Benefits: Two-Child Limit

Lord Bates Excerpts

Monday 26th March 2018 Lords Chamber

[The Lord Bishop of Durham]

To ask Her Majesty's Government what specific measures they are taking to monitor the impact of the two-child limit policy in the child element of Child Tax Credit and Universal Credit on the well-being of children.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government are committed to supporting child well-being, and keep all our child welfare policies under review. We provide a range of support for children, including child benefit, that continues to be paid for each child in a household. Since 2010 there are 1 million fewer people in absolute poverty, including 300,000 fewer children.

[The Lord Bishop of Durham]

I thank the Minister for that reply. Given that the Government’s impact assessment argues that the two-child limit would have a positive impact on overall family stability, and that the policy would increase financial resilience and support improved life chances for children, what current evidence does the Minister have to support the claims that the policy will have a positive impact on overall family stability and improve life chances for children?

[Lord Bates]

I pay tribute to the work that the right reverend Prelate does as an advocate for children among the Bishops and his consistent interest in this. The change in policy that he is referring to in effect came in at the beginning of April last year. We have said we will look at the statistics as they are gathered over a period of time and keep them under close review, particularly in relation to the exemptions, and will publish information on that. Ultimately, in the short term, the key message that we want to send is that the heart of the policy was built on the principle that work should always pay and that people should always be better off if they are working. The fact that we have near-record levels of people in employment, which is continuing to happen, is some evidence that the policy is working, but we need to keep the specific effect of this particular change under review, and we will.

[Baroness Lister of Burtersett (Lab)]

The policy is affecting those in work in particular. The Government claim that their policy-making gives primary consideration to the best interests of the child, in line with the UN Convention on the Rights of the Child. Can the Minister explain how the policy fulfils that principle, when all the independent analysis indicates that it will worsen child poverty significantly in addition to the increase in relative child poverty among larger families, particularly among certain ethnic minority groups and those in paid work?

[Lord Bates]

The benefit applies to those in work and those who are not. However, we were also seeking to introduce an element of fairness. People on very low incomes, in the low £20,000s , who may not have any children are forced to make very difficult decisions that impact upon themselves financially when they are about to have a child, and they will do so without any support—certainly child benefit, but also in terms of any additional support from the state. We feel it is only fair to them that other people ought to be in similar positions when considering whether to have a third or subsequent child.

[Baroness Thomas of Winchester (LD)]

My Lords, what is the effect of this policy on families with a disabled child? It is estimated by the Government themselves that around 100,000 disabled children could be affected, meaning that a family could lose around £1,400 a year, with transitional protection protecting only those already on universal credit, not new claimants.

[Lord Bates]

The noble Baroness is absolutely right to say that there are elements for disability and for severe disability regarding children, and those need to be protected. We maintain the assessment of the effectiveness through a number of different means, such as the households below average income survey, the universal credit data that we collect and the data on the benefits cap. As I said in answer to the right reverend Prelate, some very vulnerable people are impacted by this change, and we want to monitor it very carefully to make sure that they are protected.

[Baroness Hayman (CB)]

My Lords, the Minister mentioned exemptions in one of his answers. Many of us all around this House thought an exemption had been made and an assurance given in the case of kinship carers. We were therefore very surprised and distressed to learn of the case of a young woman who became a carer for her bereaved siblings and then later had a child herself, and became a victim of this policy. In the House on 11 December, the noble Baroness, Lady Buscombe, said this case,

“and this policy is being considered as we speak”.—[Official Report, 11/12/17; col. 1374.]

Could the Minister give us an update on that consideration?

[Lord Bates]

In respect of the kinship carers, that was a decision of your Lordships’ House when the legislation was going through, and of course we uphold that principle. However, here we are talking about cases where there is a third or subsequent child and the initial two places have been taken by either their own children or other children. The noble Baroness is shaking her head and obviously I respect the approach that she is taking. If we could talk about the specifics of the case afterwards, I will certainly make sure that it is taken up with colleagues.

[Lord Skelmersdale (Con)]

My Lords, I remember when the replacement ratio—the number of children per couple to maintain a stable population—was 2.7. What is it now, and has this had any bearing on the decision that we are discussing?

[Lord Bates]

The Office for National Statistics says that the average family size in the UK is 85% with two or fewer children and 87% for lone parents. Those are the statistics that we are currently working to.

[Baroness Sherlock (Lab)]

The right reverend Prelate’s Question asked how the policy will improve family stability, mentioned in the Government’s impact assessment, which stated:

“Encouraging parents to reflect carefully on their readiness to support an additional child”,


could help family stability. The Government argued strongly when the Bill was going through that in the case of tax credits, it would not apply the two-child limit to children who had been born before last April, because parents did not know that the policy was coming in when they had those children. However, they are applying it precisely that way to universal credit. From next February, when universal credit opens out to big families, if you make a new claim and have children born before this policy was ever dreamed of, you will not get support for the third and subsequent children. Can the Minister explain how that is fair?

--- Later in debate ---

[Lord Bates]

That is the provision under the legislation, but it needs to be placed in the context of what we are doing to ensure that families are protected. There are 3 million more people in work and 4 million people are paying less tax as a result of our tax changes. The national living wage has meant an extra £2,000 for families over the past two years alone. We have doubled the amount of free childcare available to three and four year-olds. This Government are doing a lot for families, but we need to be cognisant of those who may be caught by particular rule changes and ensure that they are helped as they should be.

Customs Clearance Arrangements at UK Ports

Lord Bates Excerpts

Monday 19th March 2018 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, with the leave of the House, I will repeat the response to an Urgent Question given by the Financial Secretary to the Treasury in the other place earlier this afternoon. The Statement is as follows:

“Mr Speaker, the Government have been clear that in leaving the European Union the UK will also leave its customs union, allowing us to establish and enhance our trading relationships with old allies and new friends around the world. The Government have also set out that in leaving the EU customs union, we will be guided by what delivers the greatest economic advantage to the United Kingdom and by three strategic objectives: first, continued UK-EU trade that is as frictionless as possible; secondly, avoiding a hard border on the island of Ireland; and thirdly, establishing an independent international trade policy.

Looking forward, as we implement the decision of the British people to leave the European Union at the end of March 2019, we want a deep and special partnership with the European Union. The Government have already set out in their future partnership paper last summer two options for our future customs arrangements—two options that most closely meet these objectives. One is a highly streamlined customs arrangement. That approach comprises a number of measures to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new technology-based solutions. The other is a new customs partnership, which is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU. Those models were detailed again in the Government’s White Paper last October, and by the Prime Minister in her speech at Mansion House earlier this year and in her subsequent Statement to this House. We look forward to discussing both these options with our European partners and with businesses in both the UK and the European Union as the negotiations progress”.

