Budget Resolutions and Economic Situation

Damian Hinds Excerpts

Monday 13th July 2015 Commons Chamber

[The Exchequer Secretary to the Treasury (Damian Hinds)]

In every part of our country this Budget is helping working people meet their aspirations. It will deliver security, stability and prosperity. It will help us in our goal to become the most prosperous major economy in the world by the 2030s.

We build on a strong record: employment up; wages up; living standards rising; the deficit down; and the strongest economic growth expected of any of the major economies—for the second year in a row. As the Chancellor said, the only way to have a strong health service, strong schools, and a strong defence is to build a strong economy, and the British economy today is fundamentally stronger than it was five years ago. But there is much more to do, because for far too long we have struggled under the burdens of low productivity and an economy that is too regionally imbalanced and too skewed towards its capital city. In this Budget we have set out how we will change all that.

London is one of the greatest cities of the world. What we now need is a better settlement for the rest of the UK, one which boosts the rest of the UK while maintaining London’s strength—a regional rebalancing that levels up, not down. That is exactly the settlement we are providing through a combination of greater investment and more devolution, greater powers to Greater Manchester, and progress on devolution deals with the Sheffield city region, the Liverpool city region, the Cornwall and the Leeds, West Yorkshire and partner authorities. There is also a new round of enterprise zones for smaller towns, an extension of the coastal communities fund, major new science, technology and culture projects all over the country, and a roads fund in England funded by vehicle excise duty for the strategic roads our regions need. There is a new statutory body, Transport for the North, to work on bringing the towns and cities of the northern powerhouse closer together, including through Oyster-style ticketing across the north, £13 billion of transport investment in the north, £5.2 billion in the midlands and £7.2 billion in the south-west, and £100 billion of investment in infrastructure in total over the course of this Parliament. There are resurgent cities, a rebalanced economy and thriving communities, and the most ambitious plan in generations for truly one nation growth. This Government are indeed “fixing the foundations”.

Let me reply to some of the specific points Members have raised; with 41 contributions to this debate, I fear I may not manage to respond to all of them, but I did particularly want to mention the seven outstanding maiden speeches, such as that of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald). Given his constituency name, we are all glad he waited for the installation of the widescreen televisions before making it. He enjoyed the rare distinction of being congratulated on his maiden speech in advance of making it as a result of what he described as the ongoing battle of the Stuarts. He also spoke kindly and appropriately of his predecessor Gregg McClymont, who is missed here, and of the House authorities and staff and how they make the daunting task of arriving here just that little bit less daunting. I am sure that is a sentiment shared across all parts of this House.

The hon. Member for Paisley and Renfrewshire North (Gavin Newlands) made a new bid in the auction of youth when he announced he had started fighting his seat at the age of 10. He also paid tribute to his predecessor, and although he made a few jokes some of us did not quite understand, as my hon. Friend the Member for Taunton Deane (Rebecca Pow) rightly said, he will certainly be a feisty and campaigning MP. He will very much make his mark.

The hon. Member for Wirral West (Margaret Greenwood) spoke powerfully, and in the best traditions of maiden speeches took us on a tantalising tour of her constituency, and told us all that is great about it from Incredible Edible to short-eared owls via Zorb ball, the Open golf championship and knitwear-clad lampposts.

My hon. Friend the Member for Somerton and Frome (David Warburton) is, I believe, a former composer and he certainly showed how to hold an audience, and how he achieved the strongest swing to the Conservatives in the country. In maiden speeches, we often talk about having big boots to fill; he exceeded that when he announced that one of his former constituents was Walter Bagehot.

My hon. Friend the Member for Chippenham (Michelle Donelan) talked passionately about education and it is clear that she is going to be fighting hard in this place for her constituents. She follows in an impressive line of MPs who first came to prominence through a Conservative party conference speech in their teens. Before her election, she was also a trustee of Help Victims of Domestic Violence, and I am sure she will bring important knowledge of that subject to this House, too.

I am particularly pleased to welcome my hon. Friend the Member for Southampton, Itchen (Royston Smith) to his place, because I spent a little time in his beautiful constituency during the election—they were among the hillier days of it. He already has an enviable reputation for the tireless work he does on behalf of his constituents, and he reminded us of the area’s long association with the military, from being Henry V’s setting-off point for Agincourt to being the place where the Spitfire was designed. He also spoke with praise of his predecessor, John Denham, who is also missed and who is now embarked on a career in academia in our county of Hampshire.

My hon. Friend the Member for Erewash (Maggie Throup) paid tribute to our friend Jessica Lee and said that although Erewash does not exist as a place, it makes almost everything—that is a real tribute to UK engineering. My hon. Friend will bring to the House knowledge of biomedical science and extensive experience of the voluntary sector. I first met her in Rwanda, where she undertook one of her many voluntary work activities.

I wanted to respond to the Chairman of the Select Committee, the hon. Member for Hartlepool (Mr Wright), on apprenticeships. Let me say to him that there will be a formal agreement with business over the coming period and further details at the spending review, and the system will be based on an employer’s pay bill. Both he and the hon. Member for Birmingham, Selly Oak (Steve McCabe) asked about exports, where a lot more support has been going in from UK Trade & Investment to help exporters, including prospective exporters, to get that first step made.

A number of hon. Members rightly talked about productivity, where we face a long-term challenge—there will be no quick solutions. That is why it is right that the productivity plan goes through the whole range of infrastructure, skills, planning, finance for investment, and making sure that cities have the governance and powers they need to succeed.

More generally, these debates sometimes have a pattern whereby Opposition Members say that they welcome certain bits of the Budget and then say they reject all the others. Of course often all the others are the difficult things we have to do in order to be able to do those first things. We do not deny that there are still difficult things that have to be done to get our country back to where it needs to be, and they include things such as some of the welfare changes and public sector pay restraint. All those things have to be seen in the context of a deficit that is still 5% and that needs to come down further if we are to protect departmental spending and continue to have the brilliant national health service that we all so value.

I will have to write to the hon. Members for South Down (Ms Ritchie), for North Antrim (Ian Paisley) and for Leicester South (Jonathan Ashworth), and to my hon. Friend the Member for North West Leicestershire (Andrew Bridgen). I think I can provide some comfort on the things that they raised but, unfortunately time is against us right now. The same applies to what my hon. Friend the Member for Congleton (Fiona Bruce) said about some of the measures on bringing local plans forward.

I wanted to take the opportunity to say to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) that this is the second time in a few days that she has suggested that the majority of the increase in employment has been in self-employment but that is just not right. Three quarters of that increase has been in employees, and while we are here I might also mention that three quarters of it has also been in full-time employment.

We heard excellent speeches throughout this debate. The right hon. Member for Wolverhampton South East (Mr McFadden) talked about some of the themes in the years ahead, speaking about opportunities for youth, Britain’s place in the world and prosperity for all parts of the UK. I think all Government Members would agree very much with that. My hon. Friend the Member for Bedford (Richard Fuller) reminded us that changes needed to be made so that we could live within our means, and he challenged the Labour party to face up to that reality. My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) reminded us of the fate of Charles X when he did not face up to the reality and was expecting the good people of France just to come round to the idea that the revolution had all been a terrible mistake. My hon. Friend the Member for Spelthorne (Kwasi Kwarteng) talked about the progress already made on tackling the deficit—as my hon. Friend the Member for Cannock Chase (Amanda Milling) said, Britain is very much back in business.

My hon. Friend the Member for Congleton talked about the importance of work in tackling poverty and in driving life chances. My hon. Friends the Members for Havant (Mr Mak) and for Fareham (Suella Fernandes) talked about the whole range of business support measures in the Budget, and of course it is businesses that create jobs.

We heard a lot about the different priorities in different parts of the country, ranging from what my hon. Friend the Member for Portsmouth South (Mrs Drummond) said about the southern powerhouse to the discussion of the Tisbury loop in Wiltshire. My hon. Friends the Members for Rugby (Mark Pawsey) and for Cleethorpes (Martin Vickers) talked about the importance of the role of mayor, not only as a democratically accountable institution, but as a figurehead for bringing inward investment. My hon. Friend the Member for Worcester (Mr Walker) talked about the beneficial impact of the fuel duty freezes we have had. It was good to see my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) back in his place, and my hon. Friend the Member for Newton Abbot (Anne Marie Morris) brought all sorts of good news from the south-west in her inimitable fashion—it is good news that will in future no doubt be brought at 140 mph on the Dawlish line or various newly improved A roads.

This Budget offers Britain a fresh settlement. Up and down the country, families will have the security of lower taxes and a national living wage. Our regions will have greater investment flowing to them and more control over their destiny. Our businesses will have the confidence to invest. There will be more jobs, more apprenticeships, higher wages, greater economic security, resurgent cities, more prosperous regions and a northern powerhouse. This is what the people of this country deserve and it is what we are providing. Britain is back in business and we will keep it that way.

Ordered, That the debate be now adjourned.—(Simon Kirby.)

Debate to be resumed tomorrow.

[Nic Dakin (Scunthorpe) (Lab)]

On a point of order, Mr Speaker. At business questions on Thursday, the Leader of the House promised to bring forward changed amendments to the Standing Orders for English votes for English laws so that the whole House could have good sight of them before the general debate on Wednesday. My understanding is that these have not yet been brought forward.

Tax Credits (Working Families)

Damian Hinds Excerpts

Tuesday 7th July 2015 Commons Chamber

[The Exchequer Secretary to the Treasury (Damian Hinds)]

The Government’s clear mission is to support working people as they strive to build security and achieve their ambitions throughout their lives. We know that most people want to do their best to provide for themselves and their families; that education and skills are the bedrock of success and security; that productive employment is the only sustainable way of delivering them; that the state should incentivise independence and self-reliance; and that when someone is working, they should keep more of what they have earned.

We need to make welfare savings so that we do not have to ask other working families to pay more, but when people need support, of course it is right that we support them. These are the principles that have underpinned our welfare and employment policies: making work pay; creating jobs and apprenticeships; improving childcare, education and training; cutting taxes, especially for the lowest paid; and, for those who need extra support, making the benefits system simpler and fairer for them and other taxpayers. On all these fronts, we have achieved a great deal, and we have done it at the same time as cutting the deficit and restoring growth.

