Loan Charge 2019: Sir Amyas Morse Review

Julian Lewis Excerpts

Thursday 19th March 2020 Commons Chamber

[Mr Davis]

I do. The hon. Lady tempts me into a political point, because the Blair Government were the most active promoter of these schemes, but she is right in general.

When something is as unclear as this tax law obviously was, we do not take the date of resolution from the first date that HMRC wins—we do not keep going until we get the answer that the Government want. We take it from the day it is finally resolved in the Supreme Court. The case was not finally and definitively settled by the Supreme Court until 2017, when it found in HMRC’s favour on the Rangers, Dextra and Sempra cases. The Government—this relates to the point made by my right hon. Friend the Member for New Forest West—then passed further legislation to clarify the law. Even after the court case, they passed legislation to clarify the law. If it was so clear, why did we need a new law in 2017? That is the fundamental point.

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

My right hon. Friend is making an unanswerable case in logic, but I would like to put another political point to him. The cause of tax avoidance is not normally associated with such parties as the Labour party or the Liberal Democrats, but I am sure he would acknowledge that Members from both those parties have played a leading role in trying to put this injustice right.

[Mr Davis]

My right hon. Friend is absolutely right. I started by saying that this is not a political issue; it is an issue of honour. As we would expect from our House—one of the greatest Parliaments in the world, if not the greatest—all sides take part in defending that honour.

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[Dr Julian Lewis]

Maybe the thesaurus wasn’t clear.

[Mr Davis]

Yes, I will send HMRC a copy of Microsoft’s thesaurus. Not only that, but in paragraph 3.8 of his report, Sir Amyas states:

“The Review’s legal advisers found that there was no precedent for that element of the design.”

That is the retroactive, retrospective or backward-looking element. There was no legal precedent for that design. I hope, frankly, that the Government will now stop playing with words and finally concede that this is indeed a retrospective measure—an unprecedented retrospective measure.

The only just, fair and rational resolution is to remove the retrospective nature of the loan charge and set the cut-off date when the law became clear—when the Supreme Court finally settled the matter in 2017 and when the Government felt it necessary to legislate to make clear what they meant in the first place. That is why, as I made clear, if the Government do not act to address this issue, Parliament—all of us who take this very seriously—will have to act for them and make clear that, in the future, HMRC can under no circumstances act retrospectively. If we cannot solve this, here comes a Finance Bill. I suggest that the Minister should make one simple adjustment to his plans before they are published: change December 2010 to July 2017. That would resolve the issue. It would lift enormous pressure off 50,000 of our constituents, and it would put the Government in a morally defensible, justifiable and decent position.

Tax law is the only part of English law where “innocent until proven guilty” does not apply. If HMRC tells us we owe it money, then, until we prove otherwise, we owe it money. It is therefore very important that the law is clear—that it is not subject to reinterpretation by subsequent Governments and it does not move with social mores or whatever; it is simply clear. That is what we have to do. In the interests of natural justice and the financial and mental wellbeing of thousands of our constituents, it is time for the Government to change their mind and remove this harrowing burden from the 50,000 people who have been caught by it.

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

During business questions before this debate, I asked about the perennial issue of war widows whose pensions were stopped because they remarried or cohabited, and we were told in no uncertain terms that those pensions would not be reinstated retrospectively. On 6 February, I tabled a question to the Financial Secretary to the Treasury, who is present, about the apparent difference between the approach to war widows, who will not get retrospective pensions, and people who will be hit retroactively by the loan charge. I was told in the reply that the loan charge is not retrospective. We now know that the reason it is not retrospective is that it is retroactive, even if the two things are exactly the same.

I pay tribute to my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) for taking the initiative over several months to try to put this right, to the all-party parliamentary group ably led by the right hon. Member for Kingston and Surbiton (Sir Edward Davey), and to our former colleague, Greg Mulholland, who has done a great deal of background research in support.

My understanding of the situation can be summarised as follows. First, uncertainties arising from IR35 legislation led tax experts to approve umbrella company loan schemes. Secondly, many self-employed public sector workers, among others, had no idea that they were being paid by means of such loans. Thirdly, if HMRC had been doing its job properly, it would have sanctioned the purveyors of those schemes and warned the victims, as soon as they sent in their first annual returns, that they were making themselves liable for charges.

Fourthly—this is quite incredible—such schemes are still being sold to thousands of people who clearly still have no idea what is waiting for them from HMRC further down the line. Fifthly, the Morse review’s decision to exempt people affected prior to 2010 leaves people who were bullied into making large payments relating to the years before 2010 unable to get those settlements rescinded. People actually paid money before the Morse review for a period that has now been exempted, and they could probably negotiate better settlements, if any were still needed, than those for which they paid money that they cannot now get back, because they cannot reopen the negotiation.

Sixthly, people acted in good faith on the best professional advice that they could get. They should not have been left in blissful ignorance for years on end by a Government body that is now playing catch-up. Because of the time constraints, I will not go through the harrowing personal testimonies, but will stick to a couple more theoretical points and then conclude.

Seventhly, it has been pointed out that there was something called part 7A ITEPA—part 7A of the Income Tax (Earnings and Pensions) Act 2003—which came into effect in December 2010, and this has been cited as justifying the decision for the loan charge to apply from 2010 onwards. However, I am advised by Alan Williams FCA, a constituent as well as a highly qualified professional, that this does not apply to the self-employed, so the self-employed who were so often the victims of this set-up ought not to be caught by a provision—by the assumed knowledge of a provision—that did not, in any case, apply to them.

An eighth point is that the loan charge is not, in any case, full and final settlement, and therefore does not close open years. Even those paying the loan charge will see HMRC continuing to pursue further sums for so-called protected years in which loans were received. The recommendation of Mr Williams is that those accepting the loan charge should be afforded finality by making the loan charge full and final settlement.

I come to the conclusion that HMRC fell down on the job. It was asleep at the wheel. It bullied the victims, and let the villains who created these schemes get away with it. HMRC in this case is not just a bully; it is a negligent bully. The Government should know when they are beaten both morally and intellectually, stop flogging this dead horse and finally do the right thing.