[Lord Tunnicliffe (Lab)]

My Lords, I thank the Minister for repeating the Answer to the Urgent Question. According to the Guardian, Chris Grayling said:

“We will maintain a free-flowing border at Dover. We will not impose checks in the port … We don’t check lorries now; we’re not going to be checking lorries in Dover in the future. The only reason we would have queues at the border is if we put in place restrictions that created those queues. We are not going to do that. We will manage trade electronically. Trucks will move through the border without stopping”.


Does the Minister accept that it is both reckless and misleading for his colleague, the Transport Secretary, to imply that there will be no checks at Dover in the case of a hard Brexit? Can the Minister point out to the House other examples of countries that allow goods to flow through their borders unchecked without some form of customs agreement? Can he also explain to the House how HMRC will be able to implement customs checks post Brexit while the Government continue to close HMRC offices and when they have cut staffing levels by 17% since 2010? Finally, given the Government’s track record of delivering computer systems, does he honestly think that delivery of an upgraded system by March 2019 is in any way realistic?

[Lord Bates]

In response to the first question, what the Secretary of State for Transport described is pretty similar to what I said in the Answer to the Urgent Question about our desiring a frictionless border between ourselves and the European Union and a deep and ongoing partnership. Clearly, “frictionless” has connotations relating to particular checks which could be undertaken at roll-on, roll-off ferry terminals such as Dover, which are important to the economy.

On the second point, the noble Lord invites me to think about whether there are other examples which could be pointed to in this regard. But again, we are looking for something unique, innovative and different. We believe that it is possible; the fact that we are seeing agreement on the implementation period just today shows that it is possible with good will on both sides.

Finally, the noble Lord asked about HMRC and computer systems. That was one of the reasons why the Chancellor announced in his Autumn Budget that a total of £3 billion will be made available and, specifically, that £260 million will be made available to HMRC to prepare itself for the outcome. Therefore the resources are there. To touch on the point the noble Lord made about technology, that is interesting, because it is not as if at the moment the UK does not have any expertise in trading with the rest of the world. It does so quite frequently, and if you go down to Felixstowe or other places, you will see significant amounts of imports that come through and are dealt with in an incredibly efficient and effective way, using technology. We are seeking simply to take that technology and to give it wider usage so that it achieves our objective of a frictionless border that enhances both trade in the EU and for the UK.

[Baroness Kramer (LD)]

My Lords, does the Minister understand that even companies that have obtained trusted trader status—it is expensive—do not use it, because it is so complicated and expensive that they have found that it is not worth while? Secondly, he will know that in the container ports he cites, goods coming long distance are on ships for days and even weeks, which is why trusted trader status can be used in those situations; it takes so long that it cannot be used at an equivalent of Dover, where you have a roll-on, roll-off situation. Does the Minister also recognise that coming through the Dover port, and intermingled with the kinds of operations that could perhaps seek trusted trader status, are vans that have the accumulated goods for 12 small companies, Amazon delivery vans, and so on? The traffic is so completely mixed, and because there is no space at Dover or any capacity to pull out any of the trucks, the mechanism he describes is in effect one of turning a blind eye.

Picking up the Government proposals for dealing with the Irish border, where essentially small businesses, which account for 80% of cross-border traffic, would not be checked, that, again, is the blind-eye strategy. Does the noble Lord understand the implications for smuggling and for abuse of the system of what he is talking about? We already have extensive fuel smuggling at the Irish border and extensive abuse of the VAT tariff differential. He is now creating an opportunity in not just Ireland but at the UK ports, especially the ro-ros, for criminal activity on a scale which this country has fought deeply in the past.

[Lord Bates]

The noble Baroness takes a very pessimistic view of this matter. We believe that we are taking a realistic and optimistic view of the potential agreements. For example, we believe that it is in everybody’s interest to ensure that this process takes place. If we look at the balance of trade between ourselves and the EU, there is a deficit of £96 billion on trade in goods, which suggests that it is very much in the enlightened self-interest of our European friends to ensure that that border is as frictionless as possible so that this trade can take place.

The noble Baroness referred to the situation in Northern Ireland. Of course, there is a difference in duty on certain goods between the two countries, as she alluded to, and they have introduced mechanisms for dealing with that. They have a variety of means of doing so, not just technology. They use some physical checks, particularly to clamp down on the fuel element of that traffic, so I believe that where there is a political will, there is a way. We believe that a will to make this frictionless border happen has been demonstrated, and that is what we are working towards.

[Lord Lamont of Lerwick (Con)]

My Lords, will my noble friend draw the attention of noble Lords opposite who are so sceptical about the use of technology to the evidence given to the House of Commons Select Committee on Exiting the European Union on 29 November 2017, when the chief executive of HMRC, Jon Thompson, said that,

“this has been our consistent advice to ministers, we do not believe we require any infrastructure at the border between Northern Ireland and Ireland under any circumstances”,

whatever the outcome of the talks? In the same session of the committee, the Defra policy director for animal and plant health, John Bourne, replied, when he was asked how he could achieve no border and no infrastructure,

“the risk post-Brexit does not change … Is there a problem … No”.

[Lord Bates]

Whatever we say, those are very profound statements made by people who are in the front line of protecting our borders and ensuring that we collect the duties and taxes due to us. That shows that it is possible. Moreover, we say that the whole trajectory of global trade is heading in a digital direction. We also believe that our approach as a Government is moving towards a digital tax system. We believe that this necessity will force further invention, which will mean that we can deliver this process to the benefit of our economy and productivity as a whole.

[Lord Campbell-Savours (Lab)]

If the Government are so confident that this arrangement in Northern Ireland will work, why do they not apply exactly the same arrangement to Dover? When the Minister talks about the system being frictionless at the moment and goods can go through, of course that is the case because there are no tariff requirements. When tariff requirements apply, the whole regime changes. What controls will exist in the case of trucks that come through this border that is proposed for Dover, where it might well be possible, because the entry is from the destination point, to unload the truck or the container en route, having already come through Dover, where the entry does not truly reflect the goods that are on the truck or in the container?

[Lord Bates]

The noble Lord raises a technical point. I am not in the front line of dealing with these issues. The people to whom my noble friend referred, who gave evidence to the Select Committee, are, and they seem to think that it is possible to do this and achieve these objectives. We should have confidence in them and in ourselves.

Economy: Spring Statement

Lord Bates Excerpts

Thursday 15th March 2018 Lords Chamber

Moved by

[Lord Bates]

That this House takes note of the economy in the light of the Chancellor of the Exchequer’s Spring Statement.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, this debate, which I have the privilege of leading, represents two firsts. First, it is the first in a new format of Spring Statements, which represent a single fiscal event. This was announced by the Chancellor in 2016 and aims to restrict tax and spending announcements to a single event in the autumn, which will allow more time for consultation and for planning by businesses and families. Secondly, today we have the privilege of listening to the maiden speech of the right reverend Prelate the Bishop of Lincoln. I am looking forward to that contribution almost as much as my noble friend Lord Cormack, who is of course a champion in this place for all matters to do with the great city of Lincoln.

