Private Finance 2/Private Finance Initiative

Jim Shannon Excerpts

Monday 5th September 2016 Commons Chamber

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Most MPs can show in their constituencies where there are rotting floors, outdated buildings and potholes. Some may even have made a website about it, but the truth is that this is no laughing matter. We know that our schools in this country are falling apart, and that investment in our education buildings is 18% lower in 2014 than it was in 2009. Britain is now ranked 24th by the World Economic Forum for the quality of its infrastructure, down from 19th in 2006, and we cannot see this getting any better. Indeed, spending on infrastructure has nose-dived since Brexit.

Whatever some may say about fixing these problems, all of it has to be paid for, and Governments of all persuasions, including the previous Labour Government as well as the current Government, have used private finance to build. It is the equivalent of getting a mortgage or even remortgaging our home to pay for a new roof or an extension. Crucially in these deficit-denying times, it is seductive not only because it spreads payments for new schools, hospitals and stations and their management over decades or more, but because it keeps them off the books.

[Jim Shannon (Strangford) (DUP)]

According to a report of 2014, in Northern Ireland there were some 39 PFI projects with a staggering total cost of £7.3 billion for the maintenance and so forth. Does the hon. Lady agree that any further PFI must be an absolute last resort and indeed should only be permissible in cases of extreme need?

[Stella Creasy]

I hope to convince the hon. Gentleman that there may be many alternatives to PFI, because the question for us is: at what cost have we engaged in this borrowing? We now pay £10 billion a year in PFI repayments, equating to £3,400 for every man, woman and child in Britain. These projects are worth £57 billion, but we are committed to paying back £232 billion by 2050.

It is clear that PFI has addressed some of the project management issues we had in the public sector that made it so bad at building. As the National Audit Office highlights, it has dramatically cut late delivery of projects and overspending on buildings, but as the Treasury Committee points out, it is “sub-optimal value for money”.

One hospital was charged £52,000 to demolish a £750 shelter for smokers, and a school had to pay £302 for a plug socket to be replaced, five times the cost of the equipment it wanted to plug into it. In my constituency of Walthamstow, we have seen first-hand the damage done. My local hospital, Whipps Cross, is part of the Barts health foundation, which has the largest UK PFI deal, at £1.1 billion. By 2049 the amount paid back will be £7 billion. Last year alone the trust shelled out £148 million, equivalent to the salaries of 6,000 nurses, of which half was the interest paid on the loan. Its deficit of £90 million has led managers to downgrade nursing posts. It is little wonder the Care Quality Commission placed my local hospital into special measures as the quality of care declined.

The Minister will, I have no doubt, say his Government have reviewed PFI and made cuts to the costs, renegotiating to buy fewer lightbulbs and to do less cleaning, saving us a whole £1.6 billion out of about £220 billion, but as the NAO has pointed out, no one has really considered whether private finance itself is value for money.

Tonight I want to ask three simple questions: whether the terms of PFI—the rates we pay to borrow this way—are the best we as taxpayers can get to build schools and hospitals; whether even now we can save money on the costly deals that have been signed by Governments of all persuasions, and which are draining our public services of much-needed money; and above all whether the Government are doing enough to secure the competition for our business as taxpayers.

Of course it is hard to answer those questions without the data on what we are paying. I know that the Government do not have those data, because I have asked. I tried asking all the hospitals around the country what rate they were paying, because on 8 February this year Treasury Ministers told me that they do not hold those data centrally. Most NHS trusts refused to disclose the information, claiming that it was commercially sensitive, but those that did were very revealing. Their data showed that, in December 1994 under John Major’s Government, two PFIs in Durham—one for the Dryburn district hospital and one for the Bishop Auckland general hospital—had rates of return of 15% and 18% respectively. In comparison, the 10-year gilt rate was just over 8% at the time. In December 2002, the Crosshouse maternity hospital in Kilmarnock was rated at 16%, while a month later Edmonton acute services were rated at 14%. The gilt rate was 4.6% at that time. In March 2010, the Leeds Wellbeing Centre offered a return of 14% and the Liverpool University hospital redevelopment offered 11%. The long-term gilt rate was then 4.2%.

Some people will argue that we cannot make a direct comparison with gilt rates, so let me flag up the fact that equity returns on the stock market have averaged between 5% and 6% per annum over the past 30 years. It is therefore clear that PFI investors got a great rate, and that was no accident. Critically, research from Edinburgh University shows that these rates do not vary as other premiums do in our financial markets, and that they stay well above the cost of other forms of funding. So public bodies might know full well that the premiums are high, but if that is the return that the market expects for managing the projects and there is no alternative, there is not much they can do without the Government’s help.

I should also point out that those are the rates for when the contracts were signed. As we now know, much profit has been made by selling the debts on. The South London Healthcare NHS Trust, which collapsed, had two large PFI contracts, one of which was offering investors annual returns of 71%. Most PFI contracts were let on an expectation of an already high rate of return of 15% to 17%, but refinancing has seen some returns to investors rise to over 70%.

In 2007, a new standard contract clause was created to allow authorities to request this financial information in order to track the returns that investors were creating. However, there is little evidence that the clause has been used or even that the Government have promoted it, so it is hard for us to see just how much taxpayers’ money is being recycled into higher payments for investment funds rather than into infrastructure for the UK. Again, no central database exists.

We might not know what we are paying, but we do know who we are paying, and it is often the same companies, with 45% of projects funded by the same people. Firms such as Dalmore Capital, Semperian, Kajima, Innisfree and Barclays crop up time and again, and they often invest together too. This dominance by a small group of companies matters because this Government are continuing to use their services in their proposed replacement for PFI, known as PF2. PF2 separates out the service element—the building management—from the capital, which involves the building of the project. So far, so good. Those lightbulbs might be replaced after all, if their cost is not connected to the cost of building the schools.

However, PF2 is supposed to attract more long-term investors by increasing the requirement for equity—the most expensive bit of the deal—potentially making it even more expensive to the public purse than PFI. It also expects us as taxpayers to take on more—not enough to be in charge of the project, but more to cover the cost. So it is not that different from PFI. It is still about us borrowing money from private companies to build things, at rates that are not transparent or competitive with the alternative sources of finance that we could raise.

Are there better ways to borrow to build? Certainly the calculations used by the Government in the Green Book to compare the cost of these deals with public spending have not made that question easier to answer. They set the value of public sector borrowing at 3.5% real and 6 % nominal since 2003, despite the cost of public borrowing being well below that for over a decade. The Treasury Select Committee has suggested that the Government review the Green Book, but it is not clear that the Government have heard that message. Will the Minister tell us whether PF2 is using the same calculations as PFI, at the very time when the cost of borrowing to the public sector is even lower? The Green Book also includes the shadow price of tax—the money that private companies will pay in tax in the UK as a result of getting this business. That money is set against the cost of borrowing from those companies to decide whether the deal is better than using public money to fund a project.

The lack of information about such projects means that the Government are simply unable to verify whether the tax presumptions are accurate. The NAO suggests not. The companies themselves continue to be sited overseas. Innisfree and Palio Partners are sited in Guernsey, and Semperian is registered in Jersey. PF2 will do nothing to tackle that or to stop the resale of shares in such deals, which make more money by taking advantage of the fact that Governments do not default. What does the Minister make of the bosses of the Sandwell and West Birmingham Hospitals NHS Trust, who admitted that they could not stop Carillion, investors in the PF2 for the Midland Metropolitan hospital, from selling on its equity investment to generate the kind of profits that we saw under PFI?

At a time when huge spending cuts are being threatened and when the NHS faces a financial shortfall of £20 billion by 2020 alone, to continue to pay inflated rates to rich investors is to continue to ignore the problems. A quarter of single-tier and county councils now spend the equivalent of 10% of their revenue on debt servicing. The answer to the first question is no; private deals are not always a good deal. We therefore need to answer a second question: if we cannot get out of them, can we renegotiate? Can we consolidate to reduce the repayments and put the savings back into front-line services? To date, sadly only Northumbria NHS Trust has done that and only at great expense to the council and with minimal savings. Imagine the savings that could have been achieved had the Government negotiated a group of the contracts with these companies at the same time. The savings in interest could be paying down debt or paying nurses and teachers properly.

We then face our final question: why are we borrowing only from these companies? Why are more companies not competing for our business as taxpayers? In the past few years, this Government have been making it harder for local government to pay down its debts. The Public Works Loan Board could use the Government’s financial strength as a borrower to secure much lower rates and then pass them on to public bodies. Instead, they changed the early repayment terms in 2007. In 2010, changes were made to loans to make it harder, not easier, for local councils to borrow efficiently.

