Cider Industry: Duty Changes

Ian Liddell-Grainger Excerpts

Wednesday 1st December 2021 Westminster Hall

[Bill Wiggin (North Herefordshire) (Con)]

I beg to move,

That this House has considered the cider industry and duty changes.

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

I welcome the progress the Treasury is making on cider and alcohol duty. It will be helpful to hear what the Minister thinks the direction of travel is for the industry, and how the Treasury is helping. The announcements by the Chancellor in his autumn Budget on alcohol duty were largely welcome. His five-point plan will simplify the tax brackets. It is supposed to come at an overall cost to the Treasury of £555 million by 2027. The number of bands at which different duties are levied will be cut from 15 to six. That ambition is tremendous. However, I hope the debate will be helpful in ironing out some of the issues with the proposed changes.

I want to draw attention to the traditional small-scale cider makers, who make up roughly 80% of the country’s cider makers. I also wish to draw the House’s attention to the announcements on flavoured cider. My constituency of North Herefordshire is home to many small-scale and large-scale cider makers. The cider orchards of Herefordshire are said to produce more than half the cider consumed in the UK.

The call for evidence document in the Government’s alcohol duty review consultation sets out three objectives:

“a) Simplifying the current complicated system;

b) Making the basis of alcohol taxation more economically rational, with fewer distortions and arbitrary distinctions; and,

c) Reducing the administrative burden on producers when paying duty and complying with excise requirements.”

Alcohol duty was harmonised under EU law, but now we have left the EU and its onerous legislature, it is right that we consider how the duty system works. The stated aims from the Treasury are welcome, but why are the Budget announcements made only to have a consultation occur afterwards? Should it not be the other way around? On a positive note, I can report that the consultation has been managed in a way that cider manufacturers found very helpful. However, one cannot help but feel that all this could have been ironed out before the Chancellor rose to his feet.

UK cider producers sell to more than 50 countries over five continents, and that trade is worth more than £100 million a year to the economy. I hope that the duty reforms will encourage cider producers to go beyond the hobby level to become sustainable businesses and increase those figures.

What the Chancellor announced in relation to alcohol duty is welcome. However, looking a little further, there are some discrepancies, and I hope the Department will not mind me bringing them to its attention. In his Budget statement, the Chancellor proclaimed that this would be the

“biggest cut to fruit ciders in a generation.”

Fruit cider is currently treated as made-wine for excise duty purposes, and it is taxed at two and a quarter times the rate of apple cider. The proposed tweaks in the duty rate leave made-wine with a proposed excise duty two and a half times the duty rate for packaged ciders, and more than twice that of keg ciders. That is probably because flavoured ciders have a 22.8% market share of the UK’s £2.1 billion cider industry. Helpfully, the flavoured cider market is established at 4% ABV, or alcohol by volume. They are some of the lowest-alcohol ciders on the market—obviously, excluding the no and low-alcohol ciders—but they are charged a premium in excise duty.

Under current proposals, the duty on 4% packaged fruit cider bought from a shop will change from £91.68 per hectolitre to £90 per hectolitre. To put that in context, the duty on a hectolitre of apple-flavoured cider will move to just over £35. That is a difference of £55 per hectolitre. The higher rate of duty for fruit cider was introduced to protect apple cider made using British apples. However, many fruit ciders now simply have an apple cider base, made with British apples, with flavourings or colour added. The excise duty rates seem to be hampering innovation and growth in this sector—a sector that can offer much safer, lower-ABV ciders. Producers such as the ones in North Herefordshire want to increase innovation and diversity across the cider category.

At present, flavoured cider has not been included in the Government’s consultation. I hope that the Minister will agree that it can be added, as I am sure many producers would like to have their say. Helpfully, the anomaly was recognised in the Chancellor’s statement. Paragraph 2.11 of the consultation, under the heading “Anomalous and arbitrary”, notes:

“Larger cider makers felt that the duty differential between flavoured and non-flavoured cider impeded innovation in the market.”

However, paragraph 2.12 suggests that craft and small cider makers are supportive of a higher rate of duty for flavoured ciders. That is not right; in my frequent discussions with producers, I get a very different picture.

Fruit ciders, rosé ciders, mulled ciders, cider with honey, cider and elderflower and spiced cider are all treated as made-wine. Such ciders have been made for centuries, and there are records of them going back more than 400 hundred years. They are firmly part of the traditions of cider making. Many small and craft cider producers make such variants using traditional methods, and the market for them is increasing. Each household is reported to buy fruit cider an average of six and a half times a year.

The demand is also there to support local, small-scale producers, many of whom would like to tap into the fruit cider sector. Those small and craft cider producers still use traditional fermentation processes to create fruit cider, and then work with other local fruits to produce their local version of fruit cider. What does stifle innovation is the fact that when making cider through the natural process, rarely does a product come in at under 6.5% ABV. Fair enough—that changes slightly each year, depending on how much sugar is in the apple crop. Because of the way the fermentation process works, unless the cider is diluted, it will probably come out at above 6.5% ABV. My own cider, when I made it myself, was above 7%. The benchmark ABV is 4.6%, so someone wishing to make a fruit cider using traditional methods, without dilution, is likely to be hit with an excise rate too high to justify that diversification. Traditional cider makers using natural fermentation from apple juice could see upwards of a 40% increase in duty, and it could be even higher if they venture into fruit versions.

The proposed changes to flavoured ciders will only truly benefit the makers of large, mass-produced flavoured cider in the established 4% ABV market, selling in 50-litre kegs. That is Kopparberg, which is Swedish; Heineken, which is Dutch; and Aston Manor, which is French. Those manufacturers, with their foreign-owned parent companies, are destined to benefit the most from the excise duties at their current levels—the same duties that are meant to be championing the local little guy.

Would the Treasury not see benefits in bringing fruit cider in line with the apple cider rate, which is better known as notice 162? If the fruit cider market is opened up and brought into line with its apple-only equivalent, growth will occur. Flavoured ciders lead many global cider markets, so encouraging the growth of lower-ABV flavoured ciders can help the rejuvenate the industry and expand our global reach in the sector.

The changes to alcohol duty rightly address concerns about problem drinking. A recent survey asked 20,000 people about alcohol consumption in 2019 and 2020, and it found a spike in high-risk drinking following lockdown, from around 25% to 38%. According to the World Health Organisation, alcohol consumption contributes to 3 million deaths each year globally.

It is no secret that white ciders—the type sold in 2.5 litre bottles at a cheap price—have exploited the current duty system. A report by the charity Thames Reach found that of the 8,096 people found sleeping rough by outreach teams in the capital, 43% had an alcohol problem. Of those, an astounding 98% are primarily drinking high-strength cider and super-strength beers. Popular brands include the 7.5% Ace cider, which comes in a three-litre bottle and contains 24 units of alcohol, but retails at only £3.99. This is clearly wrong and dangerous, so I understand the Government's commitment to increasing the duty on this type of cider.

However, there are concerns that such products are conflated with those made by the producers I am championing today. I will quote a company in my constituency called Little Pomona, which has visits to its cidery during the tourist season:

“With over 1,000 visitors over the last year, we have never had any instances of over-drinking. We don't serve our cider in pints. Purely as thirds, halves of pints, and wine glass measures. Our ciders are served in restaurants, from modest bistros to Michelin starred establishments”.

The point is that the consumer who indulges in a craft, artisanal, small-batch cider is different from the consumer who buys a £4 bottle of white cider. I hope that my hon. Friend the Minister can point the industry to how it can best maximise its potential safely, and tell us how the Government see the industry progressing.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

I declare my interest as the chairman of the all-party parliamentary cider group, and I support my hon. Friend in his argument. I know that the Minister takes a keen interest in this issue, and my hon. Friend is absolutely right that cider is an incredible, world-beating British product. He has laid the case out beautifully. Does the Minister agree that we, as a Parliament and as a Government, need to do much more to highlight the benefits of responsible cider drinking? We have Glastonbury in Somerset, and we do not get drunks on Glastonbury. It is not cider that causes the problem; it may be other things, but it is not cider.

[Bill Wiggin]

I will have to take my hon. Friend’s expertise on that matter at face value, but I agree with all the good things he said and I thank him for his work as the chairman of the all-party group.

The cider industry in this country is unique. Family-owned companies such as Westons in Much Marcle, which has 240 employees, contribute so much more than just delicious cider from local apples. People such as Helen Thomas, to name just one of many, ensure that my constituency leads the way. That spirit of innovation and history needs to expand as we forge new relationships with nations around the world. Fruit ciders produced by a craft cider maker in North Herefordshire should be in stock behind bars from Armenia to Zimbabwe, in a truly global British fashion.

From my discussions with relevant local stakeholders in the cider industry, I know that most of their concerns could be addressed via the consultation. I hope that any additional points are taken as constructive and that the Minister will be able to provide reassurance to cider makers in Herefordshire, and indeed nationwide, that their historic and significant craft will be nurtured and given the boost that the recent announcements have set out to achieve.

