Business Banking Resolution Service

George Eustice Excerpts

Tuesday 11th July 2023 Westminster Hall

[Andrew Griffith]

The right hon. Member makes a fair point. The cracks that exist in the compensation regime are a challenging feature. That is one reason why I am attracted to using as much of the existing architecture as possible precisely to avoid that point about cracks.

[George Eustice (Camborne and Redruth) (Con)]

I apologise that I missed the opening speech because I had another meeting. If a lender were to try to enforce security in respect of a residential mortgage on a home, they would first need to go to a court to get a possession order. When it comes to business lending, a bank can enforce their security without any recourse to the courts at all. Does the Minister think that that is something we should look at?

[Andrew Griffith]

My right hon. Friend raises an important point. It would not be right to say that we should not look at it, but he raises this in the closing minutes of the debate and he knows that these areas can be fraught. One of the most challenging things about the regulation of financial services in general is the unintended consequences. The hon. Member for Hampstead and Kilburn talked about that, and we do not want to see any diminution in access to capital that could prevent our small businesses from growing. I would be happy to meet my right hon. Friend to understand the issue he raises in more detail, but I do not want to go any further from the Dispatch Box on that.

We have heard the importance of this matter to constituents of hon. and right hon. Members. We are united in this House on the importance of the provision of that lifeblood of business growth capital for our small businesses, which lack some of the sophistication and have been predated on by the banking sector in the past. That is not acceptable, and it remains the position of the Government to do everything we can to deliver redress where we can and to ensure the financial regulatory regime protects those who need our protection.

Public Bodies and VAT

George Eustice Excerpts

Wednesday 17th May 2023 Westminster Hall

[George Eustice (Camborne and Redruth) (Con)]

I beg to move,

That this House has considered public bodies and VAT.

It is a pleasure to serve under your chairmanship, Mr Betts. Hon. Members will be well aware that His Majesty’s Treasury tends jealously to guard its primacy on tax matters. Indeed, I remember as a Minister frequently being given a briefing inviting me to respond to questions about tax with the simple words, “This is a Treasury matter.” If I ever sent officials to the Treasury to raise an idea or discuss a particular matter, they would go away with a look of trepidation in their eyes and come back looking rather chastened. However, I never accepted that tax is a matter for the Treasury alone. I have always believed that it is a matter for the Government as a whole because tax affects every industry, every public body and every Department. Its effect on all those things means there is also a vital role for Parliament in scrutinising tax policy.

I want to focus on the Value Added Tax Act 1994 and the way we treat public bodies—especially the unfair treatment of further education colleges. The United Kingdom was forced to introduce VAT when we joined the European Economic Community in 1973, and over the years VAT became one of the big three tools used by Government to raise revenue. It has also been the main go-to tool for Governments when they are trying to deal with a crisis. VAT was slashed after the financial crisis of 2008, and again during the covid pandemic.

Under the VAT rules, tax can be levied on goods at either the standard rate—the full 20% tax is levied on sales—or at a reduced rate of 5% for certain items, such as children’s car seats. There are also zero-rated goods—principally food and children’s clothing. Finally, there is another category—exempt goods. That applies to many services, including insurance, finance and, notably, education.

The 1994 Act established a basis for public bodies to reclaim the VAT on their purchases, even though their services were exempt. That applies in particular to councils, the police, schools or academies and, notably, museums. However, there is an anomaly in the way the tax system works, in that FE colleges are not on the section 33 list that would make them exempt.

[Daniel Zeichner (Cambridge) (Lab)]

The right hon. Gentleman is making an important and useful speech. Does he agree that the VAT trap has sometimes been used as a way to lure institutions out of the maintained sector and into academisation and that that is another lever that the Government have used the VAT system to create? That has affected institutions such as Hills Road Sixth Form College, Long Road Sixth Form College and Cambridge Regional College.

--- Later in debate ---

[George Eustice]

The hon. Gentleman makes an important point, but academies are included on the exempt list, which the Government amended specifically when academisation started, so that schools would not be placed at a disadvantage by leaving the local authority. Councils are also on the list, so they can reclaim their VAT inputs.

My argument is that His Majesty’s Treasury should, at the earliest opportunity, introduce a statutory instrument with respect to section 33 of the 1994 Act to ensure that FE colleges are treated fairly and that this anomaly is corrected. FE colleges would therefore be able to reclaim VAT on their inputs.

The Treasury guards tax policy ferociously, but it also has a duty to be fair and consistent and to at least have defensible policies in these areas. Under the current arrangements, there is a ludicrous situation whereby a school with a sixth form can reclaim its VAT, but an FE college with a sixth form cannot. That makes no sense whatever.

[Vicky Ford (Chelmsford) (Con)]

My right hon. Friend is making a really important point. Chelmsford College in my constituency provides an outstanding education to young people from all over Essex, providing skills and training, as well as education. It pays around half a million pounds a year in unrecoverable VAT, which means it cannot pay the same level of remuneration to its staff as a local school with a sixth form can. That is not fair, not just for the college, as compared with a school or academy, but for the young people involved.

[George Eustice]

My right hon. Friend raises an incredibly important point. It is profoundly unfair on the young people who choose to attend an FE college, and perhaps even to do A-levels in its sixth form, that the college is treated differently—almost as a second-rate institution—when a school with a sixth form enjoys the higher funding and benefits that come with being able to reclaim VAT.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

I apologise to my right hon. Friend and the Minister that I cannot stay, but I will read very carefully what the Minister says. Perhaps she could quantify what she thinks the VAT take from FE colleges is, so that we know what we are discussing.

Does my right hon. Friend the Member for Camborne and Redruth (George Eustice) agree that we are not discussing a free gift to FE colleges? Like Colchester Institute, which serves my constituency, they are suffering an unparalleled financial squeeze at the moment and are having to inflict redundancies and cost reductions against a background of very low pay for most of the academic staff. Unless the Government can resolve that anomaly, FE colleges will face a crisis.

[George Eustice]

My hon. Friend raises an important issue, which is affecting colleges in Colchester, the rest of Essex, Cornwall and the whole country. The cost of having staff at an FE college to run courses in practical skills such as electrical engineering or bricklaying and construction is probably higher than at a university, which can just cram a couple of hundred students into a lecture theatre and simply deliver a lecture. The cost of providing those important skills, which are vital to our economy, is higher. My hon. Friend is right that it is incredibly difficult for FE colleges to recruit and retain staff, because of the squeeze on their budgets, so we need to do better.

During the EU era, the Government were able to blame EU law for the fact that FE colleges had to be treated differently. I have done my share of blaming EU law in the past for various things that were my responsibility, but EU law is no longer a barrier and cannot be used as an excuse or a reason for not doing the fair and just thing. We have now vanquished EU law and we have the freedom and power to set a coherent tax policy that is consistent and fair.

Doubts have sometimes been expressed about whether FE colleges are public bodies per se, but that has now been settled. I understand that, last autumn, the Office for National Statistics, which has been going through a rather tortuous classification exercise, has deemed that all sorts of bodies that might have been considered private are now public. It has cleared the issue up and said that FE colleges are public bodies, and in my view they should therefore be included in the section 33 list of public bodies that can reclaim VAT.

I have looked at parliamentary questions that have been raised in this area, and Treasury Ministers have sought to insist that the ONS designation does not change anything and, indeed, that it does not change the Treasury’s right to set out what it considers the right bodies to be included in the section 33 list. That might be the case, but the House is entitled to a rational answer as to why FE colleges are treated differently. We are entitled to insist on consistency and fairness in the tax system and, therefore, to request and require the Government to bring forward a statutory instrument to remedy this unfair situation.

This issue matters because the FE sector really matters. I declare an interest: as a teenager, I attended Cornwall College, which has a campus in my constituency and is the leading FE college there. My hon. Friend the Member for St Austell and Newquay (Steve Double) is also passionate about the interests of the college, which has a site in his constituency. I learned to arc weld at the college; I was not particularly good at it—indeed, I returned recently and tried my hand at it, and if I was not good then, I am certainly not very good now. I also attended a course on business studies and management, and a second course on farm management, and the skills and knowledge I gained were invaluable to me, not just during my first career, when I went into the farming business, but for things I have done since.

A succession of Ministers in this Government have been passionate about the FE sector and have recognised the importance of apprenticeships. The Government can be proud of the way they have tried to raise the status of vocational courses through apprenticeships. That is one of their great achievements; it started under the coalition Government and has been maintained. That is important, because apprenticeships add real value to the real economy, but we have to put our money where our mouth is, and at the moment FE colleges just do not have a fair financial settlement.

We often point to the success in technical skills of other countries in Europe and elsewhere, and we argue that we want to match that. We have lots of good ideas about apprenticeships and raising the standard and consistency of the courses, but sadly it feels like we do not follow through by providing the funding offered by countries that have shown us how to do technical skills properly.

Last year, schools were rightly given an injection of about £2 billion to help them with the cost of energy and the pressures on labour charges and wages. We all have schools in our constituencies that are suffering those pressures, but FE colleges, although they had some uplift, received just a fraction of what schools were given. Again, it is difficult to escape the impression that they were treated unfairly.

FE colleges are really struggling to recruit staff. They have the difficulty of running courses that are much more hands-on. There are all sorts of health and safety considerations for courses such as bricklaying, carpentry or electrical engineering, and the tutor-to-learner ratios are probably much higher than in universities, where everyone is just sat in a lecture theatre with their notebooks out. The situation is very different, and it is much harder for FE colleges to cope with fewer staff. Because these are successful parts of the economy—wages have been rising for technical skills such as electrical engineering and construction—it is difficult for colleges to lure people back from the private sector. They often find that people do the work partly out of a sense of duty or public service.

It is important that we recognise that, because the FE sector really matters. It gives us the skills we need for the economy of the future. We increasingly recognise that if we want to level up economic growth around this country, we need to rekindle and start to respect again manufacturing industries and the sectors of the economy that require technical skills. We cannot just get by with people in pen-pushing roles and the service industry; we have to recognise the value of those skills and fund them.

Even in new sectors of the economy, such as computer software and coding, the best way to learn those skills is often in a business, so that an apprentice can actually learn the approach taken by an individual computer software company and really learn on the job, while getting generic training in computer coding from the local FE college as well. As my right hon. Friend the Member for Chelmsford (Vicky Ford) said, we should value young people who have chosen such a career and to train in something that will be of real value to our economy.