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[The Financial Secretary to the Treasury (Jesse Norman)]

I congratulate my right hon. Friends the Members for Haltemprice and Howden (Mr Davis) and for New Forest East (Dr Lewis) and the hon. Member for Brentford and Isleworth (Ruth Cadbury) for securing this debate today, and I thank colleagues on both sides of the House for their contributions. It is a measure of the effect they perceive on their constituents that, in these circumstances, they are here in such numbers.

The outbreak of covid-19 has created extraordinary circumstances, and it is important to say up front that the Government are keeping the situation under close review, as elsewhere, and will take a proportionate and reasonable approach to anyone covered by the loan charge who is unable to file their return by 30 September. That date has been moved back to give people enough time to respond to the Morse report and its recommendations, but the Government will insist that HMRC takes a proportionate and reasonable approach to anyone covered by the loan charge who is unable to file their return by 30 September.

Anyone who believes they may be affected by this should please contact HMRC as soon as possible. Equally, we must recognise that HMRC’s workforce may well be affected by the outbreak. Where appropriate, HMRC has made it clear that it will take steps to support anyone who has been disadvantaged by delays at its end as a result of covid-19. As the House will know, HMRC has already established a helpline to support any businesses and individuals affected. The hon. Member for Bootle (Peter Dowd) raised that issue, and I can confirm the helpline has now been in place for some time and has an expert and supportive staff behind it.

As this debate has made clear, the loan charge, and with it the wider issue of using disguised remuneration schemes to avoid tax, has been the subject of public concern and considerable controversy. Let us be clear that tax is never popular, and my colleagues and I recognise the strength of feeling and sympathise with those who may be subject to the charge. Today’s motion reflects some of the arguments and concerns expressed by colleagues that the loan charge is retrospective and unjust and that the law was not settled, it is claimed, until 2017. If I may, I will deal with each of those charges in turn.

First, however, we need to be clear what we are talking about. Disguised remuneration is a term of art—it is a fancy term—but the House should be under no illusion as to what it amounts to. Such schemes are a form of contrived tax avoidance in which people are paid in the form of a loan with no interest and no intention or requirement to pay the loan back.

[Dr Lewis]

If it were so clear and the schemes were so contrived, why did HMRC not point that out to people at an early stage, so that they would have seen what they were letting themselves become vulnerable to?

[Jesse Norman]

I thank my right hon. Friend for the question. All he needs to do is attend to the detail of the Morse report, in which Sir Amyas Morse goes through the efforts made at that time, before and after 2010, in some detail. That is the basis for the judgment that he reaches about the appropriate relief.

Coronavirus: Employment Support

Julian Lewis Excerpts

Thursday 19th March 2020 Commons Chamber

[John Glen]

The hon. Lady makes a reasonable point about the concerns that are being raised. That is why the Cabinet Office will give further advice today on key workers and the support that will be given. I recognise that yesterday’s announcement on schools will be a significant disruption to the lives of many of our citizens. It is very important that we put in place urgently clarity about who is involved—who is designated in those categories—and the support that will be available. I will ensure that her point, which I am sure reflects the views of many, gets to the Cabinet Office after this session.

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

Given that the suggestions of my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) could be implemented so speedily, will the Minister undertake to try immediately after this session to get an answer on whether they should be implemented?

[John Glen]

I thank my right hon. Friend for that question. Of course I will.

Loan Charge

Julian Lewis Excerpts

Thursday 11th April 2019 Commons Chamber

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

If there is an inquiry into this matter, as I hope there will be, I would be surprised if it were not found that the whole issue boils down to a single, simple question—were people who were using these avoidance schemes and openly reporting them to the taxman adequately warned at the time by HMRC that such schemes were not approved and might lead to heavy future bills? If they were warned yet chose to proceed, they have only themselves to blame for continuing to use such schemes after the warning was given, but if they were not warned at all, then HMRC cannot reasonably expect to recover any tax whatsoever from them.

2019 Loan Charge

Julian Lewis Excerpts

Tuesday 20th November 2018 Westminster Hall

[Mr Baker]

I certainly agree with the right hon. Gentleman that there is a job of work to be done across parties to uphold the rule of law, in particular the principle that legislation should not apply retrospectively. That is a subject on which I have made speeches over the years. We end up in a hideous cycle of undesired action, in particular to avoid taxation, followed by the injustice of retrospective action to protect other taxpayers and the misery that causes to large numbers of people. It must be brought to an end, but underpinning that we must be committed to the rule of law.

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

I am grateful to my hon. Friend for bringing this debate to the Chamber. Can I ask him about retrospection? My constituent, Alan Williams FCA, points out that HMRC already had sufficient power to recover tax from individuals, so it is rather its own convenience and its unwillingness to apply its existing powers that have led to this legislation. My constituent Andy Pocock points out that in his case, he has procedures under the existing legislation whereby he is allowed to appeal, but all that will be cut off retrospectively by the new legislation and he will not have a chance to fight and defend his corner.

[Mr Baker]

One of Parliament’s duties is to restrain the Executive and ensure that their powers are reasonable. We should look carefully at the subject that my right hon. Friend has just raised. It is important that HMRC treats people in a decent and civilised way, and certainly more powers ought not to be taken than are strictly necessary.

May Adjournment

Julian Lewis Excerpts

Thursday 3rd May 2018 Commons Chamber

[Bob Stewart]

Mr Speaker, as ever, you put me properly in my box and, as ever, I take a spanking without any problem.

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

Too much information.

[Bob Stewart]

Indeed. I think this is one of those debates.

Let me get back to the main point, which is that it is a bad omen if young men and young women trying to be criminal law barristers are finding it very difficult. I am making this speech because earlier this week, I met a young barrister from my constituency who has had to leave the criminal Bar because she simply could not afford to live while working within the system. She was originally from the midlands, from a family of farmers, and she and her siblings were the first generation of the family to go to university. Her parents were totally supportive of her wish to be a barrister, a dream she told me she had had since she was 12 years old. She loved lawyer dramas on television, and her mother told her that her urge to be a lawyer had probably come from watching too much of the American law drama “Ally McNeal”, because she had a superb mobile phone.

