Car Insurance (Northern Ireland)

Jim Shannon Excerpts

Wednesday 19th October 2011 Commons Chamber

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

I am pleased to have secured this debate on an issue that severely impacts on my constituents and others across Northern Ireland. I welcome the fact that the Financial Secretary to the Treasury is here to respond to the debate.

There are considerable problems in the motor insurance market at present, especially in Northern Ireland, where drivers are subject to excessively high insurance costs that are rising rapidly year on year. The problems are not unique to Northern Ireland, but they are particularly striking in our case. We have also found in our research that consumers in Northern Ireland have less choice of insurance providers, with three times fewer companies offering car insurance.

I also welcome the introduction of the Motor Insurance Regulation Bill, promoted by my right hon. Friend the Member for Blackburn (Mr Straw). My right hon. Friend, quite rightly, shone a light on troublesome referral practices and the Bill promises to make much-needed changes to the regulation of the insurance market in England and Wales. Although referrals operate in a different manner in Northern Ireland, the purpose of my speech this evening is to cast light and call for action on many of the issues that plague the operation of the car insurance industry in Northern Ireland. These issues are not entirely commensurate with those raised by my right hon. Friend in relation to England, but must be dealt with in the same direct and purposeful manner. I call on the Minister, where possible, to ensure that that is the case and to use his good influence to press the Northern Ireland Executive to act on the issue.

In August the Consumer Council for Northern Ireland launched a campaign to highlight the cost of car insurance, which I fully support. The Minister will no doubt be aware that the Office of Fair Trading subsequently agreed to undertake an investigation into the car insurance market with a specific focus on Northern Ireland. We must robustly establish why premiums have increased by a reported 40% in the 12 months to March 2011, and why insurance costs are significantly higher in Northern Ireland than in other regions. Indeed, we need not only to assess that, but to redress it. The findings must be robust and the resulting measures must have teeth.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on introducing this debate on an issue that is very important to us all in Northern Ireland. The concern about the insurance premiums is clear, and one reason for those insurance premiums, and the difference in price between Northern Ireland and the UK mainland, is the Compensation Act 2006. Is the hon. Lady aware that in the past year the number of claims notified to the compensation recovery unit in Northern Ireland fell by 23%, whereas in England and Wales it rose by 17%? Is she also aware that last year some 30,000 claims for compensation were made, but that in the past year only 768 were made and their value in the county court is less than £5,000—far below the equivalent figure in England and Wales? Does she feel that, for those reasons alone, insurance premiums in Northern Ireland should be reduced? It is quite obvious that the drivers and vehicle users in Northern Ireland are being disadvantaged financially.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. That intervention was a tad long, Mr Shannon.

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[Ms Ritchie]

I thank the hon. Lady for her useful intervention.

All those facts weigh heavily against any argument that the specific demographic or topographical factors in Northern Ireland justify the increasing costs of insurance, and are extremely difficult to relate to the draconian rise in the cost of insurance premiums.

It has also been suggested, by the Association of British Insurers and others, that the legal system in Northern Ireland imposes increased costs on insurers. However, when compared with what happens in England and Wales, many of the factors in Northern Ireland would be expected to act in the opposite direction. My right hon. Friend the Member for Blackburn rightly highlighted the impact of referral fees on insurance premiums in England. It must be noted that a statutory prohibition is in force against solicitors paying referral fees in Northern Ireland. Given that the payment of referral fees to claims management companies has frequently been cited as a significant contributory factor to increasing premiums in England, its absence would be expected to drive down the costs of insurance in Northern Ireland. However, that does not appear to be the case.

I am certainly not claiming that the system in operation is perfect. Indeed, although referral fees are prohibited for solicitors, other agents, such as brokers, credit hire companies and repair garages, may receive them. Although credit hire companies offer a useful service for non-blame drivers, they also raise the cost for insurers, and we must have firm regulations to remove the potential for the exploitation of accidents or those involved in collisions. The claims advice service is an important step in doing that, and should be commended. Another factor cited as a reason for increasing insurance prices in England is the practice of “no win, no fee”. Such a regime does not operate in Northern Ireland. Indeed, the fact that any claimant would have to invest their own money, or else find a solicitor willing to fund the costs, is a powerful disincentive against speculative claimants.

[Jim Shannon]

I shall be very quick with this intervention, Mr Deputy Speaker. Does the hon. Lady think that specific consideration needs to be given to social need and the fact that Northern Ireland is clearly, as we all know, a rural community? There are special circumstances in Northern Ireland. Does she think that those should be considered as well?

[Ms Ritchie]

I take on board what the hon. Member for Strangford (Jim Shannon)—my neighbouring constituency—has said. Like him, I represent a rural constituency and am well aware of issues such as a lack of jobs, inaccessibility, and the economic burden on people. All those can place increasing burdens on people at a time when insurance premiums are increasing.

All that, taken together with the absence of referral fees for solicitors, suggests that Northern Ireland offers a legal system that should act to keep costs down and be at least as effective as the system in England and Wales, if not more so. I would like the Minister to note my concern that that is certainly not reflected in the cost of insurance. I accept that the cost of claims for minor injuries in Northern Ireland can be higher than in England and Wales, partially as a result of there being no recourse to the small claims court for such cases, but opening up the small claims court to such cases is not necessarily the remedy, as that will bring its own risks and problems. However, more needs to be done to ensure that spurious and over-inflated claims do not clog up the system and raise costs for honest motorists. We must increase the burden of medical evidence that is required before establishing cases of whiplash or other, similar injuries, not to penalise the vulnerable—those with genuine, medically verifiable injuries would in no way be affected—but to ensure that the police and medical authorities work together so that claims are paid only in cases involving genuine accidents and genuine injuries.

I have dealt at length with the figures and the legal issues, but behind the wealth of statistics are the everyday problems that the high cost of insurance represents. Those living on low incomes or in rural areas can simply no longer afford to keep a car on the road. Many young motorists and their parents in my constituency have told me of their struggles to secure affordable insurance. They are understandably concerned about the discrepancy in insurance prices between Northern Ireland and other regions in Britain. Through having to pay excessive insurance fees, households in Northern Ireland are being discriminated against. That unfair practice has been in place for too long, adversely affecting those, young and old, who depend on their cars for work, particularly in areas where public transport provision is limited.

The broader context is that the economy is suffering, with record numbers of young people out of work, and that is only exacerbated by restricting people’s use of motor vehicles. We need a dynamic, mobile work force, but making the cost of car insurance so expensive puts up a barrier to our economic success, especially for the young, among whom the unemployment rate is estimated at 18%—almost one in five cannot find a job—compared with an overall unemployment rate in Northern Ireland of 7.6%. Excessive insurance premiums adversely affect young people, preventing them from offering the skill of driving to potential employers. In these extremely challenging economic times, I would ask the Minister to consider any measures that would make insurance more affordable for young people, particularly when driving relates to their employment.

Insurance costs have a real impact on people, young and old, who need to be mobile for social and economic reasons. I hope that I have made clear the scale of the problem faced by our motorists. The insurance industry must stabilise its premiums so that hard-pressed motorists get a fair deal when they purchase their vehicle insurance. I seek assurances from the Minister that he recognises the problem and will act in unison with ministerial colleagues in the Northern Ireland Executive to address the problem in the light of any recommendations from the upcoming Office of Fair Trading report.