The Budget earlier this spring had much in it to welcome. In particular, I welcomed the introduction of investment allowances, which will benefit the manufacturing sector and help it to get tax relief and capital allowances for investments in business, but I must say that it feels like there was a failure to support FE colleges in the Budget. That was disappointing for many Members on the Government Benches, and dozens of us wrote to the Chancellor asking him to take the plight of FE colleges seriously and to look at whether additional funding to help FE colleges could be found, but that appeared to fall on deaf ears. I hope the Chancellor will take the earliest opportunity to put that right and rectify that unjustified omission.

I invite the Minister simply to commit to bring forward a statutory instrument under section 33 of the 1994 Act. I appreciate that she may need to do a bit of a Government write-round before being able to commit fully, but I hope she will at least express an openness to the idea and give us a clear explanation, if she is able to, of why a school with a sixth form can reclaim VAT, but an FE college with a sixth form cannot. That is the key question, which highlights this terrible unfairness.

In conclusion, many hon. Members on both sides of the House want to see fairer funding for FE colleges. Introducing the change I have set out would help; it would not involve a huge amount of money, but it would probably give FE colleges somewhere in the region of a 2% to 4% respite on their budget. They would probably all use that money immediately to help retain and recruit staff. It is a relatively small amount of money but, like my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin), I am interested to hear what the Minister considers it would cost. Among those who support the change is my hon. Friend the Member for Worcester (Mr Walker), who is Chair of the Education Committee. There is widespread support for this, and I very much hope that the Minister will give us positive news in her response.

[Mr Clive Betts (in the Chair)]

We have only one other Member asking to speak, which makes things quite easy this morning.

--- Later in debate ---

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairship, Mr Betts. I congratulate the right hon. Member for Camborne and Redruth (George Eustice) on securing the debate, and raising the issue of the important role that further education colleges play in training the workforce of the future, and upskilling the existing workforce.

I am happy to be here on behalf of the Opposition. I thank hon. Members for their contributions to today’s debate, particularly the hon. Member for Torbay (Kevin Foster), and my hon. Friend the Member for Cambridge (Daniel Zeichner). We have heard today about the role that further education plays in the lives of constituents, and the challenges they face, such as the struggle to recruit staff. As the right hon. Member for Camborne and Redruth has explained, section 33 of the Value Added Tax Act 1994 specifies that special provision is made for local authorities and specified bodies to recover VAT incurred on goods and services purchased in relation to non-business activities. The section sets out a list of public bodies eligible to recover VAT, which the Treasury can amend via secondary legislation. Guidance from HMRC says:

“Treasury will consider applications from bodies that meet both the following criteria—the body must undertake a function ordinarily carried on by local government and have the power to draw its funding directly from local taxation.”

I note that last October, the Office for National Statistics deemed that further education colleges should be public bodies. That is the basis of the right hon. Gentleman’s case that further education colleges should be added to the section 33 list. That will allow them to reclaim the VAT that they are charged in the same way that schools can.

This is a very topical debate, and real concerns have been raised about the financial stability of further education colleges. FE college funding fell by 27% in real terms between 2010 and 2019. In that same period, growth stalled, wages fell and prices rose. That has meant that the cost of everybody’s inputs, from energy to textbooks, have become more burdensome and unmanageable, and things have grown more difficult for colleges across the country.

One of Labour’s missions for government is to break down the barriers to opportunity for every young person. We are determined that every child and young person should have access to excellent education, so that the opportunities open up to help them thrive. Thirteen years of Conservative failure have weakened our education system, meaning that all too often young people are held back, unable to fulfil their potential. With our green prosperity plan, we will make Britain a world leader in the industries of the future and ensure that people have the skills to benefit from opportunities. Institutions such as FE colleges can play a vital role in that endeavour.

As the world’s economy changes, Britain needs to grasp opportunities to get ahead in the race, and we need to give British people the tools and skills they need to succeed. As I have laid out, the Labour party believes very strongly in the role of skills, and believes that FE colleges are key to getting Britain growing. We want the education system improved, and we want skills provision updated for a modern economy.

[George Eustice]

The hon. Lady is making a very strong speech about the importance and value of FE, but can she confirm that it is her party’s policy that further education colleges should be added to the list under section 33, so that they can reclaim VAT?

[Abena Oppong-Asare]

The right hon. Gentleman has raised important matters in this debate. The Labour party will evaluate the situation properly before putting any proposal forward. I look forward to the Minister’s response. It is really important to hear from the Government on this issue, and I hope she will address the points raised by the right hon. Member for Camborne and Redruth.

[The Financial Secretary to the Treasury (Victoria Atkins)]

It is a pleasure to serve under your chairmanship, Mr Betts. I thank my right hon. Friend the Member for Camborne and Redruth (George Eustice) for securing today’s debate; I know his great personal commitment to the issue. I was extremely interested in his description of how officials from his former Department viewed meetings with Treasury officials—I do not know whether that is a badge of pride for the Treasury or whether we should take some learning from it.

We are a nation that takes enormous pride in its education system, and rightly so. May I take this opportunity to celebrate the news, which we heard yesterday, that England has risen up the international league tables and is fourth in the world for progress in literacy? That is an extraordinary achievement that has been made possible by the intense concentration that the Government have put on phonics and on driving up standards in schools. It is right that we applaud the teaching sector and everybody else involved in education for their significant achievements, and the students themselves for working so hard.

I note the constructive way in which the SNP has contributed to this debate. I genuinely hope that Scotland will be able to join us in rising up the league table in due course, because we know that sadly it is not there yet. However, I am sure we will have many more discussions about standards of education in Scotland.

Students from around the world flock to our schools, universities and institutions of learning throughout the country, where they have a tremendous diversity of subjects to study and people to meet. For example, a pupil from a disadvantaged background is something like 83% more likely to go to university now than they would have been in 2010-11, because we have put the expansion of life chances at the heart of our education programme.

The further education sector has a huge role to play in preparing young people for university, and indeed for whatever life they wish to live as they leave their teenage years behind. That is an important distinction to make, because the education structure that we have known for decades has undergone significant change in recent years. We now have vocational study, T-levels, technical colleges, academies, state schools, independent schools and free schools all catering to the unique needs of young people and our local communities.

Of course, further education can continue through one’s career when one leaves formal education. I had the great pleasure of visiting Brompton Bikes recently. I saw not just that it had taken advantage of the Government’s super deduction and capital allowance schemes in recent years, but that it was doing wonderful work to train its workforce at various stages of workers’ careers. That has an enormous benefit not just for the individual’s career path but for the business.

I am pleased to be having this discussion with hon. Members today. We want to support the FE sector and ensure that it continues to be able to cater for people’s various needs. If I may, however, I will take a step back, because although our focus today is on a particular provision in the Value Added Tax Act, it is important to look at investment in the FE sector over recent years. We have invested £300 million before the end of the previous financial year to eliminate the current deficit in funding experienced by March each year. That completes a move to a more even profile of funding that better matches the needs of FE colleges, recognising the challenging environment that the sector faces. We have also provided an additional £150 million allocation of capital grant funding in this financial year to support and protect colleges that are planning to invest in their infrastructure or estate.

We have made other changes, including opening a new college capital loan scheme and allowing colleges to continue to retain surpluses and proceeds from asset sales. At the most recent spending review, we announced large-scale investment in skills, including funding to increase the average hours funded in 16-to-19 education by an additional 40 hours per pupil per year, bringing us closer to high-performing countries such as Sweden. We have also committed to increased capital funding in FE, including £1 billion over the spending review period to transform the FE college estate.

[George Eustice]

All that funding is, of course, welcome—indeed, Cornwall College would acknowledge that it has had a very good capital investment settlement—but the real problem is not the capital departmental expenditure limit. Welcome though it is, there is no point in colleges having that capital if they cannot afford to recruit the lecturers and teaching staff to run the courses. The increase in budget to extend the hours of teaching is also welcome, but it still does not address the core problem of the difficulty that colleges are having in properly funding, recruiting and retaining staff to run the courses.

[Victoria Atkins]

If I may, I shall develop my argument. I have taken careful note of the issues raised by my right hon. Friend, and I hope to respond to them through the rest of my speech.

Let me give a little overview of VAT. I think it is fair to say that VAT is the most complicated area of tax law, which itself is pretty complicated, to put it mildly. I have a whole team of very erudite experts who advise me on all aspects of VAT. It is charged on most goods and services. Taxable businesses can recover the VAT cost on their inputs, but public bodies, which generally engage in non-business activity, cannot. That is why there are several VAT refund schemes in the Value Added Tax Act 1994 that allow some public bodies to recover, to differing degrees, the VAT on goods and services purchased in the course of non-business activities. Section 33, to which my right hon. Friend alluded, provides a scheme that allows local authorities and similar public bodies to recover the VAT incurred on purchases of goods and services relating to their statutory non-business activities. Its rationale is to prevent VAT costs from falling as a burden on local taxation.

Funding for maintained schools is channelled via local authorities, which benefit from the scheme. We allow academies to recover their VAT through section 33B, which we introduced in April 2011 to ensure that academies were not disincentivised from leaving local authority control. The hon. Member for Cambridge (Daniel Zeichner), who is no longer in his place, intervened on my right hon. Friend the Member for Camborne and Redruth, but I was not clear whether he was supporting academies or was agin them. We are certainly very proud of the academy system and the benefits that it provides to our education system. Again, that is a point of contrast between the parties.

Sixth-form colleges and FE colleges are not included in the section 33 or section 33B refund schemes as they do not fit the rationale for either, which is to protect local taxation or encourage academisation. Like many other providers of public services, FE colleges and sixth-form colleges are expected to cover their VAT costs from their funding allocations. Sixth-form colleges have the choice to restructure as academies, enabling the recovery of VAT under the refund scheme, but many choose not to. That is their decision.

My right hon. Friend raised the comparison with a school that has a sixth form. More widely, FE colleges are different from schools and academies in that they provide a range of different services for a broader range of students. In my constituency, Boston College is moving into Horncastle, and we are very excited about it. I fully hope and expect that it will offer a range of services not only to 16 to 19-year-olds, but to a wider field of people. Because FE colleges have a different, more autonomous way of operating, they benefit as eligible bodies from an advantageous VAT exemption when competing with commercial providers of higher levels of training. That is a difference.

[George Eustice]

I think I understand my hon. Friend’s argument, but I am not sure that it is a very persuasive one, since academies are independent for all intents and purposes. They run their own ship. They are not funded out of local taxation—if that were the objective of section 33, we would not have protected academies in that way, as they are funded directly by central Government grant. The ONS has effectively now said that FE colleges are public bodies. I really do not see the difference between an independent academy, funded by central grant, and an FE college that is also funded through central Government funding.

