Charter for Budget Responsibility

John Hemming Excerpts

Wednesday 26th March 2014 Commons Chamber

[John Hemming (Birmingham, Yardley) (LD)]

It is often said that a week is a long time in politics, but in one sense that is wrong. Dealing with Government finance and the economy takes multiple years, so the problem that we had in 2010 will take at least eight years to resolve. People who interview me every so often say, “Oh, we have more cuts this year,” but those decisions were made in 2010 and they were driven by Government policy in the previous years.

I shall quote a few comments about Government policy from 2005 to 2010 because they are relevant to this debate and the issue of budget responsibility in the long term. One person said in his memoirs:

“However, we should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”

That was Tony Blair, who was Prime Minister at the time.

Lord Turnbull, who at one stage was the Cabinet Secretary, the chief civil servant, noted that excessive borrowing started to be a problem from 2005. He said:

“It kind of crept up on us in 2005, 2006 and 2007, and we were still expanding public spending at 4.5 percent a year”.

His argument, essentially, was that the Labour Government should have been aiming to put money aside in the good years. He cited examples of other places that began to accumulate surpluses for a rainy day—places such as Australia.

The Government were borrowing £2,500 on behalf of every person in the country so that, in effect, a baby would have borrowed £45,000 by the time it reached the age of 18. That had to be brought under control, but it cannot be done immediately. It is important that we properly manage Government finances. If anyone can be bothered to read the charter for budget responsibility March 2014 update, they will find on page 10 that if the welfare cap is found to be breached, there are three options, one of which is to

“explain why a breach of the welfare cap is considered justified.”

Members can vote against the motion only if they do not believe in the Government managing and knowing what they are doing. I would be worried if there was a scheme whereby somebody came and said, “I need benefits. I’ve got no money,” and the Government said, “We’ve run out of money. We have no money to give you jobseeker’s allowance.” People will still have entitlements, but if we spend more than we intend to spend, the Minister will, as an absolute minimum, have to explain why.

I worry still about how the Government manage finances. I have asked questions, for example, on tax credits, to try to work out how many effectively fraudulent self-employed schemes there are, often run by people who are recent migrants. People set up nonsense scrap metal businesses that exist not as businesses, but to qualify for tax credits, but the Government cannot give that information. That is bad. We should be able to analyse the figures.

We need a good benefits system that ensures that there is a solid and straightforward safety net so that if people end up in difficulty, there is a way of rescuing them and keeping them from destitution. However, to argue that we should not try to manage the total costs is nonsense. Hence, I am not surprised that the official Opposition are backing the motion. Anyone who believes in having the money available to look after people believes in managing the accounts and knowing what is happening, and if we spend more than we expect, as an absolute minimum the Minister should explain why.

Holiday Pricing

John Hemming Excerpts

Monday 24th February 2014 Westminster Hall

[John Hemming (Birmingham, Yardley) (LD)]

I beg to move,

That this House has considered the e-petition relating to holiday companies charging extra in school holidays.

I would like to start by referring to an e-mail I received a few minutes ago from a parent who hopes to take his three children to Turin next February half term, in 2015. According to his e-mail, the British Airways website gives a price of £54 for a single person on Tuesday 10 and Wednesday 11 February 2015. On the Thursday, the price goes up to £112, and on the Friday it is £344. That is for a one-way flight for a single person. My correspondent asks how on earth parents can ever afford to pay such prices. That is what this debate is about, in essence. The fact is that many parents across the country are having great difficulty in being able to afford to go on holiday with their children.

The e-petition that we are debating was initiated some time ago by Donna Thresher, although Paul Cookson has been campaigning to get signatures for it since he found that Center Parcs doubled its prices at half term. Donna has said:

“Firstly we the undersigned are grateful that our voice is to be heard. The news of the debate is welcomed by all of us as we feel this is a positive step towards an outcome that we deem extremely important to the well being of family life. For those of us that work hard, pay our bills and taxes, a family holiday is the only time off we get to spend QUALITY time with our families. The government are struggling to understand why we have ‘Benefits Britain’ and one of the reasons is simple, broken families. Parents need time off, they need to enjoy their children and have time together as a unit. With holidays being priced out to such a degree that makes them unobtainable and means families are not getting this important time together.”

The e-petition was tabled before the changes to the regulations came into force on 1 September 2013. I thank the Chair of the Backbench Business Committee, the hon. Member for North East Derbyshire (Natascha Engel), for allocating time for this debate. The comments I am about to read were written after the new regulations, which are very relevant, came into force. Donna said:

“The original petition still stands in its own right but we do feel that the change in legislation has impacted the costs even further.

However, there are things to be considered—the petition was raised almost a year ago and the legislation with regard to the change in the discretionary rights of head teachers to allow pupils time of in term time had NOT at the time been made public.”

Donna’s thoughts since the change in legislation are:

“Holiday prices have increased even further. Schools will no longer know when children are being removed for a holiday as parents may decide to not say, this could constitute a safeguarding issue and end up with social service involved! The 10 days discretionary was working, why did it have to be changed? Fines are sought by the school and yet they don’t receive the money; it goes to the council and not back into the schools themselves. Therefore this seems to me to be another stealth tax.”

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Will my hon. Friend confirm whether the previous rule used to be about 10 days or 10 sessions? I think he will find that a session is actually half a day.

[John Hemming]

My understanding was that it was 10 days.

[Dr Thérèse Coffey]

I think that is wrong.

[John Hemming]

My hon. Friend may be right, but that has been changed anyway.

There is also the issue of the new regulations, which we discussed with the Backbench Business Committee. A group called Parents Want a Say was established following the introduction of the new regulations, and it has a website. A number of e-petitions relate to the issue of school holidays. E-petition 49640 is entitled “Reverse the changes to school term time family holiday rules”.

E-petition 53002 states that it is

“calling on the government to help British families manage the ‘Parent Trap’ of inflated holiday prices in summer by suspending or reducing the rate of Air Passenger Duty (APD) for the annual school summer-holiday period of July and August.”

E-petition 45247 states:

“Relax the strict rules on term time holidays for school children.

Give parents the right to take their child on holiday in term time if the holiday would benefit the child.

Respect the rights of the child and bring term time holiday regulations in line with UNCRC (specifically article 3,4,5 and 31).

Standardise the criteria for term time holiday approval to prevent inconsistencies.”

E-petition 46455 states:

“Family time is so much more essential in the current working world, but so many people cannot afford holidays in school holidays. A break at home is not the same as getting away from it all where there isn't any house work or DIY to get done, instead focus is on family. Its time to stop the holiday companies cashing in on school holidays and let parents have some guilt free family time! Enforce action that caps the percentage increase on holiday prices in school holidays.”

There are also e-petitions 55426, 51533, 42884 and 23709, which I am not going to read out. This debate is a very good example of how effective an e-petition can be in getting an issue of considerable concern to many constituents across the country raised and debated in Parliament. It looks to me like an example of the success of the e-petition system.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

I apologise for not being able to stay for the entire debate, but I wanted to support my hon. Friend. I have received a lot of letters on this issue from my constituents in Shrewsbury. They feel strongly that the Government must show innovative thinking to resolve the situation for hard-working families who, on rare occasions, need to pull their children out of school for a holiday.

[John Hemming]

I thank my hon. Friend for that comment. As I talk about specific examples, we will see that different families have different circumstances, and a one-size-fits-all approach is not necessarily the best solution.

It is interesting that the tensions that have arisen beyond the initial problem of high prices during the holidays are the result of the new regulations, passed in statutory instrument 2013 No. 756. For those interested in procedural issues, as I am, I should say that the regulations went through Parliament under a negative resolution—that is, they would pass as long as Parliament did not vote against them. Parliament would have had an opportunity to discuss the regulations had anyone tabled an early-day motion praying against them, but no one did. There was no discussion.

The regulations were laid before Parliament on 4 April 2013. There was no request to debate them on the Floor of the House of Lords either. That House differs from the House of Commons in that it has a Secondary Legislation Scrutiny Committee, which looked at the regulations and decided not to comment on them. However, we have heard from our constituents that there are considerable problems across the country. That shows the strength of the e-petitioning process. Something went through Parliament on the nod, but constituents had a mechanism to express concerns. The issue has been raised and now everyone present is here to debate it.

I must disagree with the point made by my hon. Friend the Member for Suffolk Coastal (Dr Coffey). The Department for Education website states that the regulations were changed from allowing up to 10 school days—not 10 school sessions—per year for holidays to allowing children to leave school only in exceptional circumstances. As I said, I will come to specific examples. Although there was some form of consultation on changes to the regulations, that did not get across to people and Parliament was not aware of constituents’ concerns when the changes were made. However, that has now changed.