Day in, day out, my Northern Ireland colleagues and I face constituents who come to us about the rising cost of car insurance. I heard it again today when I participated in a BBC Northern Ireland debate. There were numerous calls from young people, as well as middle-aged to elderly people, all complaining about the lack of competition and the lack of insurance companies offering different insurance rates. However, the most abiding comments that I heard were about how people wanted insurance costs driven down so that they could drive their cars and access the employment market.

I thank you for your indulgence, Mr Deputy Speaker, and look forward to the Minister’s response.

Arch Cru Compensation Scheme

Jim Shannon Excerpts

Wednesday 19th October 2011 Westminster Hall

[Tom Greatrex]

I thank my hon. Friend, who makes an important point, which goes to the heart of this issue—the role of the FSA as the regulator and, it seems, the broker of a deal that might help to get something off its back.

It seems the FSA cannot work out what happened. It wants a line to be drawn under this issue, but thousands of unhappy people expected the regulator to prevent this abuse from happening. The FSA has said that the deal will return to investors approximately or up to 70% of their investment, and the words “up to” are quite significant. That 70% is based on the £54 million that has been returned already, £149 million from the sale of other assets, which were valued at that level at 31 March 2011, and an additional £54 million, which Capita, HSBC and BNY Mellon agreed to without accepting liability in a deal brokered by the FSA. However, that £149 million might well not be realised, especially when we consider that the asset base included Greek shipping and what have been described to me as rust-bucket ferries, as well as middle eastern property, the value of which—if there is any left at all—could have fallen, even in the short time since March, given the current economic conditions.

The question I put to the FSA—it was entirely reasonable, but the FSA was unable to answer it—was why it did not add up the asset sales and projected asset sales and subtract them from the investors’ losses to give a figure that would make the compensation up to 100% of what people invested. In that way, people could get their money back; they would not make a profit, but simply get back what they invested, based on the assurances they were given by an organisation that was regulated by the FSA when they took out their investment.

[Jim Shannon (Strangford) (DUP)]

One thing that has come to my attention through my constituents is that the FSA has given advice to investors pushing them towards independent legal advice. Some of that legal advice has led to further complications and added to the money they had already lost. Does the hon. Gentleman feel the direction the FSA pushed investors in should be addressed, given the extra heartache and money losses they have experienced as a result of seeking legal advice that has turned out to be wrong?

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. I do not wish to get drawn into the background dispute between people who have paid into a class action legal fund and people involved in a different action group on behalf of investors. To be frank, I have spoken for far longer than I intended, and I want to give others the chance to get in. There are lots of complicated issues, and I want to focus on the compensation scheme before I draw my remarks to a conclusion. I hope the hon. Gentleman will forgive me.

The approach I have suggested would simply enable people to get their money back—to get up to 100%. This case has been described as one of the worst investment scandals of recent years. There was a similar scandal under the FSA’s predecessor, the Investment Management Regulatory Organisation, and the name Peter Young will mean something to many people here. The relationships and problems involved were broadly similar, but following the suspension of the fund in question in 1996, IMRO achieved a settlement whereby people got their money back. The deal was funded by Morgan Grenfell, which was broadly in the same position as Capita.

That settlement was agreed three months after suspension. Although IMRO took action against the chief executive of the fund manager, the offer was not paid until January 1999—two years and four months after suspension. In the case of Arch Cru, however, it is now two years and eight months since suspension, and only now are letters starting to go out to people with the payment offer—I understand that they are going out now or will be going out in the next couple of weeks. Why was the FSA unable to get close to the resolution achieved by its predecessor as regulator in a similar time frame? Why is up to 70% acceptable to the FSA, when IMRO managed to get 100%?

Fourthly, there is the issue of ensuring that these events do not happen again. Something needs to change if these things are not to happen again, and people who invest their retirement nest eggs or lump sums on the basis of being told that a fund invests cautiously are not to lose their money, not to have to battle through the press to get a hearing, not to have to get a debate in Parliament so that issues can be aired and not to experience the stress, anxiety and rank unfairness of losing their money in a high-risk gamble they were told was a cautious investment.

In this regard, the FSA is about to be replaced by the Financial Conduct Authority, and the relevant proposals are beginning their pre-legislative scrutiny. What will be put in place to enable the FCA to prevent something similar from happening again? All of us, including the Government, have an opportunity to get the proposals right, and that is why these issues are a matter for the Minister and the Government. The Minister and the Treasury correspondence unit have been clear that this affair is a matter for the regulator, not them, but when the ACD fails, the regulator admits it did not know what was happening because of the structure of an investment vehicle, and the basis of a payment offer is so woefully inadequate, these things become a matter for the Minister; it becomes the Government’s responsibility to prevent or minimise the risk of such things ever happening again.

It also becomes a matter of my constituents and those of other Members present being entitled to information, but the FSA and others are not releasing much information. That is why I am putting the questions to the Minister today. Does he believe that Capita fulfilled its role effectively? Does he accept that the FSA has been hampered in fulfilling its role as regulator by its structure? Does he understand that in not providing information, there is suspicion among the investors? Does he realise that on that basis, up to 70% is just not good enough? Does he now know that the FCA needs to be bolstered for the future? Given all the above, will he now ensure that there is a section 14 investigation into what went on with Arch Cru?

I have spoken for far longer than I had intended, so I will conclude. It is easy, when looking into the matter, as I have done over the past few weeks, to get into the details and get lost in the technicalities and minutiae of the regulatory regime, and in the reputations of blue-chip companies, the statements of their chief executives and other individuals, and even the reputations of some of those in high-profile positions in the investment fund. Ultimately, the matter is about people—people such as my constituent Mr Pringle of Cambuslang, whom I have been in correspondence with. He e-mailed me yesterday and asked me to include a final point in the debate, which I will conclude on. He said that

“my wife…and I invested all our pension money with the Cru in this ‘Low Risk’ venture. Being pension money we obviously did not want any high risk ventures that would put our money at risk…We are extremely disappointed in the FSA’s attitude towards this case, by saying that they think Capita’s offer is ‘Fair and Reasonable’. Not in any way is their offer ‘Fair and Reasonable’. Investing in Greek Shipping is not ‘Low Risk’!”

That is the crux of the issue. That is why it is a matter for the Government as well as the regulator, and that is why the Minister needs to respond to the debate this morning.

Jobs and Growth

Jim Shannon Excerpts

Wednesday 12th October 2011 Commons Chamber

[Emma Reynolds (Wolverhampton North East) (Lab)]

It is a great pleasure to speak in this debate. Today’s shocking unemployment figures are only the latest confirmation that the Government’s economic policy is in tatters. When they came to power last May, the economy was growing and unemployment was falling. Only 16 months later there is a growth crisis in our country. Growth is flatlining. Unemployment is rising and is at its highest level since 1994. Youth unemployment is rising and is at its highest level since records began. Women’s unemployment is rising and is at its highest level since 1988. In my constituency the claimant rate has increased by 10% over the past year and we have an unemployment rate that is double the national average.