[Victoria Atkins]

We have to be a little careful about the ONS argument. The ONS has many attributes, but it is the Office for National Statistics; the eligibility for VAT refunds is not related to ONS classification. There are a number of public bodies and publicly funded activities that make significant contributions to our lives but are not eligible for VAT refunds, such as the Bank of England or university research grants. We are hoping to encourage even more university research with some of the measures set out in the Chancellor’s Budget, including through investment zones, but these are not eligible for VAT refunds. These colleges have never been eligible for refunds, regardless of their classification by the ONS. Where public bodies cannot recover VAT, we provide overall funding with the irrecoverable VAT in mind.

My hon. Friends the Members for Torbay (Kevin Foster) and for Harwich and North Essex (Sir Bernard Jenkin) asked for an estimate of the cost of allowing FE colleges to join the section 33 scheme. The estimate is £200 million a year, which is a significant sum. As I always find myself saying when I am at the Dispatch Box or the lectern, there is a balancing act. We have to look at these extremely large numbers in a whole variety of areas, particularly VAT: I am asked frequently by colleagues to move something out of the VAT scheme, but we have to look at the figures.

It was interesting that when my right hon. Friend the Member for Camborne and Redruth asked the shadow Minister, the hon. Member for Erith and Thamesmead (Abena Oppong-Asare), whether Labour would commit to adding FE colleges to the section 33 scheme, she did not commit. We all recognise that there is a significant cost, but those are the figures that we have to work with. We know, because we believe fundamentally in sound money, that if we allocate £200 million to this scheme, we will have to find that £200 million from elsewhere in our vital public spending priorities such as the schools budget.

[George Eustice]

The Minister is being very generous in accepting my interventions. As you have said, Mr Betts, we have plenty of time, and sometimes these sorts of discussion are better had via intervention.

I want to return to the point about the ONS classification exercise. In most other fields of Government policy, in other Departments, the Treasury allows the ONS tail to wag the Government dog. For example, the ONS has a view about how the Flood Re scheme should be treated in the public accounts; as a result, the Treasury insists on the Department for Environment, Food and Rural Affairs applying all sorts of public sector restrictions, including salary restrictions, to the way it operates. We have seen a similar approach to the Agriculture and Horticulture Development Board and the extended producer responsibility scheme.

With all those schemes, when the ONS says, “These are public bodies,” the Treasury is first in line to tell the Department, “You must now change your behaviour, change your laws and change your approach as a result.” That is what it says to other Government Departments, so what is different here? Now that the ONS has confirmed that FE colleges are a public body, should the Treasury not bring them in line with academies, schools and local authorities?

[Victoria Atkins]

I hope my right hon. Friend will forgive me, but I do not have an intimate knowledge of the treatment of the bodies that he describes. I respect the fact that as a former Secretary of State he knows a lot about those schemes. I do, however, hear him kicking back against the seeming power of public bodies or of those who have a role in our national life in ensuring that statistics, budgets and so on are certified and scrutinised. If he is complaining about that power, I am not sure that that is an argument for extending it.

[George Eustice]

I think what I am trying to say is that it would be a legitimate approach for the Government to say, “We are going to disempower the ONS. It is out of control. It is doing all sorts of things that cause chaos with Government policy and is driving a coach and horses through it. We are not going to allow this to go on, and we will pass emergency legislation to overrule it.” However, in the absence of that—and I have only ever detected intense reverence for the ONS in the Minister’s Department—she has to fall in line with what the ONS says. I think that that requires her to bring FE colleges into line with academies.

--- Later in debate ---

[George Eustice]

I thank all hon. Members for attending the debate. I appreciate that at 9.30 am on a Wednesday, the subject of the debate—public bodies and VAT—might have felt daunting for many. As the Minister herself said, tax is complicated and VAT is the most complicated part of tax.

I thank everybody for contributing to the discussion. In particular, I am grateful for the support that I received from my hon. Friend the Member for Torbay (Kevin Foster), and for the supportive interventions from my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) and my right hon. Friend the Member for Chelmsford (Vicky Ford). As a former Minister in the Department for Education, she knows about the issue; it was great to have her support. There were also very good contributions from all the Front Benchers.

A parting thought: the Minister says that it is important for the Treasury to protect its tax base and that that is why it is reluctant to make changes. We all understand the importance of balancing the books and protecting the tax base, but in doing so the Government and the Treasury must seek to have fairness and consistency. My point today is there is an inconsistency. If the Treasury wanted to raise taxes somewhere else and then bring consistency to the VAT system, we would all understand and appreciate that by all means.

This debate will conclude early. The really good thing about debates that conclude early, when you are a Minister, is that they mean a whole half-hour with nothing in the diary. I used to find that when debates wrapped up early, rather than rushing off to the next thing, it was sometimes quite useful to have half an hour to give instructions to the officials—they are currently sat behind my right hon. Friend—about further work in the area. I hope that she will take up that opportunity.

Question put and agreed to.

Resolved,

That this House has considered public bodies and VAT.

Religious Slaughter of Farm Animals

George Eustice Excerpts

Tuesday 2nd July 2019 Westminster Hall

[George Eustice (Camborne and Redruth) (Con)]

I beg to move,

That this House has considered the religious slaughter of farm animals.

Before I get to the issue in the motion, I must say that free votes in the House are wonderful. Those moments when the party structures and the Whips withdraw from the debate—when there are no Whips to point to which Lobby to go through—allow each individual to engage with an issue using their own reason and judgment and can be incredibly refreshing for our politics. Some of the best-quality debates in Parliament take place under free-vote conditions. Cross-party alliances form and, in the end, the House tends to arrive at a sensible and proportionate consensus.

Of course, the party system developed because, if there were free votes on everything, the Government would not be able to get anything done or deliver any of their manifesto commitments, but issues of ethics and religious conviction have always been universally accepted as free-vote issues. For instance, we have free votes on same-sex marriages and on contentious issues such as abortion. My key contention is that religious slaughter should be made a free-vote issue by every party in the House.

Whitehall feels awkward about dealing with this complex issue and it is not sure what to recommend to Ministers. Governments of all shades have tended to leave the issue in the “Too difficult to address” box and have talked themselves into a stance that says, “Now is not the time to deal with it.” If we made it a free-vote issue for the House, we would liberate the Government of that burden of responsibility and, more importantly, liberate Parliament to address the issue.

[Jim Shannon (Strangford) (DUP)]

I spoke to the hon. Gentleman beforehand to get his thoughts about what he was going to say. In my council area of Ards, there was an abattoir that carried out some of the ritual killings and stunned and so on. It created jobs and stability and there was a system in place, which seemed to be acceptable. Is he looking for changes in the methodology of killing or does he want to stop it entirely?

[George Eustice]

I will go on to advocate a package of measures to improve our law, having looked at the issue in some depth. I would stop short of banning it altogether, but we could make major improvements, which I will come to.

The history of our current derogation is long. The first regulations governing abattoirs and the humane treatment of animals in them were introduced through the Public Health Act 1875, which said that all animals should be “effectually stunned”. In 1904, a committee of the Admiralty considered in some depth the right methods of slaughter to deliver humane outcomes for animals and recommended that, without exception, all animals should be stunned. Subsequently, however, the Local Government Board issued a circular that drew on the advice in the 1904 report. It recommended that, as a general rule, all animals should be stunned prior to slaughter, but it created what has become a long-standing religious derogation for Jewish and Muslim communities.

[David Simpson (Upper Bann) (DUP)]

I declare a number of interests in the industry. The 2017 Food Standards Agency report revealed that 84% of halal-slaughtered animals were stunned prior to slaughter. That means that when the speed of production is important, people will stun them.

[George Eustice]

I was going to come on to that. There is no barrier to using stunning for halal, provided it is what is called a recoverable stun. That same FSA report also worryingly revealed that 25% of all sheep slaughtered in the UK are slaughtered without stunning. That alarming rise is difficult to explain.

Our laws were formalised by the Slaughter of Animals Act 1933, where the exemptions for religious slaughter were maintained. They have evolved from that through various stages, but the current position has not changed much since 1995. The principal plank of our national requirements on religious slaughter mainly revolve around standstill times. In the case of non-stunned slaughter, sheep cannot be moved until they have lost consciousness or, in any event, for at least 20 seconds. Cattle cannot be moved for at least 30 seconds, or until the animal has lost consciousness. There is a different requirement for chickens, which cannot be moved to the next stage of production until 30 seconds have elapsed or the bird has become unconscious. The purpose of those standstill times is to prevent stress on the animal.

It is worth recognising how animals die in a non-stun slaughter situation. For sheep, most of the evidence suggests—I have discussed this with officials—that they typically lose consciousness in somewhere between 10 and 15 seconds. It takes slightly longer for chickens, which lose consciousness in between 15 and 18 seconds.

The greatest concern, however, is always the impact on bovine animals—cattle—although they are small in number, because their physiology is complicated by the fact that they have a third artery that goes to the back of the head that continues to supply blood even after the cut has taken place. I apologise to hon. Members for going into the gruesome details, but if we allow such things to happen in our name, it is important to explain exactly what they are. For cattle, it typically takes 40 to 45 seconds for the animal to collapse—not to become unconscious, but to fall off its legs due to the lack of blood supply—and between one minute 20 seconds and two minutes for the animal to lose consciousness. A former Farming Minister, Jim Paice, once described a situation that he had seen when visiting a religious slaughter abattoir where it took six minutes for a bovine animal to bleed to death, which he said was a truly horrific event to watch.

I often hear from representatives of organisations such as Shechita UK that the cut is so precise and clean that it all happens very quickly, but there is not really any evidence to support that. In fact, in the shechita slaughter process, if the blood starts to clot in the throat cut, it is permitted for the slaughterman to push his hand into the wound and disturb the clotted blood to resume the flow. Those are difficult situations. For bovine animals in particular, it is a major cause for concern.

[Neil Parish (Tiverton and Honiton) (Con)]

I thank my hon. Friend for securing the debate and for his point about it being a moral issue. We rear animals as farmers and we want them to be stunned when they are killed. It is we—man—who decide how they are killed, not the animal. New Zealand has brought in stunning for all the halal it does across the world, and it exports a lot to the middle east. When we leave the European Union, we will have the opportunity to have a similar system.

With shechita, I wonder whether we could not at least have post-stunning of bovine animals. What my hon. Friend has described is horrendous and we need to do more to relieve the suffering of those animals.

[George Eustice]

My hon. Friend makes an important point. I will come to how other countries address this challenge.

