Oral Answers to Questions

Debate between Andrew George and Simon Hughes

Tuesday 16th December 2014 Commons Chamber

[Andrew George (St Ives) (LD)]

T4. What progress are the Government making on the introduction of a women’s justice board? The important question asked earlier by hon. Member for Livingston (Graeme Morrice) emphasised the need to address such issues.

[The Minister of State, Ministry of Justice (Simon Hughes)]

The coalition Government are clearly committed to making sure that we reduce the reoffending and imprisonment of women. As my hon. Friend knows, at the moment I chair an advisory board on female offenders, which is very helpful and successful—indeed, it is meeting this afternoon—in making sure we have a good policy. The introduction of a women’s justice board has been put forward. As it happens, our party, the Liberal Democrats, supports the policy. It is not yet an agreed policy across government, but I am determined that we will do as much as we can with the present structure in the rest of this Parliament, even though we might be able to change it in the next Parliament.

Oral Answers to Questions

Debate between Andrew George and Simon Hughes

Tuesday 15th October 2013 Commons Chamber

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

5. What progress the Government has made in reviewing the law on the funding of political parties; and if he will make a statement.

[Andrew George (St Ives) (LD)]

6. What recent assessment he has made of the need for reforms to party funding.

Health and Social Care Bill

Debate between Andrew George and Simon Hughes

Tuesday 20th March 2012 Commons Chamber

[Simon Hughes]

I understand that. I was not pretending that everything could be dealt with in regulations. I said to the hon. Lady, I hope fairly—I am trying to be fair—that I thought she made a good point that the proposal has come late in the day and does not have the support of the people leading the community involvement at the moment, one of whom she cited and whom I have known for many years. I do not think that the Government have yet given a full explanation of why the new proposals are better than the old ones. I understand why they have suggested that there should not be a one-size-fits-all approach, but I hope that in his winding-up speech the Minister will explain, because I think that Ministers have a case to answer.

[Andrew George]

My right hon. Friend will have heard me intervene on my hon. Friend the Minister of State on that issue, seeking the rationale behind the decision to remove the statutory basis for HealthWatch. As I understand it, his response was that there would be a statutory measure to achieve this—healthwatch organisations would be tied in with local authorities. Does my right hon. Friend agree that there is a potential weakness there? If we are seeking to integrate health and social care, a conflict of interest may arise if a body is tied in with the local authority but is also supposed to be scrutinising the activities of that authority.

[Simon Hughes]

I understand that point and share some of those concerns. I hope that the Minister will explain before the end of the debate why the more variegated model will not carry the risks that were alluded to by the hon. Lady when she read from the document earlier and by my hon. Friend.

I want to flag up two other things in relation to accountability, one of which is to do with the decisions made by the commissioning groups. Like many colleagues, I met a group of my local doctors again the other day. They had two areas of concern. First, they had concerns about the Bill. There is a lot of work to be done by Ministers and by all of us to allay concerns about the Bill when it becomes an Act—that is, on the basis of the facts, not the fiction. There is a huge amount of work to do. I do not think that we should underestimate that. Secondly, they have concerns about the system as it is now, before any measures have become law. I hope that Ministers have heard those concerns, some of which are not of this Government’s making but derive from previous legislation.

There is a concern that there is an excessive interest in some places in looking for private work and private contracts. There is a concern that the middle class and well heeled will speak more loudly and influence the commissioners in their interests, rather than in the interests of the poor and the vulnerable. That is a real issue in a constituency such as mine, where a lot of people are on low incomes and in need of a good public health system.

I want to put on the record that, although I understand the argument about getting rid of tiers of management and giving GPs the power to commission, and that is a good thing, it will not be a good thing if the decisions end up being taken not by GPs and the commissioning groups and the people who are meant to be taking them, but by the people they appoint to do the work for them. They may be private sector companies or somebody else. We have to make sure that it is health service professionals who make the decisions, in an open, accountable and transparent way, not people they employ, who may have a big vested interest in capturing more work for their own commercial gain.

Water Industry (Financial Assistance) Bill

Debate between Andrew George and Simon Hughes

Wednesday 14th March 2012 Commons Chamber

[Simon Hughes]

I am not pretending that we are hugely disadvantaged in the Thames Water area at the moment. My colleagues in the south-west and their constituents have had hugely greater bills over very many years. I am not arguing that we should not have to pay more money as Thames Water ratepayers, but that if we are going to do so, we should be paying it for a project, if it is agreed, where we know that the taxpayer is not being fleeced and water rate payers are not paying more than they should be. This must not be seen as a method for allowing private sector companies—all the water companies are now, in effect, private sector companies—to export profits indefinitely, at a higher level than they ought to, when they should be putting that money into the project and making sure that bills are lower.

[Andrew George]

Bearing in mind that the probity or otherwise of Thames Water is outwith the purpose of the Bill, would my right hon. Friend care to comment on the fact that, as I understand it, Thames Water might not undertake this project and that the question then arises of what happens to the asset, which is the tunnel? Surely that is the key issue, and then there is the separate issue of the probity, management and proper regulation of Thames Water as a company.