How do we deal with the issue? Obviously, many of our constituents face a serious problem; that is evidenced by the number of people in the Chamber. Concerns have been expressed about the extent to which companies can be forced to charge the same price throughout the year. I do not think that that is a practical solution, particularly given that the market includes people visiting this country—we could end up with holiday touts and all sorts of things.

There are two solutions for dealing with demand. First, we could have flexibility in holiday periods: we could stagger holidays. Secondly, we could have more flexibility—moving back towards how things were previously, although not necessarily all the way—and allow people to take their children out of school in term time, in the right circumstances. I think that would be reasonable in some circumstances.

Looking further at how the issue is regulated, we already have Ofcom, Ofwat and Ofgem; I do not think we can have Offonholiday—that would not work. A reduction in air passenger duty has been proposed, but there would be problems with that. First, it would not benefit UK holidaymakers. Paul Cookson, who I referred to earlier, was worried about the doubling of prices at Center Parcs. As Center Parcs is in the UK, a reduction in air passenger duty would not have an effect on people going there. If the APD proposal reached the Treasury, it would go into a nosedive; we would find that it was not a flyer—[Interruption.] Sorry about that. I will give up on the jokes now.

We come to the question of what will happen as far as flexibility for holidays is concerned. I have found an interesting copy of Travel Trade Gazette from 1963, which reports:

“It was in the House of Commons on February 12, 1960, that approval was first given to the setting up of a committee to examine the question of extending the U.K. holiday season.

The subject was introduced by Mr. Robert Mathew, M.P. for Honiton, in a motion which read:

‘That this House, recognising the need to extend and adjust the holiday period so as to relieve congestion at the peak period, asks Her Majesty’s Government to set up a committee to examine this question urgently with special reference to the educational, tourist trade and transport interests concerned, and the problem of summer time, with the power to recommend early action.’ ”

We are now a good few years on; we did not have the early action. That was in 1963. In 1964, the heads of Germany’s regional governments, which are responsible for state education, were called together to stagger the summer holidays in such a way as to prevent all the region’s leisure seekers from leaving for and returning from their holidays at the same time, with the corresponding detrimental effect on traffic and demand for accommodation in tourist areas. They divided the country into five roughly equal population blocks, which were all to have different holiday periods that moved around. It is interesting that Germany managed to do something. In fact, I understand that the Republic of Ireland, the Netherlands, Sweden, Norway, Finland and France also have such a facility.

Interestingly, schedule 14 to the Deregulation Bill, currently being discussed, allows head teachers to decide when holidays are. The general secretary of the National Association of Head Teachers, Russell Hobby, said recently that the NAHT has been saying for some time that there is an argument for more flexibility over term times, to relieve the pressures that drive up holiday costs. However, it is important for schools to co-ordinate timings across a town or region; parents with children at different schools would not welcome the inconvenience and child care costs of different term dates. That is obviously sensible. We must also think of the teachers; those with children would not like their children’s holidays to be at a different time from theirs.

Staggering holiday dates can definitely be done, but it will need co-ordination; it will not be something to wash our hands of. It may be for the Select Committee on Education to consider, in conjunction with other people, how we might stagger holidays across the country so that we do not end up with everyone trying to go on holiday at the same time and prices rocketing.

That is one question. The more difficult question is when people should be allowed out of school during term time and what exemptions should apply. Again, I will quote from what people have said to me. One person says:

“This coming Tuesday is my uncle’s funeral in Folkestone…Our three children were quite close to him. We enquired of their schools (primary and secondary) whether they would be prepared to grant exceptional circumstance leave for one day only and in both cases they said they felt unable to do so under the new rules.”

There we have a specific example of children being refused permission to go to the funeral of their great-uncle. Personally, I think that is wrong.

Other parents do not have a choice as to when they have holiday. A lady who returned from maternity leave to her post as a staff nurse in a bone marrow transplant unit at a hospital put in an early request for annual leave during the Easter or summer half-term break. Her requests were not granted, as too many other nurses were off during those periods and the unit must remain adequately staffed. In addition, her husband has been unable to secure annual leave during the summer. They have always made their best efforts to book holiday time during school breaks, but the only week that they could secure together this year was in June, when there is no school holiday. That lady spends her time saving lives. She is committed to that, so she does not have flexibility in her holidays, and the new rules say that she cannot go on holiday with her children. I think that is wrong, too.

[Penny Mordaunt (Portsmouth North) (Con)]

Does the hon. Gentleman also recognise the particular problems faced by members of the armed forces? Some schools have been pragmatic in allowing members of the armed forces, particularly if they are being deployed, to spend a holiday with their children. It is particularly shoddy when they are not given that opportunity, especially now that we have the armed forces covenant.

[John Hemming]

I thank the hon. Lady for making that excellent point. I would happily have made it myself, but I now no longer need to.

[Dr Julian Lewis (New Forest East) (Con)]

I draw the hon. Gentleman’s attention to the situation of my constituent Amanda Wooding, who is a child care specialist. She, of course, finds herself particularly in demand during the school holidays, but she has children of her own, so she can never take them on holiday at other times because of her profession.

[John Hemming]

The hon. Gentleman makes an excellent point. The issue is all about considering individual cases. Perhaps the hardest case is that of the police, who not only often do not have any choice as to when they take holiday, but also can be fired if they are fined. That is a double whammy. Not only is taking holiday difficult; they also face losing their job. That is clearly unfair to those people.

Another constituent of mine says that they have one family holiday a year. Until this year they have been fortunate enough to take it for a week during the school term, always authorised by the school, but they cannot afford to take the same holiday during the school holidays, although their children’s attendance is otherwise excellent. That is my constituent’s point: they ensure that their children’s attendance is excellent and that they maintain their educational standards, do work and so on. Now, from a cost-effectiveness point of view, it is cheaper to pay the fines. It is not very good to have a structure in society that effectively encourages people to break the criminal law because it would cost them thousands of pounds not to.

I have another story from some people from Australia who have difficulty visiting family if there is no flexibility at all. They say:

“What is clear is that this ruling actually favours the rich. Those who can afford it pay the fine for taking their children out—I know of one family who recently took themselves skiing to do this—while those on low incomes who cannot afford the fine but feel they must go will get a criminal record. The ruling is draconian.”

Similarly, I have a constituent with links to Pakistan who has concerns that the ruling is damaging their family links as well. Those examples give us some idea of the exceptions that are now not being treated as exceptions.

On mechanisms for change, we should first look to the Taylor report itself, as that drove the changes. Recommendation 6 was that

“changes are made to the pupil registration regulations to strengthen the rules on term time holidays. While head teachers should continue to have discretion, holidays in term time should be the exception rather than the rule.”

Actually, they are not happening at all now. One obvious question in all this is what pressure Ofsted is placing on head teachers to reduce the numbers. The numbers were that 7.5% of absence in primary schools and 2.5% in secondary schools was related to holidays. Obviously, if head teachers are under pressure to reduce those numbers, there will be an effect.

We must consider the mechanisms for change. One is for the Government to produce guidance saying clearly that going to a great-uncle’s funeral, for instance, is reasonable. Secondly, the Government could introduce a new statutory instrument changing the regulations. The final question is whether a judicial review under article 8 of the European convention on human rights, or using the UN convention on the rights of the child—a point made in one of the other petitions—could have an effect.

There is undoubtedly a problem. The fact that so many constituents have highlighted the issue and so many people have signed online petitions about it demonstrates that. There are numerous solutions, including working with schools to stagger school holidays or changing regulations. We need to do something.

--- Later in debate ---

[Dr Coffey]

I do not profess to be an expert on parliamentary procedure or on why certain bits of legislation are introduced under the negative or the affirmative resolution procedures. That tends to be defined in the original Act—in this case, I do not know who was responsible for the very original Act and whether it was 1944 or 2006. The original Act is when the process for the introduction of future secondary legislation is decided, but the hon. Gentleman is aware, as my hon. Friend the Member for Birmingham, Yardley pointed out, that any Member of the House or of the other place may trigger a stay on any regulation on negative resolution by signing an early-day motion. That is a mechanism available to us all. I recognise that MPs therefore have to be even more on the ball about checking what statutory instruments are up for affirmative or negative resolution. That information, however, is made available to every Member of the House in the vote bundle.

On “exceptional” or “special”, I do not have children, so I do not pretend that I have to face the issue. I have, however, had six parents contacting me, four of whom cited cost. In one of those situations, incidentally, teachers had given activities for the children to do while away from school. Another case involved getting time for the children with the other parent. The sixth person who contacted me did so about parental choice: it is for parents to decide when their children go on holidays, not schools, because teachers could make up the time, with the children given special projects. I am not sure that that is necessarily acceptable behaviour. I fully understand the issue about cost, but I have no idea why “special” versus “exceptional” makes a difference for the head teacher in assessing such a decision.