All sorts of difficulties arise through our current rules on halal and shechita or kosher meat production. There are a wide range of definitions of halal. As hon. Members have pointed out, some statistics suggest that 70% to 80% of all animals slaughtered under halal are stunned. The key requirement for halal is that animals receive an Islamic blessing and that any stun should be recoverable, so that in theory they could regain consciousness. It is very hard to define what is halal, because it ranges from simply playing a recording of an Islamic blessing, right through to non-stun slaughter.

In the case of kosher meat, there is a further problem. The hind quarters of an animal are not deemed kosher, even if the animal was slaughtered under kosher methods. That means that the rump of cattle and sheep ends up going into the mainstream market—usually the service trade through Smithfield, where unwitting customers in restaurants in London and other parts of the country buy the meat not knowing it has been slaughtered by kosher methods.

[Giles Watling (Clacton) (Con)]

Does my hon. Friend agree that the labelling of meat, so that consumers know the exact method of slaughter when they order their food from restaurants or supermarkets, might be a way forward to address overproduction and allow consumers to make an informed choice?

[George Eustice]

Labelling is indeed one option, which I was going to come to. It does not get us all the way, because we have the service trade, where labelling would be ineffective at helping consumers to understand how their meat was slaughtered.

If we had a free vote in Parliament, what types of issues might we want to consider? Although this is a sensitive issue, it is important to ask whether our current derogation accommodates a religious need, or whether it is more a cultural interpretation of such a need. There is wide variance in what is defined as halal, depending on local imams.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

I am trying to look at the consistency of what my hon. Friend has said. He has acknowledged that, as far as Jewish koshering laws are concerned, the animal has to be killed in a certain way, and certain parts of the animal are not allowed. He started by saying that he would stop short of banning it altogether—I think those were the words he used. How can he reconcile those two things? If we were to have stunning, it would in effect be a ban.

[George Eustice]

I was going to come on to that. Even within the kosher community, there is not a universal view on whether post-cut stunning should be permitted.

A couple of years ago, I visited Kuwait and talked to a meat importer about the issue of halal production. He explained to me that the main requirement in Muslim countries in the middle east is that there is no pork contamination in the food they eat, which is why all their protocols focus predominantly on not sharing machinery between pork production and lamb, chicken or beef production, to ensure that there is no pork DNA. That is their primary concern, alongside ensuring that there has been an Islamic blessing of the food. When I explained to him that the issue of non-stun slaughter was contentious, he said it is predominantly a western cultural interpretation of the Muslim faith. Interestingly, non-stun slaughtered meat is not a particular requirement in middle eastern countries. There are exceptions, but generally speaking that is not their primary concern. Indeed, non-stun slaughter is banned in Australia and New Zealand, which are the largest lamb exporters to all countries across the middle east, from Israel right through to Kuwait and Saudi Arabia.

The other point about kosher meat is that Shechita UK insists that it is most certainly not a religious ritual, and a Hebrew blessing is not given. It is simply the case that the ancient holy books describe a method of slaughter that they believe remains the most humane approach. The principal concern for Shechita is that there should be no injury to an animal before it is presented for slaughter. They regard stunning as an injury to the animal—that is their particular concern—but that is not a universal view. There has been some rabbinical support for the idea of post-cut stunning, and we know that some abattoirs producing kosher meat allow post-cut stunning of bovine animals.

I turn now to some of the options that we could consider. My hon. Friend the Member for Clacton (Giles Watling) mentioned labelling, which is a complex area because there is no single definition of halal. The simplest way would be to label meat as un-stunned, because that is a clearly definable legal definition. That causes some concerns for Jewish communities. They argue that if we did do that, we should also list whether an animal has been killed through anaesthetic gas or electrocution, or all manner of other things. Farmwell, which is a leading charity in this area, established a system that all religious groups are willing to buy into: a coded approach of numbers from one to 10, denoting the method of slaughter. However, it does not deal with the problem of food entering the service trade, where unwitting customers would buy it.

There are a number of other things that we could do, including increasing the standstill time on bovine animals. The current limit of 30 seconds was probably due to a drafting error—we know that cattle do not lose consciousness that quickly. We could therefore move the minimum standstill time to at least one minute and 30 seconds or two minutes, to ensure that there is no movement of a bovine animal while it is still conscious. In conjunction, we could require a post-cut stun on all bovine animals, recognising that there is an issue with the physiology of bovines, which leads to a long and protracted death. I do not believe that a post-cut stun would violate the religious beliefs of either the Halal Food Authority or Shechita UK.

As an alternative, we could simply ban the non-stunned slaughter of bovine animals, recognising that there are issues with that. We could introduce a maximum standstill time, which is the approach taken in countries such as the Netherlands and France, where there is a requirement to use a bolt gun if a period of, say, 40 seconds has elapsed after a cut has taken place and the animal has still not lost consciousness.

We could introduce more formal quotas for abattoirs, which is an interesting idea. It is already the law that only food destined for Muslims and Jews is permitted to be slaughtered under our current religious derogation, but we know that there is a real problem with the mainstreaming of religious slaughter. We know that that provision, as drafted in our law, is unenforceable. When I discussed that with departmental lawyers, their response was that if somebody maintains that they thought that the animal was destined for a religious community when they committed the slaughter, that is sufficient to satisfy the requirement, so it is entirely unenforceable. In Germany they have a much more sophisticated quota system. They make an assessment of the need of orthodox religious communities, and abattoirs must apply for a licence and demonstrate that they have an actual market for the food they are producing.

[Sir Roger Gale (North Thanet) (Con)]

If I am fortunate enough to catch your eye, Mr Rosindell, I will come back to the basic principle. On this specific point, Germany can do it, so why can we not do it? It is not good enough for departmental lawyers to say, “Oh, it’s all far too difficult,” which is effectively what my hon. Friend has said. There is a way through this. We know the market is oversupplied. It should be limited, should it not?

[George Eustice]

I agree that adopting a German-style model, whereby we put in place the measures and mechanisms necessary to enforce something that has been a facet of our law since at least 1933, makes a lot of sense, and is probably the easiest option for the Government, given the alarm that there has been about the growth of religious slaughter.

We could increase the period of standstill time before chickens move on to the next process. There is a very real concern at the moment that there is typically a moving shackle line for chickens, whose throats are cut randomly by people as they go past, but what happens if they miss a chicken? What happens if the chicken is not stunned through a water bath and they fail to cut its throat? The answer is that it probably proceeds to the next stage of production, which if I am not mistaken is a scalding tank to remove the feathers. It could enter that while fully conscious, which is horrific. We should be doing more to check that those birds genuinely lose consciousness before they move on to the next stage. It should not just be a moving shackle line.

[Giles Watling]

It is known that in many cases stunning fails during the process. Should we not clean up our act on stunning, as well as taking on the issue of labelling? I hate to drag my hon. Friend back to that issue, but why can we not put labelling on menus too?

[George Eustice]

So-called mis-stunning is also an issue. I am not pretending that religious slaughter is the only welfare issue. Another area of concern, about which I commissioned some work when I was Minister, is the make-up of the gas mixture used in the slaughter of pigs, which was also problematic. Clearly, because it relates to pigs, it has no religious dimension whatever. There are other issues, and mis-stunning is one of them. The point about mis-stunning is that even if they get it wrong, they are there immediately afterwards with a second stun, which can resolve the issue.

I will conclude at that point, because we have only half an hour and the Minister will want to come back on some of these points. I seek to liberate him, the Government and all his successors from having to wrestle with this difficult issue. Instead, they should make it a free-vote issue and give it back to Parliament to decide.

Kew Gardens (Leases) (No. 3) Bill [Lords]

George Eustice Excerpts

2nd reading: House of Commons
Monday 24th June 2019 Commons Chamber

[David Rutley]

The hon. Gentleman speaks well for the west London posse. He speaks very assuredly and with great passion as always for Kew Gardens, and we are grateful for that. It is a wonderful institution. I assure him that people not just in west London but across the nation want to visit it, and I hope that that is a boost to the local economy.

We are facing immense challenges in preserving the natural world. Within the challenge it is clear that there is a central role for plants and fungi, and Kew can provide answers about how plants and fungi will help us and our planet not just thrive but survive. Kew is a custodian of world-renowned collections, including the Millennium Seed Bank at Wakehurst and the Herbarium at Kew itself. The restoration and digitisation of the Herbarium will need considerable investment and will make the collection accessible globally.

Kew scientific research leads the world. With more scientists than at any time, its research is crucial in solving the challenges facing humanity today. Kew plays an extraordinary global role, in partnership with scientists, educators and communities, promoting research, education and conservation.

Kew does so much to involve the public, as we have already heard. With over 2 million visits to Kew and Wakehurst each year and around 100,000 pupils on school visits, it is building a wider understanding of plants and fungi and why they matter to us. Across the spectrum of public engagement, Kew is fostering a wider understanding of plants and fungi and why they matter to us.

Kew is not only an extraordinary scientific institution; as visitors and scientists will know, the estate includes many special buildings and structures, more than 40 of which are listed. It is a huge challenge to ensure the maintenance of these structures, which due to their historical nature is undertaken at considerable expense. We have a duty to balance public spending against priorities, and Kew is no exception. In view of Kew’s important role, DEFRA has been able to maintain funding to Kew in cash terms over this spending review period, but a key part of that was to support Kew to develop its other sources of income to deliver its ambitions.

Kew has made great strides in improving its financial sustainability. Kew’s Government grant forms just over one third of its income—37% in the 2017-18 accounts—and its mixed funding model is proving hugely successful, for example by using Government funding to leverage significant philanthropic and grant funding for renovation of the Temperate House, which reopened in 2018. Nevertheless, parts of the Kew estate, including some listed residential buildings near Kew Green, badly need investment to maintain and enhance their condition and enable Kew to realise additional income.

Attracting capital investment to refurbish buildings within the boundaries of Kew is one of the big opportunities available, but the current 31-year limit on leases imposed by the Crown Lands Act 1702 has made this difficult to realise. The Bill will allow leases to be granted on land at Kew for a term of up to 150 years. Longer leases will enable Kew to realise additional income from land and property, and will reduce maintenance liabilities and running costs. The additional income generated will help Kew to achieve its core objectives, maintain its status as a UNESCO world heritage site, and prioritise maintaining and developing its collections as well as improving the quality of its estate.

[George Eustice (Camborne and Redruth) (Con)]

We all support the work that Kew does and obviously want to support its estate strategy and the funding, but the point my hon. Friend has just made is important. Will he confirm that this is less about income and more about capital receipts? The significance of going to a 150-year lease is that the seven or so residential properties around Kew Green can be sold on a leasehold basis. Kew Gardens is also interested in developing the car park area alongside the Thames.

