Public Accounts Committee
Lord Hanson of Flint Excerpts(13 years, 10 months ago)
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Mr David Hanson (Delyn) (Lab)
I have sat through the debate and found it extremely positive in its approach to the issues. There is a great deal of cross-party support for making how we manage issues in government a key focus.
May I begin by paying tribute to my right hon. Friend the Member for Barking (Margaret Hodge)? It is already clear that she has not only a grasp of the role of the Public Accounts Committee but the respect and support of Members on both sides of the House. It is crucial to consider the PAC’s role by leaving aside party politics and examining where systemic failures in Government expenditure occur.
May I also echo my right hon. Friend’s thanks and support for the hon. Member for Gainsborough (Mr Leigh)? He served the House of Commons well during his period in office, when he produced more than 400 reports on a range of issues. I can honestly say that during the last Parliament I appeared to wake up most mornings to the hon. Gentleman on the radio, kicking somebody. As a Minister in the last Government, I was often grateful that it was not me.
I welcome the approach taken in the motion. I will support it as I recognise that it contains elements that will help to strengthen the accountability of Ministers for acting upon the reports that they have accepted as recommendations from the PAC. Anything that puts in place a mechanism that will make Ministers and their civil servants know that they have to report back to the House on progress on measures that they have accepted and agreed to do is extremely important.
I am grateful for the speeches made by right hon. and hon. Members on both sides of the House. Several key themes have come out of the debate. First, we have seen the importance of the scrutiny role that the PAC will perform and has performed. The hon. Member for Orpington (Joseph Johnson) pointed out the recent report on the activities undertaken by DFID.
The hon. Member for South Norfolk (Mr Bacon) referred to not just scrutiny but to the positive actions taken on hospital-acquired infection as a result of reports undertaken by the PAC. Indeed, he mentioned the improvements that are taking place in the Home Office. I can speak from personal experience as for a short period I was subject to a report as a Minister in the Ministry of Justice. It was on the National Offender Management Service’s C-NOMIS programme, which is an interesting point to which I shall return later. I became a Minister three and a half years after the programme commenced, froze the project three months after my inauguration in the Department and was subject to a PAC report that considered a range of issues. Civil servants had come, gone and left before I came and, after I left, civil servants were still managing that project. There are important lessons that we need to consider.
The scrutiny role of the PAC is important, but key issues to do with good governance have arisen in today’s debate and they are equally important. The hon. Member for North East Cambridgeshire (Stephen Barclay) listed clearly what is required of good governance in any project management. It is the sort of project management that anybody in the private sector or the voluntary sector who has responsibility for resources will undertake. Even in our private lives, most of us will undertake such good governance to ensure that we meet collective objectives. The hon. Gentleman’s point was also reflected in the comments of the hon. Member for Thurrock (Jackie Doyle-Price) on the leadership that is required for the role of good governance. The hon. Member for Southport (Dr Pugh) also touched on that.
Good governance relates to some key issues that were reflected in what the hon. Member for Redcar (Ian Swales) said about self-evident truths that recur. They should be the key issues that the Committee focuses on as part of its future role, and they involve simple issues such as having a proper business plan, clarity of objectives and clarity and responsibility for budgeting. It is also about having a reporting mechanism so that people know what is being spent when, how and for what purpose, and it involves the good governance of civil servants, which the hon. Member for South Norfolk mentioned, and good ministerial governance. That was reflected in the comments of my hon. Friend the Member for Walthamstow (Dr Creasy) about her constituent. Now that he has been elevated to the Lords, I am afraid that however he voted at the last general election, he will not be able to vote in the next one.
The issue is how to put in place and systemically manage the overall issues. It comes down to key issues of personal accountability for civil servants and Ministers. There is a role for the Committee, which is echoed in the motion, and it relates to the accountability of individuals—Ministers and at civil servant level—for the decisions they take and for how they manage the good governance issues I have outlined.
Delivery is key. The hon. Member for Stockton South (James Wharton), who showed real commitment to the Committee by missing his constituency party, focused on the issue in his area about how the political aspirations of whichever party is in government are delivered on the ground. What Ministers decide, how civil servants protect the taxpayer against reckless ministerial decisions and how they implement positive ministerial decisions is key. The points that the hon. Gentleman made were very important in relation to the health aspirations he discussed, but this is ultimately about value for money and making sure that whatever objectives Ministers have set are delivered in a timely, sensible and forward-looking fashion.
My right hon. Friend the Member for Stirling (Mrs McGuire) highlighted some of the challenges we will face in the future. I do not want to politicise this debate, but the current Government’s focus on greater localism, devolution of power and distribution of responsibility will mean that the food chain of accountability that she mentioned will be equally important in future.
As a background to all this, we are in a time of increasingly reducing resources. The Government’s Budget proposals mean reductions of £32 billion a year and additional net tax increases of £8 billion a year by 2014-15. Departmental losses include figures such as a 49% reduction in the capital budget in the Home Office and reductions in revenue budgets of 23% and 24% at the Ministry of Justice and the Home Office. Whatever our views on those matters, and we all have our own views, it is even more important at this time of diminishing resources that they are spent with a clear focus on value for money, that they deliver what they are meant to deliver and that they are managed by Ministers through the civil service. As we have seen recently, the Committee’s reports on the Ministry of Defence’s major projects review, which my right hon. Friend the Member for Barking has ably led on this week, and on the private finance initiative contracts with the Highways Agency to widen the M25 show that, retrospectively, there are real issues that will be common themes that we need to address for the future.
Before I conclude, let me make a simple point about how stability relates to political accountability. I was a Minister for 12 of the 13 years of the previous Government and not once did I hold a job for more than a couple of years. I was the longest-serving Minister with responsibility for prisons and probation in the history of the Labour Government—I served for two years and one month. I had to pick up, learn about, develop and manage projects that had started before I was in the post and carried on after I left to go to the Home Office. As well as accountability for civil servants, it is important that we have accountability for Ministers. The motion would ensure that Ministers who make agreements and accept recommendations report back to the House on what they have done. I hope they will have longer in office so that they can see projects through from start to finish. They would thus remain personally accountable and, on behalf of the House, they could hold civil servants to account, too.
I commend the motion to the House, and I look forward to hearing the Minister. I thank Members on both sides of the House for their contributions.
Terrorist Asset-Freezing etc. Bill [Lords]
Lord Hanson of Flint Excerpts(13 years, 10 months ago)
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Dr Huppert
I am delighted to move amendment 2, and to speak to amendments 3, 5 and 11, which are also in my name. They reflect recommendations from the Joint Committee on Human Rights, and Members might wish to see its more detailed report if they have not done so already. The amendments are all about ensuring proportionality and a fair hearing.
We should clearly be able to restrict funds that help terrorists in their activities, but people who are accused of such activities should not automatically lose their regular status in this country. We have a great principle in this country whereby a person is innocent until proven guilty; it is a great British tradition and one that we should support. We should also accept, however, that errors are made in legal processes, by the court and by Governments, and that is why we should have principles of fair hearing and high thresholds before we take state action.
Amendment 2 is about errors and the thresholds that we require. How can we be sure that the courts or the Treasury are making the right decision? How much error is acceptable? Various thresholds are already used for various decisions. We have the threshold of beyond reasonable doubt, which roughly equates to our saying that we do not accept even a 1% error—to the extent that we can attach numbers to it. Then, we have the civil standard, or the balance of probabilities, whereby we want to be sure that we are probably right. We want at least a 50:50 chance—in other words, with the balance of probabilities, we say that we want to be wrong less than half the time; we want to be probably sure that we are right.
If we go any lower with a threshold, we take steps—we punish people—when we say that we believe that they were probably not involved in the given situation. That is the consequence of a threshold below the balance of probabilities. None of us wants that, and none of us wants to take steps against people when we think that they were probably not involved in the first place.
I accept the principle of a lower threshold for interim designations. It is more akin to arrest, which takes place at a much lower threshold, but that is not the same as the permanent designation. I strongly urge the Government to reconsider their proposal. They should consider taking such steps against people only when the Treasury believes that they were probably involved, rather than on the basis of anything lower.
Amendment 3 is a simple requirement. A fair hearing must mean knowing the accusations—the reasons why the Treasury believes that somebody has been involved in funding terrorist activities. The amendment includes an important safeguard for public interest in non-disclosure, so damaging information would not come out, only that which we could afford to release. Again, I should have thought that we all agree with such a position.
During the Bill’s passage, the Government have said that, effectively, the amendment’s intention will be achieved but they do not want to see it in legislation. I am always concerned, however, about the principle that we should not write things into legislation but trust in the benevolence of Governments—this or any future Government. If the Minister will not accept the amendment, will he clearly commit to disclose such reasons subject to the public interest requirement, as the amendment says—even if that takes place in a non-legislative way?
Amendments 5 and 11 deal with the hearing itself. Section 67(3)(c) of the Counter-Terrorism Act 2008 puts a heavy weight on the principle of non-disclosure. Although that is an important principle, we must counter it with the principle of a fair hearing. Currently, the balance goes far too far in the direction of non-disclosure.
In the case of AF, it was held that similar rules are not appropriate to control orders, so I find it hard to see why the courts will not in time hold the same principle on terrorist asset freezing. There are more details on that reasoning in the Joint Committee’s report. The courts have yet to take such a decision, but surely as a principle it would be better not to go through costly legal action, but to save time by making the changes now.
There is a review of the use of sensitive material in judicial proceedings, and I welcome the fact that there will be a consistent approach. If the Minister will not agree to including such safeguards in the Bill, will he commit to the Bill being updated when the review is complete in order to reflect that consistent approach and to introduce a better system throughout those areas? I shall listen carefully to the Minister’s comments on all those suggestions, and I hope he takes on board what has been said.
Mr David Hanson (Delyn) (Lab)
I am grateful to the hon. Member for Cambridge (Dr Huppert) for introducing the amendments, which represent important issues that the Joint Committee on Human Rights considered. However, the Opposition believe that the test of reasonable belief is appropriate to the circumstances covered by the Bill. Indeed, I said so in Committee.
The tests for the asset-freezing regime are strict. In clause 2(1)(a)(i) to (iii), the Treasury has to consider real issues about the involvement of individuals in terrorist activity before such powers can be invoked. Those considerations are:
“(i) that the person is or has been involved in terrorist activity,
(ii) that the person is owned or controlled directly or indirectly by a person within sub-paragraph (i), or
(iii) that the person is acting on behalf of or at the direction of a person within sub-paragraph (i)”.
If we changed from reasonable belief to a situation in which the Treasury had to satisfy the balance of probabilities, as the amendment proposes, we would water down the ability of the Treasury and, therefore, the Government to take early action on the use of resources to finance terrorist activity in relation to the items detailed in clause 2. The asset-freezing regime must be preventive to be effective. One must be able to use it at an early stage to disrupt and prevent terrorist acts, and a threshold of a balance of probabilities would not enable the Government to act when action is needed.
The balance of probabilities test is applied by the courts in the context of civil proceedings and requires one party to demonstrate to the court that it is more likely than not that a particular fact is true. If that test were applied to asset freezing, it would require the Treasury and, indeed, the Minister to be satisfied and able to demonstrate to a court that a person is more likely than not to be, or to have been, involved in terrorism. That is too high a burden at the moment, because the burden of proof would rest with the Treasury.
If the Treasury brings forward proposals under this legislation in due course, I rest assured that it will have had solid grounds, from the intelligence and information provided to it, for doing so. If the picture were unclear, and an equally plausible argument could be made for an individual not being involved in terrorism, the Treasury would not be able to impose an asset freeze. That might put the constituents of Cambridge and, in my case, north Wales, or any constituent in the country, at risk of terrorist attack.
Dr Huppert
I am sure that the right hon. Gentleman knows of the existing power for an interim designation. It has a much lower threshold, so in emergency cases, such as those that he mentions, there would be no problem and we would be safe. I am delighted that he cares about the people of Cambridge so much, but the amendments are about longer-term designations.
Mr Hanson
Indeed, but I speak as somebody who in the previous Parliament was the Minister responsible for terrorist issues and policing. Those are serious matters, and the Government need to take action on them. There is always a balance to be struck between the civil liberties of individuals and the civil liberty of ordinary people to live their lives in peace without the threat of terrorist activity. On balance, my judgement is that we need to support the Government’s proposals in the Bill, which initially had its genesis in the previous Government, so that all measures are taken to ensure that the asset freeze can take place and action can be taken accordingly.
I understand the concerns of the hon. Member for Cambridge; they are valid and should be explored. However, in clause 26 there is a right of appeal for designation both at an interim and final stage. If an individual feels aggrieved, he can undertake to exercise that right of appeal. However, very few people will do so if the Bill becomes law, because the Treasury will have taken steps to ensure that those individuals are rightly in the frame, for the reasons that the asset regime has been introduced, and I trust the Treasury to take those actions; that is not something we say all the time but, on this occasion, I have done so.
I hope that the hon. Gentleman feels that he has raised the issues of concern. I am sure that the Minister will give, almost word for word, the exact response that I would give. I am happy to talk about the amendments in more detail, but my message to the hon. Member for Cambridge is clear: in the event of him pushing the matter to a vote, he will find not just the Financial Secretary against him, but the shadow Minister.
The Financial Secretary to the Treasury (Mr Mark Hoban)
I shall respond to each of the amendments proposed by the hon. Member for Cambridge (Dr Huppert). I welcome the approach adopted by the right hon. Member for Delyn (Mr Hanson), who speaks with some authority on these matters, having dealt with them in government. Looking around the Chamber, he is probably the Member with the most experience of tackling these issues. The amendments were considered in Committee. They were tabled by the hon. Member for Carshalton and Wallington (Tom Brake), and I made the same comments in response to them then as I do today. He sought to withdraw them in Committee and I hope that the hon. Member for Cambridge will do the same today.
As I said in Committee, amendment 2 would change the threshold for the making of a final designation from the Treasury from reasonably believing a person is or has been involved in terrorism, to needing to be satisfied on the balance of probabilities. As I emphasised on Second Reading and in Committee, the asset-freezing regime needs to be preventive to fulfil our UN Security Council obligations and to meet our national security needs. In other words, it must be capable of being used at an early stage to disrupt and prevent terrorist acts.
In our view, a threshold on the balance of probabilities would not enable us to act when needed. The balance of probabilities test is applied by courts in the context of civil proceedings and requires one party to demonstrate to the court that it is more likely than not that a particular fact is true. If that test were applied to asset freezing, it would require the Treasury to be satisfied and to be able to demonstrate to a court that a person is more likely than not to be or to have been involved in terrorism.
That may sound reasonable but—to echo the words of the right hon. Member for Delyn—it is, in fact, a high burden. The fact that the burden of proof would rest with the Treasury means, for example, that if the picture were unclear and an equally plausible argument could be made that an individual was or was not involved in terrorism, the Treasury would be unable to impose an asset freeze. The serious threat posed by terrorism means that in such cases where the reasonable belief standard is met, the Treasury should be able to freeze assets on a preventive basis to protect the public. The alternative is to hold back until further evidence is accumulated. However, that runs the risk of an individual being able to carry out a terrorist act without preventive action being taken.
I hope that the hon. Member for Cambridge bears it in mind that—as eminent judges such as Lord Justice Laws and Lord Rodgers have remarked—we need to be mindful of the fact that material available to the authorities about terrorist plots may be fragmentary and incomplete. The picture may not be complete for good reasons, but that does not mean that the material is wrong. Such a situation simply reflects a number of real-world facts about terrorism: that intelligence has to be gathered covertly; that terrorists take considerable steps to disguise their activities; and that the need to protect the public sometimes means that plots have to be disrupted at an early stage, rather than allowed to run on further to accumulate more evidence. For those reasons, moving to a balance of probabilities test would have significant risks for our national security.
I also explained in Committee that a balance of probabilities test would be out of line with international best practice. The Financial Action Task Force makes it clear in its guidance on terrorist asset freezing that a legal threshold of reasonable suspicion or reasonable belief should be used. We are not aware of any other country that uses a balance of probabilities test to freeze terrorist assets in accordance with UN Security Council resolution 1373. As I set out on Second Reading and in Committee, for those reasons we remain convinced that a reasonable belief test is the right threshold for making a designation and that it strikes the right balance between protecting our national security on the one hand and protecting civil liberties on the other.
Mr Hoban
If we assume that the legislation will receive Royal Assent, it will stand. However, clearly, all terrorism legislation is kept under review and it would be wrong to prejudge the outcome of any other court case. We have taken forward the best form of the legislation, which was, as the right hon. Gentleman knows, based on the previous Government’s proposals. The Bill reflects case law as it stands.
Despite the approach we have taken on reasonable belief, the Bill will not result in the Treasury making decisions where it thinks it is more likely than not a person is not involved in terrorism. The point is that the decision maker should believe, from a careful assessment of what may well be a complicated intelligence picture, that a person is involved in terrorism. The threshold of reasonable belief for a decision is one used in many contexts, including in decisions made about terrorism, such as under the Anti-terrorism, Crime and Security Act 2001 and under schedule 7 to the Counter-Terrorism Act 2008. The courts are then asked on an appeal or review to determine whether there are reasonable grounds for that belief. That is the right test. It provides an assurance that a proper burden is placed on those seeking to impose a designation but, at the same time, it enables action to be taken to protect national security when needed.
Let me move on to amendment 3, which, as the hon. Member for Cambridge pointed out, reflects the report by the Joint Committee on Human Rights. I understand that the amendment would ensure that individuals are sufficiently informed of the reasons for their designation at the point their assets are frozen in order to enable them to mount an effective challenge. As I stated in Committee, the Government do not believe it is necessary to include such an obligation in the Bill because the JCHR’s proposal was intended only to ensure that the Treasury complies with the basic administrative law principle of giving reasons for such decisions. It is the Government’s view that administrative law principles apply regardless of whether a duty is specified in this legislation. Writing such an obligation into the Bill is therefore unnecessary. I think that that was the commitment the hon. Gentleman was seeking.
Amendments 5 and 11 were considered in the other place and in Committee. It is worth reminding the House that the Prime Minister announced in July that the Government will review the whole matter of the use of sensitive material in judicial proceedings and will issue a Green Paper next year. We expect the Green Paper to be published in the summer. The Government do not consider it appropriate to pre-empt it, which we would certainly be doing if we were to accept amendment 5.
Let me consider the amendment in detail. It seeks to create a new subsection within section 67 of the Counter-Terrorism Act 2008, which provides for the content of court rules about disclosure in financial restrictions proceedings and which will apply to court rules made in relation to challenges to decisions under the Bill. The amendment would place a requirement for the court rules, which are to be made initially by the Lord Chancellor for England and Wales and Northern Ireland, to ensure that the Treasury provides sufficient open disclosure to enable the designated person to give effective instructions to the special advocate. That form of words is based on the European Court of Human Rights judgment in the case of A, which was applied by the House of Lords in the case of AF and others to the stringent control orders that were before it. The effect of the amendment would therefore be to apply “AF No. 3” principles to challenges to final designations. I reassure the hon. Member for Cambridge that persons designated by the Treasury will have the full protections afforded them under article 6 of the European convention on human rights. Section 67(6) of the 2008 Act states:
“Nothing in this section, or in the rules of court made under it, is to be read as requiring the court to act in a manner inconsistent with article 6 of the Human Rights Convention.”
It is therefore absolutely clear that article 6 rights apply in full to asset freezing.
Dr Huppert
I thank the Minister for his comments and for the assurances and commitments that he was able to give. I continue to disagree with him about the standard that should be required, and I still find it concerning that we are not moving towards a balance of probabilities. However, I will not press the matter to a vote. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 31
Independent review of operation of Part 1
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss amendment 6, page 15, line 25, at end insert—
‘( ) A person may not be appointed under subsection (1) unless—
(a) the Secretary of State lays a report before both Houses of Parliament which recommends the person and sets out the process by which he was chosen,
(b) a Minister of the Crown tables a motion in both Houses to approve the report laid under this subsection, and appoint the person, and
(c) such a motion is agreed by a resolution of both Houses of Parliament.’.
Amendment 7, page 15, line 31, leave out ‘send the Treasury a’.
Amendment 8, page 15, line 32, after ‘report’, insert ‘to Parliament’.
Amendment 9, page 15, line 34, leave out subsection (4).
Amendment 10, page 15, line 37, at end add—
‘( ) Appointment under subsection (1) shall be for a non-renewable term of five years.’.
Mr Hanson
We had a good debate on this issue in Committee. It is my contention that if we are to create a post to review the operation of this Bill once it achieves Royal Assent, it makes eminently logical sense for the person who is appointed by the Treasury to review the legislation to be the same person as the one appointed by the Home Office under section 36 of the Terrorism Act 2006 to review terrorist legislation and its impact from the Home Office perspective. As the House will know, Lord Carlile is currently appointed to that position. He is independent of government; he has an office outside the Home Office as well as a secure office in the Home Office; and he provides an independent review of a range of issues, including control orders and other legislation under the 2006 Act. Clause 31 of this Bill allows for an individual to be appointed by the Treasury. In Committee, I tested the Minister on whether he had discussed with the Home Secretary the possibility of appointing the same person under clause 31 to review part 1 of this potential Act as is currently appointed by the Home Office to review legislation under the 2006 Act.
Whatever our agreements in Committee, there is also, I hope, an agreement that we do not want to see duplication of these roles. The role of reviewing whether a designation has been made fairly and is being operated fairly is the same as that of reviewing whether an individual’s control order has been judged and operated fairly. I accept that there are differences, as alluded to by the Minister in Committee, but in broad terms an individual appointed under clause 31 to review part 1 of this potential Act will be dealing with similar issues and similar evidence—sometimes evidence supplied by agencies within government—and undertaking similar assessments of the effectiveness and fairness of the operation of the legislation.
The current reviewer, Lord Carlile, will finish his tenure in that role very shortly. Mr David Anderson QC will be the new independent reviewer of terrorism legislation from, I think, 1 January next year. He has expertise in the European Union, in public law and in human rights. He is a Queen’s counsel of more than 10 years’ standing, and he is a recorder and a visiting professor at King’s college London. The skills that are required to review control orders under the 2006 Act are, in my view, the same as those required to review the provisions in this Bill. I am making this proposal because there could be synergy between the two posts.
I am equally interested—I know that the Minister will have a wry smile at this—in the costings and the operation of the parallel regimes in the event of the Minister appointing somebody different to review the provisions of this Bill when enacted. The Home Office supplies the reviewer with administrative facilities, office support and research support as needed. He has an independent private office in central London as well as secure rooms in the Home Office that he uses to deal with information to help him in his task. I question the need to establish a parallel regime with a separate person being appointed through a separate recruitment procedure and having separate offices inside and outside the Treasury, given that very often, and potentially even more so in this current age, the individual may be reviewing activities that impact on the same small group of people who are seeking to do harm to our citizens in the United Kingdom as a whole.
I would welcome an update from the Minister on my suggestion and on whether he has had an opportunity to talk to the Home Secretary about this matter. Has the Minister had an opportunity to consider whether the person who will be appointed under clause 31 should be the same person who is appointed by the Government to review Home Office legislation under the 2006 Act?
My amendment has been unduly twinned with the rest of the amendments in the group, which were tabled by the hon. Member for Cambridge (Dr Huppert). They relate to the method for appointing the reviewer—whether they are appointed as under my proposal or as under the Bill. The hon. Gentleman has again drawn on the report of the Joint Committee on Human Rights in proposing that the House of Commons should ultimately be the appointing body for the independent reviewer.