What do the Government say? They try to blame the eurozone. That is a completely fatuous claim, because unemployment in the eurozone and in the US is falling. The fatuous comparison with Greece really makes me angry, because Greece’s debt-to-GDP ratio has been double ours for quite some time and over 100% since the early ’90s. The truth is that the Government’s economic policy is politically motivated. Let us face it: the Chancellor is their chief political strategist and his calculation last year was to get the pain out of the way early in this Parliament so that he could offer some sweeteners towards the end, when the economy will hopefully be growing again, so that they can try to win a majority and will not have to tolerate the Lib Dems in government. Their plan is hurting, but it is not working.

The Government’s political motivation and their ideological commitment to a much smaller state is blinding them to the reality that their policies are actually making it more difficult to cut the deficit. They are now set to borrow £46 billion more than they planned. They have created a vicious circle, with massive public sector job cuts, fewer people paying taxes, more people claiming jobseeker’s allowance, less revenue in Government coffers and therefore higher than expected borrowing. They should face up to the fact that these deep cuts are self-defeating.

It is not just the Labour party that is telling the Government that their economic policy is dangerously wrong. Businesses, commentators and economists are lining up to urge them to develop a credible plan for growth. Even the Conservative Chair of the Treasury Committee, the hon. Member for Chichester (Mr Tyrie), who is not in his place, has criticised the Government for lacking a growth plan. He recently said that the

“piecemeal policies for growth need radical improvement. In places it is inconsistent, even incoherent.”

In fact, the Tory leadership was so worried about his forthright opinions that he was literally bundled into a private room for a quiet chat after the Prime Minister’s speech to his party conference. The Chancellor’s good friend, the managing director of the International Monetary Fund, Christine Lagarde, has also warned that the Government should be prepared to change course if the economy is headed for weak growth and high unemployment. Surely that is exactly where we are now.

[Jim Shannon (Strangford) (DUP)]

The Opposition’s motion recognises the need for a one-year cut in VAT on home improvements. Does the hon. Lady feel that such an initiative, by its own nature, will motivate the construction industry, give opportunities to apprentices in particular and ensure that the economy grows, rather than stagnates?

[Emma Reynolds]

I could not agree more, and I was just moving on to the interdependence between the public and private sectors, which the Government seem to be totally unaware of. According to an independent study, at least 2.3 million private sector jobs are now at risk from public spending cuts. Some parts of the country are being hit harder than others. Oxford Economics forecasts that in the west midlands, between 2010 and 2016, 310,000 jobs are at risk in private sector firms that are directly or indirectly reliant on public sector spending. That is on top of a net loss of 50,000 public sector jobs across the west midlands.

The victims of this Government’s policy are mostly the young and women. Young people are the future of our country. For the first time in decades, parents are pessimistic about their children’s futures, wanting them to do better than they did but fearing that their opportunities will be worse than their own.

It is time for the Chancellor to put aside his original political strategy of getting the pain in early in this Parliament and admit that his economic plan is not working. He needs to change direction. There is an alternative. Of course we need to reduce the deficit, but with deep and fast cuts, his plan is not working. Without economic growth, it will not be possible to bring the deficit down.

Road Fuel Duties

Jim Shannon Excerpts

Tuesday 13th September 2011 Westminster Hall

[Mr Donohoe]

We will have to wait for the Economic Secretary’s response on that point. As an Opposition Member, I am not in a position to give any assurances.

We must consider the problems with the Government’s approach. Although they have frozen fuel tax duty for the next couple of years, we must take into account the fact that the freeze will be more than offset by the rise in inflation. As petrol is always an easy revenue raiser, it is widely expected that the Government will make up their losses, leaving the consumer no better off in the long term.

I will highlight three areas of concern. The first is environmental, the second is economic and the third involves the social impact of the road fuel duty. The removal of the duty differential will affect the green economy. The UK Sustainable Biodiesel Alliance has raised concerns about the Government’s decision to remove the 20p duty differential for biodiesel produced from used cooking oil by April 2012. I ask the Economic Secretary to consider that loss more closely. It does not stack up against the Government’s views on the green economy. Many see the impact of the removal of the duty differential for biodiesel as a disastrous blow for the growth of the green economy. Just outside my constituency is the company Stagecoach, which runs buses on biodiesel. It is highly successful, and particularly popular with youngsters, but it will come to an end if the differential is not maintained. Will the Minister clarify why on earth the Government, whom we have heard are the greenest Government ever, continue to consider it?

On the economic side, we risk the demise of the independent fuel sector. Retail Motor Industry Petrol told me that MRH, the UK’s largest independent forecourt operator, has highlighted the unfair pricing practices used against it by both hypermarket chains and oil companies. That is a concern. In addition, the four big supermarket chains are struggling with their own retail this year due to the downturn, which in turn is placing greater pressure on and compounding the problems of independent retailers.

Such relentless competition has been going on for some years. It is responsible for the closure of around 400 independent forecourts, and it continues. It will lead to a sparse population of fuel retailers, obliging motorists to drive great distances to top up their tanks, which is not sustainable. More than 6,000 garages have closed since 1998, which is a problem, as anybody knows who travels off motorways. Particularly in more rural areas, as I have seen at first hand, running out of fuel because there are no petrol or diesel stations is always a danger.

[Jim Shannon (Strangford) (DUP)]

The hon. Gentleman has outlined the issues relating to road fuel duty and mentioned garages running short. Does he share my concern—I suspect that he does—that it is not only about garages running short but about elderly people in our community? This winter, they will be asking themselves, “Should we use oil, electric, coal or gas?”, but they will be stuck with oil and the cost that that entails. Does he not feel that the Government should consider what help they can give elderly people to ensure that this winter will not be a hard one?

[Mr Donohoe]

The blasé slogan “Either eat or heat” is becoming a reality faced by many of my constituents, particularly the elderly. The hon. Gentleman is right. It is a major concern, and it should concern the Government.

To return to the economic point, the industry should look into the fact that some oil providers supply their own forecourts with fuel at one price while selling the same fuel to a second retailer down the road at a higher cost. Something must be done about that. Anyone who travels two miles along the road from Prestwick to Ayr in my constituency can see it at first hand. Prices at forecourts using the same supplier vary 6p from one end to the other, which should not be allowed. Two-tier pricing is becoming a joke.

--- Later in debate ---

[Mr Donohoe]

I thank my hon. Friend for that intervention. I am sure that the Economic Secretary will address that issue when she sums up, along with the points made by other hon. Members.

My third point concerns the social and economic consequences of the situation. Everybody can see that many kinds of damage have been done to consumers and businesses, particularly small businesses. As I have mentioned, the erosion in the number of forecourts is obvious, particularly in rural areas, and it will lead to fuel deserts in many parts of the UK. A vital immunity for low-income families, pensioners and the disabled has been lost. Journeys to fill fuel tanks are longer, increasing carbon emissions needlessly. Consumer choice has been reduced. There are fewer facilities for HGV and van users, as supermarkets do not cater for them. The impact on the UK’s ability to cope with emergencies has also been massive. Perhaps most importantly, jobs and job opportunities are being lost.