Oral Answers to Questions

Ian Liddell-Grainger Excerpts

Tuesday 27th April 2021 Commons Chamber

[Rishi Sunak]

The hon. Lady is confusing multiple things. She has asked me previously about circuit breakers. At the time there was a debate, appropriately, about whether a national intervention was right at a time when the epidemiology across this country was incredibly varied. That is something that the deputy chief medical officer himself spoke about at a press conference, and he said it would be inappropriate at that time to take forward national interventions. That is what I was referring to.

To go back to the shadow Chancellor’s previous comment about transparency, in fact I voluntarily published extra messages to aid the transparency of this process for people. I am fully committed to working constructively with the inquiry, both the Boardman review and the Treasury Committee inquiry. It is worth reminding the shadow Chancellor of something she herself wrote last April in The Daily Mirror:

“The ‘Coronavirus Business Interruption Loan Scheme’ seems to be stuck in the banks, and not getting to small businesses in particular, where cash flow is desperately needed.”

Well, the Government were also looking at how to get cash flow to small businesses, and I am sad and disappointed about what a conveniently short memory she has.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con) [V]]

I wonder whether the Chancellor would order an investigation into the management of contracts between Skanska and Somerset County Council. There is evidence emerging of lazy council practices which are costing millions and millions of pounds in overpayment. We need to get to the bottom of this, and we cannot get the local county council to do it. Will the Chancellor please not only investigate, but suggest how we as MPs can force the issue before we have a complete disaster on our hands?

[Rishi Sunak]

In my previous job as Minister for local government, I enjoyed many conversations with my hon. Friend about local government matters. He will know it is not for the Chancellor or indeed national Government to implement redress processes. There are established redress processes, which I would be happy to write to him about, so he can seek redress for his particular concerns.

Finance (No. 2) Bill

Ian Liddell-Grainger Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[Virginia Crosbie]

I thank the hon. Gentleman.

Unfortunately, despite all the good reasons I have for bringing a freeport to Anglesey, the Welsh bidding process has not yet started. The Welsh First Minister has cited concerns about economic displacement, but my biggest concern is the economic displacement that will occur when trade that could have come to Anglesey goes instead to one of the eight English freeports announced in the Chancellor’s Budget. Ports such as Liverpool are already six months ahead of us in this process.

I absolutely support the Finance Bill and the opportunities that it gives the UK now that we are free from the shackles of Europe. I look forward to seeing Anglesey become a freeport, attracting new investment and creating the good, quality jobs that the island so desperately needs and deserves.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con) [V]]

I am absolutely delighted to take part in this debate and also to follow my hon. Friend the Member for Ynys Môn (Virginia Crosbie). We share a nuclear power station. I look forward to the fantastic day that we build at Wylfa.

I must say that the Chancellor has done a remarkable job in supporting the economy during this pandemic. He has also kickstarted the economy without a shadow of a doubt. Economic regeneration and regional economic regeneration does have to come with various—dare I say it?—caveats. I advise extreme caution when shelling out any extra cash to Somerset County Council. I would not spend a penny on it. Somerset County Council is incompetent, profligate and, worst of all, unbelievably pompous. It has failed to get broadband working. It has signed contracts that it does not understand, which has cost the tax payers millions of pounds. It adds absolutely nothing to the development of the local economy, except, unfortunately, hot air. Oh yes, Somerset County Council loves to claim credit for everything, but that is either exaggeration or lies.

Somerset is run dishonestly and it does not deserve to be taken seriously. My constituency has the biggest infrastructure project in the whole of Europe. Hinkley Point C nuclear power station is taking shape. Who masterminded this local planning? Who carried the burden? It was Sedgemoor District Council. Sedgemoor is one of the four districts that Somerset wants to gobble up in its greedy ambition to become a unitary authority. Why? It is because the district councils do not squander public money. They save it and have shown that they do so year after year. What does Somerset County Council bring to the party? They bring nothing but trouble and, I am afraid, waste. It pleads poverty, and begs for more, but it does not deserve a bean.

Across the country, our secondary school head teachers are furious with the council for ordering extra cuts that will hurt the most vulnerable children in our society who desperately need all our help. The heads have no confidence in the overpaid oaf in charge of Somerset schools. I do not think that I have confidence in any of them in the council, and I am not sure that I ever had. The staff of Chief Executive Pat Flaherty call him “flat battery”, which is a little worrying. He actually could not start a Dinky toy, let alone regenerate the economy.

Most people say the council is a waste of space and money—this has been going right across Somerset for the past few months. The public is not being fairly consulted about the unitary dream, which is, I am afraid, a scandal that lies at the door of the Secretary of State of Housing, Communities and Local Government. This is at the heart of the problem. The county chose to bid for change, just as the pandemic started. It is crazy timing. Why the rush? It should have waited. People have suffered because of this, but the Government danced to its tune and postponed the county elections, which were meant to take place next month, depriving the voters of a democratic say. I worry about the state that we are in.

Economic Update

Ian Liddell-Grainger Excerpts

Monday 11th January 2021 Commons Chamber

[Rishi Sunak]

There are specific provisions in place in guidance for employers for calculating pay with respect to periods of maternity. Hopefully, those are clear, but I am very happy to look into the hon. Lady’s specific point.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con) [V]]

My right hon. Friend is aware how good Bridgwater and Taunton College is and how many apprentices it is training for Hinkley Point and many other organisations. One of the unforeseen consequences of the pandemic is that £8 million of the college’s funding goes into training those people but, unfortunately, a lot of employers are not taking on apprentices, or are making them redundant, so those young people are not getting the chance to finish their training in the skills they need to get jobs. Can we urgently examine ways to ensure that they and the colleges are empowered to train those young people and get them into the workplace as soon as possible?

[Rishi Sunak]

I am fairly certain we have already put in place a new matching services for apprentices who, sadly, are unable to complete their apprenticeship with their current employer, but I am happy to get the details and write to my hon. Friend about that. More broadly, like him, I support passionately further apprenticeships, which is why we have given companies a £2,000 bonus to take on a new apprentice and provided additional funding to both businesses and colleges to pay for the associated training.

Future of Farming: Somerset

Ian Liddell-Grainger Excerpts

Wednesday 18th March 2020 Commons Chamber

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

I start my dissertation by firmly apologising to the Minister, who has not had a copy of my speech. I managed to send it to the wrong Minister, so I apologise unreservedly—that just shows quite how incompetent I can be.

Believe it or not, I am very grateful to have this rare opportunity to address the House about a subject that is very close to my heart and that of a lot of Members—farming. As I am talking about farming, I ask the Minister to make sure that we as a Parliament ensure that vets are taken in as key workers. I know that that was not mentioned today by the Prime Minister, and I take this opportunity to put that forward.

Adjournment debates are a bit like Opposition election slogans, especially if you turn them upside down—in our case, it would be, “For the few, not the many”. However, at least the few of us here this evening are demonstrating the best health practices. I am keeping a safe distance from the Minister and I promise that no offence is intended.

This is a difficult time for all of us, I am afraid, farmers included. Let me tell the Minister a bit more about the Bridgwater and West Somerset constituency. At the Bridgwater end, we have some of the lowest-lying farmland in the United Kingdom, and at the West Somerset end, particularly on Exmoor, we have some of the highest. Both areas have faced huge challenges even at the best of times. Down on the levels, we have so far managed to survive the winter without a repeat of the devastating floods that emerged in 17 miles of Somerset six years ago. Back then, the Environment Agency was led by deaf donkeys in blindfolds. It took a great deal of persuasion to convince them that rivers work much better when they are regularly dredged, and I pay enormous tribute to David Cameron for leading that charge. Any of my farmers on the levels could have told them that, and in fact, they did tell them that in no uncertain terms—I went to the meetings.

The thing about farmers is that they know the land. They respect the weather. They understand that climate is changing and that we cannot afford to sit back and do nothing. They, like me, speak their minds. For example, there is genuine concern about the long-term financial commitment to keep Somerset flood-free. Naturally, I am delighted—as is my whole area, and especially the levels—that the Chancellor’s Budget guaranteed proper funding of £114 million for the tidal barrage. That is incredibly welcome, and I thank the team.

But the Minister will be aware of the question mark that continues to hang over the future of the Somerset Rivers Authority. The SRA is a flood prevention organisation. It uses the expertise of local drainage boards and the most clued-up councils, such as Sedgemoor District Council. The authority gets its funding from various public organisations but also, crucially, relies on a precept that is added to council tax. That is rare, but not unusual. Without that tax element, all the ambitious plans to safeguard people from the horrors of flooding would be at risk. As of now, the precept is not enshrined in law. A private Member’s Bill to fix that passed through the House last year, for which I am grateful to colleagues, but it was then sabotaged by the Liberal Democrats in the other place for reasons that I still, to this day, do not understand.

However, the new all-singing, all-dancing Environment Bill could easily be tweaked to ensure that the SRA can raise what it needs through precepts. I hope that the Minister will be in a position—perhaps not now, but in the near future—to give me an indication of how and when that problem could be solved. I would be happy to have a discussion with him about that.