Unusually, I think that I will find myself agreeing with the Minister. Whatever my views on a range of issues, I cannot accept amendment 6, because the post of the independent reviewer must ultimately be a Government appointment. It reports to and supplies information to Ministers, and it is ultimately funded by the Government to provide that information. It is crucial, however, that the post is independent of Ministers. It reports to them, provides them with information and is funded by them, but it ultimately acts independently of them. It advises them and can cause difficult issues for them, because of its independence. If the post was appointed and supported by a resolution of both Houses of Parliament, it would be in a very different position from an independent reviewer of legislation.
Lord Carlile was independent. Never once did he ask me for information that he could not access appropriately. Never once was he compromised by Ministers, of whatever hue, in relation to his jurisdiction and duties. He has provided a fair assessment of the operation of the legislation to date.
I hope that the Minister reflects positively on amendment 1. I suspect that he will not support amendments 6 to 10, which were tabled by the hon. Member for Cambridge, because the independence of the post is crucial. If we tie it to the Minister or to the House of Commons, we will betray that independence and do a disservice to the role. If the Minister cannot give me good news on amendment 1, I hope that he can encourage me generally on the appointment. I look forward, also, to hearing the hon. Member for Cambridge speak to his amendments.
Dr Huppert
I will speak briefly to amendments 6 to 10, which come from the Joint Committee on Human Rights, on which I am privileged to serve. I agree with the right hon. Member for Delyn (Mr Hanson) that the key issue is the independence of the reviewer. The amendments seek to strengthen that independence, by ensuring that the reviewer is a creature not of Government, but of Parliament. Being nominated by Government and approved by Parliament would give the reviewer greater independence.
There is also a question of accountability. Who should hold accountability on behalf of the British public—Parliament or Government? Should the reviewer’s report go directly to Parliament, or should there be the potential for it to be filtered by Government? Although I accept that that does not generally happen, there is the potential for it to happen.
Mr Hanson
I ask the hon. Gentleman to consider that Ministers are accountable to Parliament. I rose because of his use of the word filter. When I was the Minister with responsibility for policing and terrorism, not once did I change a single word of a reviewer’s report to Parliament, even though such reports were produced ultimately by Ministers for this House. I do not expect that any other Minister would do so, because the independent reviewer would make a play of it and the relationship would be devalued tremendously.
Dr Huppert
Indeed, I was saying that I did not believe that that had ever happened, and I am grateful for the assurance that it never has. That shows exactly why amendment 6 makes sense. If no Minister would ever filter such reports, there should be no requirement for them to go through Ministers. That creates a potential filter that we hope will never be used. I hope that the Government simply agree with my position, so I will not labour the point. However, I doubt that the Minister will say that he agrees.
I will raise something that I mentioned on Second Reading, which might provide a compromise. As the Minister is aware, there is a recent precedent for Select Committees to approve independent appointments. That happened with the Office for Budget Responsibility and I hope that it will happen with other bodies. Perhaps the Minister will agree that it would be helpful for the reviewer to be confirmed by an appropriate Select Committee in a similar way, to ensure that there is certainty for Parliament as well as Government that the reviewer will perform their role properly and independently.
Mr Hoban
I did not know that we were going to proceed at such a quick pace this evening, although perhaps it is not as quick as you, Mr Deputy Speaker, and other colleagues might have hoped. I hope that we will not detain the House too much longer on the matters before us.
I will deal with amendments 6 to 10 first, before returning to amendment 1. As the right hon. Member for Delyn (Mr Hanson) pointed out, amendment 1 relates to a topic that gave rise to one of the longer debates in Committee.
The amendments tabled by my hon. Friend the Member for Cambridge (Dr Huppert) relate to the appointment of the independent reviewer and the terms by which he will report. My hon. Friend and other hon. Members will be aware that such amendments were debated at length during the Bill’s passage in the other place and in Committee. As I said in Committee, the proposals are based on the provisions of the Prevention of Terrorism Act 2005 that relate to the independent reviewer of terrorism legislation. That provides an effective and suitable model for the statutory independent asset-freezing reviewer.
Amendment 6 would require the independent reviewer to be approved by Parliament. I believe that the intention is to ensure that the reviewer is suitably independent of Government. I hope that I can reassure my hon. Friend that the Government are fully committed to the independence of the reviewer. Independent oversight is an essential element of the safeguards that the coalition Government have introduced into the Bill, and it will be the principal objective of any appointment. I will touch on the recruitment process later.
We do not believe that it is necessary for Parliament to approve the independent reviewer. That would be a significant departure from standard practice. The appointment of the reviewer by Government reflects the long-standing principle of ministerial responsibility. It is Ministers who are accountable to Parliament and to the public for the people whom they appoint. Parliament will, of course, be able to scrutinise the work of the reviewer and to hold him or her to account through existing mechanisms—for example, through Select Committee scrutiny.
My hon. Friend proposed the compromise of a requirement that an appropriate Select Committee approve the appointment of the reviewer. The Minister for the Cabinet Office and Paymaster General is due to meet the Liaison Committee shortly to discuss the pre-appointment hearing process. A decision to add new appointments to the list of posts subject to pre-appointment scrutiny may be announced as a result of that meeting.
Amendments 7, 8 and 9 would replace the independent reviewer’s obligation to report to the Treasury and the Treasury’s obligation to lay that report before Parliament with an obligation for the reviewer to report directly to Parliament. To draw a comparison, all the annual reports and ad hoc reports produced by Lord Carlile, the current independent reviewer of terrorism legislation, have been provided in the first instance to the Home Office to check that they do not inadvertently contain any classified material that cannot be published. Hon. Members will recognise that asset freezing deals with sensitive and classified information. That is why the Government believe that a similar approach is appropriate.
The independent reviewer will have access to all relevant papers and evidence, including highly classified intelligence reports and, on occasion, material that is being considered as part of a separate criminal prosecution. It is important to ensure that published reports do not include classified or sub judice material, and Parliament could not undertake such a check. I reassure my hon. Friend that the Government will not seek to influence the outcome of any report. The reports will be provided to Parliament as quickly as possible after they have been delivered, and they will be available to the public.
Amendment 10 suggests that the appointment of the independent reviewer should be for five years, and that it should not be renewable. We do not believe it necessary or desirable to have a statutory limit on the length of time that a reviewer should remain in post. There might be valid reasons why someone wishes to step down at an earlier stage, but there might also be valid reasons why they wish to occupy the position for a longer period. They will build up significant experience and significant knowledge of how legislation works, and that will be invaluable.
It is important to take the opportunity to learn from the experience of the current reviewer and see how he feels the system should work. In the debate in the other place, Lord Carlile said about appointment procedures:
“As to the way in which the independent reviewer is appointed, I do not have any very strong views. Appointment by a Minister does not make the reviewer any less independent. Many public appointments have sprung surprises on government; for example, chief inspectors of prisons. Independence is in the way the person concerned operates.”—[Official Report, House of Lords, 25 October 2010; Vol. 721, c. 1085.]
I notice that the right hon. Member for Delyn raises his eyebrows at the reference to the chief inspector of prisons—he clearly knows from his own experience how independent such people can be once they are appointed.
On the question of whether submitting reports to the Government, rather than directly to Parliament, would run the risk of reports being altered in any way, Lord Carlile said:
“I cannot imagine any circumstances in which any honourable person appointed to this role would be prepared to change their report at the behest of a Minister or civil servant for political reasons. It has never happened. It did not happen with any of the reviewers before I was appointed, it has not happened during my period of tenure, and I do not think it will happen with any successor I can foresee under the present or changed arrangements.”—[Official Report, House of Lords, 25 October 2010; Vol. 721, c. 1086.]
That reinforces the right hon. Gentleman’s experiences.
It is essential that the independent review of the asset-freezing regime is robust, impartial and transparent, and we are satisfied that the provisions in the Bill regarding the appointment and operation of the reviewer are appropriate to achieve that. I therefore hope that my hon. Friend the Member for Cambridge will not press his amendments.
Amendment 1, tabled by the right hon. Member for Delyn, would, as he said, ensure that whoever fulfilled the role of Home Office independent reviewer of terrorism legislation would also fulfil the role of independent reviewer of asset freezing. I shall provide the House with an update on the Treasury’s position on the appointment of an independent reviewer, but first I wish to set out why we do not support the amendment.
The Government do not accept that the independent reviewer for asset freezing must always be the same person as the Home Office counter-terrorism reviewer. Requiring them to be the same person would unnecessarily reduce flexibility, and could therefore constrain the Government’s ability to appoint the best person to the post. There might be good reasons why, in a particular case, both roles could not be held by the same person. For example, the best qualified person for the job might simply not have the time to carry out both roles to the level required.
We have to remember that both roles are demanding and important. Counter-terrorism legislation is an expansive and complex area, and the issues raised concerning the balance between protecting security and protecting civil liberties are of fundamental importance. Moreover, individuals may well wish to combine their work as independent reviewers with other ongoing professional commitments. That is entirely reasonable, as long as it does not give rise to conflicts of interest. In the light of that, it would be wrong to say that we must only ever appoint somebody who can perform both roles. We need to retain flexibility and always look for the most suitable person to do the job.
We recognise, however, that there are good arguments for combining the two roles where it is possible and desirable to do so. That might produce greater consistency and coherence and better value for money, as the right hon. Member for Delyn said in Committee. As I have said, however, we need to consider the matter on a case-by-case basis and not just assume that combining the two roles is the only approach that can work.
I now turn to the current situation. My officials have been in close contact with Home Office and Cabinet Office officials to explore the matter further. There has also been an initial discussion with the incoming counter-terrorism reviewer, David Anderson, to explore whether he would be willing to be considered for the asset freezing reviewer post. Mr Anderson has indicated that he would be willing to take up the post were it to be offered to him, and that neither he nor the Treasury is aware of any impediment to his taking on the role were it to be offered.
At this stage, the Treasury has not made an offer of appointment to the role, and in our view it would be premature to do so. After all, the Bill is not yet law and the post does not yet exist. However, I reassure the House that the Treasury is considering all the relevant issues, including value for money and the interconnection of the two roles. The process of appointing a reviewer is on track, and the appointment will be made in plenty of time for the reviewer to prepare their first report, which is due nine months after the Bill comes into force. I hope that that update will reassure Members of the progress that the Treasury is making in filling the post, and of its recognition of the points made today about costs and the interconnection of the two roles. On that basis, I hope that the right hon. Gentleman will be willing to withdraw his amendment.
Mr Hanson
I think I will take that as a sort of yes from the Minister about the principle behind the amendment, even though he is not accepting it. I feel reassured by what he has said. He has been very fair in his assessment that there are synergies between the two roles and potential cost savings. An individual could undertake both roles, and from my experience the two posts may be reviewing a similar pool of people. I believe that progress has been made.
The Bill obviously needs Royal Assent very quickly, because of the expiry of the previous legislation. I urge the Minister to ensure that, upon his final approval of a person to review the operation of the Bill, he tables a written ministerial statement. The individual needs to be in post prior to the time set out in clause 31(2) for the production of the first set of reviews, which is nine months after part 1 comes into force. It is important for the House to have feedback on that, and that will keep the House informed, at least in part, of matters related to the other amendments in this group.
I am very pleased to “bag” my amendment. The Minister has made his case and come as near as he can to saying what will happen. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Third Reading
Mr Hanson
I simply want to say on behalf of the official Opposition that we welcome the Bill, which, as the Minister has said, had its genesis with the previous Government. Previous Treasury Ministers have worked with officials to develop a regime that is, in my view, about protecting civil liberties. We hear a lot about civil liberties in these debates, and the Bill is about protecting those liberties and protecting individuals’ rights to live their lives without fear of terrorist attack. The terrorist asset-freezing regime that is in place and that will be in place once the Bill receives Royal Assent will help to develop still further the protections to ensure that those who wish to do harm to our society do not use such resources to do that harm.
The Bill has obviously been subject to great and detailed scrutiny, not just here but in the other place. It has also been scrutinised by the Joint Committee on Human Rights. As a House, we have considered the arguments put to us about several issues and we have ultimately decided that they do not hold merit. That is an important part of the process. The Bill leaves us with the full support of the Opposition. It will, I hope, provide greater safety for our community and help to ensure that we take action against those who use finance to undertake terrorist acts.
I am pleased that the Minister has given a strong indication that he will consider seriously the two roles of the reviewer. One is set out in clause 31 and the other—the reviewer of terrorist activity, who will soon be David Anderson, QC—is set out in previous legislation. There is merit in that synergy. Having heard what the Minister has said today, I wish the Bill well and the Opposition support it.
National Insurance Contributions Bill
Lord Hanson of Flint Excerpts(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Gauke
Compared with the plans that we inherited, the impact of the increase in threshold will be such that employers will pay £3 billion less in employer’s national insurance contributions. The overall reduction of the burden on employment will be £6 billion as a consequence of the overall package.
Mr David Hanson (Delyn) (Lab)
Will the Minister confirm, however, that about £1.4 billion is not being compensated for by the threshold? I want us to be clear. He says that he has offset the threshold, but he has offset only about £3 billion, not the whole amount of the rise.
Mr Gauke
The fact is that the Labour party would have raised the full amount. We are offsetting £3 billion, which will be most helpful for employers whose employees earn under £20,000. The package is good for employment and, given the fiscal mess that we inherited, I am very proud that this Government are able to reform national insurance contributions exactly as we set out in our manifesto at the general election, and in the coalition agreement.
As far as we can deduce it, the Labour party’s position is that it wants to do more to reduce the deficit by raising taxation and it does not believe in increasing VAT, which will bring in £13 billion a year. We can assume only that it would favour greater increases in national insurance contributions than it had already set out.
We are not going to take any lectures; this Government have managed to reverse a very painful and damaging policy that would have meant employers’ contributions rising for every single employee paying national insurance—and in a way that would have damaged jobs in this country.
Mr Gauke
A charitable entity that is located in one of the relevant regions and that carries on a trade, vocation or business will benefit. That is likely to apply to, for example, shops that are run by charities. Such entities must meet that criterion to benefit, but not all charities will necessarily do so.
Mr Gauke
At this early stage, we have had around 1,000 applications, but we expect more as awareness of the policy becomes greater and as businesses contact their professional advisers. We are keen to publicise the policy, and I encourage hon. Members for any of the relevant regions to notify businesses in their areas. The Government and our policy aim to help businesses and those who want to start a business and get it going. In contrast, the previous Government increased such taxes. Start-up and existing businesses throughout the country faced rising taxes and employers’ national insurance contributions, which was a particularly deeply damaging tax.
The Bill is an important part of the Government’s plan to reduce Labour’s taxation, help those on the lowest incomes, and support private enterprise and employment in the parts of the country that need them most. It is a simple and important Bill, and I commend it to the House.
Mr David Hanson (Delyn) (Lab)
I am grateful to the Minister for his exposition of the Bill. We will test aspects of it in Committee and at other stages in its passage. As he said, it divides effectively into two parts. The first part is the increase in national insurance contributions by 1%, which we will support because we want to ensure that we protect services and support our economy. The second part introduces a three-year regional national insurance holiday for new employers. As the Minister said, many businesses will qualify for their first 10 employees in their first year of business; I shall return later in detail to the question of the regions and areas that will not qualify.
Let us first consider the national insurance contributions. The Minister rightly said that this policy was set out both in the Labour manifesto and elsewhere in the period before the general election in May. My right hon. Friend the Member for Edinburgh South West (Mr Darling), the then Chancellor, announced in the pre-Budget statement on 9 December 2009 that the previous Government would increase national insurance contributions by 1% to protect public services. We had a choice, and we were straight about it both before and during the election. Raising national insurance contributions was a tough decision, but we ensured that we would protect those earning less than £20,000 a year.
The Conservatives condemned that national insurance rise throughout the election, but—surprise, surprise!—they have now decided to go ahead with it. In the Conservative manifesto, which I have come to recognise is not worth the paper it was written on, the party committed itself to raising the thresholds for national insurance by £24 a week, the upper earnings limit by £29 a week, and the secondary threshold at which employers start paying national insurance by £21 a week. I look forward to seeing the details in the secondary legislation.
My intervention on the Exchequer Secretary showed that although the Government are raising the thresholds, there is still a shortfall of about £1.4 billion in employer national insurance contributions. The Labour party was open about that in the run-up to, and during, the general election, but the Conservative party was not. In my view, this is all smoke and mirrors.
Mr Gauke
Page 8 of our manifesto stated that we would
“raise the secondary threshold at which employers start paying National Insurance by £21 a week.”
The secondary legislation will increase the secondary threshold at which employers start paying national insurance by £21 a week, so we are doing exactly what we said in the manifesto.
Mr Hanson
But there were no caveats about a shortfall in the Budget proposals of about £1.4 billion. I think it is smoke and mirrors—and, as my hon. Friend the Member for Edmonton (Mr Love) said, it is coupled with the increase in VAT from next year. The VAT rise will impact more than three times as much as the increase to national insurance contributions would have done, and will affect 250,000 jobs.
Charlie Elphicke
The right hon. Gentleman is right that the national insurance holiday will not apply in my constituency—a matter that I regret. Nevertheless, I welcome the fact that 1,400 of the least well-off people in my constituency will be taken out of tax altogether. It seems that he opposes the increase in the personal allowance and would rather cut national insurance, which we originally planned to do. Instead, we are helping the least well-off. Surely he would welcome that.
Mr Hanson
I look forward to the hon. Gentleman going back to Dover to explain why he is supporting not only a Bill that does not give a national insurance holiday to his constituents, but the VAT rise elsewhere in the Budget proposals—we need to look at that in the round—which will impact on pensioners, the low paid and everybody in his community. This is not a topic for today, but the debate on the national insurance rise was open and honest on our side. During and after the election, the Conservative party argued against the rise, but it is now implementing it. On top of that, it is not meeting the objectives in its manifesto and has increased VAT. I think that a VAT rise is a regressive tax policy that will hit the poorest hardest, but that is the choice that the Conservative party has made.
I want to focus most of my remarks on the second part of the Bill. The decision to introduce a regional employer national insurance holiday is welcome, but it specifically excludes new businesses in Greater London, the south-east and the eastern region. We tabled a reasoned amendment that has not been selected, but which would have declined to give a Second Reading to the Bill because of those exclusions. I sense that the hon. Members for Portsmouth North (Penny Mordaunt), for Meon Valley (George Hollingbery) and for Basildon and Billericay (Mr Baron), who spoke earlier, will have expressed their concerns about how the choices on the national insurance holiday were made. [Interruption.] The Economic Secretary to the Treasury says that we would have increased national insurance contributions across the board.
Madam Deputy Speaker
Order. We cannot have comments shouted across the Floor from a sedentary position. It makes it very difficult for Hansard to record our proceedings, particularly when the comments are then referred to without having been recorded. Will the hon. Lady make her point from the Dispatch Box, so that the right hon. Gentleman can answer it?
The Economic Secretary to the Treasury (Justine Greening)
My point was that the Labour party would have increased NICs for absolutely everybody.
Mr Hanson
The hon. Lady knows that that was a clear and honest policy that we put to the electorate. The Government have now introduced proposals for a national insurance holiday for new businesses in certain regions. I will explore shortly why we think that that choice is unfair in the context of the resources the Government are trying to save.
Justine Greening
Can the right hon. Gentleman tell us whether it is still his party’s policy to go ahead with those NIC rises?
Mr Hanson
I have said what I have said. We were open and honest during the election campaign, and we will support the rise proposed in the Bill, because we expected to do that. During the election campaign, the Economic Secretary and the Exchequer Secretary attacked the NIC rise without proposing the alternative that they have seen through in practice.
Let us put that aside, because the key issue before the House is the payment holiday. We do not believe that it is being proposed fairly, honestly or openly, and we do not believe that it will help the poorest and most deprived areas of the UK, which in great part are excluded from the scheme. Of the top 12 most deprived local authorities on the economic deprivation index, no fewer than seven will be excluded from the payment holiday. The seven boroughs of Hackney, Newham, Tower Hamlets, Islington, Barking and Dagenham, Haringey and Lambeth are excluded from the scheme.
In his written statement on 6 September, the Exchequer Secretary said:
“The Government are determined that all parts of the UK benefit from sustainable economic growth”.—[Official Report, 6 September 2010; Vol. 515, c. 1WS.]
If we are having a holiday from national insurance contributions, I do not understand how excluding those areas from the payment holiday will do that.
I want to challenge the Government’s logic. They claim that the reasoning behind the policy is that areas outside London, the south-east and the east are more reliant on public sector employment. Will the Exchequer Secretary confirm that that is his logic?
Mr Hanson
The Minister has confirmed that. Tomorrow’s business leaders who want to start businesses in the constituencies of Oxford East, of Luton North, of Lewisham East, of Canterbury, of Southampton, Test, of Eltham, of West Ham, of North Thanet, of Hackney North and Stoke Newington, of Tooting, of Islington North, of Dulwich and West Norwood, and of Brighton, Kemptown will miss out. I mention those constituencies specifically because they are in the top 10% in the country with the highest percentage of public sector employment.
As the hon. Gentleman knows, there are 650 constituencies. His policy is supposed to help compensate for possible loss of employment in the public sector. Those concerns have been reflected today, and I pay tribute to the hon. Members for Portsmouth North, for Meon Valley and for Basildon and Billericay, who have defended their constituencies and raised their concerns about how the policy will be applied.
If there is to be a holiday, it can be applied in different ways. It could be applied regionally, as the Minister has done, or on the basis of unemployment levels or regional levels of public sector employment per constituency, instead of the blanket regional approach that the Minister has chosen.
Mel Stride (Central Devon) (Con)
The shadow Minister has heard that rolling the scheme out across the entire country would cost an additional £660 million. Will he explain whether he would propose to raise that by increasing our deficit, by cutting expenditure—in which case what expenditure would he cut—or by raising taxes, in which case what taxes would he raise?
Mr Hanson
That is a fair and valid point. Yesterday, in reply to a parliamentary question, the Minister emphasised the cost of the scheme for the regions covered. My purpose today is to challenge the Minister’s logic for allocating the resources for the payment holiday to the regions that he has selected, because that distribution does not necessarily reflect the level of deprivation or public sector employment. The cake that the Minister has allocated may be sliced in several ways, but he has sliced it to exclude the constituencies represented by my hon. Friends in London and those who represent seats in the south.
Barry Gardiner
Is my right hon. Friend aware that Tottenham, which has the eighth highest number of jobseeker’s allowance claimants in the country, will not benefit, although Tatton, which has the 509th highest number of JSA claimants, will receive the NI break? Is that fair?
Mr Hanson
My hon. Friend makes a very valid point. I do not begrudge the people of Tatton anything, and I will tell him why. I was once a Labour councillor in the Tatton constituency. I represented the ward of Rudheath and Whatcroft, and I was the leader of the Labour council that covered half the constituency at that time. I have absolute faith in those areas, but there is deprivation in Tatton. In fact, Neil Hamilton, a former Member of this House for that area, was my pair when I first came here. Such is life! But that is another story.