[Jim Shannon]

As the hon. Gentleman will be aware, an e-petition is circulating that has some 62,000 signatures at the moment. If it gets 100,000 signatures, we can debate the matter in the House of Commons. Does he not feel that he should encourage people to sign it so that the matter can be debated at length in the House, as it needs to be?

--- Later in debate ---

[Mr Reid]

The Chairman asked for limited interventions and I have already given way to the hon. Gentleman.

I have accepted the Government’s view that we must have an islands pilot first, but after that I would certainly press for it to be extended to remote areas of the mainland.

[Jim Shannon]

The hon. Gentleman refers to the mainland; obviously, I am very keen for the same opportunities to exist for the people of Northern Ireland. Will he address that issue and does he agree that Northern Ireland also needs to have a similar pilot scheme, because the prices there are equal to those in the western islands of Scotland?

[Mr Reid]

I agree with the hon. Gentleman. From the perspective of a Scottish island, the mainland is the mainland of Great Britain, but I accept that there is another part of the United Kingdom. I am not sure whether calling it the mainland is the correct way to refer to it or not.

[Jim Shannon]

As Margaret Thatcher said, we are more British than Finchley.

[Mr Reid]

We are straying into another debate here. I think we will stick to fuel duty, which is probably a lot less contentious.

Operating a rural filling station is clearly not a profitable business these days, and we heard from the hon. Member for Central Ayrshire about how many have closed. In my constituency, I can point to 10 that have closed since I became an MP in 2001, and that is fairly typical of the country as a whole. On the Kintyre peninsula, only three of the five filling stations that the area had at the beginning of the year are still open. Two have closed this year, which is causing real concerns on the peninsula. As the hon. Gentleman who opened the debate pointed out, people are therefore driving longer distances to fill up their tanks and the choices available to rural motorists have been reduced. Action to help rural motorists is certainly badly needed.

There was a time when it could be argued that high fuel taxation was needed to discourage people from polluting the environment, but market forces have already achieved that. Nobody drives for the fun of it these days unless they literally have money to burn and, of course, anyone in such a position would not be deterred by high fuel duty anyway. High fuel duty has played its part in discouraging people from using their cars when public transport alternatives were available but, of course, in a rural area those alternatives are not often available. The price of fuel is already very high and the Government should not be considering putting duty up any further.

I was delighted when the Government abandoned Labour’s fuel duty escalator in the Budget, introduced the fuel duty stabiliser instead and brought down the fuel duty because the price was so high. The Government have scheduled a fuel duty increase for January as it was hoped at the time of the Budget that prices would have decreased by then, although they show no sign of doing so. If prices are still at this level in January, I hope that the Government will not press ahead with the increase.

My final point, which was also touched on by the hon. Member for Central Ayrshire, is about what exactly is causing the high price of fuel. The hon. Member for Coventry South (Mr Cunningham) referred to oil companies storing fuel rather than putting it on to the market. I want to ask the Government whether any collective action can be taken internationally—for example, through the G20—to bring the price of fuel down. The price of fuel adds to the price of everything in a rural area, so anything that the Government can do to bring the price down would be greatly appreciated by my constituents and all hon. Members who represent a rural constituency.

--- Later in debate ---

[Mr MacNeil]

I have some sympathy for what the hon. Gentleman says, and I will come on to distribution in a second, but we have played the patient game long enough. I think it was Martin Luther King who said that it was not the time for the “tranquilising drug of gradualism”. This is a time for action. At £1.50 and £1.57 a litre, people are hurting and hurting badly.

I am aware that I have taken six or seven minutes, Mr Hancock, and that others want to speak. I would finally like to mention fuel distribution. I have asked the Secretary of State for Scotland, the right hon. Member for Berwickshire, Roxburgh and Selkirk (Michael Moore), about distribution from refineries to retailers, and he has assured me that he is looking into the issue.

[Jim Shannon]

On distribution, I would like to underline how the issue affects Northern Ireland. The same oil that comes into Belfast goes out all over the whole of the province and the prices vary incredibly. Does the hon. Gentleman feel that there is a need to address how oil companies distribute fuel across the whole of Northern Ireland and the United Kingdom?

Summer Adjournment

Jim Shannon Excerpts

Tuesday 19th July 2011 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I wish to speak about something that is a great boost for the countryside—rural country sports and the benefits that they bring to the countryside and to the economy. In the time it takes me to load two cartridges into my over and under shotgun and shoot the pheasant on the far side of the Chamber, my time will be up because I have only four minutes.

Eighty thousand people participate in country sports in Northern Ireland, contributing £45 million to the local economy in the past year. Some 480,000 people are involved in country sports across the whole of the United Kingdom, with the equivalent of some 70,000 jobs in primary and secondary roles. They contribute some £2 billion each year in goods and services and some £6 billion in the whole UK economy. The role of country sports is critical. Shooting, in particular, is important to the management of two thirds of the rural land area. Two million hectares are actively managed for conservation as a result of shooting. It is recorded that shoot providers spend some £250 million a year on conservation. Indeed, shooters spend some 2.7 million days on conservation—the equivalent of 12,000 full-time jobs.

There are 17 hunting packs in Northern Ireland and some 325 registered hunts across the whole of the United Kingdom. Eight hundred people in Northern Ireland are involved in hunts, and some 45,000 people are so involved in the rest of the UK. The benefits are clear—they come from the farriers, the veterinary surgeons, the feed merchants, the insurance companies, the saddleries, the horse box people and horse lorry suppliers.

Point-to-points have been described as

“the lifeblood of the racing industry in Ireland”,

and they clearly are. They contribute some £5.3 million to the economy, and on the UK mainland they do even better than that. Point-to-points are a good opportunity for horses to graduate to national hunt racing—ultimately, to the Cheltenham gold cup. One example of that would be the aptly named Looks Like Trouble, who was born and bred in Northern Ireland. This is clearly how champions are created. The overseas interest in the horse industry is also of great importance, and a great many people can see the benefits of that.

Shooting takes care of almost 1 million hectares in Northern Ireland, with £10 million spent on habitat improvement and wildlife management, and some 640 jobs created in Northern Ireland and some 12,000 jobs across the whole of the United Kingdom—Scotland, Wales and England. It can do better, and I believe it will. Some 150,000 people regularly shoot clay pigeons. There are about 1,000 shooting clubs in the United Kingdom, and the benefits and spin-offs that they bring are very important for the industry and the sector.

Angling in Northern Ireland is worth about £40 million. Some 420 angling destinations in Northern Ireland are open to tourists, and Northern Ireland is one of the best places in Europe to fish. We have some 800 jobs in angling in Northern Ireland, and by 2015 there will be 2,000. In relation to antisocial behaviour, of 660 youths in England who took part in a police angling scheme, 98% are still fishing and not one has reoffended. There is clearly a lesson to be learned from that. Casting for Recovery, a unique charity specially designed for women who have or have had breast cancer, uses angling to promote mental and physical healing.