In my time, I have been involved in children’s education as a school governor in two different schools. I will not say which school, because it would be unfair on the head teacher, but in one we discussed the issue in lengthy detail. Parents had almost come to see it as a right to request the time off, and the head teacher would be given a hard time by the parents unless up to 10 days of leave were given. We felt that that was wrong, because it put pressure on the head teacher, as well as on the classroom teacher, who had to cope with the child missing 10 days of schooling.

There is no doubt of the strong link between a school’s attendance records and attainment at the school. That cannot, of course, be proved for every single child, but it is fair to say that, in the schools in my constituency where attendance rates are significantly below the average, I see a significant difference in the attainment of the children. We need to stand up for that consistently: it is not necessarily simply about the individual child—although that child’s education is important—but about all the children in the classes. We need to remember that.

I had not planned to speak and I do not wish to extend the debate unduly, but the regulations introduced last year still leave the head teacher with appropriate discretion. In cases of children with military parents, or those whose parents wish them to attend a funeral, the situation remains the same. There is no automatic right for parents to remove a child in such a case, unless they wish to go down the unauthorised absence route, but by changing the focus and putting in regulation that circumstances must be exceptional, the right expectations are set for parents. It is not therefore a right to take a child out of school for up to 10 days of holiday, as referred to in regulation. What is allowed is exactly what is said: if there is no other opportunity for a particular situation to happen, head teachers may use their discretion. Frankly, if MPs hear of cases in which that is not being applied, we should take them up on behalf of the parent.

[John Hemming]

Does my hon. Friend agree, as she probably does, that a funeral would be a valid use of exceptional circumstances? Perhaps we should be concerned about Ofsted possibly putting pressure on head teachers to reduce the numbers to such a low level that they cannot even take into account exceptional circumstances.

[Dr William McCrea in the Chair]

[Dr Coffey]

I am not aware that Ofsted is applying that particular pressure. I agree on one aspect, however. I would be surprised and disappointed were a head teacher to refuse a request in the case of a funeral. As a slight aside, however, I was disappointed when a Whip initially refused me permission to be away to attend a funeral—when I made my representation directly, he changed his mind.

We need consistently to support our teachers, who want to give children the best education possible. We should remove unnecessary pressures on head teachers. I welcome any talks there might be on seasonal pricing, but I encourage us to stand firm and ensure that we put education first.

--- Later in debate ---

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

As everyone has today, I congratulate my hon. Friend the Member for Birmingham, Yardley (John Hemming) on leading the debate in the wake of a very significant number of signatures on the e-petition.

It is interesting that this was an issue in Parliament long before I was born—I do not know whether that is a good or a bad thing, but it has clearly been an issue for many decades. I have listened with great interest to the points that have been made. There have been a variety of speeches, coming, in a number of cases, from slightly different perspectives. I agree with the hon. Member for Chesterfield (Toby Perkins) that it has been a very good debate, which on the whole, has been fairly consensual; there is a reasonable amount of agreement across the Chamber. As a constituency MP, constituents have been getting in touch with me about the subject, and I have a personal interest, as my children are heading rapidly towards school age. Along with a lot of other people, this issue is close to my heart as well.

I would like to put my comments into context at the start and make it clear that the Government do not regulate the price at which goods or services are offered for sale. We have heard from a number of Members that most people would agree that that is the way it should be. We feel that it is a commercial matter for the businesses concerned and that the Government should not intervene. It is not for the Government to dictate to any particular market how it should charge for its services, or to intervene unless there is evidence of market distortion or market failure. That is when Ministers and the Government would get involved.

As we have heard today, and as I hope hon. Members would agree, the UK holiday sector is one of the most competitive markets in the UK, if not Europe. That has made the sector not only one of the most responsive to consumer demands and preferences, but one of the most innovative. It has driven change very much over the years. It is not so long ago—only a few decades—that only the wealthy could contemplate having a holiday abroad, and even holidaying in the UK, which was more popular and much more affordable, was certainly not the norm for many people. That was the situation not that long ago. With the development of cheaper package holidays and so on, far more people have found that they can afford a foreign holiday, but the sector has developed rapidly over the past few decades and expanded in many respects.

An almost endless variety of offers are available for people, which meets the demand from consumers for more choice, flexibility, value and so on. The dynamism and innovation that is shown in this diverse sector is evidence of keen and persistent competition in the market, so the Government feel that there is no market failure and therefore no reason for the Government to intervene to impose price limits. I got the feeling today from colleagues across the House that most would agree on that point.

As the hon. Member for East Hampshire (Damian Hinds) said in his confession, prices charged across the year reflect demand, availability and the need to attract consumers in a competitive market. It is common to all competitive markets—it is especially acute in fluctuating markets, such as the travel sector—that prices rise and fall according to demand and supply. That is the way in which markets work in general. When demand is high and supply is limited, prices invariably increase to the point at which demand moderates. It is the level of demand that dictates the prices in a competitive market, so if demand increases, so do prices.

Demand appears to remain high in the travel and holiday market, despite the economic difficulties that many people are facing—it has been a very difficult time for many across the economy over recent years. The industry reports that the holiday market is buoyant and consumers are prepared to pay the prices being asked for the services on offer. If people were not prepared to pay the prices being asked, demand would drop and prices would come down, so it is being driven by the fact that people are prepared to pay the prices that holiday companies are demanding.

[John Hemming]

Given that the issue is about supply and demand, the regulations that the Government introduced affected the demand by focusing it more on one place. Is my hon. Friend as surprised as me that the Department said in the explanatory note to that statutory instrument that an

“impact assessment has not been provided for this instrument as no impact on businesses or civil society organisations is foreseen”?

[Jenny Willott]

I shall come back to the point about the schools regulations if my hon. Friend will bear with me. If he is not satisfied with my comments, he can come back to me.

There is another important element to consider in respect of the prices in this sector, and it was mentioned by the hon. Member for East Hampshire. During peak periods, the UK industry is in fierce competition with those of other countries, whose consumers want to go on holiday to the same destinations. That competition for limited facilities means that costs rise—it is not all being driven by consumers in the UK—and those costs are reflected in the price put to the consumer. As this is a Europe-wide market, consumers are similarly affected in other countries across Europe. As a result, Governments across Europe have decided that protection is needed for consumers in the package holiday sector over and above that provided by general consumer protection law.

I hope that what I say now answers a point made by the hon. Member for Chesterfield. One of the key protections in the package travel directive is the requirement that those arranging and selling package holidays and package tours have in place protection for consumers against their insolvency. That additional protection is an area in which we in the UK were leaders. The air travel organisers’ license—ATOL—system was brought in before the European regime as a result of the huge growth in the UK of the package holiday market in the 1970s and 1980s.

The extra protection is considered necessary because those operating in the package travel market are deemed to be more at risk of insolvency than businesses in other sectors. That is because the business model in the holiday industry is based on predicting demand and committing to those predictions in advance. I mention that because it is further evidence of the extent and level of competition in that market—the industry is forced by those pressures to price as competitively as it can. There is considered to be a higher risk of insolvency in that sector because the margins are thin and because the market is so competitive.

[Jenny Willott]

I cannot comment on the impact assessment done by the Department for Education, but I will come back to the point about the regulations. I think it is wrong to say that the 2013 change was a significant change in the law, but I will come back to that in a minute.

Hon. Members will have gathered from what I have said that I am not convinced that businesses in the holiday market are treating consumers unfairly in the way in which they price their products. It is pressures in the market that cause the fluctuation in prices that some have concluded is unfair. However, the hon. Member for Chesterfield raised allegations of cartel-like behaviour. If hon. Members come across allegations of that nature, they should be referred to the Competition and Markets Authority for investigation. That is what it is there for, or at least it will be from 1 April. Cases like that involving Expedia, which the hon. Member for Chesterfield mentioned, were dealt with by the Office of Fair Trading, but will in the future be dealt with by the Competition and Markets Authority. However, the CMA will also have a role in keeping markets under review for breaches of competition law and consumer detriment, so it has a broader remit. It will also have a role in dealing with consumer enforcement issues when an issue has nationwide implications. This would be an area where that could be considered.

The hon. Member for Leeds East (Mr Mudie) asked about discussions between travel agents, the holiday industry and the Department for Business, Innovation and Skills. BIS is in regular contact with the holiday industry on a very wide range of issues—that is the relationship—and my officials will of course raise the points that have been raised in today’s debate when they next meet representatives of the industry, so we will ensure that hon. Members’ views are fed back.