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[Bob Stewart]

I think there will be a debate on these issues next Tuesday, and I might take part. I entirely agree with my honourable and very good Friend, and I thank him for raising that point.

My second topic is something that struck me as I passed by the television monitors this morning. If there is a terrorist incident in our wonderful building, we are told to “run, hide and tell”. I was slightly shocked by that, and I asked a policeman whether that is also the advice they are given. The police officer said, “Yes, but don’t worry, sir, that is the last thing we would do. We would not run, hide and tell.” If that is the way we are telling security personnel to conduct themselves, I am extremely concerned about what the implications might be if someone did not run, hide and tell, but instead ran towards the incident, put themselves in danger and was hurt. Does it mean that the Government might say, “Your advice and instructions were ‘run, hide and tell’ and you did exactly the reverse. Therefore we will not give you compensation”?

This issue concerns me a great deal. I do not believe for a moment that the people responsible for our security would do such a thing as “run, hide and tell”. I spoke with the Chair of the Defence Committee a few minutes ago, and he said that he wanted to comment on that point, so I will sit down.

[Dr Julian Lewis]

I am grateful to my hon. Friend, and I am frankly surprised that common-sense advice from the point of view of an untrained civilian should be extended—if indeed it is—to those who are professionally engaged in maintaining the security of this place and those who work in it. Of course we expect people to rise to the occasion when they are on duty, and we expect those who are not charged with being on duty to keep out of the way of those who are. How concerned is my hon. Friend at the prospect that people who work in the security field are beginning to think that they might pay some sort of financial penalty if they do what most of us would admire, and tackle the danger rather than hide from it?

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[Jeremy Lefroy (Stafford) (Con)]

I am most grateful to follow the speech of my distinguished colleague, my hon. Friend the Member for Gainsborough (Sir Edward Leigh). I very much agree with him on a lot of areas, but I shall start with a point where I might pose a little challenge. I believe we wish, as a country, to be strong on defence. I absolutely agree with him on that and think that what my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) has said about a minimum of 2.5%—and possibly even more—is right. I am very proud that Stafford is host to three signals regiments and the tactical supply wing of the Royal Air Force. If we are to be a global Britain, punching above our weight by maintaining a proper diplomatic representation around the world, which is vital as we leave the European Union, and at the same time we are to ensure that our citizens have high-quality public services, be they in respect of law and order, health or social care, we cannot be an absolute low tax economy. The two things do not add up. If we look at the percentage of GDP that we spend on our public services and compare that with what happens in France, which has a similar global profile to the UK, we see that our figure is much, much less.

At this point I wish to raise the issue of our health service. I declare an interest, in that I am married to a doctor, and I am the father of a doctor and the brother of a doctor.

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

So where did it go wrong?

[Jeremy Lefroy]

My right hon. Friend may very well ask!

If we look at the World Health Organisation’s report on people’s perceptions of access to good quality healthcare in 2013, under a Conservative-led coalition Government, I am glad to say, we find that 82% of France’s population and 85% of Germany’s felt they had access to good quality healthcare, whereas in the UK the figure was 96%. For all its faults, and there are many, as I know personally from my constituency experience, our system is held in high regard and it provides almost everybody—96% is not 100%—with access to high-quality healthcare.

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

My hon. Friend the Member for Stafford (Jeremy Lefroy) is one of the most decent and good-hearted Members in any part of this House. It is therefore a pleasure, as well as a privilege, to follow him in this short debate.

My hon. Friend the Member for Gainsborough (Sir Edward Leigh) and I are acquaintances and friends probably going back longer in our political association with one another than either of us does with any other Member of the House. We began to work together politically in 1981 and, as he said in the somewhat reflective part of his contribution, the issue on which we were working was to counter the dangerous and widespread movement for one-sided nuclear disarmament that was in its heyday at that time at the height of the second phase of the cold war. He rightly paid tribute to the work of Lord Heseltine, as he now is, and others who fought and won that battle. They not only won the argument but won the election on the basis of the strength of the argument, because of the commitment of the British people never to leave this country wide open to aggression from undemocratic and, indeed, dictatorial states.

At the time when my hon. Friend the Member for Gainsborough and I were waging that political campaign, my hon. and gallant Friend the Member for Beckenham (Bob Stewart) was engaged in somewhat more dangerous activities, fighting to defend the integrity of the United Kingdom and the security of its citizens in Northern Ireland. Some time ago, he and my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) raised the question of the legal persecution of soldiers who had fought in Northern Ireland in an attempt to mount a successful security operation against enemies who were bound by no accepted rules, norms or laws of conflict. In that counter-terrorist campaign up to 40 years ago, they had to make sometimes life and death decisions in fractions of a second in a form of conflict for which, for the most part, they were entirely untrained. Now, up to 40 years later, as my hon. and gallant Friend the Member for Beckenham and my hon. Friend the Member for Filton and Bradley Stoke have made clear, they find themselves in peril of being brought before the courts in relation to actions that have often been investigated over and over again without there being enough evidence available for any proper prosecution to be brought forward.

[Bob Stewart]

I thank my right hon. Friend and you, Mr Deputy Speaker—a colonel of the Royal Army Medical Corps, of course—for allowing me to intervene.

I was involved in fatality shootings in Northern Ireland in my time, but every single time there was a fatality, it was investigated. If it was considered right by the Royal Ulster Constabulary, it would send in an investigation team to check that we had acted legally. I tell fellow Members this: we were so constrained by the yellow card—the rules for opening fire—that we almost thought about it as we went to sleep. It weighed heavily on us in those milliseconds before we opened fire. So it is very hard on us, all these years later, to face the prospect of revisiting these incidents when they were properly investigated at the time and we were told that there was no case to answer.