Time has not permitted me fully to express the benefits of country sports to the economy, but I hope that I have managed to highlight the great spin-offs that come from this thriving industry. Perhaps Members have seen it as being more than what they thought earlier on. Now I will go and collect that pheasant on the far side of the Chamber.

GM Food Technologies

Jim Shannon Excerpts

Tuesday 19th July 2011 Westminster Hall

[George Freeman]

I could not agree with my hon. Friend more. I mentioned my own experience in the biomedical sector, where I have come across that sort of extreme anti-science movement. I hope that in my moderate tones I have communicated the fact that I am not for one moment an extremist on either side. But I could not agree with my hon. Friend more.

Extremism is not helpful in the debate on this subject. In my medical experience, I have seen the extremism of the anti-animal experimentation groups. Nobody is in favour of animal experiments. However, there is an irony that I will share with everyone here today. I am setting up a company to develop predictive toxicology software, to reduce the need for animal experiments. In order to do that, one needs to consult with the people who know most about the animal experiments, to reduce the necessity of those experiments. In so doing, we triggered the attention of the animal extremists, who targeted the company. Of course, of the six people on the board, there was one female, who was the company secretary. Who do people think the extremists targeted? The lone female in her cottage at night. The cowardice—moral, intellectual and physical—of the extremists shocked me then and in this debate today I want to try to initiate an open debate and to invite a proper and open discussion of the issues. As I say, I could not agree more with my hon. Friend.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this matter to Westminster Hall, because the debate about it is very important and the matter needs to be aired, debated and talked about. I agree with the hon. Gentleman that GM food technology gives an opportunity for cheaper food and better usage of the land, to try to meet the demand for food that exists throughout the world. Is he aware of the key and critical role that some universities are playing with private partners in the development of GM technology? One of those universities in particular is Queen’s university in Belfast. I have visited the university and I am aware of the good work that it does. Does he accept that that key partnership is important to the development of GM food technologies?

[George Freeman]

The hon. Gentleman makes an excellent point. Yes, a number of our universities play a key role in GM development and I absolutely agree with him that Queen’s university in Belfast is in the vanguard of that, along with the universities of Liverpool, Reading, London, Norwich and Aberystwyth, and one or two other universities in the UK. Moreover, GM is potentially an important part of helping our universities to generate novelty and to put themselves at the front edge of this important area of science. The foresight report frames for us the challenge and the opportunity for the UK. In my own area of Norfolk, when one openly discusses the benefits of the technology for local agriculture, people are interested, and there is an appetite out there to hear more about it.

It might be useful to share one or two facts to help frame the debate. It is worth remembering that commercial GM crops have been grown and eaten since 1994. In 2010, the hectarage of GM crops worldwide was 148 million hectares across 29 countries, 48% of which was in developing countries. Some 15 million farmers, 90% of whom are small and resource-poor, are already actively involved in growing GM crops. The argument is often put that the technology is untried and untested, but I suggest that that is a substantial body of evidence, with proper scientific and rigorous monitoring, and I do not think that anyone is aware of any serious problems that have arisen as a result of the adoption of the technology.

It is also worth acknowledging the extent to which it is the developing world that is driving the adoption. On top crops by area, the percentage of global crop that is now GM is 77% of soybean, 26% of maize, 49% of cotton and 21% of canola. The interesting thing that comes from that is that GM crops have a potential not just in food but in fuel and fibre. One of the problems with the debate in the UK is that the extremists take us straight to the hardest point of all, which is the compulsory—that is often the implication—force-feeding of people here with GM food. To my knowledge, no one is proposing that; I certainly am not. I do propose, however, that we should debate whether this country has a role to play in the application of the technology in fuel and fibre, and certainly in food production around the world. That should be non-controversial.

Going further, one could say, “Should there not be choice in the UK, particularly in the health care and the nutraceuticals and functional foods areas?” I think it would be perfectly appropriate—and the idea would enjoy public support—to say, “The consumer should have choice, but what is wrong with going into a supermarket and having on one side the organic carrots grown locally, here in Norfolk, over there the carrots grown more intensively at a lower cost, and over here the rather more expensive cholesterol-reducing carrots that have been grown and bred specifically for a group with particular dietary, nutritional and health care needs?”

Finance Bill

Jim Shannon Excerpts

Tuesday 28th June 2011 Commons Chamber

[Fiona Bruce]

I fully accept that the Government’s priority has been to clean up the terrible financial mess left by the previous Administration, which has necessarily involved difficult decisions, and I want to put on record today my support for the Government, who have not been afraid to grasp the nettle and make the difficult decisions that the previous Administration were incapable of making. Britain is on a much sounder footing today than was ever the case under the previous Administration, and I pay tribute to the Government’s hard work in this respect. However, even in the current economic environment, I believe that new clause 5 would, as I have outlined, be an investment well worth making both fiscally and socially. The Government have said that they will recognise marriage in the tax system at the appropriate time. I suggest that that time is now, particularly given that it would still take Her Majesty’s Revenue and Customs some considerable time to implement a transferable tax allowance, because of the IT and other implications.

Does the Minister agree that the increased tax burden on one-earner married couples on an average wage—it will soon be more than 50% greater than the OECD average burden on such families—commends the early introduction of the transferable allowance if we are to be, as we aspire to be, the most family-friendly country in Europe? What assessment has he made of the time it will take to make the necessary IT and other changes to give effect to the Government’s commitment to introduce the transferable allowance? If he has not made such an assessment, will he do so? I ask the Government to bring forward this legislation not when they are ready, but sufficiently in advance of that, so that all IT and planning changes can be made first, and when the money is available, transferable allowances can become operational quickly, not one or more years later.

The transferable personal allowance was a key election commitment from many of us in the House and an important reason why people voted for the Conservative party. They are now looking for action. I very much look forward to what the Minister has to say, and I will conclude with a quotation from a speech given by the Chief Rabbi in another place earlier this year:

“If the Jewish experience has anything to say to Britain today it is: recognise marriage, not just cohabitation, as in the best interests of the child. Do so in the tax system. Do so in the educational system. Do so in relationship support. Otherwise, our children will pay the price—financial, educational, medical and psychological—for generations to come. Without stable marriages we will not have strong families, and without strong families we will not have a big society.”—[Official Report, House of Lords, 10 February 2011; Vol. 725, c. 366-7.]

[Jim Shannon (Strangford) (DUP)]

Thank you for giving me the opportunity to speak this evening, Mr Deputy Speaker. For the first time in what I suppose is a long time, I will be at odds with some of my colleagues sitting on the Opposition Benches. They are surrounding me at the moment, and I suspect that I will say something that they might not be entirely happy with. None the less, that will not stop me making my point of view heard.

--- Later in debate ---

[Kate Green]

Does the hon. Gentleman not accept that the reason why children from married relationships so often do better is that their parents come from higher socio-economic backgrounds, not the fact of marriage itself?

[Jim Shannon]

The evidence from the constituency that I represent would indicate that that is not necessarily the case. Those who are perhaps worse off financially are in stable relationships as well. The reason I am speaking on this issue tonight is that I am reflecting not only my personal views, but—I believe—those of a large majority of the people whom I represent. I am here as the MP for Strangford to put that on the record and ensure that that opinion is well heard this evening. Many people might not like what I have to say, but hon. Members will have to accept that it is my opinion.