Having said that, I am very sympathetic to those who struggle to afford a holiday in peak season. I appreciate that the difference in price between off season and high season can be very significant. If people have children, it becomes increasingly expensive and difficult to take holidays, and I appreciate that the problem places an extra burden on families. I also completely agree that family holidays are enormously important. They give children opportunities to relax and unwind and create lasting memories, as well as building family relationships and broadening the experiences of children. I have very fond memories of taking holidays as a child with my grandparents and parents and I am sure that everyone in the room would say the same. It is important that children are able to have those experiences and benefit from them.

Clearly, in all of this, the dates of the school holidays are critical. It has been suggested that pressures on the industry might be alleviated by extending the periods during which families can take a holiday, thereby spreading the demand over a longer period. We have heard that idea mentioned today, and it is put forward not only by those who want cheaper family holidays; it is also supported by many in the industry. We have also heard it said a lot today that the rules on school attendance are too strict. Almost every hon. Member who spoke discussed that. People have suggested that schools should be able to approve families going on holiday during term time. Others believe that it would help if schools had different term dates. I shall come back to that point, but, on the issue of absence, despite the clear value that a family holiday can have for children and also for parents, the Government’s view is that a good education is more valuable for pupils in the long run and that getting a good education depends on regular school attendance throughout the school year.

We have heard a lot about the change in regulations in 2013. The hon. Member for Suffolk Coastal (Dr Coffey) gave a very useful summary of the legal framework. I found it quite illuminating and am sure that a number of other colleagues did as well. What the Government did in 2013 was remove the misconception held by some parents that pupils were entitled to 10 days’ absence for holidays per year. There was actually no entitlement in the previous regulations—that was not what they said. We have clarified that school heads should accept a request for a leave of absence only in exceptional circumstances.

We have heard a number of examples of cases in which requests have been turned down by head teachers. Many of them are very distressing, but I clearly cannot comment on individual cases, not knowing the full details. Let me make it clear that the Government have not said that any absence is not possible. We have given head teachers the discretion to make that call. In addition, we have not specified what constitutes exceptional circumstances, as we believe that cases need to be considered individually. A number of hon. Members mentioned the need to trust head teachers, and that is exactly what the Government are trying to do—we want to ensure that head teachers have the power and discretion to look at the individual circumstances of an application and take them into account.

[John Hemming]

Obviously, it is difficult being a Minister in a different Department. Will the Minister ask the Ministers in the Department for Education to write to me and the other hon. Members who have spoken in the debate about what pressures Ofsted is putting on schools to reduce the number of absences? I ask because if Ofsted is driving down the numbers, that affects what is considered to be exceptional and what is not. Obviously, some of the cases that I would consider exceptional, such as funerals, are not being considered as such by the schools.

[Jenny Willott]

I am happy to ask colleagues to write to my hon. Friend, because clearly I haven’t got a clue about that. As a Minister in BIS, I do not know what discussions Ofsted and the Department for Education have had, but I am happy to pass the request on to colleagues in the Department for Education.

[Jenny Willott]

When we contact colleagues in the Department for Education, I am sure that we can send them a copy of Hansard so that they can respond to the hon. Gentleman and others who have raised that point. When head teachers decide whether to grant absence, they must be able to take into account individual circumstances such as the examples raised today of parents in the military or the police, or cases in which a close relative has died. We cannot legislate for such instances; they must be left to the head teacher’s discretion.

Several hon. Members have asked for head teachers to be given clearer guidance on what constitutes exceptional circumstances, and the point has been made that it is difficult to balance the provision of clearer guidance with allowing head teachers discretion and trusting them to make the right call. I will refer that matter to colleagues in the Department for Education.

[John Hemming]

A number of participants in the debate think that head teachers are making the wrong decisions. If Ofsted is putting pressure on numbers, guidance would help us to analyse that in more depth. Prior to the changes, less than 10% of parents took advantage of the process in primary schools and less than 3% in secondary schools, so it did not affect many people. Those were clearly special circumstances, but for some reason they were deemed not to be acceptable. Guidance would give head teachers strength to argue with Ofsted.

[Jenny Willott]

My figures on the number of parents who took their children out of school are slightly different from my hon. Friend’s. My hon. Friend the Member for Solihull (Lorely Burt) also said that most parents do not take their children out of school for holidays, and my figures show that in 2011-12, some 90% of secondary school pupils and 80% of primary school pupils did not miss school for a family holiday. Although the overwhelming majority of pupils are not missing school to go on holiday, therefore, a significant number of pupils are. The Department for Education was sufficiently concerned about the matter to want to tighten up the rules. I understand that in some areas, parents thought that they were entitled to 10 days’ absence a year for holidays, which was not the intention of the original regulations. The regulations introduced last year were designed to correct that misconception and clarify that schools should authorise absence only in exceptional circumstances.

[John Hemming]

The discrepancy between the Minister’s figures and mine may rest on the fact that mine deal with authorised absence, whereas hers include unauthorised absence as well. Unauthorised absence is increasing, which is another factor in this debate.

[Jenny Willott]

That may well be the case, but it does not undermine the argument that we must ensure that parents do not take their children out of school for holidays unless there are exceptional reasons for doing so. As the right hon. Member for Knowsley (Mr Howarth) said, family holidays taken during term time disrupt the education not only of the individual student but of other pupils. The hon. Member for Leeds East, whose wife is a head teacher, said the same thing. Such absences create additional work for teachers who have to try to help pupils catch up on their return while looking after the other students in the class and ensuring that their progress is not disrupted. Removing a child from school has significant implications for other pupils in the class and for teachers. The Government do not want to change the rules on permitted absences, because the effects on a child’s education and a school’s ability to teach pupils effectively are significant.

Another suggestion has been to introduce more flexibility into school term dates. The holiday industry argues that making the peak period longer would spread consumer demand, and because holiday companies could make the same amount of money over a longer period of time, they would be able to reduce prices a little for families. The spreading of demand would also reduce competition for facilities and allow them to be used more efficiently. Although there would still be competition with organisers of holidays from other countries, it would be spread over a longer period of time.

--- Later in debate ---

[Jenny Willott]

As I have said, free schools, academies and some church schools can set their own dates. There is already some co-operation, or at least awareness, between some local schools regarding what others in the area are doing. When the Deregulation Bill gives more schools the power to set term and holiday dates, we will encourage schools to collaborate more widely to take into account the needs of families and other schools in the area. I am confident we can ensure that the hon. Gentleman’s views are fed into the process and taken into account by the Department for Education.

[John Hemming]

On that point, schedule 14 to the Deregulation Bill will give schools the power to set term and holiday dates, but in constituencies such as mine, one family may have children in a primary school in the Birmingham local education authority and children in a secondary school in the Solihull local education authority. I would propose bringing in the Education Committee to look at the country as a whole and suggest sub-regions wherein local education authorities could co-ordinate. A parent would not want their children in a Birmingham primary school to have different holidays from their children in a Solihull secondary school.

[Jenny Willott]

I cannot really comment on what the Education Committee should or should not look at, but I am sure that its Chairman, the hon. Member for Beverley and Holderness (Mr Stuart), will have noted my hon. Friend’s comments. Perhaps my hon. Friend and anyone else present with views on that matter might wish to take it up with the Chairman directly and suggest that his Committee initiates such an inquiry.

--- Later in debate ---

[John Hemming]

I thank you, Dr McCrea, for your chairmanship, Mr Turner for his able work, and all the contributors to the debate. I do not think that there is any advantage in repeating what everyone has said, but there are some issues that must be sorted out, so let us get on with it.

Question put and agreed to.

Resolved,

That this House has considered the e-petition relating to holiday companies charging extra in school holidays.

Public Service Pensions Bill

John Hemming Excerpts

Monday 22nd April 2013 Commons Chamber

[John Hemming (Birmingham, Yardley) (LD)]

Does my hon. Friend agree that this is about the physical efforts of the uniformed services, and that the £10 million will not derail the whole package? We need to be aware that certain jobs are particularly physically demanding, and that people cannot keep on doing them until they reach the relatively young age of my hon. Friend the Member for Colchester (Sir Bob Russell), for example?

--- Later in debate ---

[Richard Fuller]

The hon. Member for Nottingham East is a fine fellow, but I have to tell him—[Interruption.] “Fine fellow” will be the beginning and end of my comments to him. [Interruption.] I will come to the point, as this strikes at the credibility of the political class in this country. What the Labour party spokesman is trying to do is to use words to set up people’s expectations without taking the responsibility to fund them. That is why the political class is seen through by the public, who are fed up with politicians making up arguments that exist in the world of fancy but not in the hard reality in which people live. If I may say so to the fine fellow opposite, if he wants to be honest to the British people and, more importantly, to the people whom this amendment is designed to represent, it is his responsibility to pledge today to put taxpayers’ money where his mouth is if he is ever in government. I note that that is a commitment that he has very specifically missed out today.