If that does not excite Ministers, perhaps they will support an alternative in the shape of the new municipal bond agency created by local councils. The agency seeks to lend at margins of between 0.6% and 1% over the underlying Government funding rate. Currently, if a council wants to borrow money for 30 years from the Public Works Loan Board, it will charge just over 2%. In contrast to the complexity of PFI or PF2, municipal bonds are simple and transparent. Bonds are issued to the market to raise funds and local government lending is at a fixed rate.

The Government could make pensions funds more likely to invest in partnerships with Government by being more transparent about the deals and the returns to be made. The current Pensions Infrastructure Platform has led to such companies buying old PFI debt, but that can change. The Manchester and London local government pension funds have recently acted together to invest in windfarms and biomass, so there is clearly a market. With Government support, that could be the basis for a UK sovereign wealth fund—the people’s money used for the people’s projects. The sad truth, however, is that no such innovations are coming from this House or the Treasury, so why are we throwing good money after bad trying to make private finance initiatives work? With a Prime Minister who has pledged to put infrastructure investment at the heart of post-Brexit economy, Britain cannot afford to keep making expensive mistakes.

I have five simple questions for the Minister. First, will he commit to publishing the rates at which public agencies are borrowing so we can have greater transparency of the costs incurred to the taxpayer and so that we can check whether, as many fear, PF2 will be more expensive than PFI? When will the Government publish the equity returns data, promised since last year, on the PF2 deals? Secondly, is the minister not perturbed by the relationships between a small group of institutional investors in these deals and the lack of competition for taxpayers’ business? If so, will he ask the Competition and Markets Authority, which acts on the behalf of consumers—as taxpayers, we are consumers—to review the sector and explore whether barriers to new entrants exist? Thirdly, will the Government help public bodies saddled with PFI and PF2 contracts to renegotiate debts and get the costs down to save money for front-line services? Fourthly, will the Government rewrite the Green Book to reflect the real costs and benefits of public borrowing versus private borrowing? Fifthly, what does he make of the new Eurostat rules published in March that consider the equity stakes that the Government intend us to take out under PF2 to be direct financing, meaning that they should be on the books? Does that not undermine the point of PF2 in the first place?

Finally, how will the Minister stop money simply going overseas into tax havens and into higher profits for private companies, not public services for the people? As things stand, 46 schools, and many more hospitals, will be built using £700 million of that PF2 control total, at a time when borrowing is at an exceptionally low cost for government. Do not take my word for that. Instead, take the word of Leo Quinn, the chief executive of Balfour Beatty, who recently said that “money is effectively free”. There is no excuse not to act, to tackle the costs of existing PFI contracts and the lack of competition for our business as taxpayers, so that we can really get value for money and so that instead of injecting our cash into profits for private companies overseas, we can inject our money into the kind of projects that will get Britain’s economy and Britain’s people back into business.

Summer Adjournment

Jim Shannon Excerpts

Thursday 21st July 2016 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I welcome the Deputy Leader of the House to his new position and wish him well for the times ahead. We look forward to working with him and speaking to him on many issues.

I am going to bring something completely different to the House on this occasion. I want to speak about some of the history of Northern Ireland and, in particular, the Loyal Orders, and one of those especially. Those not associated with the Loyal Orders will immediately think of the Orange Order, and as it is the largest fraternal Protestant association in the world, that is understandable. However, there is more to the Loyal Orders than meets the eye. We have other associations, some linked to and some not linked to the Orange Order. The Loyal Order that I wish to speak about in order to enlighten Members and anyone watching about its illustrious and too often unknown history is the Apprentice Boys of Derry, of which I am a member and have been for 39 years. I am also a member of the Orange Order and of the Royal Black Preceptory.

The Apprentice Boys of Derry is not linked to the Orange Order. However, membership overlaps, as indeed it does in my case. The Apprentice Boys of Derry has a membership of some 10,000 in Northern Ireland, Scotland, the Republic of Ireland, England and Canada, with supporters and affiliates in many other Commonwealth countries. The institution seeks to commemorate and celebrate the siege of Derry, recognised as the longest siege in British military history. It goes back to the Glorious Revolution. It is called the Glorious Revolution because, as many people know, it was a rather bloodless revolution. In that revolution James II was ousted from power by Parliament in 1688, and Parliament subsequently offered the English throne to James’s daughter Mary and her husband, William of Orange. In Scotland, the then ruling body, the Privy Council, asked William to assume responsibility for the Government in January 1688, and in March that year King William and Mary assumed the throne.

The different situation across the Irish sea is what ultimately led to the siege of Derry, the creation of the Apprentice Boys of Derry and the famous battle of the Boyne. In November 1688, there were two garrisons in Ulster that were not loyal to James. They were Enniskillen and, of course, Londonderry. I listened with interest to the hon. Member for Stirling (Steven Paterson), who referred to the gillies. He said they were small in stature, but when the Earl of Antrim was trying to recruit some soldiers, he went to Scotland because he wanted men who were six feet-plus. He managed to get a force from Scotland, the Scottish Highlander Redshanks, who set off for Derry. On their way they made sure to strike fear into the hearts and minds of the resistance by being merciless to any opposition.

On 7 December 1688, as the King’s forces approached the city of Derry, they were met not with the welcome that they expected, but with shots and cries of “No surrender”. The Brave Thirteen, the 13 apprentice boys, as they were, are one of the central pillars of symbolism and significance within the institution to this day. In April 1689 hope arrived, in the form of reinforcements from England led by Colonel Cunningham, a native of the maiden city. The governor of that city, Lieutenant Colonel Robert Lundy, called a meeting with his most loyal supporters to discuss the surrender of the city. News of the meeting spread, however, and the citizens were furious. Lundy had to flee the city in disguise with his supporters. The impact of Lundy’s betrayal is that Unionists and loyalists across Ulster and in Scotland to this day refer to a perceived traitor as a “Lundy”. His name went down in history for the wrong reason.

On 18 April the Jacobite army reached the city, expecting the inhabitants to be overwhelmed by the presence of the king and to admit them to the city. James repeated his attempt to enter the city three times, but on each occasion he was refused with cries again of “No surrender” and with many shots. Hamilton’s forces on behalf of King James rounded up hundreds of Protestants from nearby villages, proclaiming “Let your fellow Protestants in or let them die.” The act horrified King James himself, because he had given no instruction for that to happen and in no way approved.

On 28 July two armed merchant ships, the Mountjoy and the Phoenix, sailed towards a boom protected by HMS Dartmouth. The Mountjoy rammed and breached the boom and the ships moved in and relieved the city. After 105 days the siege was over, with some 8,000 of the 30,000 inhabitants dead. The Mountjoy, like those who oversaw the siege, has become iconic in the remembrance of the siege in the Apprentice Boys and in wider loyalist and Unionist circles. Today, the siege is commemorated by the Apprentice Boys of Derry, named after the Brave Thirteen.

We have in Londonderry a week-long Maiden City festival, which culminates in a parade around the city by members of the Apprentice Boys of Derry. Our colours are crimson red, commemorating the blood of the 8,000 who died in those battles. The institution is now widely commended for how it conducts parades, which have been peaceful and successful over the years. The parade this year will be on the second Saturday of August, which is 13 August.

What is good about the parade is not just the history, but the fact that this is the one place in Northern Ireland—well, there are lots of places in Northern Ireland—where there was contention before, and now there is not. The agreement to parade in the city of Londonderry is a catalyst for other parts of the Province to have a loyalist parade in a mainly nationalist city and to have the tolerance that is needed to make that happen. If Members want an example of how things can happen in Northern Ireland, that is the example I would give, and that is why I wanted to speak about it today.

The parade has become a tourist attraction for many people. People from Northern Ireland, from the Republic and from across the world come to watch the historical enactment that takes place on that day, and I would like to commend the Apprentice Boys of Derry for all they have done to make that happen.

In conclusion, Madam Deputy Speaker, I would like to thank you, the other Deputy Speakers and the Speaker of the House for your kindness to all right hon. and hon. Members in giving us a chance to participate in debates in this Chamber. I would also like to thank the Backbench Business Committee, which also makes it possible for us to come here and speak in debates. I am told I have a season ticket for the Backbench Business Committee, and whether I have or not, I am very pleased to participate in the debates in this Chamber and in Westminster Hall. I thank the House staff for all their kindness to us, and I thank the Hansard staff, who have told me they can now understand my accent and my writing, and they do not need any more help with what it should say. I thank the people of Strangford for giving me the privilege of representing them in the wonderful political and democratic institution we have here in the House of Commons. It is a pleasure to be here, it is a pleasure to represent Strangford and it is a pleasure to have so many friends in this Chamber.