[Barry Gardiner]

I, too, believe that marriage is good for society, but surely what we have to consider this evening is whether the proposals before us would do anything to incentivise marriage and increase the number of people going into wedlock, and I do not believe for a moment that they will.

[Jim Shannon]

I do not believe that that is the intention of those who have put these proposals forward. I believe that they are about the unfairness in the taxation system that impacts directly on those in marital relationships. That is the reason. This is not about creating a financial incentive—other Members have suggested that it is about encouraging people to get married for an extra £150—and I do not believe for a second that it is.

[Ian Paisley (North Antrim) (DUP)]

Does my hon. Friend agree that these proposals are not about incentivising or encouraging people to get married, but about saying to people who are married, “You will not be penalised financially”? Marriage is good for society, good for relationships and good for children, and it should be encouraged. We should not as a House try to pour scorn on the many married couples out there, whether they are unemployed married couples or wealthy married couples.

[Jim Shannon]

I thank my hon. Friend for his intervention and for the passion in his voice.

Mindful of those points, it is a minimal responsibility of policy makers to remove all obstacles to marriage resulting from fiscal policy. Indeed, there is a good case for considering what steps could be taken to support marriage. I believe that the proposal before us is one suggestion that we should be considering. In the light of that, I am delighted by what the Prime Minister has said. Some people in this Chamber would say, “If the Prime Minister supports it, we don’t,” but if the Prime Minister says something good, let us support it, whether he is the Prime Minister or not—and if one of my colleagues says that something is good, then that is good as well.

[Mr Burrowes]

The hon. Gentleman is making the case on behalf of his constituents and presenting his own personal view, but does he also recognise that a strong case has been made in those countries that recognise marriage in a way that this country does not?

--- Later in debate ---

[Jim Shannon]

I thank the hon. Gentleman for his intervention. Clearly that is the issue, because there are many countries right across the world that have tax breaks. Indeed, the Prime Minister has said:

“Britain is almost the only country in Europe that doesn’t recognise marriage in the tax system.”

That was his comment back in 2007, but he reiterated the point in 2008 and 2010. There is clearly an issue to be addressed if we are to make comparisons with tax systems in other countries across Europe.

[Barry Gardiner]

I am grateful to the hon. Gentleman for giving way again; he is being extremely generous. I am delighted that he believes that this should not be about incentivising—[Interruption.]

[Barry Gardiner]

My apologies, Mr Deputy Speaker.

I am delighted that the hon. Gentleman has said that this measure is not about incentivising marriage, or about penalising people. Can he therefore explain why, under the proposals, a woman with children who has recently been widowed would suffer a financial loss at precisely the time when the family needed the money the most? That seems to me to be a fundamental flaw in the proposals.

[Jim Shannon]

The hon. Gentleman made that comment earlier to other speakers, and they responded to it. I accept that there are anomalies in all systems. In the short time that I have been in the House, I have spoken on many issues, and each one was something that my constituents told me that they wanted me to deal with. I am on record as having opposed changes to the education maintenance allowance, the employment and support allowance and incapacity benefit. I am also on record as opposing changes to the disability living allowance, among other changes in the benefit system. I have done that in this Chamber; if I see something wrong, I will take a stand on it. If I see an anomaly, I will do my best to address it. I cannot necessarily tell the House every detail of the matter, because I might not be aware of them, but if there is a wrong, it must be righted.

[Ian Paisley]

Does my hon. Friend also accept that it is all very well to say that there are anomalies, but that sometimes straw men are put up in these arguments? The fact is that if a pensioner, for example, loses a loved one, their tax credits and allowances go up, not down. We should not allow these straw men to be introduced into the debate.

[Jim Shannon]

I thank my hon. Friend for that contribution.

[Yasmin Qureshi]

No one is saying that there is anything wrong with marriage. Of course, one should encourage it. My parents were married, and I am married. No one is objecting to people getting married or saying that we should be telling people to get married. However, a fundamental problem with the new clause is that it effectively discriminates against one set of people. Why should a man and a woman who live together and have children be less well off or be discriminated against, compared with a married couple? Why would we wish to create discrimination between those groups of people?

[Jim Shannon]

People’s interpretations of these issues are different; we see things in different ways and have different opinions. I do not necessarily agree with what the hon. Lady has said, but there are issues to be addressed.

[Roberta Blackman-Woods]

Does the hon. Gentleman accept that there is inconsistency among Conservative Members, in that they want to support marriage while taking away huge amounts of financial support from ordinary families?

[Jim Shannon]

I do not believe that there is an inconsistency in relation to this matter, although, with respect, I would disagree with certain other proposals relating to the benefit system.

[Michael Connarty]

I am grateful to my hon. Friend—I regard him as such—for giving way. I share his warmth about marriage, having spent the past 41 years married, although I am not sure that my wife would be quite so enthusiastic. He has, however, strayed beyond his own guidelines. He said that the provision was not about people marrying for a payment, yet he is now arguing that that is what he supports. Surely this should be about the responsibilities that people take on as a couple, especially when they have children, because that is the most burdensome time when they need the most help from the tax system. This is not about whether they decide to have one kind of a relationship or another. Whether they are married or unmarried, if they decide to be together and have children, they will be burdened with other costs.

[Jim Shannon]

I can tell the House that when I married, I married for love. I am one of those old-fashioned boys; that is just the way I am.

[Mr Leigh]

In the light of the intervention from the hon. Member for Linlithgow and East Falkirk (Michael Connarty), it is important to point out that we are not trying to penalise single-parent families or families in which there are two earners. All we are trying to do is remove the severe penalty on families in which there is only one earner, because our system is totally out of step with most of the rest of the world in that regard.

[Jim Shannon]

I thank the hon. Member for his contribution and for providing a bit of focus to this debate.

Given that the agreement pertains to a full Parliament, one ordinarily would not be concerned at the failure to action a commitment in just over a year. What we need is for legislative change to be approved by the coalition Government, to move forward and perhaps see this legislation coming through in two years. The latest publication of the international tax comparison, CARE’s “The Taxation of Families 2009-10” puts things in a very different light. It demonstrates that we are now headed to a place where the tax burden on a married family with children with one earner on an average wage is growing so much that it will soon be more than 50% greater than the OECD average. That breaks new ground, taking us into territory that not even new Labour dreamt of occupying.

Some will no doubt respond by saying that this is a result of the tax burden having to increase on everyone in the context of the debt crisis. I understand that, but it is not exactly the case. Let me quote a director of an influential think-tank, who said:

“Given that it will take some time between changing the law and implementing the actual recognition of marriage in the tax system, it is important that the Government makes this a priority, takes swift action. The change, or at least a recognition of it, should be made”.

I very much hope that that report can be taken seriously, that the Government can look further at the issue and perhaps bring it forward in future legislation.

[Kate Green]

I just want to ask the hon. Gentleman which report he is referring to and which think-tank?

[Jim Shannon]

The think-tank is ResPublica.