Tatton has one of the lowest levels of unemployment in the country. That constituency, which is represented by the Chancellor of the Exchequer, will get the benefit of the national insurance holiday to start 10 employees, but Portsmouth North will not. Neither will Brent North, Edmonton or Lewisham. The constituency of my hon. Friend the Member for Leyton and Wanstead (John Cryer) will not get that benefit either—
Mr Hanson
Indeed, and neither will the constituencies of my hon. Friends the Members for West Ham (Lyn Brown) and for Ilford South (Mike Gapes). We are talking about encouraging growth and promoting job opportunities, and how we split the cake is very important, as the hon. Member for Central Devon (Mel Stride) has pointed out. My hon. Friend the Member for Brent North (Barry Gardiner) mentioned the different figures for jobseeker’s allowance across the country. We need to address those significant differences.
Mr Love
For the record, unemployment in my constituency is about the 50th highest in the country, and my constituents want to know why they will not be getting the benefit of these measures in the Bill. The fallacy behind the Government’s argument is that the affluent part of the region will raise employment in my constituency, but all the evidence shows that there are hard-core pockets of unemployment, and that even during the economic good times over the past 13 years, unemployment there did not come down. The only way to address that fallacy is to apply the provisions of the Bill to all the regions of the country, as my hon. Friend suggests.
Mr Hanson
I am grateful to my hon. Friend. The question that the Minister needs to reflect on, here or in Committee, is how we should split the national insurance holiday cake. There are many ways of doing that, but his way is unfair to the areas of greatest need, to the areas with the highest public sector employment, and to areas that contain seas of prosperity as well as deprivation.
The Minister has mentioned areas of high public sector employment, but I have already shown him the fallacy behind his argument as it affects many of our constituents throughout the country. Figures for jobseeker’s allowance show that the rate of unemployment is currently higher in London than in the south-west, part of which is represented by the hon. Member for Central Devon, in North Wales, where my constituency is, or in Scotland, where it is 3.8%. Unemployment is also higher in London than in the east midlands or the north-west—[Interruption.] The Economic Secretary to the Treasury did not take your strictures to heart, Madam Deputy Speaker. She is continuing to heckle from a sedentary position. I would be happy to give way to her if she wants to intervene.
However we measure unemployment, the levels of jobseeker’s allowance claims in London are higher than in the south-west, Wales, Scotland, the east midlands and the north-west. Indeed, they are above the UK average. That is a key point when we are thinking about how to divide the cake up.
Andrew Bridgen (North West Leicestershire) (Con)
I must say that the enthusiasm being shown by the right hon. Gentleman, and by so many Opposition Members for this fantastic Conservative policy, or coalition policy, on national insurance holidays is absolutely heart-warming.
Mr Hanson
The hon. Gentleman will know that North West Leicestershire will benefit from the scheme, but I hope that he will look slightly beyond the confines of Leicestershire and talk to the hon. Members for Portsmouth North, for Meon Valley and for Basildon and Billericay, who have all expressed concern about the proposals.
Charlie Elphicke
I spoke on the subject of regionalisation in the Finance Bill, and we have to take the rough with the smooth. Does the right hon. Gentleman welcome the fact that in places such as Delyn, 500 new jobs have been created in the past six months? In Dover 500 new jobs have also been created in the past six months. Across the country as a whole, about 300,000 new private sector jobs have been created in the past six months. Does he not welcome that?
Mr Hanson
I think I know Delyn better than the hon. Gentleman. If he would like to come to me to talk to the 320 people who lost their jobs yesterday at Headland Foods in Flint, I should be happy to discuss the issue. That happened only yesterday in my constituency, so I will not take any lessons from him about what happens on my patch in north Wales.
I will tell the hon. Gentleman straight away, however, that West Ham has 6.8% unemployment, Tottenham 7.4% and Camberwell 6%. That is more than three times the level of unemployment in Tatton, in Richmond (Yorks), represented by the Foreign Secretary, and in Derbyshire Dales, represented by the Government Chief Whip. Indeed, it is four times the level in Sheffield Hallam, represented by the Deputy Prime Minister. All those areas will benefit from the scheme, while areas of severe deprivation in London will not.
Let us look at the constituencies of coalition Cabinet members. Berwickshire, Roxburgh and Selkirk has 2.8% unemployment, North East Somerset has 1.6%, Tatton has 2.1%—
Jacob Rees-Mogg (North East Somerset) (Con)
Will the right hon. Gentleman give way?
Mr Hanson
In a moment. [Interruption.] Not North East Somerset. The hon. Gentleman knows that I meant the Defence Secretary’s constituency. I am sure that the hon. Member for North East Somerset (Jacob Rees-Mogg) will eventually make the Cabinet, however, because he is an assiduous attender of the Chamber.
Richmond (Yorks) has 1.8% unemployment, Derbyshire Dales has 1.6%, Rushcliffe has 2%, Sheffield Hallam has 1.8%, Sutton Coldfield has 2.6%, North Shropshire has 2.7%, and Inverness has 2.3%. All the Cabinet members representing those constituencies will benefit from the payment holiday, while colleagues representing seats in Walthamstow, Islington, Mitcham, Luton North, Luton South, Tottenham, Tooting, Dulwich, Streatham, Hampstead, Vauxhall, Hammersmith and the two in Hackney will not.
If we are to make the scheme fair, taking the point that the hon. Member for Central Devon made, we should divvy up the benefits that the Government are bringing forward in a way that tackles the central issues of deprivation and unemployment.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
We as a party welcome the initiative, and I am sure the Government will be happy to hear that. It is an important countervailing measure, and we need further such measures. Have the Opposition assessed how much it would cost to roll out the scheme as they suggest in their amendment, and how that would be funded?
Mr Hanson
If the scheme were applied to Greater London, the east and the south-east, and taken up at the level that the Minister expects, it would—according to figures that he gave me only last night—cost about £660 million. He says that there are about 1,000 interested companies to date, but I do not know what the take-up would be.
The cost could be offset by new employment and new taxes, because let us remember that the scheme under discussion is for new businesses, so the holiday period offset will be a cost to the Treasury, but it could be offset by increased growth, increased taxation paid by individuals who are employed and by the increased growth of businesses. The cost of the scheme downstream, at the end of the three years, is debatable, but, equally, there are ways in which we could divvy up the money that the Minister has allocated to the regions of Wales—one of which the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) represents—and all others. We could think about whether to divvy them up differently, so as to tackle areas of high unemployment in London or—if the Minister’s criterion is high public sector employment—areas with high public sector employment, such as those that I mentioned. They are in the 10% of areas with the highest such employment, and include seats that the current scheme will not cover.
Andrew Bridgen
Will the right hon. Gentleman clarify his statement? Did he just suggest that we cut taxes to increase growth in order to increase the tax take overall? If so, I welcome the right hon. Gentleman as a believer in the Laffer curve.
Mr Hanson
The hon. Gentleman knows that the Opposition have a growth strategy. We had one prior to the election.
The measure under discussion has been proposed to give new businesses a national insurance holiday to help them with their costs for three years. The Minister estimates the costs for the three regions as £650 million to £660 million, based on the scheme’s anticipated roll-out in those regions. My simple point is that these are new employment jobs and new businesses, so they will presumably entail new employment areas and new people employed to fill them, who will pay new taxes. All that is part of the growth strategy, which will be hit hard by VAT increases and public spending cuts. That is a separate issue.
If we are thinking about a payment holiday, the question for me is whether it will achieve its objectives by being available in the areas of the highest public sector employment, or whether it will go to areas such as Tatton, Richmond or other wealthy areas of the north and midlands. In those areas jobs will be created, but the people who most need them will not be able to get them. That is the crucial issue for debate.
Without making a party political point of it, I would argue that Government Members have participated constructively both in previous debates on this subject and in today’s debate. John Walker, the chairman of the Federation of Small Businesses has said:
“With small firms in the South East most likely to be working below capacity, this shows how wrong the Government is to not include this vital region, as well as the East and London, in its proposals for a National Insurance holiday for start-up businesses.”
I have already said that we are not going to vote against the Bill—although if the reasoned amendment had been selected we would have voted for that. However, it is important both to consider the issue in the round and for the Minister to reflect on the concerns expressed, by his hon. Friends as well as by Labour Members, about the application of the national insurance holiday.
At the same time as implementing this Bill, the Minister is scrapping completely the regional growth strategy for different departments, and scrapping the regional development agencies and replacing them with local enterprise partnerships, which in my view will not help with regional development to the extent that we would want. The Under-Secretary of State for Defence, the hon. Member for Mid Worcestershire (Peter Luff) has said that that sends out the wrong message about the work that has been done.
We need to look towards a better application of this policy, and the Minister needs to reflect further on the concerns expressed in our debate. Although we will disagree politically, I am most interested in ensuring that any national insurance holiday is of benefit to the people who most need it. Sadly, the Bill misses the mark in that respect, and fails to address those key issues.
I repeat that we will give the Bill a fair passage and not vote against it this evening. We welcome the rise in national insurance, which we too would have implemented. We welcome the holiday provisions as far as they go, but they need further reflection, so we will take every opportunity in Committee to try to persuade the Minister to look at more imaginative schemes, which might use the same amount of money in different ways, or extend the holiday to areas where it would be a valued resource and help reduce unemployment in the constituencies in the south-east, London and the east that most need that.
I hope that what I have said is helpful to the Minister. I look forward to spending the next few weeks in Committee with him, just as I have spent the last few weeks in Committee with him and his colleagues on various other Bills. To make a wholly non-partisan point, the Treasury appears to be one of the busiest Departments at the moment, and we are all having fun. I am sure that our discussions will shortly continue elsewhere.
Savings Accounts and Health in Pregnancy Grant Bill
Lord Hanson of Flint Excerpts(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Hanson (Delyn) (Lab)
I beg to move amendment 1, page 1, line 1, leave out Clause 1.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
Amendment 17, page 1, line 6 , leave out ‘3rd January 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 4, page 1, line 6, leave out ‘2011’ and insert ‘2016’.
Amendment 18, page 1, line 8, leave out ‘3rd January 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 5, page 1, line 8, leave out ‘2011’ and insert ‘2016’.
Amendment 19, page 1, line 14, leave out ‘3rd January 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 6, page 1, line 15, leave out ‘2011’ and insert ‘2016’.
Amendment 20, page 1, line 17, leave out ‘3rd January 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 7, page 1, line 17, leave out ‘2011’ and insert ‘2016’.
Amendment 21, page 1, line 18, leave out ‘3rd April 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 8, page 1, line 18, leave out ‘2011’ and insert ‘2016’.
Amendment 22, page 1, line 21, leave out ‘3rd January 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 9, page 1, line 22, leave out ‘2011’ and insert ‘2016’.
Amendment 23, page 2, line 2, leave out ‘3rd April 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 10, page 2, line 2, leave out ‘2011’ and insert ‘2016’.
Amendment 24, page 2, line 4, leave out ‘3rd January 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 11, page 2, line 4, leave out ‘2011’ and insert ‘2016’.
Amendment 25, page 2, line 5, leave out ‘3rd April 2011’ and insert
‘a date to be set by regulations made by the Secretary of State by statutory instrument’.
Amendment 12, page 2, line 5, leave out ‘2011’ and insert ‘2016’.
Amendment 26, page 2, line 8, at end insert—
‘(5) Regulations made under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.’.
Amendment 51, page 2, line 8, at end insert—
‘( ) The Chancellor of the Exchequer must lay a report before Parliament no later than 31 December 2011 on the impact of section 1 on looked-after children in England, Wales, Scotland and Northern Ireland.’.
Amendment 52, page 2, line 8, at end insert—
‘( ) The Chancellor of the Exchequer must lay a report before Parliament no later than 31 December 2011 on the uptake of tax free savings accounts by looked-after children in England, Wales, Scotland and Northern Ireland following the implementation of section 1.’.
Amendment 36, in title, line 1, leave out
‘To make provision about eligibility for a child trust fund;’.
Mr Hanson
The Bill was considered in Committee but it was not amended, despite the fact that we had some 19 Divisions, which showed the strength of feeling among Labour Members. I am pleased to see so many of my hon. Friends who served in Committee in their places today.
The Labour Opposition’s objection to clause 1 was well rehearsed on Second Reading and in Committee, but I regret to tell the House that it will be rehearsed again as we continue to explain our objection to the clause. As ever, I wish to help the Minister and be pragmatic by giving him the opportunity to reflect on the mistake he is making in proposing clause 1 and on the issues we raised in Committee, which my right hon. and hon. Friends want to debate again.
My main concern is to delete clause 1, which amendment 1 is designed to achieve, unless we can get the Minister to reconsider some of the amendments we tabled in Committee, which are before us today. I refer particularly to amendment 17, which would delay the abolition of the child trust fund until such time as the proposed child ISA—individual savings account—came into play. We had that debate in Committee and I will refer to it again later.
Amendment 4 would allow the abolition of the child trust fund to be delayed until 2016. Again, I want to help the Minister and give him an opportunity to fulfil his manifesto commitment to help the poorest third of children in society. At the general election in May, he said that he would not wish to see them disadvantaged by the abolition of the child trust fund.
I also support amendments 51 and 52, tabled by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), which raise issues that my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) aired in Westminster Hall relating to looked-after children. It is important to return to those issues again today.
Amendment 1 would delete clause 1. I want the Minister and the House to know that, however pragmatic our approach to the abolition of the child trust fund, our fundamental objective is to ensure that the fund remains for all children, as proposed by the previous Labour Government.
I say that for three reasons. First, we believe that the child trust fund promotes saving, encourages financial education and ensures that all young people have a financial asset at the age of 18, which is particularly important for those who come from poorer families. The child trust fund scheme, introduced by the Labour Government, was having a positive effect between April 2008 and April 2009: a massive 823,504 vouchers were issued—about 70,000 a month; more than 74% of the accounts were opened by parents; and about £2 billion is held in funds. By the end of this year, it is likely that more than 6 million child trust funds would have been opened. That is a success by any stretch of the imagination—a success now being torn up by the coalition Government. Those child trust funds would have helped to support our children when they reached the age of 18. That would have been a progressive measure, which is why Labour Members oppose clause 1.
Paul Maynard (Blackpool North and Cleveleys) (Con)
I am grateful for the opportunity to pass comment on the Opposition’s continued attempts to retain child trust funds. I am struck, in particular, by the nature of their opposition: rather than concentrating on the effectiveness or otherwise of child trust funds as savings vehicles, they appear to have reduced their argument to one about generic usefulness. There seems to be a growing objection to abolishing child trust funds, because somehow the Opposition have inadequate confidence in the junior ISAs or child ISAs that are due to replace them. That is particularly concerning.
I remind those Members who sat on the Public Bill Committee with me, and inform those who did not, of a quote from the director general of the Building Societies Association, Mr Adrian Coles, who said:
“let us not pretend that we need to rely on the Government or the public sector to do all of this. The 49 building societies and other mutuals offer about 100 children’s savings accounts in the free market, which have been pretty successful over the years”.––[Official Report, Savings Accounts and Health in Pregnancy Grant Bill Public Bill Committee, 2 November 2010; c. 26, Q67.]
I know that in Committee concerns were expressed that the customers who take out ISAs might be the more affluent or the more elderly. It was made clear at the time that 12 million people on incomes under £20,000 have ISAs, and that 40% of them are under the age of 44, compared with just 20% who are over the age of 64, so any concerns that younger families are not sharing in ISAs are unfounded.
I was particularly concerned when I heard continued doubts about the ability of families on lower incomes to cope with the financial complexity of an ISA. We need to trust people. A great deal of work is going into financial education—an increasing amount. It is a trend initiated by the previous Government, and I congratulate them on that. We are building on it, so we can have confidence in ISAs as a potential future savings vehicle.
Another reason for opposing the abolition of the child trust fund was the impact that that could have on the needs of families with disabled children. I was shocked by one of the statements by the shadow Minister, the right hon. Member for Delyn (Mr Hanson), when he said that
“the proposal for providing 8,000 week-long respite breaks each year for disabled children in England . . . trivialises the nature of the child trust fund”.––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 9 November 2010; c. 228.]
I found that a disquieting comment. I do not regard respite breaks for children as trivial in any way, shape or form.
Mr Hanson
There are two points about those discussions in Committee about which the hon. Gentleman is aware. First, the abolition of the child trust fund takes away a resource that is applicable in Scotland, Northern Ireland, England and Wales, and replaces it with a provision that is available only in England. Secondly, provision for respite care is entirely different from building a capital asset for individuals at the age of 18. That was the objective of the revised proposals from the Minister.
Paul Maynard
I thank the right hon. Gentleman for that effort to bring clarity. None the less, I regret the use of the word “trivialise”, if only because I have spoken to many families in my constituency with disabled children. When speaking just a fortnight ago to one family who had benefited from the family fund and had their first holiday in five years, the mother broke down in tears.
I raise the matter not to have a go at the shadow Minister, but to highlight one of the wider issues that was illuminated in Committee: the difference between the accessibility of an asset that is locked away until the young person is aged 18, and the changing needs of families with disabled children—and of looked-after children, for that matter. If we are seeking to target the child trust fund at those in the community who are the most vulnerable, who have the most chaotic lives, who are subject to the most pressures, to whom unexpected things occur, is it truly sensible to tie them into something that can be delivered only when the individual reaches the age of 18?
Mr Hanson
I am grateful to the Minister for his response to the debate. It is self-evident that I am disappointed with the fact that he wishes to continue to seek the abolition of the child trust fund. I did not expect him to accept amendments 1 and 4, both of which gave him an opportunity to stick to his manifesto commitments and save some remnant of the child trust fund.
I have some concerns about the Minister’s responses. I hope to encourage my noble Friends to return to the matter raised in amendment 17, because it is about ensuring that we do not have a hiatus between the abolition of the child trust fund and the establishment of the new child ISA. It simply gives the Minister an opportunity to reflect on the fact that he can delay the abolition for what may be only six or seven months to ensure that he does not have to backdate the child ISA and confuse parents. He can put a product in place and ensure that we know about it by the time of the abolition. I suspect that there will be further debates on the matter in another place, and I hope that amendments will be tabled there to support the aims behind amendment 17.
On the amendments tabled by my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins), I am grateful that the Minister is continuing to discuss what we should do about looked-after children, who are a vulnerable group of individuals. I wish to ensure that he—[Interruption.] I hope that the Minister will listen to this point. He has just said to the House that he is in discussion with his colleagues in the Department for Education about how we deal with looked-after children. I am pleased about that, but I remind him that the current child trust fund is a UK-wide facility funded by the Treasury, which applies in the constituencies of my hon. Friends in Scotland and Northern Ireland as well as in mine in north Wales. If he just brings forward an England-only solution with the Department for Education, that will not satisfy my hon. Friends. I hope that he will reflect on the fact that the current child trust fund is a UK-wide provision for looked-after children. My right hon. Friend is trying to ensure that that is what it remains at a relatively low cost to looked-after children and the state. I do not expect my right hon. Friend to press his amendments, but I do expect the Minister, in the context of the discussions that we will have in another place, to look at a UK-wide solution, not a solution that simply involves him having discussions about England with his hon. Friend in the Department for Education.
Paul Goggins
In addition to the points made by the Minister, my right hon. Friend has raised a very serious issue. Any replacement provision for looked-after children would have to be UK-wide to be fair, so his point is clear. I share his thinking on whether I should press amendments 51 and 52 to a vote. When somebody with whom one has a disagreement reaches across and begins to come halfway, one probably does not poke them in the eye just at that moment. I am not tempted to press amendments 51 and 52 to a vote, but my right hon. Friend knows me well enough to know that, the Minister having made the commitment, I will be closely on his tail every inch of the way to make sure that he delivers something for looked-after children right across the United Kingdom.
Mr Hanson
I know my right hon. Friend very well and I know that he will do that. In coming to a solution, will the Minister make sure that it is UK-wide? Will he make sure that it is not based on a postcode lottery, under which one local authority might contribute for looked-after children, while another local authority might not? We want to ensure, at the very least, that we salvage something from this train crash, and that is help and support for looked-after children in our society as a whole.
Based on what the Minister has said, I have no alternative but to press amendment 1, because the abolition of the child trust fund is wrong. Opposition Members believed that it was wrong on Second Reading, we believed that it was wrong in Committee and we believe that it is wrong on Report, so we will press amendment 1 to a Division.
Question put, That the amendment be made.
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss the following:
Amendment 13, page 2, line 10, at end insert ‘with effect from 1st January 2014’.
Amendment 14, page 2, line 10, at end insert—
‘(1A) The provisions in subsections (2) to (5) come into force with effect from 1st January 2014.’.
Amendment 15, page 2, line 36, in clause 4, leave out subsection (2).
Amendment 16, page 2, line 39, leave out ‘The rest of this Act ‘ and insert ‘This Act, apart from section 2’.
Amendment 27, page 2, line 39, leave out ‘The rest of’.
Amendment 40, page 3, line 1, leave out subsection (4).
Amendment 28, page 3, line 1, leave out from beginning to ‘3(1)’ and insert ‘Section’.
Amendment 29, page 3, line 2, leave out ‘extend’ and insert ‘extends’.
Amendment 41, page 3, line 4, leave out subsection (5).
Amendment 31, page 3, line 4, leave out from beginning to ‘3(2)’ in line 5 and insert ‘Section’.
Amendment 32, page 3, line 6, leave out ‘extend’ and insert ‘extends’.
Amendment 39, page 3, line 7, leave out ‘The rest of’.
Amendment 37, in title, line 1, leave out ‘to repeal the Saving Gateway Accounts Act 2009;’.
Mr Hanson
We are in danger of repeating discussions that we had in Committee, but the Prime Minister has said that opposition is an important constitutional duty, and I intend to fulfil it in the next hour on the question of saving gateway accounts.
Amendment 2 seeks to remove the abolition of those accounts by removing clause 2. As ever, and as I said in relation to the first group of amendments, I am trying to be pragmatic. The Minister will note that amendment 13 seeks merely to delay the abolition of the saving gateway until 1 January 2014 to allow him and his officials a period of reflection in which they can examine whether abolition is required.
The saving gateway, which was originally introduced in the Saving Gateway Accounts Act 2009, is important—[Interruption.]
Madam Deputy Speaker
Order. One conversation in the Chamber is quite enough at any one time, and the conversation we are supposed to be hearing is the shadow Minister addressing the House.
Mr Hanson
I am grateful, Madam Deputy Speaker. This debate is about how we help poorer people in society and save resources. Of course, that might not interest all hon. Members in the Chamber today, but that is another discussion—[Interruption.]
The Saving Gateway Accounts Act was introduced to pave the way for a national scheme. Members will be aware that the saving gateway was to be a cash savings account for those on lower incomes. It was to provide a financial incentive to save, with the Government making a matching contribution for each pound that people saved in the scheme. The saving gateway was first proposed in 2001, after which it was consulted upon and piloted twice. In total, more than 22,000 people took part in the pilots, achieving an additional £15 million of savings. As Members will know, accounts would have run for two years and would have been offered by financial institutions such as banks, building societies and credit unions. The Government would have contributed 50p for each pound saved, which would have been paid at the end of the accounts.
The criteria for opening a saving gateway account were fairly straightforward. If an individual in the community was on income support, jobseeker’s allowance, incapacity benefit, employment support allowance, severe disablement allowance or carer’s allowance, or if they were on tax credits and their income was less than £16,040 a year, they would qualify for the saving gateway scheme. The objectives of the saving gateway scheme were quite simple: to kick-start a savings habit among people on lower incomes, by providing a strong incentive to save through a matching fund contribution from the Government; and to promote financial inclusion by encouraging people to engage with mainstream financial services.