Centenary of the Battle of the Somme

Jim Shannon Excerpts

Wednesday 29th June 2016 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to contribute on this issue. As the hon. Member for South West Wiltshire (Dr Murrison) clearly outlined in his introduction, in the Province of Ulster or Northern Ireland as it is now, we remember with great pride the courage of our forefathers at the Battle of the Somme. I would also like to thank the hon. Gentleman for the overseeing work that he has done for the whole of the United Kingdom in the commemorations for the first world war.

My right hon. Friend the Member for Lagan Valley (Sir Jeffrey M. Donaldson) is not in his place, but it is only fair to put on record on behalf of the MPs and the people of Northern Ireland our recognition of the energy, drive and leadership of my right hon. Friend as the chairman of the Northern Ireland First World War Centenary Committee. Many events taking place today are happening because of his leadership. He would always say that it was due to those around him, but the fact of the matter is that he is the Michael O’Neill of this first world war commemorative committee.

It would be remiss of me not to mention the hon. Member for Beckenham (Bob Stewart). I want to put it on the record that he spoke most gallantly. We in Northern Ireland want to thank him very much for his courage, his leadership and heroics. He will not take it lightly, but we mean it. I thank him for all he did in uniform for Northern Ireland and for helping to make it a better place today. I thank him so much for that, which is something I have always wanted to say publicly in this Chamber; it is only right that we should do so.

As the diktat of home rule loomed, Ulstermen and women organised their resistance. From 1910, the leadership of the Ulster Unionist Council had been persuading the Dubliner, Edward Carson, to become their leader. In 1911, he wrote to James Craig that in return for his leadership he wanted to satisfy himself that the people really meant to resist:

“I am not for a game of bluff and, unless men are prepared to make great sacrifices which they clearly understand, the talk of resistance is useless.”

Under the leadership of famous Lord Carson among many others, Ulster stood up and backed up her defiance with a willingness to fight. Up to half a million signed the Ulster covenant, signalling their intent to resist home rule by all means necessary, and over 100,000 signed up to join the Ulster Volunteers, should such means of resistance become necessary.

From where I am from in Strangford, I can see the Helen’s Tower where the 36th (Ulster) Division trained. It is always good to remember that. Just three weeks ago, the Orange institution of which I am proud to be a member in the fourth district of Newtownards paraded on the same route that the men marched down after their training at Helen’s Tower before they went off to Newtownards to catch the train to go to fight in the first world war and the Battle of the Somme. Wearing a different hat as a mayor back in 1991 and ’92, I had the opportunity to visit the Somme, and I will always remember the youth of those who died so clearly for a cause, as they did.

At a rally in the Ulster Hall, Fred Crawford, who had been keen on obtaining arms to challenge home rule from the mid-1890s, stated:

“I predict that Home Rule will never be killed until we show any British Government which brings it forward that we will resist to the death, even with arms if necessary”.

But soon, a foe beyond our shores would raise its head. This is pertinent to last week when the Ulster boys were making all the noise at the Euros; 100 years ago, our boys were sent off to France. Without fear, reservation or doubt and with no uncertainty in their conviction, our boys went off to fight for King, country and empire. Their presence alone turned heads before a shot was even fired.

In July 1915, the division moved to Seaford on the Sussex coast of England. This was the first time that many of the men had been outside their native land. Lord Kitchener inspected the division there on 27 July 1915, and later remarked to Carson:

“Your Division of Ulstermen is the finest I have yet seen.”

Off to France our 36th Ulster Division went—and in the finest spirit and as finely trained as they could be.

In March 1916, the sector of the front held by the Ulster Division was extended to cover an area south of the river called Thiepval wood. This wood, the name of which would become indelibly linked to the Province of Ulster, served as a base until the commencement of the Battle of the Somme on 1 July 1916. Thiepval comprised an area of some 100 acres of deciduous forest and was criss-crossed with deep communication trenches leading to the front line. Dugouts were excavated from the chalky earth and provided some shelter from the German artillery.

Food stores and ammunition dumps were also constructed in the wood, and it was near one of those dumps, on the morning of 1 July, that Rifleman William McFadzean, of the 14th Royal Irish Rifles (Young Citizen Volunteers), won immortal fame when he was awarded a posthumous Victoria Cross for an act of courageous self-sacrifice. Last Saturday, in my constituency, we unveiled a new commemoration garden and a new monument to the 36th (Ulster) Division, 100 years after the event, and we mentioned the four VCs that were won by members of that division.

Thiepval wood housed the four battalions of 109th Brigade. The River Ancre divided the 108th Brigade, with two battalions in the wood and two in the village of Hamel. Divisional headquarters were at Aveluy Wood, which also housed the 107th Brigade.

On 1 July 1916, as the morning mists cleared away, the assault waves of 130,000 British infantry called their rolls and checked their arms and ammunition. Each man was in “fighting order”, and given the extra burden of shovels, grenades, a Stokes mortar bomb, wire cutters, a gas mask, a prepared charge of explosives for cutting gaps in wire and other obstacles, many of them were carrying up to 90 lb. At 7.30 am, zero hour, the artillery barrage lifted off the first German line and moved on to the second. That was the first employment of the so-called rolling barrage. Steel-helmeted and with bayonets fixed, the infantry left their trenches and advanced. A senior officer wrote to The Times of the Ulster Division:

“It was done as if it was a parade movement on the barrack square”.

They were closely packed in rigid lines, the military doctrine of the day being that they should swarm on to the enemy trenches as soon as their own artillery had lifted, but that stiff formation prevented the use of cover and inhibited initiative. Thousands of Ulstermen reportedly dumped supplies so that they could be as fast and as agile as possible.

From 1915 until 1918, the 36th Division was commanded by Major-General Oliver Nugent, a general of distinction. The 36th was one of the few divisions to make significant gains on the first day on the Somme. It attacked between the Ancre and Thiepval against a position known as the Schwaben redoubt. We are told that the leading battalions of the division

“had been ordered out from the wood just before 7.30am and laid down near the German trenches ...At zero hour…blew the ‘Advance’.”

It is said that many of those Ulstermen wore their orange sashes when they went over the top. The pipes were skirling—the Ulstermen loved the pipes, as we still do—and they advanced out of their trenches full of energy, courage and conviction. They

“rushed the German front line ...By a combination of sensible tactics and Ulster dash, the prize that eluded so many, the capture of a long section of the German front line, had been accomplished.”

At first, south of the Ancre, everything went well, and the108th and 109th Brigades moved over the German trenches with few casualties. Scarcely were they across, however, when the German batteries opened a barrage on “no man’s land”.

[Bob Stewart]

Thank you, Mr Speaker, for allowing me to intervene on my good friend. I seem to recall that an officer rallied the troops with the very appropriate battle cry for the moment, “No surrender”.

[Jim Shannon]

The hon. Gentleman has said it for me. I thank him for the benefit of his knowledge, as always.

Simultaneously, the resolute German machine-gunners, who had remained safe from our bombardment, sprang up from their shelters, pulling up their guns and heavy ammunition boxes, and raked our men from the flanks and the rear, thinning the waves of soldiers. Many officers fell, and the men went on alone.

The Ulster Division’s position was now a vulnerable salient in the German line, a few hundred yards wide and raked by German fire. At dusk, a powerful counter-attack by fresh German troops drove our men, almost weaponless, back to the second German line, which they held all the next day until they were relieved at night by the troops of the 49th Division. They withdrew, having suffered horrendous casualties. The Innsikillings lost more men than any British regiment had ever lost in a single day. Of the 15th Battalion Royal Irish Rifles, only 70 men answered a roll call on that night of 1 July. The total number of British casualties on that first day was 60,000. Many homes were affected in my constituency, in Ards and Comber, in the borough of Ards and North Down, and there are many memorials there to lost loved ones and to the injured. Families lost brothers, sons, fathers and uncles. Some families lost two of their members, and some lost three. The losses were horrendous.

Through no fault of their own, the blinding success that the Ulstermen had achieved had not been exploited, but the Battle of the Somme had inflicted on the Germans a wound from which they never fully recovered. I love this statement by Captain Wilfred Spender of the Ulster Division's HQ staff, which was quoted earlier by my right hon. Friend the Member for Lagan Valley. It was reported in the press after the battle The captain said:

“I am not an Ulsterman but yesterday, the 1st. July, as I followed their amazing attack, I felt that I would rather be an Ulsterman than anything else in the world.”

He further stated:

“The Ulster Division has lost more than half the men who attacked and, in doing so, has sacrificed itself for the Empire which has treated them none too well. The much derided Ulster Volunteer Force has won a name which equals any in history. Their devotion, which no doubt has helped the advance elsewhere, deserved the gratitude of the British Empire. It is due to the memory of these brave fellows that their beloved Province shall be fairly treated.”