[Dr Lewis]

Everything I have heard about the conduct of my hon. and gallant Friend, not only in Northern Ireland but in Bosnia and in other dangerous parts of the world, testifies to one single unanimous assessment: that he was an inspiration to the troops he led and that they would follow him anywhere. It is quite right that he has done so much in his time in this House to repay that admiration and to honour the trust that they rightly put in him. What concerns me is that we are not repaying the debt that we owe to servicemen, who in those days were very young who were put in an invidious position in a counter-terrorist environment in circumstances for which they had received no special training.

The Select Committee on Defence has looked into this matter in some depth, and we had an extensive debate on the subject on 25 January in Westminster Hall. I do not propose to rehearse the arguments made there. I just wish to remind the House of something that I have pledged constantly to keep reminding it of—that there will be no end to this process until the Government have the determination to bring in a statute of limitations for all terrorist-related incidents up to and including the date of the Belfast agreement. I have had many conversations with many people about this, including Sinn Féin MPs, who had their own concerns that also have some power and force to them. For them, there is the issue of many unresolved deaths for which inquests have not yet been held.

I believe that there is a basis for a comprehensive solution to that problem. People would be best able to get to the root of what happened to their loved ones if other people, on any side of this multifaceted and horrible conflict, could come forward to explain to the best of their ability what they remember of those circumstances so long ago, without fear of finding themselves in a state of self-incrimination. We have the example of what happened in South Africa and the lesson taught to us by Nelson Mandela.

In the course of the Defence Committee’s inquiry into these matters, we took evidence from eminent professors of law. They said that we could not have a statute of limitations that favours only one side in a conflict, because that could be interpreted as the state legislating for its own impunity, but they emphasised that if we were to combine a statute of limitations with what they call a “truth recovery process” for everybody, that could indeed be entirely legitimate in the face of any form of international legal regime.

The reason for my raising this issue yet again today is my concern about one particular point. The previous Secretary of State for Northern Ireland, my right hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), whom we all welcome back into the Cabinet in another capacity following his successful surgery, initiated a consultation exercise that is supposed to be going ahead. He specifically said that the option of introducing a statute of limitations on the basis I have described would be included in that consultation exercise. I do not expect the Deputy Leader of the House to be able to respond today, but I do expect him to take away my concern about the suggestions that that option may not now be included in the consultation when it eventually happens. That would be a retrograde step.

As we have seen with Brexit, we cannot always have our cake and eat it. Sometimes we have to decide whether we are going to have—in other words, keep—our cake or eat it, and we cannot put off the point of making that direct choice forever. If that is true of Brexit, it is also true of the ongoing problem of the vulnerability of our armed forces to one-sided prosecution. The Government need to grip this matter. They have an opportunity to, and I hope that they will.

Exiting the EU: Costs

Julian Lewis Excerpts

Wednesday 29th November 2017 Commons Chamber

[Elizabeth Truss]

The hon. Gentleman will be well aware that, as part of last week’s Budget, we were able to put additional money into the national health service—into hospital capital and making sure we hit our A&E targets—and we are also allocating money to help with nurses’ pay. The hon. Gentleman will no doubt be pleased about that.

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

These negotiations remind me of the even more complex ones on arms reductions in the 1980s. Will the Minister bear it in mind that the lessons of those negotiations were, first, that too many one-sided concessions project an image of weakness and, secondly, that to get the very best deal, we often have to walk away first and wait for the other side to agree with us, come back, sit down and negotiate realistically?

[Elizabeth Truss]

It is because we need to make sure that the European Union is aware we have alternatives that we are preparing not only for our preferred option of a transition period plus a long-term economic agreement, but for a no-deal scenario. The Opposition want to give that option away, so we would not be able to have that discussion with the European Union.

Intelligence and Security Committee of Parliament

Julian Lewis Excerpts

Thursday 16th November 2017 Commons Chamber

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I want briefly to add to the Intelligence and Security Committee’s to-do list, because it is important that there should be a rapid study—with conclusions brought to the House, when appropriate—of what is a rapidly emerging 21st century propaganda operation for which a playbook emerged during the elections in Europe and in America, and in our recent referendum campaign. That involves some reasonably sophisticated techniques in fabricating division and discord on social media platforms such as Twitter, which are then imported into social media networks such as Facebook, with significant—often dark—money behind them, to spread messages that are quite simply not true.

The impact of that is often to undermine democracy, and we in the mother of Parliaments have a particular duty to ensure that the new techniques are fully exposed and that commensurate action is taken against them. We have talked about the gaps in our laws, and we must make sure that the disinfectant of sunlight shines right the way through the elections we have had so that those laws can be fixed.

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

I speak not only as a former member of the ISC, but as someone who was involved in the 1980s in trying to counter what were called active measures—the use by the Soviet Union of agents of influence and organisations to try to have an impact on British public opinion. The difference between then and now is that it was then quite easy to expose who was behind the influence operations, but now that is much harder because the internet allows concealment.

Does the right hon. Gentleman agree that one of the main antidotes to the concerns expressed in this debate is that the intelligence agencies, and particularly the new technological arm of GCHQ that deals with the internet, should work to expose who is behind the messages that are coming through? We cannot stop messages getting through, but we can neutralise them by showing up their provenance.

[Liam Byrne]

The right hon. Gentleman is exactly right. There are well-sourced reports that there have been at least two briefings about Russian interference to the Prime Minister, if not the Cabinet. It is not clear what action was taken in response, but it is now quite clear that dark forces have new techniques. We recognise their fingerprints in some of the referendums and elections that have played out in our country and elsewhere, but let us be under no illusion that their job is not done. They will continue to try to influence debates in this House because they want to change the political environment in which we debate the terms of Brexit, for example. The faster the ISC can do its work and expose, in an appropriate way, what is truly going on, the better for all of us.

UK Economy

Julian Lewis Excerpts

Wednesday 29th June 2016 Commons Chamber

[Alec Shelbrooke]

rose—

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

rose—

[Stewart Hosie]

I will give way one more time.