Meanwhile, farmers on the Somerset levels remain understandably anxious, as we all are, over our future trading relations with Europe. This is dairy country—although not exclusively—and the dairy industry is, as one analyst put it recently, “close to broke”. We have one of the largest milk companies in the country, Müller. We are also the home of Yeo Valley. That is why farmers are puzzled and concerned by the decision of the Secretary of State to potentially halt—it depends how we look at it—the culling of badgers in Somerset. I know that it is an emotive subject for all sides, but there is ample evidence that the cull in Somerset is significantly cutting the incidence of tuberculosis and proving its worth. That is because it is being done well. Badgers and their human supporters may take a different view, but I am slightly shocked and worried that the Secretary of State— I say this advisedly—appears to be siding with them.

Dairy farmers, like all farmers, love their animals. They know how bovine TB can rip through a herd. What kind of message are we sending them? The cull has effectively removed a major health risk. The prospect of vaccinations is still too vague and too far away. I wonder whether the Minister understands the economic tightrope that dairy farmers and beef farmers already face. The only way to make any decent money from milk is to turn it into butter, yoghurt and cheese. Many farmers would struggle or go bust if they could not do that.

Despite all the hurdles, Somerset cheese has developed a worldwide reputation, which is fantastic. But that was before this awful virus stopped worldwide travel, crippled airlines and squeezed economies right around the globe. A week or so ago, you could visit the swankiest cheese shop in the swankiest food mall in San Francisco and find an unpasteurised Montgomery’s cheese from Somerset displayed in pride of place. The only complaint the proprietor would have was that he could not get enough of it. Now he would be very lucky to receive any supplies at all.

Cheese makers such as Wyke Farms also export large quantities to Europe—or they did. Even at the best of times, the margins are uncomfortably tight, and these are not the best of times. There is a stupid urban myth about farmers: that they all plead poverty but still find the cash to buy flashy new cars each year. We have all heard that. I can assure the House—I think the House knows it anyway—that that is not true. Every farmer I have ever known works their socks off to break even. They are rightly worried about the impact of new trading hurdle that comes up. The latest threat is to suspend trade at the Sedgemoor auction centre, which is commonly known as junction 24—junction 24 being the junction on the M5. I have to say that that would be a financial disaster for local farmers. The centre attracts entries from all parts of England and Wales. The impact on the rural economy, if it closes, cannot be overstated. Farmers, by and large, buy and sell their animals at auction. That is the way it has always been done, and it would be almost impossible to do so at the end of a computer, even if one could get a connection, and I will come to that in a minute.

I appreciate that tackling the virus is the most urgent national priority, but I ask the Minister to consider whether there are sensible ways in which auction centres such as Sedgemoor can be allowed to continue trading. The public have already been discouraged from attending sales. The organisers are already considering limiting sellers and buyers. They are doing their bit.

I would like to have discussed the issue with Somerset County Council’s—believe it or not—£108,000-a-year director of public health. However, she is hard to reach and appears to be working at home, as indeed, I am afraid, most of our county staff soon will be. It does not inspire much confidence. I would have expected a decent county council to be making information videos, putting up posters and taking advertising space in the local press to keep us informed. In most counties, people are doing it. That is great. I certainly know that they are doing it in Bristol. I am afraid Somerset, with its fat cat top brass, is silent. This disease demands a better response from county councils. It seems that Somerset is wasting time and money on becoming a unitary authority and is not listening to what the people need. I appeal to the leader of Somerset County Council to please stop posturing and get on with the job.

When this dreadful virus is behind us, there is one other thing that farmers fear: a post-Brexit tariff war with Europe. Make no mistake, farming is a vital industry in Somerset. It employs, indirectly and directly, many hundreds of people, but it is forced to look over its shoulder and count the pennies all the time. We are no longer a member of the European Union, but until December we remain in the system, claiming the subsidies and following the rules. All that will change, particularly for farmers who will continue to farm on the uplands of Exmoor.

It has been recognised for the best part of a century that hill farming on Exmoor is viable only because of the subsidy system. Trying to make a living out of some Exmoor farms, if they were unsubsidised, would be like trying to make a living out of a window box. That is flippant, but true. It is not a comfortable living, and I invite any lowland farmer who thinks Exmoor is a featherbed to spend a hard, wet winter high on the moors. This year it has been hard and very wet.

What we get for our money is the preservation of some of the finest landscape anywhere in the United Kingdom—landscape that forms the key attractions of the south-west’s tourism industry. I can show the Minister plenty of evidence that the landscape is the No. 1 reason most people come to Exmoor on holiday, and rightly so. We welcome any Members of the House who want to come and see how beautiful it is. We must support the hill farmers as generously as we do now.

Without the hill farms much of Exmoor would revert to an ugly, unloved wilderness—all scrub and, to paraphrase, tumbleweed. Much of the moor is still a no-go area for any kind of modern communications. There are dead zones for mobile phones and internet speeds can be so slow that it is almost quicker to post a letter. I know that progress has been made and things have improved, but we are still in an unparalleled national crisis and the Government want people to work from home. That is rightly so and totally supported by the House, but we need a technical taskforce to be able to create a quick fix for Exmoor and other cut-off rural parts. Across the United Kingdom, broadband is a necessity. It is a miracle that our hill farmers continue to put up with it. Thank heavens they do.

Those who want the land to go back to the wild are not living in the real world. Rewilding may be a fashionable fiction in “The Archers”, but it is make-believe for places such as Exmoor. In any case, only proper farmers can make it work. They have to work the land, not learn it in a book. That is why I want the new Agriculture Bill to match every EU subsidy pound for pound, improve the way that farmers are paid and protect the quality of British products against foreign competition. I do not believe we should tolerate the importing of inferior goods with lower standards than our own. There is a long way to go before the new Bill is passed, and I would like the Minister’s assurance that there is still time for constructive change. I am sure that there will be in Committee.

I have asked a lot in this short debate—

--- Later in debate ---

Motion made, and Question proposed, That this House do now adjourn.—(David Rutley.)

[Mr Liddell-Grainger]

That will teach me to watch the time more carefully.

I have asked a lot in this short debate. In the weeks and months ahead, farmers will become more important to us all. We will rely on what they produce in ways that we have probably never considered but now need to because we are in a national emergency.

[Kerry McCarthy (Bristol East) (Lab)]

I have read that Somerset County Council has sold off nearly two thirds of its agricultural land in the past decade. The Agriculture Bill Committee is looking at how we can better support county farms, which the Government have promised to do in the past. Does the hon. Gentleman think it is a real shame that the council no longer owns those farms, which often provided an entry to farming for people who could not afford to buy huge swathes of land themselves?

[Mr Liddell-Grainger]

The hon. Lady knows me well—she tempts me, and I will rise to the bait. Yes, it is appalling that the council sold them off. I was totally against their being sold off. County farms were the way that young people got into farming—the way people could get on the farming ladder. The farms were not big—they were comparatively small—but they gave people a chance. Any county that sold them off is an absolute disgrace. Yes, of course, I know that they wanted the money, but we have stopped an entire generation of young people going into farming. I am 61, and the average age of farmers is my age. How long can we sustain real farmers? I do not think that the Government can be blamed for that—although I would probably quite like to blame them, they cannot be blamed—because it was done under many different Governments over many years. Places like Somerset, the old county of which we were all part in the old days, had a huge amount of farms, and they were enormous and did such a good job. They have gone over a long time, covering three generations—basically since 1945—but the hon. Lady makes an absolutely fair point and I agree with her.

I have one final appeal to the Minister. Sedgemoor auction centre is crucial to farmers, as it is—believe it or not—to all of us here. Whatever our party, whatever our age and however much we are at risk, just being here shows that we are still in session. We must support that and stay in business here, and that goes for our farmers, too: they want to stay in business there.

Easter Adjournment

Ian Liddell-Grainger Excerpts

Thursday 29th March 2018 Commons Chamber

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

The House may not be surprised by the subject about which I will be speaking. I will be speaking about it because the Government have just announced that two councils are to be merged, and I will be speaking on behalf of my constituents.

I was very pleased to hear from the hon. Member for Gateshead (Ian Mearns) about the festival of the north. I have a slight vested interest in Newcastle, and I think that it is fantastic news. I urge colleagues to go to Newcastle, which is a very beautiful city—partly because we built it.

I welcome the chance to contribute to the debate, although what I have to say will not please everyone. I want to tell the House about a town hall in Somerset that is being spoon-fed huge sums of public money and, I am afraid, wasting every penny. The name of the waster is Taunton Deane Borough Council—unfortunately, because it has just been announced that it will be amalgamated with my local council, West Somerset. It had ambitions to take over the council, and last week the Secretary of State for Housing, Communities and Local Government gave it the thumbs up.

Most people shook their heads in disbelief and shock, including the locals in Taunton Deane, as they read the latest letters in the local paper. The Taunton Deane councillors plan to change the council’s name, sack more than a third of the workforce, spend millions of pounds that, unfortunately, we do not have on computers that do not seem to work, make themselves comfy in new offices on which they are spending £11 million although they are worth £5 million, and then come begging to Whitehall when it all goes wrong. Even the unions, which have been instrumental in providing information, agree with that.