In serving King and empire, the men of the Ulster Volunteers had in their incredible bravery in the 36th secured Ulster’s place within the United Kingdom. Let us never forget their sacrifice and let us live with the same vigour and valour that they did show.

[Several hon. Members rose—]

Oral Answers to Questions

Jim Shannon Excerpts

Thursday 9th June 2016 Commons Chamber

[Mr Evennett]

My hon. Friend has been a tremendous champion for his constituency over many years. Thanks to the Chancellor, we have the £40 million Discover England fund to incentivise the development of world-class itineraries. I hope that my hon. Friend’s area and others like it will be looking to make applications to see that we get tourists to their parts of the world.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his response so far. We have an increasing number of tourists visiting Northern Ireland, not just because Liam Neeson is voicing the tourism adverts or because we have the Titanic, the SS Nomadic and the Giant’s Causeway, but because more people are holidaying at home. What can the Minister do to ensure that all the regions of the United Kingdom of Great Britain and Northern Ireland work together so that we can all take advantage of the tourism attractions in each of them?

[Mr Evennett]

I know the fantastic opportunities that there are for tourist visitors to go to Northern Ireland and see what is on offer. We are trying to encourage people to have holidays at home—staycations—but we are also working with the devolved authorities to try to promote tourism, along with VisitEngland, Discover Northern Ireland, VisitScotland, Visit Wales and VisitBritain, so that we have a joined-up approach that shows the fantastic offer we have in our four countries of the United Kingdom.

--- Later in debate ---

[Tom Brake]

I agree entirely with the hon. Lady’s point. She will, I hope, be pleased to hear that on 5 July the Advisory Committee will discuss this very subject. I hope the Committee will be able to provide her with a clear action plan that will help to address her concerns.

[Jim Shannon (Strangford) (DUP)]

It is vital that we embrace diversity at all levels to ensure that history is remembered correctly. We have portraits and statues of Queen Victoria in the House of Lords. Does the Commission agree that Members and visitors, particularly the latter, are astounded by the architecture, colours and sheer splendour of the Palace, and that there is unlikely to be anyone who leaves feeling negative or even discriminated against?

[Tom Brake]

I am happy to agree with that comment.

Battle of Jutland Centenary

Jim Shannon Excerpts

Wednesday 25th May 2016 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for bringing the matter to the House for consideration. HMS Caroline, which has been undergoing restoration while docked in Belfast harbour, saw action at the battle of Jutland. The strong links and bonds between our great nations are exemplified by our shared history and experiences. Given the number of approaching centenaries, does she agree that now is an opportune moment to ensure that we link all our common experiences and see Britishness come roaring back?

[Mrs Drummond]

Absolutely. HMS Caroline has just received a large sum of Heritage Lottery Fund money for its restoration and the site is opening next week.

In battle, the confusion and strain must have been immense as ships manoeuvred at high speed as they shot shattering broadsides and received hammering hits from enemy guns. Below deck, the men would have been working in extreme heat in the boiler rooms or in the gun turrets with a sense of helplessness at influencing all that was going on around them. A single hit to a ship’s magazine could blow both ship and crew to pieces. One such tragedy sunk HMS Invincible in 90 seconds with the loss of more than 1,000 lives.

Commonwealth War Graves Commission

Jim Shannon Excerpts

Tuesday 10th May 2016 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the right hon. Member for Broadland (Mr Simpson) on his graphic and detailed presentation of the case, which we appreciate. The Commonwealth War Graves Commission is as relevant now as it was when it was founded, which is testimony to the hard work and determination of those involved.

Neither a soldier nor a politician, the commission’s founder, Sir Fabian Ware, was, at 45, too old to fight, but he became the commander of a mobile unit of that fabulous organisation, the British Red Cross. Saddened by the sheer number of casualties, he felt driven to find a way to ensure that the final resting places of the dead would not be lost forever. His vision chimed with the times and has continued to this day. Under his dynamic leadership, his unit began recording and caring for all the graves it could find, and by 1915 its work was officially recognised by the War Office and incorporated into the British Army as the Graves Registration Commission. That work continues today, and Sir Fabian Ware’s vision is now a reality. The initial aim of ensuring that the final resting places of the dead would not be lost forever has been successful.

As others have said, the Commonwealth War Graves Commission does a staggering amount of work, and it has some 23,000 memorials and cemeteries in 154 countries, making it a truly global organisation. In my constituency of Strangford, we have between 60 and 70 graves that are looked after by the commission. I went around the graves with one of the commission’s officers to see its work. A young British Army soldier who died in the 1916 uprising is buried in Greyabbey, and another young soldier from the first world war, Pritchards, was lying in an unattended grave. The commission will look after graves, but it needs the permission of the families. We need to ensure that Ware’s vision can continue to be fulfilled and that war graves are maintained and looked after from Strangford to South Georgia. From the Menin Gate and the Thiepval memorial to the India Gate in Delhi and the Helles memorial in Turkey, the commission tends some of the most iconic architectural structures in the world. From tiny cemeteries containing just a handful of graves to the Tyne Cot cemetery in Belgium, where there are 11,000 burials, the commission ensures that the memory of all those who perished is preserved with the utmost respect.

The commission cares for the cemeteries as a whole, so conservation and reconstruction can, and often does, involve teams from different disciplines. It is not just a matter of tending graves; it is much, much more than that—horticulture, headstone carving and manufacture, and the architectural maintenance teams. They are people with skills, love, affection and commitment to their job. The cemeteries are the sum of their individual parts, and teamwork at all levels helps to maintain their overall appearance.

Even the most durable materials require maintenance, especially when they are used in constructions that are nearly 100 years old. Climate change, pollution and vandalism all take their toll. The background information mentions deliberate vandalism in places such as Libya, Iraq and Beirut, and the commission has made it its business to reinstate those graveyards, as the right hon. Member for Broadland said. Structural renovation projects can involve anything from reroofing buildings to drainage systems. Headstones, memorials and sculptures are kept in good order by a regular cycle of maintenance—a lot of good work is done. To ensure that the quality of materials and the craftsmanship remain a priority, the commission employs specialist masons and runs its own workshops, in which many of the replacement headstones are made.

Barry Edwards, the commission’s architect, was asked to construct a brand-new cemetery at Fromelles to take the remains of 250 Australian and British servicemen who lost their lives at the battle of Fromelles in July 1916. It is amazing to think that, a century on, the commission is still making a difference in the proper remembrance of those who lost their lives in the first world war.

With gardeners and horticultural experts working in 154 countries, the commission has an enviable track record of innovation and expertise. More than half of the 1,750 acres of ground under the commission’s control is given over to fine horticulture, making maintenance a year-round task for its 900 gardeners. That might mean bringing seeds from Nepal to use in Gurkha cemeteries, or bringing maples from Canada for Dieppe. Even in horticulture, the commission goes the extra mile to ensure that each nation’s war dead are remembered properly.

Today, the work continues to the highest standard with the restoration of the Thiepval memorial. I have seen the memorial and remember it well. It is a fitting tribute to the fallen of the Somme. I could not conclude my speech without mentioning the Somme, which means so much to Ulster men and women because of their ancestors’ sacrifice. It is always good to remember that the 36th (Ulster) Division fought alongside the 10th and 16th (Irish) Divisions, when it was the United Kingdom of Great Britain and Ireland. The battle of the Somme resonates. Many streets and many Orange lodges across the Province are named after the battle. The banner of my lodge depicts the battle of the Somme too. This year, the battle’s centenary will be commemorated across Northern Ireland, and people from all community backgrounds in the Province have connections to the battle. As a Unionist of Ulster, I find it hard to think of something more deeply embedded in our psyche as a people than the Somme, which is seen by many as the people’s blood sacrifice in the pursuit of our self-determination.

The final stage of repointing on the Thiepval memorial has been done, and pointing work has started on the natural stone. The new coping stones and stone garlands are being repointed with a specific mortar that is close to the colour of the stone. The memorial is now equipped with a new distribution board for all the new electrical installation, and work continues on the top roof. It has been waterproofed to ensure that it is watertight.

On 15 March, the new flags flew again on top of the memorial. To mark the occasion, Lieutenant Colonel Kian Murphy, representing both France and the UK, rendered the military salute. The next step is placing the British and French crowns on top of the flag poles and cleaning the memorial from top to bottom. It will not be long before we see the final result. We commend the Commonwealth War Graves Commission for all that it has done for its workers and staff, and for commemorating battles of many years ago, particularly the battle of the Somme.

Fixed Odds Betting Terminals

Jim Shannon Excerpts

Tuesday 26th April 2016 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I beg to move,

That this House has considered fixed-odds betting terminals.

