycling and walking strategy must include measurable targets that improve women’s safety, including clear goals to increase the proportion of cycling trips made by women. The draft strategy already recognises that investment in well-lit, safe and high-quality walking and cycling routes increases people’s feelings of personal safety. Of course, that includes the personal safety of men and boys, and of all children, but it is particularly important for women.
Such improvements support the Government’s work to tackle violence against women and girls. Cycling UK urges the Government and Active Travel England to update design guidance LTN 1/20, strengthening standards for lighting and night-time safety, and introducing gender-responsive safety audits for all new active travel schemes. I very much hope to see those measures in the final cycling and walking investment strategy.
Right now, the UK lags behind many of our European neighbours, and I would say that includes the number of children who are allowed to cycle at an early age to school. There are a lot of things that we can do to encourage young people at school to take up cycling; I myself became a lifelong cyclist because I started early. However, in Britain fewer than one in five people walk, wheel or cycle on an average day, compared with more than one in four people across Europe. Now is the time to change that.
Kirith Entwistle (Bolton North East) (Lab)
It is a pleasure to serve under your chairship, Ms Jardine, and I thank my hon. Friend the Member for Lowestoft (Jess Asato) for securing this important and timely debate.
Put simply, women are not safe running, walking, cycling or even just existing. We are not safe in our own homes; we are not safe in pubs, bars, restaurants, at school or at work; and crucially, for the purposes of this debate, we are not even safe at the gym.
Girls are at risk, too. How many of us here today have stories that start with our wearing school uniform? When I was at school, men in cars slowed down beside me, men in white vans asked me where I was going, and grown men followed me and asked to wear my glasses; I am not wearing them today.
As the daughter of a prison officer, I was educated early, not in confidence but in caution. My dad would say, “Don’t take your phone out when you are walking home. Don’t listen to music on a walk home. Stay alert. Cross the road if a man’s behind you. Walk with your keys between your fingers.” All of that does not just disappear when we grow up.
Only last week, when I was going for a run in Bolton, I shared my location with my family over WhatsApp, just in case. “Just in case”—those words tell us everything. I wear a running vest with a phone pocket. I clip my SOS fob to my clothes. I plan my route as if I was carrying out a risk assessment, and that is the point. Men do not make contingency plans to exercise, but we absolutely have to.
When it comes to exercise, women are constrained by the hours that we can safely be outdoors. Even in daylight, safer does not mean safe, and after dark many women feel pushed indoors. Here is the bitter irony: a lot of us can only exercise when it is dark, because we are primary caregivers. We do the school runs, and we care for our elderly or disabled relatives, or our children with additional needs. Society relies and depends on that care, and then acts surprised when women’s lives are more restricted and when we are forced to pay for safety. For many women, a gym membership is the price of feeling secure enough to exercise at all. Women-only spaces in gyms are growing, and that is progress, but where is the acknowledgment that many women are paying simply to do what others can do for free—exercise without fear?
Let us be clear: this is not a confidence gap; it is a safety gap that is rooted in our environment and systems. In winter, nearly three quarters of women change their outdoor exercise routines for safety, and over four in five say they feel unsafe in parks at night. I know that most of us avoid parks altogether.
Gordon McKee (Glasgow South) (Lab)
In the southside of Glasgow, we are lucky to have some wonderful parks and green spaces, but I often hear from women in my constituency who do not feel safe going through them. The Light the Way campaign, led by Radio Clyde, is campaigning for better lighting in parks, including in Queen’s Park in the southside. Will my hon. Friend join me in paying tribute to that campaign, and in encouraging councils to make park lighting a priority so that women can feel safe in their own spaces?
Kirith Entwistle
My hon. Friend makes the important point, which I will come on to, that well-lit spaces would make a world of difference for so many women and girls.
The safety gap that I mentioned earlier is also written into our transport patterns. In Greater Manchester, women make less than a third of all cycling trips. When women are asked why that is, they talk about traffic danger, harassment and intimidation. One Bolton resident told me that routes can feel pleasant by day but unusable after dark, and that one incident can be enough to stop women from cycling altogether.
Women’s participation in outdoor exercise is already lower than men’s, but the safety gap widens again for women from ethnic minority backgrounds, who face higher levels of harassment on the streets. Black, Asian and minority ethnic women are nearly 20% less likely than white women to exercise outdoors regularly, and half as likely to cycle to work. If we bear in mind both the ethnicity and gender pay gaps, we are also less likely to be able to afford a gym membership.
In Bolton, I am proud of the grassroots work that is making a difference, including Horwich Ride Social’s women-only rides, Krimmz girls youth club’s glow rides and the United We Run campaign, which gives thousands of Bolton women access to the Her Spirit fitness app. These initiatives, while brilliant, are also a warning sign. Women should not need safety in numbers. It is time that we address women’s safety properly, as we should have done for decades. That starts by building routes that we can actually use—the well-lit, connected routes that were mentioned earlier—and, as my hon. Friend the Member for Lowestoft said, treating harassment as public safety, making it easier to report and making it clear that it will be taken seriously.
Finally, we must put women’s safety into transport planning from day one, and ensure that progress is measured so that we can check whether the gender gap in cycling and walking is closing.
Anna Sabine (Frome and East Somerset) (LD)
It is a pleasure to serve under your chairmanship, Ms Jardine. I thank the hon. Member for Lowestoft (Jess Asato) for securing this important debate.
I am passionate about women’s safety, especially in semi-rural areas such as Frome and East Somerset. This is not an abstract policy discussion. As has been discussed, it is about the constant calculations that women make every day: “Do I take the longer, better-lit route? Do I run before dawn, or wait until daylight? Do I walk home, or pay for a taxi that I cannot really afford?” These decisions are so ingrained that many women barely register them any more. But this should not be accepted—it is not normal. No one should have to limit their freedom of movement because they feel unsafe.
Last year, I met a constituent called Holly who had been the victim of repeated incidents of flashing when she was out walking in her village in Somerset. As a result of talking to Holly, I launched a survey in my constituency to hear directly from women about safety in rural areas. With nights getting darker, I wanted to understand how safe women feel when getting to work, socialising or simply going about their daily lives. The responses were sobering. Women spoke about being followed on dark country lanes with no street lighting, waiting for buses on isolated roads with no shelter or CCTV, giving up running and cycling altogether because it simply did not feel safe, and above all, the constant vigilance required just to get home.
Rural areas face particular challenges. Public transport is limited and street lighting is sparse or non-existent. Communities are spread out and mobile signal is often unreliable. The scale of the problem is clear: UN Women UK found that 71% of women have experienced sexual harassment in public spaces, yet most never report it because they believe nothing will be done. The Government are right to call violence against women and girls a national emergency. I know that members of the Government are committed to this issue, but there is currently a glaring gap between Government Departments on planning policy.
Just days before publishing the new strategy on violence against women and girls, the Government also published a revised national planning policy framework, with no reference to women, girls or gendered safety. That omission matters. The places we build determine whether women feel safe walking home, waiting for a bus or going for a run. Planning policy is one of the most powerful tools we have to prevent harm before it occurs. A place cannot credibly be described as “healthy” if half the population feel unable to use it safely after dark.
We know what works: good lighting, clear sightlines, active streets, safe transport routes, and design that considers how women experience public space. Without explicit national policy, women’s safety becomes a postcode lottery. I put it to the Minister that if we truly believe in a whole-society approach to ending violence against women and girls, women’s safety must be designed into our streets, paths, transport networks and public spaces, not just bolted on as an afterthought.
Will the Minister talk to colleagues in the Ministry of Housing, Communities and Local Government and the Home Office about the importance of this joined-up thinking? Women are not asking for the impossible; they are asking for the freedom to move through their communities safely. Let us commit to making that a reality.
Amanda Martin (Portsmouth North) (Lab)
It is a pleasure to serve under your chairship, Ms Jardine. I thank my hon. Friend the Member for Lowestoft (Jess Asato) for considering such an important topic.
I am an avid runner, having taken part in the Great South Run and a 4.5 km MyWay to raise awareness of male suicide. I am pleased that I will also be running with On the Tools 7K and hope to be one of the women MPs running the London marathon this year. It is a brilliant form of exercise for mental health and wellbeing because it gets people outside and clears the mind, but clearing the mind is difficult when worried about safety.
Women and girls should feel safe when exercising in public, yet for so many that is not the reality. When I leave the house, I say jokingly to my kids, “If I’m not back in 45 minutes, send the police.” But that is not a joke. Studies have found that 70% of women have experienced an intimidating incident when running. A rise in social media and online abuse and videoing is making that worse.
Constituents have contacted me out of concern for the safety of women and young girls who run and jog in Portsmouth. They talked of their 15-year-old daughter, who loves going on runs. Despite doing what she felt were all the right things, such as going out only in daylight hours, she had been catcalled and verbally harassed on multiple occasions. The parents were not only distressed for their daughter but worried about her reaction. She was taken aback at first but then insisted on shaking it off, believing that reporting it would just be a waste of police time. Like her parents, I feel that she should not have to put up with that.
She is not alone. Others have reported aggressive behaviour, bunching around them as they are running, stepping out in front of them, throwing things and saying, “Why don’t you just smile at me, you grumpy cow?” We do not want our girls to experience that brazen misogynistic behaviour any longer. It is upsetting but not surprising that women and girls have to deal with such harassment, with the added mental load of worrying about their safety, from such a young age. If we socialise our young girls simply to brush off such abuse, we are harming society as a whole. As we know, low-level harassment of women can be a gateway to more serious crimes. We need to take this persistent and common harassment more seriously. We do not want women and girls to feel that they are unable to participate on the grounds of their gender.
Although I welcome the Government’s strategy to build a safe society for women and girls, using a whole-society approach, and the VAWG strategy’s prioritising of prevention by getting to root causes, such as the normalisation of women and girls’ feeling unsafe while walking, wheeling, cycling and running, it is vital to tackle this by working across Government Departments. We must join up the Home Office, the Department for Transport, MHCLG, the Department for Science, Innovation and Technology and many others, so that our young women and girls feel safe when they are outside exercising.
Jim Shannon (Strangford) (DUP)
It is again a real pleasure to serve under your chairship, Ms Jardine. I thank the hon. Member for Lowestoft (Jess Asato) for setting the scene so well and giving us a chance to speak on the matter.
The situation in Northern Ireland for women’s safety is incredibly worrying, and of course it is equally concerning for the rest of the United Kingdom, as the hon. Lady and others have said. The stats speak for themselves back home, and I want to be here to represent others and have that conversation.
The hon. Member for Lowestoft mentioned smart glasses. I confess that until last Wednesday, when I was watching TV, I did not even know there was such a thing. They can contain a concealed camera, almost requiring a close-up inspection. I am not sure what can be done in relation to that, but if there is a problem, as there clearly is—there were many examples in that TV programme—maybe the Minister can give us an indication of what can be done.
There has been an increasingly negative perception of safety in public places, especially among women. One we always associate as most notable is the tragic and heart-rending murder of Sarah Everard, who was walking home in London when she was kidnapped, raped and murdered by a policeman—of all things in this world. The horror that lady must have felt is inconceivable, when she expected protection but got the very opposite.
The Northern Ireland Statistics and Research Agency has revealed that in Northern Ireland significantly more men report feeling safe than women—68% of men compared with only 27% of women—which is a devastatingly low figure. Shared public spaces are also widely used for the likes of running, walking and cycling. A separate survey by Queen’s University Belfast found that only 43% felt safe walking alone on a public street or on public transport. Official crime statistics show that sexual offences in Northern Ireland have risen significantly over the past decade and remain a serious concern tied to women’s safety in public places.
I want—we all want—to live in a society where individuals, and women in particular, do not fear being out in public. There are some fantastic helplines, such as Strut Safe, where a volunteer stays on the phone with a caller and chats until they get home. That is something that can really help. It is sad and unfortunate that such services must exist, but we are grateful that they are there and are taking extra steps to protect the public while they are in public. Many universities have those kinds of services. I know the Minister does not have responsibility for education, but perhaps she can tell us whether she has had discussions with an Education Minister to ensure that girls are safe in school and young women are at universities.
Policing and community safety partnerships back home, and others, have noted an increasing number of women looking to obtain a personal alarm for their own safety. I know the Police Service of Northern Ireland do that, so if ladies want an alarm, they can get one. It makes a high-pitched noise that would sometimes distract the person involved, which can be helpful. They can carry it out in public with them should they feel unsafe. That demand reflects the argument that women are simply afraid and that more must be done to ensure that fear is not there.
I have noticed that in my constituency, and maybe it is the same in others, that with the sports club we have, whether karate, judo or boxing, many young girls and women are taking up those sports simply so they can protect themselves. Let us remember, and I will try to be very careful with my words, that when a man approaches with intentions that are wrong, we know where he is vulnerable—kick him hard in a certain place and his fervour will leave him right away. Young girls and women are getting their protection in the karate, judo and boxing clubs in Newtownards so they can protect themselves, which has to be good news for the clubs in my constituency.
There is clear evidence of too many women in Northern Ireland and further afield feeling unsafe walking, running or cycling in public spaces. We must invest in better infrastructure, lighting and policing, alongside better community awareness and safety initiatives. I look to the Minister, as I always do. I know her intention to help us all in our request to make public spaces across the nation feel safe, accessible and welcoming for all women, whether in a group or alone.
Amanda Hack (North West Leicestershire) (Lab)
It is a pleasure to serve under your chairship, Ms Jardine. I thank the hon. Member for Lowestoft (Jess Asato) for giving us the opportunity to speak in such an important debate for our constituents, but many of us in the room will also be speaking from personal experience and for those people who are close to us.
Walking, wheeling, cycling and running are sold to us as sports that are easily accessible, particularly walking and running because there are no monthly fees and many will have the equipment accessible at home—pop your shoes on and off you go—but for women it is nowhere near as accessible as it should be. We hear the phrase, “Everyone has the same 24 hours” a lot, particularly on social media, trying to shame people for not going for a run, going to the gym or choosing to bike to work instead of taking the bus. I know many women who actively choose not to exercise at night because they feel unsafe; suddenly, those 24 hours are limited to when it is light outside. If someone works in an office or during the winter, the hours available to them to go for a run or a cycle can feel even more restricted.
Kevin Bonavia (Stevenage) (Lab)
In my constituency we have one of the best cycling networks in the UK. However, the lighting is absolutely shocking in some places, because over the years Hertfordshire county council has changed it to LED lighting. Does my hon. Friend agree that we need a whole-Government approach to this at all levels, and that we should encourage local councils to think about that when they are designing their lighting systems?
Amanda Hack
My hon. Friend makes an incredibly important point. Some 58% of women say that their cycle journeys are limited because of safety concerns and the infrastructure provided. As somebody who has run fairly regularly for a number of years, being hassled has sadly been a daytime as well as a night-time experience.
Helen Maguire (Epsom and Ewell) (LD)
As the hon. Member rightly alluded to, catcalling, being followed or being shouted at by passing cars is a frequent experience for many women who go out running. In my constituency, there are many poorly lit paths and parks, which limits where women feel safe to go out for a run. Does the hon. Lady agree that women should not have to choose between doing the exercise they love and their safety?
Amanda Hack
Absolutely. That is why this debate is so important. We should not be restricting access to exercise because we do not feel safe.
It is frustrating that I have been catcalled both running on my own and with buddies. What was saddest for me was during covid. My 10-year-old daughter had just got on to her big bike and was faster than me while I was running behind her, and we had comments from a car. Thankfully, she did not really understand what had been said, so I will not repeat it here, but I can guarantee that they knew exactly what I thought of their disgusting behaviour. It changed my approach to life, however, and we did not do that again. We both went cycling together instead.
This is what we have to do all the time. We are constantly compromising on what we can and cannot do, and when we can and cannot do it. Whether it was a poll on a Facebook group for Leicester and Leicestershire runners, or my running trainer trying to learn more about his female clients, the comments were inundated with women sharing their experiences. We have to start changing the way that we feel. It is no surprise that 20% of women never walk at night, and that 48% of women in the UK feel unsafe while out running according to SportsShoes. That is shameful, and we have to change it.
It has been really good to see the Government take such a strong stance on violence against women and girls, but this problem is embedded in our infrastructure. As a councillor, I saw part of a bus route being cut. I then demonstrated to the bus company what they wanted us to do: to walk along an unlit path on dangerous roads, to get from where the bus would stop to the place of business where people needed to go to work. These things are baked in, and we have to change them for everybody.
Footpaths and cycleways must be built with women’s safety in mind, not with cost-cutting measures putting in fewer lampposts and less lighting, or weaving cycle lanes well away from well-lit main roads because it is cheaper. Those compromises should not be taken. Too often, cost savings prohibit women. Safer streets for us to get to work and exercise on would have huge benefits. If someone cannot drive, and public transport where they live is not very reliable—as it is in North West Leicestershire—cycling can help open up more doors to work, education, and seeing family and friends.