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[James Cartlidge]

I accept my hon. Friend’s point, but the EU as a whole is a tariff-free market of half a billion people, and it is a massive asset for our economy to be part of that. In my opinion we need to remain in the single market at all costs. The principle of openness is important, but this is also about the message we send. We have all agreed that there is a threat to inward investment—this is an existential threat to our economy—and it is important to send to the world the message not just that we are open for business, but that we will be open with the principles of our economy and not resort to protectionism.

Secondly, any negotiation on our new arrangements must take place in a tone and manner of goodwill. We must seek an arrangement that is not just in our interest but in those of a strong European Union, and that is fundamental. Whoever undertakes those negotiations with our European partners must be someone who is trusted to want something that works for both parties—I worry about people going to negotiate with a body that they have spent many months heavily criticising.

My third point is about fiscal policy. Whatever we do, if we want to maintain a sense that we are sound, and win back the sense that we are a stable country in the world, we must continue with a fiscally prudent regime. We must continue to take tough decisions, and commit to balancing the books and reaching a surplus. The message that that would send will inspire confidence in our investors and help to restore the stability we all seek.

[Dr Julian Lewis]

Does my hon. Friend agree that an important start has been made on building up that mutual trust by the candour and openness with which the Prime Minister and Chancellor accepted the verdict of the people, even though it went against their own strongly held beliefs? We must carry that forward by ensuring that we observe the spirit, as well as the letter, of the people’s decision.

[James Cartlidge]

I agree with my right hon. Friend, and I was coming on to speak about why this decision came about. While we must accept the decision of the people, we must also understand and be honest about the prospectus on which we believe they voted. A few days ago my hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), the former Mayor of London, of whom I am—of course—a huge fan, wrote:

“It is said that those who voted Leave were mainly driven by anxieties about immigration. I do not believe that is so.”

However, the huge turnout that we saw in working-class areas of this country, council estates and so on, was not due to people saying, “We didn’t get a say on the Lisbon treaty”; it was because of immigration, which was pushed in an inflammatory way throughout the debate. If anyone wants proof of that, I can bring the tweets and emails that I have received, some of which were shocking and horrific—indeed, some were too shocking to read out in the House in the way that some of my hon. Friends have done.

We must accept that the campaign was driven by concerns about immigration. That makes things difficult for us, because when we negotiate we must find a way of preserving all the economic strengths to which I referred while controlling immigration from the European Union. If we boil down the explicit underlying nature of the prospectus from vote leave, it was the end of unskilled immigration from the EU. We heard that there will be skilled migration, but at the moment tier 3 is closed and unskilled workers cannot come to this country from outside the EU. Finding that balance will be incredibly difficult, but it is possible if we have good faith and show goodwill towards those with whom we negotiate.

Electoral Fraud: Tower Hamlets

Julian Lewis Excerpts

Monday 18th April 2016 Commons Chamber

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

May I put on the record my personal admiration for the heroism of those people who took this matter to the electoral court? Does the Minister agree that it would be a betrayal of their courage if the police, for reasons of political correctness, were not to follow through on what appears, in the case laid out by the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), to be an open-and-shut matter of criminality?

[John Penrose]

My right hon. Friend anticipates my next remarks, because we all owe a debt of gratitude to the four petitioners. We have heard that they were pretty heroic in the way they pursued this matter. They were not dissuaded. There were plenty of points at which lesser people might have backed away, but they did not take those opportunities and they pursued the matter through thick and thin. On occasion what they had to put up with was pretty thick and pretty thin, yet they continued throughout. We owe them a debt of thanks, particularly those local to Tower Hamlets.

It was not just those four petitioners whom we must thank, however, because other people picked up the challenge. We must thank my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles), who put the commissioners in Tower Hamlets in the first place, as well as the commissioners; the presiding judge, Richard Mawrey, QC; a number of other officials, including Barry Quirk; and local councillors such as Peter Golds for their assiduous and determined campaign. Many people rallied round the cause of democracy in Tower Hamlets, which is all to the good.

I hope the hon. Gentleman will appreciate that I cannot comment on specific details of ongoing investigations. As an experienced parliamentarian and former Minister, he will understand the constraints of what I can and cannot say. He is, however, doing entirely the right thing. He mentioned that he was about to have discussions and meetings with Commissioner Hogan-Howe and perhaps others. I hope that they can provide him with further reassurances about what is going on with the investigations. I understand that there are still investigations into grant fraud, for example, in parallel with the ongoing investigations into electoral fraud. They perhaps cannot be made public, but he might be able to get further reassurances.[Official Report, 12 May 2016, Vol. 609, c. 3MC.]

I am sure the hon. Gentleman will also pursue, assiduously and determinedly, the point made by my right hon. Friend the Member for New Forest East (Dr Lewis) about the extremely trenchant criticisms in Richard Mawrey’s judgment. While many people might have expected a prosecution to be straightforward, clearly there are different standards of proof, as the hon. Gentleman mentioned, and different levels of admissibility for evidence. The police and the Crown Prosecution Service need to make a judgment, but he will want to investigate the individual cases and allegations to find out what can be pursued. Local people in Tower Hamlets and the electoral community more widely will want to know how we can be sure that these sorts of cases are pursued in the strongest possible terms, whenever the evidence allows, so I would encourage him in those meetings and in pursuing those inquiries.

The hon. Gentleman asked where the plaintiffs stood in respect of recovering costs, and then gave at least a partial answer to his question by talking about the ongoing discussions and investigations in respect of the ownership of assets associated with former Mayor Rahman and members of his family. There have been press stories and reports of court judgments about what has, and has not, been found to be the property of either the former mayor or his family. I understand that that process is ongoing, and again I cannot comment much beyond that, but this is not a finished story, or a set of conclusions finally reached. The mills of both God and, in this case, the justice system are grinding slowly but, one hopes, exceeding small as well.