The pilots, which were successful, were delivered in partnership with the then Department for Education and Skills, with the Halifax bank—now HBOS plc—providing banking facilities. The first pilot ran from August 2002 to November 2004, with individual accounts open for an 18-month period. In the first pilots, about 1,500 people took part, and the scheme covered five areas: Cambridge, east London, Hull, Cumbria and Manchester. People living in those areas were eligible to open an account if they were of working age—between 16 and 65—and had household earnings of less than £15,000 or individual earnings of less than £11,000, or if they were out of work and receiving benefits, as I have described. Individuals in the first pilot were allowed to save up to a limit of £25 a month in the account, up to a maximum of £375 overall, for which they received a pound-for-pound match when the account matured. A final evaluation of the first pilot was produced in March 2005. Based on that pilot, the largest saving gateway pilot was run in the same five locations, as well as in another area, south Yorkshire. That pilot started in March 2005, and the accounts were open for 18 months, as in the first pilot. In total, around 22,000 accounts were opened and the second pilot was opened to a wider income group, including households with incomes of less than £50,000, individuals with incomes of less than £25,000 a year and, similarly, those receiving benefits.
The point of the pilots was to establish whether the scheme would be successful and whether it would meet the objectives that we had set, which were to encourage lower-income savers and to ensure that individuals saved resources that they would not have saved previously. The key findings from the pilots were that the saving gateway scheme generated new savers, that new saving was generated among existing savers and that the scheme brought individuals into contact with mainstream financial institutions for the first time. Research from the pilots showed that 60% of participants were still saving regularly two years after they had ended, and that three in 10 participants who were not saving regularly before the pilot were now doing so. Participants were extremely positive about the saving gateway. I quoted in Committee the fact that 98% of people involved in the pilots said that they would open another saving gateway account if offered the chance, while an astonishing 99% would recommend it to a friend.
Mr Hanson
I am a realist—the Government have changed—but any realist would say that before the election the Conservative party and the Liberal Democrats supported the then Bill, along with my right hon. Friend the Member for Edinburgh South West, the then Chancellor, and his team, and every other Labour Member. Nothing has changed since except for the change of Government, which has meant that the Minister and the Liberal Democrats have stood on their heads and jettisoned the scheme, which would have been in place in July and would have helped to support the poorest in our society.
Sarah Newton (Truro and Falmouth) (Con)
There is another significant change since that time, which is the financial mess that we found we had inherited. This Bill, along with other measures, has to sort out our finances. When the Public Bill Committee took evidence, Carl Emmerson of the Institute for Fiscal Studies said:
“I think that £1,000 at age 18 will improve their life outcomes and will help. I think that the money spent on education or on increasing their family’s incomes over those first 18 years is probably going to help more.”––[Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 12, Q23.]
Does the right hon. Gentleman agree?
Mr Hanson
There are two points about that. I do not wish to cause the hon. Lady any difficulty, but I think that her intervention relates to the previous group of amendments, on the child trust fund. We are now talking about the saving gateway account, which is for poorer people. It does not relate to people under the age of 18, and if she looks at Hansard, I think that she will realise that she is talking to the previous group of amendments.
However, I should also say that if the hon. Lady thinks that the current financial situation is difficult, I look forward to her supporting amendment 13 in the Lobby, because it would give the Minister time to reflect. Amendment 13 says that we should delay scrapping the saving gateway until 2014. We have had the saving gateway account—which the Minister and the Liberal Democrats supported in opposition and which Labour supported in government—which has had its pilots. The pilots have proved successful, and by any assessment more people have saved, resources have been generated and people on low incomes have learned the saving habit. The Bill abolishes the saving gateway account that was to be implemented in July this year, until the Minister put that on hold.
Two amendments are the focus of the debate. Amendment 2 would delete clause 2, so that the saving gateway account would not be abolished. However, I am being pragmatic, and I tabled an amendment to abolish the saving gateway account on 1 January 2014. That would provide a three-year gap in which the Minister could, as the hon. Member for Truro and Falmouth (Sarah Newton) said, look at the economic situation and assess whether the financial contributions are practical and desirable. I happen to believe that they are, and that the scheme is affordable now, but I will park that debate for the moment, and simply tell the Minister and the hon. Lady that if they accepted amendment 13, they would accept minimal cost, if not almost no cost, to the Treasury. All that would be abolished, effectively, is the pilots, and their assessment. The saving gateway scheme has not started, and there would be no financial contribution to it because it did not commence in July 2010.
The Minister could accept amendment 13 and not commence the scheme next year. He could accept it and not commence it in 2012, or 2013. He could make an assessment in 2014 of the principles that he espoused in Opposition with his hon. Friend the Member for Taunton Deane—that the scheme is a positive one that brings benefits. If the economic situation improves during those three years—the Minister presumably believes it will as a result of his other economic policies—he could consider returning to the saving gateway scheme without repealing the Saving Gateway Accounts Act, which is what the clause will do, and end any possibility of the scheme being introduced.
I am offering the Minister an opportunity. He need not abolish the scheme, but could reflect on it. He could delay its commencement until 2014, and not rip up a scheme that he supported in opposition, and on which valuable work was done in five areas in the first pilot, and in those areas plus south Yorkshire in the second pilot.
The Minister has a duty to explain why he believes the scheme should not progress now. If the reason is finance, amendment 13 provides the opportunity to reflect on that. The Opposition would swallow our pride and support him in not having the saving gateway scheme starting this year, next year or the year after. That would be a big step for us, but we might consider it if he would accept amendment 13.
Bill Esterson
Is not the truth about the Government’s position on the saving gateway that if they were serious about using it as part of tackling the deficit, as the hon. Member for Truro and Falmouth (Sarah Newton) said, they would support amendment 13 and delay repeal of the 2009 Act, because improving the financial habits of people from the poorest backgrounds is part of what the coalition Government say is their solution to the country’s financial problems?
Mr Hanson
I thank my hon. Friend for his intervention. He emphasises that amendment 13 would not cost the Government anything. If it cost anything, it would be a minuscule amount to maintain the scheme because it has not yet started. The Minister froze it, and said that he would not start it in July 2010, as planned by the previous Labour Government. All the expense to date has been on the pilots in phase 1 and phase 2. I remind him that the legislation had his support and that of his hon. Friends the Liberal Democrats without a vote on Third Reading, and with warm words being spoken by them in Opposition. The situation now—it is self-evident to my hon. Friends—is that we have a scheme that is on the statute book and that has been successfully piloted but has not commenced. Amendment 13 gives the Minister the opportunity to delay its commencement until at least 1 January 2014.
If the situation improves and the Minister’s economic policies ensure that we tackle the deficit, build a strong economy, recoup our money from Ireland and consider all the issues that we have talked about during debates on the economy over the past few months, he will be able, if he wants, to go back to his electorate in Fareham, Truro, Falmouth and everywhere else and say, “Not only have we helped to tackle the deficit, we have not hit poor people in doing so.” He will have secured a scheme that he can continue to implement because he will be able to repeal the 1 January 2014 date later. Presumably, both the Liberal Democrats and the Conservatives thought that it was a good thing in February last year, or they would have voted against it on Third Reading, and would not have used such warm words to describe it from the Opposition Dispatch Box.
Sarah Newton
I agree that the coalition definitely wants to enable people to make better financial decisions, and I am sure that the Minister will detail all the ways in which we plan to do that, but I want to bring the right hon. Gentleman back to the evidence that we heard about the saving gateway from the Institute for Fiscal Studies:
“There was not any really strong evidence from the saving gateway that it led to more overall saving from lower-income households.”
I could go on. There is not the strong evidence base that the right hon. Gentleman refers to.
Mr Hanson
That is not what the pilots showed. They showed that there were new savings, engagements and increased resources. Does the hon. Lady believe that, at no cost, we could maintain the saving gateway on the statute book, allow it to develop for the next two to three years, and not abolish the scheme until 1 January 2014? If she voted for amendment 13 tonight, she would vote not to spend any money or to start the scheme but simply to say, “Let’s note the pilots that have taken place and that the legislation is on the statute book, but let’s not repeal it until a future date.”
That option would allow the Minister to accept the amendment and reflect on the matter. I remind him that not only did he and the hon. Member for Taunton Deane support the measure in February, but nowhere in the coalition agreement or at the general election was there a manifesto commitment to abolish the saving gateway account—[Interruption.] The hon. Member for Birmingham, Yardley (John Hemming) asks whether it was in our manifesto. No, it was not. The Minister knows that it was not in his manifesto, but it was certainly in ours to maintain it once it had started.
We heard warm words about the scheme before the general election, no words about its abolition during the election and no manifesto commitment to do so. We have had successful pilots, and there is an opportunity tonight for me to put aside my wish for it to start in July and to ask the Minister not to abolish the scheme now, but to reflect on it and allow it to stay on the statute book. If it is a good scheme, as it presumably was in February and at the election, the Minister could return to it in the future and decide whether the Government can afford to contribute to it.
The pilots showed that the scheme increased poorer people’s savings. They were successful, and I hope that the Minister will not throw it out and stand on its head what he said in February 2009. He has had plenty of other opportunities to do that.
John Hemming
Indeed. The difference with this particular scheme was that it was to provide a way of matching funds that people put into their savings. If we go back to the evidence session, we find that the Institute for Fiscal Studies was asked whether it thought the child trust fund did no harm; in fact, it showed that this particular scheme had the potential to do harm by encouraging people to put money into the savings account rather than pay off the debt at the time. The Royal College of Midwives said that if people have just had a baby, it is better for them not to save money, but to spend it on healthy living and feeding the baby well. I believe that this is where the Opposition are fundamentally wrong. According to the IFS—again, I stress the IFS rather than the Government or the previous Government —there was no strong evidence that greater saving was encouraged.
Mr Hanson
I would be grateful if the hon. Gentleman could tell us why the Minister of State, Foreign and Commonwealth Office, his hon. Friend the Member for Taunton Deane (Mr Browne) supported the scheme prior to the election, did not oppose it during the election and did not vote against it on Third Reading?
John Hemming
We need to find some way of reducing this country’s borrowing. We do not want to end up like Ireland or Greece. If, on looking around, we find something that costs £115 million—
John Hemming
If there were an amendment to say that we should delay it until it is instituted by order, I would find that more reasonable, but I do not think we should set a date in the future. If there is not sufficient independent evidence that this scheme achieves a result and there are good arguments to show that there are better ways of helping people in these circumstances, I would press the Government to consider them and work with organisations such as the credit union movement to ensure that everyone has access to accounts, is encouraged to balance out their financial positions and gain wider access to crisis loans.
Mr Hoban
Let me make some progress and explain why we are repealing the Saving Gateway Accounts Act 2009. The repeal is part of our deficit reduction policy. The right hon. Member for Delyn (Mr Hanson) quoted from my Second Reading speech. It was the third time that I had heard him use the same quotation. Let me now, for the third time, expand a little on what I said on that occasion. I said:
“The pilot scheme demonstrated some benefits, but it demonstrated some challenges too… What are the long-term benefits? What are we getting in return for the quite generous bonus that we are giving to savers?.. In the second pilot, questions were raised about whether the scheme was effective… First, there was no statistically significant evidence that, in delivering genuinely new savings, the saving gateway accounts delivered higher overall net worth.”
I referred to a
“number of anecdotes, rather than hard evidence, used to support the proposal”,
and added:
“It appears that money was moved from one set of savings to another, perhaps from a current account to a savings gateway account, simply to secure the Government match.”—[Official Report, 13 January 2009; Vol. 486, c. 145.]
While accepting the principle behind the saving gateway account, we nevertheless flagged significant concerns about its effectiveness.
The right hon. Gentleman mentioned the pilots. According to the conclusion from the second pilot,
“when we look at a broader measure of net worth (including investments as well as all cash deposit accounts), there is no statistically significant evidence that funds held in these forms have increased… we nevertheless do not find statistically significant evidence of an increase in overall net worth among this group.”
Carl Emmerson said in his evidence to the Committee:
“There was not any really strong evidence from the saving gateway that it led to more overall saving from lower-income households.”––[Official Report, Saving Accounts and Health in Pregnancy Grant Public Bill Committee, 2 November 2010; c. 18, Q42.]
Given the fiscal constraints that we face, we must question the value for money to be obtained from this project. It would be nice to be able to proceed with it, but the evidence suggests that it does not increase saving and does not possess the benefits ascribed to it by Labour Members. Not only is the evidence of its effectiveness in question, but it would cost more than £300 million over the next five years, which makes it unaffordable in the light of the need to reduce the deficit.
The other strand of the argument, touched on by the hon. Member for Makerfield (Yvonne Fovargue), is access. Who would be able to gain access to the saving gateway account? My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) echoed Adrian Coles, the director general of the Building Societies Association, who said that
“no building society had committed to offering a saving gateway account”.
Eric Leenders of the British Bankers’ Association said
“there were only a couple of providers who felt that it was suitably beneficial for them to provide the account.”
The banks that said they would provide accounts were Royal Bank of Scotland and Lloyds. The Post Office would take part in the scheme only if it received more taxpayers’ money.
I do not think we would have seen the easy access that the hon. Lady believed to be a key part of the scheme’s attraction. The only credit union outlet in my constituency is in a deprived area, and is open for only a short time each week. In my constituency, credit unions would not have been a vehicle for access to the saving gateway account.
Given that we do not intend to proceed with the scheme, we should leave no room for uncertainty among financial institutions or advice-giving bodies, and the best way in which to be clear about our intentions is to repeal the 2009 Act. I believe that if a future Government revisited the scheme, they would design it very differently. If the right hon. Gentleman wishes to press his amendment to the vote, I will ask my hon. Friends to oppose it.
Mr Hanson
I am disappointed by the Minister’s response, but that is the nature of the role that I currently fulfil. He did not oppose the saving gateway in opposition or in the general election; he did not vote against Third Reading of the Saving Gateway Accounts Bill; and he could have taken the opportunity today to accept the amendment enabling him to delay the repeal of the Act until a later date in order to judge how the economic situation developed. I have to assume that he says one thing in opposition and another in government, and that he is abolishing the scheme on the basis of dogma rather than the economic situation. I urge my hon. Friends to reject clause 2, and to support the amendment.
Question put, That the amendment be made.
Mr Hanson
I thank the Minister for his opening remarks on Third Reading. He and I have got to know each other, as Minister and Opposition spokesperson, and other members of the Committee quite well over the past few weeks. We have now discussed the key issues on Third Reading. He will know that we have had a total of 23 votes on Second Reading, in Committee and on Report. I hope that that illustrates the strength of feeling about the Bill among Labour Members. It contains only four clauses, yet we have managed to have 23 votes on a range of issues as we continue to oppose the Bill. We have fought the Bill at every opportunity, and will continue to do so in another place shortly.
We oppose the Bill because the abolition of the child trust fund will reduce the opportunity for the poorest in our society to have a capital asset at 18. We oppose it because the abolition of the saving gateway scheme will reduce saving opportunities for the poorest in our society. We also oppose it because it will reduce the help available to pregnant women by stopping the £190 grant that is available to them in the 25th week of their pregnancy. Again, I must point out, for the Minister’s benefit, that that will hit the poorest in our society the hardest.
As Opposition spokesman, I have tried to be as pragmatic and helpful to the Minister as possible on a number of occasions. I have tried to help him by giving him an opportunity to delay the implementation of the Bill, so that we could see whether some of our economic woes—which are difficult and challenging at the moment—are overcome in the next three years. We offered the Minister the opportunity to postpone implementation of the bill until 2014, or 2016, but he rejected it. We offered him the opportunity to have payment holidays, but he rejected it. We also offered him the opportunity to deal with Wales, Scotland and Northern Ireland differently, but he rejected it.
We offered the Minister the opportunity to fulfil his manifesto commitment to keep the child trust fund for the poorest third of our society, for those on disability living allowance and for looked-after children—a point that my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) has particularly focused on during the debate. We have considered a range of issues, including whether the Bill needed a proper equality impact assessment, but the Minister has chosen to reject them all. Well, so be it; that is his prerogative. I believe that he has made the wrong choices in relation to tackling the deficit, by putting women, children and the poorest at the forefront of his deficit reduction plan.
In doing that, the Minister has broken his manifesto commitments on the child trust fund for the poorest third, for looked-after children and for those on DLA. He has made a U-turn by abolishing the saving gateway scheme, which he supported during the election and right up to the moment when the Bill was introduced, and by abolishing the health in the pregnancy grant, for which he had no mandate. He never argued for its abolition at the general election, or mentioned having to cut it; he never said that he was concerned about it at all. He must have known at that stage that there would be, as there are, challenges for whoever won the general election to ensure that we met those needs.
The Bill abolishes the child trust fund completely; it abolishes the saving gateway completely; it abolishes the health in pregnancy grant completely. It is the deficit reduction plan hitting women, children and the poorest in our society the hardest. The Minister will know that the child trust fund was introduced by the Labour Government not just as a way of helping poorer people to save, but as a means of ensuring that we have individuals with a capital asset at the age of 18. He will know that there was a take-up of about 70,000 a month until he introduced this measure in July; with this Bill, we now look to 3 January 2011. He will know that 6 million families and people have the child trust fund in operation at the moment, but that in future that opportunity will be denied to individuals across the UK because this Minister has chosen—of all the choices he could have made—to ensure that the deficit reduction plan falls on those people who need the help and support the most. The Minister will also know that £2 billion of saving has been generated by the child trust fund to date. He will know that it might not be generated in future because the partnership between Government, the state and individuals will no longer be there in future.
In its place, the Minister wafts in front of us the prospect of a child ISA for the future. I await the details, but so rushed is this proposal that it was not even worked out fully for the Committee. So rushed is this Minister that he brings a proposal before the House today, yet he cannot even say what the child ISA scheme will be in detail. He cannot say when it will definitely be introduced. He cannot say whether contributions from looked-after children—an issue brought to our attention by my right hon. Friend the Member for Wythenshawe and Sale East—will be possible. He cannot say how much will be involved or how the scheme will operate downstream, yet he asks us today to abolish the child trust fund, which has had a proven record of saving success to date.
The Minister brings forward the abolition of the saving gateway, doing away with the Saving Gateway Accounts Act introduced in 2009, even though it was not opposed by the Conservatives on Third Reading. The purpose of that scheme was to promote savings habits among working-age people on lower incomes. He will know that we have had two pilots, neither of which was criticised by the Minister at the time, and they involved 22,000 people generating £15 million of savings—helping poorer people to save for the future. He does this at a time when his deficit reduction plan is going to put 500,000 people in the public sector on the dole. With VAT increases, with loan sharks operating in the community and with the collapse of schemes such as Farepak, which my hon. Friend the Member for Makerfield (Yvonne Fovargue) mentioned in Committee, the Minister will find that the need to give help and support to poorer savers is even greater now than before. But, no, the Minister will not even allow a three-year gap to see whether the economy recovers. The scheme would not cost him a penny in the next three years, but he wishes to abolish it because of dogma—nothing else but dogma.
When he abolishes the saving gateway scheme and when Government Members vote for that abolition this evening, they need to know that they are voting to ensure that people on working tax credit, income support, incapacity benefit and jobseeker’s allowance, and other low-income people will be denied the benefits of that scheme. Let us remind the Minister that a Labour Government would have brought this into play in July 2010, supported by our Chancellor and supported by a deficit reduction plan in last March’s Budget that would have ensured that we halved the deficit within four years.
Last of all, the Government are abolishing the health in pregnancy grant—a one-off tax-free payment of £190 to mothers-to-be who are 25 weeks pregnant. We can debate it and have debated it in detail, but nobody can deny that a £190 grant would have helped the poorest pregnant mothers in our society to meet the costs of their pregnancy and to ensure, as my hon. Friend the Member for Bristol East (Kerry McCarthy) said, that they receive further help and support through medical advice in the 25th week and beyond, linked to medical visits. The Minister knows that 750,000 qualifying pregnancies each year will not receive the grant. Again, he has hit women—pregnant women—and children hardest.
It would be different if the Government’s proposals were due merely to the fact that these were Labour Government initiatives. However, Mike O’Connor, chief executive of the watchdog group Consumer Focus, has said:
“The Saving Gateway would have been a great opportunity”.
The Child Poverty Action Group, which was led with distinction by my hon. Friend the Member for Stretford and Urmston (Kate Green), has said:
“It’s a real shame that this move to help people build up savings to deal with crises… should be scrapped.”
The National Childbirth Trust has said:
“At a time when families are trying to make ends meet, the Coalition Government has hit parents particularly hard. Cutting pregnancy and maternity grants”.
The Royal College of Midwives—this answers the point made by the hon. Member for Central Suffolk and North Ipswich (Dr Poulter)—has said that it is
“disappointed at the decisions to abolish the Health in Pregnancy Grant”.
A common thread runs through the Bill. The Government are hitting the poorest hardest. They are ensuring that those who need the help, support and partnership of the state are hit hardest; and although they claim to be doing it in the name of deficit reduction, they are actually doing it in the name of dogma. I urge my right hon. and hon. Friends to reject the Bill, but I also urge the Minister to reflect on the fact that, although there is much on which we have disagreed today, there are still areas on which we can reach agreement.
I particularly hope that the Minister will examine in detail the methods and discussions being undertaken by my right hon. Friend the Member for Wythenshawe and Sale East in regard to looked-after children, and that he will return with positive proposals so that, although the Bill has not been amended in this House, amendments may be made in another place. Whatever the Minister says about the need to abolish help and support through the child trust fund, or about the removal of the saving gateway or pregnancy grants, he must know that looked-after children do not have parents who are responsible for them. Their parents may be dead, or they may be in difficult circumstances—they may be in prison, or involved with alcohol or drugs. But the Minister knows that those parents are not there to support their children, and he should know that in that instance, if in no other, the state needs to step in.
Graeme Morrice (Livingston) (Lab)
I agree with my right hon. Friend that the Government’s proposals are a direct attack on the poor. In my constituency 7,824 children, many from backgrounds that are less than affluent, currently benefit from the child trust fund. The Minister said earlier that it was a luxury that we could not afford. Does my right hon. Friend agree that that is an affront to all those people in my constituency and throughout the country, many of whom are impoverished?
Mr Hanson
I am grateful for my hon. Friend’s comments. The Minister and the Conservative party—and let us not forget their partners, the Liberal Democrats—are ensuring that they hit such people hardest in abolishing the child trust funds, particularly looked-after children and those whom they said they would defend, the poorest third. They are hitting people on jobseeker’s allowance who would have benefited from the saving gateway. As for the removal of the health in pregnancy grant, the loss of £190 may not be the end of the world for many people, but for the poorest in our society it was a contribution on which they depended to ensure that they met the costs of pregnancy.
Whatever disagreements the Minister and I have had—and we have had many over the past few weeks—I hope that he will take the opportunity to consider some of the key issues that he can still salvage. I hope that he will at least ensure that we can provide a partnership for looked-after children. Undoubtedly all the promises that he made before the election will be quoted again in another place, and every one of the issues will be tackled again there. We shall see what is said in the other place, but I hope that the Minister will reflect on those issues. In the meantime—with some pride in what the Labour Government did—I urge my hon. Friends to reject the Conservative-Liberal Democrat proposals.
Oral Answers to Questions
Lord Hanson of Flint Excerpts(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Hanson (Delyn) (Lab)
Will the Minister take time to remind the House of the Government’s manifesto commitment in the May general election to retain the child trust fund for the poorest third of children in society? Does she accept that looked-after children predominantly will fall into that poorest third? Will she therefore consider the amendments to the Savings Accounts and Health in Pregnancy Grant Bill so that she can meet her manifesto commitments, or will it be a case, again, of hitting the poorest hardest?