Before responding to some of the points made during the debate, I want to make one thing clear. We have set out our commitment to reducing the deficit, which, among other things, requires £12 billion of savings to be realised on welfare, on top of the £21 billion we saved in the last Parliament. Further details, of course, will come from my right hon. Friend the Chancellor in tomorrow’s Budget, and clearly I am not going to pre-empt any of that this evening.

We have had a very good debate today. In particular, we have heard three distinguished maiden speeches. The hon. Member for Bradford West (Naz Shah) spoke of the sartorial act she had to follow, and she united the House—a rare occurrence—in sharing her pleasure at giving her predecessor a little more time to work on his wardrobe. She was also very generous about her Conservative opponent and the positive role he played in that difficult campaign. That was very much appreciated.

The hon. Member for Blackburn (Kate Hollern) spoke about her ambition to be the pinnacle, or indeed the pineapple, of politeness—a reputation she brings with her from her leadership of Blackburn with Darwen Council—and reminded us of the long historical roots of the northern powerhouse. She also reminded us of our schools days with her comments about Hargreaves and the spinning jenny. She, too, has a hard act to follow, in the shape of Jack Straw and Barbara Castle—two great parliamentarians.

The hon. Member for Ayr, Carrick and Cumnock (Corri Wilson) spoke about maintaining a sense of perspective. She also spoke movingly about her battle with serious illness and about how that helped her get perspective on what was most important in life. In reminiscing about the election, she also reminded us that, in our work in the House, it is not about “me”; it is about “us”.

There were some other excellent speeches. My hon. Friend the Member for Bexhill and Battle (Huw Merriman) advised that we should always listen to the originator of a policy and what they intended. I am sure that in this case the originator did not intend, and never expected, that the total cost of tax credits would eventually top £30 billion. My hon. Friend the Member for Solihull (Julian Knight) talked about the uneven generosity of the Labour party in reaching that figure and about the particular increases just before 2005 and 2010. My hon. Friend the Member for South Suffolk (James Cartlidge) spoke about the jagged edges in the welfare system that universal credit—that great reform—is set to smooth out.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) spoke about the importance of productivity, which is what underpins real-wage growth and is an absolute focus for this Government. We shall hear more about the productivity plan very soon.

Today’s debate occasionally strayed into realms of speculation about what may come in the days to follow, but in a powerful speech, my hon. Friend the Member for Croydon South (Chris Philp) reminded us to focus on the facts. Some of those facts include this Government’s strong record on reducing income tax, which has already seen a typical basic rate taxpayer benefit to the tune of £825 since 2010, with that figure set to rise to £905.

Responding to some points raised by Opposition Members, I first remind them that the number of children in workless households is at a record low, which is something we should all celebrate. I say to the Father of the House, the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), that according to the most recent statistics, the number of children in low-income households in Manchester has fallen.

In contrast to what the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) said about the quality of the enormous number of 2 million jobs created since 2010, there has been a 1.5 million increase in the number of people in full-time employment and a 1.27 million increase in the number of people in high- skilled employment. I remind the hon. Members who spoke about zero-hours contracts that they account for something in the region of 2.5% of the total jobs in this country, delivering an average of 25 hours’ work a week.

Even the Labour party nominally agrees that tens of billions of fiscal consolidation will be necessary over the course of this Parliament. I have to remind Opposition Members that the Charter for Budget Responsibility was passed by 505 votes to 18, and we will have to continue the journey towards balancing the budget. I hope that that is a journey we will be able to go on together.

In 2010, spending on tax credits had spiralled out of control, with nine in 10 families with children eligible for tax credits. We were taking money away from people in the form of income tax and then giving it back to them through another route. That is why we reformed the system to target support at those who needed it most—for example, by increasing the disability element while lowering overall Government spending.

[Hannah Bardell]

rose—

[Damian Hinds]

I am sorry, but I am too short of time.

In the longer term, we will be migrating tax credits into the new system of universal credit, which will improve incentives to work, reduce reliance on benefits, make households better off and increase the number of people in work.

There are three key ways to help people to build success and security for themselves and their families: make sure everyone can get a good start in life; create the strong economy that sustains quality jobs; and let people keep as much as possible of what they have earned. We have been doing all three. We have increased our support on childcare and early years education by £1 billion; radically extended childcare provision; and increased funding for the most disadvantaged children in our schools and nurseries. We have created record job growth of 2 million—more than the rest of the EU put together—moved more and more households out of unemployment and supported millions of new apprenticeships. We have lowered income tax for 27 million people, including moving the lowest-paid 3 million out of tax altogether, and for the next five years, there will be no increases to income tax, VAT or national insurance contributions. These are the policies that our working people deserve—the ones they expect and have recently voted for.

The only sustainable way to raise living standards is to keep working through the Government’s long-term economic plan to build a resilient and dynamic economy. Just last week, we learned that living standards had risen again by 3.9% against the same period last year—further proof of how our long-term plan is helping hard-working families. We have reversed the system inherited from Labour, where it could be more rewarding to live off benefits than to get a job. We have cut income tax for 27 million people. We have capped benefits in a fair way and increased support for those who need it most. We have simplified the benefits system, cracked down on those who abuse it, and helped to provide millions of jobs to empower people to help them get on in life. This Government have continuously stood up for both the vulnerable and the hard working in our society, and we will continue that support every step of the way.

Question put.

Productivity

Damian Hinds Excerpts

Wednesday 17th June 2015 Commons Chamber

[The Exchequer Secretary to the Treasury (Damian Hinds)]

Solving the productivity puzzle is a vital component of the journey we have been on since 2010—the journey to long-term prosperity through a comprehensive long-term economic plan. In 2010 this country urgently needed financial stability. We provided it. We needed to get public spending under control. We did so. We needed job creation, because that is the best way to help people support their families, and 2 million jobs were created—1,000 a day.

Rebuilding an economy takes time. It is a long journey, and we have always known that improving productivity is a key part of that journey. Our productivity plan, which the Chancellor announced last month, will set out how we develop that further. Forty-five years ago, when I was born, UK output per hour was 37% below that of the United States, a significantly bigger gap than there is today. What happened 45 years ago is of limited significance and, I suspect, interest to anybody sitting here right now, but it highlights the partial picture presented by the words of the motion, that UK productivity has been an issue “for several years”. It has been an issue for several decades.

Ever since we returned to government in 2010, productivity growth has been central to our mission of sustainably rebuilding the economy. In 2010 our overarching priority had to be keeping people in jobs while we set about the task of returning to fiscal balance. I make no apology for that. At the same time as pulling us back from the financial brink, we were also bringing in key supply-side reforms to boost efficiency and productivity. We created a national infrastructure plan and, as a result, infrastructure investment was 15% higher in the previous Parliament than in the preceding one. On road, on rail and online, thousands of infrastructure projects are connecting people and communities.

Our support for science and innovation has increased our competitive advantage by focusing on the UK’s great areas of strength. Even as we had to trim departmental budgets across the board, we protected science. We helped our universities to get on a firm financial footing to maintain their world-class position as centres of excellence. To rebalance the economy we put together a radical programme for growth outside London and the south-east, combining investment and devolution.

All this has helped to deliver jobs and growth. Last year we saw productivity begin to rise. The Office for Budget Responsibility expects productivity growth of 0.9% this year, and after that it grows at 2% or above in every year of the forecast period. We are now ready for the next step. Our productivity plan, as the Chancellor announced on 20 May, will explain how we shift our economy up a gear. It will be ambitious, long term and wide-ranging. Our manifesto is a programme for long-term sustainable growth: £100 billion of infrastructure this Parliament, as well as the big infrastructure questions for the decades ahead; skills for the long term, at every stage of people’s education and career; a better balanced Britain, and not just a northern powerhouse because, as I am sure Members will agree, there should be no monopoly on powerhouses.

We will deliver the affordable homes that people need. We will cut red tape, help businesses to access finance, and maximise workforce participation, including giving parents who want to return to work the support to do so—this, and much, much more, is a blueprint for a more productive Britain.

Today we have had interesting and powerful speeches from a number of right hon. and hon. Members, many drawing on their own business experience. Two speeches that we heard, which were maiden speeches, were particularly outstanding. The first was that of my hon. Friend the Member for Hertsmere (Oliver Dowden)—as expected, a highly erudite maiden speech from the former deputy chief of staff to the Prime Minister. He reminded us of the rich lineage he has in his constituency predecessors. I am sure he will make an extremely admirable addition to that line. The second was that of the hon. Member for Sheffield, Brightside and Hillsborough (Harry Harpham). He, too, knows what it is to have big shoes to step into—those of David Blunkett, who is so respected right across the House. The hon. Gentleman follows in his footsteps from local government into this place. He put EU renegotiation in a very interesting, long historical context. As for the topic of today’s debate, he rightly put productivity in its proper context—that of raising living standards and spreading prosperity.

There were a number of other interesting speeches. My right hon. Friend the Member for Wokingham (John Redwood) reminded us of the sectoral shift that has been going on. He spoke about the maturity of the UK continental shelf and the fall of the oil price, and what that has done to the North sea oil sector, as well as the shift away from financial services. My hon. Friend the Member for Bexhill and Battle (Huw Merriman) reminded us of his own lack of productivity when he challenged Madam Deputy Speaker electorally in North East Derbyshire. He also described the contrast between this country and France, and how we should be careful who we follow.

My hon. Friend the Member for Yeovil (Marcus Fysh) talked about the importance of services as well as manufacturing in productivity growth. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) spoke of the importance of cutting red tape. My hon. Friend the Member for Solihull (Julian Knight) welcomed employer involvement with schools in building skills, and my hon. Friend the Member for Croydon South (Chris Philp) talked about all the things that Labour did not choose to debate today, which are just as instructive as the things that they chose. There were excellent speeches from my near neighbours, my hon. Friends the Members for Havant (Alan Mak) and for Fareham (Suella Fernandes), and from my hon. Friend the Member for Newark (Robert Jenrick).