Fixed odds betting terminals are a big issue, and a big crowd of hon. and right. hon Members are here to speak about them. There is a lot of concern in the House about the issue. There are probably some hon. Members here today—perhaps not so many—who will not be speaking with the same level of concern as me, but Opposition Members intend to take the issue further in their speeches today.

Fixed odds betting terminals are touch-screen roulette machines found in betting shops across the whole United Kingdom. Gamblers can play casino-style games with a maximum stake of £100, which can be wagered every 20 seconds. That is a possible total of £300 a minute. We have more than 35,000 fixed odds betting terminals in the United Kingdom’s bookmakers. FOBTs are disproportionately found in the poorer parts of the United Kingdom and generate some £1.7 billion of revenue for bookmakers. Campaigners have labelled the machines the crack cocaine of gambling, and that is what they are. The issue is of great importance.

Bookmakers have a powerful lobby and powerful friends. They have kept arguing that we need more evidence, despite the obvious case for regulation, in order to protect their huge profits made at the expense of the vulnerable. We are here to speak for the vulnerable, for legislative change and for better protection.

[Fiona Bruce (Congleton) (Con)]

The hon. Gentleman is bringing forward the debate with his characteristic compassion. Does he agree that it is a matter of social justice that we address this issue? Those affected are not just those who are addicted, but their families, and in particular their children. It is primarily for them that many of us are here today.

[Jim Shannon]

As always, I thank the hon. Lady for her intervention—she is an hon. Friend, too. She speaks with heart and compassion, and she speaks for me as much as everyone else here.

Our Prime Minister told Parliament more than 12 months ago that FOBTs are a serious issue, and that he would act as soon as there was more evidence. Since then, two tragic cases of suicide have been linked to the machines, and there are numerous reports of the terrible impact they are having on the most vulnerable, but the Government are yet to act. The Minister is here to respond to the debate, and we look forward to hearing the ideas that he will put forward in response to what we have to say. There is no place for £100-a-spin games on the high street in bookmakers that have little or no supervision. There is a simple answer to protect the vulnerable, as the hon. Lady said, and that is to reduce the stake.

[Mark Tami (Alyn and Deeside) (Lab)]

While a lot of us have worries about what is going on in betting shops, does the hon. Gentleman agree that we do not know enough about the people who gamble at home on their phones and on the internet? There is no control over that at all, and they are being equally affected.

[Jim Shannon]

The hon. Gentleman is absolutely right. We have many concerns. Today’s debate is fixed primarily on the fixed odds betting terminals, but I accept that control is needed elsewhere.

The lack of regulation of FOBTs has meant that they have clustered in areas of high social deprivation. They can prey on the young and vulnerable. There is strong evidence that the high stakes on FOBTs in the low-supervision environment of a bookmaker have led to increased problem gambling. Recent Responsible Gambling Trust research on FOBTs showed that 37% of players exhibited signs of problematic gambling. At stakes of more than £13.40 a spin, that rose to 80% of players exhibiting problem gambling behaviour. One third of problem gamblers calling the national problem gambling helpline cited FOBTs as their issue. Let us be clear that the debate is about fixed odds betting terminals and the blight they cause on society.

[Lady Hermon (North Down) (Ind)]

There is evidence that the terminals have been used for money laundering. Will the hon. Gentleman reflect on the involvement of paramilitary organisations in money laundering through the terminals in Northern Ireland?

[Jim Shannon]

The hon. Lady is absolutely right. There is evidence of that, and I will give examples shortly. I am sure others will, too. Whenever there is misuse and a dirty laundering system, that has to be addressed.

More than half the UK population plays the national lottery, and they lost £7.2 billion last year. That compares with the less than 4% of the population who play FOBTs, who lost £1.6 billion. The unemployed are twice as likely to play the machines as someone in work. The demographic that bookmakers target with FOBTs are also the least likely to have access to bank accounts, debit cards and credit, and thus have restricted access to remote gambling sites. Bookmakers and the gambling associations are clearly targeting those who are vulnerable to start with, but who are perhaps in some difficulties with money, too.

Bookmakers are using the cover of account-based play, which was instigated by the Government, to provide cash top-up cards that facilitate access to their online sites; the hon. Member for Alyn and Deeside (Mark Tami) mentioned such sites in his intervention. The gambling lobby says that we need more evidence, but it is clear that the evidence is out there. It is comprehensive, and it consistently lines up on the right side of the argument: we need to protect the vulnerable and enact regulation. I hope that, arising from this debate, we will have a chance to enact regulation that will filter out from this House to the whole United Kingdom, including Scotland and Northern Ireland.

FOBTs are useful for money laundering, as the hon. Member for North Down (Lady Hermon) said. The machines have a few filters, but the money launderers know them and work within the limits. Supervision is low and closed circuit television is poor, so it is a safe way to money launder. Low-level drug dealers clean cash in case they are pulled over by the police. Generally, they are younger lads with smaller amounts of cash. In one West Yorkshire case, the police uncovered £18,000 of FOBT tickets being held by one drug dealer. The machines are used for underworld criminal activities by those whose thoughts are nothing but criminal and outside the law.

Using the proceeds of crime to fund a gambling addiction, or cleaning the cash obtained from a crime, is common. The most common use of FOBTs since they landed on the high street is for getting rid of dyed notes obtained during robberies on armoured vans, cash machines and so on. The notes are sprayed with an irremovable dye that is an immediate alert as to their origins. They are therefore not exchangeable. However, they are still identified as legitimate currency by note accepters on gaming machines. The machine with the highest cash transaction capability and ticket pay-out facility would be the preferred option for laundering, and that is the fixed odds betting terminal.

The bookies and the suppliers adapted the software controlling ticket pay-outs to identify where less than 40% of the cash put in is wagered—that is where people either put cash in a FOBT and then print a ticket straight out, or stake a minimal amount of the total cash inserted—so that staff are alerted when people cash those tickets. Launderers have adapted to that by using minimal-risk wagering. The bookies are now making it easier for criminals by allowing them to put cash winnings on to a pre-paid credit card. They are not just hiding the cash, but making it electronic. Never ever think that the criminals and evildoers have not got ideas as to how to get around the law, how to work it to their advantage and how to launder some of that dirty money.

Following on from weaknesses in money laundering policies at Ladbrokes in 2013, Paddy Power was recently the subject of a high-profile money laundering investigation. That investigation resulted in the Gambling Commission reprimanding Paddy Power and imposing a £280,000 penalty; there were also serious failures in social responsibility. The Government are considering including betting shops in the European Union’s fourth money laundering directive. That would require the identification of customers transacting over £1,500 in a 24-hour period. The bookmakers are lobbying to be excluded from that, despite recommendations that they should be included first being made in 2001 in the Budd report.

The lack of FOBT regulation is a huge issue that cannot be ignored, and I am keen to ensure that the debate highlights it. Gambling the world over has evolved into a consistent structure, with the hardest gambling reserved to highly regulated venues such as casinos, where customers go with the knowledge and expectation of experiencing a harder gambling environment. Casinos have very high levels of player supervision and therefore protection. Players tend to be occasional visitors, and the casinos tend to be viewed as a destination leisure venue with more than just gambling on offer.

The Gambling Act 1968 put in place a regulatory permit for gambling. This set out that high-stakes gambling should take place in highly regulated and highly supervised environments such as casinos, and low-supervision environments should have lower stakes and require lower levels of supervision. Those principles were reaffirmed in the Gambling Act 2005 by Sir Alan Budd. Other countries follow this model. The UK is alone in offering very-high-stakes gambling of £100 on Britain’s high streets in the low-supervision, easily accessible environment of a bookmaker. Little or no monitoring and little or no supervision means vulnerable people can be taken advantage of. The regulation of fixed odds betting terminals is out of kilter with the principles of gambling regulation. They offer very-high-stakes gambling in an unregulated environment.

The only material restriction is that bookmakers are allowed four fixed odds betting terminal machines per shop. The result of this is that bookmakers have opened multiple betting shop branches in close proximity. That is a concern. When we look at the streets of the United Kingdom of Great Britain and Northern Ireland, we sometimes wonder whether we are in a gambler’s paradise—if there is such a place—because betting shops seem to be prevalent everywhere.

The bookmaker Paddy Power has focused its branches in areas with high immigrant populations. We have seen a 43% increase nationally in the number of betting shops located in town centres.

[Mr David Nuttall (Bury North) (Con)]

On the number of machines allowed in each shop, is the hon. Gentleman arguing for fewer in each shop, or for more in a smaller number of shops?