Justine Greening
I do not accept that we did not follow our manifesto commitment. The House had another difficult debate on Second Reading of the Bill, and yet again the Labour party seemed to want simply to ignore the challenges that our country faces. In doing so, it does the public a disservice.
Terrorist Asset-Freezing etc. Bill [Lords]
Lord Hanson of Flint Excerpts(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Hanson (Delyn) (Lab)
For the avoidance of any doubt, I should say that the Opposition support the aims and objectives of the Bill, are grateful for the Minister’s explanation and will not oppose the Bill this evening. Indeed, as the hon. Gentleman said, the Bill had a considerable genesis in the work of previous Governments on these matters. Its purpose is to continue the asset-freezing regime that the previous Labour Government put in place, and to put it on a more secure legislative platform. It is an aim that we support, and one that, but for the election, we would have progressed ourselves.
At the heart of the Bill is the ambition to maintain a strong, effective and proportionate system in order to tackle the continued threat of terrorism, which the Minister mentioned. The legislation has been sent to us from another place, where it has been carefully scrutinised, and some amendments have been made to ensure that the actions remain proportionate to the threat that we face.
As the Minister said, the Bill had its genesis not only in our international obligations, but in our own assessment of how we tackle the international terrorist threat. There have been a series of United Nations Security Council resolutions, demanding that states take action, including by asset freezing. In response to 9/11, the Security Council passed a further set of resolutions, requiring states to take greater steps to freeze the assets of those involved in terrorism. The Minister mentioned resolution 1267, which, in 1999, provided for the freezing of funds and other financial resources derived or generated from property owned or controlled by the Taliban; and resolution 1333 took that further by stating that states should freeze the funds of Osama bin Laden. In the aftermath of September 2001, the Security Council broadened its approach, requiring that action be taken against everyone who had committed or attempted to commit terrorist acts or facilitated their commission.
As the Minister said, the United Kingdom gave effect to those and other resolutions through Orders in Council under the United Nations Act 1946, and he also mentioned the decision on the challenge to those orders in the case of Ahmed and others v. HM Treasury. Indeed, it was the first ever hearing of the Supreme Court, which is just over the road. The Minister will know and the House should know that, on behalf of the Labour Government, the former Minister and Member for Portsmouth North, my then hon. Friend, Sarah McCarthy-Fry, brought forward fast-track primary legislation to restore the UK’s asset-freezing regime. We intended to go on and produce a piece of permanent legislation, of which the Bill before the House is a part, after consultation.
We know that, because the existing terrorist asset-freezing legislation that the then Labour Government introduced is only temporary, new legislation is required, and we welcome this attempt to put the measures on a more secure and durable footing today. That is not to say that we will not fulfil our constructive role as an Opposition and scrutinise the measures in Committee and on the Floor of the House. I hope that the Minister would expect nothing less. I am sure that he would have done the same—[Interruption.] He says that he is used to it. The Minister and I have had a number of constructive run-ins over the past few weeks on Bills, and we have a few more to come. On this Bill, I can assure him that there will not be the conflict that we have had in previous discussions, but I am sure that he would want us to test it in Committee.
Indeed, the Committee stage will give the Minister the opportunity to comment on this week’s report from the Joint Committee on Human Rights, which is on the Table of the House. The Joint Committee has looked at the Bill in detail and raised a number of issues, including the need for a higher standard of proof, the need for transparency on the use of closed material and the proposal that the reviewer should be appointed by Parliament rather than by Government.
I say to the Minister that those suggestions do not necessarily have the support of the Opposition; indeed, we may not have supported them in government. However, it is important that they are considered and that the Minister responds to them, so that there is clarity about the Government position and the Opposition position on this issue, and so that we do not just ignore the concerns that have been expressed but at least respond to them in due course.
Dr Francis
I thank my right hon. Friend for giving way and for his warm words of support for our report. Can he elaborate on why he would not necessarily support our proposed amendments?
Mr Hanson
My hon. Friend has raised a number of issues in the report, and those need to be examined. However, regarding the three points that I have mentioned—including a higher standard of proof—it is my view that the key issue for the Government and the Opposition is to ensure that we take action to stem the flow of funds to terrorists. That means that there are potentially some issues whereby that lower standard of proof would achieve that objective and is still open, as the Minister himself said, to challenge and review. On closed material, very often information crosses Ministers’ desks—I was the Minister with responsibility for policing and terrorism in the previous Government—that they are aware of and act upon, but the disclosure of which could potentially compromise the security of the United Kingdom.
There is a debate to be had—I thank my hon. Friend the Member for Aberavon (Dr Francis) for raising this point—about who the reviewer of this legislation is accountable to. In the Joint Committee’s report, he suggests that the reviewer should be accountable to Parliament rather than Government. We currently have a reviewer of terrorist legislation that is independent of Government but accountable to the Home Office.
We need to have some clarity on those issues, and I think that they are worthy of debate. I am not closing the book on any of them, but I do not wish to come to final conclusions today based on the Joint Committee report, which was produced only over the weekend.
Dr Huppert
On the subject of the standard of proof, is the right hon. Gentleman saying that it is the Opposition’s policy that we should be applying measures to people where we think it is more likely that they were not involved with any terrorist activity than that they were? That is the implication of what he is saying.
Mr Hanson
The official Opposition’s view is the same as that underlying the Bill that is before the House. We have always held the view that there is a need to take action, as set out in the clauses in the Bill that indicate that, when there is information, the Minister can bring forward an order and designate the individual according to a standard of proof that may not be a conviction standard of proof but responds to a level of concern that leads the Minister to want to take action. We support that.
As I said to my hon. Friend the Member for Aberavon, we will look at the suggestions that were raised on Friday in the final draft of the Joint Committee’s report. However, there are proposals in the report that I suspect I would not have supported as a Minister and that I will therefore not necessarily support as an Opposition spokesman. Nevertheless, we will give them due consideration; indeed, I may even table amendments that reflect the Joint Committee’s deliberations while ultimately allowing the Minister the opportunity to respond to them, so that there is a debate. I may not even necessarily force those amendments to a vote.
Keith Vaz
Although I obviously accept the thrust of what my right hon. Friend says, there seems to be something of a love-in going on between the two Front Benchers on this issue, and it always worries me when Front Benchers are in agreement over everything.
I am concerned about those who have had their assets frozen and who have now had their orders revoked; there are 13 people in that situation, according to the written ministerial statement. What do we say to them? They have had their bank accounts frozen and, in a sense, someone has believed that they have in some way been linked to terrorism; there is a reasonable suspicion of that. It will be pretty difficult for them now, will it not?
Mr Hanson
First, may I assure my right hon. Friend that there is no love-in between the Minister and myself? We have been jackets-off for the past week and a half in a Committee dealing with another Bill, and I suspect that we will be jackets-off next Monday dealing with the same Bill. However, where there is agreement on this issue, we will maintain that agreement, and I think that the Minister and I agree that the powers before us are proportionate. In the cases that my right hon. Friend mentioned, people will have an opportunity under the Bill to appeal, and there will be independent oversight. Those are important safeguards.
Ultimately, the most important liberty of all must be people’s right to live in a society free from the fear of terrorist attack and from incidents such as those that we have seen not far from the House of Commons in our capital city of London in recent years. We need to ensure that we take action, but that it is proportionate in cracking down on those who look to perpetrate acts of terrorism.
Having said that, I did not intervene on the Minister and I would still welcome some clarification. It is particularly important to know how the role of the independent reviewer of asset freezing will be constituted, and such clarification might, indeed, help my right hon. Friend. I would like to hear from the Minister about certain issues at some point—I give him due notice that these are issues for Committee. How will the independent reviewer be appointed? Will he or she be the same person as reviews terrorism legislation? Currently, that is Lord Carlile, but the appointment of David Anderson QC, was recently announced. Will this be a completely different role or a parallel role? What will the budget for the office be and how will the office work?
We need to look separately at some of the considerable powers that the Bill gives the Treasury; for example, in clause 31, which deals with appointing the reviewer, and in clause 3, on the notification of final designation. Clause 3(3)(iii) gives the Treasury powers to do things that are
“in the interests of justice”,
but that term can be defined quite widely. I will therefore be testing the Minister in Committee, not out of broad opposition to the proposals, but so that he can clarify these issues. Those who ultimately read the proposals that we make in Committee and on Second Reading will then understand the powers that we are giving the Treasury and, in particular, how the Treasury will disclose matters and use those powers. I give the Minister notice that although we are giving him a free ride today, we will still look in Committee at how powers such as those in clause 3 are intended to be used, what
“in the interests of justice”
means, what we define as being
“in the interests of national security”
and what
“for reasons connected with the prevention or detection of serious crime”
actually means. Although we support the Bill, we will continue to look at such issues.
The Minister gave us a powerful reminder of the types of terrorist attacks and actions that individuals and groups have undertaken, and will continue to undertake, as they attack not only our way of life, but innocent individuals across the United Kingdom and, indeed, abroad. The recent discovery of an explosive device on a courier aircraft that had landed at East Midlands airport en route from Cologne to Chicago powerfully brings home to us again the fact that that terrorist threat remains in the United Kingdom.
The Bill will impose severe financial restrictions on those whom Treasury officials “reasonably believe” have
“been involved in terrorist activity”.
I support that test, which will give us the opportunity to use asset freezing as a tool across the international community to prevent the financing of terrorism. We know how devastating and indiscriminate terrorist attacks on our shores and abroad can be.
It will be of interest to the House to know that the attack in London in 2005 cost less than £10,000 to carry out. As of July, as the Minister said, about £150,000 remained frozen in the UK under the regime. If freezing assets intended for terrorist purposes can prevent attacks and potentially save lives, and if blocking the flow of money and working alongside our international partners can disrupt international terrorist networks, we should, quite frankly, do those things. We should do them while cognisant of the human rights implications that my hon. Friend the Member for Aberavon and his Committee have raised, but do them we should.
Any measures that we take forward in the House must delicately weigh up national security and civil liberty implications. We will discuss that in Committee, but I will look at the debate in the other place and the changes made there. I recognise that those are important, but ultimately our purpose is to protect citizens in the country whom terrorists would attack.
Interestingly, in another place, Members raised concerns about how the Bill will fit into the wider counter-terrorism review, which raises further concerns that we will need to explore both this evening, including when the Minister responds, and in Committee. I confess again that I have concerns about the coalition’s position on the counter-terrorism strategy generally. Having been a terrorism Minister in the last Government, I know that things such as section 44, control orders and CCTV usage are important and help to prevent terrorist attacks. That is a debate for another day, but I note the concerns that the Bill might be subsumed by some of the outcomes of the review. I would therefore like to know either in Committee, or even this evening, whether this is stand-alone legislation or whether it will be further amended in light of any review coming out of the counter-terrorism strategy as a whole. I do not wish to waste the time of the House or the Committee discussing issues only to find that the noble Lord Macdonald throws up concerns that have to be incorporated in another Bill dealing not just with this issue but with those to which we might return, such as section 44 and control orders.
The Commercial Secretary to the Treasury said in another place that
“where the review’s conclusions are relevant to asset freezing, and should those conclusions alter the balance in favour of introducing additional safeguards, we will take them into account and bring forward any amendments that may be appropriate to the Bill.”—[Official Report, House of Lords, 27 July 2010; Vol. 720, c. 1252-1253.]
Presumably that also means that if Lord Macdonald says that they are disproportionate, proposals might be introduced watering down the Bill’s provisions. The Minister needs to reflect on that and indicate clearly in his winding-up speech whether the Bill is separate from, or part of, the review.
It would also be useful to know the time scale of the ongoing general review. Under tonight’s programme order, we will complete the Committee stage of the Bill in short order—by 25 November—and will be returning on Report shortly after that. If Lord Macdonald’s report has not been completed by then, will we go immediately to Royal Assent? I need some indication from the Minister of the time scales in order to know the product and concerns we are dealing with.
I want to raise another matter—I hope that I am being supportive—that Ministers need to reflect on. Again, it is something we will return to in Committee. There is a grey area between terrorist financing and some aspects of organised crime. I noticed that my hon. Friend the Member for—
Mr Hanson
I worked in Northern Ireland for two years, but my mind went completely blank then. My hon. Friend the Member for Upper Bann (David Simpson) will know that there is a great deal of linkage in Northern Ireland particularly between organised crime and terrorist financing. We need to be clear about the Bill’s purpose in relation to that activity. There might be areas where financial activity under organised crime, while being an organised crime issue, ultimately goes towards financing terrorism. Particularly in the Northern Ireland context, it is worth while our examining that area and whether there will be any consideration downstream of reviewing and harmonising asset freezing in those areas as a whole. I think of the case of Mr and Mrs Chandler today, where allegedly money might have been passed to those who kidnapped them. I do not know whether that is true, but it relates to potentially criminal, terrorist or other activity where these powers could be used. Clarity there will be important in our Committee discussions, so that we are aware of those things in due course.
My only potential criticism of the Minister over this proposal is that it might lead to a state of limbo in the asset-freezing provisions after the counter-terrorism review. It would be helpful if the Minister clarified those issues when winding up today, and in Committee.
In general, as I have said, terrorism is a still a real threat in this country, and although people have a statutory and historic right to civil liberties and freedoms, they also have a right to go about their daily lives without fear of serious threat to their safety. The key test for the Government is to balance those liberties with the actions that we must take to ensure that we secure those liberties for the future.
The Opposition support the Government’s attempts to maintain an effective, proportionate and fair terrorist asset-freezing regime that meets our United Nations obligations, protects national security by disrupting the flow of terrorists’ finance, and safeguards human rights. We believe that the Bill is necessary to help to combat the terrorist threat in this country, and we look forward to scrutinising it. I have indicated to the Minister the sort of areas that will need discussion during its passage through the House, but in broad terms, we wish it well and we will support it this evening.
Matthew Hancock (West Suffolk) (Con)
I think that hon. Members on both sides of the House recognise the importance of the Bill, of implementing it and of a legislative structure for freezing terrorist assets. The ministerial statement says that 205 people currently have assets frozen up to a value of £290,000. Most importantly, the measure is part of a global system of freezing assets, which is crucial in this interconnected world.
I do not believe that I need to declare an interest, but I have a history in this area because I worked in the Bank of England on the freezing of assets under the jurisdiction of EC and UN orders. It is surprising that we are talking about this in November 2010, because it has been clear for a while that we need substantive legislation on the statute book to provide a framework for the freezing of terrorist assets. I am glad to be speaking in this debate, but it is a shame that that has not already happened.
I am glad that the Bill has all-party support, but I was surprised by the comment that it is being rushed through. There has been widespread consultation and the Bill has been through the full process in the other place, which included a day of debate on the Floor of the House. It is now going through the full process in this place. The suggestion that it is being rushed through is odd. What is more, it was clear earlier this year, during the previous Session, that there would be a Bill to put asset freezing on a permanent basis. The shadow Minister said that if the Labour party had won the general election, it would have introduced such a Bill.
The system that is now in place is based on UN resolutions 1267 in 1998, 1333, which specifically targeted Osama bin Laden, and 1373, which went through very quickly after the 9/11attacks. As those resolutions were being passed, it was clear that the structure of terrorist asset freezing was becoming more comprehensive, and more important to our national armoury against terrorism. That was supported by terrorism orders in 2001, 2006 and 2009, so the process has been ongoing for many years. In 2002, New Zealand put on its statute book permanent legislation covering a formal structure, which was based on modern statutes for dealing with terrorist financing. Australia has introduced similar legislation.
Over the past decade, we have had many opportunities in terrorism and crime Acts to put such legislation on the statute book. The Ahmed case was started in 2008 on the back of 2006 terrorism orders. It is surprising that anyone can say that the Bill is being rushed through. What is more, for the Opposition to say that it is too soon to put it on the statute book because we need first to know the conclusions of the Home Office’s broader review does not take into account the importance of doing so by the end of December, when the temporary measures will lapse, and we will be back in the same position as when the Supreme Court struck down the previous legislation. It is at least timely, and perhaps too late to be standing here discussing the matter.
A broader question arises about the Supreme Court’s action. It concluded that the United Nations Act 1946 did not intend to support actions on terrorist financing, such as were then carried out under UN and EC structures. We all recognise that it was appropriate for the Supreme Court to give the then Government the ability to put through temporary legislation to ensure that assets were not unfrozen. It is important to note that because of the widespread public policy need for such freezing the Supreme Court recognised the importance of continuing to freeze assets, even while the formal legislative structure was being put in place.
My final question concerns the standard of proof. I am particularly interested in the extent of cross-party support for changes to the standard of proof. I have previously argued that the balance between civil liberties and protection against terrorism in this country has swung too far in favour of autocracy and away from civil liberties. I am pleased to see the new threshold of over 30 days of reasonable belief, rather than reasonable suspicion. I am also pleased that an appeal process is being put in place. However, I was surprised to hear the shadow Minister say that that may not have the support of the Opposition and that they need clarification of the position. The Home Office’s review will look into a much wider array of issues, including control orders, CCTV, border controls and indeed terrorist assets, and I hope that it will ensure that we can go forward and that the freezing of assets will continue to receive cross-party support.
Mr Hanson
For the sake of clarification, my right hon. Friend the Member for Morley and Outwood (Ed Balls) will look closely at those issues. As a Government, we obviously had in place the section 44 regime on control orders and CCTV, and we were introducing legislation. We will examine all those matters, but the balance between civil liberties and the protection of individuals, and securing action against terrorists must be right. That is the balance that I hope the review will seek.
Matthew Hancock
I am sure that the review will seek that balance. My question is whether the Opposition will have a position when the review comes out. I am glad that the Opposition believe that the measures are proportionate, and that at this stage there is cross-party agreement.
That brings me to my conclusion that far from being rushed through, the Bill is timely, and far from its being introduced too soon, given that a review is under way, it is important that it is enacted within the timetable, no matter the Macdonald review’s timetable. No doubt it will suggest amendments to many pieces of legislation from the previous decade that have been too autocratic and have not sufficiently respected civil liberties, but we must ensure that any amendments are part of that much bigger picture, rather than criticising the timing of this important legislation, which I would argue is about 10 years too late.
Mr Gauke
Given the flexibility that we need, I believe that we have struck the right balance by allowing an interim arrangement on the basis of reasonable suspicion followed by a longer-term arrangement on the basis of reasonable belief. Sometimes, it is a question of timing and we may need to act first on freezing assets and subsequently to make an arrest—we must remember that after all, the vast majority of those in the UK who have been subject to a freezing order have gone on to be arrested. For example, if we limited the Treasury’s freezing powers to those charged or convicted, we could prevent the UK from co-operating with international partners when we are trying to prevent funding getting to international terrorists and terrorist groups. For those reasons, the Government remain convinced that the legal test as set out in the Bill—reasonable suspicion for an interim period of 30 days and reasonable belief for a final designation—strikes the right balance.
My hon. Friend the Member for Cambridge mentioned the role of the courts, which has also been raised by civil liberties groups. They have called for a mandatory court involvement in asset-freezing. They want freezing decisions either to be made by the courts or to be approved by them mandatorily, but the Government do not support those proposals. Decisions to freeze assets are national security measures taken on operational advice from law enforcement and intelligence agencies, and fall squarely within the remit of decisions that Ministers should and do make on other matters, such as prescription, deportation and exclusion. Ministers are accountable for their designations both to Parliament and to the courts.
We also do not believe that mandatory court approval for asset freezes is the right approach. Only a very small minority of asset-freezing cases—around 10% of current cases—concern people in the UK who have not been prosecuted for a terrorist offence. The remaining 90% of cases concern either individuals in the UK who have been prosecuted or individuals and groups overseas. Mandatory court approval would therefore add no value in those 90% of cases. Indeed, it might even be unhelpful. For example, overseas terrorist groups who do not currently challenge asset freezes would nevertheless have their designations subjected to mandatory court scrutiny.
My hon. Friend also mentioned written reasons. We heard today that the JCHR recommends that an express requirement to provide reasons for a designation, subject to public interest requirements of non-disclosure, be written into the Bill. The Committee’s reasons for that were eloquently put, but the Government are not convinced that an express obligation on the Treasury to provide reasons for a person’s designation is necessary. It is already a requirement of the basic principles of administrative law to provide reasons for a designation where possible, subject to public interest requirements. If this Government or any other were to write into a Bill all the Treasury’s obligations under administrative law, such a Bill would be considerably longer. I do not see that as desirable. The time available for parliamentary scrutiny should not be spent debating unnecessary provisions. I should also make it clear that there will be times when the Government cannot divulge the case against a person or the reason for a designation, such as when sensitive intelligence has been relied on for a decision and there is an obvious case for withholding information. None the less, where possible, the Government disclose information when that can be done without, for example, damage to a pending prosecution or to national security. There is no sensible reason to go beyond that and write such a requirement into the Bill.
The JCHR also sought to convince hon. Members that the Government should accept the principle set out in the House of Lords in the case of AF on the use of special advocates and closed-source material. It said that that principle should apply to asset-freezing provisions. I am sure that hon. Members have read Hansard and are aware of the debate on that in the other place. I can but restate the points that the Government made then. First, the courts have not considered whether AF applies in asset-freezing cases, and it is not the role of the Government to prejudge what the courts would say. Secondly, the Supreme Court will consider the wider application of AF (No. 3) in January 2011 when it hears the Tariq case. Thirdly, the Government are committed to ensuring that any challenge to a Treasury decision is heard fairly. Finally, the application of AF (No. 3) is part of a wider debate on the use of special advocates and intelligence material, and we have already announced that we will be considering the use of special advocates and closed-source evidence as part of a Green Paper next year.
There will be plenty of opportunity for the JCHR and other interested parties to relay their views as part of the consultation that informs that Green Paper. It is right and proper that the Government give all parties the option of commenting on such an important mechanism without prejudging the outcome.
The final matter raised by the JCHR is the question of transparency and accountability. The Bill strengthens transparency and accountability in two ways. First, we are enshrining in legislation the Treasury’s existing practice of presenting quarterly reports to Parliament on the operation of the powers in the Bill. That will guarantee transparency on the quarterly operation of the regime. Hon. Members will note that the most recent quarterly report was laid today. Secondly, we have written into the Bill that the operation of the regime should be independently reviewed nine months after the Bill is passed and every 12 months thereafter.
The JCHR maintains that the provision in the Bill for an independent reviewer does not go far enough and that the independent reviewer should be more independent of the Government—the right hon. Member for Delyn made that point in the debate. I am sure that that will be debated further in Committee, but the Government cannot accept the JCHR position. We are committed to effective scrutiny of the asset-freezing regime and the independence of the reviewer will be a principal objective of any appointment, but for Parliament to approve the independent reviewer would be a significant departure from standard practice. The appointment of the reviewer by the Government reflects the long-standing principle that Ministers are directly accountable to Parliament and the public for those whom they appoint and for the operation of the regime.
Finance (No.2) Bill
Lord Hanson of Flint Excerpts(13 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
With this it will be convenient to discuss
New schedule 2—Video Game Production—
1 After section 1216 of CTA 2009, insert—
Part 15A
Video Game Production
Chapter 1
Introduction
Introductory
1216A Overview of Part
‘(1) This Part is about video game production.