I want to mention the contributions of two Opposition Members in particular. The hon. Member for Hartlepool (Mr Wright) talked about the success stories of the automotive and aerospace sectors, and the importance of research and development spending. He asked about the Government’s industrial strategy. Our entire programme of government is an industrial strategy. It is integrated with what we do, not something that we add on. Of course, we stay in constant contact with industry.

The hon. Member for Sefton Central (Bill Esterson) spoke of his own experience in training and development, and the key role that management quality plays in productivity. He is quite right, and I remind him that our postgraduate loans will be available to MBA students as well. More broadly in terms of skills-building, we have an ambitious programme to deliver 3 million quality apprenticeships. To date, there are 50 higher apprenticeships available up to degree and masters level. Last year, there was a 40% increase in the number of people participating in higher apprenticeships.

[Steve Rotheram (Liverpool, Walton) (Lab)]

Will the Minister confirm how many of those 3 million quality apprenticeships will be conversions from other programmes?

[Damian Hinds]

We have a track record in the previous Parliament of delivering 2.2 million quality apprenticeships. We will carry on delivering that important investment in the young people of this country and in our industrial future.

The reforms of the past five years have delivered jobs, growth and security for the people of our country. We now have a chance to take things to the next level through our bold and ambitious productivity plan. We have a track record of making the right economic decisions—a record that, I am glad to say, the British people strongly endorsed five weeks ago. There is a real ambition to achieve the step change in productivity that our country needs. Our cities want it, our businesses want it and the people of this country want it. With them, we will make it happen.

Question put.

Landfill Tax (No. 2)

Damian Hinds Excerpts

Tuesday 16th June 2015 Commons Chamber

[The Exchequer Secretary to the Treasury (Damian Hinds)]

I beg to move,

That the Landfill Tax (Qualifying Fines) (No. 2) Order 2015 (S.I., 2015, No. 1385), dated 12 June 2015, a copy of which was laid before this House on 12 June, be approved.

It—[Interruption]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. We are all very enthusiastic to welcome the Minister to one of his first outings at the Dispatch Box, but I will allow my introduction to take another few seconds and ask Members leaving the Chamber to do so swiftly and silently to allow the Minister to be heard.

[Damian Hinds]

This statutory instrument implements the loss on ignition testing regime for landfill tax. Landfill tax was introduced in 1996. It has been successful in reducing the amount of waste sent to landfill by more than half, and has encouraged reuse and recycling of waste. However, we want to eliminate tax evasion and ensure a level playing field for all operators. This testing regime assists landfill operators in determining the correct rate of tax when accepting waste that results from mechanical waste treatment processes.

The regime was introduced on 1 April 2015 by way of legislation included in the Finance Act 2015 and an order—statutory instrument 2015 No. 845—was made under it using the affirmative procedure just before Dissolution. Unfortunately it was not possible to secure time for the order to be scrutinised and approved by the new Parliament before it lapsed on 14 June 2015. Therefore, we have made a new order, which came into effect on 15 June, ensuring the provisions introduced on 1 April continue uninterrupted. Today’s debate gives us the opportunity to scrutinise the order and vote on confirming its status in law. [Interruption.]

There are two rates of landfill tax: a lower rate of £2.60 per tonne for the least polluting waste and a standard rate of £82.60 per tonne for other taxable waste. [Interruption.]

[Madam Deputy Speaker]

Order. I hesitate to interrupt the Minister, but this is not a place for general conversation. The Minister is making an important speech. I am addressing the people behind the Chair.

[Damian Hinds]

Operators pass on the cost of the tax to those using their site to dispose of their waste. For some types of waste it can be difficult to determine visually which rate of tax should apply. This is particularly true of the so-called waste “fines”, which are the residual materials produced by the mechanical treatment of waste at waste transfer stations and similar facilities. In recent years this type of waste has increased significantly in volume.

Some businesses sending waste to landfill have deliberately mis-described this waste to evade the standard rate of landfill tax. When landfill site operators raised concerns, we responded by working closely with the wider waste industry to devise a testing regime. The testing regime provides an objective way to determine the rate of landfill tax that should be paid on fines from mechanical treatment, while at the same time protecting compliant landfill operators.

The loss on ignition test is a laboratory test that involves heating a sample of material in an oven to see how much the mass reduces. This provides a highly reliable indicator of the percentage of waste that is degradable, with the higher the percentage the more polluting the waste. Each year, the operator has to take a minimum number of samples from each of its customers for testing. The frequency increases if certain risk categories are triggered, such as when a sample from a customer has previously failed a test. An operator can also instigate a test if it suspects that a load is not eligible for the lower rate of tax. Only qualifying fines that produce laboratory tests at or below a 10% rate are eligible for the lower rate. However, to allow for the adaptation of processes, there is a 12-month transitional period—we are now in that period—during which we will allow waste with test results of up to 15% to be subject to the lower rate. The testing regime has been welcomed by landfill operators because it gives them more certainty over the correct rate of tax to pay and to pass on to their customers.

The order does not apply in Scotland, as the tax was devolved to Scotland on 1 April 2015—the same day the new regime came into force. One of my very first visits in this role was to a landfill site—no one can say that life is not glamorous—and I have seen for myself that the test is already working in practice, providing certainty and fairness to all parties. The test will help to address the tax evasion in the waste sector and provide a level playing field across the waste industry. It has been developed with, and supported by, the wider waste industry. I shall be happy to answer any questions that right hon. and hon. Members might have.

--- Later in debate ---

[Damian Hinds]

We have had a good, if short, debate on this important matter. Let me deal with some of the points that have been raised.

The whole point of landfill tax is to reduce landfill, and it has been successful in that regard. We have seen the amount of waste in landfill drop by 70% since 2000 and average household recycling rates have risen from 18% to 44%. Landfill tax is not the only cause of those beneficial changes, obviously, but it is one cause.

The hon. Member for North Durham (Mr Jones) is right to identify aspects of fraud that will not be eradicated by the measure, but that does not mean that the measure is not beneficial; it deals with a large part of fraud. Wider enforcement is also important, and I am assured that HMRC is on top of that. He and I are to meet in a couple of days, and I look forward to discussing in more detail particular issues that arise in his constituency and elsewhere.

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

Does my hon. Friend the Minister appreciate that it is a given that the higher the tax, the greater the incentive for people in the industry to evade the tax? What will the sampling regime be? Who will take samples of the waste and determine what grade of landfill tax is applicable?

[Damian Hinds]

Landfill operators must take a certain number of samples per customer load, depending on the risk profile of that customer. So if the operator has never had a difficulty with a customer before, rightly they should use a light touch, but where there have been problems before, that frequency should increase. There is a loss on ignition test to find out what volume of the sample is degradable and in its steady state there is a limit of 10%, but for a limited period of a year, to allow industry to make the transition, a slightly higher rate of 15% will be allowed.

The hon. Member for Wirral South (Alison McGovern) asked about conducting the tests. The key factor is laboratory capacity. The samples go off to accredited labs, and I have no reason to believe that there is a problem with capacity. It is a commercial line of business.

HMRC compliance in general is a wider issue. HMRC cannot be in every operator’s yard at every moment, but it treats all forms of tax evasion extremely seriously and has a statutory duty to ensure that the correct taxes are collected, as well as a direct incentive to do so.

[Andrew Bridgen]

Can the Minister see that the next area of potential tax evasion will be the sampling regime and what samples are taken from a large load of waste?

[Damian Hinds]

There is probably no fool-proof or fraud-proof system of taking samples. People will seek to get around the regime, but the challenge in compliance is to interrupt that activity and stop it. In the past 15 months HMRC has accelerated its response to tax aspects of waste crime. It has a range of responses, including criminal and civil investigations, and the national waste sector task force takes cross-tax approaches.

[Mr Kevan Jones]

How many prosecutions have been taken forward?

[Damian Hinds]

I may get inspiration on that point before I sit down. If not, I will not have to write to the hon. Gentleman because I will be able to update him on Thursday.

In the 2015 Budget the coalition Government provided a further £4.2 million of funding to the Environment Agency specifically to tackle waste crime. That will enable it to take action against more illegal waste sites and illegal waste exports. HMRC always acts on information indicating non-compliance. For legal reasons, it generally does not comment on specific allegations of tax evasion and fraud. It fully engages with key partner agencies, most notably the Environment Agency, to ensure that compliance and enforcement activity is properly co-ordinated.

On the question about Scotland, the hon. Member for North Durham will know that this is a devolved tax, but it is set at the same rate on both sides of the border so there is no incentive to cross the border to take advantage of a lower rate. HMRC is, of course, in close, regular contact with Revenue Scotland, and the same is true of the two relevant environmental agencies on each side of the border.

We have had a useful debate. I hope I have covered Members’ concerns adequately and I commend the order to the House.

Question put and agreed to.

Oral Answers to Questions

Damian Hinds Excerpts

Tuesday 16th June 2015 Commons Chamber

[Amanda Milling (Cannock Chase) (Con)]

7. What fiscal steps he is taking to help people keep more of their earnings.

[The Exchequer Secretary to the Treasury (Damian Hinds)]

The Government are committed to raising the personal allowance to £12,500 and the higher-rate threshold to £50,000 by the end of this Parliament, but we will go further than that and ensure that in future people who work 30 hours a week for the minimum wage will not pay income tax.

[Amanda Milling]

Can the Minister provide an estimate of the number of people in my constituency of Cannock Chase who will benefit from the implementation of the Conservative manifesto pledge to increase the personal allowance to £12,500?

[Damian Hinds]

My hon. Friend is right to highlight the broad benefit of our policy. Increases in the personal allowance and the higher-rate threshold during the current Parliament will benefit 30 million people. It is not possible to make reliable projections for an individual parliamentary constituency, but I can tell my hon. Friend that 2.28 million taxpayers in the west midlands have benefited from personal allowance increases to date, and that a typical basic-rate taxpayer is £825 better off.

[Kevin Brennan (Cardiff West) (Lab)]

Apart from specific tax steps, what steps is the Minister taking to ensure that employers actually pay the minimum wage?

[Damian Hinds]

Minimum wage compliance is, of course, vital, and work in that regard is ongoing. Universal credit encourages people to work more hours, and, in general, they should be doing higher-paid work.