[David Rutley]

My hon. Friend speaks from experience; he knows this Bill very well. [Interruption.] Yes, very well. I agree: this is about not just income generation but cost reduction because of the maintenance costs of these properties. It is about getting capital in to help to renovate these important buildings and enable Kew to achieve its wider ambitions, so my hon. Friend is absolutely right. Of course, any development will be restricted by local planning legislation and by Kew’s provenance as a world heritage site. Many protections will be put in place, notwithstanding the need to take forward these renovation works.

The Bill has the full support of Kew’s board of trustees and residents in the Kew area, in particular through the Kew Society. It might be helpful to set out the protections that have already been alluded to, particularly to confirm that the various safeguards that apply now would continue to apply to any lease granted under the Bill.

Kew’s activities are overseen by Kew’s board and by the Secretary of State for Environment, Food and Rural Affairs. The Royal Botanic Gardens, Kew is an Executive non-departmental public body and an exempt charity. It is governed by a board of trustees established under the National Heritage Act 1983. As an exempt charity, although the Charity Commission does not regulate it, it must abide by charity law with the Secretary of State as Kew’s regulator for charity purposes. This regulation is co-ordinated between the Charity Commission and the Secretary of State.

To ensure that Kew’s operational arrangements comply with the National Heritage Act and with public and charity law, a framework document exists between Kew and DEFRA to deal with business planning, resource allocation, the appointment of board members and, pertinently, the disposition of land. Thus, at all times in the governance process, the board of Kew, the Secretary of State and DEFRA play a key role in determining the operational management, and will continue to do so in the grant of any lease under this Bill.

The Bill goes further on that point in requiring that, before granting any lease, the Secretary of State must be satisfied that the lease—and anything that the leaseholder is permitted to do with the property under the terms of the lease—would not have any adverse impact on the functions of the board of trustees as set out under the National Heritage Act.

--- Later in debate ---

[David Rutley]

Noted. The hon. Gentleman is well informed, and I thank him. Of course it makes sense to use sustainable transport whenever possible, particularly when visiting Kew.

Another element of protection that will continue under the Bill is that of Kew’s UNESCO world heritage site status, and other designations that offer protection under the planning system. These will apply to any lease granted under the provisions of the Bill. Once again, the Bill goes further, requiring that before granting any lease the Secretary of State must be satisfied that the lease and anything that the leaseholder is permitted to do with the property under its terms would not have any adverse impact on Kew’s UNESCO world heritage site status.

[George Eustice]

My hon. Friend will be familiar with the fact that it is typical with leasehold properties, particularly flats, for a leaseholder to have an entitlement to extend the lease before it reaches an 80-year cut-off period. With the type of leasehold we are discussing, will it be possible for a leaseholder to continue to extend in the normal way, or will it be a fixed term of 150 years only?

[David Rutley]

It would be possible to extend the lease in the normal way, except for the fact that a lease would never go beyond 150 years. There are different protections in place because Kew is on Crown land.

It is important to note that the Bill goes further on the UNESCO world heritage site status. Kew was inscribed as a UNESCO world heritage site in 2003 owing to its outstanding universal value as a historic landscape garden and world-renowned scientific institution. As a result, the UK Government, through the Kew board and the Secretary of State, have the ultimate responsibility for ensuring the protection, management, authenticity and integrity of the site. As part of its world heritage site status, Kew has a management plan to show how its outstanding universal value as a property can be served, and that includes protections and mechanisms in the planning system relating to conservation areas in the London boroughs of Richmond and Hounslow.

The Kew Gardens site is also listed as grade I on the Historic England register of park and gardens of special historical interest in England. Much of the Kew site is designated as metropolitan open land, which applies similar protection to that offered to green belt land. Forty-four of the buildings and structures within the site are listed, and Kew is part of an archaeological priority area.

All the protections mean that any building work or alterations to any leased property, including the interior declarations in some cases, would require local planning permission and compliance with the Town and Country Planning Act 1990, the Planning (Listed Buildings and Conservation Areas) Act 1990, the national planning policy framework, and the Government’s policy for the historic environment.

Finally, of course, conditions would apply to the lease itself. In accordance with the duties that the Kew board and the Secretary of State must carry out, the lease itself, while seeking to be commercial, will include any restrictions that the Secretary of State decides are required—for example, to the extension or change of use to protect Kew, its UNESCO world heritage site status, or to ensure that the functions of the board of trustees under the National Heritage Act 1983 are not interfered with in any way.

As I set out earlier, the Bill disapplies the restriction in section 5 of the Crown Lands Act 1702 in relation to the maximum duration of leases of land at Kew. The Bill will remove the limit of 31 years on leases on land at Kew and apply a maximum of 150 years, bringing Kew into line with the provisions made for the Crown Estate by the Crown Estate Act 1961. The changes provide the ability to grant longer leases on the land. The Bill will not alter the many existing protections in place for Kew and its status as a world heritage site. In fact, the Bill strengthens the protections by formalising the duty of the Secretary of State to uphold them.

All proposals for granting leases are subject to scrutiny and must go through both Kew and DEFRA’s governance and comply with the protections in the planning framework, and in every case the lease itself will contain any restrictions that may be necessary.

The Bill will ensure that Kew’s historic properties are afforded the best protection. It is all about empowering Kew to manage its assets on a sound and sustainable commercial footing to enhance the estate and to pursue its core objectives. Kew’s trustees need the Bill to do what is necessary for the future of this national institution, which is part of our shared global heritage.

The modest dimensions of this two-clause Bill belie its importance in helping to safeguard Kew and its invaluable work. This is an opportunity for us to support Kew’s mission, because enabling Kew to maintain and enhance all parts of its estate will be crucial to its long-term success and to its global role in addressing today’s challenges for plants, fungi and humankind.

Mortgage Prisoners

George Eustice Excerpts

Thursday 6th June 2019 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I congratulate my hon. Friend the Member for Dover (Charlie Elphicke) on securing this debate and commend the work of the APPG on fair business banking, and in particular the work of my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake).

I have always had an interest in modernising the regulation of our banks. Indeed, in 2010 I introduced a private Member’s Bill—the Secured Lending Reform Bill—that sought to rectify a major deficiency in the law, which is that banks can currently repossess commercial property without even having to go to court to get a possession order. The power that our law grants lenders to repossess property is a rather extraordinary power that should be used lightly, and we should put in place protections for those who offer a lender a charge over their home or other property as a result of that lending. This debate also affects a type of secured lending: mortgages where the home is offered as security. I believe that people who offer their home as security should enjoy special privileges and rights.

I recently had a very sad case in my constituency that is relevant to the issue of mortgage prisoners. My constituent had taken out a mortgage in 2007 with North Yorkshire Mortgages. The circumstances behind that were not altogether happy. This gentleman needed to buy a new bungalow because his son had tragically suffered a sporting accident, and they needed a new property that he could access. His father was also ill, so there were many pressures on the family at that time. Tragically, his son passed away three years later. We all know that bereavement can be difficult, especially the loss of a child, and that affected my constituent’s ability to work at the same level, which affected the household income.

After the first five years, the promotional rate on this interest-only mortgage expired, and it reverted to the standard variable rate of 5.5%. That put pressure on the household finances even further, but when he approached North Yorkshire Mortgages about a switch to a more affordable product, he was told that he could not switch to an affordable product because his income was too low. As my hon. Friend the Member for Dover pointed out, as perverse outcomes of such regulations go, it does not get much worse than this. We are saying to people, “Your income is too low to be able to pay less, so instead we are going to sting you on the standard variable rate.”

My conclusion from all this is that we should revisit the regulations issued by the FCA and reconsider the approach. In particular, the voluntary agreement proposed by UK Finance last year should be placed on a statutory footing. It should not just be a voluntary thing that lenders can opt into. There should be a statutory obligation on them to offer their existing customers a switch to a more affordable product.

If that is something the Government are unwilling to consider, I have a second proposal, with which I will conclude. It is that the Government should, at the very least, issue new guidance to the courts or put in place new regulations under the Administration of Justice Acts to make it clear to the courts that, when assessing any application for a possession order from a lender, there should be a powerful presumption against granting any repossession order where a customer has been refused the ability to switch to a more affordable product. The reality is this: there will be instances where people have fallen into arrears and ended up facing repossession of their home where the lender itself has been culpable in that default and in the repossession proceedings. In my view, our law should have a powerful presumption against granting any repossession order where a switch to a different product has been refused, and I think that would focus the minds of lenders.

Wild Animals in Circuses (No. 2) Bill

George Eustice Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Tuesday 7th May 2019 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I support the Bill, not least because, as a Minister in the Department for Environment, Food and Rural Affairs, I spoke in favour of such a Bill on many occasions. As a number of Members have pointed out, it has been on the agenda for some time—it was a manifesto commitment in both 2015 and 2017—and, as the Minister said, the existing licensing regulations will expire in 2020, so it is necessary to ensure that we have something with which to replace them.

The Environment, Food and Rural Affairs Committee, of which I was a member before I became a Minister, examined this issue in some detail. At that point, the committee proposed a slightly different approach to dealing with this challenge. It proposed an annexe to the Bill listing the animals that would not be allowed to be in travelling circuses: a negative list. We envisaged that the most controversial species—lions, tigers and elephants—would be banned immediately, and that other species, such as snakes and camels, could also be removed in due course. I understand that, in the event, DEFRA took the view that that was over-complicating the issue, given that 19 species were involved, and that a simple ban was what was needed.

As the Minister said, this has been on the agenda since 2011. My hon. Friend the Member for The Wrekin (Mark Pritchard), who has just left the Chamber, initiated a number of debates at that time. The initial debate followed a public reaction to the terrible abuse of Anne the elephant in one of the circuses in this country. I am happy to say that a couple of years ago I visited Longleat safari park, where Anne now has a new home, is being properly cared for, and is ending her days in a suitable fashion.

Now that the Bill is before us, I think it important for us to perform our role as legislators: to scrutinise it, and to ensure that there are no inconsistencies in its application. As the Minister pointed out, it is a rather unusual Bill to deal with the regulation of animal welfare and the way in which we manage animals. It imposes a ban not on the grounds of animal welfare, but on ethical grounds.

[Jim Fitzpatrick]

I have great respect for the former Minister, as he knows. Does he share my lack of understanding of the fact that animal welfare was never a reason for us to ban wild animals in circuses, and that—as he has just mentioned—we had to find alternative ethical grounds? Surely the Animal Welfare Act 2006 was the appropriate vehicle for these measures.