(2) Sections 1216B to 1216G contain definitions and other provisions about interpretation that apply for the purposes of this Part. See, in particular, section 1216C which explains how a company comes to be treated as the video game production company in relation to a video game.
(3) Chapter 2 is about the taxation of the activities of a video game production company and includes—
(a) provision for the company’s activities in relation to its video game to be treated as a separate trade, and
(b) provision about the calculation of the profits and losses of that trade.
(4) Chapter 3 is about relief (called “video game tax relief”) which can be given to a video game production company by way of additional deductions to be made in calculating the profits or losses of the company’s separate trade.
(5) Chapter 4 is about the relief which can be given for losses made by a video game production company in its separate trade including provision for certain such losses to be transferred to other separate trades.
(6) Chapter 5 provides—
(a) for relief under Chapters 3 and 4 to be given on a provisional basis, and
(b) for such relief to be withdrawn if it turns out that conditions that must be met for such relief to be given are not actually met.
Interpretation
1216B “Video Game” etc
‘(1) This section applies for the purposes of this Part.
(2) “Video Game” includes a game played by electronically manipulating images produced by a computer program on a display screen.
(3) A video game is completed when it is first in a form in which it can reasonably be regarded as ready for copies of it to be distributed to the general public.
1216C “Video game production company”
‘(1) For the purposes of this Part “video game production company” is to be read in accordance with this section.
(2) There cannot be more than one video game production company in relation to a video game.
(3) A company that (otherwise than in partnership)—
(a) is responsible—
(i) for design, programming and production of the video game, and
(ii) for delivery of the completed video game,
(b) is actively engaged in production planning and decision-making during design and programming, and
(c) directly negotiates, contracts and pays for rights, goods and services in relation to the video game,
is the video game production company in relation to the video game.
(4) If there is more than one company meeting the description in subsection (3), the company that is most directly engaged in the activities referred to in that subsection is the video game production company in relation to the video game.
(5) If there is no company meeting the description in subsection (3), there is no video game production company in relation to the video game.
(6) A company may elect to be regarded as a company which does not meet the description in subsection (3).
(7) The election—
(a) must be made by the company by being included in its company tax return for an accounting period (and may be included in the return originally made or by amendment), and
(b) may be withdrawn by the company only by amending its company tax return for that accounting period.
(8) The election has effect in relation to video games which commence design in that or any subsequent accounting period.
1216D “Video game-making activities” etc
‘(1) In this Part “video game-making activities”, in relation to a video game, means the activities involved in design, programming and production of the video game.
(2) The Treasury may make regulations to—
(a) amend subsection (1),
(b) provide that specified activities are or are not to be regarded as video game-making activities or as video game-making activities of a particular description, and
(c) provide that, in relation to a specified description of video game, references to video game-making activities of a particular description are to be read as references to such activities as may be specified.
“Specified” means specified in the regulations.
1216E “Production expenditure”, “core expenditure” and “limited-budget video game”
‘(1) In this Part, in relation to a video game— “production expenditure” means expenditure on video game-making activities in connection with the video game, and “core expenditure” means the total costs that relate specifically to the producing and developing of the video game up to the point of commercial release.
(2) For the purposes of this Part a “limited-budget video game” is a video game whose core expenditure is £3 million or less.
(3) In determining if a video game is a limited-budget video game, any core expenditure that—
(a) is incurred by a person under or as a result of a transaction entered into directly or indirectly between that person and a connected person, and
(b) might have been expected to have been of a greater amount (“the arm’s length amount”) if the transaction had been between independent persons dealing at arm’s length, is treated as having been of an amount equal to the arm’s length amount.
1216F “UK expenditure” etc
‘(1) In this Part “UK expenditure”, in relation to a video game, means expenditure on goods or services that are used or consumed in the United Kingdom.
(2) Any apportionment of expenditure as between UK expenditure and non-UK expenditure for the purposes of this Part is to be made on a just and reasonable basis.
(3) The Treasury may by regulations amend subsection (1).
1216G “Company tax return”
In this Part “company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1)).
Chapter 2
Taxation of Activities of Video Game Production Company
Separate video game trade
1216H Activities of video game production company treated as a separate trade
‘(1) This Chapter applies for corporation tax purposes to a company that is the video game production company in relation to a video game.
(2) The company’s activities in relation to the video game are treated as a trade separate from any other activities of the company (including any activities in relation to any other video game).
(3) In this Chapter the separate trade is called “the separate video game trade”.
(4) The company is treated as beginning to carry on the separate video game trade—
(a) when design begins, or
(b) if earlier, when any income from the video game is received by the company.
1216I Calculation of profits or losses of separate video game trade
‘(1) This section applies for the purpose of calculating the profits or losses of the separate video game trade.
(2) For the first period of account the following are brought into account—
(a) as a debit, the costs of the video game incurred (and represented in work done) to date, and
(b) as a credit, the proportion of the estimated total income from the video game treated as earned at the end of that period.
(3) For subsequent periods of account the following are brought into account—
(a) as a debit, the difference between the amount of the costs of the video game incurred (and represented in work done) to date and the corresponding amount for the previous period, and
(b) as a credit, the difference between the proportion of the estimated total income from the video game treated as earned at the end of that period and the corresponding amount for the previous period.
(4) The proportion of the estimated total income treated as earned at the end of a period of account is given by— C / T x I where— C is the total to date of costs incurred (and represented in work done), T is the estimated total cost of the video game, and I is the estimated total income from the video game.
Supplementary
1216J Income from the video game
‘(1) References in this Chapter to income from the video game are to any receipts by the company in connection with the making or exploitation of the video game.
(2) This includes—
(a) receipts from the sale of the video game or rights in it,
(b) royalties or other payments for use of the video game or aspects of it (for example, characters or music),
(c) payments for rights to produce games or other merchandise, and
(d) receipts by the company by way of a profit share agreement.
(3) Receipts that (apart from this subsection) would be regarded as of a capital nature are treated as being of a revenue nature.
1216K Costs of the video game
‘(1) References in this Chapter to the costs of the video game are to expenditure incurred by the company on—
(a) video game-making activities in connection with the video game, or
(b) activities with a view to exploiting the video game.
(2) This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.
(3) Expenditure that (apart from this subsection) would be regarded as of a capital nature only because it is incurred on the creation of an asset (the video game) is treated as being of a revenue nature.
1216L When costs are taken to be incurred
‘(1) For the purposes of this Chapter costs are incurred when they are represented in the state of completion of the work in progress.
(2) Accordingly—
(a) payments in advance of work to be done are ignored until the work has been carried out, and
(b) deferred payments are recognised to the extent that the work is represented in the state of completion.
(3) The costs incurred on the video game are taken to include an amount that has not been paid only if it is the subject of an unconditional obligation to pay.
(4) If an obligation is linked to income being earned from the video game, no amount is to be brought into account in respect of the costs of the obligation unless an appropriate amount of income is or has been brought into account.
1216M Pre-trading expenditure
‘(1) This section applies if, before the company began to carry on the separate video game trade, it incurred expenditure on development of the video game.
(2) The expenditure may be treated as expenditure of the separate video game trade and as if incurred immediately after the company began to carry on that trade.
(3) If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.
(4) Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.
1216N Estimates
Estimates for the purposes of this Chapter must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.
Chapter 3
Video Game Tax Relief
Introductory
1216O Availability and overview of video game tax relief
‘(1) This Chapter applies for corporation tax purposes to a company that is the video game production company in relation to a video game.
(2) Relief under this Chapter (“video game tax relief”) is available to the company if the conditions specified in the following sections are met in relation to the video game—
(a) section 1216P (intended for commercial release),
(b) section 1216Q (British video game), and
(c) section 1216R (UK expenditure).
(3) Video game tax relief is given by way of additional deductions (see sections 1216S and 1216T).
(4) Section 1216U contains provision about unpaid costs and artificially inflated claims.
(5) In this Chapter “the separate video game trade” means the company’s separate trade in relation to the video game (see section 1216H).
(6) See Schedule 18 to FA 1998 (in particular, Part 9D) for information about the procedure for making claims for video game tax relief.
Conditions of relief
1216P Intended commercial release
‘(1) The video game must be intended for commercial release.
(2) For this purpose—
(a) “commercial release” means distribution to the paying public, and
(b) a video game is not regarded as intended for commercial release unless it is intended that a significant proportion of the earnings from the video game should be obtained by such distribution.
(3) Whether this condition is met is determined for each accounting period of the company during which video game-making activities are carried on in relation to the video game, in accordance with the following rules.
(4) If at the end of an accounting period the video game is intended for commercial release, the condition is treated as having been met throughout that period (subject to subsection (5)(b)).
(5) If at the end of an accounting period the video game is not intended for commercial release, the condition—
(a) is treated as having been not met throughout that period, and
(b) cannot be met in any subsequent accounting period.
This does not affect any entitlement of the company to relief in an earlier accounting period for which the condition was met.
1216Q British video game
‘(1) Subject to subsection (2), a video game is a British video game for the purposes of this Part if it achieves a minimum of 19 points out of a maximum of 37 from the following table, with a minimum of 9 points being obtained in sections A and B:
A | Cultural Content | Number of points |
A1 | The video game is based on locations in Europe (including fictionalised versions of locations in Europe) or on peoples of Europe. | From 0 to 4 points |
A2 | The video game is inspired by or based upon: (i) European underlying material (such as a film, a book or artistic work;or(ii) a sport (or sports) that originated in Europeor(iii) an event (or events) held (or previously held) within Europe;or(iv) any other European subject matter. | From 0 to 4 points |
A3 | The in-video game dialogue and in-video game text is mainly in the English language. | 2 points |
B | Cultural Contribution | |
B1 | The video game is an original video game (as opposed to being a sequel to a previous video game). | 3 points |
B2 | The video game is based on or strongly features a narrative (as opposed to being a purely abstract or non-linear video game). | From 0 to 4 points |
B3 | The video game incorporates any clear technical or creative innovations such as innovations in: (i) gameplay; (ii) graphics; (iii) user interface; (iv) artificial intelligence, audio or physics; or (v) online or multiplayer functionality. | From 0 to 4 points |
B4 | The video game represents or reflects: (i) diverse European culture;or(ii) European heritage;or(iii) European creativity. | From 0 to 4 points |
C | Cultural Hubs | |
C1 | At least 50 per cent. of the production budget in incurred within the UK. | From 0 to 4 points |
C2 | The in-video game text is translated into at least two other official languages of the EEA. | 2 points |
D | Cultural Practitioners | |
D1 | Executive Producer. | 1 point |
D2 | Lead Programmer. | 1 point |
D3 | Lead Artist. | 1 point |
D4 | Scriptwriter. | 1 point |
D5 | Lead Designer. | 1 point |
D6 | Lead music and audio composer. | 1 point |
Total Achievable Points | 37 points |
(2) Notwithstanding the above, a video game is not a British Video Game if it is of a pornographic nature or features extreme violence.
1216R UK expenditure
‘(1) At least 25 per cent. of the core expenditure on the video game incurred must be UK expenditure.
(2) The Treasury may by regulations amend the percentage specified in subsection (1).
Additional deductions
1216S Additional deduction for qualifying expenditure
‘(1) If video game tax relief is available to the company, it may (on making a claim) make an additional deduction in respect of qualifying expenditure on the video game.
(2) The deduction is made in calculating the profit or loss of the separate video game trade.
(3) In this Chapter “qualifying expenditure” means core expenditure on the video game that falls to be taken into account under Chapter 2 in calculating the profit or loss of the separate video game trade for tax purposes.
(4) The Treasury may by regulations—
(a) amend subsection (3), and
(b) provide that expenditure of a specified description is or is not to be regarded as qualifying expenditure.
1216T Amount of additional deduction
‘(1) For the first period of account during which the separate video game trade is carried on, the amount of the additional deduction is given by— E x R where— E is—
(a) so much of the qualifying expenditure as is UK expenditure, or
(b) if less, 80 per cent. of the total amount of qualifying expenditure, and
R is the rate of enhancement (see subsection (3)).
(2) For any period of account after the first, the amount of the additional deduction is given by — (E x R) - P where—
E is—
(a) so much of the qualifying expenditure incurred to date as is UK expenditure, or
(b) if less, 80 per cent. of the total amount of qualifying expenditure incurred to date,
R is the rate of enhancement (see subsection (3)), and P is the total amount of the additional deductions given for previous periods.
(3) The rate of enhancement is—
(a) for a limited-budget video game, 100, and
(b) for any other video game, 80 per cent.
(4) The Treasury may by regulations amend the percentage specified in subsection (1) or (2).
Miscellaneous
1216U No account to be taken of amount if unpaid
‘(1) In determining for the purposes of this Chapter the amount of costs incurred on a video game at the end of a period of account, ignore any amount that has not been paid 4 months after the end of that period.
(2) This is without prejudice to the operation of section 1216L.
1216V Artificially inflated claims for additional deduction or video game tax credit
‘(1) So far as a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it is to be ignored in determining for any period any additional deduction which a company may make under this Chapter.
(2) Arrangements are entered into wholly or mainly for a disqualifying purpose if their main object, or one of their main objects, is to enable a company to obtain an additional deduction under this Chapter to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled.
(3) “Arrangements” includes any scheme, agreements or understanding, whether or not legally enforceable.
Chapter 4
Video Game Losses
1216W Application of sections 1216X and 1216Y
‘(1) Sections 1216X and 1216Y apply to a company that is the video game production company in relation to a video game.
(2) In those sections— “the completion period” means the accounting period of the company—
(a) in which the video game is completed, or
(b) if the company does not complete the video game, in which it abandons video game-making activities in relation to the video game,
“loss relief” includes any means by which a loss might be used to reduce the amount in respect of which the company, or any other person, is chargeable to tax,
“pre-completion period” means an accounting period of the company before the completion period, and
“the separate video game trade” means the company’s separate trade in relation to the video game (see section 1216H).
1216X Restriction on use of losses while video game in production
‘(1) This section applies if in a pre-completion period a loss is made in the separate video game trade.
(2) The loss is not available for loss relief except to the extent that it may be carried forward under section 45 of CTA 2010 to be set against profits of the separate video game trade in a subsequent period.
1216Y Use of losses in later periods
‘(1) This section applies to the following accounting periods of the company (“relevant later periods”)—
(a) the completion period, and
(b) any subsequent accounting period during which the separate video game trade continues.
(2) Subsection (3) applies if a loss made in the separate video game trade is carried forward under section 45 of CTA 2010 from a pre-completion period to a relevant later period.
(3) So much (if any) of the loss as is not attributable to video game tax relief (see subsection (6)) may be treated for the purposes of loss relief as if it were a loss made in the period to which it is carried forward.
(4) Subsection (5) applies if in a relevant later period a loss is made in the separate video game trade.
(5) The amount of the loss that may be—
(a) set against other profits of the same or an earlier period under section 37 of CTA 2010, or
(b) surrendered as group relief under Part 5 of that Act,
is restricted to the amount (if any) that is not attributable to video game tax relief (see subsection (6)).
(6) The amount of a loss in any period that is attributable to video game tax relief is calculated by deducting from the total amount of the loss the amount there would have been if there had been no additional deduction under Chapter 3 in that or any earlier period.
(7) This section does not apply to a loss to the extent that it is carried forward or surrendered under section 1216Z.
1216Z Terminal losses
‘(1) This section applies if—
(a) a company (“company A”) is the video game production company in relation to a qualifying video game,
(b) company A ceases to carry on its separate trade in relation to that video game (“trade X”) (see section 1216H), and
(c) if company A had not ceased to carry on trade X, it could have carried forward an amount under section 45 of CTA 2010 to be set against profits of trade X in a later period (“the terminal loss”).
(2) If on cessation of trade X company A—
(a) is the video game production company in relation to another qualifying video game, and
(b) is carrying on its separate trade in relation to that video game (“trade Y”), it may (on making a claim) make an election under subsection (3).
(3) The election is to have the terminal loss (or part of it) treated as if it were a loss brought forward under section 45 of CTA 2010 to be set against the profits of trade Y of the first accounting period beginning after the cessation and so on.
(4) Subsection (5) applies if on cessation of trade X—
(a) there is another company (“company B”) that is the video game production company in relation to a qualifying video game,
(b) company B is carrying on its separate trade in relation to that video game (“trade Z”), and
(c) company B is in the same group as company A for the purposes of Part 5 of CTA 2010 (group relief).
(5) Company A may surrender the terminal loss (or a part of it) to company B.
(6) On the making of a claim by company B the amount surrendered is treated as if it were a loss brought forward by company B under section 45 of CTA 2010 to be set against the profits of trade Z of the first accounting period beginning after the cessation and so on.
(7) The Treasury may, in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6), make provision by regulations corresponding, subject to such adaptations or other modifications as appear to them to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief).
(8) “Qualifying video game” means a video game in relation to which the conditions for video game tax relief are met (see section 1216O(2)).
Chapter 5
Provisional Entitlement to Relief
1216AA Introduction
‘(1) In this Chapter—
“the company” means the video game production company in relation to a video game,
“the completion period” means the accounting period of the company—
(a) in which the video game is completed, or
(b) if the company does not complete the video game, in which it abandons video game-making activities in relation to it,
“interim accounting period” means any earlier accounting period of the company during which video game-making activities are carried on in relation to the video game,
“the separate video game trade” means the company’s separate trade in relation to the video game (see section 1216H), and
“special video game relief” means—
(a) video game tax relief, or
(b) relief under section 1216Z (transfer of terminal losses from one qualifying video game to another).
(2) The company’s company tax return for the completion period must state that the video game has been completed or that the company has abandoned video game-making activities in relation to it (as the case may be).
1216AB The UK expenditure condition
‘(1) The company is not entitled to special video game relief for an interim accounting period unless—
(a) its company tax return for the period states the amount of planned core expenditure on the video game that is UK expenditure, and
(b) that amount is such as to indicate that the condition in section 1216R (the UK expenditure condition) will be met on completion of the video game.
If those requirements are met, the company is provisionally treated in relation to that period as if that condition was met.
(2) If such a statement is made but it subsequently appears that the condition will not be met on completion of the video game, the company—
(a) is not entitled to special video game relief for any period for which its entitlement depended on such a statement, and
(b) must amend accordingly its company tax return for any such period.
(3) When the video game is completed or the company abandons video game-making activities in relation to it (as the case may be), the company’s company tax return for the completion period must be accompanied by a final statement of the amount of the core expenditure on the video game that is UK expenditure.
(4) If that statement shows that the condition in section 1216R is not met, the company—
(a) is not entitled to special video game relief for any period, and
(b) must amend accordingly its company tax return for any period for which such relief was claimed.
1216AC Video game tax relief on basis that video game is limited-budget video game
‘(1) The company is not entitled to video game tax relief for an interim accounting period on the basis that the video game is a limited-budget video game unless—
(a) its company tax return for the period states the amount of planned core expenditure on the video game, and
(b) that amount is such as to indicate that the condition in section 1216E(2) (definition of “limited-budget video game”) will be met on completion of the video game.
In that case, the video game is provisionally treated in relation to that period as if that condition was met.
(2) If it subsequently appears that the condition will not be met on completion of the video game, the company—
(a) is not entitled to video game tax relief for any period on the basis that the video game is a limited-budget video game, and
(b) must amend accordingly its company tax return for any such period for which such relief has been claimed on that basis.
(3) When the video game is completed or the company abandons video game-making activities in relation to it (as the case may be), the company’s company tax return for the completion period must be accompanied by a final statement of the core expenditure on the video game.
(4) Subsection (5) applies if that statement shows—
(a) that the video game is not a limited-budget video game, or (as the case may be)
(b) that, having regard to the proportion of work on the video game that was completed, the video game would not have been a limited-budget video game had it been completed.
(5) The company—
(a) is not entitled to video game tax relief for any period on the basis that the video game is a limited-budget video game, and
(b) must amend accordingly its company tax return for any period for which such relief was claimed on that basis.
1216AD Time limit for amendments and assessments
Any amendment or assessment necessary to give effect to the provisions of this Chapter may be made despite any limitation on the time within which an amendment or assessment may normally be made.”.
2 In Part 9D of Schedule 18 to the Finance Act 1998, references to film should also include references to video game.’.
Mr Hanson
As the House will be aware, my hon. Friend the Member for Wallasey (Ms Eagle) referred on Second Reading to the fact that we want to bring forward a provision on tax relief in order to help to support the video games industry. Although, undoubtedly, new clause 1 would not do that in every respect, I want to put it before the House, so that we can have an in-principle debate about video game industry tax relief. The new clause provides an opportunity for the House to consider enhanced relief based on UK expenditure on video game production.
The new clause suggests that we might consider qualified tax relief for the video game industry, and that it should be based on strict criteria: the video game must be for commercial release; it must be a British video game, assessed on the basis of a points system; and it must meet a 25% UK expenditure threshold, whereby 25% of the total expenditure on the production and development of the video game is UK expenditure on goods or services. We intended to look at that issue, and I would have tabled a much more detailed new clause, but the advice was that we could not. I hope that I have, however, tabled sufficient proposed changes for the Government to consider bringing back at a future date, or supporting the principle of, tax relief for this vital sector in the United Kingdom.
The video games industry is a real success story for British industry, and we look to support it in detail. As I am sure that the Minister is aware, research from TIGA, which represents the gaming industry, shows that over a five-year period games tax relief could create or save about 3,500 graduate-level jobs, secure £450 million-plus in new and saved development expenditure, and generate about £415 million in new and saved tax relief. I hope that it would do so in a way that ensures that the cost to the Treasury amounts to about £192 million over five years, which would be more than paid for by the jobs and investment, and encouragement to the industry, that that would develop in due course.
My hon. Friends the Members for Dundee West (Jim McGovern), for Liverpool, Wavertree (Luciana Berger) and for West Bromwich East (Mr Watson) have been very vocal in supporting such a tax relief. I hope that the Minister will consider it in principle, so that we can begin to develop a cross-party consensus in due course.
Mr John Redwood (Wokingham) (Con)
If it works for this industry, why does it not work for others? Why is the right hon. Gentleman limiting it to this one industry?
Mr Hanson
Our proposal is based on an existing tax relief for the film industry, which has been very successful in helping to generate extra revenue for that industry and keeping production in the United Kingdom. I am sure that the right hon. Gentleman will be interested to know that the Under-Secretary of State for Culture, Olympics, Media and Sport, the hon. Member for Wantage (Mr Vaizey) said this on 13 April—I accept that that was in the middle of an election campaign, so we will take these words as being from that particular time:
“We are committed to a tax break along the lines of the video games tax credit. We have been calling for tax breaks for the video game industry for the last three years.”
In the spirit of cross-party co-operation, the hon. Member for Bath (Mr Foster), who then held the esteemed position of Liberal Democrat shadow spokesman for Culture, Media and Sport—the Lib Dem spokesmen are now all subsumed into one entity—said:
“Liberal Democrats support the introduction of a Games Tax Relief. Following consultation on the details, we would implement the Relief as soon as possible.”
At that time, my hon. Friend the Member for Wallasey, who is shadow Chief Secretary, the then shadow Culture Minister, who is now a Minister, and the then Liberal Democrat spokesperson supported this proposal, as did I. Since then, however, it has vanished without trace—until today’s debate.
The right hon. Member for Wokingham (Mr Redwood) may oppose tax reliefs generally. However, such a relief has been proved to work in the film industry to date. Unfortunately, the Chancellor of the Exchequer said in his Budget:
“we will not go ahead with the poorly targeted tax relief for the video games industry.”—[Official Report, 22 June 2010; Vol. 175, c. 512.]