[Jeremy Quin (Horsham) (Con)]

Will my hon. Friend join me in welcoming the fact that this Government, more than any other, have made quality childcare accessible to hard-working families?

[Damian Hinds]

My hon. Friend is right. The suite of childcare support that the Government are providing for families is unprecedented. It includes the doubling of provision for three and four-year-olds, the extension of provision under universal credit, and tax-free childcare.

[Mr Speaker]

Order. I think that the Minister meant to use the phrase “affordably, thereby enabling people also to keep more of their earnings.” I am sure that that is what he meant to say.

[Ms Margaret Ritchie (South Down) (SDLP)]

Will the Minister assure us that, as part of ensuring that people keep more of their incomes in their pockets, the Chancellor will not increase fuel duty in the forthcoming Budget?

[Damian Hinds]

During the last Parliament, the Government made difficult decisions in order to keep fuel duty frozen and save motorists £9 every time their tanks were filled. Of course, no decisions of that kind are cost-free, and difficult measures had to be taken so that we could afford the freeze. All taxes are kept under review, and my right hon. Friend the Chancellor will announce the details in the Budget.

[Alan Mak (Havant) (Con)]

8. What steps his Department is taking to (a) support savers and (b) promote home ownership.

--- Later in debate ---

[Ruth Smeeth (Stoke-on-Trent North) (Lab)]

12. If he will maintain current levels of and entitlement to child benefit over the next five years.

[The Exchequer Secretary to the Treasury (Damian Hinds)]

As the Prime Minister pledged before the election, this Government will not cut child benefit.

[Ruth Smeeth]

In my constituency, there have been reports of children returning to school in September malnourished because their parents are struggling to afford to feed them. Does the Minister agree that cuts to either child benefit or child tax credit would exacerbate the problem and make the issue of holiday hunger even more common?

[Damian Hinds]

The Prime Minister has made this extremely clear by stating categorically that child benefit stays as is. The most important thing in regard to affordability and household budgets is to increase employment and ensure that people are in good jobs. The Government have also done an awful lot to bear down on household costs to make them more affordable.

[Rishi Sunak (Richmond (Yorks)) (Con)]

Will my hon. Friend tell my constituents what this Government will continue to do to cut the costs of childcare for hard-working families?

[Damian Hinds]

The coalition Government had a very strong record on extending childcare, and we are going to go much further in this Parliament with the extension from 15 to 30 hours of childcare for the three and four-year-old children of working parents, the introduction of tax-free credits and the further extension of childcare provision under universal credit when that migration happens.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

14. What his policy is on the future ring-fencing of the science budget.

Antisocial Behaviour (South Manchester)

Damian Hinds Excerpts

Thursday 4th December 2014 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

I congratulate my hon. Friend the Member for Manchester, Withington (Mr Leech) on bringing this important and timely debate to the Floor of the House. The House will have been struck—and shocked—by some of the incidents that he recounted from his constituency. Like him, I pay tribute to what our police, including Greater Manchester police, do in this area, alongside the other relevant agencies.

Antisocial behaviour is a very important subject that affects many people and communities in different ways—including in my own constituency, and, I am sure, the constituencies of other hon. Members here today. I know a little about the setting in Withington, as it is very near to where I grew up. If left unchecked, antisocial behaviour can prevent the law-abiding majority from enjoying public spaces or even feeling safe in their own homes. That is why the coalition Government made it clear that we would introduce effective measures to tackle antisocial behaviour and low level crime in order better to better people. That is what we have done.

The reforms we introduced through the Anti-social Behaviour, Crime and Policing Act 2014, which my hon. Friend mentioned, focus the response to antisocial behaviour firmly on the needs of victims, allowing agencies better to protect the communities they serve by quickly clamping down on problems whenever and wherever they occur. Where individuals do not respond to informal approaches, or where they are causing serious nuisance, front-line professionals can, where appropriate and proportionate, use the new faster and more flexible antisocial behaviour powers that came into force on 20 October.

It is widely acknowledged that the higher education sector in Manchester makes a significant contribution, economically and culturally, with its world class universities and the annual influx of tens of thousands of students. Many are drawn to private rented accommodation in Fallowfield and Withington, as well as to halls of residence. It is of course also the case, as my hon. Friend was at pains to point out, that the vast majority of students are law abiding, enjoying the richness and diversity of the great city of Manchester. However, and as ever, the conduct of a small minority can cause great harm and distress to others. The authorities must be able to act and use their professional judgment to resolve such problems where they occur.

In that respect, I note that the restorative justice approach has been piloted in five wards in south Manchester: Burnage, Fallowfield, Levenshulme, Old Moat and Withington. Its purpose is to resolve issues of antisocial behaviour. Early and informal interventions will often be successful in stopping such antisocial behaviour. The aim of the pilots is to establish clear standards of behaviour and reinforce the message that antisocial behaviour will not be tolerated.

I am sure that my hon. Friend welcomes, as he outlined in his speech, the fact that Manchester Metropolitan university is one of seven higher education institutions taking part, with the National Union of Students and funded by the Home Office, in the alcohol impact project. The project is developing an accreditation mark—a sort of kitemark—that will be awarded to universities committing to actions such as: preventing alcohol-related initiation ceremonies; tackling participation in irresponsible pub crawls; and monitoring antisocial behaviour. Manchester Metropolitan university has also committed to increase the number of alcohol-free student events and to promote responsible alcohol consumption at other events. There is much that institutions can do through policy, procedure, retailing and accommodation, and it is good to see some of these coming forward.

Successful partnership working, as acknowledged by my hon. Friend, along with early and informal action, can reap rewards in tackling antisocial behaviour, but, where more formal interventions are needed, in specific cases we have given front-line professionals new and more effective powers to enable them to act quickly to deal with a range of problems, whether noise, nuisance or drunken and rowdy behaviour in public places.

If the police or a council officer has reason to believe that the use of premises has resulted in nuisance to members of the public or that that could happen, a closure notice can be used to protect victims and communities by quickly closing premises that are causing nuisance or disorder. Of course, those who habitually reside in the premises cannot be excluded for the first 48 hours, but visitors could be excluded completely from the property. As the power can be used preventively, the local community need not suffer while waiting for action, so the harm caused by a party could be prevented altogether.

Moreover, where there is more serious nuisance to others, the police or the council can apply to the magistrates court for a closure order to close the premises for up to six months. I have noted the concerns raised by my hon. Friend that the new closure power does not allow the police to shut down unruly student parties immediately “on the spot” as it were. I have heard what he has said on this point and the commentary and critique that he brought forward from Inspector Sutcliffe, and we can certainly look at all suggestions for improving the legislation to make it even more effective for front-line professionals to protect victims and communities.

The police or local council can now also use new community protection notices, also introduced under the 2014 Act. These are intended to deal with particular ongoing problems or nuisances that are having a detrimental effect on the quality of life of those in the community, and where the conduct is persistent or continuing and is unreasonable. For example, this could cover noise nuisance, as well as littering, fly-tipping or graffiti. Such a notice may impose requirements to stop doing certain things, to do certain things, or to take reasonable steps to achieve certain stated results.

The new power is available to the council and the police, including designated police community support officers, and can be issued against any person aged 16 or over, or against a body, including a business. Before the notice can be issued, the officer must serve the individual with a written warning to make it clear that if they do not stop the antisocial behaviour, they could be served with a community protection notice.

Police officers in uniform and designated PCSOs can also use the new dispersal power in public places to prevent or to stop members of the public from being harassed, alarmed or distressed, or to prevent crime or disorder. The new power combines the most effective elements of the previous dispersal powers into a single, less bureaucratic power. It allows the police to deal with problems instantly and nip them in the bud before the antisocial behaviour escalates, by issuing a direction to the individual to get them to leave a specified area for up to 48 hours.

The new dispersal power must be authorised in writing by an officer of at least the rank of inspector, specifying the grounds on which it is given, which is an important safeguard. Furthermore, authorisation may be given and the dispersal power may be used only after regard has been had to the rights of freedom of expression and freedom of assembly set out in articles 10 and 11 of the European convention on human rights.

Local councils can also use public spaces protection orders to ensure that the law-abiding majority can use and enjoy their public spaces safe from nuisance and disorder. The order can be used to deal with a particular nuisance or problem in a particular area. This power is available to local councils and works by allowing the council to impose conditions on the use of a public place, which apply to everyone, to certain categories of people at certain times or in specific circumstances.

The test for issuing the order will be that the local authority reasonably believes that the behaviour is or will be detrimental to the local community’s quality of life, and that the impact justifies restrictions being put in place. The behaviour must also be, or likely to be, continuing or persistent and unreasonable. Such an order must also be published in accordance with regulations made by the Secretary of State to ensure that people are properly informed that it is in place.

Before using this new power, however, the local council must consult the chief officer of police, the police and crime commissioner, the owner or occupier of the land and any representatives of the local community they consider appropriate. This could involve people living nearby or regular users of the space. Again, such an order may be made only after consideration has been given to the rights of freedom of expression and freedom of assembly set out in articles 10 and 11 of the convention. A public spaces protection order, for example, can be used to restrict the consumption of alcohol in a public place when the requisite test has been met.

My hon. Friend asked whether councils should provide a 24-hour helpline so that people may report instances of antisocial or threatening behaviour. That is, of course, a matter for councils to determine, although discussions take place in partnership with police and police and crime commissioners. No doubt my hon. Friend will wish to continue to raise the issue with Manchester city council.

Manchester was one of four areas that trialled the “community trigger”, which proved in several cases to be an effective way of ensuring that action was taken to deal with persistent or previously overlooked antisocial behaviour. We want information on how it can be used to be made widely available to the public. The trigger can be exercised not just by victims themselves, but on behalf of victims—with their consent—by, for instance, a friend or carer, or, indeed, by a councillor or Member of Parliament.

Let me again congratulate my hon. Friend on securing this important debate. I hope that I have been able to make clear how seriously the coalition takes the issue when it occurs, in Greater Manchester and elsewhere, and to explain the steps that have been taken to improve the response. It is still early days for the new antisocial behaviour powers, and we will continue to work on their use with front-line professionals.