Helping us to feel safe while running, walking and wheeling would mean that women are far more likely to exercise, helping to ease some of the strain on our NHS and other services by keeping women fit and active.
Dr Scott Arthur (Edinburgh South West) (Lab)
It is a pleasure to serve under you, Ms Jardine. I thank my hon. Friend the Member for Lowestoft (Jess Asato) for introducing the debate in such a compassionate way. As a wannabe runner—I cannot claim to be a runner—on behalf of myself and also my son and daughter, who are both keen runners, I want to thank all the people who have been talking about running.
In Edinburgh the gold standard for active travel routes were our canal path and converted railway tracks. Across the city, converted railway tracks offer routes away from busy roads and are used for thousands of journeys every year. In my constituency, a national cycle route runs alongside the Water of Leith—the route that used to be the Balerno branch line—and provides a space for active travellers to enjoy a quiet and beautiful route away from traffic. I use the route regularly and feel incredibly lucky to be able to enjoy it as I travel through my constituency. It is one of the things that defines my constituency.
I said the routes were the gold standard. That is because in 2021, the brutal death of Sarah Everard so far away from Edinburgh heightened an ongoing conversation about women’s safety in public spaces. In Edinburgh, the safety of our active travel routes came to the forefront. At this point I have to thank Councillor Mandy Watt, who showed amazing leadership and quite quickly allocated around £500,000 to light some of the routes through our parks. Routes along old railway lines and canal paths that offer enjoyable, smooth, green and quiet routes during the day change in the darkness. Even with lighting, without the passive surveillance found in busier public areas, I know that women often feel unable to use those routes, or feel unsafe when they do so. You, Ms Jardine, will know that from Roseburn path in your constituency.
During the winter when it is dark, often from around 3 pm to 9 am in Edinburgh, those routes become less accessible. This has a significant impact for those who rely on them to travel to work or for leisure. The last Edinburgh walking and cycling index showed a 7% difference in the perception of safety between men and women, with women feeling much less safe. In many cases this prevents women from integrating active travel into their daily lives—we have heard about that from other speakers. But it also pushes women who had previously walked or cycled to stop, and that is not good for them and not good for us or our economy. It is worth pointing out that all of us want to live in a town, city or village where more people walk, run or cycle. It is a tragedy that often these investments and changes can be so controversial, because it is something we all aspire to. It is about how we do it.
Too many women face harassment. One study in Edinburgh showed that around 20% of women cyclists stop after experiencing a single event of harassment. Unsafe routes decrease women’s ability to travel easily around the city, and no doubt reduce the mental and physical benefits that come with active travel. Ensuring safe routes in busier areas through the creation of separate, well-maintained cycle lanes on roads, for example, are one way to ensure that those who feel unsafe using our canals and former railway tracks are still able to actively travel during the winter months and at night. I want to thank the InfraSisters in Edinburgh who have run a fantastic campaign over many years—I am sure you are aware of their work, Ms Jardine.
As walking and cycling routes reach the city centre, it is vital that we have the correct architecture and infrastructure to ensure women’s safety in busier areas as they travel home or to work. In a public consultation in 2023, up to 80% of women who responded stated that they had experienced harassment, abuse or violence in public spaces in Edinburgh. Some people might think 80% is an exaggeration—I did when I first read that stat—but when we speak to women we find that it is absolutely not. I was ashamed to hear some of their experiences.
Wera Hobhouse
Is the hon. Member not absolutely shocked at how much this behaviour is normalised, and that we accept it as normal? When my male partner’s sons do not realise what happens, we continue to normalise it. Is it not time that we stopped?
Dr Arthur
Absolutely. As a cyclist in Edinburgh, I have been verbally abused by drivers. On my social media pages, I am also often criticised for encouraging more people to walk and cycle. However, that is very different from abuse based on someone’s gender, which really goes to the heart of who they are, rather than simply what they are doing. I thank the hon. Lady for making that point.
The feeling of safety among women in Edinburgh varied seasonally, and according to lighting and the presence of passive surveillance from other citizens. Variation was also found between different groups, with disabled women and BAME women more likely to experience some form of harassment. That is in Scotland’s capital city; it is absolutely shameful.
There are seemingly small things that we can implement to improve the situation. Providing multiple points for road crossings, improving street lighting and increasing on-street passive surveillance can make a difference, and we now integrate those things into our urban design in Edinburgh.
The safety of women on public transport deserves a debate of its own, but ensuring that women can safely access public transport, either by walking and cycling, should also be actively considered. We must look at the routes between communities and key public transport hubs, ensuring that they are safe and, above all, well lit—bus stops, in particular. All those small changes can improve the safety of women as they walk around our city centres and outlying neighbourhoods.
I will quickly give two examples. Lighting was recently installed in Hailes Quarry Park in my constituency, which has made such a change to local travel. Colinton tunnel, which I am sure you are familiar with, Ms Jardine, and which is 120 metres long, also had lighting added. I thought nothing of it—it just used to be a dark tunnel —but many women came forward to say that having lighting in place had transformed the way they walked along that route. It was cheap, easy and transformational.
Anna Dixon (Shipley) (Lab)
It is a pleasure to serve under your chairship, Ms Jardine. I congratulate my hon. Friend the Member for Lowestoft (Jess Asato) not only on securing the debate but on her fantastic opening speech, which really set the scene.
Violence against women and girls, including sexual harassment and assault, affects millions of women across the UK. It affects what we say, what we wear and what we do. It affects how we live our everyday lives and—as we have heard from many hon. Members in the debate—whether and where we walk, cycle and run. In what I think was a national survey, 20% of women said they would never go walking at night. Local research undertaken by the West Yorkshire combined authority and the University of Leeds produced similarly stark findings. In a survey of users of Myrtle Park in Bingley, in my constituency, they found that 48% of respondents would not feel safe at night.
According to the Office for National Statistics, over 15% of women and girls in Britain feel “very or fairly” unsafe in parks during the day. It is a scandal that women feel unsafe while walking, wheeling, cycling or running. As we have heard, it is also harmful to our health and wellbeing. Increasing active travel by 50% in England would result in 1.8 million fewer GP visits and 4 million fewer sick days, so it is vital that we provide safe opportunities for women and girls to participate in active travel.
The Mayor of West Yorkshire, Tracy Brabin, has led the way on this issue, by not only publishing her safety of women and girls strategy but going on to commission and produce specific guidance called “Safer Parks”. The guidance sets out in detail how to address the inequity of access to parks, promoting the need for them to be designed in a way that makes women and girls feel more secure. I have been briefed on the research, and interestingly the most obvious things—such as lighting the path through the park—do not always result in people feeling safer, because they are in the spotlight and fear that attackers are hiding in the shadows. It is really important that we do the research and get the design guidance right. We must also address the different barriers that exist for different groups, and generally increase the number of people using the parks—that is something that makes us feel safer. The guidance was trialled in Bradford last year, and will hopefully inform planning of how we improve safety in parks for women and girls across West Yorkshire and beyond.
Like the West Yorkshire combined authority, Bradford council is treating the issue with the seriousness it deserves. I recently met the council to discuss the safety concerns of women who visit Myrtle Park. I will continue to engage with the council, the Friends of Myrtle Park—a fantastic community group—and the local councillor, Susan Fricker, who has been a really strong advocate on this issue.
I have also been pleased with some of the initiatives by West Yorkshire police. The Jog On campaign is dedicated to tackling the harassment faced by female runners and joggers. It seeks to raise awareness of inappropriate behaviour, provide education—including through active bystander training—and take enforcement action against individuals who persist in targeting runners with unwanted behaviours such as catcalling, horn-pipping or sexualised comments. At my request, Jog On recently attended the parkruns in both Myrtle Park and Roberts Park in Saltaire, in my constituency, encouraging and advising women who enjoy parkrun, but who may want to go out and run at other times of the day and week.
Women and girls must feel confident to get out and about on their bikes. They must also feel safe in our parks and green spaces and along our canals and greenways —I am campaigning for the Wharfedale Greenway in my constituency, and I will highlight that it must be designed with the safety of women and girls in mind, following the excellent points made by my hon. Friend the Member for Edinburgh South West (Dr Arthur) about Edinburgh. I hope the Minister will encourage the sharing of these positive initiatives from West Yorkshire and Bradford and, with colleagues, ensure that local authorities have the funding and guidance they need in order to secure the safety of women and girls in all our public spaces.
Josh Fenton-Glynn (Calder Valley) (Lab)
It is an honour to serve under your chairship, Ms Jardine. I refer Members to my entry in the Register of Members’ Financial Interests, as chair of the all-party parliamentary group on running. It is a pleasure to speak in the debate, and I thank my hon. Friend the Member for Lowestoft (Jess Asato) for securing it and for her constant work on this issue.
Running should be available to everyone as a form of exercise, stress relief and mental regulation, but it simply is not; it is available only to people who feel safe to do it, and the reality is that too many women do not. Put plainly, 70% of women say they have experienced an intimidating incident while running. Two out of three women have faced harassment. Those are not isolated experiences; they show a pattern that forces women to adapt their behaviour. Women change their routes, avoid running in the dark or stop altogether. That is not freedom; it is women adjusting their lives because of the behaviour of men.
I am a member of a running club, and there are many running clubs in my constituency, which make women feel safer because there is safety in numbers. I pay tribute to those clubs—particularly the all-female ones, such as the St Pol Striders—for creating these spaces, but they should not be relied on, and women should not have to do things differently.
Men who make women feel unsafe have to face consequences, because serious offenders begin with acts of harassment. If we want to prevent worse crimes, we cannot ignore the early ones. We need to make reporting easier and the follow-up stronger. We need systems that take women seriously when they come forward. I represent a constituency with large rural areas, so simple solutions such as better lighting or planning just cannot be relied on. Fundamentally, it comes down to how seriously these complaints are taken.
I am reminded of two very similar incidents about five years apart of men exposing themselves to female walkers, which happened while I was a councillor. In one, the police did not take the act very seriously at all—I suspect that the policeman spent more time complaining to me about people posting about the crime on social media than he did following it up—and in the other they did. Things have changed in West Yorkshire, not out of the ether, but because of leadership. Alison Lowe, our deputy mayor for policing, has really changed how things are looked at, and that has made a huge difference.
Fundamental to good outcomes is an institutional recognition of the problem. We need our police to lead from the front, take victims seriously and be proactive in their information and support. Running should be for everyone; it should not depend on gender, postcode or the time of day. If we want more people to enjoy the benefits of running, we must make sure women feel safe enough to take part. That means consequences for harassment, proper lighting, easier reporting and support for the communities that bring people together.
Christine Jardine (in the Chair)
Before I call the final Back-Bench speaker, I should say that I would like to call the first Front-Bench spokesperson at 28 minutes past 3.
John Slinger (Rugby) (Lab)
It is an honour to serve under your chairship, Ms Jardine. I pay tribute to my hon. Friend the Member for Lowestoft (Jess Asato) for her assiduous campaigning and for bringing this important issue to the Chamber.
This is a problem suffered by women but caused by men—not all men, of course—and men must be the main part of the solution. Women’s spaces are being constricted. Women are forced to take exercise in more public places and to avoid footpaths and canal towpaths, and parents of daughters will have had those conversations with them. However, when they move into those more public places, which are better lit and supposedly safer, they face intimidation, catcalling and the like. That is a total outrage, as my hon. Friend the Member for Shipley (Anna Dixon) said. If it were happening to men, I can assure Members that it would be dealt with very rapidly.
Women are adapting their behaviour, but it is men’s behaviour and attitudes that need adapting, confronting, changing and—yes—on occasion prosecuting. Many men and boys do not even know they are doing anything wrong, but they are intimidating women, and shrinking their status and freedom as citizens. We therefore need a multifaceted approach, and that of course is what the Government are taking through their VAWG strategy, encompassing education, public education, police and criminal justice system work, and more.
This is clearly not something that can be prosecuted out of existence, but part of the challenge is to defeat the defeatism, and more can and is being done. If we mention catcalling, people instinctively say, “That can’t be dealt with; How could you prosecute it?” However, as we heard in relation to the Jog On campaign, it is possible for police to take action.
I want to touch briefly on the work of Warwickshire police in Rugby. They have a safer neighbourhood team that carries out VAWG walks; an enhanced policing initiative on Friday and Saturday nights that promotes Ask for Angela; and Project Vigilant, in which officers are trained to detect predatory behaviour. They have also set up a working group that looks at surveys from the parkrun and walking groups to get data so that they can work out whether they would like to carry out an operation similar to the Jog On operation carried out by Surrey police. They also do a lot of education in schools.
We need to ensure that there are no no-go areas for women and girls in our society, and to commit to work more to tackle the misogynistic, predatory behaviour of some men and boys. They need to be the people who feel worried and intimidated when they go into public spaces—or any other spaces—with the attitudes we have talked about and perpetuate them.
Marie Goldman (Chelmsford) (LD)
It is a genuine pleasure to serve under your chairship, Ms Jardine. I pay tribute to the hon. Member for Lowestoft (Jess Asato) for securing this important debate. As hon. Members have set out, the abuse and violence experienced by women and girls in public spaces is horrifyingly prevalent and should be called out for what it is: a national emergency.
I want to pay tribute to hon. Members from across the House for some of the things they have said this afternoon, and particularly to the hon. Member for Lowestoft, who started the debate in such a wonderful way and really set the tone. She highlighted things that we all know, as women, but that, shockingly, still need highlighting. She spoke about women having to choose either the most direct or the safest route home, and about the unspoken risk assessment we all do—those words rang true to me.
My hon. Friend the Member for Bath (Wera Hobhouse) spoke about her personal experience of harassment while cycling, and about the importance of encouraging children to start cycling early. The hon. Member for Bolton North East (Kirith Entwistle) spoke about the things we do “just in case”, and that really resonated with me. My hon. Friend the Member for Frome and East Somerset (Anna Sabine) talked about her constituent, Holly, and her call for women’s safety to be designed in—that is really important, and I hope the Minister listens to that call. The hon. Member for North West Leicestershire (Amanda Hack) said that women are “constantly compromising” in what they do, and that also rang very true to me. I also highlight the hon. Members of the other gender who spoke up so passionately and convincingly when they said that men’s behaviour needs to change and that they would champion that. I thank them very much for speaking out about it.
A UN Women UK study found that 71% of women of all ages have experienced sexual harassment in public spaces in the UK, as my hon. Friend the Member for Frome and East Somerset said. That figure increases to a shocking 86% for women aged 18 to 24. Part 2 of the Angiolini inquiry confirmed, in black and white, what women already knew—that it is common for us to feel unsafe walking or running in our own streets, and that as women we often actively change our daily routines to avoid very real threats, as highlighted by Members across the House.
It also found that sexually motivated crimes against women in public are not prioritised to the same extent as other serious offences. Women have felt that to be true for far too long. A University of Manchester study found that more than two thirds of women runners experience some form of abuse while running, most commonly verbal, with just 5% of them reporting such incidents to the police. That is plainly unacceptable in Britain today.
Liberal Democrats have urged the Government to implement all 13 of the inquiry’s recommendations without delay. The sense of insecurity among women worsens during the winter months as the lack of safe routes on dark evenings greatly restricts women travelling for work or leisure.
Sarah Olney (Richmond Park) (LD)
Richmond Park in my constituency is a very popular spot for runners and cyclists, but as my hon. Friend points out, it is so much darker during the winter months. Our dedicated police force, the Royal Parks constabulary, has recently been completely scrapped, leaving the park unpatrolled and even less safe. This means women are choosing not to run in the park at all, which reduces their options for safe running and cycling routes in the winter months. Does she agree that investing in neighbourhood policing, including the policing we used to have in the royal parks, is critical to women feeling safer?
Marie Goldman
My hon. Friend’s intervention is very timely. My Chelmsford constituency is in Essex, and Essex police has just announced that it feels it will have to scrap numbers from the force, which is very concerning indeed. She also highlights the importance of women feeling safe, particularly in parks. In Chelmsford, streetlights were left dark and unrepaired by Essex county council for years, leaving many women feeling unable to take the most direct and quickest route, which was through the park, from the station to their home, at the end of the day.
As a county councillor, I campaigned hard for the lights to be fixed. I am pleased that they were eventually fixed, but that was with the help of Liberal Democrat-run Chelmsford city council. It is hardly surprising that inadequate street lighting and a lack of safe paths to facilitate active travel are widely reported to be significant barriers to women walking in their communities.
A report by the Institute for Public Policy Research in the last two years found that chronic underfunding of active travel across England is undermining efforts to get people walking, wheeling and cycling, instead of driving, with just 2% of the total transport budget spent on infrastructure to support active travel. It sometimes seems that we are putting our money in the wrong places.