[John Hemming]

The Opposition seem to be saying that the decision should be made today without negotiation, but does my hon. Friend agree with me that negotiation is the best way forward, and that to have such negotiation, we need to support the Government’s proposal for negotiation?

[Richard Fuller]

I am grateful for my hon. Friend’s second intervention, because it enables me to agree with him this time. As I said at the start of my speech, the hon. Member for Hayes and Harlington and the right hon. Member for Bermondsey and Old Southwark made the same point in pressing the Minister for more specificity. I, too, wish to ask him for clarification on that point.

Beer Duty Escalator

John Hemming Excerpts

Thursday 1st November 2012 Commons Chamber

[Greg Mulholland]

It is, indeed. I have not tried Coalition ale—perhaps we can toast with it when the Government abolish the duty escalator next May. Exactly the same point applies to my own breweries: Wharfebank, Briscoe’s, Rodhams and other Leeds breweries all contribute to the local economy.

[John Hemming (Birmingham, Yardley) (LD)]

I declare an interest on behalf of myself and my hon. Friend the Member for Cheadle (Mark Hunter). We are both members of the Campaign for Real Ale. Does my hon. Friend agree that the social environment of pubs is very important?

[Greg Mulholland]

My hon. Friend is absolutely right. The key point from the hub perspective, as opposed to the beer perspective, is that beer duty is simply absorbed by the big supermarkets. They do not need to pass it on. They do not even have to make a profit from beer. Indeed, they have been shown to be selling irresponsibly at a loss. The point is not one of unfairness, though; the escalator simply makes no sense in terms of the Government’s own agenda, because it pushes people away from drinking in the sociable, controlled environment of the pubs and social clubs around the country, and encourages them to drink at home.

Beer is now 10 times more expensive in pubs than in supermarkets. That cannot be good. I am delighted to see the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who has responsibility for community pubs, in his place. I welcome him to his post and look forward to working with him, as well as with the Economic Secretary. Frankly, though, we should also have a Health Minister attending this debate, given the health impacts that are being discussed.

The beer duty escalator does not make economic sense. It was introduced in 2008, at a time when alcohol duties were keeping pace with rising incomes and when inflation was considerably lower. Now, incomes have fallen, inflation is higher and VAT has risen. The simple reality is that since 2004 beer duty rates have increased by 60% and beer duty revenue by just 10%—a significant fall in real terms. As well as the damage to jobs, in putting up the duty, the Government are simply not taking the revenue projected. It is nonsense. It is a tax that simply does not add up.

It is encouraging to see Opposition Members now opposing the escalator. We have this strange situation, though, in which Labour, which introduced it, now opposes it, and Conservative and Liberal Democrat MPs who opposed it at the time now support it. Can we not unite the House now and say that this silly tax should go? We are sending that message loud and clear today.

I know that the Economic Secretary is a fan of pubs, and I know his Bromsgrove constituency well, because it is where my in-laws come from. I often visit and am pleased to drink in some of his local pubs. As well as announcing—I hope—that he will conduct this review, will he take the opportunity to consider other forms of progressive taxation that can help the British pub? There are various ways of doing that.

On the question of whether we can tax cask beer or real ale—or, indeed, all draught ale—separately, there is of course the problem of European regulation, as the Economic Secretary will point out when he sums up. First, we should challenge those regulations, but secondly may I put to him the interesting possibility presented by the duty-free element on cask beer? The reason for the duty-free element is the sediment in cask beer and the fact that cask beer requires much more care and effort to store, and lasts for a much shorter time. At the moment, we have a complex regime under which different breweries have different rates for different casks of beer. It is very complex and costly to administer. Could we not consider standardising the allowance and being generous with it, because it could provide a perfectly legal way of applying a lower rate of duty for real ale, our great British beer?

I also ask the Economic Secretary to consider the report by the Institute for Public Policy Research on the possibility of community pubs being granted 50% business rate relief if they can demonstrate their social and community impact. It has come up with a test, and I urge him and his officials to look into that and other ways of benefiting the pub in the way that right hon. and hon. Members are suggesting, alongside getting rid of the beer duty escalator.

As the chair of the save the pub group, I would be the first to say that the beer duty escalator is not the only issue facing pubs. There are others that should also rightly be tackled. I want to raise with my hon. Friend the Minister the issue of large pub companies and the large pub-owning breweries. Unfortunately, the large pub companies’ tenants and lessees also face their own pubco escalator, with unfair rises resulting from the eye-watering debts that those companies incurred because of their irresponsible actions some years ago. It is also important to tackle that. When my hon. Friend announces the review, as I hope he will, I hope he will also make it absolutely clear to those companies that they should pass on any drop in beer duty, because if they do not, those tied pubs will see no benefit whatever. In conducting the review and, we hope, making that announcement in the Budget next year, he must issue and receive a firm guarantee that any drop will be passed on, so that it benefits licensees and can therefore be passed on to customers, so that those pubs can become more attractive in competing with free houses.

My final point—I say this to the community pubs Minister—is that we must look at giving more protection to pubs in planning law.

Multiannual Financial Framework

John Hemming Excerpts

Wednesday 31st October 2012 Commons Chamber

[Sammy Wilson]

I have no difficulty with the veto. I do not have to be ambivalent about the veto. Whatever is required in these vital negotiations—whatever leverage is required—must be used. The point I am making is that the best leverage that the Prime Minister can exert in the negotiations is his ability to say, “Regardless of their positions on the party-political spectrum in the House of Commons, all its Members support me in saying that we will not give an extra penny to the European Union, and, furthermore, we want to see a reduction in the amount of money that we give to the European Union.”

[John Hemming (Birmingham, Yardley) (LD)]

I agree that we should constrain the amount of money we send to Europe, but in financial terms the difference between the amendment and the original motion could be less than £1 a year. Why divide the House when we all wish to constrain that amount?

[Sammy Wilson]

The hon. Gentleman is wrong. As so much of our rebate is not covered in the new arrangements owing to increases for new member states, our contributions would go up by 5.3% over the seven years even if we opted for and secured a real-terms freeze in the budget. We are talking not about pennies, but about billions of pounds.

The bottom line that is suggested in the motion would actually prove very costly for the British taxpayer, which is why a motion proposing not a real-terms freeze but a real reduction in our contributions to the EU could, and in my view should, gain unanimous support in the House. That is the only way of ensuring that the austerity that people in the United Kingdom have had to experience is also experienced in the European Union. It is not that there are no ways in which money can be saved. For 17 years, the European Union’s accounts could not even be signed off because billions could not be accounted for. The amount of waste that takes place in the EU shows that it is not impossible to make reductions.

I do not know whether I shall be on the right or the wrong side of the vote tonight, in terms of who wins, but I do know that the Lobby that I go through will be the Lobby entered by Members who are standing up for people who have experienced austerity, and experienced it stoically because they believe that it is the right way to ensure the financial soundness of the United Kingdom. I will go through that Lobby because I am on the side of those who want to give the Prime Minister the best hand in the negotiations. I will go through that Lobby for the sake of the people who want to see an end to European and bureaucratic waste. For those reasons, I shall support the amendment.

Oral Answers to Questions

John Hemming Excerpts

Tuesday 11th September 2012 Commons Chamber

[Sajid Javid]

Under the previous Government, spending on tax credits was out of control, having risen from £18 billion in 2003 to £30 billion in 2010, meaning that nine out of 10 families with children were eligible for tax credits. This Government have reduced that to six out of 10 by taking a more targeted approach. It is important that we support those on the lowest incomes while ensuring that those who can contribute to deficit reduction do so. There is nothing fair about running huge deficits for our children.

[John Hemming (Birmingham, Yardley) (LD)]

In Birmingham, 283,000 people have benefited from a tax cut of £220. Will the Minister assure me that we will continue to try to protect the low-paid by reducing how much tax they pay?

[Sajid Javid]

That is a central plank of the Government’s policy, and I am sure that my hon. Friend will agree that some of the changes we have already announced, such as those contained in the personal allowance, which I know he supports, are doing exactly that.

Finance Bill

John Hemming Excerpts

Tuesday 3rd July 2012 Commons Chamber

[Mr Hoban]

The UK economy has suffered hugely as a consequence of the financial crisis. It has lost £140 billion in growth. We have to tackle the causes of that failure, as well as tackling the deficit that the previous Government left behind. That is what we are doing through the Financial Services Bill, which is passing through Parliament at the moment.