Question put and agreed to.

Oral Answers to Questions

Damian Hinds Excerpts

Thursday 3rd July 2014 Commons Chamber

[Sajid Javid]

We work very closely with the Welsh Government on these issues. There is a lot to be gained from cross-co-operation, and a number of initiatives are in place.

[Damian Hinds (East Hampshire) (Con)]

8. Inbound tourism is as strategic a sector for this country as advanced manufacturing of pharmaceuticals, and the Tourism Council presents an opportunity for it to punch its weight. Will my right hon. Friend set his sights high in terms of productivity, skills development, and co-operative working on distribution channels in marketing this country to the world?

[Sajid Javid]

I absolutely agree. My hon. Friend will be pleased to know, as will other hon. Members, that last year inbound tourism hit a new record high of 33 million visitors spending a record amount of £21 billion in the UK. He rightly points out the importance of improving skills, and we are working with the Tourism Council on that.

Office for Budget Responsibility (Manifesto Audits)

Damian Hinds Excerpts

Wednesday 25th June 2014 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

I am grateful to you, Mr Speaker.

There are arguments in favour of the proposal and of doing it in time: it could help to ensure that only realistic proposals are put in front of the electorate; also—the shadow Chancellor made this point jokingly, but it is a serious one—within parties it could help to strengthen the hand of those seeking to impose fiscal discipline against those who wish to offer the earth, of whom his own party has more than its fair share; and it could open a dialogue early on between the OBR and a group that might soon be in government; but there is one big argument against it, and it was alluded to by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I am talking about the danger of a false sense of security being attached to a party’s programme for government.

It is right, and it happens, that independent and respected organisations make appraisals of parties’ proposals. We need extreme caution, however, if we seek to institute a single gold-standard appraisal with a sort of state licensing behind it which could be attached to a manifesto. It would be extremely difficult for the organisation involved to avoid political controversy, and there would also be a danger of closing down further debate and additional scrutiny from elsewhere. With tax and spending, it is never as simple as saying, “Oh, cost the proposals”, because behavioural assumptions are, of course, relevant as well.

When it comes to forecasting, J. K. Galbraith said there were two types of people:

“those who don’t know, and those who don’t know they don’t know”.

Fortunately, the OBR is in a group that knows it does not know, but unfortunately it has to deal with other people who have a hunger for simple binary answers and do not deal in “don’t knows”. Forecasting is a series of fan charts, an examination of assumptions, an appraisal of the risks and upsides—and, crucially, seeking ways to mitigate those risks. The media, however, will look for a simple yes or no, and we can bet that any party going through the process will find a way to say that the organisation concerned has said yes, which makes it dangerous. The OBR knows that, and it knows that it is a nuclear option to say “No, the official Opposition’s proposal for government does not get our seal of approval.” That is not a power it would use, so the implicit yes is not worth a huge amount either.

I am in favour of there being wider capability for analytical scrutiny of political parties’ proposals, and that could be done either through the OBR or through Parliament itself via the Select Committee system. To be reliable and to avoid politicisation, an institution should not be making forward-looking projections relating to individual proposals. They should be either backward looking or generic—backward looking in the sense of “what did happen with the changes to the top rate of income tax?” or generic in the sense of “what is the evidence from this country and around the world relating to elasticity of tax rates?” If such things are to happen, they should happen gradually, but it is very risky to have a single state-licensed, gold-standard approval mechanism for any party’s manifesto.

Consumer Rights Bill

Damian Hinds Excerpts

Tuesday 13th May 2014 Commons Chamber

[Lilian Greenwood (Nottingham South) (Lab)]

I should like to speak in favour of new clause 2, which seeks to clarify how the Bill will be implemented and how consumers will be informed of their rights.

In particular, I want to ask some questions of the Minister about the implications for rail services. It was welcome news in Committee when, in responding to a question from my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), the Minister confirmed that the National Rail conditions of carriage will be refreshed to provide stronger provision for consumers in order to make them consistent with the rights set out in this Bill. The operators’ trade body, the Rail Delivery Group, has said:

“The Conditions of Carriage are under review. They will be published by the end of the year and will be fully compliant with the Consumer Rights Bill.”

It also said:

“They’ll be more consumer-friendly in terms of the language used”.

That will be a huge improvement from the passenger’s point of view.

I have a number of questions about how this implementation will be carried out. Do the Government intend to conduct a wider review of the passenger protections in the National Rail conditions of carriage? They could use the Bill as an opportunity to strengthen passenger rights where, for example, the train operator fails to provide passenger assistance, which is so important for disabled passengers; where someone finds that the seat reservations on their train are not being honoured; where there are planned engineering works that the operator could have known about in advance but has not informed people about; or where someone finds on arriving at the station that part of the journey they expected to be by train will be on a replacement bus service.

If the intention is to carry out this wider review of the National Rail conditions of carriage, why has Passenger Focus so far been excluded? Can the Minister guarantee that there will be no watering down of passenger protections in the National Rail conditions of carriage that may be additional to the protections provided in the Bill? All the consumer protections in the Bill are subject to parliamentary scrutiny, and the public have had an opportunity to influence them and have a view on them. Changes to the National Rail conditions of carriage are not usually subject to such public consultation, but this is an unusual circumstance. Will the Minister clarify whether the proposed revisions to the National Rail conditions of carriage to make them consistent with the Bill should be subject to public consultation?

I have a few more questions about implementation and the consequent need for further guidance, as set out in the new clause. The National Rail conditions of carriage do not apply to light rail systems such as the Docklands light railway or the London underground, where separate conditions of carriage are set out by Transport for London. Have the Government made an assessment of the various light rail conditions of carriage? Do Ministers plan to exclude them from the rights in the Bill, as with the National Rail conditions of carriage, or, indeed, to do something different about them?

There are also a number of issues concerning equivalent protections and how they will be met. At present, under the National Rail conditions of carriage, a passenger is entitled to a full refund only if they decide not to travel after the service is cancelled or delayed or when a reservation is not honoured and the ticket is unused. Passengers are entitled to partial refunds if they decide not to travel for other reasons, but they are subject to a £10 administration charge. Passengers who start their journey are entitled to compensation of only 20% of the price paid, and only if their service is more than an hour late. Although some rail operators offer a more generous delay/repay compensation scheme, that is not set out in the national rail conditions of carriage.

If passengers are entitled to a repeat performance, as set out in clause 54, on the grounds that the journey was not in accordance with the information given about the service, as outlined in clause 50, will they now be entitled to a full refund? Could that therefore be the stronger provision relating to compensation for consumers that the Minister mentioned when she responded in Committee in March?

I also want clarification on another issue. When passengers are affected by planned possession works by Network Rail, rather than the train operator, they will clearly be receiving a substandard service, but will they be entitled to compensation? I do not think they have such an entitlement at present.

Obviously, I am speaking in my capacity as a Back Bencher rather than from my position on the Front Bench. Many of our constituents are frustrated by their experiences on the railways, and they want to know that the rights set out in the Bill in relation to rail fares and services are being addressed by the Minister and that there is an opportunity to strengthen consumer protections in such an important area of policy.

[Damian Hinds (East Hampshire) (Con)]

I want to talk briefly about new clause 3 and new schedule 1, particularly because they relate to the private sector and one of the three sectors named under the Enterprise and Regulatory Reform Act 2013.

As the hon. Member for Walthamstow (Stella Creasy) has said, this country, like the rest of the world, is undergoing a revolution in data in terms of their volume, richness and accessibility, and, in some ways, their associated risks. There is also a rapidly changing market in price comparison, and the hon. Lady has referred to some of the benefits that can accrue from that. The development of that market is not entirely benign and is certainly not without cost. There are two opposing forces: consumers’ ability to compare prices and services side by side tends to bring prices down, but the nature of the marketing—the branding land grab, the cost of advertising and particularly the pay-per-click auction model on the internet—tends to drive costs and therefore prices up. It is certainly true, however, that price comparison has great potential to make markets work better. I am very proud of everything the Government are doing with midata to help make that a reality.

One market that does not work at all is one of the three mentioned in the 2013 Act: retail banking current accounts. The actual cost to consumers of having a current account is, on average, £152 a year, but nobody we talk to, including informed consumers and even Members of this House, knows that. Whenever we talk about “free” banking, we should use inverted commas, because, of course, there is no such thing as free banking. If consumers could see how much they are actually paying, both explicitly in behavioural charges and implicitly through forgone interest, the retail banking market would work better because there would be more diversity and competition.

Critically and perhaps even more importantly—this touches on some of the new clauses and amendments we will debate later—the fact that people do not know how much their banking is costing them inhibits the development of new retail banking products. Such products include budgeting bank accounts—so-called jam jar accounts—for which people have to pay a fee, but through which they are much less likely to tip into debt, because they make it easier to budget money and also that tiny bit easier to save a small amount.

New clause 3 is not necessary because progress is already being made. The powers already exist.

[Stella Creasy]

indicated dissent.

[Damian Hinds]

The hon. Lady shakes her head, but the powers already exist under the 2013 Act. The Government are looking for voluntary progress, which I think is the right way to proceed on reforming markets. A review of progress is due about now, and I hope the Government will continue to do what they are doing. They have the reserve right to push for more and have said explicitly that if not enough is being done, they will consult on the wording of regulations in order to make those markets work better compulsorily. That is the right approach, as opposed to jumping the gun.

--- Later in debate ---

[Damian Hinds]

It is always a pleasure and an honour to follow the hon. Member for Makerfield (Yvonne Fovargue) who talks not only with passion but with a great deal of knowledge and expertise about these matters. I wish to speak briefly about new clauses 11 and 6. Before I do, may I say that it was a little unfortunate that the remarks of the hon. Member for Walthamstow (Stella Creasy) took the turn that they did at the end? What she said is simply not true, and everybody in this House who takes an interest in these issues, which she certainly does, knows that the sub-prime high-cost credit market has been around for donkey’s years. It has not started—[Interruption.] No, it has not started, or even in its totality dramatically shifted, in the past three years.