The Spring Statement reports on a Britain that continues to grow, to create jobs and to outperform expectations. It is the next step in the plan set out in the Autumn Budget to build a Britain that is fit for the future and an economy that works for everyone. Our economy has been resilient, beating expectations and growing for five years straight—this is a fundamental strength which can help build the economy to meet the challenges that lie ahead. The Office for Budget Responsibility forecast reflects continued robust performance and has revised up the outlook for the economy this year, with growth slightly higher in 2018 than previously expected. Employment continues to rise, and has now risen by 3 million since 2010, the equivalent of 1,000 people finding work every day. This progress has been shared across the UK: since 2010, all nations and regions have seen higher employment and lower unemployment. The lowest paid have seen their wages grow by almost 7% above inflation since April 2015, and the OBR expects inflation to fall over the next 12 months, meaning that real-wage growth is expected to increase over the course of the year.

This Statement points to our mission to repair the public finances, with debt set to fall from next year onwards. Thanks to the hard work of the British people, today’s forecast shows that our plan to get back to living within our means is working. The deficit has been cut by three-quarters: from a post-war high of 9.9% of GDP in 2009-10 to 2.3% in 2016-17, its lowest level since before the financial crisis. The OBR forecasts that, next year, debt will begin to fall and will continue to fall in every year of the forecast, the first sustained fall in debt for 17 years.

While this is good news, borrowing and debt remain too high. We need to keep debt falling: it leaves us vulnerable to future economic shocks; we spend about £50 billion a year on debt interest payments, which is more than the amount we spend on the police and the Armed Forces combined; and it is not fair on the next generation to foot the bill for our current spending. We continue to take a balanced approach to public spending by reducing the debt, investing in Britain’s future, reducing taxes for hard-working families and putting money into public services.

If the public finances continue to reflect the improvements seen in the Spring Statement and the economy continues to be on a strong footing, at Budget 2018 the Government would have the capacity to enable further increases in spending on our vital public services and the long-term investment in Britain’s future. At the Autumn Budget the Government announced £25 billion of spending, including £6.3 billion for our NHS, and supporting households and businesses by investing in the UK’s potential in the long and medium term. Next month, working families will see another increase in their personal tax allowance, inflation-busting increases in the national minimum wage and the national living wage, and a freeze on fuel duty.

I turn now to the specific OBR forecasts. The OBR delivered its second report of the fiscal year 2017-18 on Tuesday. It points to the fact that the economy grew by 1.7% in 2017, compared to the 1.5% forecast at the Budget. Forecast growth is unchanged in 2019-20 at 1.3%, before picking up to 1.4% in 2021 and 1.5% in 2022. The OBR also expects inflation—currently above target at 3%—to fall back to target over the next 12 months. Borrowing is now forecast to be £45.2 billion this year, £4.7 billion lower than was forecast in November last year, and £108 billion lower than in 2010.

The Spring Statement reflects and supports the Government’s balanced approach to public finances by getting our debt levels down to secure our economy against future shocks, and freeing up taxpayers’ money for our vital public services rather than servicing ever-greater debt interest.

Since the Autumn Statement 2016, £60 billion of new public spending has been committed to support our public services. These measures take public investment in schools, hospitals and infrastructure in this Parliament to its highest sustained level in 40 years. Our fiscal strategy is driven by a balanced approach which will ensure that this country has robust and enduring economic growth to prepare us for the future.

Our economy reflects the potential of markets to develop talent and create opportunity because free markets provide jobs for millions, create wealth and form the bedrock of our tax revenues that underpin our vital public services. We will continue to support British businesses and champion free enterprise and free trade around the world. In this respect the Chancellor announced in the Spring Statement that the Autumn Budget 2017 moved to triennial revaluations of business rates from 2022, and it was confirmed that we will be bringing forward the next revaluation to 2021, with triennial reviews starting from then onwards.

The persistent challenge of productivity was also addressed in the Spring Statement. Notwithstanding the strong productivity numbers in the past two quarters, the Chancellor launched a call for evidence to understand how we can boost the productivity of the UK’s least productive businesses, among other pressing issues. As part of the Government’s modern industrial strategy, announcements were made to ensure that Britain remains at the forefront of new technology such as high-speed broadband. The Chancellor announced the first allocations of a £190 million local full-fibre challenge fund announced in the autumn Budget and confirmed £25 million for the first 5G testbeds.

A central part of a thriving economy and business environment is, of course, the people who work within it. The Spring Statement also told us that the Government are prioritising skills and training so that people can access and capitalise on available opportunities. The Chancellor reiterated the commitment of over £500 million a year to T-levels, the most ambitious post-16 reforms in 70 years, and £50 million of support is available to employers to prepare for its rollout.

We are also undertaking the largest road-building programme since the 1970s and embarking on the largest investment in our railways since Victorian times. We are making solid progress on plans to deliver the Cambridge-Milton Keynes-Oxford corridor and we are devolving powers and budgets to elected mayors across the northern powerhouse and midlands engine. We are in negotiations for city deals with Stirling and Clackmannanshire, Tay Cities, Borderlands, north Wales, mid Wales and Belfast, and we have invited proposals from cities across England for the £814 million fund that was announced in the Budget to deliver on their local transport priorities as part of our plan to spread growth and opportunity across all parts of the United Kingdom, because we know that investment in critical economic infrastructure and skills feeds through into the productivity bottom line.

The Spring Statement echoed a commitment to tackle the challenges in the housing market, and the Chancellor has set out measures this week to help it happen—an investment programme of £44 billion to raise housing supply to 300,000 a year by the mid-2020s. The Chancellor announced new updates to the Government’s housing strategy. The Government will work with 44 authorities which have bid into the £4.1 billion housing infrastructure fund to unlock homes in areas of high demand. It was announced that the West Midlands has committed to deliver 215,000 homes by 2030-31, and London will receive an additional £1.7 billion to deliver a further 26,000 affordable homes, including homes for social rent. It is estimated that 60,000 first-time buyers have already benefited from the stamp duty relief introduced in last year’s Autumn Budget.

The Chancellor also reported progress on aspects of tax policy, including multiple tax consultations, both published and impending. We have published the consultation on improving the way in which the tax system supports self-funded training by employees and the self-employed, and the Chancellor has asked the ONS to look at developing a more sophisticated measure of human capital so that future investment can be better targeted. In the autumn the Government published a paper on taxing large digital businesses in the global economy, and the Spring Statement follows this up with a publication that explores potential solutions.