[John Hemming (Birmingham, Yardley) (LD)]

rose—

[Mr Hoban]

I will take one last intervention on this point, then I will move on to the substance of the debate.

[John Hemming]

In December 2008, the then Chancellor said:

“The measures that I announced in October have stabilised the banking system, and inter-bank lending rates have fallen. The three-month LIBOR rate halved to just over 3 per cent. this week.”—[Official Report, 18 December 2008; Vol. 485, c. 1213.]

Does the Minister think that that was a fantasy, like much of what the Opposition propose?

[Mr Hoban]

The last Prime Minister had a problem recognising his responsibility for the problems that befell the economy.

One way in which we have sought to get the balance right in the taxation of businesses is by introducing the bank levy. We took that decision in opposition. We thought that it was right to ensure that banks paid their fair share towards dealing with the risks that they pose to the economy. The measure was opposed by the previous Government. They did not want to introduce a bank levy on a unilateral basis. We had the courage to make that decision and to ensure that banks pay their fair share.

The bank levy is a tax on the balance sheets of banking groups and building societies. It complements the wider regulatory reforms that are aimed at improving financial stability, such as the higher capital and liquidity standards. It thereby ensures that the banking sector makes a fair and substantial contribution that reflects the risks that it poses to the financial system and the wider economy. The levy is also intended to encourage banks to move away from risky funding models.

From the outset, the Government have been clear that we intend the levy to raise at least £2.5 billion each year. The Opposition should get their facts right. They have trotted out the gross figure that was raised by the bank payroll tax. They must bear in mind that the tax also reduced pay-as-you-earn and national insurance receipts. That is why the actual yield of the bank payroll tax was only £2.3 billion. Our levy will therefore raise more, year after year, than was raised by their one-off bank payroll tax.

The target yield for the levy was set out in the Government’s first Budget. We also announced our intention to make significant cuts to the main rate of corporation tax. Let me deal with another red herring from the Opposition. We were clear at that time, as we are now, that the bank levy yield will far outweigh the benefits that banks will receive from the corporation tax changes. Other sectors, including manufacturing, will benefit from the reduction in corporation tax, but banks will not benefit because of the bank levy. In the 2011 and 2012 Budgets, the Chancellor has gone further and announced two more cuts in the main rate of corporation tax. It now stands at 24%. The increase in the bank levy announced in the Budget offsets the benefit of those additional cuts to maintain the incentives on banks to move towards less risky funding.

New clause 13, tabled by the shadow Chancellor, is, in the words of Yogi Berra, the great American baseball coach,

“déjà vu all over again”.

This is at least the fifth time in this Parliament and the second time in the passage of the Finance Bill that we have debated the bank payroll tax. We have heard no new arguments from the Opposition and nothing to persuade us to vote for it.

Yet again, we have to point out to the Labour party that such a tax would be counter-productive and unnecessary. The bank payroll tax was introduced as a one-off interim measure in the last Parliament ahead of regulatory reforms and changes to remuneration practice and corporate governance. The previous Chancellor, the right hon. Member for Edinburgh South West (Mr Darling)—somebody the hon. Member for Newcastle upon Tyne North should listen to and learn from—said that it could not be repeated. He pointed out that it was a temporary measure until bank remuneration practices were changed, and we have changed those practices.

The new clause calls for the proceeds of the tax to be used to help employment, but I should take some time to remind the House of the measures that we are already taking to do that. We have introduced the youth contract and are investing £1 billion over the next three years in supporting half a million young people into employment and educational opportunities. We will provide 160,000 wage incentives worth up to £2,275 each to employers who recruit an 18 to 24-year-old through the Work programme. There will be an extra quarter of a million voluntary work experience or sector work academy places over the next three years and a further 20,000 incentive payments to encourage employers to take on young apprentices, taking the total to 40,000.

We are also providing additional support through Jobcentre Plus and the opportunity for people to be referred for a careers interview with the national careers service. We are already providing more apprenticeship places than any previous Government, with a record 457,000 apprenticeships delivered in 2010-11 and a commitment to delivering 1.2 million over the entire spending review period. That is a quarter of a million more than the previous Government’s commitment.

The hon. Member for Newcastle upon Tyne North says that the bank payroll tax should be used to help youth employment, but let us consider the number of ways the Labour party has already announced it would be used. The Leader of the Opposition was asked where the money would come from to reverse the increase in VAT, and he said:

“I said for example we should have a higher bank levy.”

It was also suggested that it be used to pay for higher capital spending of about £7.5 billion in 2010, which would have required £6 billion from the bank levy. The Leader of the Opposition said that reversing child benefit changes could be afforded by using the bank payroll tax—yet another use for it.

The bank payroll tax is the tax that continues to give, the tax that the Opposition always turn to when they want to find a way of plugging the black hole in their figures. They used it to explain how they would reverse tax credit savings, spend more money on the regional growth fund, cut the deficit and turn empty shops into community centres. We have heard a remarkable number of ways in which something that the previous Government said was a one-off would be used to fill the black hole in Labour’s economic thinking.

Finance Bill

John Hemming Excerpts

Monday 2nd July 2012 Commons Chamber

[Mr Gauke]

To be fair, that is not what my hon. Friend said, although I did not agree with everything that he did say on that issue. I shall take this opportunity to say a word or so about avoidance, because the Government are keen to address that.

[John Hemming (Birmingham, Yardley) (LD)]

rose—

[Mr Gauke]

Before I do that, I give way to my hon. Friend.

[John Hemming]

I am a Government Back Bencher who is not massively enthusiastic about the reduction in the top rate; I think that the Laffer curve peak would be at a higher rate than is thought. However, will the Minister comment on the fact that the Labour party seems to have forgotten that it did nothing to close the transparent fiddles, which are so resented, when people have paid 1% or 2% in tax? Those transparent fiddles have been around for years and Labour did nothing to close those gaps.

Financial Services Bill

John Hemming Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Chris Leslie]

Indeed it can, but it is the way of triggering an FSA investigation that is the case in point. The FSA can choose not to listen to the voices of dozens or hundreds of small businesses, not necessarily in regard to this product but in regard to other products in the future. It is a question of giving some power to small firms, as consumers, to trigger an investigation by the regulator. This is not just a pro-consumer amendment; it is a pro-business amendment, as I hope can be agreed on all sides.

I have spoken about the amendments tabled in my name; there are others on the list. I shall be interested to hear what the Minister has to say.

[John Hemming (Birmingham, Yardley) (LD)]

Let me begin by referring Members to my entry in the Register of Members’ Financial Interests. I think that I should declare registrable holdings in RBS and Lloyds as regulated entities. I have just checked my entry in the register, and note that I have a declarable interest in Highway Capital. It is a stock exchange rather than a parliamentary interest, but I think that it should be declared because it is relevant to the debate. I also founded, and still chair, John Hemming and Company LLP, which supplies software to the financial services sector. Although it is not itself regulated by the FSA, it trades with FSA-regulated entities, so I think that interest should be declared as well.

My hon. Friend the Member for Solihull (Lorely Burt) sadly cannot be here today, although she attended 16 of the Committee’s sittings. She has, however, passed me certain comments that she has received from interested parties, which she wishes me to raise with the Minister.

Payday lending has been a substantial issue throughout the debate. My personal view is that it is not a good thing, because it traps people in many circumstances. The question of what is the best way of dealing with it is a complex one, and I think that the Government are entirely right to ask the University of Bristol to investigate it. However, I have spoken to companies in my constituency and have said that I do not think that it is a very good thing.

In Committee, my hon. Friend the Member for Solihull said that the Bill should explicitly encourage the Financial Conduct Authority to seek to maintain and extend consumers’ access to financial services that meet their needs, and that when making regulatory decisions, it should assess their impact on markets and consumers. It should place value on policy proposals and regulations that increase access to savings, protections and other financial products, and also on financial advice. In the absence of such a requirement, there would be a risk of the FCA always being steered towards a risk-averse regulation. Markets might be restricted to large groups of consumers to avoid any consumer getting sub-optimal products.

The Government seek to encourage the development of simple financial products. If we are to succeed, we must have a regulator working with the grain of the policy rather than acting as an obstacle to it, as appeared at times to be the case with the last Government’s stakeholder products initiative. Does the Minister agree that the FCA now has the “teeth” to engage with the industry and engage in issues such as the maximum number of rollovers that a payday lender should be permitted to allow? Could the FCA set a threshold for market entry? Could it impose on companies real penalties that hurt, rather than the £50,000 limit imposed on the Office of Fair Trading, and make lenders pay compensation to consumers who have suffered detriment?