The hon. Lady mentioned statistics for payday lending and logbook lending, but, if she was being complete in her analysis, she might have talked about when the big growth spurt came in home credit. She might even have talked about when the growth spurt came in rent to own. Perhaps she would like to take the opportunity to talk briefly about those things now. I would happily take an intervention.

[Stella Creasy]

Will the hon. Gentleman clarify whether he voted three times in the House over the past three years against capping the cost of credit and therefore tackling some of these problems? If he recognises that there are problems, is he saying that he will support the new clauses today?

[Damian Hinds]

Clearly, I was not saying that. I was asking the hon. Lady whether she wanted to comment on the growth of home credit and rent to own. We have had many opportunities in this House to discuss a cap on the cost of credit, and she and I—and she and many other Members—have had an opportunity to discuss some of the practical aspects. There will now be a cap on the total cost of credit, but that is not to say that the definition of that is without difficulties. It remains a tricky thing to do. All of us, including her, who take a close interest in these issues know that there is no single silver bullet solution that solves any of these market problems. We need regulation, empowerment for consumers, financial education and sensible alternatives. This House is at its best when we are discussing what those practical approaches might be, and I welcome the new clauses, which allow us to talk about those very things. I have an awful lot of sympathy for the sentiment behind new clause 11, which was put forward by the hon. Member for Makerfield, and for what is behind new clauses 7 and 9, but we must be wary about seemingly straightforward legislative solutions that may not deliver all they purport to.

We always talk in the plural when we refer to rent-to-own companies, but in reality there is one really big company. There is a problem with the pricing and marketing of these companies. I have recently been added to the BrightHouse e-mail marketing list. I do not know what I have done to deserve that honour—I am not sure whether I should take it as a compliment—but I am now bombarded with messages saying how easy it is to pay weekly, and it is those messages that go to the heart of the problem. To be fair, the slightly misleading approach that we are talking about does not necessarily apply just to rent-to-own companies. We could say that it applies to every pay-monthly mobile phone contract, through which we not only pay for our calls but finance the phone, but it is never advertised how much is for the phone and how much for the calls. We always see it as one all-together monthly amount.

[Mrs Anne Main (St Albans) (Con)]

My hon. Friend is making very measured comments. It is true that no one party has a handle on debt in this debate. Many of us are concerned about the matter. Does he agree that companies such as Emmaus in my constituency have helped to ensure that people do not have to take on ridiculous payback terms, by enabling them to access good refurbished second-hand goods free of charge if their circumstances allow? I pay tribute to companies such as Emmaus that have helped many people in difficulty who need goods.

[Damian Hinds]

I am not familiar with Emmaus, but I am sure that it is an admirable organisation. I can mention Furniture Helpline in my constituency, and there are many others throughout the country.

[Mr Mike Weir (Angus) (SNP)]

I am listening carefully to what the hon. Gentleman is saying. Affordability is at the root of this issue. It is not only companies such as BrightHouse that concern us—for years, when interest rates were rising, supposedly reputable companies simply extended the time that people had to pay, so that the weekly payments stayed relatively low. That is the real issue at the heart of this.

[Damian Hinds]

The hon. Gentleman is absolutely right. [Interruption.] My hon. Friend the Member for St Albans (Mrs Main), who is sitting next to me, mentions catalogues: catalogue credit has worked on that basis for a long time, stressing the weekly repayment amount. There is also an ability to shift the amount that is apparently the cost of the product and how much is paid for the financing—in the case of catalogues, that is often zero, but the base price is inflated to allow for that.

My worry about the approach in the new clause tabled by the hon. Member for Makerfield is that I do not know how we would make the price comparator work. She made an important point about product numbers. As electronic comparison capability increases, it will be important to be able to make a direct like-for-like comparison, and adding an extra letter to a product number to make such comparison impossible should certainly be cracked down on.

[Mrs Main]

My hon. Friend is absolutely right. Many of the goods that are advertised are often own-label brands, and that makes it very hard for consumers to make a direct like-for-like comparison with another branded good.

[Damian Hinds]

It is difficult, but if we are talking about a big plasma TV or a washing machine, equivalent products and other brands are also available. The basic problem, however, is not that the information is not available, because the idea that people do not have the ability to make such comparisons becomes less and less true every month, with smartphones and so on. The difficulty relates to money advice, and encouraging and prompting people to make the comparison. We do not solve that problem by adding small-print text about the total cost, the annual percentage rate, the total cost of credit, the reminder that “your house may be at risk”, blah, blah, blah. All those things do not solve the problem of how we encourage people to make that comparison and do the analysis to ensure that they are not worse off than they need to be.

That leads me on to new clause 6 and the so-called

“annual report on the level at which a levy on lenders in the high cost consumer credit market should be set”.

There is a levy that applies to lenders, so I assume that the requirement for a report is a device to call for something that might be in place anyway. Debt advice is also provided. We could argue that, at the high-cost end of sub-prime, such lenders should make a greater contribution, because of the detriment associated with them, but that does not require primary legislation.

The new clause would also have the Government make provision for affordable credit to be available through credit unions. I would argue strongly that the Government have brought and are bringing forward measures to ensure that affordable credit is available to vulnerable customers through credit unions. Through the credit union expansion project, tens of millions of pounds are being made available to modernise and upgrade the sector. Through regulatory reform—the passing, finally, of the legislative reform order—the increase in the monthly interest rate cap from 2% to 3% makes competition with high-cost, short-term lenders a little more possible. Also, as we were discussing, the cap on the interest charged in the commercial sector will at least help to slow the apparently inexorable rise of that sector. There are also things that the social lending sector must do. It has to step up to the plate on its marketing, branding and consistency of product offer. There will have to be consolidation in the sector to provide the services that people want.

I do not know whether the idea behind new clause 6 in the mind of the hon. Member for Walthamstow came from the recent IPPR report, on which she commented, which suggested that a one-off levy on high-cost lenders would facilitate a great expansion in the social lending sector.

[Mrs Main]

Will my hon. Friend speak a little more slowly? The hon. Member for Walthamstow (Stella Creasy), on the Opposition Front Bench, is having trouble tweeting. She is trying to provide a running commentary on his speech and perhaps if he went a little more slowly she would catch up.

[Damian Hinds]

I will always follow the hon. Member for Walthamstow, so I shall pay great attention to what she has tweeted after the debate.

I have a lot of sympathy with any measures proposed to help support the growth of the credit union sector. A lot of things in the IPPR report are welcome and positive, such as the idea of having credit unions in post offices, Church of England facilities and so on, but with respect to all concerned I would say that those are hardly first-time-out occurrences of the proposals. A back-stop reclaim facility, through the benefit system, could also have some benefits.

However, the idea—this is the main point—that some huge one-off capitalisation of credit unions would help to facilitate their growth, is not right. Under the previous Government, we had the growth fund, and I am not here to diss that. It was a well-intentioned initiative and will have done a lot of good. Such things are also eroded over time, however, and by definition if one has a big one-off capitalisation one ends up having to address a slightly more costly part of the market, which contributes to that erosion. What we need to do to help support and facilitate the growth of credit unions is what this Government are doing. We are trying to get them on to a sustainable footing with modernised systems, working collaboratively together to get the marketing and branding right so that the sector does not need a subsidy for ever but reaches a scale at which it can address more and more consumers, meaning that fewer and fewer consumers need or want to access the types of lenders we have been discussing today.

[Fiona O'Donnell]

Despite appearances, my hon. Friend the Member for Walthamstow (Stella Creasy) and I are not taking part in a mother and daughter catalogue photo shoot later. We should perhaps co-ordinate in future on what to wear when we are both taking part in the same debate.

It is a pleasure to follow the hon. Member for East Hampshire (Damian Hinds). He said that his Government are taking an interest in issues around payday lending. They are certainly taking something, although I am not sure whether it is just an interest. When he criticises Labour, saying that for 13 years we did nothing, he fails to recognise that there has been an incredible growth, certainly in my constituency, in the number of people having to resort to payday lenders. They are having to increase the amount they are borrowing from those lenders as well as their general debt levels. There is a cost of living crisis and poverty is the root cause, and the Government should have acted more quickly. The hon. Gentleman is on the record as having said that self-regulation works, but even he has had to admit that self-regulation of payday lending has not worked and that it is time for action.

Figures reported by StepChange last December showed that among its clients, people seeking debt advice in East Lothian, my constituency, are now saddled with average payday loan debts of £1,864, £466 above the Scottish average.

--- Later in debate ---

[Jenny Willott]

I am very grateful to the hon. Gentleman for highlighting that.

[Damian Hinds]

To complete the set, may I use this opportunity to mention the important work done by credit unions that operate junior savers clubs in schools in the constituencies of many hon. Members? It would be great to have them in many more schools in many more places, so that young people get into a savings habit before they reach the first point at which they might take on consumer credit.

[Jenny Willott]

Perhaps the hon. Gentleman would like to speak to the hon. Member for North Swindon (Justin Tomlinson) about that. He raises a very important point: the more we can help young people to understand some of these complex financial systems and how to manage money, hopefully, fewer people will end up in debt—particularly unaffordable debt—in the future.

Returning to the FCA rules on hire-purchase contracts for household goods and what has been called the “BrightHouse clause,” the FCA’s new rules will require firms to provide pre-contractual explanations and information in line with European requirements. I hope that answers the point made by a number of Members on both sides of the House. The information will include the cash price of the goods being financed and the total amount payable. The FCA rules will require that information to be provided to consumers before they sign up. I hope that will ensure greater transparency for customers.

The rules also mean that firms have to adhere to debt-collection rules—a point raised by the hon. Member for Makerfield—including treating customers who are in default or arrears with forbearance and due consideration. They also require firms to assess credit worthiness and affordability, including the potential to impact adversely on the consumer’s financial situation and their ability to make repayments as they fall due. There are, therefore, broad requirements on firms to try to tackle some of the hon. Lady’s concerns about consumer detriment.

When firms sell associated insurance products, they must do so in line with the FCA’s requirements for assessing a consumer’s eligibility to claim on a product and the high-level principle of treating customers fairly. Those are new requirements to ensure that we try to tackle consumer detriment. The Government believe that the tough and decisive action taken by the FCA will ensure that customers are better protected as a result.