[George Eustice]

It was, but, as the hon. Gentleman says, the legal advice was that these were not necessarily animal welfare issues per se.

I support the Bill. I have argued for it, and I want it to be passed. A number of Members have said that it is perhaps a little overdue; I was in the Department and it took time for this to be done, so I cannot criticise others on that front.

[Kerry McCarthy]

Will the hon. Gentleman give way?

[George Eustice]

I am going to make some progress.

However, the Bill does raise some anomalies. For instance, two or three of the animals in the list of 19 are camels. They will be banned from circuses in future, but I understand that camel racing takes place in some venues in the country, and that that practice would continue. Only a few years ago, there was a dancing raccoon on “Britain’s Got Talent”, the ITV show. Do we think that that is ethical? If it is not ethical to have a dancing raccoon in a circus, why is it ethical to have one on “Britain’s Got Talent”?

What about falconry displays? They travel from agricultural show to agricultural show. Falcons are wild animals. What is the difference? We are starting to enter borderline territories.

Then there is the issue of snakes. There is a growing trend for the keeping of corn snakes and other exotic pets such as bearded dragons, a type of lizard. Are we convinced that every 10-year-old boy in the land who has a corn snake or a bearded dragon is looking after that pet adequately? A number of vets are increasingly concerned about the welfare of some of these pets, not least because many vets lack the expertise to deal with their specialist needs. Why is it OK to have pet snakes with, in many cases, no regulation at all unless they are deemed to be a species of dangerous wild animal, while having one in a circus is seen as wrong? And what about reindeer? There is nothing in the Bill to prevent a reindeer from being outside a Santa’s Grotto, yet reindeer in circuses will now be banned.

I have made all those comments not to suggest that I will oppose the Bill—as I have said, I fully support it—but simply to highlight a matter that I think we ought to consider. As we introduce a rather unusual Bill that is based on ethics rather than animal welfare, it will throw up issues that we, and those tasked with implementing the policy, will have to resolve, and we ought to be thinking about those issues now.

Privileges

George Eustice Excerpts

Tuesday 2nd April 2019 Commons Chamber

[Damian Collins]

Indeed. The questions that we wished to put to Mr Cummings were highly relevant to our inquiry. They were also highly relevant to evidence presented by other people, including representatives of organisations that had worked with him in his capacity as director of Vote Leave. I think that we should have had an opportunity to put those questions, as a relevant part of our inquiry and the work of the Committee. As the Committee of Privileges says in its report, it cannot be for individuals to seek to interfere with the work of a parliamentary Committee. We should regard that as a very serious matter.

[George Eustice (Camborne and Redruth) (Con)]

I understand the point that my hon. Friend is making, but is there not also an issue of consistency? I am told that Mark Zuckerberg also declined to give evidence to the Committee during the same inquiry. Moreover, it is quite common for Ministers to decline to give evidence to inquiries, including Ministers in some of the devolved Administrations and Assemblies. I think that the point my hon. Friend is making should be applied consistently and across the board to all potential witnesses, and that we should not fall into the trap of singling out one individual.

[Damian Collins]

I do not believe that we are singling out one individual in this case. It is highly unusual for anyone to behave in the way in which Dominic Cummings behaved towards the Committee. My right hon. Friend is right in saying that we issued an invitation to Mark Zuckerberg, but that is all that we could do. We did not issue a summons or an order for him to appear, because we do not have the jurisdictional powers to do so. He is not a UK national, and is not resident in the UK. We can only issue summonses of that sort to foreign nationals if they happen to be in this country. We said that we would do that, but obviously we do not have an opportunity to do it. So the circumstances in that case are very different.

On the day that we issued the order for Dominic Cummings to appear before the Committee, we also issued an order to Alexander Nix, the chief executive of Cambridge Analytica, and he chose to accept. The personal circumstances of Mr Nix at the time, in terms of the investigations of him and his former company, gave far greater reason for him not to attend than Dominic Cummings, who was not under personal investigation at all at that stage. There were no reasons in law why he should not appear. The normal sub judice rules that protect witnesses from incriminating themselves did not apply in his case. The Committee sought legal advice in that regard. I think that, when we have gone through a thorough process and there are no particular grounds for a witness not to appear, if the Committee and the House believe that it is important for that witness to appear, he should do so.

I agree with what my hon. Friend said about the privileges of Ministers, but the rules of the House in that regard are very different from those applying to private citizens.

[George Eustice]

Will my hon. Friend confirm, then, that it is his view that it is illegitimate for Ministers ever to claim that they cannot give evidence to a Committee because legal proceedings on a particular issue are under way?

[Damian Collins]

The House does have rules relating to matters that are before UK courts and may prevent witnesses from giving evidence, but I agree with the principle that my hon. Friend has cited. I do not believe that Ministers should claim special privileges in order not to give evidence to a Committee, but they do have a different status. I do not think that that different status should give any individual in the country an opportunity to ignore an order from a Committee or a summons to appear before Parliament simply because they happen to take exception to the idea that Ministers have special privileges that they do not have—as, indeed, do Members of the House of Lords.

--- Later in debate ---

[Damian Collins]

As I said to other hon. Members, I am sympathetic to any Select Committee that seeks to interview a public official or Minister as part of their inquiry. In my three years’ experience as Chair of a Select Committee I have never had that problem, but others have. There is a big difference between a Minister of the Crown and a private citizen, in that a Minister is a Member of Parliament and can be questioned, in this House or in the House of Lords, as part of their ministerial duties. The only opportunity we have to question people outside Parliament, as part of an inquiry, is to invite them to appear before the Committee. There is no other avenue, be it a ministerial question time or debate, where we can pursue that person. That is why the rules concerning private citizens are particularly important. I would be very sympathetic to the idea of looking at the rules for Ministers, but at least other avenues are open for challenging a Minister as part of parliamentary process.

[George Eustice]

I recall, as a Minister, having agreed to give evidence to a Committee of the Welsh Assembly and being told that it was not Government policy for Ministers in Westminster to attend such Committees, since they had no rights to hold us to account. Does my hon. Friend think that, bearing in mind what he has just said, perhaps a different set of rules should apply to the devolved Administrations, and that Westminster Ministers should be required to attend such hearings in devolved assemblies?

[Damian Collins]

As I said to my hon. Friend earlier, I think there is a basic principle and a presumption that witnesses, be they a Minister or not, should attend Committees conducting inquiries. Select Committees conduct such inquiries on behalf of the House, with powers delegated to them by the House. I also believe that if a Member of the House of Lords chose to use their special privileges as a parliamentarian not to be summoned in front of a Committee, that would not be appropriate if that Member of the House of Lords held an important public position, as many Members of the House of Lords do.

Other options are available to question Members of Parliament and Ministers that are not available to question a private citizen. The only forum we have to question a private citizen as part of a parliamentary inquiry is to invite them to appear before a Select Committee. That power is incredibly important, because the role of a Select Committee is not just to scrutinise the work of a Government Department or a public body, but to scrutinise other matters of public interest, where a Committee believes there is a case for Government intervention, new rules or new laws on something important. It is for the Committees to determine the scope of their inquiries, and witnesses should attend when required. It is very rare that witnesses choose not to attend.

[Damian Collins]

The correspondence between me as Chair of the Committee and Mr Cummings is published in full in the Committee’s report, so any Member can read that and make their own judgment as to the case that Mr Cummings made. Obviously, the matter was also reviewed by the Privileges Committee, which also invited Mr Cummings to speak to it as part of its inquiry, which he declined. Mr Cummings stated that other cases were involved, and that he had been guided by the people he had spoken to not to appear, but there was no reason in law for that. He was not under personal investigation; he was not likely to be charged with an offence. He may have all sorts of private grounds for not wanting to do it, but unless there is a particular legal reason why witnesses should not appear, I do not believe it is good enough for them to create reasons why they would rather not give evidence; that would undermine the whole process. If a witness declines to give evidence simply because it is unsatisfactory to him to do so, I do not think we should accept it.

[George Eustice]

Does my hon. Friend not have at least some sympathy for the argument that Vote Leave was under investigation by the Electoral Commission—a full-scale legal investigation? Given that that was an ongoing investigation, a request to give evidence after that had concluded was not at all unreasonable.

[Damian Collins]

We had a similar issue with other witnesses during the inquiry. When Arron Banks gave evidence to the Committee, some aspects of Leave.EU’s work that were relevant to the Committee investigation were under investigation by the Electoral Commission at that time. My hon. Friend may check the official record of the evidence session. We told Mr Banks at that session that we would not question him about matters that were under investigation by the Electoral Commission, as it would not be proper to do so, but there were a large number of other topics on which we wanted to pursue relevant lines of inquiry.

It was exactly the same with Dominic Cummings. We could have reached an accommodation, but he was not prepared, in principle, to attend. During the course of our correspondence we set out why we thought he should attend, and it became quite clear that once he was aware that we were determined to issue an order requesting that he appear on a certain day, he would refuse point-blank to appear at all. He then requested all sorts of other conditions—that he would not appear before the DCMS Committee but he might appear before a specially constructed ad hoc Committee of the House, and that members of the Committee should swear an oath before questioning him, in addition to his swearing an oath. This is nonsense. We either respect our rules and the powers that we have, or we do not.

Not just my Committee found this. I am sure that the Chair of the Privileges Committee will speak for herself about her inquiry. During the Treasury Committee’s inquiry before the referendum, different parties were invited to give evidence, and it too is scathing about the experience of dealing with Mr Cummings and the general contempt that he showed. We have to accept that if we do not really take our own powers seriously, other people will behave in a similar way. Other people will look at this case and say, “Actually, you can just ignore the Committees’ requests. There is nothing they can do.”

There are often important reasons why Committees wish to call in private citizens to account for their work. Mr Cummings is not just a private citizen going about his business in a quiet part of the country. He has held a series of important offices, he is a former Government special adviser and he was director of an incredibly important national political campaign. The work of that campaign had been referenced already in a parliamentary inquiry, and we wished to ask him about the evidence that had been given, of which he himself was critical and to which he felt there should have been some right to reply.

--- Later in debate ---

[Damian Collins]

Those conditions certainly applied in the case of Rupert Murdoch, because he was asked expressly what he knew about the practice of phone hacking at his newspapers, as was Rebekah Brooks, who gave evidence on the same day. That was a major part of the hearing. Those people could have used that excuse. There are different questions involved here. The right to non-incrimination for someone who is likely to face court proceedings and be charged with a particular offence, or who has already been charged, is already covered by the House’s sub judice rules. There are already clear rules in place for that. In this case, however, Mr Cummings had not been directly charged with an offence, although there were other ongoing investigations. As I have said, we agreed with other witnesses that there were certain things that we would not discuss as being on topic, so as not to interfere with other ongoing inquiries. Nevertheless, we managed to conduct a proper hearing with those witnesses and gain valuable evidence from them. There is no reason why that could not have been done in Mr Cummings’s case.