Let me now turn to the reflections of industry practitioners. The smallest businesses are keen to ensure that the cost of the regulation to them is not disproportionate. Forty per cent. of credit licence holders are sole traders. What cost-benefit analysis has been carried out for the smallest practitioners?

What about the implementation time? The Finance and Leasing Association has observed that the less far-reaching Consumer Credit Act took four years to implement. It estimates that implementation of this legislation would take between five and seven years. I am sure that the Government will work with all the professional bodies in devising a sensible implementation plan, but I should be grateful for any reassurance the Minister can give.

The Association of Independent Financial Advisers is fearful about the lack of a limit on time for complaints, which it says will place a burden on provisions that it will need to make to cover this open-ended provision—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman is speaking quite quickly, but I am trying to follow what he is saying. Will he explain how it is relevant to the amendments that we are discussing?

[John Hemming]

It is not.

[Madam Deputy Speaker]

In that case, it is out of order. Perhaps we should move on, unless the hon. Gentleman is going to speak in order.

[John Hemming]

rose—

[Madam Deputy Speaker]

Order. I should like the hon. Gentleman to do it now. Otherwise I am going to sit him down straight away, given that he knows that he was out of order. Presumably that is why he was speaking so fast. I ask him to speak directly about the amendments.

[John Hemming]

The Opposition have raised interesting questions about the issues of shareholder activism and the interrelationship between shareholder activists and companies, and I would be interested to hear what the Government have to say in response.

[Madam Deputy Speaker]

Splendid; thank you. I call Lisa Nandy.

--- Later in debate ---

[John Healey]

My hon. Friend, who knows far more about this matter than me and many in the House, is absolutely right. At a time when a loss of trust and confidence in financial services is evident across the board, that local presence and face-to-face relationship counts for a great deal.

[John Hemming]

Amendment 72 is a permissive amendment, and yet clause 47(3)(f) mentions

“making provision that appears to the Treasury to be necessary or expedient in consequence of the provisions of this Act.”

What will the amendment enable the Government to do by order that is not already possible under that measure?

[John Healey]

I am disappointed in the hon. Gentleman, because he, too, has a strong track record on this matter, and that sort of nit-picking misses the point of the amendment. The point of the amendment is to hold the coalition parties in the Government to their coalition pledge, which he is unable to do. It is a way of making public two years of failure and saying, “Within six months, you must do better.”

[John Hemming]

The amendment does not make the Government do anything, because clause 47 states that the

“Treasury may by order amend the legislation”.

If the Treasury does not want to do so, it does not have to do so. The amendment does not hold the Government to account. No wonder you are failing as an Opposition; your amendments are badly drafted.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am not failing as an opposition, so I do not think that is parliamentary.

[John Healey]

I have not seen the hon. Gentleman’s amendments to make the measure not permissive, but a requirement of the Government—Mr Speaker must not have selected it. Clearly, anything in statute would be a significant step forward, as the shadow Minister, my hon. Friend the Member for Nottingham East, has argued. Those on both sides of the House who have an interest could use a permissive measure in future.

[John Hemming]

Does the right hon. Gentleman believe that we make a man any taller by measuring his height?

[John Healey]

No, but by measuring height, one makes a statement that height matters. The amendment makes a statement that the coalition pledge on mutuals, and on greater diversity and competition in financial services, matters. That is the purpose of the amendment and the debate. I hope that my hon. Friend presses it to a Division because it will expose the Government’s complacency in making promises and failing to live up to them.

--- Later in debate ---

There is nothing sinister about this amendment. Yes, we couch it in terms of the manifesto commitment, but it is really about recognising that we need diversity in the marketplace, to avoid monocultures developing, to give choice to consumers and to create a competitive spur. If we can do all that, this amendment will provide some modest support in ensuring the continuation of the mutual movement in our country—a movement, it has to be said, that is small by international standards. Mutual insurers, along with what we would call building societies and credit unions, are much more prevalent in other marketplaces—including in the Netherlands, Germany, France and even the United States—than they are here. This modest amendment would go some way to addressing that and ensuring that the consumer—the member—got a fair deal in the marketplace.

[John Hemming]

I think there are two issues in this debate. First, everybody agrees that mutuals are good. They are good in a number of ways, one of which is that “boring” is good in finance. We need more boring finance —we need things that will not double one day, fall by a half the next, and go bust by next Wednesday. We have had too much “interesting” stuff in finance; we need some more boring stuff. Building societies have always been relatively stable—nothing much has changed; things are gradual, with perhaps a few mergers. Some building societies have suffered as part of the financial problem, and in other countries some credit unions have suffered. I should declare what is perhaps a non-declarable interest, namely my membership of Citysave, Birmingham city council’s credit union.

I think there is a major role for such bodies—the hon. Member for Stone (Mr Cash) highlighted the issue of people having a stake in society. That is a very good thing, as is the fact that mutuals look to serve their depositors—often they will be depositors and borrowers. To that extent, I welcome the fact that the Opposition have raised this issue for discussion. The difficulty is that the amendment—it is a permissive amendment; it allows, for instance, the number of members of mutuals to be counted—is the sort of thing that would be done anyway. A mutual could be sent an e-mail saying, “How many members have you got?” It really does not require a statutory instrument to—[Interruption.] The hon. Member for Nottingham East (Chris Leslie) says from the Opposition Front Bench that the number of members of credit unions is not being tracked. However, the amendment does not require it to be tracked, as he knows.

[Mark Durkan]

The hon. Gentleman makes the point that this is a permissive amendment, but it is actually an amendment to a permissive clause, which anticipates that there may, for various reasons, be all sorts of changes. However, in transferring the functions relating to disparate types of mutuals and so on, surely it is right to suggest that someone should have regard to ensuring that mutuals as a sector are promoted and that somebody should measure what is happening. If those in the coalition are committed, why do they not want to be able to know or show what is happening?

[John Hemming]

The amendment does not compel anything to happen; it merely makes it possible, if the Government wish, to change the law if necessary—which it almost certainly is not—to measure the number of members of credit unions. The Opposition may be right that the figure is not being measured, although that would surprise me, as the industry bodies will almost certainly have total numbers of members. If we contacted the Council of Mortgage Lenders, for instance, and asked how many members the building societies in the council had, it would probably give us the answer. Getting the answer should not be that difficult; however, as the amendment does not compel the Government to do anything, it will have no effect if accepted.

I return to the point that we have to welcome the fact that the issue of mutuals is being kept on the agenda. I would be interested if any Opposition Member wanted to liaise with me over the coming months to see whether we could find the answers that the amendment makes it possible to find—which are probably possible to find anyway, if the Government wish to find them. Indeed, I would have thought that the Government would not be that averse to knowing what the market share was.

[Chris Leslie]

This is a very confusing speech. The hon. Gentleman is in an honoured position, speaking on behalf of the Liberal Democrats. They helped to write the coalition agreement, so he has a responsibility to say what progress is being made on the detailed proposals to promote mutuality. Do the Liberal Democrats agree with that objective, and, if so, what are they doing to achieve it?

--- Later in debate ---

[John Hemming]

I think it is a good idea to encourage mutuality. There is no question about that. As for asking me, randomly, to answer such detailed questions on what the Government are doing, I must admit that I am not a Minister. This is, admittedly, a debate about mutualism, however, and I am quite happy to do a certain amount of research to see whether I can find the answers that the amendment would allow the Government to find—if they wished to do so by changing legislation, which almost certainly is not necessary.

That brings us to the nub of the problem with such an amendment. It would have almost no effect, because if the Government wanted to find out how many members the building societies had, they would simply ask the building societies, without going through the process of tabling a statutory instrument, whether through the permissive approach or whatever it may be.

On that basis, although we should welcome the fact that the issue of mutuals is being kept on the agenda, it would be better done by an amendment that had some effect.

[Mark Durkan]

I had not originally intended to speak to this amendment, as time is tight and we need to make progress. I have also dealt with some of the points in interventions.

The Government say that they are committed. This Bill gives them an opportunity to go a bit further on that commitment. That is what the amendment offers them. The Government have said that they want to encourage mutualisation. I have heard Ministers talk about the damage done by the rampant trend towards demutualisation in the past—they have blamed that on others, as well as perhaps accepting some blame on behalf of a previous Government. However, clause 47 is a permissive clause, and there is good cause for saying that if the Treasury amends legislation dealing with mutuals—let us remember that we are talking about industrial and provident societies, building societies, credit unions and friendly societies—and if it transfers functions to the FCA, the PRA or both, given that the clause provides that functions can be transferred between different bodies, the Treasury should, in making those arrangements and exercising those powers, have regard to ensuring that someone can measure the size of the mutual sector overall and show progress where that is relevant. That is what the amendment would provide for. Such information will be relevant for Parliament’s interests and purposes—I am sure that future Treasury Committees will want to know what is happening and who is responsible for measuring such things, rather than relying on the market players. The information will also be hugely important for consumers, because if, as the hon. Member for Stone (Mr Cash) said, we are to encourage more people to have confidence in this option, then the more people we can show are using it successfully, the better.