Finally, we discussed the issue of logbook loans at some length in Committee and I completely understand the concern about the potential for consumer detriment as a result of these products. The Government believe that people should be free to borrow and have the tools to make an informed decision about which credit product is right for them, but consumers should be confident that they will be treated fairly and that the regulator will step in when things go wrong.

As the hon. Member for Walthamstow will be aware, logbook lenders now also fall under the responsibility of the FCA. As I have said with regard to other credit firms, I believe that consumers will be far better protected under the FCA regime than they have been in the past. The FCA has been very clear that logbook lenders are among the firms that it considers pose the greatest risk to consumers, and they will be in the first phase of firms that have to be fully authorised from October. Logbook loans are defined by the FCA as higher risk activities and, as such, lenders face closer supervision and higher regulatory costs.

Logbook loan providers are now also required to meet the standards the FCA expects of lenders in making thorough affordability checks and providing the adequate pre-contractual explanations to consumers. They are also subject to the high-level principle of treating customers fairly. Indeed, the FCA considers this area to be a particular concern. It has said that it is

“putting logbook lenders on notice”,

and that its new rules give it

“the power to tackle any firm found not putting customers’ interests first.”

It is therefore taking its new responsibilities very seriously.

In addition to the FCA’s robust action, Treasury Ministers have asked the Law Commission to look at how best to reform the Bills of Sale Act—as we know, the legislation underpinning logbook loans is old, lengthy and incredibly complex—and, as the hon. Member for Gainsborough (Sir Edward Leigh) highlighted, the Government believe that the Law Commission is best placed to undertake a thorough assessment of how we can bring the legislation up to date. It has responded favourably to the Treasury request, and it will confirm its upcoming work programme soon.

The hon. Member for Walthamstow raised concerns about people buying cars with outstanding loans against them and about the impact on customers. She said that a large proportion of second-hand cars are sold with pre-existing charges. The Bill, like the existing law, is clear that there is a legal obligation on the seller to notify the buyer of any outstanding charges. The Bill covers business-to-consumer sales, and sales between individual consumers have the same level of protection under the Sale of Goods Act 1979, which provides that the seller must have the right to sell the goods. That applies to all contracts for the sale of goods, so it covers private sales, in addition to purchases of goods from a shop or a business. Goods must be free from any undisclosed charge or encumbrance, which applies to hire-purchase terms for goods sold on, as well as to logbook loans. The private seller is in breach of contract if they do not have the right to sell, or if there are undisclosed charges on the goods, which means that the buyer can get their money back from the private seller.

The Government are concerned about the impact of unscrupulous traders in all these areas. That is why we have taken so much action and given such strong powers to the Financial Conduct Authority, and I do not believe that the Opposition’s new clauses are the right way forward. The Government’s approach is the right one for protecting consumers, particularly the most vulnerable, and I hope the hon. Member for Walthamstow will withdraw new clause 6.

--- Later in debate ---

[Damian Hinds]

The hon. Lady rightly talks about the difficulties that many people face in trying to find the money to pay these fees, but is it her assumption, and that of the Opposition, that were letting fees to be banned, that source of revenue would disappear for the agents but they would not seek to reclaim it elsewhere?

[Stella Creasy]

It is not simply an assumption; it is based on the evidence we have seen from Scotland, which is that this money would be incorporated in the centre of the tenancy and so that the landlord would pay the fee. We would expect the tenant to pay one fee—the credit referencing fee—but once the tenancy was secure and the landlord could therefore be confident that the person was back in the place, we would expect it to be refunded. We are very clear that the practice of charging fees to both parties at the same time is a conflict of interest and therefore needs to be addressed, which is what our proposal would do. It would spread the fee over the course of the tenancy.

[Damian Hinds]

Just to complete the point, is it also the hon. Lady’s assumption, and that of the Opposition, that were landlords to face greater fees, they would not seek to recoup that extra cost in some other way?

[Stella Creasy]

One issue is what landlords are charging for. I see landlords who are charging twice for credit referencing, because they are charging the landlord and the tenant that fee. [Interruption.] The presumption the hon. Gentleman makes is that all the fees are for different activities—

[Damian Hinds]

I am asking what your presumption is.

[Stella Creasy]

Our presumption is that the fees would then be taken on by the landlord and taken as part of the tenancy agreement. Our approach would resolve the problems we are seeing for tenants and the conflict of interest over whom the agent would act for. Our proposal is about making sure we deal with that conflict, particularly how for landlords and for tenants it creates a series of perverse incentives whereby both can be charged for the same service.

Holiday Pricing

Damian Hinds Excerpts

Monday 24th February 2014 Westminster Hall

[Damian Hinds (East Hampshire) (Con)]

I am grateful for the elevation implicit in your introduction, Mr Turner. It is a pleasure to see you in the Chair. As it was said earlier, you represent the Isle of Wight, which is one of the important tourist destinations in this country.

This debate has already covered a number of important subjects, including the importance of family life and family time, the value of an education, which people do without by missing part of education, the joy and the benefits of discovery through travel, and the health of the travel industry. I hope that you will forgive me, Mr Turner, if I restrict my remarks mostly to the topic of the e-petition, which is on whether to stop holiday companies charging extra in the school holidays.

In the current tough times, of course we are focused in this Parliament on affordability of everything for families and being able to spend time together away from home is one aspect of that. In the words of the petition:

“Family time is so much more essential in the current working world, but so many people cannot afford holidays in school holidays”

and a

“break at home is not the same as getting away from it all where…focus is on family”.

Who could disagree with that?

I understand why people would say, “If holiday companies can make money charging price x in the winter, surely they must be able to make profit by charging the same price in the summer. By charging a higher price, they must be making huge profits on the backs of other people.” That is not correct. If the same is charged in summer as in winter for a popular sun-based tourist destination, those companies would be out of business and nobody would be going on those holidays. It is also worth saying that what counts as a peak period in the travel business is partly but not entirely determined by when school holidays are. Weather also plays a big part, and so does the timing of public holidays such as Easter, Christmas and, in this country, bank holidays.

A little Google research this morning revealed that for holidays on which presumably no children are involved, and therefore school holidays are not involved, there is also a big difference in price. The price for a Thomas Cook couple’s retreat in Negril, Jamaica goes up by 31% between June and August. As you will recall from when we were there together recently, Mr Turner, the price for an “Ibiza Rocks” clubbing holiday also rises by 31% between June and August. The differences in those prices are clearly not driven by the timing of school holidays.

I have a confession: I come here today as a sinner. Before coming to Parliament I spent about a decade in the travel trade. I am afraid that I was mostly involved in pricing and what the travel trade calls “revenue management.” I do not want to go into the technical detail, but revenue management is basically the discipline of deciding what prices to offer, to whom, when and under what conditions.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

It’s your fault.

[Damian Hinds]

Yes, it is my fault. I worked mostly in the hotel business, but the same principle applies to airlines and most of the travel business’s wide range of products—basically anything with high fixed-cost assets, a perishable product and fixed or semi-fixed capacity. Hotels are also suppliers to holiday companies. Package operators buy in capacity from airlines, hotels, bus companies and so on. It is also worth bearing in mind that there is an international market, especially in foreign travel. Packagers are to some extent price takers. No one in this country decides the market rate of a hotel room in Spain in the high season. Even if we believed that British companies set the prices for holidays, no one would suggest that Spanish hoteliers are within the control of Her Majesty’s Government. Resort-based travel is international in nature. People have already mentioned the timing of German and French holidays, which are already factored into the price. If people from different countries are going to a resort, the demand is an amalgam of all the incoming traffic.

I come here as a sinner, but I have not come here to confess. I do not anticipate a popularity boost from my appearance in Westminster Hall this afternoon, but the simple fact is that to a large extent we are talking about the laws of economics. There is no single year-round market clearing price in holiday resorts.

[Annette Brooke]

I want to draw on the hon. Gentleman’s expertise. I accept that there is supply and demand and that, if we attempt to interfere too much, there will be touting and so on, but does his analysis include the reasons for the steep rises on particular days, which seem to coincide with school holidays?

--- Later in debate ---

[Damian Hinds]

The hon. Lady is correct that the rises coincide with school holidays. To some extent, the existence of those holidays creates those spikes, but the holidays themselves coincide with the high season. As I outlined earlier, the prices for holidays marketed to couples, older people, singles, groups and clubbers typically go up in late July and August because that is the most popular time of the year, particularly to visit European, sun-based resort destinations.

This debate is no place to start deconstructing the profit and loss accounts of holiday companies, but contribution to profit is a key concept. I will talk about hotels, but the same logic applies to airlines and other travel products. The direct marginal cost of someone staying in a hotel room is rather low. Globally, the figure is somewhere between $15 and $20. That is the cost of laundering towels and sheets, issuing soap and providing heat, light and power, and so on. On one level, a hotel will make a profit if it charges anything over $20. The problem is that there are other, fixed costs. For an airline or hotel, the biggest fixed cost is the building or aircraft—loan repayments do not go up and down. Taken together, the cost per night goes up from $20 to, say, $100, which is a big difference. In the off-season, a hotel room might be sold for $80, $70, $60 or $50 a night. In other words, a hotel might deliberately make a loss. Why would a hotel do that? It does it because as long as it charges more than $20 a night, which is the direct marginal cost, it is contributing to profit. If a hotel tried to charge the $100 profitable rate, it would not sell the room.

[Dr Julian Lewis]

I fully appreciate my hon. Friend’s argument that the rich seasons help airlines and the tourist industry to function during the off-seasons. What does he think would happen if some flexibility were introduced so that schools in different areas took their school holidays at different times? Would he anticipate prices remaining low during those times, or would he anticipate the travel industry increasing prices to reflect such an expansion of the season?

[Damian Hinds]

My hon. Friend makes a good point. The short answer is that such a measure would be welcomed by the travel business because it would extend the season, which would be good for capacity utilisation. There would be an effect, but the effect would not be nearly as big as many people anticipate. The season might be extended by a week or two, but those would still be shoulder periods. They would not be peak periods, so there would be a difference, but the difference would not be huge.