[George Eustice]

The argument that my hon. Friend is making is a curious one, because Dominic Cummings was the director of Vote Leave, and the investigation into Vote Leave was ongoing. As the former director of that organisation, it was obviously legitimate for him to be concerned that the investigation might be prejudiced, in much the same way as a Minister, while not being directly charged with anything, might nevertheless have concern for proceedings being made against the Government.

[Damian Collins]

Well, it sort of depends on what Mr Cummings thought he was going to say and whether he thought he was likely to be in that position. As I have said, the Committee wished to discuss a range of issues and topics with him that were not at the time being expressly investigated by the Electoral Commission. Its investigation was largely to do with funding issues and the co-ordination between Vote Leave and other campaigns involved in the referendum. We had lots of questions about Vote Leave’s work with AggregateIQ and about its involvement in data analytics and the way data was being gathered, stored and used during the campaign that were highly relevant to our inquiry. He could have come in to discuss those issues. If there were no grounds for him not to appear, and he just did not want to appear, I do not believe that the House should accept that as an excuse.

--- Later in debate ---

[George Eustice]

Does the hon. Gentleman not accept that the direction that Mr Speaker gave at the beginning of the debate was for an important reason? This is a serious discussion of an admonishment for someone’s failure to appear before a Committee. It should be about the facts of that decision not to appear or otherwise—

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. I, too, know what was said, and I will be the judge of whether something stretches beyond or remains within the advice that Mr Speaker gave. I can assure the hon. Gentleman that I am listening carefully. At the moment, we have not stepped outside the limits, and the hon. Member for Edinburgh East (Tommy Sheppard) is coming towards the end of his speech. We all know that there are limits that we should not go beyond. To mention someone in passing is one thing, but I do not want to get into an argument about the weakness of examples. It is purely about privilege, and we certainly have not stepped outside those limits.

--- Later in debate ---

[John Redwood]

I was not going to conclude that we should stop asking people who do not have a well backed up job, but we need to understand, as I am sure my hon. Friend does, that if we are asking an individual who was once in an important position, with all that back-up, to come and talk about events of a year or two years ago, and if they do not wish to mislead the Committee and they wish to be factually accurate, they will need somehow to get access to the records of their past institution and they will need to go through a lot of preparation, and they will have to do it all for themselves or spend their own money on getting advice and legal support.

[George Eustice]

Does my right hon. Friend agree that we need to be mindful of the unintended consequences if we were to introduce a stronger sanction on witnesses for failing to appear? What if, for instance, the Digital, Culture, Media and Sport Committee were holding an inquiry into phone hacking and decided it would be newsworthy to force the parents of a murdered schoolchild to appear before the Committee? That would clearly be inappropriate, and it would clearly be inappropriate to use such a sanction in that situation.

[John Redwood]

That is another hard case I had not thought of, and it needs to be taken into account as we pursue this general issue of what would be a relevant sanction.

The third category of people is senior officials and Ministers who receive salaries from the public via the Government. I think they should be more answerable than anybody else, because they are, by definition, primarily remunerated by and spend much of their lives working for the Government and the public. I would have difficulties if we found that Committees could not get access to senior officials who work full time for the Government and the wider public or if, in certain cases, as my hon. Friend the Member for Folkestone and Hythe (Damian Collins) mentioned earlier, Ministers did not think they should be answerable to elected Assemblies because they thought it might be inconvenient to give more background or detail on the policies they have been pursuing or the decisions they have taken.

I would want to weight things a bit more heavily in favour of this House having extremely strong powers to demand the presence of senior officials and Ministers, who should not be able to refuse to answer, unless it is a state secret or a matter of national defence, just because it is embarrassing or might reveal that the Government have made a mistake or wasted a lot of money—as if those things never happen. It is our job to tease out those things, and to do so we need direct accountability.

Our Ministers are normally very good, and they have to be, because Mr Speaker or the Deputy Speakers will grant urgent questions, or there will be a statement or a Question Time at which Ministers have to come and give answers. Ministers also normally come to Select Committees. The system is not perfect, but it is rather less satisfactory with senior officials, and there have been occasions when Select Committees have found it quite difficult to get access to very senior officials who know a great deal that is of public interest and should not be secret.

From my memory of my past life as a Minister, there was a bit too much secrecy in government, and there was a feeling in the official machine that everything that happened before a Minister made a statement was somehow private, whereas I felt it was often better to explain some of it. If I had made a 51:49 call but had a lot of sympathy with the 49%, because it was a collective decision, I found it helpful to explain to the House that I could see both sides of the argument, that we had to come down on one side or the other but that it was a marginal call. That is helpful to the House, but sometimes Ministers seem to think that the 51% call has to be put up as the only possible answer and all other answers are stupid, which does not make for good inquiries or for a good understanding of the difficult and sometimes messy business of government, in which Ministers often make imperfect decisions on insufficient information because a decision has to be made.

Something good can come out of this incident, which may be a more general recognition by this House that we need a stronger sanction for anyone in future who has no good reason for turning down a requirement to come as a witness. We need all UK citizens to feel they should come unless there is a compelling legal reason, but we need to be sensitive to the different categories of witnesses, and we need to have proportionate and sensible responses, according to how powerful a witness is and how much access they have to support and legal advice.

Exiting the European Union (Agriculture)

George Eustice Excerpts

Monday 18th March 2019 Commons Chamber

[George Eustice (Camborne and Redruth) (Con)]

I rise to support these two statutory instruments. I will be brief because, although I intended to serve on the original Committee, I appreciate that I have not had a chance to give you a great deal of notice of my intention to speak in this debate, Madam Deputy Speaker.

I pay tribute to our civil service and the officials in the Department for Environment, Food and Rural Affairs who, on these regulations and many others, have done a sterling job in making sure that retained EU law is operable should we leave without an agreement at the end of this month. Over the past six months, I have seen at first hand the huge amount of work put in by DEFRA officials, working late at night, to ensure that we have such statutory instruments in place so that retained EU law is operable when we leave.

We often read media reports that we are not ready for a no-deal exit and that we could not possibly leave without an agreement, and on that basis Parliament decided last week to vote to say that we should not leave without a withdrawal agreement. My experience in the Department until quite recently is that a huge amount of work has been put in, and the civil service has made sure it is an option for us to leave without an agreement, should that be necessary and should Parliament have the courage to do so. Obviously, we will find out in the next couple of weeks whether, indeed, that is still necessary.

Both sets of regulations, in common with all statutory instruments tabled under the European Union (Withdrawal) Act 2018, make very minor changes simply to make existing retained EU law operable.

[Sandy Martin (Ipswich) (Lab)]

Does the hon. Gentleman share my fear that people working extremely hard very late at night to get through vast quantities of regulations might make some mistakes?

[George Eustice]

No, I do not. Having worked in DEFRA for five and a half years, I have tremendous admiration and respect for all those people. Although they work very hard through the night, somebody will mark and check their work the next day. That is how our civil service works, and it has made a sterling effort to make sure we have all these regulations in order.

As a general rule, almost every regulation of these two statutory instruments substitutes “Secretary of State” for “European Commission”. These regulations are not complicated but rather straightforward. We often hear a lot about so-called Henry VIII powers in such debates, and there is a suspicion that, through the use of statutory instruments, we might be making changes to primary legislation that should not be made.

In truth, the most pernicious use of a Henry VIII power in modern times has been section 2(2) of the European Communities Act 1972, which has run rampant through whole pieces of primary legislation, even important flagship Acts that predate our membership of the European Union. We are in a rather odd situation in debating on the Floor of the House whether it is okay to change “European Commission” to “Secretary of State”, as the original powers implied by these statutory instruments were imposed by the European Union without any debate in this House, typically through either an implementing Act or a delegated Act, and therefore with little or no scrutiny by the European Parliament and often with little or no scrutiny by the European Council. The role of this Parliament, if it was lucky, was to receive an explanatory memorandum but, by and large, only ever to receive letters to the European Scrutiny Committee advising on what the European Union had done to us.

Nevertheless, this is what taking back control means. It means that our Parliament, for once, is starting to take an interest in these matters, rather than leaving them to the European Union.

[Rebecca Pow (Taunton Deane) (Con)]

I pay enormous tribute to my hon. Friend. I was his Parliamentary Private Secretary when he was an Agriculture Minister, and I went through a great amount of this important work with him. On organic standards, is it not the case that we very much see ourselves as setting the bar not just nationally but across Europe and across the world, that we have influenced Europe on these standards and that we ought to keep these standards as high, if not higher, in leaving?

[George Eustice]

My hon. Friend makes an important point. Of course, that is exactly what the regulations are about. We have had some influence on the organics regulations. Indeed, when I first became Agriculture Minister, something called the organics dossier was going through the European Parliament, and it concluded that journey only around six or nine months ago. Along with the smarter rules for safer food dossier, it became something of an internal joke about an interminable debate taking place in the European Union. In the end, we managed to get that agreement into something that was satisfactory to us, although it meant that not much had changed.

Finally, let me recognise something in the statutory instrument related to the control of imports. As the shadow Minister said, we are indeed ready to replace the EU trade control and expert system with a new UK system that has been in development in DEFRA for at least the past nine months. There has been a prototype version for several months and it will be ready to replace TRACES from the point at which we leave the European Union. I welcome the Minister’s point about the recognition of existing EU logos and standards for a 21-month period. Of course, we all hope that the European Union will do the honourable and sensible thing and reciprocate.

--- Later in debate ---

[Neil Parish (Tiverton and Honiton) (Con)]

It is a great pleasure to speak in this debate; I think that we should perhaps get back to organic farming. It is nice to speak after my hon. Friend the Member for Camborne and Redruth (George Eustice). I would like to put on the record my thanks for all the work that he did as Minister and all the great, detailed help that he has given the whole agriculture sector over this five-year period.

I welcome this debate tonight. We must remember that organic production in the UK is probably one of the best—if not the best—in the world. Converting to organics takes longer in this country than it does in other EU countries, even under present legislation. We must remember that our poultry, pig, beef, lamb and dairy industries all operate under very high standards of organic production and people respect and trust that production. We must remember, as we move forwards, to make sure that imports meet our very, very high standards.