The hon. Gentleman asked how we might take forward the broader question of how electoral fraud can be made less easy to perpetrate, though it is not easy in the first place, and how we can ensure that the consequences of electoral fraud are clear, swift and unappealing to those considering undertaking it. My right hon. Friend the Member for Brentwood and Ongar, the former Secretary of State for Communities and Local Government, is working on a report on electoral fraud for the Government that I suspect will land on my desk with a satisfactorily large and weighty thud in the next few weeks or months, with a series of recommendations as to how we can tighten the rules still further.

I obviously do not want to prejudge my right hon. Friend’s recommendations, but the hon. Gentleman will appreciate that my right hon. Friend, having been Secretary of State and, before he entered the House, the leader of a local council, will have observed the local democratic process up close and in huge detail, and will have seen its strengths and weaknesses, as well as those of the parliamentary democratic process. I cannot think of anybody better placed to come up with trenchant and closely reasoned recommendations, and I look forward to receiving them. We will all want to read them and consider them in depth.

We will have to wait and see what my right hon. Friend recommends, but I can confirm that he and I have spent time with Richard Mawrey, discussing what he saw both in Tower Hamlets and in his previous judgments—he has a track record of specialising in this area, having examined a series of these problems. Thankfully, such problems are not terribly frequent, but when they have arisen, he has been the person with the single best judicial experience in the country. We have spoken to him and, in depth, to people such as Peter Golds, whom the hon. Gentleman mentioned, so plenty of care has been taken to gather whatever information is available out there. I am sure that we all await my right hon. Friend’s report.

The hon. Gentleman’s final question was where the local righting of the ship had got to in Tower Hamlets. I have made inquiries of the Department for Communities and Local Government on where we have got to. The answer is, broadly, that huge progress has been made, but there is still further to go. I understand that the council has made some progress on key areas in its best value action plan—on procurement, property disposals, and elections management—and has made particular progress since the arrival of Mayor Biggs last June and the new chief executive officer, Will Tuckley, in October. There are still concerns, however, about delays in other intervention areas, particularly in respect of grants, communications and organisational and cultural changes, some of which take longer to bed in than others. Progress in those areas will need to be continued, as will close monitoring by the commissioners to make sure that the progress made is not eroded and does not start to flag.

The Secretary of State for Communities and Local Government will continue to monitor the position very closely and will not consider any variation to the current directions until there is sufficient evidence that the change has been deeply embedded and the key outcomes delivered. I am sure that the hon. Gentleman would want those to be the main criteria. Given the seriousness and acuteness of the problems encountered in Tower Hamlets—he ably and lucidly summarised the worst of them, but there were many others that he did not have time to go into—I am sure that he will applaud every move to make sure that there is no prospect of a recurrence, and that those standards are fully met before we get back to the widely wished-for normality in the electoral and registration arrangements there.

I hope that I have answered the hon. Gentleman’s questions. Where I have not be able to because they are the subject of ongoing investigations, he will, quite rightly—I applaud him for it—speak to the police, including the Metropolitan Police Commissioner and others. I hope that he will get the answers there that he cannot get here. If he pieces the different parts of the jigsaw together, I hope that he sees an optimistic picture, albeit one in which it cannot yet be said that the problem has been solved. At least progress has been made on a problem that is being solved, even if we have not quite reached the final destination.

Question put and agreed to.

Electoral Integrity and Absent Votes

Julian Lewis Excerpts

Wednesday 9th December 2015 Westminster Hall

[Mr Stewart Jackson (Peterborough) (Con)]

I beg to move,

That this House has considered electoral integrity and absent votes.

It is a pleasure to serve under your chairmanship, Mrs Main, and to welcome the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Weston-super-Mare (John Penrose), to his place.

In this country, we pride ourselves on having free, fair, open and honest elections, but we are wrong. In too many parts of the UK, electoral fraud means that honest people’s votes are potentially invalidated by crooked votes. Our whole democratic system is being undermined and the votes of thousands of women of all ages are being regularly stolen by their menfolk. We are turning a blind eye, in effect, to regular breaches of section 115 of the Representation of the People Act 1983 in respect of undue influence.

In May’s general election, 9,372,449 postal votes were sent via Royal Mail. These issues are not new, and the Electoral Commission and Government know about them, but so far we have had very little by way of concerted action to tackle them. This subject has been raised in the media, most notably and compellingly by Radio 4’s “File on 4” investigation programme in March 2014, which focused on electoral fraud in Pendle, Woking and Derby. It was also brought up by my hon. Friend the Member for Pendle (Andrew Stephenson). With great courage and foresight, he raised the matter directly with Ministers on the Floor of the House three years ago during a debate on the Bill that became the Electoral Registration and Administration Act 2013.

Who can forget the words of the election commissioner and presiding judge Richard Mawrey, QC, after hearing the most well-known electoral fraud case in Birmingham in 2005—following events in 2004—which resulted in the conviction of five men? His written judgment referred to

“evidence of electoral fraud that would disgrace a banana republic”.

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

Is my hon. Friend aware that of course there are the open, overt, straight-down-the-line fraudsters at work, collecting ballots that are not their own, but even where that does not happen, within the individual household the privacy of the ballot is lost where voting slips are sent to the household and no one can keep their voting intentions to themselves?

[Mr Jackson]

My right hon. Friend makes a very apposite point, which I will elucidate on and develop later in my remarks. I thank him for his intervention.

Have things really changed in the past 11 years? Mr Justice Mawrey was quoted last year as saying that our present procedures are “wide open to fraud” and that

“serious fraud is inevitably going to continue”,

enabling the manufacture of votes on an industrial scale. He also stated just before this year’s general election:

“The law must be applied fairly and equally to everyone. Otherwise we are lost.”

We await the details of the review commissioned by my right hon. Friend the Prime Minister on electoral fraud in the light of the appalling scandals uncovered in Tower Hamlets following the failure particularly of the Metropolitan Police Service to take timely and robust action. That fell instead to a number of courageous and concerned citizens, including my old friend Councillor Peter Golds CBE, via a petition to the High Court. The long overdue review is being undertaken by my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles). It was announced in August and, as I understand it, will be published in the new year in order that we can look at what further options are available to address this continuing and, as I will make clear later, endemic and institutionalised abuse and illegality. I will touch on Tower Hamlets in particular.