The Government published a consultation on the new VAT collection mechanism and a call for evidence on how to encourage digital payments while ensuring that cash remains available for those who need it. The call for evidence will also seek views on how the tax system or charges can reduce the amount of single-use plastic waste in our society. Further consultations have also been announced, including a call for evidence on whether the red diesel tax relief on non-road mobile machinery discourages the purchase of cleaner alternatives.

The Spring Statement sets out how, through targeted measures, we are restoring the UK’s public finances for the benefit of our economy, for our public services, for our taxpayers and to ensure that we have an economy which is fit for the future. I commend the Spring Statement to the House.

[Lord Young of Norwood Green (Lab)]

Why did the Minister omit the paragraph on page 8 of my report dealing with the commitment to delivering 3 million apprenticeship starts?

[Lord Bates]

I think the noble Lord may be confused. This is not a repeat of the Statement given in the other place earlier in the week. It is a new speech addressed to a specific debate. It is not a repetition of a Statement but is part of a debate on the state of the economy and the OBR. I hope that helps clarify the position. However, I will be happy to deal with that point when I wind up the debate.

--- Later in debate ---

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I sense that the opening part of the speech of the noble Lord, Lord Davies, might be the one area in which we find common agreement, on the majestic qualities and aesthetic beauty of Lincoln Cathedral, which is a great place to start. Again, in responding to this extraordinarily high-quality debate, I congratulate the right reverend Prelate the Bishop of Lincoln on his excellent contribution to it. As someone who hails from the same part of the world as he does, having been born in County Durham, I used to think that Durham Cathedral was the greatest cathedral on the planet, but even I was turned when I saw Lincoln Cathedral in all its splendour, particularly the facade. It was wonderful to hear his remarks, and I look forward to hearing many more.

This debate covered a number of areas, and I will try to summarise the key themes. There was a focus on the debt and the progress made in reducing the deficit; we are beginning to see a reduction in the debt. My noble friend Lord Higgins, whom I congratulate on his 54th contribution to a Budget debate, pointed to the fact that in absolute terms debt continues to rise. We referenced the percentage of GDP, which the OBR forecast shows is beginning to fall. My noble friends Lord Hodgson, Lord Higgins and Lord Freeman, and the noble Lords, Lord Mawson and Lord O’Neill, all made reference to the important element of continuing that effort to control spending, and said that rather than pitching it in terms of austerity, we should do so in terms of living within our means. The noble Baroness, Lady Kramer, also mentioned intergenerational fairness, which means ensuring that we hand on a legacy to our children which does not saddle them with the debt of the previous generation.

Public services featured significantly in the debate, and rightly so. The noble Lord, Lord Haskel, began by highlighting the importance of public services, as did the noble Lords, Lord Taverne and Lord Davies, the noble Viscount, Lord Chandos, and the noble Baroness, Lady Kramer. There was a strong focus on productivity, investment and technology, which the noble Lord, Lord Mawson, focused on, as did my noble friends Lord Hodgson and Lord Freeman. There was particular reference to skills, which was commented on by the noble Lord, Lord Young, and my noble friends Lord Freeman and Lord Hodgson; I will come back to that in a moment.

A variety of views were expressed on the OBR forecasts themselves. It was a bit of a teaching masterclass with the noble Lords, Lord Skidelsky and Lord O’Neill, as we listened to their explanations, and the noble Lord, Lord Livermore, gave his own interpretation of those statistics. However, everybody focused on them. The Chancellor said in his Statement that GDP growth statistics are not a target to be met. They were forecast to be beaten. We are very much in that mindset—just as when the forecast for last year, given as recently as November at 1.5%, was beaten, at 1.7%. We would like to believe that a lot of the changes announced will produce a better outcome.

Brexit featured large in the contributions of the noble Lords, Lord Taverne and Lord Higgins, and the noble Baroness, Lady Kramer. In a spirit of fairness, as Brexit has had so much airplay in your Lordships’ House, particularly this week, I am tempted to say that I may not dwell on it to the extent that they may wish—but I will certainly refer to it. There were some significant contributions both by the right reverend Prelates the Bishop of Lincoln and the Bishop of Portsmouth, and by the noble Viscount, Lord Chandos, about what I would term societal fairness, particularly with regard to young people and people living on welfare. I shall seek to cover some of those points.

Some of the points that I will not be able to address at this moment—I give notice that I shall write on these subjects—concern the review by the Office of Tax Simplification, which was raised by the noble Viscount, and the change in methodology and a paper announced by the Chief Secretary to the Treasury that might be forthcoming, which were mentioned by the noble Lord, Lord O’Neill. I will look into that matter and write to him, if I may.

Now I shall address some of the specific points raised. The noble Lords, Lord Young of Norwood Green and Lord Davies, spoke about the importance of schools. Even while repairing the public finances, the Government continue to protect the schools budget. The core schools budget is at a record high of around £41 billion, and in July the Government announced £1.3 billion in additional schools funding over the next two years.

The noble Baroness, Lady Kramer, spoke about the issues and challenges facing social care. The Government have given councils access to £9.4 billion more of dedicated funding for social care over the next three years, as a result of measures since 2015. The OBR says that the current forecast would leave local authorities in England with £20.2 billion of reserves at the end of 2020-21, which is £3.8 billion—25.3%—more than they had at the end of 2010-11.

The noble Viscount, Lord Chandos, spoke about inheritance tax. Moving to a recipient-based system for inheritance would not only, in our view, increase the complexity of tax but add to the administrative and compliance burdens. The OTS will review the tax to ensure that it is fit for purpose; the review will consider a range of simplification options.

Several noble Lords, including the noble Lord, Lord Davies, and the noble Baroness, Lady Kramer, referred to housing. The Autumn Budget of 2017 said that more than £15 billion of new financial support would be available for housing over the next five years, taking total financial support over the period to £44 billion. In February we announced £866 million-worth of successful housing infrastructure bids, which will deliver up to 200,000 homes in high-demand areas. We have doubled the size of the Housing Growth Partnership to £220 million, providing much-needed investment in small to medium-sized housebuilders, and the Government launched a consultation, under a revised National Planning Policy Framework, to ensure that more homes are built.

My noble friends Lord Freeman and Lord Hodgson, and the noble Lord, Lord Young, spoke about the importance of developing human capital in the context of the advance of technology and the fourth industrial revolution, in AI, that is coming down the track. These are very real challenges that we face. In the new economy we expect increased levels of automation, with some jobs changing. For example, tomorrow’s employers might start to pay more of a premium for general or technical competence rather than for traditional forms of educational attainment. We therefore need to ensure that we make the right investment in our people now so that everyone has the best start at school and continues to receive support and training throughout their working lives. With the support of the ONS, our analytical work will examine the nature of the skills that are valued by the labour market and look at labour market outcomes resulting from education so that we can take a more sophisticated approach going forward.