It is disappointing to note, as my hon. Friend the Member for Bath did, that the UK lags behind its European counterparts, with fewer than one in five people walking, wheeling or cycling on an average day, compared with more than one in four across Europe. The report highlights that this failure has locked in more congestion and contributed to worsening air quality, making it harder to reduce emissions while also limiting growth. Members might wonder why I mention that, but we also know that higher levels of pollution intersect with racial and wealth inequalities, with the most racially diverse and the poorest parts of our towns and cities suffering the most.
There is even evidence that equal exposure to air pollution does not mean equal health outcomes for women and men. For example, some studies have shown that women experience more harmful effects from air pollution than men. More research is needed, but at the very least that demonstrates the necessity of inclusion when considering the importance of prioritising active travel.
The same goes for road safety more generally, and the Liberal Democrats have for some time been calling for an updated road safety strategy, so we welcomed its recent publication by the Government. My Liberal Democrat colleagues and I also welcome the publication of the pavement parking consultation outcome, albeit five years on. Although it might seem strange on the surface, women are likely to be disproportionately affected by the inaccessibility caused by pavement parking.
Women are more likely than men to be disabled and have mobility or visual impairment issues. We are more likely to be accompanying children and wheeling prams, and we are more likely to be carers, as was pointed out earlier. I was therefore pleased, in the autumn, to table an amendment to the English Devolution and Community Empowerment Bill that would have enabled local authorities to enforce pavement parking laws more easily. Pavement parking is not just a minor inconvenience; it puts people in harm’s way, impacts their sense of dignity and limits their access to public space. It is easy for the casual observer to dismiss some of those small changes as trivial, but they make a genuine difference in improving women’s sense of safety and inclusion.
In Chelmsford, Make Space for Girls has been doing great work to build inclusive infrastructure, which is so important for creating environments where women feel safe. The project enables girls and gender non-conforming children to design their own play spaces, and it is just as much about creating safe, comfortable physical environments as proving to these children that they can enact change in their own communities and hold power to shape their own futures. That is important, because although street lighting and safer paths play an essential role, those issues are ultimately symptomatic of the broader problem that faces our country. That is why initiatives such as Chelmsford city council’s women’s safety charter, through which local premises commit to a range of training to ensure that staff consider and prioritise women’s safety as standard, are also necessary.
Finally, the fact remains that women who are victims of violence are incredibly likely to be known to the men who attack them. We must therefore focus our efforts on tackling the societal attitudes that lead people to look away from, excuse and sometimes justify violence against women and girls. We have a responsibility to change that. It cannot be that, in a decade’s time, women are still fearful of walking our streets because of who may be lurking in the dark. We owe it to future generations of women to act. My Liberal Democrat colleagues and, I believe, Members from across the House will continue to press the Government to do so.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Ms Jardine. I congratulate the hon. Member for Lowestoft (Jess Asato) not just on securing this important debate, but on the powerful way in which she opened it. It can be described only as a sobering debate that requires the Government’s full attention, and that must come not just from the Department for Transport but, as others said, from other Departments, too.
I thank the hon. Members for Bath (Wera Hobhouse), for Bolton North East (Kirith Entwistle) and for North West Leicestershire (Amanda Hack) for sharing their personal experiences. It is completely unacceptable that anyone should have to face what they described on the streets of this country.
I equally agree with the hon. Member for Calder Valley (Josh Fenton-Glynn) that so-called low-level offences should be stamped down on incredibly forcibly. He is right—I have long argued along similar lines—that it is essential because so-called low-level crimes lead to more serious and potentially fatal crimes in the future. It is therefore absolutely essential that they are clamped down upon incredibly hard.
The method by which anyone, and particularly women, chooses to travel should not be dictated by how safe they feel. Everyone should feel safe walking, running, cycling, wheeling, driving or riding a horse—we had a good debate about horse riding last week, and it should have been added to the title of this debate, because it is incredibly important in rural communities such as mine.
It is clear that the challenges of securing women’s safety are an obstacle to an array of activities that women might want to do, but feel unable to do so. It is incredibly concerning that, according to Cycling UK, 23% of women cite harassment or intimidation as a reason not to cycle. The data on running is even starker. Research published in 2023 found that almost three quarters of women in the United Kingdom change their outdoor activity routines during winter, with many doing so because they feel unsafe.
Separately, survey data from SportsShoes.com, which is not a website I was particularly familiar with until I began my research for this debate, found that 48% of women had felt unsafe while running, compared with 36% of men. Similarly, 70% of women had experienced an intimidating incident while running, including 22% saying that they had been followed and 21% reporting that they had been beeped at by someone in a car. Such behaviour on the streets of this country is deeply unacceptable.
Even though it is challenging to point to a single source, data from a variety of organisations highlight that a considerable number of women experience behaviour that is not acceptable—indeed, it is clearly despicable—in our society. The idea that someone who is merely trying to run or cycle should be followed or harassed is clearly wrong and must be stopped.
Therefore, to address both the safety of women while cycling, wheeling, walking or running, and concerns about harassment, we must make sure that we embed enforcement as the underlying principle of safety strategies. That must involve having sufficient numbers of police officers located in the areas where women feel most unsafe. That is a challenge, given that we are currently seeing a reduction in the number of police officers on our streets. The hon. Member for Richmond Park (Sarah Olney) gave a particularly stark example. The thought that a park such as Richmond Park, which is so suited for walking, running, cycling and all sorts of activities, is no longer to be policed should horrify all of us in this House, no matter what political party we belong to.
Improving the safety of women should also involve following up on incidents properly. For example, a small minority of drivers demonstrate truly unsafe behaviour and put women at risk. We have strong rules about what constitutes dangerous driving, and those rules must be enforced where people have broken the law. However, the rules for dangerous driving must apply equally to those who behave in an unacceptable way by verbally abusing people, beeping their horn or whatever it might be.
To do that, we need effective funding for our police forces, which is why my party has specifically said that we would provide £800 million to deploy 10,000 new police officers in hotspot areas where crime is most likely to occur. I appreciate that hotspot policing might be less impactful for groups such as cyclists, who travel much greater distances than other people, but in urban environments or in places such as Richmond Park, which we have already heard about, there are often particular locations and areas that dissuade people from running and walking. The more we can do to target those locations—where crime, particularly crime against women, is more likely—the more we can instil trust and a sense that such activities are safe.
Therefore, can the Minister say what cross-Government work has been conducted by her Department to prioritise the safety of women and girls when they are engaged in active travel and to feed into the Government’s strategy on preventing violence against women and girls? Also, can she make a commitment that her Department will engage with local police forces to ensure that they are monitoring areas where women feel most unsafe?
Also, I understand that the consultation for the third cycling and walking investment strategy says that
“Investment in well-lit, safe, high-quality walking, wheeling and cycling routes increases feelings of personal safety, as well as improving road safety”.
I think we can all agree with the sentiment and the principle that we want particular areas to have improved lighting, in order to improve safety. As with many aspects of road safety, targeted measures that focus on the most dangerous areas will rightly have support from Members across this House.
I am aware that issues such as improved lighting form part of the much broader calls for clear targets on what organisations such as Cycling UK describe as high-quality cycling infrastructure, which are made alongside calls for appropriate levels of spending. That is all important. And from our time together on the Transport Committee in the last Parliament, I know the Minister is a long-standing supporter of active travel in general and of cycling in particular.
There is always a difficult balance to be drawn between making our roads safe for cyclists and making them too difficult for other modes of transport to use, or even prohibiting other modes of transport. Nevertheless, I hope the Government can find the appropriate balance by making cycling safer for women without making it more difficult for those same women to use their cars for other journeys.
One request from Cycling UK and a range of other road safety organisations is to improve understanding of the 2022 changes to the highway code. These organisations have been clear about welcoming the changes as an important step in improving the safety of pedestrians, cyclists and other road users, but the knowledge gap remains in the public’s awareness of these changes.
All in all, as I said at the start of my remarks, this needs a whole-Government approach. The safety of women cannot be put on the back-burner or into a footnote; it must take centre stage across multiple Government Departments. I look forward to hearing the Minister’s commitments this afternoon on how she will be leading that in the Department for Transport and across the whole of Government.
The Parliamentary Under-Secretary of State for Transport (Lilian Greenwood)
It is a pleasure to serve under your chairship this afternoon, Ms Jardine. I thank my hon. Friend the Member for Lowestoft (Jess Asato) for raising this important issue and congratulate her on her appointment as violence against women and girls adviser to the Department of Health and Social Care. I look forward to working with her to help to drive forward the Government’s mission to halve violence against women and girls within a decade.
I imagine that every woman here today will have recognised the issues under discussion. My hon. Friend the Member for Bolton North East (Kirith Entwistle), the hon. Member for Frome and East Somerset (Anna Sabine), my hon. Friends the Members for Portsmouth North (Amanda Martin) and for North West Leicestershire (Amanda Hack), the hon. Member for Bath (Wera Hobhouse), my hon. Friend the Member for Shipley (Anna Dixon) and the hon. Member for Chelmsford (Marie Goldman) all described vividly what those issues mean for women in our daily lives. The fear of male violence is so normalised that it is easy to forget that it is anything but normal. I am pleased that many men, including my hon. Friend the Member for Edinburgh South West (Dr Arthur), the hon. Member for Strangford (Jim Shannon), my hon. Friends the Members for Rugby (John Slinger) and for Calder Valley (Josh Fenton-Glynn), and indeed the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), are also committed to ensuring that the situation changes.
As we have heard, women remain under-represented in cycling due to persistent safety concerns: 58% of women feel that their cycle journeys are limited by such concerns, and more than a third say that roads do not feel safe. Harassment, intimidation and poorly lit routes all contribute to a sense that cycling, particularly in the evening, is simply not a safe or viable option. Research conducted by Dr Caroline Miles and Professor Rose Broad at the University of Manchester found that, over a two-year period from 2021 to 2022, 68% of women survey respondents said they had experienced abuse while out running, but only 5% of those women had reported the abuse to the police.
Paul Waugh (Rochdale) (Lab/Co-op)
My hon. Friend the Minister and my hon. Friend the Member for Lowestoft (Jess Asato) have both referred to the excellent research by the University of Manchester. One of the most shocking findings of that research, which I discussed with the researchers last year, was that 19% of women runners had been followed and 7% had been flashed at. Does the Minister agree that, while women are often taking measures to mitigate the threat, whether through smartphones, special safety apps, or even changing their routes, the real answer ultimately lies in more visible policing, more CCTV, better lighting—crucial for local communities—and in tackling at source, as the violence against women and girls strategy does, the misogyny in our schools and workplaces?
Lilian Greenwood
My hon. Friend makes a number of very important points. The scale of violence against women and girls in our country is intolerable, and that is why this Government are treating it as a national emergency, but the most important change is a change in the behaviour of men, frankly.
The Government published our strategy to build a safer society for women and girls last month, and have set out a range of actions to prevent violence and abuse, pursue perpetrators and support victims. Giving women the confidence to report incidents is essential. The strategy includes an ambitious aim to halve violence against women and girls in a decade, which will require us to take a transformative approach to the way that we work across Government and with other partners. I can assure the shadow Minister that Ministers regularly come together from all Departments to discuss the action that we need to take.
Turning to active travel, in December we announced that we are allocating £626 million over the next four years for local authorities to deliver walking, wheeling and cycling schemes—enough for 500 miles of new walking and cycling routes. That is in addition to almost £300 million of funding that we announced in February 2025.
In November, we launched a consultation to develop the third cycling and walking investment strategy, which recognised the need to address the barriers to active travel, including for women and girls and proposed two new objectives to support the long-term vision for active travel: ensuring both that people are safe to travel actively and that people feel it is an easy choice. The consultation closed on 15 December; we are looking carefully at all the comments received and the final strategy will be published this spring.
Since its establishment in 2022, Active Travel England—ATE—has worked with local authorities to help them to make walking, wheeling and cycling a safe and attractive choice for everyday trips. That has included overseeing £435 million of investment to deliver more than 400 miles of routes and hundreds of safer crossings and junctions.
ATE has commenced a project focused on the need to design streets better for women and girls and to support local authorities in the delivery of that. The organisation is working with Living Streets and with Footways to pilot an approach to developing walking network plans. Through that project, women have highlighted issues with walking, including—these will be very familiar to hon. Members—poor lighting, isolated routes and limited visibility, which strongly shaped their willingness to walk and influenced route prioritisation. Those findings will inform an important part of the evidence base for planning walking networks that work for everyone. I welcome the examples of good practice highlighted by a number of hon. Members, including Members from West Yorkshire.
This year, through ATE, we have provided £2.5 million to Cycling UK to deliver the Big Bike Revival, which is now in its 10th year and has reached more than half a million people. The Big Bike Revival programme helps people across England to get back on their bikes and experience the many benefits of cycling. Since it began in 2015, more than half of participants have said they now feel safer cycling and 49% of participants have been women. Women who have taken part in the programme have described being made to feel comfortable, having their confidence and self-esteem boosted, and feeling empowered.
Last October, Cycling UK organised “My ride. Our Right”, and approximately 60 women-led glow rides took place across the country to increase the visibility of women’s cycling and demand better infrastructure. In my constituency, the cycling groups Women in Tandem and Pedals organised rides and are doing great work to give more women the confidence to ride a bike especially, or including, after dark. As Women in Tandem says, cycling should “feel liberating, not intimidating”—hear, hear!
We know that good street design can contribute to helping women to feel safe when walking, cycling and running, and enables safe access to public transport. We are currently working with MHCLG to update the manual for streets, which was first published in 2007. That will include advice on aspects of street design that can help to improve personal safety and perceptions of safety: how safe is it, and how safe does it feel?
Anna Sabine
I thank the Minister for giving way. It may be that she is coming on to this issue but, while everything she is saying on active travel is fantastic and I recognise the point about the manual for streets, does she recognise that if the overarching framework, the national planning policy framework, does not pay regard to women’s and girls’ safety, it is much harder to enact those subsets such as active travel?
Lilian Greenwood
I thank the hon. Member for her contribution. As I said, we are working with our colleagues in the Ministry of Housing, Communities and Local Government to ensure we have a coherent approach.
I welcome the support of the Liberal Democrat spokesperson, the hon. Member for Chelmsford, for our proposals to tackle pavement parking. Of course, the issue is not just safety on the street, as my hon. Friend the Member for Edinburgh South West highlighted, but having the opportunity to walk, wheel, cycle and run in our green spaces and parks, on canal towpaths and on greenways. Natural England’s “Green Infrastructure Planning and Design Guide” offers detailed guidance on creating accessible green spaces and, for teenage girls specifically, emphasises the need to design spaces that are not only safe and inclusive but also comfortable and welcoming. Sport England is also running campaigns challenging prejudice to make clear that sport is for everyone. That has included the “This Girl Can” and “Let’s Lift the Curfew” campaigns; the latter included 320 local events in October to amplify women’s voices and overcome barriers that prevent women from being active outdoors.
I again thank my hon. Friend the Member for Lowestoft for raising this important issue. It has been wonderful to see the level of contribution and the interest that has been shown in the debate. I look forward to continuing to work with her, with other hon. Members here this afternoon, and with my colleagues across Government to take further action on this important issue and ensure that for our daughters the opportunity to go out and walk, run and cycle is different from how it perhaps has been for our generation. We can, must and will do better.
Jess Asato
I thank all Members who contributed and the Minister for her remarks and ongoing work on this issue, which forms a key part of the Government’s ambition to halve violence against women and girls. We all very much look forward to working with her to improve women’s safety in this area. I finish with this quote from the Belonging Forum:
“When women feel unable to move freely in public spaces, this limits opportunities for connection, reinforces isolation and undermines a sense of belonging.”
We must work to tackle that.
Question put and agreed to.
Resolved,
That this House has considered women’s safety while walking, wheeling, cycling and running.
Consumer Energy Bills: Government Support
(1 day, 7 hours ago)
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Christine Jardine (in the Chair)
I will call Luke Taylor to move the motion, and then I will call the Minister to respond. I remind other Members that they may make a speech only with prior permission from the Member in charge of the debate and from the Minister. As is the convention for 30-minute debates, there will be no opportunity for the Member in charge to wind up.
Luke Taylor (Sutton and Cheam) (LD)
I beg to move,
That this House has considered Government support for consumer energy bills.
It is an absolute pleasure to serve under your chairship for the first time, Ms Jardine. This morning, hon. Members may have caught the same package on the breakfast news as I did. It followed Ukrainians on the outskirts of Kyiv who had been without heating for more than two weeks. They have suffered in conditions unthinkable to those of us in modern Britain, with temperatures in some places dropping to minus 20° overnight. The pictures —of children with frozen faces wearing four or five coats, and grandmothers slipping on sheets of ice that had formed on the floors of their apartments—were heartbreaking.