We also have a lot of vegetable and fruit production, but much of that is organic. Again, it needs a great deal of labour. If a farmer weeds organically, they are not using any form of chemicals to destroy those weeds, which means that they have to use extra labour in order to keep that production going. We may in the future be able to electrocute weeds provided that we get them at a very early age. Seriously, this is something that may well help with the labour requirements in production in the future, but again that will not happen overnight, so we must be realistic as we move forward. I agree very much with the Minister and the previous Minister, my hon. Friend the Member for Camborne and Redruth, that DEFRA has done an awful lot of work to prepare either for a deal on Brexit or for no deal.

We can deal well with the imports of organic food, because we can bring products in, check the standards and ensure that they flow freely into the country. Where I have slightly more of a problem—DEFRA has admitted this to me, although it is not its fault—is that every time the Department contacts the European Union about registering as a third country and ensuring that there is third country equivalence, we just do not get a reply. To a degree, we can let the imports flow in because we can recognise the previous EU standards, but it will be much more difficult to get that food across the channel if the EU decides to play hardball.

[George Eustice]

My hon. Friend makes an important point about being listed as a third country so that exports can continue. Shortly before I left the Department, there was a request from the European Union that we dynamically align our regulations for a period of nine months, and in return the EU would recognise our third country status from the start. We are obviously willing to agree to that.

[Neil Parish]

I very much welcome that comment, because two or three weeks ago, the Environment, Food and Rural Affairs Committee went to DEFRA, where we saw the regulations being laid out and had a look at what was happening. I welcome what my hon. Friend said, but I reiterate that as much as I may love our French cousins, they can be very difficult when it comes to trading into the European Union. Much of our produce will have to pass from Dover through into Calais, and we have to be absolutely certain that they will process our food and let it into the EU.

Spending Review

George Eustice Excerpts

Wednesday 26th June 2013 Commons Chamber

[Mr Osborne]

We are giving local councils more freedom, including some more flexibility in the use of assets, particularly where they want to spend to save. The broader point is that if all the changes in local government and social care I announced are taken into account, the change for local government is more like minus 2%—still difficult, but I think that good local councils can continue to deliver excellent local services.

[George Eustice (Camborne and Redruth) (Con)]

I welcome the commitment the Chancellor made today to renew the water bill rebate for South West Water customers, which has been a vital respite for some 700,000 households in the west country. Does he agree with me that it would be wrong of any future Government to reverse that commitment for this spending review period?

[Mr Osborne]

I commend my hon. Friend for the campaign he has run. He has represented not only the people of his constituency but people across the south-west of England. Water bills are abnormally high because of the money that needs to be spent on cleaning up beaches and the like, and we have stepped in to help. It is this Government who have done that, after years of campaigns, and we have made the commitment to extend it. As for whether a Labour Government would remove it—well, they never introduced it when they were in office, so I suspect they would.

Taxation (Living Wage)

George Eustice Excerpts

Tuesday 22nd January 2013 Westminster Hall

[Robert Halfon]

Of course, if businesses want to pay their employees a living wage, that is all well and good; I would be delighted at that and would have no problem with it whatever.

My hope is that once the threshold reaches £10,000, we will consider bringing back the 10p rate for the lower-paid. Some Liberal Democrats disagree; they have suggested that the best way to help families is to raise the personal allowance even further, to something like £12,500 a year. I absolutely agree the coalition should fulfil its £10,000 commitment, but it would be unwise to raise the personal allowance even further. Everyone should feel that they have a stake in the state, and they should have some stake in the tax system even if they pay only a small amount, because they need to realise that public services are not free and that there is no magic money tree. My fear is that the Liberal Democrats want to pay for their policy, which will cost £14 billion if applied to everyone, by dragging even more workers into the 40p band. That is what has happened historically. The problem is that we will soon have families with not very high wages paying a marginal rate of 40p, and that will include police officers, shop owners, managers and senior nurses in the national health service.

[George Eustice (Camborne and Redruth) (Con)]

That point goes right to the heart of my hon. Friend’s argument. The aim of this policy should be to encourage people on low incomes to take higher-paid work, to work longer hours and to start the transition up the income scale. That is why he is right that we need to introduce a 10p tax rate in the interim; otherwise, people will go straight from their tax-free allowance to being taxed on any income above that. Does he agree that, in an era where there is downward pressure on many benefits, some of which affects the working poor, the 10p tax rate could be a good counterbalance, so that people keep their income in the first place?

[Robert Halfon]

My hon. Friend is exactly right. What he is saying is that we will create a hand-back society, where we give people back their own money, rather than just a handout society, which recycles benefits through the tax system.

Taxing the people I describe at the 40p rate is a brake on aspiration, and it has hit single-worker families the hardest. We started this Parliament with about 3 million workers paying the 40p rate, and the number will be closer to 5 million by 2015. We should not add further to that figure, as my hon. Friend says. Restoring the 10p band is more affordable than raising the personal allowance to £12,500. Most low-income workers would still have a stake in the tax system, and it would avoid dragging more families into the 40p band. That is why I support it over the Liberal Democrat proposals.

The fundamental point is, as the Government say, that we lost £7 billion when the high tax rate went up to 50p. If we get more revenue from having a 45p tax rate, the moral thing to do will be to put those extra billions towards funding the 10p tax rate.

Of all the things the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) did, the one that genuinely amazed me was that he scrapped the 10p band, given what the Labour party stood for. I accept that he introduced it in the first place, but when I watched him scrap it, I genuinely could not understand why he was doing it. Overnight, the change crushed working people with a £232 tax rise. Why should the Government not set themselves the goal of reversing that unpopular decision? There is a strong case for doing so. As I said, tax credits are flawed; small firms cannot afford the living wage; a flat tax is not going to happen and is unfair; we do not want to drag any more families into the 40p band; and everyone should have some stake in the tax system.

I suggest to my hon. Friend the Minister that the policy would be popular, that it would be a symbol of the Government’s economic mission and that it would help to tackle the desperate stagnation in incomes that Britain has suffered in the past 10 years.

--- Later in debate ---

[Catherine McKinnell]

The hon. Gentleman is well aware that Labour introduced the 10p tax rate. In the context of levelling out income tax and the personal allowance, the tax rate went from 22% to 20% and the 10p rate was abolished. There were various debates about winners and losers at the time, and there is no particular move at the moment to reintroduce the 10p rate. We are more concerned about the impact of the Government’s economic measures on low-paid workers, which the hon. Member for Harlow was discussing.

The Labour party’s approach has been clear—to tackle issues of low pay and to ensure that work always pays. We therefore want support for those who need extra help to make work pay, to keep them off benefits and to ensure that they can afford necessities such as child care so that they can stay in work. We have made our policy clear and we are therefore proud of what we achieved through the tax credit system.

[George Eustice]

I am grateful to the hon. Lady for giving way on this obviously difficult point. Having been in opposition, I fully understand her difficulties with people trying to bounce her into writing a manifesto commitment for the next election, but can she say whether the Labour Government made the right decision to abolish the 10p rate or, with hindsight, was that a mistake?

[Catherine McKinnell]

I appreciate the hon. Gentleman’s concern, but I am trying to discuss the premise proposed for debate today by the hon. Member for Harlow, which is people on low pay and the living wage campaign, so I will return to my point on the national minimum wage, which transformed the lives of millions. The policy is now taken for granted, but it was implemented in the face of often strident opposition, in particular by members of the Conservative party. Despite significant opposition at the time, however, it now seems to be universally accepted as an important aspect of our economy in ensuring fairness across the board.

The squeeze on people’s incomes and the ever-increasing cost of living, of which we are all aware and which we have all seen among our constituents, mean that for many the national minimum wage is simply not enough to make ends meet. Thus, a higher rate of £7.45 per hour outside London and £8.55 per hour inside the capital has been calculated by the Centre for Research in Social Policy as the level required to enable people to provide for themselves and their families.

--- Later in debate ---

[Mr Gauke]

The argument that I am making is about the contrast that can be drawn with the approach taken by the present Government, who have focused on reducing the tax bill for low-paid workers. That could be done in different ways, but we have undoubtedly, as a Government, reduced the income tax bill for low-paid workers. That compares favourably with the approach taken in the last Budget of the right hon. Member for Kirkcaldy and Cowdenbeath, in which he introduced a measure that increased pretty substantially the amount of income tax that low-paid workers had to pay. It is worth highlighting the point that we as a Government have done more, in very difficult circumstances, for those low-paid workers than the previous Government did.

I think that my hon. Friend the Member for Harlow agrees that we should meet the £10,000 target. The debate is then about where we go next. I will not be drawn into going beyond the firm commitment that we have in the coalition agreement and that has been evidenced by the steps that we have taken at every Budget and in the last autumn statement to make progress towards meeting that £10,000 target for the personal allowance.

My hon. Friend has set out very clearly the case for focusing on reintroducing a new lower rate. There are pros and cons of such an approach, and the debate on that will continue. As he would expect, I will not make any commitments on the matter. Clearly, there is a substantial fiscal cost in reintroducing a 10p rate of income tax. However, the Government’s values are clear. The overall cost of the personal allowance by the end of this Parliament will be around £9.5 billion a year as a consequence of the measures that we have taken. Clearly, where we can, we have been prepared to take substantial steps, at quite significant cost, to reduce the income tax bill for those on low earnings. That is something of which we should be proud, and as a number of my hon. Friends have said, we should be communicating that out there, because it demonstrates our values.

[George Eustice]

I give credit to the Government for everything that they have done to help those on low incomes get out of the tax bracket altogether by increasing the thresholds. I entirely understand that the Minister will not want to predict what might happen in the future, but, looking to the recent past, will he explain what the Government believe the advantages are of lifting thresholds as an alternative to a 10p tax rate? In other words, why did the Government decide to lift the thresholds rather than reintroduce a 10p rate?

[Mr Gauke]

There is a case for simplicity in focusing on the increase in the personal allowance. My hon. Friend the Member for Cleethorpes quoted the Forsyth Commission, which looked into this matter, and there is a question why we should ask people who are on quite low wages to be contributing income tax. I appreciate the arguments that everyone should make a contribution, and I do not in any way dismiss them, but when we are asking people earning such relatively low amounts to pay income tax, there are the significant questions of work incentives and simplification. The Government must bear those in mind when considering whether to reintroduce the 10p rate. There is a debate to be had on both sides. There are pros and cons both to personal allowance increases and to a new lower rate. In our coalition agreement, we rightly set out our determination to get to £10,000. Fiscal drag had brought more people into income tax than was right, and we have rightly made it our priority to address that.