The right reverend Prelate the Bishop of Portsmouth made a profound point about the poorest in society. He will have heard me comment in my opening remarks about how the combination of the changes to the national living wage and tax thresholds is leading to some welcome and real wage increases for some of the lowest paid in our society. The Government are committed to taking action to help the most disadvantaged, with a focus on tackling the root causes of poverty, including workless households. The fact that there are 3 million more people in work and 950,000 fewer workless households and that 608,000 fewer children are living in workless households has to be, as the right reverend Prelate put it, a reason for hope for the future.

The noble Lord, Lord Skidelsky, focused on productivity and analysed it in some detail. Following the good practice of a student, I will read the Official Report and review what he said. We are very much of the view that productivity is, and has been for many years, one of the greatest challenges that our economy faces. There have been many debates and arguments about why that is so. Some have pointed to its reliance on services rather than manufacturing. As automation has increased, we have not seen the same growth in productivity as, say, the German economy. However, we are not in any sense complacent about this. That is why we set up the National Productivity Investment Fund. Some £31 billion has been made available for research and development—an area which my noble friend Lord Hodgson spoke about and which my noble friend Lord Freeman also mentioned. In digital, we have announced over £95 million for 13 locations as part of the £190 million Local Full Fibre Network Challenge Fund. Transport is another element that feeds into productivity.

I think we need to look at employment and take on board the performance of many other countries in the European Union in relation to GDP. For example, the unemployment rate in France is currently 9.5% and its youth unemployment rate is 22.4%. According to the OECD, in the third quarter of 2017 in the UK it was 4.2%.

The noble Lord, Lord O’Neill, who did so much during his time as a Treasury Minister to advance the northern powerhouse, was right to challenge us not to be timid about the advances that have been made there—due, in not insignificant part, to his efforts in and leadership of that initiative. In the past year we have seen an extra £8 billion added to the north’s economy, with growth and productivity rising at a faster rate there than in London and faster than the UK average. The north’s economy is now worth £316 billion —bigger than that of Norway, Sweden, Austria or Belgium. Last year, as an average, we saw employment in the northern powerhouse area rise at a faster rate than in England. There are now over 400,000 more people in work in the north than in 2010, and the number of claimants of unemployment benefit in the north has decreased by 40% over the same period. Most crucially, as regards transport, where he urged us to do more—several noble Lords referred to this—by 2020 we will have invested over £13 billion to improve transport in the northern powerhouse area. That is more than any other Government in history. I hope that will go some way to address some of the concerns referred to by my noble friend Lord Hodgson.

The noble Lord, Lord Mawson, gave an inspirational address, viewing the economy from the perspective of the entrepreneur. I pay tribute to the work that he has done in Bromley-by-Bow, and certainly in the Lee Valley. He has turned that area of London into one of the most exciting areas, particularly as regards technology around Shoreditch, which holds huge potential for the future of this country. It is instructive that business investment remains strong. It increased by 2.2% in 2016 and forecasts show that it will grow by 1.7% in 2018. I believe that technology investment, certainly in London, is at its highest level ever, which is to be welcomed, with companies such as Apple, Facebook and Bloomberg locating their offices here.

My noble friend Lord Hodgson asked about artificial intelligence and technology. New technologies have the potential to drive economic growth in the UK. We believe they are not something we should be fearful of but that we should ensure that we have the skills and the investment to take advantage of them when they arrive.

The noble Lord, Lord Haskel, asked for an update on the industrial strategy. There will be regular updates on our progress towards the grand challenges set out in the industrial strategy, though this was, of course, not the primary purpose of the Spring Statement. The noble Lord also questioned the quality of jobs. Over three-quarters of the growth in employment since 2010 and nearly all the net increase in employment in the last year has been full-time work, and the proportion of full-time jobs that are low paid is at its lowest level in at least 20 years.

The noble Lord, Lord Young, and the noble Baroness, Lady Kramer, spoke about the apprenticeship levy. There have been over 1.2 million apprenticeship starts since May 2015. We remain committed to delivering 3 million apprenticeship starts in England by 2020. We recognise, however, that this is a significant period of change for employers. As they have two years to spend their levy funds, businesses are taking their time to plan ahead and grow in a controlled way. On the overview, next month, working families will see another increase in their personal allowance, above inflation increases in the national minimum wage and the national living wage and a freeze on fuel duty, which we believe will feed through into some of the poorest areas of the country. The right reverend Prelate the Bishop of Lincoln referenced the north-east of England. Since 2010, there have been 78,000 more people in work in the north-east and 18,800 more businesses, and the north-east has seen the second-fastest growth in median gross weekly earnings since 2010, which is plus 13.8%.

As the Chancellor told us in the Spring Statement this week, this Government are delivering on their plan, which is firmly grounded in a balanced approach. It is not all about controlling finances and not all about investment but is a combination of both. We are seeing large investments, particularly in critical economic infrastructure. That has to be the right thing to do, while combining fiscal discipline with strategic investment in our economy and public services. The OBR forecasts more jobs, rising wages, declining inflation and a falling deficit. That has to be welcomed.

When we look for reasons for hope—I refer back to the speech by the noble Lord, Lord Mawson, who talked about giving people hope for life after Brexit— one area of hope could come in the shape of Forbes magazine, which undertook its annual survey of the best places in the world to do business. Out of 153 economies in the world, of the best places to do business in 2018—not historically, but in 2018—the UK was ranked number one. That is what real business is thinking. That is what Boeing is thinking when it sets up operations in Sheffield, that is what Toyota is thinking when it invests in its plants, and that is what other investors are thinking when they come to this country. We share their confidence in the prospects for this economy. While this review and these forecasts present a challenge, we believe that there is real cause for hope and that we can see a better future for the people of this country as we make a success of Brexit going forward.

Motion agreed.

House adjourned at 5.36 pm.

National Debt

Lord Bates Excerpts

Wednesday 14th March 2018 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, in the absence of my noble friend Lord Bird, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government’s fiscal policy takes a balanced approach, getting debt as a share of GDP falling but also investing in key public services and in areas that are critical for productivity and growth. The latest forecast for public finances shows that we are on target to start reducing debt as a share of GDP next year.

[Lord Bilimoria]

I thank the Minister for his response. I am sure your Lordships will wish my noble friend Lord Bird a speedy recovery. As we all know, he is famous for launching the Big Issue and looking at matters through the prism of poverty. The Chancellor has said the age of austerity is all but over. Given that the day-to-day deficit has now been eliminated, will the Minister outline which new long-term and preventive investments Her Majesty’s Government will now make? Further debt reduction should not merely be the extension of the age of austerity. Will the Minister agree that, as we have learned from today’s Equality and Human Rights Commission report entitled The Cumulative Impact of Tax and Welfare Reforms, austerity has hit the poorest and most vulnerable the hardest, with those with disabilities, certain ethnic groups, women and lone parents all bearing the brunt? Is there light at the end of the tunnel?