For the record, I have not called this debate in the light of the Oldham West and Royton by-election result, nor even of the comments of the leader of the UK Independence party, but in his media comments in the wake of the by-election he did touch on some issues that I will raise today.

Of the 1,086 cases of electoral fraud reported to police in England between 2008 and 2013, 58% originated in just 10 of England’s 39 police areas. I speak as the Member of Parliament for Peterborough, a local authority that has featured for a number of years on the Electoral Commission’s watch list of local council areas with a high risk of electoral fraud. Regrettably, Peterborough has a recent history of criminal convictions as a result of electoral malpractice and fraud. Most recently, in 2008, there was the conviction of six men—three Labour activists and three Conservatives—for postal vote fraud arising out of the June 2004 local elections. My local authority has also had problems with personation and, to an extent, voter intimidation.

I accept that there are other serious areas of concern, which will most likely be the subject of my right hon. Friend’s review and report, that are of major import. One is the lack of a requirement for proper, valid voter identification when presenting oneself as a voter at a UK polling station. That is unprecedented and undoubtedly anomalous in a modern democracy, and there is clearly a major risk of personation. Another issue is the limit on the powers to challenge alleged personation in the confines of a polling place for presiding officers, even if they know that a person is not who they say they are. The other issue is the failure to put in place legislation to curtail voter intimidation in the environs of a polling station, which we have seen in many places across the country, including Peterborough, but which was systematic in Tower Hamlets.

I will not try the patience of the House, but Tower Hamlets was but the most egregious example of many troubling themes around abuses in our electoral system. They merely coalesced in one London borough as the most extreme and shocking example. In Tower Hamlets, supervision of the corrupt 2014 elections was led by Commander Graham McNulty, who previously had been the investigating officer on the Levy and Blair cash-for-peerages allegations and was later the officer harassed—that is the word—by the hon. Member for West Bromwich East (Mr Watson) to investigate, erroneously, the late Lord Brittan. Despite Lutfur Rahman and his agent being found guilty of seven different counts of corrupt practice after the longest election petition before a court in more than a century, nobody has been charged, including supporters of Rahman named and shamed for multiple election fraud. Why is that? Perhaps the Minister will touch on that.

For the avoidance of doubt, I think that it is incumbent on Ministers to respond in a timely way to the specific recommendations made recently by the Electoral Commission on the need for photo ID at polling stations on the Northern Ireland model—I see the hon. Member for Strangford (Jim Shannon) in his place. To be fair, the Electoral Commission has raised these issues over a number of years and progress has been made, albeit slowly and by increment, on issues such as register stuffing with “ghost” voters, which individual electoral registration will mostly deal with, and the most egregious postal vote fraud methods, via the need for a signature and date of birth, but that will only half deal with the substantive issue to which I will refer later. I accept that there will always be a trade-off between accessibility to the voting system and electoral integrity. It will never be easy or simple to get that balance right.

The Electoral Commission has at least monitored trends and collected data on electoral fraud and has commissioned specialist academic research—more of that later—with an issues paper being published in 2013 and a further comprehensive and detailed report being issued in January 2014. It is a matter of regret and disappointment that the previous, coalition Government—I absolve the Minister of responsibility for this—failed adequately to address the recommendations in that report.

Where I part company with the Electoral Commission and, to an extent, Ministers is on what I see as a degree of complacency in their responses. Of course I commend the extra money for fraud prevention in high-risk areas, but I am disappointed by the blanket rejection of at least considering returning to the pre-2001 regime for postal votes and by the rather anodyne revised code of conduct for campaigners, which is frankly superfluous and lacks any real sanction in law for miscreants and those inclined to unethical or criminal behaviour—a point raised in the “File on 4” documentary.

There is much to be done to tackle electoral fraud in all its forms, but for the purposes of our debate, I will focus on absent or postal votes. It might be worth examining, by way of background, how we came to be where we are now. Postal voting was first used in 1918 for armed forces personnel serving overseas. It was reintroduced in 1945 in similar circumstances, and 1948 saw postal voting extended to certain groups of civilians including those who were physically incapacitated, those unable to vote without making a journey by sea or air or because of the nature of their occupation, and those who were no longer residing at their qualifying address.

Following recommendations made by the Select Committee on Home Affairs in 1983, the Government extended the right to apply for an absent vote in 1985, and the rules were further refined in 1989. The exception was Northern Ireland, where there was already widespread concern about electoral abuse. In 1999, a parliamentary working group chaired by the then Home Office Minister, the right hon. Member for Knowsley (Mr Howarth), recommended that postal voting applications should be simplified and allowed on demand to all voters. The Government legislated in 2000 to implement those changes, which came into effect in 2001.

In its reports on the all-postal vote elections, the Electoral Commission drew back from its earlier recommendation for all-postal voting as standard. Its research showed that a large minority of people wanted to retain the option of voting at a polling station. The Commission, therefore—thankfully—recommended the development of a new model that involved multiple voting methods, including postal voting, rather than proceeding with elections run entirely by all-postal voting.

Suffice it to say that the process for exercising one’s right to vote by post or proxy is no less complex now than it was in 1999, and turnout for general elections has fallen from 71% in 1997 to 59%—a post-war low—in 2001, rising to 66% earlier this year. That serves to refute the idea, held by those who are worried about voter disengagement, of absent voting as a panacea. Our collective obsession with electoral turnout has, surely, for too long obscured the focus on clean, honest and fair elections as the absolute priority, and that is unacceptable.