I hope that hon. Members will indulge my making that aside at the start of my remarks; as I watched those scenes, I could not help but feel alarmed at the sense that Russia’s targeting of Ukrainian energy infrastructure mirrors the shockwaves it has wilfully sent across Europe’s traditional energy mix since it first crossed the Ukrainian border nearly four years ago. Those shockwaves were amplified in the UK when they collided with the unstable economic conditions wrought by Liz Truss’s mini-Budget, whose impacts are still rumbling on today.
We are fortunate in this country not to suffer temperatures consistently way below 0°, and especially lucky not to have to contend with that while bombs rain down on our heads. But the reality of the dangers of cold is present everywhere, and our cost of energy crisis is forcing people to live without heating mere miles from where we stand today, in the world’s sixth largest economy.
It is always innocent, ordinary people—from Kyiv to Kilburn and everywhere in between—who suffer because of huge energy price shocks: ordinary people such as the pensioners in my constituency of Sutton and Cheam, who are living in homes that are sealed shut against the winter, their windows “boarded up” with blankets and towels as they try desperately to keep inside what little heat they can afford.
In the Chamber last week, I mentioned an incident in which I knocked on the door of a resident who answered in a coat and scarf—not because she was going out, but because she did not have the heating on inside; it was around 3° or 4° outside. It happened again yesterday, when I was out canvassing in Worcester Park. I have heard from households that now avoid using their ovens, not out of choice but out of fear of what switching them on will do to their finances. Local hospitals prepare for influxes after cold snaps, because the cold weather thickens blood and causes clots and heart attacks in older people. Anyone who has experienced true cold—awful, core-shaking cold—can only dare to imagine what it feels like for children and older people, whose temperature regulation is developing or fading.
The End Fuel Poverty Coalition estimated that 4,950 excess winter deaths in the UK were caused by living in cold homes during that first chaotic winter of 2022-23.
Afzal Khan (Manchester Rusholme) (Lab)
Over 6,000 households in my constituency are living in fuel poverty. The warm homes plan will deliver targeted support for those living in fuel-poor households and provide them with the means to upgrade their homes with insulation, solar panels and heat pumps. Does the hon. Member agree that we should prioritise measures that improve energy efficiency and sustainability to cut fuel bills for years to come?
Luke Taylor
Absolutely, and I will come on to the package that the Government outlined last week. It was very welcome, but we need to go further on immediate measures.
More than 12 million households are struggling with high energy bills today. It is not just the cold, but what creeps in with it: the damp and mould in children’s lungs and the reliance, for some families, on heating that produces dangerous carbon monoxide, which presents a threat to life and limb. Let us be clear: in parts of Britain where fuel poverty is all too common, we are at risk of letting one generation slip away slowly, sitting lonely in their homes, shivering, while we raise another forever stunted by a cold childhood.
Jim Shannon (Strangford) (DUP)
I commend the hon. Gentleman for bringing this matter forward; it affects everybody in the United Kingdom of Great Britain and Northern Ireland. About 39% to 40% of households in Northern Ireland are classed as being in fuel poverty, meaning that they spend more than 10% of their income on energy just to keep their homes warm. Those stats are significantly above historic measures, and many working families do not qualify for Government assistance. The hon. Gentleman is right to say that the Government must do more. Does he agree that very little action has been taken to ease pressure on working families, and that more must be done to adjust thresholds so that those families are eligible for support and assistance?
Luke Taylor
The hon. Member highlights the gap between families who are eligible for support and those who just cannot quite make ends meet. Clearly, there is a challenge in making any measure completely comprehensive and ensuring that those in need get the support they require.
When Beveridge wrote of his five great evils all those decades ago, he had in mind specifically the kind of poverty that we are talking about here—not just in material terms, but in access to living conditions that make a higher quality of life possible. In the decades since, we have clung to the findings of his report while slowly letting the meaning of those words decay, assuming that things such as freezing to death in one’s own home were evils conquered by the “white heat” of revolution. We were wrong, and squalor, by means of poor housing, insulation and lack of warmth, is back in Britain. It is here, not just in the homes of the poorest and most vulnerable, but all too often in the suburban houses of middle-income families and in urban flats where young people raise kids.
That is to say nothing of parts of rural Britain, where very old, pre-modern insulation in housing is still the norm. For too many families and pensioners I meet, across neighbourhoods, ages and even incomes, this is the single most pressing issue in their lives. We do not need a new Beveridge report to tell us that—not that we are wanting for heartbreaking statistics. We can see it with our own eyes and hear it with our own ears, and we feel it in our bones when we knock on doors in our constituencies, time and again, day in, day out.
When an issue gets to the heart of people’s quality of life in such a huge way, the state has a duty to cut through the roadblocks, take the lead and do something about it quickly. This Government, however, have taken too long to do so. The announcement last week of the warm homes plan is welcome; we Liberal Democrats have been pushing for it for years. Many organisations working in this space, such as the MCS Foundation, are relieved to see it finally outlined.
Sarah Gibson (Chippenham) (LD)
As somebody who suffers enormously from the cold—as anyone can see from my hands, which are already white—I really appreciate my hon. Friend for bringing this point forward. The warm homes plan is incredibly welcome, but I am worried about the order in which it suggests interventions. The idea that we should be putting solar panels and heat pumps before insulation and air tightness worries me, having spent 25 years in the building industry.
I am also very concerned about the focus on specific technologies rather than on aims. The real solution must be to cut the cost of heating our homes. There are innovative solutions, such as the Luthmore electric boiler, developed by an innovative firm in my own constituency; a gas boiler can be taken out and the Luthmore boiler plugged straight in. However, we risk pandering to those who can afford to put these measures in, while the most vulnerable are left exactly where they are, in damp homes. I assume my hon. Friend agrees with me.
Luke Taylor
I wholeheartedly agree. As an engineer by background, I think we need to focus on the outcome and the goal, rather than prejudicing the tool. While air-source heat pumps are suitable in many cases, they rely on air tightness and insulation, which may well be a barrier to quick implementation.
The Liberal Democrats have been calling for a 10-year emergency home upgrade programme, starting with free insulation and heat pumps for those on low incomes.
Adam Dance (Yeovil) (LD)
A constituent of mine was having energy retrofit work carried out by Consumer Energy Solutions under the energy company obligation 4 scheme, which seeks to lower heating costs. That firm has recently gone into administration, and the work will now not be finished. The ECO4 scheme has been extended, but the Government have not clearly committed to introducing better protections for customers. Does my hon. Friend agree that the Government urgently need to ensure greater consumer protections against installers’ incompetence and incompletions?
Luke Taylor
I agree 100%. Whenever we have novel technologies, there is a rush to fill the space; unfortunately, cowboys may well get there first. The Government have a huge role not only in encouraging quality installation but in protecting against that vacuum being filled by disreputable traders.
On the subject of the home upgrade programme, as with most Liberal Democrat policies we urge the Government to steal it. It would complement and, frankly, complete their own strategy. I invite the Minister to take this opportunity to outline specifically how the delivery of that strategy will work. As we Liberal Democrats have said, without a clear replacement for the ECO programme or future homes standard, we face losing skilled installers and risk long delays for the kind of ambitious programme of insulation that we need. That is not a theoretical loss: homes with lower efficiency standards are actively dangerous to people’s health. We will hold the Government accountable for their legally binding targets, but I encourage them to remember that full disclosure of the practicalities of implementing the strategy would help all of us work harder to tackle fuel poverty.
In fact, the Government should be working more closely with new projects such as the Citigen network, which I recently visited in London, or with local councils such as my own in Sutton, to see how new alternative heat sources are already making a difference to people’s lives. We can and must be more ambitious. We must surely now recognise that the scale of the crisis is so severe that tinkering with infrastructure investment, while useful for the future, does not solve the problem for families shivering and cutting back every single day.
To genuinely rescue people from the cold, we must tackle the real cost of energy now. That is why we need a social tariff to provide targeted energy discounts for vulnerable households, including those on low incomes and in receipt of personal independence payment. That is why the Liberal Democrats have been calling for the renewables obligation levy to be removed from people’s energy bills and instead funded by a proper windfall tax until April 2027—after which the Government should develop a new way of funding RO contracts, implementing Liberal Democrat proposals to move them on to a contracts-for-difference model. That would decouple energy prices from the wholesale gas prices and ensure that ordinary people across the country can benefit from cheap renewable energy.
I am sorry not to see any Reform MPs here, although it is not a surprise; it was written down here in my notes. They deserve to be told once again that net zero does not mean higher energy costs. How we fund our energy transition is a political choice. They are choosing to remain wedded to the very system that has left us so vulnerable and Britons literally freezing to death in their own homes, rather than making sure that the fat cats pay their fair share towards keeping people in this country alive.
Richard Foord (Honiton and Sidmouth) (LD)
In addition to the absence of Reform MPs, the absence of Conservative MPs is also striking. It was during the Truss-Kwarteng mini-Budget that borrowing was pushed up by £60 billion because of the energy price guarantee that was a consequence of Government dependence on Russian gas. Does my hon. Friend agree that what we need in this country is energy independence, so that we have energy security and can be the custodians of our own destiny?
Luke Taylor
I could not agree more: energy security is national security. It sounds like a trite cliché, but it is so absolutely true when we look at the dangers around the world today.
The Minister has heard my arguments and the arguments made by other colleagues who intervened. The Minister will have seen, like the rest of us, the findings of the Joseph Rowntree Foundation, published earlier today: that the number of people living in the most extreme form of poverty has reached its highest level since records began. In addition to my other asks this afternoon, I ask the Minister to simply look us in the eye and tell us why, when people are freezing, the Government are not moving faster?
Amanda Martin (Portsmouth North) (Lab)
It is a pleasure to serve under your chairship, Ms Jardine. I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing this very important debate.
I have seen at first hand how urgent the cost of living pressures are for many of my residents. Just last week, I hosted a cost-of-living coffee morning in my community, bringing together energy providers, water companies, banks and local support groups. It was a practical example of how joined-up, accessible support can make a real difference to residents in Portsmouth, particularly when people are helped to understand what they are entitled to and how they can access alternatives.
I want to say a huge thanks to all who attended, be they residents or stakeholders, including: Advice Portsmouth, Centrica, British Gas, HIVE Portsmouth, IncomeMax, Octopus Energy, Nationwide, Switched on Portsmouth, Portsmouth Water, the Energy Ombudsman, E.ON Next, Utilita Energy, Southern Water and NatWest. The drop-in highlighted so many issues, which is why I welcome the Government’s excellent warm homes plan—a plan that will improve energy efficiency, reduce energy bills, cut carbon emissions and tackle fuel poverty through a mix of grants, loans, local delivery and updating of standards.
The warm homes plan is vital because consumers have been let down by previous Governments, and by rogue tradies, so many times. We must think about trust. That is why I have been meeting with Checkatrade, the Department for Business and Trade and the sector, to ensure that our tradies’ reputations are not let down by cowboy builders and shoddy outfits when we bring about the reality of our warm homes plan. Although I welcome the warm homes plan, warmly, I ask the Minister to outline how it will build trust and complement local, community-led initiatives to ensure that energy bill support and home efficiency measures meet the people of Portsmouth’s needs.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
It is a pleasure to serve under your chairship, Ms Jardine, I think for the first time. We could probably have done with a longer debate given how many people intervened at the start, but I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing this debate and for giving us the opportunity to debate an important issue, which I know lots of Members across the House have an interest in.
I associate myself with the hon. Member’s remarks about the situation in Ukraine. Last year, when I attended the G7 Energy and Environment Ministers meeting, I met the then Ukrainian Energy Minister. I was struck by the sheer scale of what she was facing every day, such as sending energy workers into the field to repair broken transmission lines and substations—not just facing the risks that any worker faces in situations with high voltage cables, but also facing the risk of Russian drone attacks and bombs. I could not be clearer in condemning the actions of the Russian regime and what they are doing in targeting infrastructure at this time.
As I draw this debate to a close, I want to reaffirm that tackling the affordability crisis is this Government’s No. 1 priority. The main reason that bills are so high, as the hon. Member for Sutton and Cheam alluded to, is the wholesale cost of gas and our exposure to price shocks caused by our dependence on fossil fuel markets. We are working to bring down, for good, the cost of energy by taking back control of our energy system through our clean energy superpower mission. Thanks to our decisions, last year was a record year for wind and solar power, and we have embarked on the biggest nuclear building programme for half a century. Already in 2026, the Government’s seventh contracts for difference auction secured an incredible 8.4 GW of new offshore wind capacity across Britain—enough to deliver energy for more than 12 million homes. That is what it means to deliver on lower bills, good jobs and energy security. I have to look at the Opposition Benches, which are empty this afternoon, and think about the work that those Members could have been doing in government over the past 14 years to take us to a position where we would have been less reliant on fossil fuels and not facing such fuel shocks. I suppose it is no surprise that they did not turn up to defend their record.
Notwithstanding the concerns voiced by hon. Members this afternoon, which I share, energy bills are starting to come down. In real terms, Ofgem’s price cap was lower in 2025 than in 2024, but we know we need to go further. The Government’s intervention at last year’s Budget will help people deal with cost of living pressures, by taking an average £150 of costs off energy bills from April 2026. By closing the ECO scheme and providing Exchequer funding to reduce the cost of the renewables obligation for domestic energy suppliers, this Government are turning a corner by putting more money in people’s pockets in 2026.
At this point, I want to address the point made by the hon. Member for Yeovil (Adam Dance), who raised the issue of an ECO project affecting one of his constituents. I ask him to send me the details of that case in writing, so that we can investigate it fully. In addition to the £150 off energy costs, we have expanded the warm home discount scheme this year, so that more households will benefit from its support. That means that up to 6 million households will receive a £150 rebate on their energy bills this winter. In Sutton and Cheam, over 2,800 households received the warm home discount last winter; we expect that to increase significantly this year. Under the expansion across London, for example, 950,000 households will benefit from the warm home discount this winter. That is money going on to people’s energy bills and bank accounts, now. I recognise how important that support is to households across Britain over the winter months. That is why we have proposed continuing the warm home discount scheme for a further five years, up to winter 2030-31.
A number of hon. Members raised the warm homes plan, and I will address some of those issues in a moment. The hon. Member for Sutton and Cheam said we needed an ambitious plan; that is precisely what the warm homes plan that we announced last week is. Reducing bills is not just about discounts, whether that is £150 off costs or the warm home discount; it is also about transforming an ageing building stock into comfortable, low-carbon homes that are cheaper to heat and fit for the future.
As my hon. Friend the Member for Manchester Rusholme (Afzal Khan) highlighted, the warm homes plan is a vital step in the Government’s mission to address the long-term issue of energy affordability in this country. It is the biggest ever public investment in home upgrades and will help millions of households benefit from solar panels, batteries, heat pumps and insulation.
The hon. Member for Chippenham (Sarah Gibson) talked about the priority afforded to different measures. I reassure her that we are not suggesting that insulation is not important. I am sure she has read the warm homes plan and will have seen the pages that deal specifically with insulation. Insulation plays an especially important part in the local government schemes we are running. With the offer of consumer loans and the work we are doing with finance organisations, there will be an opportunity to finance the retrofit of homes.
The hon. Lady highlighted how technology is changing. She talked about the electric boiler, which I have seen myself. We have been looking at lots of different technologies that could deliver and have already made changes, for example, to the boiler upgrade scheme, which is now offering heat batteries and air-to-air heat pumps as well as traditional heat pumps. We are always on the lookout for new technologies.
Sarah Gibson
I was aware that the Minister had seen the boiler I mentioned. I welcome the warm homes plan immensely, but I have a slight worry about it. There is the old saying that doing the same thing again and expecting a different outcome is a sign of madness. My hon. Friend the Member for Yeovil (Adam Dance) highlighted that the previous scheme failed to do the right things at the right time, due to a lack of scrutiny and accountability. I have not seen anything in the warm homes plan that talks of an overview to ensure that a heat pump is installed only when it needs to be, since airtightness and insulation would be more appropriate first.
Martin McCluskey
To address those points: the warm homes agency, which is part of the plan, is there to provide advice and guidance to consumers from the start to the end of the retrofit journey. That is about increasing the level of advice and guidance available. I understand that retrofitting a home is challenging and that people need advice and guidance to do it effectively, as the hon. Lady noted.
As for oversight, there has been a problem in the past, as we saw with the number of issues around the ECO4 programme. The warm homes plan states clearly that we will consult on the protection available to consumers through the course of this year. As the Minister responsible, I never want to see an issue like ECO4 again. We need to make it as easy as possible. We should ensure that problems do not occur in the first instance, but when they do there must be proper adequate redress, so that there is confidence in the system. We cannot expect people to make these changes without confidence in the system.