In these dark corners of local government, incompetence rules, and we often find greed as well, not to mention sharp practice in many cases—not just in my area—and occasionally, I am afraid, corruption. Taunton Deane Borough Council has been making a dodgy name for itself for many years, long before my time, and has been rattling its tin in Whitehall for ages. The Government recently handed it £7 million to pay for a new road, which runs along the edge of my boundary. It never occurred to anyone that you cannot sanction a brand-new housing estate unless you build a brand-new road first.

What Taunton Deane is very good at is dishing out planning permission to builders. It is a tiny council, but, believe it or not, it wants to build 17,000 new houses. The effects of that on the roads and the infrastructure will be devastating for my constituents. A great many of those houses will be erected by people—dare I call them mates?—in the local area. The hon. Member for Gateshead will recall the days of Poulson and others. The council leader, believe it not, is a builder. Mates’ rates matter big time in Taunton, and these mates all work around Taunton.

What gets my goat is that, while laying concrete on its green fields, the council has the bare-faced cheek to pretend that it has an environmentally friendly master plan. The Government have rewarded it with a few hundred thousand pounds, which, admittedly, is not a lot in the scheme of things, but it is pretending that a few more badly planned housing estates will add up to a shiny garden town. The idea of garden towns is to build something new, and to aspire, but that does not apply in this case. Taunton Deane specialises in dreams in my area, which is a bit worrying, especially with Glastonbury down the road. Its latest lunacies include borrowing millions of pounds to tart up its headquarters, and trying to buy a hotel. Why a local council should want to buy a hotel is slightly beyond me.

The council’s leadership is rather like Arthur Daley, in a three-wheeled Reliant, flogging “cut and shut” Cortinas to unsuspecting civil servants. They will probably all end up in the canal. What saddens me is that the Government so often cave in too quickly and pay up. I would say the same about Governments on either side of the House. We must stand up against petty bureaucracies. Underfunding may be a problem, but overfunding is a downright scandal.

The future of West Somerset council, in my constituency, is being dictated by a group of people who have no interest in it whatever. It has 28 councillors, and the number will go down to roughly 15, perhaps 14. Taunton Deane has demanded red lines. It has no code of conduct, and no precept for any of its parishes. There is no town council in a town that contains about 100,000 people. The whole thing is run by someone who has a pointed beard and looks like Arthur Daley.

The point I am making is that this is not the way to conduct local government. My area is the sparsest part of England, because we have Exmoor and the Quantocks, which is an area of outstanding natural beauty. We cannot build on the coastline. We have enormous flood plains, which, as many of my colleagues will remember, have been affected rather devastatingly. Our room for manoeuvre is very tight. We have one secondary—we do not need any more, to be fair—

[Mr Speaker]

Order. I call Martin Whitfield.

--- Later in debate ---

[The Lord Commissioner of Her Majesty’s Treasury (Paul Maynard)]

I enjoy learning new things every day. It is a delight to take part in a much underrated parliamentary tradition. Many of us often participate in these debates. I am disappointed that more do not realise what a great chance it is to see the better side of Parliament. Who can forget my contribution—I think that it was in 2013—when I spoke for 10 minutes on the heritage protection of the built civil nuclear environment? No one remembers it at all, but I can assure the House that it was a scintillating performance.

I find that one of the hardest things about being a Member is retaining my own sense of good will towards all Members, whatever side of the House they happen to sit on. We often forget that we all come to this place wanting to achieve the same thing, which is to make a positive difference in the communities that we serve. This can often be hard to discern as time goes by. Our debates can grow fractious. As we have heard even today, our remedies to the problems that we see day by day vary widely. We often have very different ideas as to how we should solve the problems that we come across.

Such debates underline the fact, however, that we have far more in common as Members than what divides us. The Chairman of the Backbench Business Committee, the hon. Member for Gateshead (Ian Mearns), is a prime example of that. Week after week, he gives us opportunities to discuss the issues that matter most to Members across this House. Today, we had one such debate on autism, and it was an excellent way to spend a profitable couple of hours. I was only disappointed that I could not speak in it myself.

My last effort before being made a Minister was to chair a review of apprenticeships for people with autism for the Department for Education. That is an amazing thing. It underlines that one does not need to be a Minister to make a difference in this place. I made that point in my maiden speech. Everywhere we go in this place, as the hon. Member for Lewisham, Deptford (Vicky Foxcroft) pointed out, we can make a real, positive difference. I think we often underestimate just how much change we can effect without standing at this Dispatch Box.

The Chairman of the Backbench Business Committee made some worthwhile points. I was delighted to hear him talk about De La Rue, which is a genuinely excellent British company printing banknotes and passports around the world. It relies on an export market that is out there. I am sure that he has heard many of the arguments that have been employed over the past few days. He will know that the legal process is ongoing. He will also know that many other jobs—some 50 jobs, I believe—have been created by the alternative bid that has been successful. The security-related work will be carried out in the UK, so there are no national security concerns. I think that we all wish De La Rue well. It is an important part of the British economy and his own local economy. I am sure that we all wish him every success in that in future.

The hon. Gentleman was right to raise the importance of the economic progress that is being made across the whole north-east. Every time we have an exchange in this Chamber, I seem to make a point about the investment that we have made in new rolling stock for the Metro—a decision that I took as a Minister at the Department for Transport. To me, that is a sign of this Government’s commitment to the north-east and the importance we place on economic growth in the region.

[Mr Liddell-Grainger]

May I say, as a former major in the Royal Northumberland Fusiliers, that my hon. Friend’s point about the north-east is absolutely right? I had the great privilege to live there for many years. I commanded X-ray Company of the 6th Battalion the Royal Regiment of Fusiliers. It is a wonderful area. There is a proposal in the north-east to have the incredible showcase that I mentioned earlier. Again, I urge all colleagues to visit it. Does my hon. Friend agree that the north-east is to be celebrated and visited?

[Paul Maynard]

I certainly agree; it is indeed an area to be celebrated. Perhaps my hon. Friend is thinking of moving to the north-east and seeking election in a constituency there—I do not know. He has spoken almost more about that area than his own.

The Chairman of the Backbench Business Committee was kind enough to mention a constituency case that I came across involving sleep-in workers. I have met two of the many organisations involved. He may be aware that my hon. Friend the Member for South Cambridgeshire (Heidi Allen) took a delegation to see the Prime Minister to discuss this issue. The matter is before the courts, which are carefully examining exactly how this is dealt with. We are more than aware that there is an issue to be resolved. I have seen the consequences for myself in my own constituency.

My final point to the hon. Gentleman is that I am delighted that the Great Exhibition of the North is occurring in Gateshead, tinged only by slight disappointment that it is not occurring in Blackpool. However, anything that gives me a good reason to go over to Gateshead and Newcastle has to be a good thing, and I look forward to paying a visit.

I struggle to believe that my hon. Friend the Member for Southend West (Sir David Amess) has been in this House for 35 years. Once again, he showed the virtues of compression. I sometimes think that every single one of his constituents must write to him when the pre-recess Adjournment debate beckons just so that they get a mention in his speech. I am sympathetic towards city status for Southend, but on one condition: if I support Southend’s bid, he has to support Blackpool’s. It has to be one for one.

Business of the House

Ian Liddell-Grainger Excerpts

Thursday 11th January 2018 Commons Chamber

[Paul Maynard]

The hon. Gentleman has been a consistent campaigner on this issue over many years and has earned the House’s respect for his consistency. I will ensure that I pass his comments on to the Leader of the House, who I am sure will do her best to get him a suitable response to his point.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

Could we please have a debate in Government time on the failure of consultation on major infrastructure projects? Junction 25 on the M5 is an arterial route, and the Government have quite rightly pulled in certain proposals because of the behaviour of certain estate agents, councillors and, unfortunately, businessmen. They cannot hold these things up, but the Government have to check the priorities in local government. Could we please have a debate on that?

[Paul Maynard]

I recognise the fact that my hon. Friend has a long-running concern over these issues, and I urge him to apply for either an Adjournment debate or a Westminster Hall debate so that he can give them a proper airing and get the ministerial response to which I believe he is genuinely entitled.

Summer Adjournment

Ian Liddell-Grainger Excerpts

Thursday 20th July 2017 Commons Chamber

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

Madam Deputy Speaker, I saw the way you looked at me and I realised that I was front gunner on this one. First, I wish you and all colleagues a happy recess.

This debate is always important. It is the one time of the year when Members can say pretty much what we like to try to get the points across. I will try to keep within the time limit, but I will fail dismally. Please forgive me, Madam Deputy Speaker.

I appreciate the chance to address the House on a matter of considerable concern to 35,000 of my constituents in West Somerset. Our local district council is in mortal danger. Three years ago, it was lured into a relationship with Taunton Deane. Now West Somerset could lose all its staff, its offices and above all, its pride. The relationship with Taunton is starting to turn abusive. I am sorry to say that that was predictable. Taunton Deane has a very bad reputation. It was always a grubby and unsuitable partner, and it has wanted only one thing. I am sorry that my hon. Friend the Member for Taunton Deane (Rebecca Pow) is not in her place—I understand that as she has a lot to do. Yesterday, however, she was singing the praises of Taunton Deane at Prime Minister’s questions, including talking about its house building record. There are certainly thousands of houses and plans for thousands more, but there is nothing in the way of infrastructure, schools or surgeries—there are just houses.