[Simon Hughes]

My hon. Friend is right. Perhaps it would helpful if, rather than trying to go round the circuit twice, I quickly summarise my letter to the Secretary of State in which I set out my concerns and the history of the matter, summarise the key points of her response, which deal exactly with my hon. Friend’s point about the mechanism regarding the tunnel, and then raise the three specific issues that should be addressed before colleagues and the Minister speak.

The provisions could, of course, apply to any water company. I am talking about Thames Water because we know that the Thames tunnel is the big project that the Government have in mind. However, the Bill relates not just to Thames Water, but to financial assistance for major works by any water company throughout the country, so the issues could relate to any constituency across the United Kingdom.

I will give a brief history. Thames Water was previously owned by the German utility company RWE. As I well remember, at that time it had one of the worst records for leaks and failed to meet its agreed targets for remedying leaks for four consecutive years. Despite that, RWE raised the dividend that Thames Water paid out to the company by 52%, took £216 million from the company and simultaneously announced a rise in profits as it prepared to sell the company on. At that time, Thames Water had a debt to capital ratio of about 45% and an excellent credit rating with all the major rating agencies.

Thames Water was bought by Kemble Water in 2006 in a deal worth £8 billion. Kemble Water is a financial vehicle for a consortium of investors, primarily made up of private equity funds led by Macquarie, the Australian bank. The deal included £3.2 billion of debt, which was incorporated into the company through whole company securitisation. That was undertaken for a special purpose finance company that Thames Water set up in the Cayman Islands, presumably to allow the owners of Thames Water to avoid taxes on the income that they received from the interest raised. That increased the debt ratio sharply to 67.9% of regulated capital value. The company has continued to borrow heavily and the debt to capital ratio has now increased to 72.9%.

That has happened at a time when Thames Water has paid extremely high dividends, which have regularly exceeded its earnings. For example, in 2010, the ratio was 141.5%. In other words, it paid out in dividends nearly one and a half times as much as it received in earnings. By contrast, South East Water, to take another local example, had a payout ratio of 48%—just a third of that of Thames Water. That strategy has had a serious detrimental effect on Thames Water’s credit rating. It has fallen from a corporate credit rating of A plus on the Standard & Poor’s rating scale when the company was bought by RWE in 2000 to a position today in which some of Thames Water’s debts have been assigned a triple B rating, which is considered to be the lowest investment grade rating possible.

For 10 years, Thames Water has been owned by two companies that have sought to extract the maximum possible value from the company. It has prioritised that over the necessary prudential financial arrangements that would have allowed it to make the large, long-term capital investments that it knows it has to make. As a result, Thames Water no longer has the capacity to access the finance required to make large infrastructure investments. It is not as if this project is a new idea. It has been, excuse the pun, in the pipeline for a long time.

The company has therefore asked the Government to provide financial backing for its Thames tunnel scheme. It is not yet clear to me why our Government should help this company after its years of excessive and unjustified borrowing and extraordinary dividend payments, which have eroded the company’s capital position. At the end of the Second Reading debate, the Minister said that the financial arrangements of the company were a matter for the regulator, Ofwat. That is in part true, but Parliament certainly has an interest and the Government must have an interest. If Ofwat’s controls are not sufficient, we need to address that. That is why I have raised this matter in the amendments.

Before the sale of Thames Water by RWE, Ofwat made a clear statement warning potential investors not to follow the very strategy that Kemble Water has since followed. Ofwat said that potential bidders should preserve Thames Water’s investment grade credit rating, which would have meant keeping the company’s debt to capital ratio below 65%. That is the link between solvency, external financial respect for the company and the percentage ratio, which my hon. Friend the Member for Cities of London and Westminster raised with me earlier. Since then, the regulator has, in effect, stood by and done nothing to prevent Kemble Water from further saddling the company with debt. Ofwat has stated that that is acceptable because the company has kept its investment grade credit rating. In fact, the credit rating has deteriorated to the lowest investment grade possible. Ofwat appears to have neglected the need for the company to incur more debt in the future to pay for large capital investments.

I am troubled that, unless we amend the Bill, there will be nothing to prevent that behaviour from continuing. I am trying to make the Government address how we will prevent it. I do not propose to force the amendment to a vote, but I want to hear the input of Members, if they want to contribute, and the Minister’s response. I am keen to ensure that we do not let go of this matter. My constituents want me to raise it now and the constituents of many colleagues in London have an equally strong vested interest in it.

Water Industry (Financial Assistance) Bill

Debate between Andrew George and Simon Hughes

Wednesday 29th February 2012 Commons Chamber

[Andrew George]

I certainly would not wish to denigrate or diminish in any way the importance of successful British companies. Where a company provides a good basis for investors, I celebrate that, along with others. I am simply commenting on the reality of the situation of water companies in relation to all other private companies, which ply their trade in a much more risky environment. That is simply a matter of fact, not of debate.