The warm homes plan will roll out upgrades to up to 5 million homes by 2030, saving households hundreds of pounds on energy bills and helping lift up to 1 million families out of fuel poverty by 2030. We are providing £5 billion of targeted support for low-income households, which will receive free upgrades, including heat pumps, solar panels and batteries. That includes additional funding for the very successful warm homes local grant, and the warm homes social housing fund for local authorities and social landlords to upgrade homes for those on low incomes and in social housing. Those upgrades can provide a significant saving for a typical household of £550 a year on their bills. Alongside that, we have allocated £5 billion to a new warm homes fund, almost £2 billion of which will go to the provision of low or zero-interest loans. That will make it easier for more people to meet the up-front costs of upgrading their homes in order to benefit from lower bills.
About 30% of private rented sector tenants live in fuel poverty. We are introducing new minimum energy efficiency standards for the private rented sector and the social rented sector, which will save renters hundreds of pounds a year and ensure that they have decent, warm homes. I am confident that the landmark plan that we have announced will make people across Britain better off, secure our energy independence and do right by future generations by tackling the climate crisis.
One of the effects of the affordability crisis has been to increase consumer debt, which remains at a record level. Reducing debt not only helps those in debt but cuts the cost of managing debt for all consumers. I recognise the need to tackle that problem, and I have been working closely with Ofgem to do that. In November, Ofgem published an updated debt strategy that set out its near-term actions and priorities in supporting suppliers to reduce debt in the sector. It includes proposals for a debt relief scheme to tackle the debt that some consumers built up during the energy crisis; that could reduce aggregate debt.
I commend my hon. Friend the Member for Portsmouth North (Amanda Martin) for arranging the coffee morning and the energy support event. I believe that many Members are doing similar things; they have received a lot of support from energy suppliers and other organisations. She said that she has had conversations with Checkatrade and with people in the building trade. I said a moment ago that we are ensuring high levels of consumer protection to protect not just consumers but those in the building trade. Whenever I meet them, they ask for reliable regulation and standards that they can adhere to. The vast majority of builders, who are maintaining a high standard, do not want their reputation trashed by people who are not meeting those high standards.
The energy system is changing. We have more clean power and innovative tariffs, such as time of use tariffs, and the use of technologies such as heat pumps and electric vehicles has grown. That means that we need solutions fit for 2030 and beyond. Ofgem is currently conducting a cost allocation and recovery review to look at how costs on energy bills can be recovered in the future, and it is considering factors such as efficiency, fairness, meeting our net zero commitments, ensuring growth, and how we pay for our energy system. I am keen that that ensures that progressivity is at the heart of the way people pay for their energy.
The hon. Member for Sutton and Cheam spoke about a social tariff, which I know a lot of hon. Members would welcome, but I am always thoughtful about how we make sure that is properly targeted. For that, we need reliable data. We have just launched a kick-starter project with the Department for Science, Innovation and Technology and the Department for Energy Security and Net Zero, which is about accurately finding reliable household income data and properly targeting energy interventions—I would be happy to discuss that in more detail with the hon. Gentleman. It is vital to ensuring that energy costs and bills reflect the changing market.
We are bringing energy bills down for everyone with the actions that we will be taking in April, and we will continue to search for other ways to do so. We are lowering bills through the delivery of the Budget’s bill reduction measures. We have expanded the warm home discount, and are delivering the record-breaking warm homes plan. We are working with Ofgem to future-proof how costs are managed, and are taking action to fund a cleaner, more secure energy system. We will achieve bill savings while taking back control with home-grown clean power. That is the route to cheaper energy in the long run. Every wind turbine that we turn on and every piece of new technology that we adopt helps us reduce our reliance on fossil fuels, including gas, and ensures that we get costs down in the long run. That is the only way to protect the British people and bring down bills for good. That is what the Government’s clean energy mission is all about.
Question put and agreed to.
Digital Exploitation of Women and Girls
(1 day, 7 hours ago)
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Sir Mark Hendrick (Preston) (Lab/Co-op)
I beg to move,
That this House has considered the matter of tackling the digital exploitation of women and girls.
It is a pleasure to serve under your chairship, Ms Jardine. Online abuse and digital exploitation are extremely prevalent in the modern-day world. The targeting of women and girls in online spaces is growing into a market where legislation is not keeping up with the speed of the digital world, so much so that the world’s richest man considered it acceptable and a matter of free speech to have his personal artificial intelligence platform undress women without their consent. That is shameful.
There is a growing difference between in-person exploitation—including sex trafficking, grooming, domestic violence and coercive control—and digital abuse and exploitation of someone’s image, where victims are often not known to perpetrators. In most cases they may not have any knowledge that they are even being exploited, and these crimes often happen in a highly organised manner.
In Lancashire, the police and crime commissioner conducted a survey of 4,800 people on violence against women and girls—otherwise known as VAWG—which asked about digital abuse. Half of the women surveyed, 51%, said they had experienced unwanted or inappropriate messages or images online. Only 12% of those women reported it to the police or any official body. Only a third of survey respondents felt confident that the police would act if they reported an incident, and just 8% trusted the wider criminal justice system to deliver any kind of justice.
Research by the domestic abuse organisation Refuge states that almost every survivor they have supported was subject to some form of technology-facilitated abuse. Some 95% of survivors of technology-facilitated abuse said it had impacted their mental health. I work closely with many organisations in Preston that tackle VAWG, many of which I am pleased to say are here today to observe the debate: the Foxton Centre, Lancashire Women, Hope Prevails Preston, Girls Who Walk Preston and Trust House Lancashire. We are also talking about stalking and abuse. Most of us would think about conventional stalking, where a perpetrator knows the individual or there is often a real-life link between them. The digital world has transformed the ways in which perpetrators utilise online tools to commit intimate partner abuse and coercive control.
Jim Shannon (Strangford) (DUP)
This is an incredibly difficult subject to address, and I thank the hon. Gentleman for doing it incredibly well. As a grandfather of three beautiful granddaughters and having seen how the online world has made so many women and girls vulnerable to despicable attacks, I certainly share his concerns, and I believe that we must do more to ensure that safety is paramount. Does he agree that not only do we need to make it digitally impossible to carry out exploitation, but we must ensure that our young people are taught the dangers of image sharing, which can lead to image replication online? The Department for Education, in co-ordination with parents, has a key role to play in that.
Sir Mark Hendrick
I totally agree. In fact, I have just been discussing with some of our visitors from Lancashire what needs to happen in schools so that young people are aware of digital exploitation and the damage and distress that it can cause. I hope the Minister, who is in her place, will look at ways in which the Government could facilitate legislation so that, in future, many of these digital crimes could be included in the statute books and not be regarded as things that the police can do nothing about.
Dawn Butler (Brent East) (Lab)
Does my hon. Friend agree that consent is vital, teaching about consent and seeking consent is imperative, and that the influencers and politicians who say that is too woke and is unnecessary are actually putting our children in danger?
Sir Mark Hendrick
I totally agree. Without getting too much into the politics of this, there is a very right-wing argument about what free speech means. When I first came to Parliament in the early 2000s, the then Prime Minister used to talk about rights and responsibilities. We all believe in rights, but they need to be balanced against responsibilities. The idea that somebody can print or send a person’s image and not take responsibility for the consequences is ridiculous. A lot of the current free speech arguments do not give that balance. We need to make sure that the young people and older people who are carrying out these acts know fully what they are doing, are willing to take responsibility for it and that the legal system is equipped to deal with it.
As I said, research by Refuge showed that almost every survivor it supported was subjected to some form of technology-facilitated abuse. When we talk about stalking and abuse, most of us think of conventional stalking, but the digital world has transformed the ways in which perpetrators use online tools to commit intimate partner abuse and coercive control.
In relationships with coercive control as an element, technology is often used to stalk, track and watch a partner’s location at all times. If this were carried out in person and a perpetrator physically followed an individual, that would cross the threshold for criminal prosecution. However, doing the same thing through a device in the digital world has become normalised and is not considered criminal.
This encourages perpetrators to use technology to facilitate abuse as it is more convenient and often evades prosecution. Tech devices, such as Ring doorbells, AirTags and cloning devices are used to track and further stalk victims. In-person stalking is facilitated by the introduction of such devices. Lancashire constabulary has acknowledged the increasing use of social media and messaging apps in coercive control cases. All police forces in the north-west report a year-on-year increase in digital elements in VAWG cases.
We are also seeing the rise of non-consensual intimate image sharing, often referred to as revenge porn. These images are often shared digitally on websites. The person in the image does not have ownership of that image, meaning that it is almost impossible for it to be taken down at the victim’s request. The Revenge Porn Helpline recorded 22,275 reports in 2024, which is a 20.9% increase from the previous year, and 412,000 intimate images have been reported since 2015. We have also seen an increase in online stalking, often through social media, catfishing and doxing, to share personal information such as addresses, workplaces, children’s schools, benefits and immigration status and much more.
The issue of digital abuse is even more severe. Perpetrators are often unknown individuals or organisations, utilising online means such as dark web markets and unregulated servers. Strangers obtain images of women and monetise them. Some of the images are obtained or created to order, and there is increased use of AI to create deepfakes, undress victims and attach false bodies to victims’ faces.
There is also a market for perpetrators to obtain lists of leaked passwords, which can then be used to hack into victims’ personal accounts, where personal photographs are often kept. Widely used dark web servers are monetised to exchange explicit images of women and girls. That represents a significant shift from earlier patterns, where such images were more commonly shared in private by an intimate partner in their social circle.
In the majority of cases of digital abuse, the victims and perpetrators are not known to each other. The threat to share images also happens to under-age boys and girls, including threats to share falsified, AI-created images. That has led to suicide attempts, and, tragically, the completion of suicide in some cases.
One of the most concerning developments in digital exploitation is under-the-radar abuse, where victims have no idea or knowledge that their private images have been accessed, copied or distributed without their consent. We are aware that the non-consensual distribution of intimate images, even of children, has led to perpetrators planning to gang rape some victims in those images. Currently, there is no legal definition of technology-facilitated abuse, and I hope that the Minister will address that point in her remarks. It means that it is almost impossible to prosecute, leaving victims without the ability to seek justice before the court. That situation should not be allowed to happen.
Prosecutors have to rely on other legislation that is often outdated and does not take the growing digital world into account. That results in short sentences and no real justice for the victims. The difficulties of prosecution lead to a lack of understanding by both prosecutors and the police, as well as continued offences and reoffending, which pushes victims into stressful situations, contributing to mental health complexities. The volume of cases put to prosecution by the Crown Prosecution Service is remarkably low, and convictions are even lower. Although we are seeing an increase in the reporting of digital abuse, it often leads to victims feeling disappointed and isolated, as the criminal justice process fails to deliver meaningful outcomes.
The Computer Misuse Act 1990 is outdated, and the police are still having to apply the Police and Criminal Evidence Act 1984 when considering seizing and examining devices. That is also outdated, as mobile phones and cloud-based storage did not exist in the way that they do today. Unfortunately, in some cases, victims need to collate their own evidence, as police forces do not have adequate training or an understanding of the severity of these issues. For example, a member of Girls Who Walk Preston, who is in the Public Gallery, has had a stalker for the last six years who the police have been unhelpful with, because she has not received death threats. The stalker lives under a different police force and refuses to admit that their accounts belong to them. The victim has been forced to collate her own evidence, to prove that the accounts do in fact belong to the stalker. That should not be necessary. It is an outrage, and she should not have to endure it.
I supported a constituent who has been stalked at work, which again fell under a different police force. There is a clear gap in how different constabularies understand and can prosecute those cases. While the picture has been improving in that regard in Lancashire, it is not a country-wide push.
Dawn Butler
My hon. Friend is making a very powerful speech. Is it not also imperative—I think the Government have done some work on this—that women being stalked know who their stalker is? Sometimes they do not know, and it means that they could be at a bus stop, and their stalker could be behind them without them knowing. I am glad that the Government have done some work on that. It is important that, as technologies change, we have the legislation to keep up with them.
Sir Mark Hendrick
I totally concur; my hon. Friend makes some very strong points.
The examples that I just mentioned highlight the need for consistent and mandatory guidance for all police forces to recognise digital abuse and online stalking, and not just take it for granted that there is nothing they can do about it. I call for national mandatory education for all police forces to recognise and deal with victims of digital abuse and exploitation; exploration of a legal definition of technology-facilitated abuse; and the provision of up-to-date legislation for the prosecution of offences, modernised in line with an ever-evolving digital world.
I welcome the commitment from the Minister to work with technology companies to stop online predators and the spread of explicit images stolen through hacking. I also welcome the Government’s commitment to enact, through the Crime and Policing Bill, a new offence of taking or recording an intimate photograph or film without consent. I would be happy to support the Minister in any way to achieve this objective, working with my own local police force.
Several hon. Members rose—
Christine Jardine (in the Chair)
I remind Members to bob if they wish to be called to speak. I will call the Front Benchers at eight minutes past 5, so will Members please keep their speeches to about two and a half minutes each?
Wera Hobhouse (Bath) (LD)
I congratulate the hon. Member for Preston (Sir Mark Hendrick) on securing this very important debate. In 2018, I introduced the upskirting Bill, the Voyeurism (Offences) Bill. At the time, an alarming number of men did not consider it harassment or an offence to upskirt a female. Too often, behaviours such as upskirting are dismissed as a laugh or as not that serious. I reject that entirely.
These are not victimless acts. We know that these kinds of violations often cause long-lasting psychological harm to the victims. We must also recognise the strong link between online and offline abuse. After all, it was the offence of upskirting that first led to Dominique Pelicot’s horrific crimes being brought to light in 2020. We know that if perpetrators get away with lower-level offences, they move on to more serious crime.
The law must move as fast as technology does, but it feels as if we are constantly on the back foot in reacting to novel uses of technology that harm women and girls, for example the recent rise of AI-generated indecent images and deepfakes. We must develop more proactive measures, because by the time we legislate against one form of technology-facilitated abuse, another seems to emerge.
It is for Ofcom to hold social media companies to account, but in my view it is currently failing to treat the digital exploitation of women and girls with the seriousness that it deserves. That is why we Liberal Democrats are calling for a dedicated online crime agency to effectively tackle illegal content and activity online. I hope that the Government will take that seriously.
Another example of technology developing faster than regulation is the rise of covert filming using smart glasses. Across social media, footage is being uploaded of women who have been filmed without their consent. Often, it has been taken outside nightclubs and gyms, when women are out walking or running—as we heard in the earlier debate—or on beaches, violating the privacy of women without their even being aware that they are being filmed.
The Government must send a clear message to the tech sector that women’s safety is not optional. If they are serious about tackling the epidemic of violence against women and girls, we must create a safer online environment, backed up by strong legislation and enforcement.
Mr Richard Quigley (Isle of Wight West) (Lab)
It is a beyond fantastic pleasure to serve under your chairship, Ms Jardine. I thank my hon. Friend the Member for Preston (Sir Mark Hendrick) for securing such an important and extremely timely debate. As we have seen over the past weeks, months and years, the exploitation of women and girls comes in many forms; the digital landscape does not automatically protect them from physical harm. We have seen recently how easily predators can sexually exploit women and girls through deepfakes on social media, and how these actions are actively promoted by platforms. That exploitation can also translate into the exploitation of physical insecurities, which can lead women and girls down a dangerous and unattainable path.
Unrealistic body standards in advertising are not a new phenomenon, but AI has deepened the problem. It is beyond the pale: it now enables girls to be exposed to imagery promoting body types that quite literally defy the laws of physics. Such content is not something that they stumble on; it is actively pushed at them through targeted advertising. Once a social media platform identifies a user as a girl or a young woman, the algorithm begins promoting harmful material directly into their feed.
A recent Government report found that 19% of girls aged between 14 and 16 had been exposed to harmful content promoting extreme thinness—nearly three times the figure reported by their male classmates. A leaked internal report from Meta went further, indicating that its eating disorder-related algorithm is more likely to target users who have previously engaged with content about body dissatisfaction. That is a malicious example of how these companies, which by the way are fully aware of these risks, continue to exploit the insecurities of women and girls.
Some of the most distressing cases of deepfakes and technology-facilitated sexual abuse have resulted in women losing their job, their reputation and even access to their children. These incidents send an appalling message that perpetrators can wield overwhelming power over their victims. They confirm the very fears that many survivors live with every day.
If social media and AI companies are willing to stand by while their algorithms amplify content about dangerous eating disorders and give abusers free rein to harm women and their children, we must act. This is a significant fight, but one that I and many of my colleagues are absolutely committed to continuing. If we are not vigilant, we risk allowing our digital world to be shaped by the misogynistic impulses of figures like Elon Musk and the wider manosphere, rather than building an online world that safeguards and protects women and girls.
Lola McEvoy (Darlington) (Lab)
It is a pleasure to serve under your chairmanship, Ms Jardine. The argument for urgent and robust regulation to protect girls online has been won, thanks in no small part to the grit and resilience of survivors who have spoken out, and of the Minister herself, who is a formidable force in this area.