Taunton Deane is actually run by a builder, God help us, who offers a friendly nod and a wink to any other builder he knows. Left to his own devices, Councillor Williams would lay concrete all over Somerset. The suspiciously close relationship between the leadership and certain big players in this industry is legendary. When I first mentioned the names Summerfield and John Williams in Parliament some months ago, I got a quick response from both of them. It was a co-ordinated denial; they had obviously talked and responded in unison. Actually, they could almost be brothers with a genuine family connection—perhaps they are. They are certainly brothers in aprons, not that being a mason is a crime.

But it is curious how many big projects in Taunton Deane go Summerfield’s way. It builds a new premises for Taunton Deane’s direct labour force—a nice little earner. The latest wheeze is Nexus 25, next to junction 25 of the M5, designed to be a business park. Summerfield owns the land, which prompts the question: why did it buy it? For years building anything on that side of the M5 has been considered out of bounds; a very small amount of social housing was possible, understandably, but nothing else. Back in 2007 Summerfield bought the social housing arm known as My Home and applied to Taunton Deane to build an estate of affordable houses near Henlade. Then an upright planning officer looked at the plans and put his foot down: “Too big,” he said, “Too many houses. Make it smaller.” Oh dear. Summerfield refused to downscale; instead, it walked away.

It was not until around 2012 that a different housing association secured permission for a smaller development in the same area. But Summerfield probably never surrendered its interests in the land, and recently paid £1 million for a large plot of land near Henlade—which could never, surely, be built upon. It has no obvious access, unless, of course, Summerfield has already taken out options on land that adjoins it. I do not know; I would probably need to talk to a very well-connected land agent to find out. I wonder if, perhaps, my hon. Friend the Member for Taunton Deane knows of one.

Anyway, this Summerfield land is surely safe from housing unless a big dual carriageway ever gets built—and, abracadabra, yesterday my hon. Friend was on her feet going all gooey-eyed about the investment in the A358. I know that Highways England has proposed a scheme to upgrade the A358, and I also know that my hon. Friend has been publicly saying that it is the wrong scheme. She also mentioned Taunton’s record on unemployment; actually, it is a record regularly beaten by Sedgemoor. Yesterday the hon. Lady unfortunately failed to tell that to the Prime Minister, but never mind. I have seen the true face of Taunton Deane and its leader, and I do not like what I see. Why West Somerset fell for Councillor Williams and his smooth patter, I will never fully understand.

The leadership of my council would not consider taking help from any of our neighbours, including its nearest, Sedgemoor, which happens to be one of the best run councils in the United Kingdom. Sedgemoor has very healthy finances and would have helped sort out West Somerset’s problems and treated it with the respect my constituents deserve. But the old guard preferred to deal with Taunton. Now West Somerset risks being raped.

“Rape” is a strong word indeed, but it accurately describes what is happening in the relationship with Taunton Deane. The people of West Somerset have not been properly consulted, so Taunton can never claim it has had meaningful consent. Taunton Deane has muscled in like the bully that it is, and West Somerset has had to lie down and submit to a full-blown merger.

West Somerset is, I am proud to say, the smallest authority in England. The council has always found it hard to balance its books, because there are not enough people to pay the bills—I am one of the taxpayers. However, with intelligent planning and skilful cost cutting, West Somerset has made a budget that works—which is a great accolade to some of the councillors. They are on target for the budget to be properly balanced this year and probably next year, too. They do not need an abusive, aggressive partner.

Taunton Deane was—and still is—desperately short of money. It is squandering huge sums on a worthless head office and this week started procuring millions of pounds-worth of new computer equipment. It does not need either. Its mismanagement of money is a standing joke in local government. In the long term, I believe that Taunton Deane wants to get its greedy hands on the Hinkley Point business rates. For West Somerset this is rape followed by robbery, all planned by Taunton’s dodgy leader, Councillor John Williams.

Councillor Williams has a long and undistinguished record for getting everything wrong. He was an enthusiastic supporter of Southwest One, an appalling IT project that cost the taxpayers of Somerset £80 million and saved nothing. The regime he runs smiles on developers and reeks of shady deals. My constituents will not have the wool pulled over their eyes. They are not stupid; they can smell a rat—they know what one looks like, and, if they were given the chance, I am sure they would reject this half-baked scheme.

My hope is that the Secretary of State will opt for a sensible option and allow thorough independent scrutiny by the Boundaries Commission and a proper consultation with the public. My constituents want to keep their council—and so they should.

Christmas Adjournment

Ian Liddell-Grainger Excerpts

Tuesday 20th December 2016 Commons Chamber

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

This is the season of good will—let us see whether we can change that, shall we?

What I am going to relate to Members is important to anybody in this House and anywhere else. It is about one part of rural Somerset—as most Members know, my constituency is there—where there is a determined effort to hijack public opinion and, I would say, horribly to kill off local democracy. It is a tale of gerrymandering, sharp practice and strong suspicions of corruption. It concerns the plan to merge West Somerset council with one of its neighbours, Taunton Deane, and I am sorry that my hon. Friend the Member for Taunton Deane (Rebecca Pow) is not here. It is a merger most foul, and, as in most blood-curdling stories, the real motive is money.

Having won the House’s attention, I shall give Members the background to this sorry saga. West Somerset District Council is the smallest authority in England with a population of 35,000. It is a very beautiful part of the world and includes most of Exmoor. Unfortunately, the local council is perilously close to going bankrupt, partly because there are not enough people to pay the bills. For years the council has struggled to make ends meet and unfortunately it has failed. Three years ago it was lured—rather like a prostitute into a strange house—into a deal with Taunton Deane. For reasons that I do not completely understand, the leadership would not consider taking help from any other neighbour, including its nearest neighbour, Sedgemoor, which happens to be one of the best run councils in the United Kingdom. It has healthy finances and would have helped sort out West Somerset’s problems without neutering that council. But the old guard preferred to do a deal with Taunton. I do not know why.

Taunton Deane was—and still is—desperately short of money. Why on earth would it want to bail out a bankrupt neighbour when it is heading towards bankruptcy itself? Two failing councils together make a successful council? You do the maths. I believe that Taunton wants to get its greedy hands on the business rates that will ultimately come from Hinkley C nuclear power station. [Interruption.] I heard somebody say “Ah!” from a sedentary position. The House is getting the plot. My little council may be on the verge of bankruptcy today, but in 20 years when Hinkley comes on line and produces electricity, it will become seriously rich. There is nothing like the prospect of gold, as Judas would say, to bring out the green streak in neighbouring town halls.

Taunton has always craved a share of the action. It is consumed with envy. When the plans for developing Hinkley were submitted, Taunton Deane put in a formal objection. A bit of an irony, I know. It did so out of jealousy and on the orders of its leader. He is a builder by trade and a sharp and interesting operator. John Williams is his name. He looks a little like Santa Claus, but please do not be fooled in this time of good will. He is more like Rudolph who has been garrotted, but I cannot see him saying, “Ho, ho, ho.” He rules Taunton Deane with a grip of iron and he likes to get his own way, mainly by foul means, so when West Somerset came begging, he spotted his chance and went for it.

Williams’s henchmen moved in like the mafia—horses’ heads in the bed—took over the local council, pensioned off most of the staff and started running everything from Taunton, not Minehead. Since then West Somerset’s 28 councillors have unfortunately—I say this against myself, as much as anybody—become little more than a glorified talking shop. I am not being rude, but the good people of West Somerset now realise that the levers of power are being manipulated elsewhere. There are those who think Scotland has a problem!

All that would matter less if Taunton Deane were a well-oiled machine, but the truth is quite the opposite. It is led by an autocrat and managed by an absentee. Its chief executive has been off for six months—with a bad back, we think, but we are not entirely sure. She has cost £80,000 in sick pay, and nobody knows what is wrong. The House will be relieved to learn, however, that she is coming back soon after seven months. She is to be phased in in January. What is “phased in”? I should try that with my Whip, who is sitting in her place.

The penny has finally dropped! Penny James and Councillor Williams have a long and undistinguished record for getting everything wrong. They were enthusiastic supporters of Southwest One. I will not bore the House. It is an appalling IT project that cost the taxpayers of Somerset £80 million and saved nothing. Taunton urgently needs to replace its IT equipment, but it does not have anybody who knows what to do with a computer, so for the chance of another expensive disaster, watch this space and my place in the House.

Taunton Deane is known as cock-up valley. That is written all over it. One of the latest occurred a couple of weeks ago. I must tell the House about it; it is fascinating.

[Bob Stewart]

Oh, go on.

[Mr Liddell-Grainger]

I thank my hon. Friend for his support.

The planning committee of West Somerset council was meant to be considering a highly controversial building application, but the planning officers in Taunton, forgot—Fidel Castro-style—to inform any of the interested parties. Result: red faces, great anger, expense and—guess what—it had to be pulled. In my opinion West Somerset is trapped in an unfair partnership with an ineffective, overstretched and financially dodgy council. The chances are that there would be only nine or 10 councillors left when the changes come because of the demographics. It would spell the end of local democracy, not something that we want to see.