[Jim Shannon]

I seek a lesser number in the shops, and fewer shops as well. We agree on many things, but we do not agree on this topic. The opinion that I express will win: ComRes did a survey of MPs seeking their opinion, and of the MPs who responded, seven out of 10 want FOBTs regulated. They want a reduction in the number of machines and shops. It was quite clear. If a private Member’s Bill is brought before the House—some in this Chamber are of a mind to do that—we can tackle the problem.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

Does the hon. Gentleman agree that reducing the maximum stake to £2, which is opposed by betting shops, would be a good way forward?

[Jim Shannon]

I thank the hon. Lady for that; it is one of my concluding points. I know that other Members are of the same opinion. Yes, the maximum stake should be lowered; then we could manage the issue, so that people are not deprived.

The regulation of FOBTs is out of kilter, as I have said. The only material restriction is the four machines per shop. We have seen an increase nationally in the number of betting shops in town centres, and last year the Government stepped in and imposed a £50 staking threshold on fixed odds betting terminals, above which players are required to identify themselves to staff or sign up for a loyalty card. The objective of this measure is to help players stay in control. I suggest that that has not happened. The measure is non-evidence-based and the Department for Culture, Media and Sport failed to quantify what impact it would have on players other than the £17 million reduction—1%—in bookmaker revenue from the machines. Secondary research based on the British gambling prevalence survey 2010 estimates that up to 40% of B2 revenue comes from at-risk and pathologically addicted players—higher than all other combined gambling activities—so the Government predicted very little impact. There is also evidence that bookmakers are using the player registration as a mechanism to market FOBTs further.

An evaluation of the DCMS assessment of the £50 measure so far, carried out by Landman Economics, highlighted issues with the quality of the data provided by the bookmakers; it also noted that DCMS could not assess changes in staking, mentioned the absence of a pilot scheme so that the measure could be evaluated better, and noted that the evaluation omitted key questions that it is important to consider when looking at the success or failure of the £50 regulations. For example, the question why fixed odds betting terminal machine players might wish to remain anonymous is not discussed. Despite the Government measure, players are still able to stake up to £100 per spin, and it appears that bookmakers are using the change as an opportunity to further market products to vulnerable gamblers. Even £50 is still materially out of kilter in the normal gambling world.

[Kevin Foster (Torbay) (Con)]

I congratulate the hon. Gentleman on securing this important debate. Does he agree that the issue is also about making sure that players can make a genuinely informed choice? If a sign was required to be displayed that said, “A machine of this type made on average £825 a week in profit for its owners in 2012”, would people be inclined to gamble on it? In short, it would be a bet not worth having.

[Jim Shannon]

Absolutely. I thank the hon. Gentleman for his wise words.

I am conscious that many people want to speak, Sir Alan. I gave you an undertaking that I would not speak for too long, but I want to set the scene, and then I will give other Members an opportunity to participate.

The Government must take urgent action to regulate fixed odds betting terminals and reduce the stake that can be gambled from £100. The hon. Member for North Ayrshire and Arran (Patricia Gibson) referred to £2; I think that many in this House would be happy with that. This is the only way effectively to tackle the growing problems that these machines are inflicting on our communities and on those who can least afford it. The Minister responsible for gambling has said that the Government want to reduce the stake for FOBTs, so let us hear what the reduction will be. A substantially lower stake would bring fixed odds betting terminals into line with machines in other low-supervision environments such as adult gaming centres and bingo halls.

The Gambling Commission has said that if staking levels were being set now, it would advise against the £100 stake on a precautionary basis. The previous Government said that a lower stake would bring adequate public protection. The Government should take this opportunity to control the gaming machines and the stakes and reduce significantly the numbers of shops and machines on the high street. The evidence is out there and is clear: the bookies are in the wrong. They are on the wrong side of the argument, and it is our job to put it right.

I want to say one quick thing in relation to Scotland, as hon. Members from Scotland are here. The Bill in Scotland gives some control to the Scottish Parliament, but if we were to bring forward a private Member’s Bill in this House to legislate for change, this debate today would be the first stage in that process. If that happens, that will filter its way out to Scotland and to Northern Ireland as well. We in this House today have the opportunity at least to start the first stage of that process. I believe that many in this House—seven out of 10 MPs—wish for that to happen.

[Several hon. Members rose—]

--- Later in debate ---

[Jim Shannon]

I thank the Minister, the shadow Minister and right hon. and hon. Members for their significant contributions. A significant proportion—higher than for any other product—of users of fixed odds betting terminals are problematic gamblers, and that has come out of this debate. Fixed odds betting terminals are the crack cocaine of gambling. They are totally addictive, destroy lives and focus on the vulnerable. What must we do? We must reduce the number of machines from four per shop to one, and we must reduce the maximum stake from £100 to £2. We must remove the table game content from fixed odds betting terminals, because the pace of the games is faster than in real casinos. We must reduce the spend frequency from 20 seconds to 60. Those are some of the things we can do.

I welcome the new all-party group on fixed odds betting terminals, and I thank hon. Members for their contributions. The Minister can be sure that Members here will return to look for change through legislation.

Motion lapsed (Standing Order No. 10(6)).

Finance (No. 2) Bill

Jim Shannon Excerpts

Monday 11th April 2016 Commons Chamber

[Seema Malhotra]

I will just continue on steel, because it is important also to talk about what is missing from the Bill. This is a serious missed opportunity to provide greater support for manufacturing and steel. The collapse of the steel industry could cost the Government £4.6 billion over the next 10 years. Some 40,000 jobs could be lost, devastating steel-making communities and industries that depend on British steel.

We welcome today’s news that a buyer has been found for Tata’s Scunthorpe steel plant, and we congratulate Unite, Community, the GMB and others who played an important role in the negotiations leading to that deal. However, against that background comes the revelation of a U-turn on business rates by the Chancellor. Before the Budget, the Engineering Employers Federation made a strong case for giving companies an allowance on business rates for plant and machinery, which could have applied to assets such as the blast furnaces in the steel sector. However, we learned from The Times that although the Chancellor was planning to act, he then pulled plans to give Britain’s struggling factories tax relief on business rates.

Why did he do that? The answer, analysts suggest, is that British manufacturing has been sacrificed on the altar of the Chancellor’s obsession with getting a £10 billion Budget surplus in the final year of this Parliament. We wait to see what actually materialises from today’s statement and what actual support comes forward from the Government, particularly for Port Talbot.

The Office for Budget Responsibility revealed that the decision was taken so late that there was no time to change the calculations in its economic and fiscal forecast. That means that its forecast for the level of business investment in this Parliament could well be an overestimate.

Families in Britain are to suffer as a result of another missed opportunity—on housing. By 2025, nine out of 10 Britons under 35 on modest incomes will not be able to afford a home. Rents in the private sector are soaring. So much, again, for a Budget for the next generation.

[Jim Shannon (Strangford) (DUP)]

On that subject, the hon. Lady will be aware that the Residential Landlords Association put forward to the Government some ideas for changes, but those have not happened. One was to give people the chance to buy their houses, and the association was happy to do that, but we have not got that in the Bill. Does the hon. Lady feel that something could be done on that to help?

[Seema Malhotra]

The hon. Gentleman makes an important point, and there are many measures we should explore, particularly as we go into Committee, to support house building and home ownership.

We know from the English housing survey that 201,000 fewer households own a home now than did at the start of the Chancellor’s tenure. That compares with an increase of 1 million under Labour. As of last year, the housing benefit bill is forecast to be £350 million more than the Chancellor intended. It is clear that this country needs a massive programme of capital investment in new affordable homes to rent and buy—nothing less will do if we are to tackle the growing housing crisis. That is why Labour has far more coherent plans to build homes and to make sure we tackle spiralling housing costs. That is the way to control the housing benefit bill.

Today’s report from the Women’s Budget Group shows that female lone parents and single female pensioners will, on average, have seen their living standards fall by 20% by 2020. Women are now set to bear a staggering 86% of the cost of changes and cuts to taxes, tax credits and benefits by 2020. That is worse than the figure of 81% identified last year.

The tax cuts in the Bill are likely to benefit men more than women. It is surely time that the Government conducted a full gender impact analysis of their proposals. That would give the opportunity for greater parliamentary scrutiny.

When it comes to measures on capital gains tax and corporation tax, the Bill must pass two tests: are they fair and are they effective? The Bill confirms that the main rate of corporation tax will be cut further to 17% from 1 April 2020, which will be worth £945 million. If corporation tax, which is already the lowest in the G7, can be reduced yet further, perhaps money can be found and the Government can think again about cuts to working age benefits and public services.

More importantly, a cut to corporation tax will not address the underlying weaknesses of our economy, such as the challenges in productivity, skills and the investment required in infrastructure. Businesses that talk to the Minister as well as to us say that these are the biggest issues affecting their future growth. Connectivity and new technology also require investment.