I began campaigning on this issue in defence of 14-year-old girls. Being 14 is tough: your hormones are wild, your body is changing, you take risks and you are desperate to belong. It has not been that long—although it is longer than I care to state to the House—since I was 14, so I do remember it. Some people advocate for an imaginary time gone by, filled with innocence, skipping ropes and cross-stitch, but that world was not real for most girls. Most 14-year-old girls will take risks, will keep secrets, will have a crush or 10, and will say mean things they should not say. That is part of growing up.
What we have allowed to happen to our girls, through the explosion of unsupervised stranger contact and self-published content, is utterly appalling. It is not normal, and we must take action now. I will outline as quickly as possible why I think we must take action to ban any form of stranger contact for under-16s online and why self-published content and functionalities that publish unregulated and unvetted content need to be banned for under-16s, to stop the exploitation.
The first meeting I had when I was elected was with the headteachers of secondary schools in Darlington, about online safety. I wanted to hear what the real issue was in Darlington and how severe it was, because so many parents had raised it with me. The results from the first forum, in which a thousand pupils came forward, were worse than I had feared: 60% of girls had known someone who had been bullied or blackmailed online, 53% of girls had been contacted by somebody lying about their age, 49% had been asked for pictures or personal information, compared with 28% of boys, and over 70% had been contacted by a stranger. One 14-year-old girl told me that they had been added to groups of strangers and that extreme content was then shared. That was on an app where you are not supposed to have contact from strangers.
The platforms say that adults should no longer be able to contact under-16s, but it is obvious that it is still happening. It is easy to pass through: recent analysis of the ban in Australia showed that a lot of children had drawn on moustaches and coloured in fake beards in order to pass the facial recognition age verification test. I urge the Minister to look into that and to offer her support for a more rigorous ban.
Obviously, strangers should not be able to contact under-16-year-old girls. The secondary point about enforcement is quite clear, but there is also a point that has not yet been made to the House, about self-publishing and online safety. Where we see self-published content, we see an organised criminal network of people grooming children through links and through more enticing content that might lead them into a darker space that is even less regulated. I urge the Minister to support work to address that.
Finally, we need to address the deep imbalance in who pays the price for online extortion with images of girls. Girls who make a single mistake are made to suffer a permanent price. That is obviously wrong. Their image could be circulated at any time. The threat of it is unbearable: it can be used anywhere and shared with any number of people throughout their life. That is brutal enough, but as one girl in the forum said to me, “It’s so wrong. The girl’s always blamed. She’s totally responsible.” Can the Minister outline how we can do more to support girls who are victims and survivors?
Joe Morris (Hexham) (Lab)
I thank my hon. Friend the Member for Preston (Sir Mark Hendrick) for securing this debate. It could not be timelier, because today represents a significant day for the constituency and community that I represent.
Three years ago, Holly Newton lost her life at the hands of her ex-boyfriend in Hexham. She was a much-loved daughter, granddaughter and sister, a loving friend and a talented dancer. She was just 15 years old. Her ex-boyfriend had become increasingly obsessed, coercive and controlling in the lead-up to her murder, attempting to isolate her from friends and relentlessly bombarding her. Three years ago, he used Snapchat to track her movements before fatally stabbing her. The exploitation of technology was used as one of a range of tools to abuse Holly and ultimately to end her life.
Devastatingly for her family, this abhorrent act of violence against Holly and the abuse that preceded it are not recognised as domestic violence, as Holly was under the age of 16. Micala, Holly’s mother, experienced a horrifyingly similar lack of support or acknowledgment of her own experience of domestic abuse as a teenager. Without recognition for domestic abuse victims under the age of 16, the system will continue to fail children across the country.
I support the family and the campaign for Holly’s law, which would change the age of recognition and the development of relationship education for all young people. It is a critical flaw that we are not legally recognising victims when we know that they exist and that perpetrators in the realm of digital exploitation and abuse are themselves increasingly under the age of 16 or 18. I thank the Minister for the time she took to meet us last week, when we discussed the next steps for the campaign and addressed potential routes to reform.
Technology is being weaponised against women and girls at a speed that far outpaces our systems to safeguard and support victims, prosecute perpetrators and intervene in cases before warning signs escalate into fatalities. I want to touch briefly on a case that my office has been working on with another constituent for well over a year. Not only has she suffered the most appalling digital violation, but she has been a victim of systemic flaws when it comes to this form of abuse. She discovered that her partner had spent several years taking non-consensual intimate photographic images of her and had posted them to websites and forums online. He was arrested, but while he was in custody he refused to share the PIN to access his device.
The investigating force did not have the technology required to effectively review the device, which was key to the perpetrator’s activity. It had no way to prove where the non-consensual images came from or prove their existence with any electronic footprint on the suspect’s devices. With only circumstantial evidence based on who had access to the images, and with the suspect denying the accusations against him, the police could not meet the evidential threshold required for the CPS to charge. After being released, he was free to go straight back into the community, holding the very device that could be used to further perpetrate abuse, which he did. He turned to AI nudification apps to continue to produce non-consensual imagery of the victim and cover his digital tracks in the process.
Investigation resources, appropriate technologies and the boundaries of the evidential threshold have all conspired against this innocent woman whose life has been devastated by digital and domestic abuse. I urge the Minister to look proactively at a cross-departmental approach to ensuring that our commitment to tackling digital exploitation is effective and addresses the systemic gaps.
Several hon. Members rose—
Christine Jardine (in the Chair)
Order. I am sorry, but to get everyone in we will have to go down to two minutes each.
Michelle Welsh (Sherwood Forest) (Lab)
It is a pleasure to serve under your chairmanship, Ms Jardine. I thank my hon. Friend the Member for Preston (Sir Mark Hendrick) for securing this important debate.
With increased access to the internet, the exploitation of vulnerable children, predominantly young girls, has become easier for predators. Over the past few years, we have seen the rise of deepfakes on social media: the National Police Chiefs’ Council estimates that they have increased in prevalence by 1,780% between 2019 and 2024. Let me be clear: the toxic culture of misogynistic behaviour online is not banter. It is not free speech. It is abuse.
We know that the victims of online misogyny, abuse and exploitation are predominantly women and girls, so I welcome the Government’s bold action in making it a criminal offence to create or request the creation of non-consensual intimate images. How we respond to online abuse defines what kind of society we are and what kind of society we are prepared to be. We should be a society that stands up for dignity and equality for all women and girls.
The speed at which these images can be produced and shared is truly alarming. I worry that without social media platforms taking more responsibility to remove this content from their sites, we will never truly be rid of it. There needs to be more emphasis on stopping the predators who create the images and on ensuring that such images can be removed swiftly from sites to protect women and girls. That needs to be backed by legislation.
The answer should never be for girls and women to log off or stay quiet. Exploitation of women and girls online is not inevitable; it is a failure of choice and a failure of systems. If we have the power to design these systems, we have the responsibility to make them safe.
Jas Athwal (Ilford South) (Lab)
I thank my hon. Friend the Member for Preston (Sir Mark Hendrick) for securing this hugely important debate.
At the start of the year, many of us were horrified by the ease and speed at which thousands of women and children had their bodily autonomy violated, simply for existing online, but we should not kid ourselves that this was a one-off or an isolated scandal. Digital abuse of women and girls is not an anomaly; it is systemic. Only a few weeks ago, it was reported that Meta’s smart glasses are being used to secretly film women without their consent. This is not accidental misuse; it is foreseeable harm. Before these technologies are embedded in the fabric of everyday life, we have a duty to regulate and legislate so that women and girls do not become the tragic cost of a tech revolution that prizes innovation over safety. We must be proactive, not reactive, because the ways in which women and girls are degraded and denied bodily autonomy online are constantly evolving.
We must enforce safety by design, and it must mean more than administrative box-ticking. Tech firms must be able to demonstrate that they have seriously considered the harms their products may cause, and that they have meaningfully mitigated those risks. There is so much more I could say on this, particularly in the case of Grok and Meta’s smart glasses. Even a moment’s serious reflection would have made it glaringly obvious that these technologies could be exploited. This failure has already cost thousands of women and girls their sense of safety and dignity online. We must take a firm and sustained approach, and fully empower Ofcom, so that this moment of technological progress does not become a major step backward for women’s safety.
Alistair Strathern (Hitchin) (Lab)
The recent horrific stories about Grok and other AI-enabled abuse have highlighted a trend with which far too many women are very familiar. The online world, for all its benefits, has also brought new opportunities for them to experience exactly the same degrading abuse that they are all too familiar with in day-to-day life.
There are three really important lessons for us all to take from the Grok case. First, given the platform's consistent inability to act on its own before being pushed, we need to continue to be proactive in taking on tech firms. Secondly, the fact that we were able to deliver such fantastic action so quickly teaches us that when tools can be delivered robustly and with confidence, change is possible. Thanks to the brave testimony of many women, many of whom knew that in speaking up they would be making themselves targets for abuse, we were able to drive robust action from Ofcom and get X to back down. Thirdly, if we are to continue to keep pace with developing risk factors, we need to find quicker ways to legislate. The Online Safety Act 2023, for all its strengths, took far too long. We have to get comfortable with more principles-based legislation or secondary legislation options to ensure finally that we can do far better to keep women and children safe online.
Across Government, we need to make sure that our own services cannot be used to enable people to perpetuate abuse. I have been working with one woman who, having escaped domestic abuse and relocated to my constituency, now finds herself unable to reject a simple planning application because, in doing so, the local authority requires her to be comfortable publishing her full name and address online. This important democratic right cannot be denied to women fleeing domestic abuse, of all people. I welcome the chance to talk further with the Minister, after this debate, about what wider work we can do across Government to put this right and to ensure that none of our services, online or offline, are enabling women to be anything other than safe in their homes and thriving in their lives.
Amanda Martin (Portsmouth North) (Lab)
It is a pleasure to serve under your chairship, Ms Jardine. I thank my hon. Friend the Member for Preston (Sir Mark Hendrick) for securing this important debate. I speak today as the MP for Portsmouth North, but also as a former teacher, a mum of three young men and a victim of this crime.
In Portsmouth, our residents live much of their lives online for work, study, information, and socialising, but the reality for many users is worrying. In 2023-24, of the cyber-crimes reported in Portsmouth, 34% were online bullying or harassment, 30% malicious messaging, 10% stalking and 8% sexual offences. Disgustingly, that number includes 60 cases involving images of children. Most of the victims were women under the age of 45, and their perpetrators were known to them, yet only 13% reported these crimes, leaving too many to suffer in silence or to be told that their complaint did not meet the threshold.
The digital revolution has brought opportunity, but it has also brought new and relentless forms of abuse. UN Women warns that AI deepfakes, grooming and image-based abuse are escalating. The recent use of AI to generate non-consensual sexual images, as my hon. Friend the Member for Preston noted in opening this debate, shows how quickly technology can be weaponised, and how tech giants are complicit.
Let me be clear: this is not about blaming girls or young women, or boys and young men. It is about responsibility, consent and respect. It must be clear that technology does not remove consent, and anonymity does not remove accountability. Women and girls should never have to navigate fear, shame or harassment just to live their lives.
I welcome the strengthening of the law and the introduction of the long-awaited VAWG strategy. I am proud to be part of a Government who have presented it and will deliver it, but we all know that laws alone are not enough, because technology moves quickly. We need stronger enforcement, safeguarding at the source, and education for young people and their parents about respect and consent online as well as offline.
There must be joined-up Government working, taking young people, their parents and whole communities with us, so that we can change the landscape and the culture, ensure that young women and girls in Portsmouth and across the country are safe online, and give victims the confidence they need to come forward.
Christine Jardine (in the Chair)
Thank you very much, we managed to get everybody in. I call the Liberal Democrat spokesperson, Marie Goldman.
Marie Goldman (Chelmsford) (LD)
It is a pleasure to serve under your chairship, Ms Jardine. I thank the hon. Member for Preston (Sir Mark Hendrick) for securing this very important debate.
All of us here recognise that rapid technological change is creating new risks and contexts for the exploitation of women and girls. The speed, anonymity and ease of communication provided by social media, combined with increasingly sophisticated AI tools, have led to new forms of sexual abuse emerging at alarming rates.
In 2025, the Internet Watch Foundation discovered 3,440 AI videos of child sexual abuse, a vast increase on the previous year, when only 13 such videos were found. That is why this debate, and our swift action, are so important. Far more needs to be done to keep women and girls safe online, and doing so is becoming at once more difficult and more urgent by the day. If we do not act swiftly, we cannot be surprised when new technologies exploit our lack of urgency.
Lola McEvoy
Does the hon. Member have any observations on the fact that technology has always outstripped legislation, and that this is actually about accountability and the enforcement of regulation?
Marie Goldman
Absolutely, and that has always been the case. Equally, we need to learn from the fact that it has always been the case and not be surprised when these things happen. We must not wring our hands and say, “There is harm being done—what could we possibly do about it?” We need to think smarter than that and bring in legislation that is much more forward-thinking and adaptable, and enables swifter action.
As hon. Members have already pointed out in this debate, digital abuse and exploitation are overwhelmingly targeted at women and girls. Research from Internet Matters found that 99% of new deepfakes are of women and girls. Moreover, according to the Revenge Porn Helpline, 98% of intimate images reported to its service were of women and 99% of deepfake intimate image abuse depicts women. It has also been discovered that many AI nudification tools do not actually work on images of boys and men.
We have now reached a point where AI tools embedded in major platforms are capable of producing sexual abuse material, demonstrating serious failings in our current framework. X’s AI tool, Grok, is a case in point. We have talked about this many times before. Grok facilitated the illegal generation and circulation of non-consensual sexual images, yet Ofcom’s response was, I am sorry to say, woefully slow. The executive summary of the violence against women and girls strategy states that it will
“ensure that the UK has one of the most robust responses to perpetrators of VAWG in the world.”
I agree with that intention, but we must recognise that Ofcom’s response was not wholly robust. We must do something about that; we owe it to women and girls in this country to act sooner and stronger. We need more effective legislation and a regulator with the capability and confidence to take appropriate and, crucially, swift action.
I welcome the move to make the creation of non-consensual intimate AI images a priority offence under the Online Safety Act, but that will be effective only if online platforms and services are held accountable under that Act. My Liberal Democrat colleagues and I have called on the National Crime Agency to launch an urgent criminal investigation into X, which should still happen, and to treat the generation of illegal, sexual abuse material with the seriousness it demands. We must act decisively when social media platforms refuse to comply with the law.
It is also time that we introduce age ratings for online platforms and limit harmful social media to over-16s. How can we expect to tackle violence against women and girls when the next generation is being drip-fed misogynistic content on social media?
Carla Lockhart (Upper Bann) (DUP)
The hon. Member is right. Does she agree that online pornography remains an issue that needs to be tackled? The statistics show that more than 50% of young boys aged 11 to 13 have already seen porn, and that it is shaping their minds about what consent is.
Marie Goldman
There are so many aspects to this problem. What we, the parents, saw in the fledgling days of social media is not at all what our children are seeing now. We need to recognise that and act against it. What our children see online is already affecting their worldview. Internet Matters research from 2023 found that 42% of children aged nine to 16 had a favourable or neutral view of the well-known misogynistic influencer Andrew Tate, and that older teenage boys were particularly susceptible. That is incredibly worrying. Decisive action to tackle the digital exploitation of women and girls is needed across the board. Online harm is genuine harm, and we must treat it as such. There is a lot of work to do, but I am keen to work cross-party to get it done. I hope the Minister is too.
Sarah Bool (South Northamptonshire) (Con)
It is a pleasure to serve under your chairmanship, Ms Jardine. Digital exploitation does not affect women and girls exclusively, but, given that four in five victims of online grooming are girls, it is an issue that we must focus on. As MPs, we are all aware of the risks and threats that women face in the online sphere. It is no surprise that the National Society for the Prevention of Cruelty to Children found that only 9% of girls feel safe in online spaces. The accounts of stalking given earlier are terrifying, especially those using Ring doorbells, which are designed to keep people safe; that they would be manipulated in that way is horrific. The case of Holly that involved Snapchat in the constituency of the hon. Member for Hexham (Joe Morris) is frankly horrifying.
There is no doubt that the complexity of the online world has resulted in significant digital exploitation. At this very moment, online content is being produced that takes advantage of women for financial gain. That is particularly worrying given that, according to Ofcom’s 2025 report on the time people spend online, women are spending more time than men across an array of websites. The issues around the digital exploitation of women and girls are particularly prominent on social media sites: over half of girls and women report receiving sexist comments about themselves online. This is a problem on an industrial scale.