The plan was sneaked in under the radar, using a new Act of Parliament to get round the involvement of the Boundary Commission. Cunning stuff, as Baldrick would say. The Boundary Commission is an independent body, as the House knows. It always demands a fair referendum to test public opinion when it wants it. It would have gone through the emperor’s maths with a fine-toothed comb and made a fuss if the sums did not add up. However, Emperor Williams decided to push through his plans without bothering to tell Taunton Deane’s councillors precisely how he was going to do it.

In July, Taunton Deane Council approved the merger. That decision has now led to a legal challenge by a number of Taunton Deane’s councillors who insist that they were not told the truth. The legal challenge is powerful and, I can assure the House, is already causing the emperor and his team considerable anxiety. I am not surprised, because this time he has gone too far.

Do not get me wrong: I am not against change and I never have been. Partnerships can work and collaboration between councils is sensible, and maybe there are too many overpaid senior officers and too many people in town halls who do not know what they are doing. But big issues such as these deserve proper and thorough consultation. Instead we are getting a cheapskate confidence trick dreamt up by a cheapskate confidence trickster—try saying that quickly.

Through my door at the weekend came a questionnaire seeking my opinion, which will then be conveyed to the Government. Oh yeah? Golly! The plan is that money is so tight that something had to be done, so at a stroke, and without consultation, they ruled out the possibility of any partnerships. They are now looking to see how these councillors will work. Basically, there will now be a high-level business transformation document, which presumably is deliberately phrased to convince everyone that the only way is a full-blown merger.

With mergers come costly dreams, such as Southwest One, the multi million pound IT scheme. You name it, they’ve got it. This time Taunton Deane wants to put services online and trim back the staff, but that will not work because in West Somerset broadband is intermittent —in my house it is under a megabit—or non-existent, so the population do not have computers because they do not work. Pigeons are quicker. My constituents need to be able to talk to real human beings, not robots in Japan.

Unfortunately, the architects of these great schemes never do their homework. The business plan was riddled with financial guesswork, half-truths and downright lies. The document never offered the most sensible solution, which was to go back to the drawing board, talk to neighbouring councils—exactly what the Government told them to do—and find a more imaginative way forward. That is what I want and what the Government want, but Emperor Williams does not much fancy working with top-flight councils, because he could not cope with it—he is not that bright—so he has done everything in his power to prevent constructive talks taking place. Now he wants a Greater Taunton, a sprawling new authority with no separate identity for West Somerset.

The questionnaire asked me just about everything, from my favourite colour to my inside leg measurement, but at no point have I been invited to provide my name and address, even though it is a consultation in two councils, so anybody could respond. In fact, please write in—you can all take part and it is great fun—but do not opt for the merger in West Somerset and Taunton Deane.

The whole of this is ridiculous. These forms could be filled in by Mickey Mouse or even Emperor Williams. They have set up a new website with similar questions. It is not doing the trick. People are not conned, and we should know that in this House—we have seen Brexit and Trump. But it might not stop Councillor Williams and his mates trying to skew the results by making multiple entries from different computers on his own—yup, it happened before. It is a consultation sham designed to be abused, and it was ordered and approved by a council that claims to be democratic.

No wonder the electors in the Taunton Deane ward of Blackdown last week voted out the Conservative candidate after 42 years—it has always been blue, but no longer. They actually went and got a Liberal Democrat; that is how bad the council is. People in Taunton Deane are sick of the way the council is working, and it is getting worse. It used to be the county town, but its famous market has moved to the far better Bridgwater, the old site is still derelict and ugly, the whole area is overrun with unpopular housing schemes and there seems to be a determination to build for the sake of building.

But guess what? Emperor Williams is a builder. He looks great in a yellow hard hat and reinforced boots, and he is often photographed alongside prominent local developers—I will leave that hanging. They looked like a happy family in their ceremonial Day-Glo regalia. This month, “Brother John” was seen with the bosses of Summerfields, a local housing association, which recently completed Taunton Deane’s brand new Direct Labour headquarters—it sounds almost like something from the other side of the Chamber. It is located on a business park owned by Summerfields—funny, that—but most of the council’s workload is actually in Taunton, another town, so the staff have to go from one place to another to do their work. It is absolute madness. So why was there no reference to the extra cost when these plans were considered? One does not know. Ask Brother John.

A year or so ago, Summerfield applied for permission to build affordable homes just beside the M5—the famous M5. Guess what? Taunton Deane let it slip through. I am told the construction work was subcontracted to a company owned by, guess who, Brother John himself. Such a relationship is a bit too close for comfort, but, guess what, nobody has ever said there is a conflict of interest—they would not get away with it in most places. There is absolutely nothing in Taunton Deane’s constitution that obliges councillors to declare an interest when a subcontract is awarded. That is not good. We need openness in local government—I do not need to tell anybody here that.

I have highlighted these things simply to give the House a sense of perspective about what is going on in my part of Somerset. My constituents will not have the wool pulled over their eyes. They can smell a rat, and they know what one looks like, and I am sure they will reject this half-baked merger scheme. They want to keep their council—and so they should.

HM Revenue and Customs

Ian Liddell-Grainger Excerpts

Wednesday 2nd March 2011 Commons Chamber

[Mr Tyrie]

I agree completely, and the next sentence of what I intended to say was to be along the lines of asking what the situation means for small business men. They are not experts in tax, they just want to get on with their job. We must constantly bear in mind the fact that when HMRC gets things wrong, its mistake can be a catastrophe for the taxpayer on the other end of the experience.

I want to tell the story of one such business man who has written to me, who wants to remain anonymous. His business was the subject of an HMRC investigation, and when it found no irregularities, it started an investigation into his personal tax affairs. As he says in his letter to me, “They investigated everything”, even challenging a gift of £15 to a nephew. He had the impression that the local tax office felt it had to find something, having invested so much time in his case. All that went on for five years—it was like being on trial for five years. Finally, a very senior manager at HMRC saw sense and transferred the case to another tax office, and a week later that small business man had an apology.

However, like so many similar cases, it is not a matter of “all’s well that ends well”. The collateral damage has been huge. That business man’s accountant estimates that his business has lost £7 million in the time and effort of handling the case, and on top of that the stress involved in such an experience would have been crippling for many people. It is not just that individual who has lost out but all those who depend on his business for their livelihood and all those who might have had jobs in it had it been able to concentrate on expansion rather than fending off HMRC. One case does not prove anything, but the sheer scale of complaints now pouring into MPs’ postbags suggests something.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

Is my hon. Friend aware that HMRC is going to write off all open cases from 2007-08, which equate to just under £1 billion? It wants to sort out the overpayments, which of course affect the person whom he mentioned. The problem is that, under the four-year rule it is not sure how it can do so. Can he help me on that point?

[Mr Tyrie]

My hon. Friend makes a point that I was intending to make, and he makes it very fully. Because I want to give other people the opportunity to speak, I will not elaborate on it.

I wish to say a further word about HMRC as an institution. It has a very difficult job. Nobody likes the taxman, and it is easy to kick HMRC. I have no doubt that most people there are struggling to protect the revenue fairly and trying hard to do a reasonable job. Doing that job requires a strong sense of collegiality and loyalty to the ethic of the institution. When I was an adviser in the Treasury in the ’80s, I had a lot of contact with people in both the Inland Revenue and Customs and Excise, and I thought that they were the salt of the earth. They were immensely dedicated to their jobs and civil servants of the best sort. One had no doubt that they were a highly motivated group of people, or that morale was high.

What about now? The Cabinet Secretary runs an annual staff survey, which has been going on for many years. It shows that HMRC has the lowest morale of any Government Department. Some 25% of staff want to leave as soon as possible or within a year, and only 15% believe that the department motivates them to do their best. Only 12% say that the department is well managed, and the survey goes on with a similar litany. There is some good news, which relates to what I said a moment ago. The job content is still considered interesting by three quarters of staff, and more than three quarters say that they can rely on their colleagues. There is still some collegiality. Even that will not last unless we start to put right what has gone wrong. HMRC will become dysfunctional unless action is taken to bring to an end the string of disasters that has befallen it.

Let me give some examples. Last September, the Government were forced to announce that up to 6 million taxpayers were to receive letters informing them that they had paid the wrong amount of tax through PAYE. That had been caused largely by the introduction of a new computer system, which was simply not up and running in time, and it provoked a powerful Public Accounts Committee report, which detailed the failures. There was the matter of the incorrect PAYE notices in January 2010. That provoked even more critical treatment in the PAC report. Then there are the phone call response times—try ringing HMRC. The National Audit Office found that in 2008-09 only 57% of call attempts were answered. That disastrous performance declined even further for a time, before recovering recently. I could give other examples.

What is the root cause of the problems? Some clues probably come from that survey of staff morale. It shows that the collapse of morale appears to have coincided with the merger. I know that the survey on morale began in that form only at the time of the merger, but it charts a decline from then. I believe that the merger was probably a mistake, and I said, from the Front Bench at the time, that merging two institutions with such different cultures was unlikely to be worth the candle. However, now that the merger has occurred, I am equally clear that unscrambling it would also be risky.