--- Later in debate ---

[Seema Malhotra]

The hon. Gentleman makes a very important point. That is one of the concerns. It is assumed that the proceeds from those tax cuts will go directly into investment, but the evidence for that does not necessarily stack up. In fact, an estimated £500 billion is not invested in this country at the moment. That is an important point, which is why greater analysis and scrutiny are required, as well as conversations with businesses about what will actually make a difference for them in the long term.

The basic rate of capital gains tax is to be reduced from 18% to 10%, and the higher rate from 28% to 20%. That is set to cost £735 million in 2020 and £2.7 billion over the forecast period. Capital gains tax was paid by only 200,000 taxpayers in 2013, which means that about 0.3% of the population will benefit from a giveaway of more than £600 million in total from the first year. That was not called for or expected. In fact, the Financial Times described it as an “unexpected gift” for wealthy investors. In 2010, the Chancellor told the House that raising capital gains tax was necessary to

“create a fairer tax system.”—[Official Report, 22 June 2010; Vol. 512, c. 178.]

It would be interesting to hear perhaps during the Exchequer Secretary’s wind-up speech what has changed.

[Jim Shannon]

The Residential Landlords Association was keen to see the extension of the capital gains tax relief so that landlords could sell property to their tenants. That is a small thing that could incentivise the whole housing market if it was done in the right way.

[Seema Malhotra]

I thank the hon. Gentleman for his comments, but I think he will agree that the key issue in addressing the housing crisis is the rapid building of new homes and the strategy to deliver that effectively.

I want to make a few comments about entrepreneurs relief and the Government’s new investor relief. We welcome the endeavours to encourage investment, particularly long-term investment. The question will be whether the measures pass the test of what business is looking for: simplicity, stability and a strategic approach to fiscal policy. Our concern is that tinkering is no substitute for a clear, long-term strategy to support investment. That is why we are undertaking a review of tax reliefs to see what the evidence is for what incentivises business investment and provides real value for money. Our aim is to ensure that there is a strategic approach to supporting investment and the transparency around it. Those are questions we will pursue as we go forward into Committee.

We also welcome clauses on the reduction in oil and gas corporation tax and petroleum revenue tax. The Chancellor announced that he would reduce petroleum revenue tax from 35% to zero, and that he would reduce the corporation tax supplementary charge from 20% to 10%. There is no doubt that the struggling North sea oil and gas industry needs support. In fact, we think that the Chancellor could have gone further and announced the measures that Labour has called for. Our bold new proposal to invest in the industry is based on the creation of a new public body, which would be called UK Offshore Investment Ltd, to identify areas for temporary public investment. The purpose of that new body was spelled out last month by the Scottish Labour leader, Kezia Dugdale. It would conduct an open-book review with the Oil and Gas Authority to identify assets that have long-term viability and profitability. That, in turn, would provide the evidence to allow UK OIL to commit to public investment in strategic infrastructure and potentially profitable assets.

Clause 115 gives the Government power, through a statutory instrument, to reduce the VAT rate on women’s sanitary products from 5% to zero. That is welcome, as are the Minister’s comments. I am glad that the Chancellor has finally recognised that women’s sanitary products are not a luxury. However, it is crucial that the clause should set a firm deadline for the VAT reduction, and although the Minister’s comments signalled moves in that direction, they did not go quite far enough. I am sure that we will continue to address the point as we move forward in Committee and beyond. I congratulate Labour Members, particularly my hon. Friend the Member for Dewsbury (Paula Sherriff), and campaigners inside and outside Parliament on their hard work in forcing the Government’s hand on the issue. It is a sad indictment of the Government that it took a Labour amendment and an embarrassing Government defeat to achieve that result.

Where in the Finance Bill is a clause to reflect the Government’s other U-turn, which was on VAT on energy-saving materials? The Government accepted our amendment to the Budget resolution, which allowed the Government to legislate on the matter in the Finance Bill. The lack of legislation and the contradictory and noncommittal answers from Ministers are causing uncertainty in the industry. We simply call on the Government to make a commitment that they will not include a VAT rise for solar or other green energy measures in this or future Finance Bills.

On tax avoidance, the two key issues we face are structural reforms and public confidence. The rhetoric today, as in the past, has sought to be impressive—in the past, the Chancellor has said that aggressive tax avoidance is “morally repugnant”—but the reality has yet to match the rhetoric. Indeed, the tax gap has grown under this Government to £34 billion. Serious measures to tackle tax avoidance, which is estimated to account for £7 billion of the tax gap, will be even more critical.

It is two years since the Prime Minister wrote to UK overseas territories and Crown dependencies calling on them to publish a public register of firms and individuals sheltering money there, yet virtually no progress has been made so far. Today’s statement did nothing to move us forward on such a public register of firms and individuals. Fundamentally, this issue is about a rotten system that undermines the faith of ordinary families in the fairness of our tax system. Indeed, a definitive analysis by the Financial Times shows that the corporate tax avoidance measures that the Labour Government brought in will still raise 10 times as much as those introduced during the last Parliament.

While we broadly welcome the measures in the Bill, we think that they simply do not go far enough. We believe there must be far greater transparency and enforcement in relation to those who try to hide their wealth and profits in tax havens. As ever, the Chancellor and the Prime Minister give the impression of acting tough, while in reality they are proposing half-measures. Instead, as Labour have set out in our tax transparency enforcement programme, we require the introduction of a general anti-avoidance principle that proactively looks at intent and does not need the consent of the tax profession before it can be used.

Our programme includes an immediate public inquiry into the Panama papers, and more resources for HMRC. Staff numbers having been cut by 6,000 and then added to by 670, we can see that there has been a return of about 10% of those whose jobs were cut, and real concerns have been raised about the impact on tax collection as a result. We have called for a specialised enforcement unit and for greater co-operation with European partners on country-by-country reporting and protection for whistleblowers.

Budget Resolutions and Economic Situation

Jim Shannon Excerpts

Monday 21st March 2016 Commons Chamber

[Mr Stephen Hepburn (Jarrow) (Lab)]

This sorry excuse for a Budget is falling apart in front of our very eyes, just like the Chancellor’s reputation. Harold Wilson said that a week is a long time in politics, and by heaven doesn’t the Chancellor realise that today? Just one week ago, the Chancellor was standing at the Dispatch Box flaunting himself as a future Prime Minister, but now what do we see? His credibility is devaluing faster than a banknote in a banana republic.

I do not see the former Work and Pensions Secretary, who threw the towel in, as any comrade in arms in the fight for fairness and decency. I welcome his conversion to our cause after six years of the most brutal attacks on the welfare state since its creation: attacks on the lower paid, the unemployed, the disabled, the young, the vulnerable and the weakest members of our communities; and the bringing in of policies such as the bedroom tax, which has seen three-quarters of the people affected having to cut down on food to be able to afford to pay it.

[Jim Shannon (Strangford) (DUP)]

Parkinson’s UK and Arthritis Research UK say that 682,100 people currently claim PIP. Of those, 200,000 have a musculoskeletal condition, which means they cannot dress or go to the toilet unless they receive help. That is just one example of disabled people who need help. Have the Government forgotten about these people?

[Mr Hepburn]

Yes, they have forgotten about them and such cases are replicated right across the UK.

The introduction of a benefit cap will cast an extra 40,000 children into poverty. There have been cuts to employment and support allowance, tax credits and housing benefit, and with the botched universal credit, more than 2 million families will see their benefits cut by £1,600 a year. The infamous work capability test targeted terminally ill cancer patients and those with severe learning difficulties to reach targets. I welcome the change of heart from the ex-Work and Pensions Secretary, who finally realises that it is morally reprehensible to persecute people who need help to just wash, dress or go to the toilet.

What is more, we are sick of the spin from the Chancellor, whether the northern powerhouse guff he keeps coming out with or him pretending to be the builder of the infrastructure in this country. Bob the Builder was funny, but George the builder is not, Lurking in factories or loitering on building sites wearing shiny hard hats and high-vis jackets, his trips around the country are nothing but public relations trips funded by the taxpayer.

All this is happening at a time when we are facing a housing crisis in this country. I remember first coming down to London and seeing people out on the streets as rough sleepers. We all thought that was disgraceful. Labour cleared that up, but what do we see now as we walk into Parliament these days? The very same thing we saw when the Tories were in power in the ’90s—rough sleepers. It is a scandal that the fifth-wealthiest country in the world sees its priorities as cutting welfare for the weakest and increasing the number of rough sleepers by 50%, while lavishing tax cuts on the very rich.