The recent Grok sexual imagery debacle brought this into sharp focus. It demonstrated the dangers posed to women who had not even engaged with the technology. People merely used an existing image to take advantage of the technology and spread it using the power of social media. I welcome steps to stop it, but are we equipped to handle the changing digital landscape in the future? The Online Safety Act introduced key changes to the Sexual Offences Act 2003 and criminalised sharing intimate images of another person without their consent. The Government are now adding provisions to the Act to make it a criminal offence to create non-consensual intimate images. Do the Government believe that that will be sufficient, and that Ofcom has the necessary powers to stop this abhorrent practice?
What I have seen from the Government so far is a reactive approach to AI and how it relates to women and girls. The technology is undoubtedly here to stay, but given the uncertainty of its development, is the Minister confident that the Government’s approach is sufficiently agile to prevent people from taking advantage of the technology to exploit women and girls?
As we have heard, AI is only one part of the problem: social media is driving much of the digital exploitation of women and girls. Data from 44 forces provided to the NSPCC showed that the police recorded 7,263 “sexual communications with a child” offences in the last year— a number that has almost doubled since the offence came into force in 2017-18. Data from the crime survey of England and Wales showed an increase of 6% in child exploitation offences compared with the previous year, and that comes on top of evidence that these platforms are linked to the fact girls are twice as likely as boys to experience anxiety. Recent data shows that girls who use social media at the age of 11 report greater distrust of other people at the age of 14.
The problem is only growing. Every day that the Government delay is another day that millions of girls are left at risk. We do not need further reviews or consultations; we need a ban on social media for under-16s. It is time to grip this issue.
Lola McEvoy
Will the hon. Lady elaborate on her definitions of “social media” and “ban”?
Sarah Bool
In terms of social media, I mean platforms such as Facebook and Snapchat; I am not talking about WhatsApp, which is a communication platform that many families use, although we have to be careful how it is used, because images can be shared on it.
A ban is about ensuring that children cannot access these platforms. The issue has been raised at different levels. The problem is the content that children can see, and especially the way the algorithms are used. I recognise that the companies also need to take responsibility for what is being accessed and how people are accessing it, because this is going on at a scale larger than any parent could imagine. This is not the social media that we grew up on, where we used to post a little note on a wall for our friend’s birthday or upload photos from a night out—that is definitely not what children are seeing.
Lola McEvoy
My problem with the hon. Lady’s argument is that we have constantly said that our legislation is lagging behind technological advances, but the proposed solution is to name a number of platforms where there is evidence of exploitation, crime and damage. I agree that we need to do that, but is it not better to make evergreen legislation, as some Members have argued, than to have a list of examples that somebody else has come up with?
Sarah Bool
I agree, but we need to take action now on the ones that we are aware of. Our legislation absolutely needs to be much more agile for the future, and I am not saying that a ban will be a silver bullet, but it will protect many girls from digital exploitation. That is why I am asking the Minister to follow the policy set out by the Conservative party, which was accepted in the House of Lords, and prohibit those under the age of 16 from using social media. If we do not put our children into those arenas, they will be far less likely to experience the opportunities for exploitation that stem from the internet and target the young and the vulnerable.
If the Government support those measures, they could move fast and take action without delay. Let me be clear: the challenges posed by digital exploitation will not vanish if we prohibit the use of social media, but that would be a bulwark against the dangers that social media poses, particularly to young people. If we allow people to access these platforms when they are more mature and more educated, we can hopefully achieve reductions in exploitation.
The Parliamentary Under-Secretary of State for the Home Department (Jess Phillips)
As others have said, it is a real pleasure to serve under your chairship, Ms Jardine. I am very grateful to my hon. Friend the Member for Preston (Sir Mark Hendrick) for securing the debate, and to all Members who have spoken.
From the get-go, I want to set out my stall and talk about exactly how I feel about this issue. If someone makes their money through harming women, and if part of their business model is sharing terrible, sexualised, faked images of people like me—well, I am not really allowed to say what I think about that, but I want to make it completely clear that it is totally and utterly unacceptable. Discussions like this are essential, especially as we know that the technology is developing more quickly than we can write legislation.
The hon. Member for South Northamptonshire (Sarah Bool) asked why we cannot ban these things now. I remember the Online Safety Act going through Parliament, and I have to say that it is a triumph of hope over experience to think that I could just say, “Ban it now,” and that by tomorrow it would be banned. If only I wielded such a great ban hammer, I would be banning stuff all over the shop—no one would be listening to their phone out loud on the train any more. But that pace of change is not one that legislation easily keeps up with, and I say to other hon. Members who have spoken that we need to find backstops and ways to make our legislation more agile, so that it can change without having to go through some of the processes we have—I gave 10 years of my life to the Online Safety Act.
Wera Hobhouse
Is it not enforcement that is really lacking? Should legislation make enforcement the prime tool?
Jess Phillips
The hon. Lady makes an incredibly important point. She is absolutely right that we need to make sure these things are enforced. To Members who spoke about pornography, I would say that there are reasons to be cheerful about the enforcement by Ofcom. I could dance a jig because Pornhub has reported a 77% reduction in traffic since age verification stopped young people being able to access it so easily. We are in the foothills of what that legislation can do. Where pornography companies have not been undertaking age verification, Ofcom has issued £1 million fines, and changes have been made to companies’ roles in the UK, so that they meet our laws. So there are reasons to think that there is some enforcement, but I absolutely agree that we need to grapple with the agility, scale and scope of that enforcement.
I must come to the points raised by my hon. Friend the Member for Preston. Before I came to the debate, my colleague the Minister for victims was telling me how amazing my hon. Friend and his office have been in Preston in handling online abuse. People in our constituency offices often do not get praised for these things, but I hear that my hon. Friend has a legend working in his office.
My hon. Friend talked about the importance of education in this space, and about this being a country-wide push for change, and I could not agree more. The Government have invested in this issue, and it will be an absolutely fundamental part of the violence against women and girls strategy.
The National Centre for Violence Against Women and Girls and Public Protection will do exactly what my hon. Friend talked about, so that the good standards, for example, in Cheshire—it is not far from him, and the anti-stalking practices are amazing and world-leading—are the same for people in the west midlands and everywhere else. My hon. Friend used the example of stalking legislation and making sure there are standardised systems and standards that police forces have to live by, which will absolutely include upskilling, when policing the digital elements of these crimes, whether it is domestic abuse or online. Stalking online is as illegal as stalking in real life—just to be clear, they are the same crime.
My hon. Friend talked about the richest man in the world. I am not sure there are many people in this building who have quite such a claim against the richest man in the world as me. What happened is unacceptable, and anyone who has existed online will know about the Grok outcry.
Some hon. Members mentioned Meta glasses. If I had been in the meeting where they floated the idea of making Meta glasses, the very first thing I would have said would have been, “These are going to be used to abuse women.” Why is that not being baked into the design of such products?
One of the things the violence against women and girls strategy has absolutely committed to is working on safety by design. In the car industry, we now take safety features for granted. If we are talking about what it was like when we were kids versus now, my dad used to put us in the back of the car and purposefully go round the corners fast so that we would smack into the window. These things are not acceptable now.
We have to go on a journey with this technology. To me, a Ring doorbell is such an obvious way to stalk somebody, as is an AirTag. I see cases again and again. It does not matter what the new technologies are; perpetrators of these abuses will find a way to use them for that purpose, so we need to design in safety functions. On the issue raised by my hon. Friend the Member for Hitchin (Alistair Strathern) about planning, I will take that away and work with him.
The Government obviously took a strong stance—I felt pleased about this—against Grok. We can see that when we stand together and people speak up, we can make change in this area, but we need to make sustainable change. We absolutely are always looking at legislative changes. As people have said, there have been a number of those. There is the issue of Grok being added into the Online Safety Act, so that there can be accountability on that basis.
In the Crime and Policing Bill, we are also banning nudification apps. I have also had it shown to me that they do not work on men and boys, which I am glad about for men’s and boys’ sake, but if you are designing something that will nudify only women, you have a problem. I do not know who I can talk to, but there is something wrong with you. Have a word with yourself; otherwise, we will have a word with you. The ban will target firms and individuals providing and supplying tools that use AI to turn images of real people into fake nudes.
There is a raft of other legislation that we are putting through and that we hope will shift the dial. Obviously, in the violence against women and girls strategy, we have made a very clear commitment to ensuring that we make it impossible for children to take and share naked images of themselves—we will make it impossible for them to do that. My hon. Friend the Member for Darlington (Lola McEvoy) and others talked about children being taken from social media and on to other platforms. I have to say that encrypted spaces are the most dangerous for child abuse imagery. But to the hon. Member for South Northamptonshire, who was talking about that, I say this: 91% of all child sexual abuse images are self-made; they are made by children themselves. People have groomed them—exploited them—to make those images. It may be their peers.
We will not stop this just by looking at the issue of new AI. There is an issue with where our children can go and who has access to them. I agree with the hon. Lady’s sentiment. We have to make sure that we get this right. Even with the 10 years of work on the Online Safety Act, and with the level of detail and, I have to say, the arguments that went into it, it still has all the gaps that we are talking about, so we need to make sure we get this right and legislate in a way that can be agile for the future. That is why I think the Government need to take the time—not too much time, I agree—to make sure we do that.
Others talked about accountability and whether anyone ever actually gets punished for these things. As part of the work we are doing in the Home Office, we are expanding the use of covert officers to address violence against women and girls, and improving the capabilities to counter and reduce the highest harms. We operate a similar system with regard to child abuse online. We are now doing that also for women and girls online, recognising the level of organised crime that is behind this. The hon. Member for Bath (Wera Hobhouse) talked about people who are asleep and being filmed, like Gisèle Pelicot. These issues deserve a police force specifically looking at the covert aspect, and that is what this Government are doing.
Christine Jardine (in the Chair)
I call Sir Mark Hendrick to wind up the debate extremely briefly—in about 5 seconds.
Sir Mark Hendrick
Thank you, Ms Jardine. I thank the Minister and all my colleagues for an excellent debate. I think we had a brilliant response from the Minister. I am sure she is determined to ensure that the digital space can be as safe as possible for women and children, and for everybody else as well.
Question put and agreed to.
Resolved,
That this House has considered the matter of tackling the digital exploitation of women and girls.
Charter for Budget Responsibility
(1 day, 7 hours ago)
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The Parliamentary Secretary to the Treasury (Torsten Bell)
At Budget 2025, the Government strengthened the fiscal framework in order to deliver on their commitment to holding one major fiscal event per year, supporting the economy with greater policy certainty.
Responding to recommendations made by the International Monetary Fund, the Government set out that they would legislate to ensure that the Office for Budget Responsibility assesses performance against the fiscal rules once a year at the Budget.
The Finance (No. 2) Bill includes an amendment to the Budget Responsibility and National Audit Act 2011, the underlying primary legislation that sets out the requirement for fiscal rules assessments.
The draft “Charter for Budget Responsibility: Autumn 2025” has been published on gov.uk. The charter already set out the Government’s commitment to hold one major fiscal event per year. This update to the charter makes technical changes to deliver the policy announced at Budget 2025 relating to fiscal rules assessments, complementing the changes being made to the Budget Responsibility and National Audit Act. The updated charter will be laid before Parliament, and a debate and vote will be scheduled in due course.
A copy of the document is available here: https://www.gov.uk/government/publications/draft-charter-for-budget-responsibility-autumn-2025
[HCWS1275]
Grassroots Sports Facilities
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The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stephanie Peacock)
Grassroots sport plays a vital role in bringing communities together across the country. The Government are committed to supporting the growth of grassroots sport by investing in facilities, ensuring that communities benefit from the opportunity that sport provides.
Today, the Government have announced we are investing £85 million to build and upgrade grassroots sport facilities across the UK in 2026-27, as part of a £400 million boost for grassroots sport facilities across 2025 to 2030. The funding will continue to remove barriers to physical activity, ensuring we deliver new and upgraded grassroots sport facilities in the areas that most need them, so that people can participate in sport regardless of where they live. This funding is going to artificial grass pitches, goalposts, floodlights and community hubs through the multi-sport grassroots facilities programme, with a further £15 million to be invested in England in 2026-27. This includes the previously announced £5 million for basketball—the second-most-popular team sport for young people behind football—which will be invested alongside £5 million from the NBA. Further details on £10 million funding for innovative facilities models is due to be set out in the coming months.
The programme will deliver funding for pitches and related facilities through our delivery partners: the Football Foundation (a partnership with the English FA and Premier League) in England, the Cymru Football Foundation in Wales, and the Football Associations in Scotland and Northern Ireland.
In addition, we have today published updated lists of 991 projects funded by the multi-sport grassroots facilities programme so far in 2025-26. Projects funded through the multi-sport grassroots facilities programme are designed to increase participation for under-represented groups such as women and girls, disabled players and deprived communities. Moving forward, we will ensure that 50% of investment will target the 30% most deprived areas. In order that as many people can participate in sport and physical activity as possible, 40% of funding will also support projects that have a multi-sport offer. A full list can be found here https://www.gov.uk/guidance/multi-sport-grassroots-facilities-programme-projects-2025-to-2026 and I will place a copy of this list in the Library of each House. Lists will be further updated in due course.
Clubs and organisations across the UK are now being urged to come forward and apply for funding available in 2026-27, which they can do by contacting the relevant partner in their country. Further detail can be found on gov.uk: https://www.gov.uk/government/news/new-and-upgraded-grassroots-sport-facilities-to-get-the-uk-active
The Government’s future investment in grassroots sport will take into account a range of funding options, following engagement with the sports sector and local leaders to understand the demands of regions across the country. We will ensure that funding reaches a wider range of sports so that as many people as possible are able to participate in physical activity.
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Heat Networks (Mark Framework) (Great Britain) Regulations 2025
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
Today I am announcing the commencement of heat network regulation.
Remaining sections of the Heat Network (Market Framework) (Great Britain) Regulations 2025, as amended, will come into effect, introducing protections for both existing and future heat network consumers as we seek to grow the sector. These protections build on the introduction of statutory advice and advocacy through Citizens Advice and Consumer Scotland and statutory redress through the Energy Ombudsman, introduced from April 2025.
Heat networks are a decentralised energy distribution technology, which circulates heating, cooling and hot water from central sources to multiple points of use. The scale of these networks can vary significantly, from single building, communal networks to multiple building district networks. Heat network consumers have not, until now, enjoyed similar regulatory protections to those in gas and electricity markets. This unregulated state has led to a large variation in consumer experiences, including limited transparency on pricing. Where there are no consistent rules on prices, supplier behaviour or technical operation, this has meant some consumers can experience unfair high prices, poor customer service and frequent outages with limited routes of redress.
That is why the Government have taken steps to regulate the market, acting on recommendations from the Competition and Markets Authority and appointing Ofgem to act as the heat network regulator. Ofgem will operate an authorisation regime, which heat networks are bound to comply with to maintain their right to operate in the market. Ofgem’s powers will enable it to collect information from heat suppliers that will help it to assess whether regulations are proportionate and to take decisive action if necessary to address regulatory non-compliance.
Existing heat networks have been automatically deemed as holding an authorisation until the end of the transitional period on 27 January 2027. These heat networks, and any heat networks that commence operation from now until the end of the transitional period, will need to submit a lighter-touch registration to Ofgem before the transitional period ends.
Ofgem authorisation conditions include rules on how prices are charged, requiring that prices are clearly explained, bills are transparent and that prices charged are fair. Once Ofgem has collected a full year’s worth of sector data, it will set benchmarks of acceptable prices for different network characteristics, which will be a basis for more systematic action to tackle examples of unfair high pricing. Ofgem will also have powers to introduce guaranteed standards of performance once market data becomes available. This will set out the standards of service that heat networks will be expected to provide to consumers, and networks will be required to pay compensation when these standards are not met. In addition, we have published a consultation on proposals for minimum mandatory technical standards to help drive improved heat networks’ efficiency and performance.
The regime that is commencing today is set out through the first comprehensive utility regulations in the heat network sector’s history. We will monitor the market closely, working with Ofgem and other statutory partners to ensure that the regulatory regime works effectively and that it is fit for the purpose of protecting heat consumers.
[HCWS1274]
People with a Learning Disability and Autistic People: Eighth Annual Report
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The Parliamentary Under-Secretary of State for Health and Social Care (Dr Zubir Ahmed)
I would like to acknowledge today the publication of the updated eighth report on “Learning from lives and deaths—People with a learning disability and autistic people” (LeDeR) produced by King’s College London. This replaces a previous version of the report which was retracted in December 2025 due to a technical issue with the LeDeR data. I will place a copy of the revised report in the Library of both Houses.
This Government are committed to improving care and reducing health inequalities for people with a learning disability and autistic people. We understand how important the timely and accurate release of information on LeDeR is in achieving this goal.