[Lord Bates]

I believe there is. First, I join the noble Lord in wishing a speedy recovery to the noble Lord, Lord Bird, who has done so much for alleviating poverty and giving people hope, a chance and a future in this country. Of course it is welcome that the OBR forecasts are now showing that debt will begin to fall from next year as a percentage of GDP, but it is still at the very high level of 85%. The interest we have to spend on that debt represents the combined amount combined on police and defence services. It is critical that we improve our productivity, which is why we have the £31 billion National Productivity Investment Fund, which is designed to do that by investing in R&D, housing and technology. But perhaps the best thing we can do for the poorest in our country is what we have been doing. We have seen an increase in employment to near-record levels, with 3 million new jobs, and the pay of the lowest paid has been driven up so that they are now experiencing, as a result of the national living wage, the fastest growth in real income that they have had for 20 years.

[Lord Lawson of Blaby (Con)]

My Lords, can my noble friend explain why the Government insist on making the national debt appear even bigger than it in fact is? Is he not aware that as a result of quantitative easing—QE—a good quarter of the outstanding national debt is in fact owned by the Bank of England. In other words, it has been bought back. In the private sector, if a company buys back any of its debt, it is written off. Why do the Government not do the same?

[Lord Bates]

My noble friend, who comes to this with immense experience, makes an interesting point. Even if the element of total debt covered by the quantitative easing programme initiated by the Bank of England—about £120 billion—is taken out, the debt figure is still continuing to fall. That is the point we are trying to emphasise: debt is beginning to fall and we are beginning to live within our means, which is the right thing to do.

[Lord Davies of Oldham (Lab)]

My Lords, the greatest asset which any country has is the capacity and willingness of the people to work. Construction workers have been waiting for this Government to recognise and act on the housing crisis for several years. Does the Minister agree?

[Lord Bates]

I wonder whether the noble Lord heard last week when we discussed the national infrastructure plan and announced the initiatives that we were taking to boost the housing market—some £43 billion over the spending period. We recognise that housing is a huge issue, not only of intergenerational fairness but also in terms of driving forward the economy. That is why we have announced the very substantial initiatives that we have to get that sector moving, including from the National Productivity Investment Fund, a large chunk of which is dedicated to housing.

[Baroness Kramer (LD)]

My Lords, do the Government recognise that borrowing that arises from excess day-to-day spending and borrowing that arises for investment in infrastructure and other capital projects are two entirely different issues? Any corporation treats them that way and this Government surely should. Would that not allow them to take the borrowing cap off local authorities, which could then invest in the social and affordable housing that no other programme is currently delivering and which would underpin economic growth in future?

[Lord Bates]

I again refer to the Statement, in which the Chancellor announced that in areas of high demand and low affordability local authorities would be given that additional flexibility, which is welcome.

[Lord Alton of Liverpool (CB)]

My Lords, while we welcome the reductions in national debt, will the Minister confirm that household debt has been going in the opposite direction and that over the last five years there has been a 7% increase in personal debt to a staggering £1.6 trillion? Given that this is quite an albatross around the necks of many of the poorer families to which the Minister has referred, what are the Government doing to try to reduce the levels of personal debt?

[Lord Bates]

There are two things that we can do. One we have done already: the action that we took on payday loans, placing a cap on the appalling rates of interest that were being charged, was the right thing to do. Extending that to other areas of financial services is also right. But ultimately, the best thing that we can do for people who are struggling with debt is to provide work and opportunities so that they can repay that debt and provide a living and a hope for the future of their families.

[Lord Lea of Crondall (Lab)]

My Lords, is the Minister aware—

Supply and Appropriation (Anticipation and Adjustments) Bill

Lord Bates Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Tuesday 13th March 2018 Lords Chamber

Moved by

[Lord Bates]

That the Bill be now read a second time.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Syria: Protection of Civilians in Afrin

Lord Bates Excerpts

Tuesday 13th March 2018 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, with the leave of the House, I will repeat a Statement given by my right honourable friend Alistair Burt in the House of Commons yesterday. The Statement is as follows:

“I would like to update the House on the situation in Afrin. We are closely following developments in Afrin and wider north-western Syria. Over the weekend, Turkish and affiliated forces have continued their territorial gains and are now approaching the town of Afrin itself. We are concerned about recent reports of rising civilian casualties.

The Government have called for de-escalation and the protection of civilians, while recognising Turkey’s legitimate interest in the security of its borders. We will continue to push for a reduction in violence and for consideration of the humanitarian needs of the population in the affected areas. The Prime Minister has raised the need for protection of civilians and proper humanitarian access with the President of Turkey and the Foreign Secretary has done so with the Foreign Minister. The Turkish Government have assured the Foreign and Commonwealth Office that they are working to prevent civilian casualties.

UK-funded partners have been delivering humanitarian assistance in Afrin, including health and protection services. Some of these activities have been suspended due to the current hostilities, but our partners continue to meet needs where they are able and are pre-positioning supplies to help meet the needs of those fleeing the area. This includes health supplies, blankets and food. UNICEF, other UN organisations and the World Health Organization have temporarily suspended all activities in Afrin due to the recent military action.

As the Foreign Secretary said in his Statement of 26 February, we are concerned about the humanitarian consequences of the operation in Afrin. We urge all parties to respect the law of distinction between civilian and military targets, facilitate access for life-saving humanitarian aid, and allow freedom of movement for those caught up in the violence, in accordance with international humanitarian law.

The Syria conflict will soon be in its eighth year. The UK continues to make every effort to achieve our goals in Syria: defeating the scourge of Daesh and achieving a political settlement that ends the suffering and provides stability for all Syrians and the wider region. There ultimately needs to be a transition to a new, inclusive, non-sectarian Government that can protect the rights of all Syrians, unite the country and end the conflict. But we are pragmatic about how that might take place. Syria’s future must be for Syrians to decide.

As the second largest bilateral humanitarian donor in Syria since 2011, the UK is at the forefront of the humanitarian response and is providing life-saving support to millions of people. Since 2012, across Syria and the region, UK support has delivered 26 million food rations, 9.8 million relief packages, 8 million vaccines and 10 million medical consultations. Last year alone we provided clean water to over 5 million people, and contributed to the formal primary and secondary education of over 700,000 children affected by the crisis.

However, ultimately the only way to end the conflict is through a negotiated political settlement. The Foreign Secretary has emphasised, including to his Turkish counterpart, the importance of a political solution and the defeat of Daesh. This must continue to be at the forefront of international efforts and we are concerned about the possibility of the diversion of Kurdish fighters from this crucial fight. We remain committed to working closely with Turkey and other allies to find solutions in Syria that provide stability and bring to an end this terrible conflict”.