As the hon. Member for Gainsborough (Mr Leigh) said earlier, the tax burden on single people with no dependants on the same wage has been falling and far from being 50% above the OECD average, it is now actually below it. That is reflected in the fact that the tax burden on a one-earner married couple on an average wage with two children is projected to rise from 73% to 80% of that of a single person on the same wage by 2012-13, while the equivalent average burden among OECD nations is 52%.

In this context, it is strange that the Government have started investing what will probably end up being almost £12 billion on increasing individual allowances to £10,000. There is a cost factor there and an agreement within the coalition on how that is going to happen. That will cost us all. It is a measure that will have a disproportionately positive effect on single people, yet the Government will not have brought forward a much cheaper transferable allowance policy.

I do not believe that the current situation is sustainable. It is now urgent that the Government introduce legislation to give effect to the transferable allowance. I hope that the Minister will be able to provide robust assurances on this point and a commitment to ensure that as the tax burden increases in the context of the current financial difficulties, it is allocated in a way that is fair, sensitive to family responsibilities and recognises the real strengths that marriage brings to society. I also trust that the Minister will address the important points raised by other hon. Members, including the need urgently to address the IT implications of recognising marriage in the tax system. There are changes to be made, there are costs and a system will need to be set up.

I urge Members to support new clause 5. I believe it is worthy of support. I understand that there are differences of opinion. This is probably the first time that I have disagreed with many colleagues on the Opposition Benches, but I believe in my heart that this is an issue of some importance.

[Dr William McCrea (South Antrim) (DUP)]

Does hon. Friend accept that no one here needs to apologise for believing that this nation was richly blessed whenever it honoured marriage in legislation?

--- Later in debate ---

[Jim Shannon]

I thank my hon. Friend for putting the issue into perspective. We have no apologies to make; we believe in the sanctity of marriage; we believe it is important. Long may this House subscribe to that belief; we need to provide help and assistance to support marriage. We urge Members to support new clause 5.

[Dan Rogerson]

This has been a fascinating debate. It has been broad in its coverage of issues relating to marriage and social policy—although I must say that at times it has been as long as it has been broad—and it has strayed back into recent centuries in examining the institution of marriage. One common factor has emerged from it: Members in all parts of the House recognise the hugely beneficial effect of marriage on wider society in keeping families together and improving the quality of life, although some evidence presented by Members has raised questions about the quality of life during marriage.

Eurozone Financial Assistance

Jim Shannon Excerpts

Tuesday 24th May 2011 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I rise to support the motion before the House and to add some comments to the debate. I want to give a couple of examples—fishermen and the farming industry—where the EU is creating more hassle than can be justified. I am of the school of thought that we should make the best of a bad job, and on many occasions we have to do that. The EU, along with the way in which it is run, is most certainly a bad job, yet at present we are in it whether we want it or not. It therefore falls on this House, MEPs and another place to do our best to hold the EU to account as far as possible for the events that take place over in Brussels. We have an opportunity today to debate that and vote on it.

It is clear that the European financial stabilisation mechanism is not fit for purpose; owing to this, the UK could be held liable as a member state. On 9 May 2010, the European financial stability facility was created, and it is a special purpose vehicle agreed by 16 members of the eurozone and aimed at preserving financial stability in Europe by providing financial assistance to eurozone states in economic difficulty. Thus far, we are not at all involved, but no to the euro meant no to the EFSF. The tricky part came with the notion that the facility may be combined with loans of up to €60 billion from the European financial stabilisation mechanism, which is again reliant on funds raised by the European Commission using the EU budget as collateral, and up to €250 billion from the IMF, all to secure a safety net of €750 billion.

If there is no financial operation in activity, the EFSF would close down after three years, on 30 June 2013. If there is a financial operation in activity—which of course there is—the facility would exist until its last obligation had been fully repaid. There has indeed been activity, and a good deal of it involving the EFSM, despite the fact that it should not have been involved to the extent that it had an equal if not greater share of the bail-outs. The purpose of the European financial stabilisation mechanism is to provide an emergency funding programme that is reliant on funds raised on the financial markets and guaranteed by the European Commission using the European Union budget as collateral. I want to give some examples of where things have gone pear-shaped, to use that terminology.

It seems abundantly clear that, as a non-eurozone member, we can be held accountable only for the EFSM, yet for some inexplicable reason it was this funding that bailed Ireland out—to the tune of €5 billion—as opposed to the eurozone funding, which should have borne the brunt. We are neighbours of Ireland, and I do not wish to be harsh. Of course we want to help out where we can, as a healthy Irish economy could benefit the Northern Ireland economy, owing to the shared land border. However, it is hard to grow this sense of neighbourliness when we see the fund enabling Ireland to undercut us on corporation tax, which subsequently encourages business investment in the Republic as opposed to Northern Ireland, or when we see that it has enabled fuel duty to be reduced, which has also taken flight business away from the Province. So, we bail them out and then they use that to our disadvantage. Why should we doubly lose out—through access to European funds, along with increased competition for our business in Northern Ireland within the United Kingdom—when the eurozone fund should have been responsible for bailing Ireland out all along?

[Mr Davidson]

That point is of significance to Scotland as well, because the pressure from Northern Ireland to reduce its corporation tax to compete with the Irish Republic is being replicated in Scotland. Does the hon. Gentleman have any idea why this Government are using British taxpayers’ money to fund an opportunity for the Irish Republic to undercut us on corporation tax in that way and thereby cannibalise British revenues?

[Jim Shannon]

The hon. Gentleman makes an appropriate intervention. We in Northern Ireland certainly do bear the brunt of that, and we feel the pain more than most, as does Scotland. Perhaps when the Minister responds we will get an idea of exactly why that has happened.

The second example is from Iceland—there is more than one cloud hanging over Iceland, by the way—and the second referendum there. Iceland rejected a proposed deal to repay €4 billion that Britain and Holland spent in 2008 to reimburse savers hit when Iceland’s banks collapsed. Meanwhile, I am hearing complaints from my constituents about the amount of fish that fishermen can catch and the number of days that they can work being restricted by EU legislation, as opposed to the Icelandic raiders—they are certainly not an ice hockey team—who are sweeping in, despite Euro-protests, and fishing mackerel that belong to our fishermen. Those are just two simple examples of the failure of the bail-out system in Europe. It is passed the time that this be brought to a head and we ensure fairness for all in Europe.

The hon. Member for Rochester and Strood (Mark Reckless) has stated that the legality of the EFSM is called into question by the current wording of the treaties, which must be changed accordingly. That is exactly the issue that we are trying to address. Therefore, the answer is very clear: use the upcoming meeting of the Council of Ministers or the European Council to vote against the continued use of the EFSM unless a eurozone-only arrangement that relieves the UK of liability under the EFSM has been agreed.

For far too long we have slavishly followed the dictates of Europe, throwing pound after pound into that deep hole that is Brussels and awaiting some kind of recompense for doing things the right way. For too long we have watched other countries prosper—and not too far away from us, either—with bail-out funding, while we cut funding to schools, hospitals and infrastructure in order to remain solvent and claw our way back to a sound financial footing. Everyone in the Chamber today will be able to give examples of that from their constituencies. For too long we have paid in while watching our farmers and fishermen flounder under the weight of European dictates, at the same time as we watch other nations flout the very same rules that our officials seem to have an almost evangelical zeal in enforcing. Indeed, we have been fined £60 million in Northern Ireland for mistakes in bureaucracy and forms that have been filled in.