Following urgent investigation, the errors were found to be caused by an automated data-processing issue, which meant that some data on causes of death was missing at the time of analysis. This affected the conclusions originally published. I recognise how concerning the retraction will have been for bereaved families and stakeholders who place great trust in the LeDeR process. NHS England has worked with its data processor to correct the automated processing error so that it cannot recur. King’s College London has also strengthened its data checking protocols to prevent similar issues in the future. I am assured that this issue has now been resolved, and these improvements have been applied to the revised report published today.
The headline findings of the updated 2023 LeDeR report remain consistent with those previously published. The updated analysis reaffirms that people with a learning disability continue to experience significant health inequalities: on average, they die 19.5 years younger than the general population and are almost twice as likely to die from an avoidable cause of death. This remains unacceptable, and tackling these disparities continues to be a priority for this Government.
NHS England sets clear expectations for local systems, requiring integrated care boards to prioritise LeDeR reviews in their delivery plans and produce an annual report demonstrating how learning from those reviews has driven action. In addition, there is wider, significant work under way to reduce health inequalities for people with a learning disability and autistic people—including mandatory training on learning disability and autism for health and care staff, continued uptake of annual health checks, and roll out of a reasonable adjustment digital flag.
The updated report contains the following specific changes:
Review of lives and deaths (2021-23)
The proportion of deaths classed as avoidable is now higher than originally reported, particularly in 2023 (40.2% v. 38.8%), although the downward trend over time remains. Influenza and pneumonia remain the leading avoidable cause but account for a smaller share, while ischaemic heart disease contributes a larger share. Cerebrovascular disease replaces digestive cancers among the leading avoidable causes. The ranking of overall causes of death has also changed, with diseases of the circulatory system now the most common cause.
Ethnicity
There are small changes in the proportion of deaths classified as avoidable by ethnic group, with slightly lower percentages among ethnic minority groups and a slightly higher percentage among white adults. There are small shifts in the relative contribution of leading causes of death by ethnic group. These changes do not alter the overall conclusions, with avoidable mortality remaining higher among several ethnic minority groups than white adults and the general population.
Level of learning disability
Avoidable mortality is higher than originally reported for both adults with a mild or moderate learning disability and those with a severe or profound learning disability. The difference between these groups is now considerable. While there are small changes in the proportions of overall and avoidable causes of death, the ordering of causes remains unchanged, and the overall interpretation of differing mortality patterns by level of learning disability is not altered.
Autistic adults
There are small changes in the proportions of causes of death among autistic adults without a learning disability. The largest shift is in deaths by suicide, which increase from 29.1% to 31.5%. This does not alter the overall interpretation of findings. Evidence on causes of death for autistic adults without a learning disability is emerging. The number of deaths notified to LeDeR remains small, meaning findings are unlikely to be fully representative of the population of people who are autistic.
[HCWS1276]
Building Safety Regulator
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Samantha Dixon)
Today, the Building Safety Regulator moves from the Health and Safety Executive to become a new non-departmental body of the Ministry of Housing, Communities and Local Government. We are also launching the first phase of work to improve the implementation of the higher-risk building regime, so that the regulator can become more proportionate while continuing to deliver the highest safety standards for residents.
The Grenfell Tower tragedy exposed multiple systemic failures across the built environment. The BSR was created to help ensure those failures do not occur again. It has worked with others to begin a deep culture shift across the sector, improve safety standards across the built environment and deliver a major shift in how buildings are regulated, constructed, and managed.
The Government demonstrated last summer that they are prepared to act decisively to support the regulator and make sure it can work effectively, by bringing in Lord Roe as chair and setting up the BSR as a separate organisation. Today’s change in how the regulator is governed will ensure it remains dedicated to building safety and standards, with greater operational flexibility and clearer accountability to the Department. It pursues a renewed mission to uphold and advance safety standards across its areas of responsibility with rigour and expertise. This marks an important step in our programme of reform for the sector and a key milestone on the journey towards a single construction regulator.
We must go further and build on the progress already made. Today we are announcing the first phase of work to ensure the higher-risk building regime is applied in a proportionate way, and that regulatory requirements are fit for purpose and complement the operational progress made by the BSR. Strengthening safety across the system remains our overriding priority, and these measures are designed to reinforce the safeguards that underpin the regime.
We are launching a consultation on how building control, both within the higher-risk regime and in some cases across the wider system, should apply to telecommunications building work. Our aim is to ensure residents can access modern digital infrastructure quickly, without compromising safety. By refining the approach to high-volume, lower-risk telecoms building work, we can improve decision making and safety outcomes, reduce pressure on the system, and enable the BSR to focus its expertise on the most complex and highest-risk activity. This will help maintain the rigorous safety standards rightly expected, while allowing essential works to proceed at pace.
We will also be consulting on further proposals to refine the application of the regime for high-volume, low-complexity work and to ensure that the system operates in a proportionate manner. Later in the spring, we will bring forward consultations on minor building work within homes and on existing fire doors. Building homes quickly and building them safely are not in conflict; that is why we are consulting on making the system more proportionate while keeping safety at its core. Throughout this process, we remain firmly committed to ensuring safety standards and oversight of the highest-risk work are not diluted. We will engage closely with the BSR, industry, technical experts, local authorities and residents as these proposals are developed.
The consultation can be found here: https://www.gov.uk/government/consultations/improving-proportionality-and-safety-outcomes-in-building-control-telecommunications-work
These proposals reflect a commitment to appropriate levels of oversight, while freeing up regulatory resources to ensure the safe delivery of vital homes, and the refurbishment and remediation work this country needs.
[HCWS1279]
Woking Borough Council and Thurrock Council: Best Value Duty
(1 day, 7 hours ago)
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The Minister for Local Government and Homelessness (Alison McGovern)
This Government are committed to taking the action necessary to fix the foundations of local government. Today, I am updating the House on the steps we are taking to support two councils to recover and reform: Woking borough council and Thurrock council.
Woking borough council
Woking borough council has been under statutory intervention since May 2023 and, in December 2025, I published the commissioners’ fifth report, together with my response. I welcomed their assessment of continued progress in governance, housing, and commercial restructuring, and shared their concerns about the significant challenges ahead. To maintain stability and the council’s improvement progress, the Secretary of State reappointed Richard Carr as managing director commissioner, and Barry Scarr as finance commissioner. Sir Tony Redmond also remains as lead commissioner. Their appointments are in place until 24 May 2028 as a backstop, when the directions are set to expire. In practice, these appointments will lapse when Woking borough council is planned to be dissolved in 2027, as part of local government reorganisation in Surrey.
As the commissioners also note, local government reorganisation in Surrey adds urgency and complexity. In their next report, I would welcome their reflections on this process, including how Government can best support new councils in meeting their best value duty from day one and any urgent issues beyond the commissioners’ remit.
This report is published at an important stage for the council, following the Government’s announcement to provide in-principle £500 million of debt repayment support for the council in 2026-27. This is a difficult position for Government representing a significant and unprecedented commitment, made necessary in the context of Woking’s acute financial failure. The announcement of debt support reflects that Woking borough council holds exceptional unsupported debt linked to historic capital practices, and that there is a value for money case for acting to protect local and national taxpayers. Any support is subject to continued assurance of the council’s financial position; the council’s commitment to reduce debt locally as far as possible within its local capacity; and value for money for the local and national taxpayer.
Thurrock council
I am today publishing the commissioners’ most recent report which I received in November 2025. I am pleased to see the continued progress made by the council and that there has been a smooth transition to the new leadership. The report notes that financial management has improved, with more transparency in reporting and that the council is embracing external reviews and public engagement, indicating a cultural shift toward greater transparency. I am pleased the council continues to take the necessary steps locally to reduce its level of debt and to support financial improvement. Government are committed to providing debt repayment support to Thurrock and Woking councils, given their significant and exceptional unsupported debt linked to historic capital practices, and the value for money case for acting to protect local and national taxpayers. Any support for Thurrock council is subject to continued assurance of the council’s financial position; the council’s commitment to reduce debt locally as far as possible within its local capacity; and value for money for the local and national taxpayer.
The commissioners’ latest report also highlights some of the risks to improvement. It is important that that the council maintains its focus on improvement and transformation alongside the broader transformation programmes of local government reorganisation and devolution.
I also note that the commissioners support the council’s desire to be given the opportunity to appoint its own chief executive rather than the role being filled by a managing director commissioner. I am writing today to the leader of the council to confirm that I am content for the council to initiate a recruitment process for a chief executive. This is on the understanding that a suitable, experienced candidate can be recruited and that the commissioners will continue to support and guide the council throughout this process; and with the expectation that the progress made so far is embedded throughout the council and that the pace of improvement continues.
If a suitable candidate is appointed, I would expect a period of overlap with the existing managing director commissioner to enable a smooth transition and handover to take place. It is evident that ongoing commissioner support will be critical to ensure the council’s improvement trajectory is maintained. Following the conclusion of the recruitment process, I intend to review what further changes would be needed to ensure the commissioner team has capacity to provide sufficient support to the council, and assurance to Ministers.
Conclusion
I am committed to working with these councils to ensure their compliance with the best value duty and the high standards of governance that local residents expect. This Government are working to deliver a consistently fit, legal and decent local government sector that provides good quality essential statutory services for all residents.
I will deposit in the House Library copies of the documents referred to, which are being published on gov.uk today. I will update the House in due course.
[HCWS1277]
Commonhold and Leasehold Reform
(1 day, 7 hours ago)
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The Minister for Housing and Planning (Matthew Pennycook)
As a Government, we made a clear and unambiguous commitment in our manifesto to act where previous Governments had failed by finally bringing the feudal leasehold system to an end. We did so on the basis of a firm conviction that it is only by extinguishing fully the historical iniquities on which the present leasehold system rests that we can ensure that the dream of home ownership is made real for millions of households across the country.
Today the Government have published the Commonhold and Leasehold Reform Bill in draft for pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee. This historic moment marks the beginning of the end for the feudal leasehold system that has tainted the dream of home ownership for so many.
The draft Bill will transform the experience of home ownership for millions of leaseholders across the country, modernise property law and deliver a modern housing market. It includes the following key provisions:
A new legal framework for commonhold to reform and reinvigorate this radical improvement on leasehold ownership;
A statutory restriction on new leasehold flats to ensure that in future commonhold is the default tenure;
A new process for converting to commonhold, aligned with wider enfranchisement processes to make conversion possible when at least 50% of qualifying leaseholders agree;
The abolition of leasehold forfeiture as a means of ensuring compliance with a lease agreement and its replacement with a fairer system;
The repeal of draconian powers relating to rent charges on freehold estates; and
The capping of ground rent for older leases at £250 per year, changing to a peppercorn after 40 years.
Reinvigorating commonhold
The draft Bill builds on the publication of the commonhold White Paper in March last year, which confirmed the detail of our commonhold reform programme and responded to the Law Commission thorough and expert review of commonhold law.
Commonhold is a modern home ownership structure that is used widely around the world. It is not merely an alternative to leasehold ownership, but a radical improvement on it. At the heart of the commonhold model is a simple principle: the people who should own buildings, and who should exercise control over their management, shared facilities and related costs, are not third-party landlords but the people who live in flats within them and have a direct stake in their upkeep.
In enabling flats to be owned on a freehold basis, commonhold ensures that the interests of homeowners are preserved in perpetuity rather than their value depreciating over time as it does under leasehold, and it transfers decision-making powers to homeowners so they will have a greater say over how their home is managed and the bills they pay, as well as flexibility to respond to the changing needs of their building and its residents.
Commonhold was introduced in England and Wales in 2004 through the Commonhold and Leasehold Reform Act 2002, but for a variety of reasons it failed to establish itself and, as a result, there are fewer than 20 commonhold developments in existence today. The 2002 legal framework also quickly became outdated, owing to the fact it was ill-suited for use in larger or mixed-use developments.
The draft Bill will reinvigorate commonhold through the introduction of a comprehensive new legal framework based on the vast majority of the recommendations made by the Law Commission in its 2020 report. It will enable commonhold to be used in the widest possible range of settings, enhancing the rights and protections of consumers while also supporting the needs of developers and lenders.
Banning new leasehold flats
To ensure that commonhold becomes the default tenure, the draft Bill also includes provisions to ban the use of leasehold for new flats. Once enacted, this will ensure that, other than in exceptional circumstances, all flats are provided as commonhold, as is the case in large parts of the world. The provisions in the draft Bill are intended to work in tandem with the ban on the use of leasehold for new houses contained in the Leasehold and Freehold Reform Act 2024.
Alongside publication of the draft Bill today, we have published a “Moving to commonhold” consultation, seeking input from industry and consumers on precisely how we implement the new ban. The feedback received will ensure that we can proceed with a smooth transition to commonhold for new flats, while at the same time protecting the supply of new homes and determining whether there is a case for any justified exemptions.
Facilitating commonhold conversion
The draft Bill also includes measures to make it easier for existing leaseholders to convert their buildings to commonhold. The relevant provisions respond to proposals made by the Law Commission to make conversion more accessible by reducing the consent threshold for conversion.
The existing law sets out a process for conversion, but it is one that requires consent from everyone with an interest in the block. This sets an unacceptably high bar and means that commonhold is not achievable if even a single unit owner, lender or the existing freeholder objects. The draft Bill will introduce a new process for conversion—one that brings conversion into line with wider enfranchisement processes and will make conversion possible if at least 50% of qualifying leaseholders agree.
Abolishing forfeiture
The draft Bill also contains a number of vital reforms to the existing leasehold system that the previous Government’s Leasehold and Freehold Reform Act 2024 left untouched. Chief among them are provisions to end the disproportionate and draconian threat of forfeiture as a means of ensuring compliance with a lease agreement.
For too long, outdated forfeiture laws have allowed landlords to threaten people with losing their home and hard-earned equity over small debts of as little as £350, or any amount if left unpaid for three years. The draft Bill contains provisions to abolish forfeiture and introduce a modern, proportionate lease enforcement system that addresses breaches fairly, with appropriate safeguards and judicial oversight.
Repealing draconian powers relating to rent charges
To better protect homeowners on freehold estates, the draft Bill will repeal draconian enforcement powers that apply to estate rent charges on them. These powers, often difficult to find in deeds and poorly understood by buyers, can lead to rent charge owners taking possession of or granting a lease over a freehold home as a result of small sums outstanding. That is not just unfair, but creates real barriers to home ownership and property sales. The draft Bill will remove those powers and the unnecessary obstacles that drive up costs and uncertainty for freehold estate homeowners.
Capping ground rent
The Government are acutely aware that the cost of living remains a pressing concern for leaseholders across England and Wales and that those who remain subject to unfair and unreasonable practices need urgent relief.
That is why last summer we consulted, jointly with the Welsh Government, on a range of proposals to hold landlords and managing agents to account for the services they provide and the charges and fees they levy. At the heart of that consultation were measures to increase transparency over service charges and enhance access to redress, but it also included proposals to reform the section 20 “major works” procedure and strengthen regulation of managing agents. We thank all those who responded to the consultation and will set out details of how we intend to implement the measures in question as soon as possible.
However, the Government are determined to go further to alleviate the cost of living pressures facing leaseholders. In our manifesto, we committed to tackling unregulated and unaffordable ground rent charges, and the draft Bill honours that commitment.
Historically, ground rents, which often entail no service being provided whatsoever, were of low or nominal value. However, over the past two decades a practice has developed of freeholders including high and escalating ground rent clauses in leases. Such clauses are causing leaseholders considerable financial strain, and some are unable to sell or remortgage their properties as a result.
The draft Bill will cap ground rents at £250 per year initially, changing to a peppercorn after 40 years. This approach, which will apply to most long residential leases not already covered by existing legislation, will provide immediate financial relief for leaseholders with high and harmful ground rents, helping to support leaseholders currently struggling to get a mortgage, and removing unnecessary blockers to buying and selling. The longer-term change to a peppercorn cap will eliminate the two-tier market between new and older leases, delivering a fair and efficient modern housing market.
These reforms will necessarily have effects on existing contractual arrangements and investments, something that this Government do not undertake lightly. However, the Government have a mandate to tackle unregulated and unaffordable ground rent charges, and our approach has been designed to strike a fair balance between the interests of leaseholders, freeholders and investors, maintaining the reputation of the UK as a safe place to invest.
Rectifying flaws in the Leasehold and Freehold Reform Act 2024
As set out in a previous written ministerial statement I made on this subject —[Official Report, 21 November 2024; Vol. 757, c. 24WS.]—(HCWS244), the 2024 Act contains a small number of specific but serious flaws that prevent certain provisions from operating as intended and that need to be rectified via primary legislation.
Although this is not included in the draft Bill, our intention is to rectify those flaws in primary legislation. Among other things, this will allow us to commence the 2024 Act’s enfranchisement provisions. Valuation rates used to calculate the enfranchisement premium will be set by the Secretary of State in secondary legislation. We will consult on valuation rates as soon as possible, ahead of commencing the relevant provisions.
[HCWS1278]