When the hon. Gentleman suggested that the mutual sector would, by its nature and character, not need detailed regulation and legislation, it occurred to me that he was going off in a different direction. Given the experience that some of us had with the Presbyterian Mutual Society and others, I can say that mutuals do need to be regulated by their nature, so that people can be sure that they are living up to the good name that they properly have. Consumers embrace mutuals on the basis of that confidence. They need to be able to rely on the fact that legislators have put in place a regulatory system to ensure that what they are getting is what they think they are getting.

[Mark Durkan]

I thank the hon. Gentleman for that clarification. That brings us to the point that we go through all this complicated legislation, with all this complicated jargon, to try to give consumers confidence that a regulatory regime is policing these matters for them, so that they know that the people they are entrusting with their money—their savings and so on—are performing to a due and proper standard. I would not want the House to create a situation where people felt that mutuals were, by their nature, less safe and less regulated, because non-mutuals would use that on a predatory basis in their marketing.

[John Hemming]

Let us come back again to the amendment. I noted, on the internet, a report from the Building Societies Association indicating that in 2011 the market share of the mutual building societies increased by 16%, which contrasts with growth of 3% and a figure of 7.7% in the whole market. So the coalition Government are obviously delivering on their promise to have a larger mutuals sector, and the information has already been measured.

[Mark Durkan]

The information may well be measured by that group of building societies. In terms of industrial and provident societies and others, surely it makes sense that the Treasury will want to make provision on who measures the different sectors or who measures them in aggregate terms as the mutual sector—this amendment would allow that. We must remember that, as the hon. Gentleman says, the amendment is entirely permissive, and it would be set in a clause that is permissive. The clause is meant to demonstrate the coalition’s commitment to mutuals.

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[Geraint Davies]

But as I have just said, if that is the case why do we need the OBR? We could go on the internet, like the hon. Member for Birmingham, Yardley (John Hemming) did, and then say, “I’ve got a figure from a reliable mate in the City.” This is completely absurd—

[John Hemming]

rose—

[Geraint Davies]

Here comes another absurd intervention.

[John Hemming]

Just for clarification, I looked up the BSA figure for the market share of mutuals, and it indicated that the market share was increasing. The BSA is not a friend of mine in the City, and the information is already being measured and reported on.

[Geraint Davies]

My point is that second-hand information is available in all sorts of marketplaces, but the Government make a great virtue of the OBR, and of other reliable and robust statistical sources, in order to measure the effectiveness of the outcomes of their policies.

[John Hemming]

rose—

[Geraint Davies]

I hope that this intervention is not just another repetition of the same thing.

[John Hemming]

It is difficult to see where the OBR comes into all this; it is not being handed the task of measuring things.

Jobs and Growth

John Hemming Excerpts

Thursday 17th May 2012 Commons Chamber

[Mr Osborne]

I certainly think that a lack of airport capacity is a challenge for this country, but one of the good things that may emerge from the bmi merger is that more slots may become available at Heathrow to open up routes to those cities in China. My hon. Friend makes the very good observation that we have to do much more to expand our exports and our links with the Chinas and Indias of this world. One of the good things that has happened in the past few years is that our exports to China and India are up by a third, and we need to see more of that.

In his speech, the shadow Chancellor dismissed the Governor of the Bank of England as plain wrong. Who appointed the Governor? Did the recommendation ever come across the desk of the shadow Chancellor when he was the political adviser in the Treasury? [Interruption.] We will find out. Yesterday the Governor said:

“We have been through…the biggest downturn in world output since the 1930s, the biggest banking crisis in this country’s history, the biggest fiscal deficit in our peacetime history, and our biggest trading partner, the euro area, is tearing itself apart”.

My message to the House today is that addressing those problems is not easy, but nor is it impossible. I will come on to talk about the eurozone, but first we must put our own house in order, and we are making progress on doing so.

[John Hemming (Birmingham, Yardley) (LD)]

Tony Blair says in his memoirs that from 2005 onwards Labour

“was insufficiently vigorous in limiting or eliminating the potential structural deficit”.

Does the Chancellor agree?

[Mr Osborne]

I agree with Tony Blair on that and, indeed, on his views on the shadow Chancellor.

--- Later in debate ---

[Mr Osborne]

I am reminded that the players used to wear “AIG” on their shirts. Perhaps it is a sign of how things are improving that they now wear the name of a major Chicago-based insurer that has chosen to move its headquarters to London. We remember all the stories of companies that moved their international headquarters from Britain a few years ago; now they are coming back.

I want briefly to say something about the eurozone crisis.

[John Hemming]

Will the Chancellor give way?

[Mr Osborne]

Of course I give way to my Liberal Democrat colleague.

[John Hemming]

In 2006, Lord Turnbull, who was at one stage Tony Blair’s Cabinet Secretary, said that borrowing

“crept up on us in 2005, 2006 and 2007, and we were still expanding public spending…You might have thought that we should be giving priority to getting borrowing under better control, putting money aside in the good years—and it didn’t happen.”

Does the Chancellor think the Opposition have learned anything since?

--- Later in debate ---

[John Hemming (Birmingham, Yardley) (LD)]

In a hurricane, even turkeys can fly, and I will come to that later.

Rather than talking about growth, I like to talk about the national cake. The country bakes the national cake. Some shares of the cake are taken by the Government in tax and given to those without any cake. Other people work on baking their own parts of the cake. Then we have the deficit. That is where we make a time machine and snaffle a few slices of the cake baked by our children in years to come to eat today.

When 40% of GDP is being spent on public services, it is about two fifths of the national cake. That, which is the objective at the end of this Parliament, is higher than under the first two Blair Governments. Anyone who wishes to argue that the coalition Government are an extreme right-wing anti-public services Government has to explain why the Blair Government were more anti-public services than the current Government on that measure.

The growth we search for is the first differential with respect to time of the size of the national cake. The question to look at is the one about what the ingredients are. One ingredient that does not get sufficient attention is the energy used to cook the cake. It is possible to compare different countries’ national cakes and the amount of energy required to bake them. Using as the denominator the total energy supply in million tonnes of oil equivalent—not a ton as in a ton of bricks—we see that from 2006 to 2010, the UK’s energy intensity of GDP in 2005 dollars was 1.58, 1.64, 1.62, 1.66 and 1.74. That was a gradual improvement in energy efficiency in terms of bucks for bangs. The OECD average is 1.06, Switzerland has an amazing 4.74 and South Korea a low 0.45, while the US runs at 0.89.

Although the stock market is unreliable at predicting a recession, a spike in oil prices does cause a recession. A recession causes a drop in energy usage: total OECD energy usage dropped from 5,553 through 5,481 to 5,238 between 2007 and 2009, and then went up again to 5,413 in 2010. According to the International Energy Agency oil market report, OECD demand for crude oil peaked in 2007 at 49.09 million barrels of oil a day, then went through 47.5, 45.84, 46.17 to 45.63 in 2011. Brent bottomed out at just over $40 in December 2008 and has increased since. More recently, it peaked at just over $126 and today has come below $110. In the Budget, it was forecast at $110, so it has risen above Budget figures. To that extent, therefore, one would expect to have a constraint on growth in 2011 and early 2012, as oil prices have increased. Lo and behold, we have it: 10 of the 17 eurozone countries contracted in the last quarter of 2011. The lack of certainty does not help, but energy costs are part of this. The USA has the advantage that West Texas Intermediate has been cheaper than Brent.

Politicians are not all-powerful. We are affected by the global energy picture as well as the eurozone crisis. When the business climate is good, it is easier for bad managers to produce a good return—hence the US saying, “In a hurricane, even turkeys fly.” However, in difficult circumstances, such as those that we face today, the outcome can still be disappointing even though the policy choices are the right ones. The time we could have changed policy without paying was between 2005 and 2008, when Government spending was accelerated at exactly the wrong time, as was noted by Tony Blair and Lord Turnbull. It remains the case, however, that if we are to find ways forward we need to increase our energy-intensity of GDP and find more ways of having economic activity that uses less resources. A lot of all this is already being done, but there is a greater need for the future, as the old certainties of continual growth and resource consumption no longer apply.