In any case, the department is reorganising itself. It is moving from a regional structure, with customer contact based on local offices, to a centralised model. We have heard that before. The experience of the banks with that centralised model, whereby they got rid of Captain Mainwaring, was distinctly mixed. However, the die is cast on the move to a centralised model and, in HMRC’s case, the performance of the new centralised model is not entirely disastrous. Its figures suggest that overall customer satisfaction was 73% in September 2010.

The key question must be whether that reorganisation can be completed while cutting so many more staff. The hon. Member for Leeds East will consider that issue. I hope that it will be completed, but it would be the triumph of hope over experience, if we consider the history of other Whitehall Departments and their reorganisations.

Of course, the large firms with which HMRC engages will not feel the effects of the reorganisation. They will continue to receive a good service. They provide most of the tax yield, and I understand why HMRC devotes so many resources to focusing on them. However, I worry greatly about the small firms—those least able to absorb the turbulence whenever HMRC reorganises itself. I worry particularly that, while HMRC may make savings, it will merely shift the burden of administration to taxpayers and their accountants in small businesses. The effect on the whole economy will not be neutral. It is not a matter of £1 spent in HMRC transferred to the private sector—it may be worse than that, eroding overall business efficiency and bringing downward pressure on GDP.

In a recent evidence session, I asked the Institute of Directors and the main bodies representing the accountants to start to estimate a full compliance cost for firms that deal with HMRC. It has never been done before and it is not easy work. However, we must have at least some core figures to enable us to monitor over time the full compliance burden placed on firms by HMRC. There is no point—absolutely no point—in creating a leaner HMRC at the price of massive compliance costs in the private sector. My challenge to the institutions that represent the private sector is to find that true cost of compliance. I also want to allude to some challenges for the department and the Government.

First, all the evidence that the Treasury Committee has seen suggests that HMRC needs to communicate better with taxpayers—it must find ways of giving clearer and more accurate answers to reasonable queries, and to give those answers quickly. Secondly, it is vital that staff have the training and experience that they need to work with taxpayers. There is no earthly point in a call-centre culture that is based entirely on read-outs from computer scripts.

Thirdly, we need to consider incentives as well as penalties as a means of encouraging the right amount of tax to be paid. Some argue that HMRC should consider a general disclosure facility to encourage the disclosure of previously undeclared tax. We need to reflect on that. There is a risk with amnesties, which is the road down which that proposal goes, but it needs to be looked at.

Fourthly, we must accept that with PAYE coming under increasing pressure as more people develop a variety of sources of income rather than rely on employment from a single source, further changes to PAYE will inevitably be necessary, as well as the coming introduction of real-time information. Those changes must be made extremely carefully if we are not to have yet another major road crash, such as we have seen in the past few years.

I should like to end by offering one crucial, big challenge to the Government. Much that is wrong with how HMRC operates is not its fault, and nor is it the fault of taxpayers. Rather, it is the fault of us—legislators. Successive Governments have put ever more complex legislation on the statute book. In 2009, a leading legal database found that the UK had the longest tax code in the world. That is a charter for accountants and for evasion opportunities. Length means more complexity, and complexity means higher costs for all of us. In evidence to the Treasury Committee, the IOD told us that KPMG estimated the total cost to the UK economy of running the tax system at 0.4% of GDP. I wager that that is an underestimation, as I alluded to a moment ago.

My challenge to the Government is that we must have tax reform. I was struck by a point made in a discussion paper in the Mirrlees review on tax administration, which begins:

“Most of modern tax theory…completely ignores administration and enforcement. The policy formation process is not much better, too often addressing implementation only after reform has been determined”.

Of course, administration should be an integral part of the decision-making process, but in recent years, tax policy formulation has been travelling in the opposite direction. The 2004 O’Donnell report resulted in most decisions on tax policy being taken in the Treasury, with implementation done by HMRC. It is widely held that the policy-making function in HMRC has gradually been downgraded, but we must reverse that. I urge the Government to return to a situation in which there is much greater creative tension between HMRC and the Treasury on policy formulation. If we do not do so, there will be more episodes in which the implementation of policy—delivery—mysteriously turns out to have an unexpectedly high cost or to be unacceptably complex.

In that respect, I very much welcome the creation of the Office of Tax Simplification. However, that will not be enough. We must have better policy and a simpler tax system that gives greater certainty and stability. I hope that the forthcoming Budget will point the way on that. Business and the self-employed in particular are crying out for such measures. We need a series of tax-reforming and simplifying Budgets. In the long run, everyone will gain: HMRC will have a better system to manage, taxpayers will have something that they can understand and the UK economy will have a tax system that creates opportunities for better long-run performance.

The tax system loses the respect of taxpayers, however grudging, when it becomes as complex as the one that it looks as if we are developing. Once we have arrived at that point, the country has a big problem. We will be on the slippery slope towards wide-scale evasion and an erosion of the tax base. I will not name the EU countries that are on that slippery slope, but there are quite a number, and we all know which they are. It is partly with that in mind that the Treasury Committee has launched an inquiry into the principles of tax policy that are needed for such reform. We will be reporting shortly. If we in the UK get those principles right, many of the problems that we have heard about today will diminish, and a more prosperous economy and stable society can result.

[Mr George Mudie (Leeds East) (Lab)]

I thank the hon. Member for Chichester (Mr Tyrie) for his kind remarks. When Lord McFall left the Treasury Committee, no one thought its work could be kept at the same level, but I think that it has improved—that is, if one can improve on Lord McFall’s performance. As Chairman, the hon. Gentleman has already gained the respect—even the fear, I think—of witnesses appearing before the Committee, which is a good sign. He also serves a useful purpose for me, because when I go on one of my northern, regional rants, he will translate it for the southern gentlemen before us, and I sometimes get an answer.

As expected, the hon. Gentleman has dealt with this issue on a policy level that I could not match. I take a more pragmatic view towards the department, because although there is an argument for having a look at policy—tax definitely needs simplifying—we should not necessarily do things at that level to suit a vehicle that is dysfunctional; rather, we should ensure that the vehicle is functional. At the moment, I fear that the department is in a disappointing state. To give some background, we on the Treasury Committee, and on the Treasury Sub- Committee under the hon. Member for Sevenoaks (Michael Fallon), see HMRC every year, and we have had one or two inquiries over the years. In 2006, the Committee published a report on the efficiency programme. We identified concerns that reductions in the headcount were leading to falling service standards, and we made certain recommendations. We have returned to that issue in our current inquiry—we are halfway through it—into the same subject as this debate, and we have sadly discovered that nothing has been done along those lines. Indeed, in our 2009 review of administration and expenditure in the Chancellor’s Department, we noted

“a 7% increase in total recorded customer complaints”.

We asked HMRC to square that with its submission that strong progress had been made.

[Mr Liddell-Grainger]

The latest figure from HMRC is that complaints have gone up by 33% in the last two years, so the hon. Gentleman’s figures are a bit light.

[Mr Mudie]

They probably are, but the report that I am quoting is a couple of years old.

The other thing that we highlighted—the hon. Member for Chichester referred to this—were the dire results for HMRC of a cross-government staff survey. We expressed deep concern about employee engagement at HMRC and its effect on performance, along with the severely low morale, which has been referred to. What that amounts to is this. The problem could be a passing phenomenon, but it is not. It has been consistent for a number of years and it has to be faced up to. What are the reasons for it? We cannot move away from that dismal performance without accepting that severe staff cuts in the department are a major—if not the major—contributory factor. The work force has gone down by 30% since 2005. There might be some excuse in that the merging of two departments—Customs and Excise and the Inland Revenue—provides scope for rationalisation, but not for losing 30% of the staff. There is worry that with the spending review, another £2 billion might be taken out—or £3 billion, with £900 million going back. In addition to seeing those 30,000 jobs, another £2 billion is to be taken out of its resources, and we cannot anticipate a better performance in the years ahead.

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[Mr Mudie]

I am sorry that you stopped the hon. Gentleman, Mr Deputy Speaker, because his was a better speech than mine. I do not think that he needed to use the word “parochial”, or even to apologise if he thought that he was being parochial. In fact, he was being regional. Here in London, it is assumed that any region above Watford can be written off. The hon. Gentleman has made an extremely valid point.

I know that my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who is sitting behind me, is a strong supporter of tax office staff. However, I agree with the Chairman of the Select Committee about the number of telephone calls that are not answered. At one stage, the figure was 43%. One of the professional witnesses who gave evidence to the Committee said that an HMRC tax manager had been in his office and observed that it took 12 minutes for a call to be answered and seven minutes simply to change a tax code. That simple transaction took 20 minutes. That is a witness’s statement, and a very good one. I am sure that the Minister has read all the evidence given to the Committee, and has noted that that particular witness described his experiences brilliantly.

[Mr Liddell-Grainger]

The hon. Gentleman is well aware that the two companies charged with this task by the Government, Capgemini and Accenture, have been at it for a decade. The system that they were asked to use a decade ago is not the system that they use now and is not capable of doing the job, although it is starting to throw up problems that we saw a couple of years ago. Does the hon. Gentleman agree that both companies’ contracts should be upgraded to a level that is appropriate to the 21st century?