We need to assert ourselves by saying to the EU that we will no longer be Europe’s nodding dog, making do with a pat on the head every now and again, as if that is okay. We more than pay our way. Others must be held to the dictates that we adhere to. That should start with the matter of this funding and how it is used. I fully support the motion and urge every Member here today—those who embrace Europe and those who oppose it alike—to state that from now on we will make a better job of what is currently a bad job and demand our rights as a member state, beginning with the right to exclude ourselves from the euro without paying for it through the back door.

Oral Answers to Questions

Jim Shannon Excerpts

Tuesday 10th May 2011 Commons Chamber

[Mr Hoban]

I know that my hon. Friend has campaigned tenaciously for IFAs. I remind her that although the FSA is an independent regulator—this addresses her question directly—it has an obligation to assess the impact of its rules on businesses, including small businesses, and to make its rules proportionate. I should add that it is not planning any initiatives by means of its powers under the Financial Services and Markets Act apart from those that are already under way.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his response. Clearly, if the economy is to be regenerated and rebuilt, it will be small and medium-sized businesses that will achieve that, and one of the things they tell me as their elected representative is that they need rates relief and assistance. What assistance is the Minister considering giving to such businesses?

[Mr Hoban]

As the hon. Gentleman will be aware, this Government have taken many actions to provide support to small companies. For example, we have cut the small profits rate of corporation tax—which the previous Government sought to increase. We have done a lot to encourage the growth of small businesses, and we will continue to look at what further measures we might take to encourage their future prosperity.

Hospices (VAT)

Jim Shannon Excerpts

Tuesday 10th May 2011 Commons Chamber

[Bob Russell]

I am grateful to my hon. Friend for raising that point, which I was just about to mention. Let me be financially blunt about this: if the hospices did not exist, the excellent work that they do would fall to the NHS and cost the public two to three times more because of the considerably lower cost of hospices, brought about by the special working combination of professionals and volunteers, with fundraising and so on, which is the basis on which hospices were founded and have existed over the years.

I understand that, on average, charitable hospices receive about one third of their funds for the services they provide from statutory sources, which leaves two thirds to be raised to cover all the other costs. This already challenging target is not helped when it is realised that the taxman is helping himself to 20%. I am advised that most local hospices do not have three-year agreements with NHS commissioners, relying instead on year-on-year negotiations that are, by their very nature, subject to budgetary pressures within the NHS. Alarmingly, a survey of member hospices conducted by Help the Hospices last March found that 64% of primary care trusts had frozen NHS funding for hospices for the period 2010-14.

I will set out some statistics about the excellent job that the nation’s hospices do. Collectively, they provide more than 26 million hours of specialist care and support every year, 90% of which is provided through day care services and care in people’s homes, and 77% of adult palliative care in-patient units are run by hospices, with the voluntary sector providing 2,139 adult in-patient beds, compared with just 490 provided by the NHS. All children’s in-patient units in the UK are run by the voluntary sector. Independent voluntary hospice expenditure increased by a fifth between 2007 and 2009, which indicates the continuing growth and importance of hospices in the life of the nation. More than £1 million is raised every day for the nation’s hospices, from fundraising, legacies and donations.

The value of the voluntary work carried out by the 100,000-plus volunteers is estimated to be worth in excess of £112 million every year. Help for Hospices has told me:

“Hospices are unique among providers of healthcare because they contribute so significantly to the funding and provision of hospice and palliative care. In 2009, hospices spent £687 million. For every £1 the State invests in local charitable hospices, those hospices deliver £3 worth of care.”

It thus makes sense that the burden of VAT on hospices should be lifted so that they can do even more good for the benefit of the communities that they serve.

Help for Hospices also told me:

“Hospice care receives overwhelming public support in the UK. A recent survey showed more than 80 per cent of people believe everyone with a terminal illness should have the right to receive hospice care.”

My only observation is that I am amazed the figure is as low as 80%.

I would like to say a little more about the St Helena hospice in Colchester, which I visited on Saturday ahead of this evening’s debate and in order to inspect the newly extended Joan Tomkins day care centre, which was officially opened to coincide with the annual fete in the grounds of the hospice.

The original day care centre, named in memory of the late wife of local business man Mr Robin Tomkins, whose generosity made the building possible, was opened in April 1988 by the Princess of Wales. I remember that well, because my mother was in the nearby hospice and died a few days later. The princess spoke to my father at my mother’s deathbed, and he spoke afterwards of the warmth of compassion that she had shown.

St Helena hospice, the main building, was officially opened in April 1986 by Her Majesty Queen Elizabeth, the Queen Mother, so we have just celebrated its 25th anniversary. As an aside, I should have said that my mother was one of the volunteers in the early months after the hospice opened.

Like other hospices throughout the country, St Helena is rooted in the local community that it serves. It provides free medical and nursing care and therapy to adult patients with any diagnosis. Alongside the two day centres there is also one at Clacton, and there is in-patient accommodation in the purpose-built extension to the historic Myland Hall.

Services are also provided for patients in their own home. Indeed, in the past five years there has been a 58% increase in the services in patients’ homes. St Helena hospice also provides pre and post-bereavement support to family members, including children, and attached to the hospice is an education centre, providing education for health and social care professionals.

It will cost St Helena hospice more than £4.6 million in the current financial year to provide its valuable services, and it would be great if it did not have to pay value added tax, but could instead spend that money on the purposes for which people wish it to be used—supporting the work of their local hospice.

Help for Hospices told me:

“As the population ages and people approach the end of life with ever-more complex co-morbidities, a spectrum of highly flexible and adaptive hospice and palliative care services need to be available.”

[Jim Shannon (Strangford) (DUP)]

Not only the services and the care provided but also hospice-build should be exempt from VAT. Does the hon. Gentleman agree that the Minister should address that in his reply?

[Bob Russell]

The hon. Gentleman makes an exceedingly good point. We have the nonsense, right across the construction industry, whereby new-build is VAT-exempt, but when a building is added to or converted, as in the instance to which I believe the hon. Gentleman has just referred, VAT is levied. When a hospice wants to extend its building, as in the extension and modernisation of the Joan Tomkins day care centre that I mentioned, VAT is levied, as I understand it. That is wrong.

Help for Hospices also told me:

“The Government has committed to a ‘level playing field’ for all organisations delivering public services. However, charitable hospices continue to face extra costs that statutory and private providers do not.

Tax burdens should be removed from hospices where they can be. This is particularly necessary as hospices are providing public services and investing considerable charitable funds into the ‘health economy’ and, unlike other private and public providers of healthcare, are subject to significant funding and contracting challenges.”

I believe that the public would overwhelmingly take the view that the coalition Government should urgently introduce measures to deal with the unfairness of levying VAT on our hospices. I have put forward suggestions as to how that can be achieved, and I now invite the Minister to pursue these matters.