I commend this Statement to the House.

--- Later in debate ---

[Baroness Sheehan (LD)]

My Lords, I too thank the Minister for repeating the Statement. The UN Security Council Resolution 2401, announced on 24 February, was jointly negotiated with the Russians and was greeted with relief as it allowed for a ceasefire in order to deploy humanitarian aid convoys to all besieged areas, including eastern Ghouta. However, it was apparent straightaway that the Syrian regime’s concession of a five-hour ceasefire window was a mockery of any so-called humanitarian gesture, as it allowed scant time for supplies to be loaded on to lorries, the necessary permissions to be sought and put into place, and for the aid to be delivered where it was needed. On top of that, medical supplies were removed from lorries, leaving civilians without necessary and essential supplies. This has been the appalling situation since 25 February. Finally, yesterday, the US permanent representative to the UN, Nikki Haley, made a statement condemning the action of the regime, adding that the US could be forced to act unilaterally. I am puzzled as to the timing of today’s Statement to both Houses. Is it in response to the US’s statement yesterday, and if so, do the Government share the view that the ceasefire was a failure, and does it imply our acquiescence in the US’s sabre-rattling? Can the Minister at the very least articulate the Government’s view of Nikki Haley’s threat to take action?

We are all shocked by the situation in Afrin. Reports of the shelling of villages and residential areas are deeply troubling. Violence in the Afrin region escalated after the Turkish Government announced on 20 January the start of a military offensive codenamed “Olive Branch”, which in my view is a macabre choice of name. Between 22 January and 21 February the Kurdish Red Crescent reported 93 civilians killed, including 25 children, in attacks by the Turkish military. A further 313 civilians were wounded, including 51 children. Meanwhile, Kurdish YPG forces shelling in Azaz have allegedly killed four people.

The use of artillery and other imprecise explosive weapons in civilian areas is prohibited by international humanitarian law and all parties should cease such attacks immediately. I hope that the Government have conveyed that message to Turkey in the strongest possible terms. The Kurds have been key allies in our fight against Daesh and I think that all noble Lords will be appalled by the attacks that they are now facing. The Minister will be aware of UN Security Council Resolution 2254, in 2015, which states that the only sustainable solution to the current crisis in Syria is through an inclusive and Syrian-led political process that meets the legitimate aspirations of the Syrian people. Does the Minister therefore agree that such a process must involve Kurds in Syria? Finally, the Kurdish region has already accepted around 2 million refugees and internally displaced people. What assessment have Her Majesty’s Government made of the impact that the Turkish military operation will have on this group?

[Lord Bates]

I thank the noble Lord and the noble Baroness for their questions. Let me start with the Geneva peace process, which has been referred to, as well as UN Security Council Resolution 2254, to which the noble Baroness, Lady Sheehan, referred. It called for inclusive talks which we believe offer the only possible long-term solution. Staffan de Mistura, the UN Secretary-General’s special envoy for Syria, is working hard and effectively against a background of incredible difficulties and complexities to try to get those talks started again. There have been a number of rounds in Geneva and there will be future rounds, but in particular as a result of the Astana and the Sochi processes coming to an end, this is in effect the only show in town. We have to make sure that all of the parties to the conflict become parties to the peace by urging them to progress through the process.

The noble Baroness referred to the statements made yesterday by the US permanent representative to the United Nations, and of course she will be aware that a change of personnel has been announced, with Secretary of State Rex Tillerson being replaced by Mike Pompeo. We now wait to find out whether that will bring about any change in the dynamic here. Both the noble Lord and the noble Baroness were right to point out that this is a global crisis and we need to work multilaterally. We have to be quite honest in these situations about the limitations we face as regards acting independently on the ground. We must work with our EU colleagues, our NATO allies and, crucially in this context, with the UN Security Council.

The noble Lord, Lord Collins, asked what we are doing at the Security Council. Of course, UNSC Resolution 2401, also referred to by the noble Baroness, Lady Sheehan, is for a 30-day ceasefire period from 7 March. We have not given up hope of that and we still want to hold the parties to it. It was agreed so that humanitarian aid could reach millions of people who are in desperate need. In these situations, it is very easy to be frustrated at being powerless in the face of such incredible injustice and human suffering. In such circumstances you need to take every opportunity you have, and we would certainly regard UN Security Council Resolution 2401 as an opportunity. UNSCR 2165, which was very much pushed by the UK at the UN Security Council, also represented an opportunity to allow humanitarian access into Syria to provide relief, without the permission of the Syrian Government.

As I have mentioned, there has already been contact between the Foreign Secretary and the Turkish authorities. We have urged them to embark on de-escalation. We believe it is right that they do, and we can do nothing other than to keep pressing and urging them. We very much recognise what the noble Lord, Lord Collins, said about this diverting attention from the fight against Daesh. For all of those reasons, we must persevere through an incredibly difficult and complex situation, with the lives of the civilians in those benighted areas and our responsibility to them uppermost in our minds.

[Lord Robathan (Con)]

My Lords, the horror and the tragedy of the situation throughout Syria and in Afrin are beyond speaking about. I should say that I am proud of the British Government’s humanitarian efforts and that we are the second aid donor there, and I hope our aid is successful.

I would like to ask two questions of the Minister. The first is: what, if any, legal basis or excuse do the Turks claim for their invasion of this part of Syria? It seems to be an astonishing, illegal act. Secondly, and perhaps more importantly—and I am not pretending there is an easy answer to this—there is the situation regarding NATO. Throughout the Cold War, Turkey was a stalwart ally against the Soviet Union. We now have difficulties with Russia and yet, for the first time in the 70 years of the alliance’s history, on the one side we have Turkey attacking Afrin and on the other side, looking straight at them, we have American assisting troops. Is that not the case? If it is, we should all be hugely concerned about our future security. I am not pretending it is easy, but what action can NATO take in this situation? The Minister talked about the United Nations. What action can the EU take to support NATO?

[Lord Bates]

My noble friend is right to point to the complexity of the situation that we face there. He invites me to make the case for Turkey. I do not particularly want to do that but, by way of explanation, it would take a different view of the linkages between the PYD and the YPG to the PKK, the Kurdish terrorist organisation that is proscribed both in the UK and in Turkey. Turkey sees the links there. From that perspective, it also has to be said that Turkey is host to the largest number of refugees from Syria of any country—some 3 million—and all accounts are that the way in which it looks after those refugees is exemplary. We can explore those issues, but we certainly do not believe that there is a justification for this. That is why we have called for the de-escalation, and we will encourage all other NATO allies to do the same.