[Mr Ellwood]

My hon. Friend makes an important point on the responsibility of the tourism industry as a whole to ensure that it sets its prices accordingly, but I recall that during the Olympics there was a concern that many hoteliers in London increased their prices too much, which put people off. Does he have any thoughts on whether that should be rationalised for one-off events such as the Olympics? I recall wanting to stay in Manchester during the party conference, but as soon as hoteliers found out that the party conference might be held in the city, the prices suddenly shot up.

[Damian Hinds]

My hon. Friend is correct in identifying price gouging as a problem. From a regulatory perspective, most countries have laws against price gouging, but brand owners and companies have an interest in not doing such things. Even worse than the Olympics, price gouging can occur when there has been a natural disaster. People absolutely have to stay in a hotel, so they are ripped off. That is a bad thing, which is why rack rates exist. Rack rates appear on the back of a hotel door, and it is the maximum amount that may be charged in law. Most European countries, the United States and most advanced economies have that system in hotels, but price gouging remains a problem.

In summary, leisure travel companies have to make more money in peak periods to cover the marginal cost losses incurred during the off-season. The definition of a peak period is when most people want to travel, which is partly, but not wholly, determined by the timing of school holidays. I am interested to hear from the hon. Member for Chesterfield (Toby Perkins), but it is inconceivable that a British Government of any political persuasion would impose price controls on the British-based travel business. If such price controls were imposed, firms would go out of business—plenty of holiday companies go out of business anyway because margins can be thin across the year—and capacity in foreign resorts would not be made available to British tourists. Instead, capacity would be sold to people from other countries, which would have the disastrous consequence of more German towels on loungers, and we can all unite around wanting to avoid that.

What are the alternatives? I have spoken for too long, but I want briefly to address the debate on taking children out of school outside school holidays. I recognise the argument that times are tough and that people are struggling to go on holiday so want to take their kids out of school. One thing that has not yet come up in the debate is that education in this country is free, but that does not mean that education has no cost. The average cost of educating a child is some £4,500 a year, which covers 190 school days or 38 weeks. By my basic maths that works out at about £120-worth of value per child per week. If someone takes both their children out of school for a fortnight to go on holiday, £480-worth of value is forgone in the education of those children. That value cannot be transferred to the education of another child; it is value forgone for ever. The salary of the teacher and all the other things that go into running the school remain and the children miss out.

Children fall behind if they miss part of their education. In the context of a school term, even a week or two weeks is a reasonably big chunk of time. Multiplied over a lifetime, a child taking a fortnight out from school every year from year R to year 13 would be off for 28 weeks, which is three quarters of an academic year. To put that in physical terms, it is the equivalent of saying to that child, “You will do your GCSEs at the beginning of year 11 rather than at the end.”

What are the options? One thing that nobody has mentioned is counter-cyclical travel. If people go to places in the summer that have most of their demand in winter or in business periods, they can get quite a good deal. We have those places—in particular, business-focused destinations—in this country. Travelodge, for example, has hotels in many places and families can find lots of fabulous things to visit within 40 minutes of any of them.

[Mark Menzies (Fylde) (Con)]

The Fylde coast, for example.

--- Later in debate ---

[Damian Hinds]

Yes, indeed. The big thing we are talking about is varying holidays, which is intrinsically attractive, but we will never be able to move them that far, because August is August—the warmest time of year in Europe—and Christmas is Christmas. There might be a little flexibility on whether the Easter holiday takes places at Easter, but a teacher will not want the first half of term to represent 40% and the second half to be 60%, because that has a number of implications for education. Varying could be done to some extent, but my recommendation is not to do it over big areas. Some of the other advantages of staggered holidays, such as changes to road capacity usage and train capacity usage, would be lost if everyone in a massive area had the same holiday. Varying could be done at a sub-regional level.

I am not sure that holidays need a big national plan, because schools increasingly have the freedom and ability to vary them under the Government’s reforms. There is nothing to stop schools getting together—there is, for example, the education improvement partnership in my area—and saying, “We are going to do it slightly differently to give parents in our area a bit more room.” That will not, however, solve the whole problem or make holidays in August cost the same as holidays in April. There is a limited amount of movement and, at the end of the day, we just cannot change when the sun shines.

--- Later in debate ---

[Toby Perkins]

I congratulate the hon. Gentleman on repeating my suggestion.

It is usual during winding-up speeches to talk about what has been mentioned during the debate, but I will talk about what the hon. Member for Birmingham, Yardley did not talk about: the tourism industry. An important point that some colleagues mentioned is that holiday accommodation is available for 52 weeks a year, or slightly less, and there is pressure to push the customer base into a shorter and shorter period. The petition refers to profiteering holiday companies exploiting people, but that is not the reality. If a crude cap were introduced, they might retain the current price in August but they would be unable to reduce the price in April. The important question is whether people would be better off or whether those who can go away at different times would not get cheaper holidays.

The hon. Member for East Hampshire (Damian Hinds) confessed his sins—it is always good for a Member of Parliament to do that. If he did not quite ask for forgiveness, he at least offered mitigating circumstances. The debate involves the many people who cannot go away during school holidays, as well as the many who can go away only during school holidays—for example, teachers and anyone who works in the education sector and so on. If we increase the pressure, we will push up the cost of their holidays too. The debate started 18 months ago, or 40-odd years ago, depending on how people look at it, but certainly prior to the proposed changes, which, if anything, will push prices up further. What was a problem 18 months ago will be an even bigger problem in a year or two.

My hon. Friend the Member for Leeds East (Mr Mudie) asked why we are talking about the matter now and why it has become so important. I will touch on that, but in his broader view of the debate he said that he supported the petition but not necessarily the proposed remedy. That reflected what many other hon. Members said.

The hon. Member for Suffolk Coastal (Dr Coffey) focused on the semantics of “special” and “exceptional” and seemed to question whether there has been a change in policy. The previous Government introduced fines for people who took their children out of school without authorisation. The Secretary of State was clear that he wanted his direction following the statutory instrument to be seen as a change of policy. Head teachers saw it as that, and many in my constituency wrote to parents saying that the policy had changed and that there would be no discretion other than in narrow and exceptional circumstances. That was clearly the intention of the Secretary of State’s policy.

The debate has been consensual and sensible. It has shown that we all believe strongly and passionately that it is vital for our children to be in school for the maximum amount of time, that standards should be resilient and that parents should recognise their responsibility. We recognise that the present situation is desperate because prices have risen faster than wages in 41 of the last 42 months, and families are feeling the pinch. We are discussing another aspect of that cost-of-living crisis. I intended to give some examples of how prices have increased, but many hon. Members have alluded to that so I need not do so. However, the extent of price differences during the high and low seasons is huge and the success of the e-petition calling for swift action is not surprising.

The Association of British Travel Agents has made it clear that price fluctuations are the commercial reality of running a business in a seasonal market, and we understand that. The hon. Member for East Hampshire asked whether the Labour party is proposing a crude cap and rightly gave some reasons why that would be difficult. We do not have a price control policy at a macro level, but that does not mean that there is never a reason to look into whether there is a properly functioning competitive market. I will touch on that.

Many parents believe that they are exploited by the holiday industry, which uses the tight limits on when they can travel to overcharge them, and the huge cost differentials reflect that. However, there have been no thorough studies of the issue in recent years, so it is hard to get to the bottom of the problem and the extent of exploitation. The lack of such a study seems at odds with the Government’s intention of addressing consumer protection concerns. I should be grateful if the Minister commented on whether the apparent contradiction of one group of consumers apparently paying over the odds to subsidise another group is questionable under our consumer protection laws.

Consumer law has strong protections to ensure that the public are charged a reasonable price for a service. That presumably includes arranging a holiday, and does not exempt the law of supply and demand. That is an interesting question for the Government. The purpose of the Consumer Rights Bill is to make those rules clearer, but there is a glaring omission because it does not give consumers or consumer groups any power to access the information they need to check whether that is the case. Does the Minister accept that the only way to resolve that confusion more broadly is to have a proper analysis of holiday prices, and do the Government plan to conduct such research? Was there any research prior to the change of policy?

The situation demonstrates the consequences when there is no organisation to stand up for the rights of consumers as a group. The hon. Member for Birmingham, Yardley suggested that an Offonholiday regulator might not be the answer, but it might be worth considering a broader consumer rights body to act as a useful brake on exploitative practices. Most people accept that the rules of supply and demand will ensure that prices are higher at peak times, but many believe that the extreme divergence in prices is unfair.

[Damian Hinds]

Is the hon. Gentleman saying that there is something in the operation of some elements of the travel industry market over and above that which can be coped with by the current competition arrangements?

[Toby Perkins]

That is a valid question. A broader study would provide better information to establish whether that is the case. In July 2012, the Office of Fair Trading concluded a two-year investigation and found that two travel giants had struck deals with a hotel group to restrict smaller agents’ ability to offer discounted hotel rooms. Expedia admitted afterwards that it had

“engaged in cartel conduct in breach of the law”.

In 2013, a discount hotel site alleged that it was forced out of the market after attempting to undercut rivals by offering cheaper prices. There have been allegations of cartel-like activities, and those involved should be investigated and pursued rigorously. Only when we have open, competitive markets can consumers have faith in the prices that they are paying. That is important and entirely legitimate. At the same time, although we recognise that market forces exist, we do not say, “There is never anything to look at”, in the context of whether those markets are being fairly operated. We stand absolutely resolutely on the side of consumers and would be willing to investigate whether action is necessary to ensure that they get a fair deal in the travel market.

The abolition of the Office of Fair Trading, which would have looked at this issue, has highlighted the fact that a gap now exists. There is not another appropriate body that can do what the OFT did. The Competition and Markets Authority is focused on competition and not on outcomes for consumers, and therefore does not complete the same work. Does the Minister share my concerns about the lack of an appropriate body? Does she think that that makes it more likely that consumers will get a raw deal in future?

Other things can be done to support the tourism industry. We recognise that the issue is not only about tourism overseas, but very much about tourism here in the UK. We know that the VAT increase to 20% placed our tourist industry at a competitive disadvantage compared with many of our European competitors, and that the huge increase in business rates over the past three years has had a big impact on many small businesses in the hospitality and tourism industry.