I want to test with the Minister whether that is an in-principle opposition to tax relief for the video games industry. If not, is his opposition based on a poorly designed scheme by the previous Labour Government or on poorly targeted suggestions in today’s proposals? Is there, in principle, room for discussion, so that it would be possible for him to bring back, at some point, a tax relief that meets the objectives of the hon. Member for Bath, the Under-Secretary and ourselves, and that would, I hope, help to support the video games industry?
Mr Redwood
Just to clarify the point, the right hon. Gentleman should know that I believe that lower tax rates result in more revenue. I am delighted to see that he is now a recruit to that cause, but I suggest that he should not limit it to one industry.
Mr Hanson
We are happy to consider on a case-by-case basis whether tax relief helps to generate employment and earn business and crucially—I think that this is the right hon. Gentleman’s point—to maintain that business in the United Kingdom rather than transferring it overseas. The film tax credit has proved that that can be the case, and I suggest in the new clause that we consider it for the video games industry.
Jim McGovern (Dundee West) (Lab)
My right hon. Friend mentioned the British film industry. Is he aware that figures provided by TIGA, which represents the computer games industry, suggest that the cost of a tax break for computer games would be £55 million, whereas the film industry already gets a £110 million break, even though the revenue generated by both is much the same?
Stewart Hosie
The right hon. Gentleman was right to mention the Chancellor’s argument that the proposed tax break was poorly targeted, but he will be aware of the evidence given to the Scottish Affairs Committee by Edward Troup of the Revenue. He said:
“I am not sure I would say it was poorly targeted. It was targeted at the video games industry…it was perfectly designable if we had continued with it”,
and so on and so forth. Does not that experience from the coal face, from inside the Revenue, directly contradict the argument that the Government used to do away with the plan?
Mr Hanson
The hon. Gentleman has effectively read out the next section of my speech. I have indeed examined what was said in the Scottish Affairs Committee. The Under-Secretary said at the same meeting on 20 October:
“It may be that we can revisit a video games tax break in the future.”
Was he speaking for the Department of Culture, Media and Sport or for the Treasury? I presume that the Chancellor was speaking for the Treasury in ruling out the idea, but three months later his Minister in the DCMS said that we should consider it in future.
I do not necessarily wish to press the new clause to a Division, but I have tabled it so that the Exchequer Secretary can clarify whether, in the next 12 months or two years, he can meet the objectives that my hon. Friends the Members for Dundee West, for West Bromwich East and for Liverpool, Wavertree, and the hon. Member for Dundee East, have championed so strongly.
Mr Tom Watson (West Bromwich East) (Lab)
The important point about the new clause is the unique position of the video games industry. It has the potential for explosive growth and to create far more high-level, highly paid, highly skilled jobs in the UK. Yet its competitors, with a fiendish interpretation of international competition rules, are picking off the very best designers and developers from UK production shops one by one. The industry worked long and hard with the Treasury to build a robust model for a specific rate to allow the industry to grow over the coming years. That is why hon. Members are so concerned—many jobs are at risk if the new clause is not accepted.
Mr Hanson
My hon. Friend makes the important point that those are high-skilled, highly technical jobs that will bring investment to this country. They are intellectual capacity jobs that are helping to grow the areas of our international markets that we need to grow.
To follow up on what the hon. Member for Dundee East said, Edward Troup, the managing director of budget, tax and welfare at the Treasury, said to the Scottish Affairs Committee:
“There would be issues; there would be boundary issues,”
but crucially, he continued, “but it would work.” I am not trying to make political capital out of the matter, but if it is proved that the tax break would work—meaning that it can be applied, can deliver, will keep jobs in this country, will grow business and will help resources be reinvested in the British economy—will the Exchequer Secretary be willing to accept the principle and introduce an appropriate clause in some future Finance Bill?
If it is found that the tax break would work but the Exchequer Secretary will not introduce it, I will have to presume that he is not interested in doing so, rather than that he is concerned about its applicability and workability. If so, he is on an entirely different page from the one that the Under-Secretary was on in April, that the Chancellor was on before the general election and that the hon. Member for Bath, who is part of the coalition, was on at that time.
Charlie Elphicke (Dover) (Con)
The right hon. Gentleman makes a perennial point that shadow Ministers make, to which actual Ministers presumably perennially say no. May I point out to him the table in proposed new section 1216Q of the Corporation Tax Act 2009, in new schedule 2? It mentions points being given for at least 50% of a game’s production budget being incurred in the UK, and proposed new section 1216R states what the percentage of UK expenditure has to be. Will he confirm that that does not conflict with any European law provision?
Mr Hanson
I have taken advice in drafting the new clause, and my advice is that it is workable and applicable, although I have had to leave out certain aspects. My purpose is not to force this particular model on the Treasury, but to use the new clause as a debating point, so that the Treasury can respond to the principle and decide whether this is a good proposal that will help matters, bring investment back to the United Kingdom and be supportive. I would, potentially, be happy to withdraw the new clause at the end of the debate, and I am happy to listen to what the Minister says, but I want to get to the nub of the issue.
The Under-Secretary, the hon. Members for Bath and for Dundee East, who speaks for the Scottish National party, my hon. Friend the Member for Dundee West and Labour Front Benchers all think that some form of games tax relief to help maintain the industry in the United Kingdom would be a good thing. All I want today is for the Minister to say, “Yes, I agree with that general principle. Over a period of time, I will look at how we make this proposal workable and how we bring it back in a future Budget or Finance Bill.” Indeed, he could say today that he is happy with the proposals and that the Government will look at them again in the near future in whatever format they choose. It is important to get that on the table.
Dr Richard Wilson, TIGA’s chief executive, has set out his view that we will potentially lose jobs. He said that
“the UK is losing out on jobs and investment because of the absence of Games Tax Relief.
High-skilled jobs could be created in Manchester and Warrington. Instead they are being created in Montreal.”
He says that that is particularly because our
“key competitors, particularly Canada, have tax breaks for games production. The UK does not.”
Others who comment on these matters, such as Danny Bilson, THQ’s vice-president for core game brands, has said:
“The talent in the UK is extraordinary...We have a studio up in Warrington that’s an excellent studio…but I’m sorry, it’s…about money at the end of the day.”
We need to ensure that we have the support for such things. That is the reality of the market. World-leading publishers recognise that we have an asset, which it has taken years to build up and which is worth hundreds of millions of pounds, but it will go abroad if we do not compete on the same level as our Canadian colleagues. In France, there is a 20% tax reduction for video games, and tax provisions in Canada have driven up staff numbers by 43%, but in the United Kingdom we have seen the head count start to decline over the past few years.
I do not want to go into great detail or to take up the House’s time. I simply want to tell the Minister that there is real scope for these proposals. There is scope to develop the UK film tax credit model and to use it for the UK video game tax model. We can ensure that we help to grow the sector, and we can meet the commitments that colleagues made during the general election campaign. I tabled the new clause so that we could hear whether the Minister is still of the view that there is no scope for such proposals or whether he could look at the issue in detail and bring back proposals in due course. I commend the new clause to the House.
Mr Mark Field (Cities of London and Westminster) (Con)
The video games industry is very important. Its spiritual home is, in part, in my constituency, in places such so Soho and Covent Garden—
Mr Gauke
I am grateful for that invitation. I am sure it will be small comfort to the hon. Gentleman, but I will accept the pronunciation “tiger” and concede that point. I am not sure that it would be terribly helpful if we were all in the same room to discuss these particular numbers. As I say, we are not convinced by the case made on these numbers. Of course, Members with constituencies that have a concentration of video game companies will want to make that case, but it is right for the Government to look at the economy as a whole and to bring forward policies that benefit all parts of the country and all sectors, including the video game sector. As I said in the meetings I have had with the hon. Member for Dundee West, there is no sense in which the Government are in any way anti-video games or think it is an antisocial issue or anything like that. It is a question of economic efficiency and where we believe the role of Government can be best used—and that is in providing a favourable climate for businesses.
I appreciate that the new clause and new schedule proposed by the right hon. Member for Delyn (Mr Hanson) are probing measures, but I would like to touch on a point made by my hon. Friend the Member for Dover (Charlie Elphicke). This relief is targeted at a specific sector and it would be considered to be state aid; as such, it would require notification to and approval from the European Commission. The new clause and new schedule would be effective from Royal Assent. As the Government would not be able to secure approval in such a short period, the provisions would create an illegal state aid. As I said, I understand that the amending provisions are probing, but the same issue applies to the previous Government’s proposals—and they, too, would have required state aid approval, which is worth putting on the record.
The new clause would create unjustified distortion and complexity in the corporate tax system. We do not think that such an intervention would represent good value for money for the Exchequer or be conducive to providing a simple and competitive tax system. The UK needs a tax system that supports all businesses, because it is the private sector across the board that will drive the recovery. I therefore ask the right hon. Gentleman to withdraw the new clause and new schedule.
Mr Hanson
I am grateful for the Minister’s clarification of the Government’s response. If we take into account the comments made by my hon. Friend the Member for Edinburgh East (Sheila Gilmore), it is clear that the Government are not in favour of the principle of this type of tax relief rather than the practicalities of the suggestions in the amending provisions. I am disappointed about that. I remind the Minister again of what the Under-Secretary said. When asked during the election campaign whether the Conservative party was in favour of a games development tax break, he answered:
“emphatically, 100 per cent in support for game tax breaks. No ifs, no buts.”
That does not appear to be the Government’s position today, which disappoints me.
Perhaps at this point I should declare that PricewaterhouseCoopers helped me to draw up the new clause. I shall register that in due course.
Mr Hanson
The Labour party predominantly supports the Bill. It had its genesis under the previous Labour Government when my right hon. Friend the Member for Edinburgh South West (Mr Darling) brought forward many of its measures. We give the Bill a warm reception, although we scrutinised it in Committee, as was our duty, as the Opposition.
I was going to give the Minister a much warmer welcome than I might now do, but he raised several points that strayed beyond the Bill, even though they are important for the House to consider. There is a clear difference between the Government and the Opposition on public spending and taxation regimes over the next few years. Even during today’s consideration of the Bill, we saw the clear differences between us on child benefit, taxation on banks and video game tax relief. We will return to such important issues in due course. They will frame the economic debate between the Government and the Opposition over the next 12 to 18 months, and we will watch closely how the backdrop to the Bill meets the needs of my constituents and those of my right hon. and hon. Friends in relation to employment, prosperity, taxation and the economic health of the United Kingdom, because we remain of the view that the Government are cutting too far, too fast, and that they will therefore damage the economy. However, let us put those matters to one side because they are not in the Bill.
As I said, my right hon. Friend the Member for Edinburgh South West developed many of the policies in the Bill. The uncontroversial nature of the Bill is attested by the fact that there were only two Divisions in Committee. One was on the sittings motion, following a disagreement about a clash of business in Committee and on the Floor of the House—as a matter of good practice, we should try to avoid that in future. The other Division was on a matter of more significant principle: the definition of “incapacitated person”. We had a rerun of that debate today.
We support many of the detailed provisions in this technical Bill. It includes important measures on foster care relief and relief for adopters. It contains provisions to simplify value added tax and to address film tax credit. As the Minister said, it includes important measures to tackle the smuggling of cigarettes through its consideration of taxation regimes for long cigarettes. We support those measures, which were the subject of discussion in Committee. The Bill puts in place important and welcome green allowances as a kick-start for zero-emission goods vehicles. When we discussed those measures in Committee, there was broad support for their implementation.
The Bill gives welcome support for asbestos-related trusts through taxation measures, including on capital gains tax. After we tested the Minister on those measures, we reached the conclusion that they were worthy of general support. We also support the clarification in the Bill on landfill tax.
Try as I might in Committee, I could not find much in the Bill with which to disagree. However, our sittings allowed us to tease out the Government’s thinking on a range of issues and to reflect the concerns of a number of outside bodies about the implementation of policy, rather than the policy itself.
As hon. Members can see, Labour Members are so content with the Bill—and have such trust and faith in my ability—that they have left it to me to bring our proceedings on it to a close. Although we welcome the Bill, we will consider real differences between us regarding the economy of the United Kingdom on future days, and I look forward to those debates in due course.
Comprehensive Spending Review
Lord Hanson of Flint Excerpts(14 years ago)
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Mel Stride
The answer to that is that we came that close because the credit rating agencies, such as Standard & Poor’s, came that close to downgrading our triple A status. The consequence would have been that the Government, in funding their debt through their bonds and gilts, would have had trouble getting those debt requirements away, interest rates would have risen, mortgages would have gone up through the roof and the businesses on which we are counting to pull us out of the malaise that we are in would have been crippled by higher interest rates. That is the basic economics that Labour Members fail to understand—
Mel Stride
I will not give way because I have limited time available. [Interruption.] In the great tradition of not giving way, I will not give way after taking two interventions. One very important point is that we must look to the private sector to create the jobs. It is true that the OBR has said that 490,000 jobs will be lost in the public sector, and there is no getting away from it. It is also true that PricewaterhouseCoopers has suggested that 500,000 jobs in the private sector might go as a consequence of the slimming down of the public sector. So we must look to growth from the private sector.
I am therefore very pleased that this Government have had such a firm and positive focus on private sector growth. We have removed national insurance for new business start-ups outside London and the south-east; we will bring corporation tax down, in steps, over the next four years from 28 to 24%; and we have cut red tape. We have also created the regional growth fund, which we heard about in the Business Secretary’s statement earlier today. It involves some £1.4 billion, much of which is to be channelled into the very areas of the country where the private sector is weakest and the public sector has been strongest, and I welcome that as positive action.
I also welcome the fact that the Government are listening to business in a way that their predecessors never did. The Conservative party is a party that understands business; we understand how difficult it is to create the wealth that is needed to supply the public services that all in this House want.
Richard Harrington (Watford) (Con)
Like many hon. Members, I have listened all afternoon to the debate. If everyone examined the matter, they would know that the comprehensive spending review was necessary. The cuts amount to taking us back to 2007 expenditure levels. I will not repeat the arguments that we have heard this afternoon denying or not denying the effects.
Richard Harrington
Not at the moment.
I shall concentrate on two points that I do not believe have been mentioned. The first is the importance of how the cuts are implemented. My fear is that, for political reasons, some public bodies and some councils have every incentive to make the cuts go right to the bottom line. I remember how, in the years of the Conservative Government from 1979 onwards, Mrs Thatcher’s cuts, job reductions and so on were used politically by opposing parties.
Mr David Hanson (Delyn) (Lab)
Thirty-one Members from all parties and all parts of the House, including the Chair of the Treasury Committee, have contributed to the debate, which has been interesting and well informed. It is clear that there is a real divide between the Government and the Opposition on how to tackle the deficit, the impact of the CSR, and the fairness of the measures proposed by the Government.
Mr Hanson
I have five minutes or so to wind up the debate. I will not give way at present.
The spending review will hit jobs, children and families. It will gamble with jobs. It will gamble with the growth of the British economy and, as my hon. Friend the Member for South Down (Ms Ritchie) said, that of Northern Ireland as well. The spending review will hit the most vulnerable in our society the hardest.
Kwasi Kwarteng
I am obliged to the right hon. Gentleman. He acknowledges that there is a deficit and his party acknowledges that it would have made cuts, so will he please tell the House where those cuts would have fallen?
Mr Hanson
I know the hon. Gentleman was not a Member at the time, but I wish he had been here for the Budget proposals in March, when we set out clearly our deficit reduction plan.
The hon. Member for Colchester (Bob Russell) quoted the Bible at us. May I refer him to “Matthew”, chapter 7, verse 16, and the notion, “By their deeds shall ye know them”? The spending review cuts too fast and too deep, and it rejects the sensible, balanced approach put forward by my right hon. Friends the Members for Edinburgh South West (Mr Darling) and for Kingston upon Hull West and Hessle (Alan Johnson).
The Government plan to take out of our economy and our spending £40 billion more than Labour thought sensible, so I was surprised to hear the hon. Member for Thurrock (Jackie Doyle-Price) call for more expenditure. Even the Office for Budget Responsibility thinks that the Government’s measures will downgrade next year’s growth forecast from 2.6 to 2.3%.
The Budget and the comprehensive spending review will hit jobs, essential services and, crucially, take public investment out of the private sector at a time when the Government want the private sector to grow. My hon. Friends the Members for Liverpool, Riverside (Mrs Ellman) and for Ochil and South Perthshire (Gordon Banks) and, indeed, the hon. Member for Macclesfield (David Rutley) recognised the importance of the public sector in helping to support future private sector investment.
We know, because the Chancellor admitted it last week, that 490,000 jobs will be lost in the public sector. The hon. Member for Dundee East (Stewart Hosie) mentioned the impact on the defence sector, PricewaterhouseCoopers estimates that another 500,000 jobs will be lost in the private sector as a result, and my hon. Friend the Member for Nottingham South (Lilian Greenwood) described the impact of those losses. So let us not kid ourselves: the economy is still fragile. This week’s announcement on growth over the last quarter still demonstrates that point and, put simply, throwing 1 million people out of work—out of the economy—will cost us more jobs than that and impact on the private sector in the long run.
The Government’s measures will hit the private sector hardest. The hon. Member for Watford (Richard Harrington) talked about confidence, but confidence will fall if 1 million people are out of work. It will mean more people claiming benefits. As my hon. Friend the Member for Nottingham South said: fewer people in jobs, fewer people helping to grow the economy and higher welfare bills.
Government Members have been asking for it: there is an alternative to the Government’s proposals. We clearly said in the Budget presented by my right hon. Friend the Member for Edinburgh South West in March that we would take steps to halve the deficit over four years.
Mr Raab
The right hon. Gentleman refers to the March Budget, but the former Chancellor, who sat in on much of today’s debate, said in August of the election:
“Labour lost because we failed to persuade the country we had a plan for the future.”
Was he right then? What has changed now?
Mr Hanson
The hon. Gentleman was not a Member in March, but if he had been, he would have seen our proposals to make efficiencies in policing, for which I was responsible at the time, of about £1 billion. He would have seen proposed efficiencies through savings on back-office staff, police procurement, public sector pensions and pay caps—a range of issues. The Conservative and Liberal Democrat policy, which has been brought before the House today, and which, by the way, we have not had sufficient time to debate, has been shown to be misguided. The people who will find it hard to get back into work will be hit hardest. [Interruption.] The right hon. Member for Rayleigh and Wickford (Mr Francois) has not even been in the Chamber most of the afternoon. He will whip Conservative Members to vote against child tax credits, child trust funds and the health in pregnancy grant, but he will not sit here and listen to the arguments about those issues.
There will be cuts in working tax credits for child care and a freeze on working tax credits, and people on jobseeker’s allowance will be punished. As my right hon. Friends the Members for Barking (Margaret Hodge) and for Lewisham, Deptford (Joan Ruddock) and my hon. Friends the Members for Hackney North and Stoke Newington (Ms Abbott) and for Hammersmith (Mr Slaughter) said, cuts in housing benefit will exacerbate the problem. Women, children and the poorest in society will bear the brunt of these cuts.
As my hon. Friends the Members for Easington (Grahame M. Morris) and for Middlesbrough South and East Cleveland (Tom Blenkinsop) pointed out, the regions in the north of England will be hit the hardest, with the loss of the pregnancy grant, the ending of contributions to the child trust fund, the scrapping of the savings gateway scheme, and the cutting of child benefit, which, as my right hon. Friend the Member for Croydon North (Malcolm Wicks) so eloquently pointed out, is an unfair approach to tackling the deficit. My hon. Friend the Member for Hammersmith also said that that will raise serious issues. Even today the Chief Secretary to the Treasury stated very strongly that there was not a problem in the Treasury with enforcing these policies. Well, let us find out downstream whether there is a problem when we see how he ensures that there is fairness between those who earn a top rate of tax, with two incomes, and those who earn a lower rate of tax, with one income. I will be interested to see how that works in due course.
The poorest 10% of the population will be hit hardest by the deficit reduction plan proposed by the Conservatives and the Liberals. Members need not take my word for it—it comes from the Treasury’s own figures in the Red Book. Massive cuts to public spending will threaten vital local services, which my hon. Friend the Member for Stockton North (Alex Cunningham) mentioned with reference to the fire service. Capital spending benefits the private sector most, because it is not the public sector that spends money on building things in the economy—the private sector does that.
Mr Hanson
No, not in view of the little time I have left.
More widely, there are cuts to front-line policing, putting at risk Labour’s record falls in crime and, as my hon. Friend the Member for Leicester West (Liz Kendall) noted, putting extra pressure on health and education services, despite pledges to support them.
Mary Macleod
What is the right hon. Gentleman’s plan, and which cuts does he agree with?
Mr Hanson
I can see a pattern developing. Members who were not here in March of this year did not hear my right hon. Friend the Member for Edinburgh South West outline his proposals.
Despite what the coalition would have us believe, this grossly unfair series of cuts is not inevitable—there is another way. The deficit was there because as a Government we faced a choice. Incidentally, the right hon. Member for Witney (Mr Cameron), as Leader of the Opposition, supported our deficit reduction plan and spending programmes. After much dithering, he supported us in taking measures to ensure that we did not let the United Kingdom slip into a depression. Members such as the hon. Members for Central Devon (Mel Stride) and for Watford do not realise that the official Opposition supported us in ensuring that we took action to help to support the banks to keep people in their jobs and to keep people’s mortgages alive.
That is unlike what happened in the recessions of the early 1990s, which I remember as a Member of Parliament, when we saw mortgages go up, houses repossessed, and jobs lost in their thousands. We took action to save those things on behalf of the British people, and we were proud to do so. The action that we took kept people in their jobs, kept people in their homes, and gave more businesses the support they needed than at any time during the 1990s. Through our action, inflation stayed at a historical low and plans were put in place to ensure that we saw a return to growth at the end of this year. We took that action to support the economy.
We need to bring the deficit down—certainly we do. We know that tough spending choices are needed, and in our Budget we looked at saving money on IT systems in the NHS, police overtime and welfare, and made £15 billion of efficiency and back-office savings on a range of other issues. They were important savings. [Interruption.] As my hon. Friend the Member for Streatham (Mr Umunna) says, we raised money through a higher and more effective banking levy.
This comprehensive spending review debate is about choices. It is about choosing whether the banks bear more of a burden than our children. It is about choosing whether we cut public services spending deeply or quickly—and we would not. It is about targeting new tax rises to fund £7.5 billion of capital spending in order to support jobs now. The Government are making the wrong choices. We are not “all in this together”. They are gambling with jobs, gambling with growth, deepening unfairness, and increasing inequality. To cite a notable former Prime Minister, there is an alternative.
We announced our programme in our Budget in March, and we were elected—every single one of us—on that programme for the future. In the coming weeks and months, we will promote that alternative vigorously, expose this Government’s reckless policies and ensure that we stand up for the ordinary, squeezed, middle-class people of this country and the people on lower incomes. We will reject the cuts where it is appropriate to reject them and support efficiencies where they should be made. [Interruption.] Again, the right hon. Member for Rayleigh and Wickford was not listening to what was said earlier. He has not been here listening to the debates and the arguments. I urge him and the House to reject this comprehensive spending review, support the Labour alternative and ensure that we defend the poorest in our society.