I am proud to be a member of the Union of Construction, Allied Trades and Technicians. I joined when I was a building labourer, long before I became a Member of this House. I want to see the building of houses to sort out homelessness and the housing crisis, and I want to see infrastructure built for the benefit of everyone. But what do I see under this Government? I see rent rises in the private sector, council sector and housing associations brought about by a Government who persecute tenants. I see disgraceful threats to end the security of tenure to families who can be kicked out of their council houses, with kids ripped out of school and communities destroyed forever. I see the privatisation of housing association properties when the Government force them to be sold on the cheap. I see councils being forced to sell their best properties to spivs and speculators, depriving parents and children the chance to live in a nice area. I see the ludicrous first-time buyer scheme and the ridiculous belief that ordinary people can get on the property ladder by purchasing a house costing up to £450,000, which must be something like 18 times the average wage in my constituency.

I pay tribute to South Tyneside Council and Gateshead Council, who cover my constituency, for the work they have done to protect people from the cuts that have happened in the past and for what they will do in the future. Instead of building up the country and building a future for everyone in society, we have a Chancellor who is just digging his own political grave.

Budget Resolutions and Economic Situation

Jim Shannon Excerpts

Wednesday 16th March 2016 Commons Chamber

[David Rutley (Macclesfield) (Con)]

It is an honour to follow the hon. Member for East Antrim (Sammy Wilson), who spoke with characteristic passion and commitment to his constituents.

I follow other Members who have welcomed the new sugar levy announced today. I have long campaigned hard to make sure we tackle public health challenges, particularly those facing young people and children. Individuals who get a chance to look at the sugar smart app will see how much sugar is in so many of the products we and our children consume. The levy is a positive step forward.

[Jim Shannon (Strangford) (DUP)]

I am pleased to hear that the hon. Gentleman welcomes the sugar tax, as do I. I have long felt we should introduce it. The Chancellor referred to the next generation and the £27 billion we could save. The levy will bring savings to the NHS, change people’s attitudes and address levels of obesity. Does the hon. Gentleman agree that if ever there was a good reason for a sugar tax, that is it?

[David Rutley]

I completely agree. The hon. Gentleman and I have been involved in numerous debates about promoting outdoor recreation and physical activity—for older people as well as young people—and the levy is a positive step further forward. I pay tribute to the Government for taking forward its sport strategy and to the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), for her work in taking forward a very proactive public health agenda.

On other areas of the Budget, I felt that the Chancellor set out a clear, strong package of measures to help go on delivering the long-term economic plan and to make Britain the best place in the world to start up and grow a business. I have long talked about the importance of an enterprise economy. To achieve one, we need to focus on some key groups of people who make that happen: the entrepreneurs, the exporters, the employers and, of course, the employees who help put the pieces of that jigsaw together to create the enterprising economy that we want to see in Macclesfield, Cheshire and right across the country.

In recent years, I have also been campaigning hard on behalf of the self-employed. It is fascinating to see how self-employment is moving forward. I have been working with Demos and the RSA on various policy initiatives in this area, and it is clear that there is a long-term trend towards more self-employment—4.6 million, up from about 4 million in 2010. It is clear from the RSA’s own work that the pull factor is bringing more people into self-employment; there is not just a push factor. On the back of that, it is important that we welcome the Chancellor’s announcement on abolishing class 2 national insurance completely, to simplify the tax system for the self-employed.

The Chancellor also talked a lot about productivity, which the Government are absolutely committed to improving. For decades, the UK’s productivity has lagged behind that of other major economies. We need to address that. As a result of the drag from the financial crisis, the OBR has forecast lower productivity in the UK, as the OECD has done in the vast the majority of countries. That is why the Chancellor is absolutely right to keep an unrelenting focus on productivity and to take the strong action we need to take to bolster our economy now and for the next generation.

Colleagues should turn to page 61 in the Red Book to see the vast array of activity being taken forward to encourage more investment: lower taxes to boost enterprise, investment in infrastructure, as called for by Opposition Members, and a strong focus on science and innovation, which I believe is vital for the country and certainly for Cheshire.

I join the long list of colleagues on the Government side—and, I hope, Opposition Members, too—who welcome the fact that the Chancellor has set out that business rates will be reduced, which will have a huge impact on many small businesses. Capital gains tax has been cut; corporation tax has been further reduced to 17%. Stamp duty is to be reformed, not just in the residential sector, but in the commercial sector. These are vital steps in ensuring that we improve opportunities for investment. When we drive productivity further forward, it means more jobs and more skilled employment, which, when combined with the national living wage, will lead to higher wages, too.

--- Later in debate ---

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

In broad terms, the Budget is extremely welcome. It continues the extremely sensible policies that the Chancellor set out as long ago as 2010, the essence of which is on page 127 of the Red Book, which sets out receipts and expenditure as percentages of GDP. Tax receipts will run at 35.7%, 36.3%, 36.9%, 36.9% and 37% of GDP over the next few years, which is in accordance with the normal long-run averages. Only in the highest years of tax receipts, going back to the 1970s, has taxation in this country managed to get as high as 38%. That sets out a limit for public expenditure if there is to be a balance, which it is obviously important to achieve when the economy is going well. We therefore see that public expenditure will be managed in line with the receipts that will come in, so that expenditure will be less than receipts by the end of the period.

That is absolutely what the Chancellor promised all those years ago when he said that he would mend the roof when the sun was shining. A glimmer of sun has come through the clouds of international crisis and the Chancellor has been busy on his ladder fixing the roof with his nails, his hammer and his wood. The process is now nearing completion, for which he deserves a great deal of credit.

Turning to the details of the Budget, the Chancellor also deserves much credit for his reforms of corporate taxation. It was Napoleon who first called us a nation of shopkeepers, and I noticed that the Chancellor quoted Napoleon in his speech. That may say something about his European ambitions, with which I am in less agreement, but we are indeed a nation of shopkeepers. Reducing the burdens of rates, VAT and bureaucracy is only to be welcomed and is thoroughly desirable. Ensuring that multinationals pay taxation according to law is also desirable, but it is always worth remembering that tax avoidance is perfectly legal. If tax is being avoided, it is for this House to change the law so that tax must be paid. It is not some moral virtue to pay more tax than the law requires, so removing loopholes is to be much commended.

I fully support the broad thrust of what the Chancellor is doing. He has got it right, and most of his tax measures are welcome, particularly his changes to personal taxation, an area in which I would like him to go further. Having made £8 billion from cutting the top rate of income tax from 50p to 45p in the pound, he should go further in an exuberant, Laffer-like fashion and cut it back to the rate at which Gordon Brown had it throughout his period as Chancellor.

The area with which I find the most disagreement is found on page 19 of the Red Book, which sets out the economic opportunities and risks linked to the UK’s membership of the European Union. [Interruption.] I am delighted that the nationalists, who so crave independence for themselves, none the less wish to be shackled to the European Union—it is one of their idiosyncrasies that many of us find so charming. If I may, I will deal with that extraordinarily tendentious page, strewn with errors, overstatement and over-egging the pudding. Let us start with the very first line, which states:

“Membership of the EU has increased the UK’s openness to trade and investment”.

That is entirely disputable. In fact, all our membership has done is put us in a customs union with very high levels of regulation and a high external tariff. The tariff on dairy products coming into this country is 42%, much to the disadvantage of our friends in New Zealand. So EU membership has not made us more open; it has closed us to some areas.

Page 19 continues with the statement:

“The UK’s full access to the single market…clearly increases the openness of the British economy”.

There is a word for that, and it is “balderdash”. What access to the single market does is put the dead hand of regulation on the 95% of British businesses that never trade with the continent. They are suffering from that regulation, and their business is made harder to do. This has nothing to do with openness; it is to do with burdens.

Then we get to a bit that I think shows the Chancellor’s wonderful and sophisticated sense of humour. He says:

“At the February 2016 European Council, the Prime Minister secured a new settlement for the UK in a reformed EU.”

It has to be said that the EU was most certainly not reformed at that Council, and our settlement in it was so small as to be hardly noticeable. At the same time it gave away our ability to veto any treaty for fiscal union to follow the monetary union. We said we would do nothing to obstruct that, so we gave away our strongest negotiating hand for nothing—for thin gruel.

[Jim Shannon]

It is always a pleasure to listen to the hon. Gentleman’s contributions in the House—we enjoy them very much. Does he agree that one thing the Prime Minister did not secure was anything for the fishing sector, and that he also secured very little for the farming community? Does he agree that the Prime Minister should have tried to get a settlement with those two things at the forefront of his agenda, to try to achieve things for those sectors? Those were just two sectors that he neglected.

[Mr Rees-Mogg]

I agree with the hon. Gentleman entirely that fishing and farming—the common fisheries policy and the common agricultural policy—are two of the great disasters of the European Union. The fact that they are not reformed and take so much of the budget—40% in the case of agriculture—is a considerable disgrace.