[Simon Hughes]

There is a link between the experience of colleagues and constituents in the south-west and that of people in the Thames area, because Kemble used to own South West Water and it now owns Thames Water. When it owned South West Water the bills were significantly high and there were a lot of complaints. People are fearful that some of the practices it used then, which included paying out dividends greater than its income—that seems to be not about saving the capital—might be being applied at the moment.

[Andrew George]

I am grateful to my right hon. Friend for that intervention.

On the question of the high water bills in the south-west, let me put on record the fact that in 2010-11, bills for South West Water customers were, on average, £486, which is certainly higher than the average bills in the rest of the country, which were £339. Unmetered customers had much higher bills, of course, at a rate of £721, whereas bills for metered customers in the south-west were £394 on average. As I and others have said, that was the focus of the Anna Walker inquiry.

Public Bodies Bill [Lords]

Debate between Andrew George and Simon Hughes

Tuesday 25th October 2011 Commons Chamber

[Andrew George]

I agree. I am grateful to the hon. Gentleman for his correction. I was here then and it is for the hon. Gentleman and his party to reflect on why we thought at that stage that the board might have been under threat. I entirely agree with him about the full raft of protections that should be available to agricultural workers. If I thought those protections were being significantly undermined, I would certainly not pursue the new clause in this manner. I emphasise that I do not feel precious about a particular quango; it is the protections I am most concerned about. I hope to hold out an olive branch to Ministers and say to them, “I agree with the principle underlying the Bill, which is to try to rationalise, amalgamate and abolish where that is necessary. Here is an example where we want the protections, but the small quangos that have proliferated can be amalgamated.” I am meeting them halfway and saying, “Let’s keep these protections.”

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I represent one of the most urban constituencies, but I was brought up in some of the most rural ones. My hon. Friend’s new clause seems rightly to probe whether there is a sensible way to look after the low-paid in the agricultural industry without the duplication of quangos. That seems an entirely proper thing to do, and I hope that colleagues on the other side of the House have the same objective.

[Andrew George]

I did not answer the hon. Member for Harrow West (Mr Thomas), the Opposition spokesman, who asked whether the new clause is intended to be probing or whether I intend to press it to a vote. This is clearly a matter of judgment. My intention is to advance the proposal as a solution that is available to the Government. The Bill is, after all, enabling legislation; it does not actually abolish the Agricultural Wages Board. At some point in the future there will be a framework within which the Government can bring forward a proposal, and we hope that they will genuinely consult upon it and that we will have an opportunity to debate the matter before taking it forward. My intention is to probe the matter. If I receive a deeply unsatisfactory response indicating that the Government have no intention of even considering the retention of any of the protections, or that they intend to drive on as quickly as possible with the abolition of not only the board but the regulations themselves, I will certainly consider pushing the new clause to a vote. I hope that the Minister is listening on that.

Health and Social Care (Re-committed) Bill

Debate between Andrew George and Simon Hughes

Wednesday 7th September 2011 Commons Chamber

[Andrew George]

rose—

[Simon Hughes]

rose—

[Paul Burstow]

I will give way to my right hon. Friend the Member for Bermondsey and Old Southwark and then I shall make some progress because this is a very big group of amendments.

[Andrew George]

It is my amendment.

[Simon Hughes]

I am very grateful and I will not keep the Minister long. I have listened very carefully, as colleagues will have done, to my hon. Friend’s extremely reassuring comments. If he and the Secretary of State are committed to working on some wording that will alleviate concerns at the beginning of the Bill, I know that my colleagues and I will be very happy to work with him.

--- Later in debate ---

[Andrew George]

I am grateful to my hon. Friend. He has referred to the issue as being totemic, and although I do not want to detain the House for too long because many others have referred to it, he is absolutely right. Now that it has been raised in such a manner, unless there are good legal reasons not to insert it in the Bill, it should be.

On the comments of the hon. Member for Pontypridd, I make a further point. We are talking about major changes, and the issue is not only totemic but contextual, because, in the context of a major—in fact, the most major—reorganisation of the health service, the reassurance of that backstop being in place would be all the more important.

I do not questions the intentions of the Secretary of State, for whom I have tremendous respect, but, having opposed the creation of the health service in the first place, the Conservatives have a problem, because the context is one of a major change, and whether we like it or not the assumption is that, if the Secretary of State is a Conservative, the hurdle will have to be set higher to reassure the nation that there is no untoward intention behind the legislation.

[Simon Hughes]

My hon. Friend knows that I share his views, and the hon. Member for Stoke-on-Trent North (Joan Walley) made the point that this is both a political and a legal debate. First, there is certainly a political argument for keeping the definition the same as it has been throughout the history of the NHS, which was created in concert by a Liberal and implemented by Labour. Secondly, there is a legal justification for doing so, because there are specific powers to provide, and therefore there is a generic logic in stating that, as part of the initial definition, there is provision for and security of health services. I am therefore sure that my hon. Friend will be on a winning wicket in the end.

[Andrew George]

I hope so, but sporting my cricketing injury I hope that that analogy does not apply.