[Mr Mudie]

That is an interesting point.

I am using up time rapidly, but let me mention in passing another feature of call centres. Telephoning 0845 numbers can be very expensive for pensioners—indeed, for everyone. The fact that people have to hold on for so long does not help, but in any case it is not the right way to decide complex matters. It is best for people to deal with those face to face. The best people in the whole business are the agents, as they are the professionals. They take the frustration and get angry about it—and they have given good evidence. The ordinary individuals are in the worst position, however. The professionals get used to things and can get on with other tasks, yet, as the professionals said, those who are not represented get the worst deal, and with office closures, cutting hours, and relying increasingly on telephone calls, e-mails and letters, the whole system knocks out a fair number of the population. That is what is happening. Plenty of Members want to speak, and they will spell out their constituents’ experiences.

Does the system need to be improved and will it be improved? I do not think it will, first because it goes against the grain—I will explain that. Sadly, every time witnesses from HMRC have appeared before us, they have been in a state of denial. If someone has a problem, there is no chance of their dealing with it unless they own up to it and accept it. I sympathise with them in a way, however. The hon. Member for Chichester said we are to blame and that is true; we are to blame, in particular the Ministers. It is hard for a civil servant to go before a Select Committee and say, “Yeah, I admit it; we can’t do this because we don’t have the people.”

We look for loyalty and a straight bat from civil servants, but the way we are doing things is not generally the best way to get a real dialogue. Therefore, when we have them before us in a couple of weeks, I am not sure that Dame Lesley will do anything other than give us the Geoff Boycott treatment, or even do a Pietersen and knock us out of the ground a couple of times. Because she and the management are in this state of denial, I cannot see things happening unless the Minister takes some steps. I really do think this comes down to staff and resources. Unless they are in place, we cannot load new jobs on.

Finally, let me describe a few points that should push the Minister to want to have a fresh look at resources. One of them is to do with what the Chairman of the Select Committee said about the integrity and reputation of the system, and real tax compliance in this country. If we frustrate and ignore people, and make it difficult for them to get explanations, one way or another, non-compliance will grow. There will be increasing disrespect for the system and the people in it, and a growing feeling that they are not here to help. The tax inspectors and staff are adamant that they are here to help however, and that has always been my experience at that level—when we can get to speak to someone, they are helpful.

If something is not done and we treat people in this way, they will respond in a manner that I think is natural, which is to say, “Get on with it”—I almost said “Sod it”—and “I am not complying.”

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[Ian Swales]

I can express a personal opinion, which relates to what I was just saying: we should not judge efficiency savings at HMRC without reference to the tax that is collected. We cannot judge it simply according to headcount reductions and those sorts of changes.

[Mr Liddell-Grainger]

Is my hon. Friend aware that 194 million national insurance accounts are not rectifiable even though they are scanned twice a year? HMRC does not even know how much money is in those accounts. Does he think that that is equally a problem, in that the morale has gone because people do not understand what is going on within the system?

[Ian Swales]

Judging by the evidence that the PAC received, there seems to be a lack of control over the trail of cases. All the changes have resulted in less focus on individual companies and taxpayers. I certainly recognise that sort of story.

There should be a constant watch in HMRC on the business case for investment in it. I welcomed the announcement of £900 million in extra funds to address avoidance, but I remind the House that it is targeted at collecting £7 billion, although the tax gap is £42 billion even according to HMRC’s estimates. How have we arrived at the figure of £900 million, and how do we know it is the right amount? As a taxpayer, I would be happy to invest any extra money that could be proved to produce a positive return.

The department has recognised that it has lacked detailed information on the costs and returns of different types of enforcement activity. At present it does not know the costs of, or returns on, civil investigations, or the point at which further investment in a particular type of activity would produce diminishing returns. It is therefore very difficult for it to decide how best to deploy its resources. Its management and senior officials need to show strong leadership and pay close attention to the morale of staff if those problems are to be overcome. The headcount at HMRC should not be reduced further until efficient new systems and ways of working are properly established. The department urgently needs to manage its resources effectively to optimise the tax take. The current system is obviously not working effectively for people either inside or outside HMRC. At a time such as this, when everyone across the country is having to tighten their belt, it is unacceptable that HMRC is failing to collect such a large amount of money through inefficiency and mismanagement. I urge the department and the Government to put this right.

--- Later in debate ---

[Gregg McClymont]

I thank my hon. Friend for that information. As a member of the Treasury Committee, he is well known for his interest and expertise in this area. What he said sounds not only plausible, but likely.

I am suggesting that short-term savings in HMRC could reduce the Government’s ability to maximise tax revenue in the long run. They reduce the likelihood that HMRC will be able to attract and retain the talent necessary to administer complex systems and crack down on fraud, and the hon. Member for Chichester and my hon. Friend the Member for Leeds East alluded to that aspect of the argument. It seems to me that there is a danger not only that revenue will be lost to the Government, as has been made clear in previous contributions, but that reducing services to the public means that the costs will be passed on to the public and to businesses, particularly small businesses. If HMRC is harder to contact or slower to rectify errors, costs for the public and business will increase. The hon. Member for Chichester eloquently set out the dangers for small businesses of this process of HMRC reform or cutbacks, or whatever we call it. It is clear to me that those costs will disproportionately harm those with the least resources.

[Mr Liddell-Grainger]

Is the hon. Gentleman aware that the Revenue has just been fined £1.6 million for sloppy data handling and processing? When people asked why that had been a problem, they were told that it was too expensive to find out what the problem was. The hon. Gentleman is right. Is the problem due to a lack of skills, a lack of training or a lack of people? It must be one of the three, or perhaps all three.

[Gregg McClymont]

The hon. Gentleman makes a good point. My suspicion is that it will be a combination of all three. I will come to the skilling aspect, which it seems to me is important alongside the issue of number. If the costs are passed on to taxpayers, I suggest that they will fall disproportionately on those with the least resources—small businesses and poorer taxpayers.

To allude to a point made by my hon. Friend the Member for Leeds East, pensioners and other vulnerable groups will have to pay to phone 0845 numbers and will struggle to get through. Beyond the financial cost, there is the psychological anxiety caused by respectable working men and women having to worry that the taxman feels that they are not following the law. The psychological burden on vulnerable groups is worth considering alongside the burdens on businesses and other organisations.

I will focus for a moment on small businesses, although I will not take long as the hon. Member for Chichester somewhat shot my fox on this point. It is clearly okay for the big boys in business and the big organisations that can afford the finest tax accountants money can buy, but for small businesses every minute spent on administration, doing a tax return or conversing with HMRC is a minute less spent running their businesses. Usually, small businesses have much less slack to operate with. As the saying goes, “Time is money”, and any shifting of the burden back on to the taxpayer is likely to be deleterious in the extreme to small businesses and vulnerable groups.

Several Members have referred to efficiency and effectiveness, and that brings me back to staff morale, because staff motivation is particularly important in such a profession—the efficient and effective collection of taxes on behalf of the taxpayer. Inevitably, many of the savings that the Government wish to make will be made through redundancies and restructuring, but the Government approach that package of restructuring and redundancies in the context of an HMRC where staff motivation and industrial relations are already fairly poor.

The figures from the capability review that the Cabinet Office published in 2009 have been quoted, and, as we know, HMRC was the subject of heavy criticism. The review found that only one quarter of HMRC staff, compared with 61% of senior civil servants, were proud to work for the department. Perhaps senior civil servants are not the best comparator for HMRC staff, but 25% satisfaction is not very impressive. The survey also found that only 11% of staff—the hon. Member for Chichester said 12%; I am prepared to meet him halfway and say 11.5%—and 17% of senior civil servants felt that change was well managed in HMRC.

I worry that the combination of low staff morale, which the Government inherited but are contributing to, and further funding cuts might be a perfect storm that leads to more problems at HMRC. After all, if we think about it for a moment, we find that enforcing the payment of tax is not necessarily an easy job. No one likes paying tax, and HMRC staff—disproportionately, I suspect—deal with people who are particularly unhappy about the tax return with which they have been presented.

Staff in my constituency would have been greatly reassured and better able to serve the public if HMRC and the Government had worked together sooner to develop an implementation plan for cost savings, so anything that could be done to reduce the anxiety that they have felt for a reasonably lengthy period would be very welcome. It would reduce the worrying gap between the announcement of cuts and people’s knowledge of where they will fall. Anxiety among staff—particularly given the job that they do—is bound to undermine their effectiveness in serving the taxpayer and the public more widely. Given the importance to our country of effective tax collection, I urge the Government to do everything they can to reduce that anxiety.

My final observation touches on several contributions to the debate. As I have suggested, tax collection is not always an easy or, at times, pleasant job. People do not generally like paying tax, and in a profession such as tax collection, esprit de corps—a sense of public service and duty—is especially important. Previous Governments were not blameless in this respect, but this Government must be careful that, in the quest for short-term savings, they do not further damage the thread of professionalism, duty and pride in the job, without which an efficient tax collection system is unlikely to be possible.