The Electoral Commission’s response to the Pickles review is detailed, thought-provoking and helpful. It will allow Ministers to access important academic research supporting a key question—perhaps the most controversial aspect of my remarks—at the heart of this debate: the reasons for the growing evidence of criminal electoral malpractice, centred on postal vote fraud, in the British Bangladeshi and British Pakistani communities and diaspora. The debate is not party political; no party has a monopoly on virtue, and all major parties have been party to fraudulent electoral activities over the last 15 years or so. We are talking not about stigmatising a particular group or community, but about protecting our democracy and the precious faith and trust that people have in the voting system.

I am grateful for the work of academics such as Stuart Wilks-Heeg, who published a paper in 2008, on behalf of the Joseph Rowntree Reform Trust, on “Purity of Elections in the UK: Causes for Concern”; and Eleanor Hill, of the Bradford University school of historical studies, who published a paper in 2012 entitled “Ethnicity and Democracy: A Study into Biraderi”, which has laid the groundwork for more recent empirical studies.

The Electoral Commission commissioned research from the University of Liverpool and the Centre on Dynamics of Ethnicity at the University of Manchester, as well as from the social research centre NatCen. In January this year, they published two excellent, compelling and detailed qualitative studies entitled, respectively, “Understanding electoral fraud vulnerability in Pakistani and Bangladeshi origin communities in England” and “Elections, voting and electoral fraud: An exploratory study focusing on British Pakistanis and Bangladeshis”. The findings supported the Electoral Commission’s stated belief that, inter alia,

“electoral fraud is more likely to be committed by or in support of candidates standing for election in areas which are largely or predominately populated by…those with roots in parts of Pakistan or Bangladesh.”

The commissioned studies suggested that

“extended family and community networks may have been mobilised to secure the support of large numbers of electors in some areas, effectively constituting a ‘block vote’”

and that

“the wider availability of postal voting in Great Britain since 2001 may have increased the risk of electoral fraud associated with this approach, as the greater safeguards of secrecy provided by polling stations have been removed.”

The academic research focused on interviews with political activists and non-political local residents in those high-risk areas, and it pinpointed the following cultural and structural trends. The reciprocal, hierarchical and patriarchal nature of kinship networks may mean that pressure is put on people to vote for particular candidates or parties, especially within family groups, as my right hon. Friend the Member for New Forest East (Dr Lewis) has made clear. Individuals may be made to feel as though they have no choice in the matter, or they may, in fact, have no choice. That applies particularly to young women and older women, many of whom are economically disadvantaged. It their 2014 study, academics from Manchester University found that, for instance, Pakistani women are more likely to have their registration forms filled in by the male head of the household than to fill in the forms themselves.

Other problems in those communities are: low levels of public awareness about what is acceptable campaigning and what constitutes fraud; low levels of awareness about how to report electoral fraud; low levels of literacy and lack of English skills, which exacerbate those problems; and reduced political activity, or complete lack of activity, by mainstream parties in too many areas, which gives so-called community leaders free rein to claim propriety over large numbers of families, whose votes they can marshal and direct as they think fit. That is the regrettable flipside of an understandable collective need for ethnic mobilisation and solidarity, but it gives rise to practices that are inimical to our democratic values.

In too many communities, it is regarded as quite normal for political activists to engage in “farming” of postal votes on the doorstep, or even to fill in the ballots at home once signatures and dates of birth have been added, before transporting them to the town hall or polling station. That is regarded as part of the process; it is well understood and not seen as irregular. The University of Manchester reported that the biraderi networks

“may undermine the principle of voters’ individual and free choice through a range of social pressures such as respect for the decision of the elders at its mildest extreme, through to undue influence where in some instances access to individual ballots of women and adult children can be refused by the elders.”

Mainstream tolerance of such block voting is nothing new, although that makes it no less reprehensible. Lord Hattersley wrote in his 2003 biography of his polling day experience in the February 1974 general election:

“I won with an increased majority...the well organised and invariably loyal Kashmiris had cast their disciplined vote early in the day.”

The reports produced for the Electoral Commission highlighted the insufficiency of safeguards for voting procedures. One report found that respondents believed that there was a

“lack of law enforcement around fraudulent applications for postal votes…undue influence and intimidation both when filling out the vote at home with others present, and during the handling of the vote by party activists, community members and candidates themselves”.

Much more research must be done into those issues by the Electoral Commission and others. We cannot know for certain the scale of the problem and how it impacts on elections in our country at every level.

In the interim, I suggest the following measures. Ministers must, as a matter of urgency, consider and respond to the Electoral Commission’s 2014 report and to the findings of the Pickles review. Existing polling station voting vulnerabilities around ID, personation, intimidation and the flaws in the Representation of the People Act 1983 must be addressed soon. There must be a proper review of individual electoral registration to ensure its efficacy in respect of electoral register stuffing. Funds must be set aside for local authorities in high-risk areas to bid for money to work with their local police to investigate properly allegations of electoral fraud, which are often time consuming and costly to investigate. Guidance must be issued to the Crown Prosecution Service and the police to ensure that they take a much more proactive and robust approach to investigating electoral fraud, and that they are seen to be doing so. Finally, new legislative sanctions must be established by means of criminal law in respect of compulsion and intimidation of someone to apply for a postal or proxy vote, alteration of another person’s postal vote application form and the transit of another person’s postal vote documentation. It should be a criminal offence for anyone other than an authorised person to open or alter a completed postal ballot pack—either the ballot paper or the postal voting statement—before it has been received by the proper returning officer.

Ultimately, I believe that none of those measures alone will substantially reduce electoral fraud in our postal votes regime, and that serious thought must be given to returning to the tried and tested system of application in the case of illness, infirmity, military service or work commitments. That system gave us, with the universal franchise, a turnout of 84% in the 1950 general election, and 78% as recently as 1992. Our present system has been summed up perfectly: voting, once a “private act in public”, is now, owing to postal vote fraud, a “public act in private.”

We are currently condoning the theft of thousands of votes of our fellow citizens, many of whom are women—a situation that would shame Emmeline Pankhurst and make a third-world despot blush. We need to ask: what price honesty and fair play, and what price our reputation at home and abroad as the beacon of parliamentary democracy?