Savings Accounts and Health in Pregnancy Grant Bill
Lord Hanson of Flint Excerpts(14 years ago)
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Mr David Hanson (Delyn) (Lab)
If the Minister did not know the strength of feeling on the Labour Benches about this Bill before, he does now. It will hit children, women and families unfairly, it will hit the poorest in our society the hardest and it will undo the positive steps that the previous Labour Government took to tackle inequality. I say to him, on behalf of my right hon. and hon. Friends, that it is a bad Bill and that we will oppose it this evening in the Lobby. As the Minister has said, it removes eligibility for child trust funds, abandons the saving gateway and abolishes the health in pregnancy grant, each of which was a progressive measure of the previous Labour Government and was welcomed by groups that tackle inequality. Each of those measures is being jettisoned by the Conservatives and Liberal Democrats not as a matter of deficit reduction but as a matter of dogma. As my right hon. and hon. Friends have said in interventions, there has been no impact assessment. Not content with taking a gamble in the spending review on our jobs and growth, the Government have made choices that are unfair and that will hit the poorest in society the hardest.
Clause 1 concerns child trust funds, which were introduced by the Labour Government for three main reasons: to promote saving, to encourage financial education and to ensure that in future all young people would have a financial asset at the age of 18. The CTF scheme is having a positive effect. Between April 2008 and April 2009, a massive 823,504 CTF vouchers were issued—70,000 a month. More than 74% of those accounts were opened by parents and more than £2 billion is now held in those funds. At the end of this year, there will be 6 million child trust fund accounts for which the Minister will abolish contributions for the future.
Mark Tami (Alyn and Deeside) (Lab)
Does my right hon. Friend agree that it is clear that Government Members are ashamed of this terrible Bill as there is hardly anyone on the Government Benches to link themselves with it?
Martin Horwood (Cheltenham) (LD)
Does the right hon. Gentleman accept that child trust funds were never designed to help children because they are paid to 18-year-olds and that when funds are scarce it is better to target them at children who are in education through something like the pupil premium? If his party was so concerned about people having an asset at the age of 18, why did it introduce tuition and top-up fees?
Mr Hanson
I shall not take lessons from the Liberal Democrats on tuition fees given the outcome that they have got in that regard. The hon. Gentleman needs to recognise that the trust funds are an investment to tackle inequality among people at the age of 18 and to give poor people in society a chance at the age of 18. Not every will have a trust fund at the age of 18: some of the Cabinet’s will, but not everyone’s. He should recognise that poor people need that help and support at the age of 18.
Mr Jim Cunningham (Coventry South) (Lab)
Does my right hon. Friend agree that the comments of the hon. Member for Cheltenham (Martin Horwood)s are a bit rich given the Liberal Democrats’ current position on tuition fees after they campaigned against them for years? The Government claim to be very interested in eliminating child poverty, but how will what has been announced tonight do that? It is sheer hypocrisy.
Mr Hanson
My hon. Friend is correct in the sense that there are ways in which we can tackle child poverty, such as by ensuring that people have an equal opportunity at the age of 18 to make progress in their lives through jobs, training and university. One way in which we were doing that was through the child trust fund.
Sandra Osborne
Does my right hon. Friend agree that if the measures were due to financial constraints, the Conservatives would have kept the CTF mechanism in place, given its success, and perhaps cut the contributions with a view to reinstating them when times were better rather than abolishing the funds altogether?
Toby Perkins
My right hon. Friend is touching on the choices that the Government have made. The number of attacks that they have made on children, families and women is revealing. They seem willing to give money to married couples who do not have children but they are taking money from families with children. Anyone who has been married and had kids knows that it is not getting married that costs money but having kids. When my son was four months old I thought that he was robbing my wallet because I had no money left. Does not the Government’s approach show how out of touch they are with the real lives of families and children?
Mr Hanson
I agree. The Government are not in touch with the difficulties of raising a child or of meeting the costs when children reach the age of 18.
The child trust fund is worth £500 to each child over their lifetime, but it is worth £1,000 to the poorest children. The Minister will know that the previous Labour Government also introduced a disability living allowance payment on top of £100 or £200 for those entitled to DLA. That measure was introduced to take into account the significant extra challenges that disabled people face at that important time in their lives. When that measure passed through Parliament earlier this year, under the previous Labour Government, the Conservative party did not oppose that addition. Indeed, the present Financial Secretary said that
“we recognise that additional support is required for children with disabilities, and we have no objections to this statutory instrument.”—[Official Report, Eighth Delegated Legislation Committee, 10 February 2010; c. 4.]
The Liberal Democrats’ spokesperson at the time said they were happy to support the regulations. Quite simply, the Government say one thing in opposition and another in government.
As young people reach 18, the financial challenges—not least those imposed on them by the current Government—will be more difficult. If individuals do not come from a wealthy background, the prospect of stumping up extra money for tuition fees is an eye-watering one. Not everyone will have a trust fund of their own to manage those resources. The children’s trust fund would have provided young people with an extremely welcome lump sum, would have helped people with education and training from the age of 18, and would have helped people to save who had never saved before to supplement their future income.
Martin Horwood
I may not necessarily be supporting the tuition fee proposal of my hon. Friend the Financial Secretary to the Treasury, but at least he is increasing maintenance grants for the poorest students, which the Labour Government did not manage to do.
Mr Hanson
May I just say three words to the hon. Gentleman: education maintenance allowance? I look forward to him voting to abolish that and to raise tuition fees—both of which he pledged not to do at the general election.
With child trust funds we are trying to help poorer people and those on lower incomes to save for their children’s future. Before the child trust fund, only 18% of children had regular long-term savings made for them. The child trust fund industry average is now 31%. Among families on incomes just above welfare dependency, 30% of the child trust fund accounts now have money saved into them every month. Families in the lowest income bracket are now saving a higher proportion of their household income for their children than those in affluent groups. Do not take it from me, Mr Deputy Speaker: parenting groups, charities, think-tanks and academics have all put their names to motions and supporting letters that say the decision to abolish the child trust fund, along with the saving gateway, is short term and misguided.
So today, as the Government prepare to take the child trust fund from our children, we need to know what they intend to replace it with. The Minister has said that there will be no substitute and no compensation for the scheme where there is a Government contribution to encourage that saving. I welcome the fact that he wants to consider a future scheme to maintain the infrastructure. We know that the annual cost of running the child trust fund was about £5 million last year. I hope the Minister will confirm and look, in the winding-up speech at least, at how we keep that infrastructure in place to ensure that parents can make voluntary contributions.
Mrs Hodgson
Does my right hon. Friend agree that the difference between the numbers of Members present on each side of the House is interesting? As the Minister said, Governments have to make choices; indeed, I think the Chancellor said that only last week when he announced the comprehensive spending review. Some of those choices are more difficult than others and some are more shameful than others. Perhaps there is only one Lib Dem Member in the Chamber and so few Conservative Members because this is a rather shameful thing that they are doing, and a lot of them cannot face up to what is being done.
Mr Hanson
We shall see. I welcome my hon. Friend’s contribution. When we debated the child trust fund and the reduction in funding in Committee in July, and when we had a vote on the Floor of the House, Liberal Democrat Members flooded into the Lobby to support that measure; Conservative Members flooded into the Lobby to take money away from newly born children from August of this year. That is a disgraceful position, and the strength of feeling that the Minister will face today from my right hon. and hon. Friends shows that Labour Members, who introduced the saving gateway, the child trust fund and the health in pregnancy grant, are proud to have done that and proud to defend them in the Chamber today.
Pete Wishart
The right hon. Gentleman is absolutely right that the coalition Conservative Government are doing some appalling things to women and children, but perhaps he could talk about what the Labour party did. Was not the Labour party going to halve child poverty? What actually happened to child poverty in the last few years of the Labour Government? Did it not go up?
Mr Hanson
I will say just this to the hon. Gentleman: record levels of the minimum wage, record support on Sure Start, record investment in education and tackling child poverty across the board. The Labour Government have a proud record of tackling inequality and trying those issues. [Interruption.] The Financial Secretary says, “Records of deficit”. I recognise, as does my right hon. Friend the shadow Chancellor of the Exchequer, that we need to tackle the deficit, and that is where the choice is today. The choice for the Financial Secretary is to cut deeper—[Interruption.] If he stops chuntering for a moment from the Front Bench and listens, he will hear me say that choices have been made to cut the deficit much more slowly than the hon. Gentleman was doing, over a longer period. There are other issues that could be looked at. The Government’s banking levy is worth a proposed £2.4 billion. If the Labour Government had been in office, that would have been £3.5 billion. There is £1.1 billion extra already from that funding. The hon. Gentleman knows there are differences of approach, and the Labour Government would have taken a different approach to the deficit, and would have been able to save those resources in a much better way.
Owen Smith (Pontypridd) (Lab)
Does my right hon. Friend agree that another example of the fundamental difference between what we would have done in office—indeed, what we did in office—and what this Government are doing today is the disgraceful sop we have heard from the Minister, replacing the child trust fund with a tax-free account, which as we all know will do absolutely nothing substantive to encourage saving among low-earning families, as the trust fund was doing? That is the real business we are debating today, and I, for one, think it is a mistake and a disgrace.
Mr Hanson
One of the great benefits of the child trust fund was that it encouraged people on lower incomes to save, it gave a kick-start to their savings accounts and it helped them to get into the habit of saving. The change that the Minister has made will mean that those people who can save will save, and those who are not used to saving, do not have the resources to save or are not part of that savings culture, will not save. That will impact, in due course, on the inequalities of people in their 18th year.
Mr Hanson
Before I give way to my right hon. Friend, let me say that one of the most disgraceful things will be the fact that the Government are taking child trust fund contributions from children who have no parents, who are in care, who need the support of the state to reach their 18th birthday—who will need that kick-start in due course. I am sure that is the point that my right hon. Friend was going to make.
Paul Goggins
I am very grateful indeed to my right hon. Friend for giving way. [Hon. Members: “Hear, hear.”] He has been very generous, as was the Minister until, for some unknown reason, he declined to take interventions towards the end of his speech. My right hon. Friend may remember that in an intervention I raised the issue of looked-after children. After that, the Minister announced, although he did not go into too much detail, the new tax-free savings account for children. Does my right hon. Friend think it would help if we knew how looked-after children might be able to benefit from the new scheme that the Minister just announced?
Mr Hanson
Perhaps the Minister can tell us that in his winding-up speech, because clearly, looked-after children, children in care, would have had a contribution to the child trust fund, which would have helped them, on leaving care at the age of 18, to start a life without parental support. That is an important contribution that this Government have taken away from looked-after children.
Paul Goggins
To be constructive: there may be opportunities for local authorities, for charitable trusts, for other people in the community, to contribute to funds set up in the name and for the benefit of looked-after children. Will they be able to benefit from this new tax-free savings account? I do not know, because the Minister would not take my intervention and answer the question.
Toby Perkins
Teenage pregnancy levels are high in some of our most deprived communities, and the child trust fund at least offered 18-year-olds who were about to have children the chance to take a different track or to receive some support. Does my right hon. Friend agree that the Bill will take away a key tool in the battle against child poverty?
Kate Green
Is not the Minister proposing tax breaks for savers’ children, benefiting families who pay tax—the better-off—and widening inequalities, because non-taxpayers will get no benefit at all?
Mr Hanson
My hon. Friend is exactly right, and from her background outside the House as well as inside it, she will know how important that contribution is, but let me move on to the Saving Gateway Accounts Bill, which was introduced in 2009 by the Labour Government, again to encourage people on low incomes to save for their future.
Cash savings accounts were created for those on lower incomes, providing a financial incentive to save, with the Government matching, pound for pound, the money that people saved in the scheme. The scheme was proposed in 2001: 22,000 people have so far taken part in the pilots, and £15 million has been invested in savings through those pilots. The accounts have run for two years, and they have been a positive way for people to start to save, with help and support for those in our poorest communities.
The first pilot ran between 2002 and 2004, and 1,500 saving gateway accounts have been opened in Cambridge, Cumbria, east London, Manchester and Hull, in the part of the world of my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson). Additional pilots have been run recently in South Yorkshire. Those schemes have shown that we can generate new savers, new saving and, indeed, help people on poorer incomes to put aside money to meet some of the challenges that they face in their daily lives.
Hon. Members need not listen to me about the importance of those schemes; let me give them an authoritative voice on the Saving Gateway Accounts Bill:
“The Bill serves a valuable purpose in encouraging people, particularly those on low incomes, to save. People on higher incomes have an opportunity to smooth out fluctuations in income and expenses to which those on low incomes do not have access. If the Bill is successful in encouraging people to save, it will enable them to create a modest buffer against variations in income, such as the unexpected expense of being laid-off for a short period. It will give people a degree of financial security they have not had hitherto.”—[Official Report, 25 February 2009; Vol. 488, c. 323.]
Those are not my words, nor those of my right hon. and hon. Friends; they are the words of the Minister, who is now introducing proposals to end such schemes, although he supported the 2009 Bill—doing one thing in opposition and, yet again, another thing in government. At a time when potentially 500,000 people are being laid off because of the public sector cuts as part of the comprehensive spending review, the Government will take that support away from those who need it most.
In the absence of the saving gateway scheme, how does the Minister propose to promote the culture of saving among people on lower incomes? As my hon. Friend the Member for Stretford and Urmston (Kate Green) said, how do we ensure that saving is not the preserve of the rich and that it is done throughout society, so that people can help themselves and ensure that they save for the future in partnership with the state?
If we turn to the last part of the Bill, we see the full force of the coalition’s new politics turning itself on those who are pregnant. Any hon. Member who is a parent knows that raising a child is a uniquely rewarding experience, but we all need to recognise that it can be financially challenging in the run-up to a birth and that it can be difficult for young mothers and young families. Not only was the health in pregnancy grant introduced in recognition of the health benefits of covering some of the additional costs involved during pregnancy, but it was paid universally to all mothers to ensure that they could buy help and support during the last weeks of their pregnancies. Such support covered healthy eating, vitamins, medicines, books on healthy pregnancy or the cost of maternity clothes or folic acid, as mentioned by my hon. Friend the Member for Bolton South East (Yasmin Qureshi). Folic acid can help to reduce the risk of spina bifida, but 400 mg costs £9.99 at Boots. The health in pregnancy grant can be used for those costs and put towards getting help and support for health, and it is linked specifically to ensure that advice is given to mothers in pregnancy as part of the deal.
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
I am sure that hon. Members on both sides of the House agree it is important to target resources at the most vulnerable, but in dealing with pregnancy specifically, can the right hon. Gentleman point to any evidence that such help has improved the outcomes of deliveries, or births, or the health of ladies during their pregnancies?
Mr Hanson
If the hon. Gentleman cared to listen not just to me but to a range of groups that support pregnant mothers—from maternity groups to the Fawcett Society and others—he would find that there is a real input. He has a medical background, but if he is telling me that the grant does not matter to individuals who pay extra for healthy eating and minerals, who take medicines to reduce the risk of spina bifida and who need to buy maternity clothes and so on, I would like him to stand up and tell his constituents why that is so.
Dr Poulter
The right hon. Gentleman is making points about a grant that is given later in pregnancy and talking about minerals that are given earlier in pregnancy, so he needs to understand the issue a little better, but can he give any evidence of how the grant has improved the outcomes for mothers during pregnancy? Can he produce such evidence from any birthing group, any obstetric group or any midwifery group?
Mr Hanson
The hon. Gentlemen need not listen to me but should listen to the groups that are arguing for the retention of the grant. It is important not just for health but for costs of pregnancy, such as maternity dresses or equipment for the home, or covering time taken off work through ill health. Women on poor incomes need help and support to cover those important things, and this universal grant can help individuals to meet those needs at a time of great stress in the 25th week of pregnancy.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I noticed that the Minister referred during his submission to a quotation from the National Childbirth Trust, which expressed its upset that the grant was not provided earlier in pregnancy. I also have a quote from the trust that might provide the evidence requested by the hon. Member for Central Suffolk and North Ipswich (Dr Poulter):
“At a time when families are trying to make ends meet, the Coalition Government has hit parents particularly hard. Cutting pregnancy and maternity grants, as well as child benefit and tax credits, will make it even more difficult for new parents or those wanting to start a family… the Government should stick to its commitment to making the UK more family friendly.”
Mr Hanson
My hon. Friend quotes the chief executive of the National Childbirth Trust, but she could have also quoted the Royal College of Midwives, which said that there is an opportunity for midwives to communicate health advice to women and their families, as the grant is dependent on engagement with health practitioners. Never mind the cost of maternity dresses and other clothes, minerals, healthy eating, advice or taking time off work, these are important grants.
The Bill shows that the Government are out of touch with the needs of the vast majority of the British people. A £190 maternity grant may not seem much to some Government Members, but for the shop worker getting by on the minimum wage, it is a significant amount of money. For a woman with an unemployed partner, it might make a difference to the future health of their child. For those people, the grant makes a difference. Like the child trust fund, the grant is about investing in our future and in our children’s health and in giving them a good start and ensuring that they have a break at the age of 18, to make their way in life with positive support.
Kate Green
Does my right hon. Friend agree that one of the things that is likely to happen if women are given a sum of money in the seventh month of pregnancy is that they will go out and spend it, thereby also helping to regenerate their local economies?
Mr Hanson
Indeed. That is a good point, but I would say in passing to my hon. Friend that, unless I missed something, the Minister seemed to indicate that he did not feel that women would spend the money on things that matter for their pregnancy. He seemed to take a “shoes and nail varnish” approach in relation to what the grant has done. Most women take a great interest in the development of their children—that is the most important thing in their pregnancies—and they will do things to ensure that their children have a great start in life, and the grant was an opportunity to help in that respect.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Government Members are slightly confused on this matter. The Government keep saying that these draconian cuts for the poorest children are necessary to help the deficit and laud their own policy of giving two-year-olds 15 weeks’ free education, basing access to such a service on eligibility for free school meals. How many two-year-olds receive free school meals at the moment? If those two-year-olds do not have older siblings, what mechanism must be set up across Departments to work out which two-year-olds are eligible? What is the cost of such a mechanism? How much of the money recouped from the cuts that the Government propose will be wasted on a complicated mechanism to work that out?
Mr Hanson
My hon. Friend makes an important point. There was a thread running through the Labour Government’s intentions to ensure help and support for children, help and support for those on low incomes to save, and help and support for families to save for their children’s 18th birthday and beyond. [Interruption.] The Liberal Democrats are down by 50% already—down to one Member present.
Martin Horwood
In defence of my hon. Friend the Member for Bristol West (Stephen Williams), he is attending a Bill Committee.
Mr Hanson
The hon. Member for Bristol West (Stephen Williams) is a member of the Finance Bill Committee, as am I. I am in the Chamber defending our position on behalf of the Labour Opposition. The hon. Gentleman is in the Finance Bill Committee saying nothing about what is happening upstairs and supporting the Conservative party in Divisions upstairs. The hon. Member for Cheltenham (Martin Horwood) should reflect on those matters.
The changes proposed in the Bill, coupled with changes to direct tax, tax credits and benefits, will hit women harder than men. The spending review changes hit women twice as hard as men. The emergency Budget changes hit women three times as hard as men. Cuts in child care, tax credits, child benefit and other support will make it harder for women to work. More than £6 billion is now being cut in direct financial support for children—three times more than is being taken from banks.
I come back to the fact that the banking levy proposed by the Conservative Government, which was a Labour Government initiative, will raise £2.4 billion. My right hon. Friend the Member for Kingston upon Hull West and Hessle proposes a banking levy of £3.5 billion.
Mr Hoban
Last week the banking levy that the shadow Chancellor proposed was to pay for infrastructure. This week it is to pay for the cost of child trust funds and the health in pregnancy grant. With the banking levy stretched so far, the right hon. Gentleman needs to control his spending commitments.
Mr Hanson
There is a range of measures that the Labour Government introduced and would have introduced in relation to deficit reduction. There is a range of measures that my right hon. and hon. Friends and I were elected to implement to reduce the deficit over a four-year period, including an additional banking levy and help and support for deficit reduction. [Interruption.] The Financial Secretary says that is not so. Whatever happened at the general election, we were elected on a policy to reduce the deficit over four and a half years. We would have done that. We would have implemented measures including a range of tax changes and help and support for public sector efficiencies of £15 billion. He is making a choice that puts women, children and the poorest in our society at the greatest disadvantage as a result of the changes. That is a disgrace. We should have looked at the situation differently.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I hope my right hon. Friend will take the opportunity from the Opposition Front Bench to remind the Minister that it was our aim to raise an additional £19 billion through taxation, 60% of which would have come from the top 5% highest earners.
Mr Hanson
Indeed. As my hon. Friend knows, even now some of the Budget measures that make the Budget seem fairer than it is are measures that we supported in government and which the Conservative Government opposed when they were in opposition. I will not take lessons from the Conservative Minister on fairness towards pregnant women, children and those on poorer incomes, because the Labour Government, when in office, had a proud record of fighting on those issues.
In conclusion, the debate is about choices for the future. As my hon. Friends have pointed out, other choices could have been made. I am not saying that I would have supported them or agreed with them, but the Government could have considered a range of other choices. They could have suspended payments for a period of time for the child trust fund, the maternity grant or the saving gateway. They could have means-tested them, so that individuals with the highest income in society did not receive the maternity grant or the child trust fund.
The Government could have considered measures including a payment holiday. They could have considered phasing out the support over a longer period. They could have done all those things, but they have not. They have taken a sledgehammer to the child trust fund, the saving gateway and the health in pregnancy grant. It is not the deficit that is driving these measures; it is dogma on the part of the Conservative party.
The Government do not recognise the pressures of bringing up a child with limited financial means in the 21st century; they do not understand the difficulties faced by people trying to save on low incomes; and they do not understand the difficulties that mothers- to-be on low incomes face in the final weeks of their pregnancy. The Bill shows that the Government have made the wrong choices. It will deepen inequalities in our society, and I urge all right hon. and hon. Members to reject it.
Oral Answers to Questions
Lord Hanson of Flint Excerpts(14 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Danny Alexander
I would agree with that, although I am not going to go over the litany of spending by regional development agencies. Having a regional growth fund that is able to respond to bids from communities, along with a much more devolved set of arrangements, through local enterprise partnerships, which require local authorities and local businesses to work together on what is best for their areas, is a much more dynamic approach, and it is likely better to meet the needs of those areas.
Mr David Hanson (Delyn) (Lab)
What account will the Chief Secretary take of last week’s joint statement by the leaders of the devolved Administrations in Wales, Scotland and Northern Ireland? They said that the proposed cuts in the comprehensive spending review are
“too fast and too deep”,
that
“Front loading the cuts into the next two years is…the wrong approach”
and that a failure to promote growth will damage the private sector? Will he now listen to those voices, which do not just argue for the public sector, but argue that the cuts that he proposes will damage private sector growth and private sector industry?
Danny Alexander
First, may I welcome the right hon. Gentleman to his new role, congratulate him on his appointment and wish him luck with it? The question he asks is important: what is the impact on the devolved Administrations? As he knows, the budget for devolved Administrations is set by the Barnett formula, which reflects the decisions we make for Departments within the UK, and so it falls out as a consequence of the spending review decisions. Of course our decision to protect the national health service—something that the Labour party was not willing to do—will reflect well on the devolved Administrations’ settlement. If the right hon. Gentleman wishes to enter credibly into this debate, he and his colleagues should make some credible proposals of their own as to how they would tackle the deficit.