[Lord Soley (Lab)]

My Lords, the Minister will have a lot of sympathy because we all recognise the complexity of this and the frustration that we have at the failure of international policy, not least because of the policies of Russia over recent years—a point I have made before. But there is a different issue, which my noble friend Lord Collins raised, about the policy regarding the Kurdish situation and Turkey. It has always been a concern that Turkey, as a close NATO ally, as has been pointed out, has an ongoing problem with the Kurds. It is certainly not helping itself by what it is doing now; it will make it far worse to solve. I ask the Minister again, as my noble friend Lord Collins did: are the Government trying to get a policy on the relationship between Turkey and the Kurds? It is not for us to intervene, but it is for us to say that the problem with the Kurdish minority in Turkey will be made infinitely worse by what is happening now in Syria.

[Lord Bates]

As I said, we do not draw the parallel that the Turkish Government does between the PYD and the YPG. We believe that they have been courageous fighters against Daesh and have been very effective in that role. We do not recognise the links. Those points have been made. We have made the point that the battle against Daesh, which is crucial for stability in the region, is far from won and that this is a diversion of essential resource from that effort. This might not directly answer the point the noble Lord raised, but in the current context it is probably as far as I am able to go.

[Lord Hylton (CB)]

My Lords, this Statement is almost two months too late. The Turkish attack began on 20 January, supported by Leopard tanks and by militias containing many members of al-Nusra and ISIS. The attack was completely unprovoked. It has killed and wounded hundreds of people and displaced thousands of civilians. Turkey could have protected its border and its security by negotiations; it did not even attempt such a thing. Will Her Majesty’s Government condemn this brutal and vicious attack, which may well prolong the Syrian civil war? Will they re-examine Turkey’s right to remain a member of NATO and the Council of Europe?

Our Government rightly say that the Syrians must decide their own future. How can they possibly do so when Russia, Iran, Turkey and the USA have their own forces inside Syrian territory, and Israel makes constant air attacks whenever it feels a need to do so? It is surely not enough to boast about our aid for Syria since the war began. Will our Government become more realistic and press for the removal from Syria of all foreign forces, including volunteer fighters, money and weapons?

[Lord Bates]

I appreciate the noble Lord’s frustration. I know that he has visited the region and seen for himself in Aleppo the horrendous situation on the ground when these sieges take place. But, on the limited options we have as to what we can do, I do not think it is fair to discount the aid effort—the £2.46 billion that has gone there to provide relief. It is important.

We can work in three ways. One is humanitarian, providing emergency relief, and that is what I talked about in the Statement. The second is diplomatically, and I have outlined some of the ways in which we have been trying and continue to try to do that, with Turkey directly, through the UN Security Council and encouraging resumption of the talks. I have to say that there is also a military dimension to this: we have been part of the global coalition which has sought to attack the scourge of Daesh in that area, which is a massive cause of the instability that we see. So it is not just one, it is all. What I am trying to communicate to the noble Lord is that we are, to the best of our ability, trying to exert the maximum leverage we can in each of those areas, with great difficulty.

[Lord Roberts of Llandudno (LD)]

My Lords, when David Cameron was Prime Minister he made a pledge that by the year 2020 we would accept 20,000 Syrian refugees. The figure I have heard is that by 22 February this year we had welcomed 10,538. So we are half way there but we are also three-quarters of the way since the pledge was made. I ask the Minister whether we can really open that door: we still have nearly 10,000 promises yet to be fulfilled. I suggest also that when that promise—that pledge—was made, nobody envisaged that four years on there would still be this slaughter, this total catastrophe, in Syria. Can we get away from thinking that the 10,000 promise was a target or a ceiling, and work according to need instead, such as in Idlib and all these other places? This past fortnight I believe that about 900 people have been killed, including at least 100 children. Can we somehow spur the Government on to get that pledge fulfilled and if necessary—and it is necessary at the moment—go beyond it?

--- Later in debate ---

[Lord Bates]

I thank the noble Lord, first, for recognising that David Cameron’s pledge, and Her Majesty’s Government’s pledge, of resettling 20,000 refugees is on track to be delivered. Of course, there are other dimensions to this. What we faced when we were having those debates was the equally horrendous situation in the eastern Mediterranean, where people were often being smuggled and exploited by people smugglers into making perilous journeys across into Greece. Through the EU facility for refugees in Turkey, which was a €3 billion facility to which we contributed €328 million, we were trying to help in that area. Of course, again, we are providing help in the areas around Syria—in Jordan and Lebanon as well. So I hope the noble Lord will at least accept that we are working, again, on three different levels: in the region, through the Turkish facility; in the refugee camps with the UNHCR; and fulfilling our obligation to bring refugees here. We will continue to keep that under review.

House adjourned at 7.03 pm.

Finance (No. 2) Bill

Lord Bates Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Thursday 8th March 2018 Lords Chamber

Moved by

[Lord Bates]

That the Bill be now read a second time.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Bill before the House today is a mere 187 pages long, which compares favourably to the more than 600 pages of the previous Finance Bill. In part, this reflects the Government’s move to a single, annual fiscal event but it also represents the fact that in December the Government published a document setting out how future Finance Bills will interact with the new tax policy-making timetable. The new cycle carves out more time for consultations and commits the Government to publishing as much of the Bill as possible in draft. Even so, in this Bill some 111 of the 187 pages were published in draft form last September. The Economic Affairs Finance Bill Sub-Committee takes an understandably close interest in the process by which tax legislation is developed. I hope that it will find very much to welcome in this new approach.

Before I turn to the important tax changes enacted in the Bill, I shall set out the broader economic and fiscal context in which we find ourselves and which this Government have helped to create. The UK economy has now grown for 20 consecutive quarters: that is five years of continuous growth. Manufacturing grew by 1.3% in the fourth quarter of last year and has grown for the longest consecutive period in 30 years, with high-tech sectors such as cars and aerospace growing particularly strongly since 2010. Total exports of goods and services grew by 5% in 2017, up on the previous year, and manufacturers remain optimistic as surveys show high export orders. Employment has continued to rise—by 3 million since 2010. Crucially, these figures do not reflect prosperity just in London and the south-east: since 2010 all nations and regions of the United Kingdom, up and down and across the country, have experienced higher employment and lower unemployment.

At the autumn Budget, the Chancellor reported that the deficit has been reduced from 9.9% of GDP in 2009-10 to 2.3% of GDP in 2016-17. Borrowing is set to fall even further in the coming years, reaching 1.1% of GDP in 2022-23, the lowest level since 2001-02. The plan to get back to living within our means is on track. The Government’s fiscal rules take a balanced approach and the OBR forecasts that the Government are going to hit our fiscal targets. Our debt will start falling from next year. The Budget stayed true to our commitment to fiscal responsibility to improve the health of our public finances. However, at 86.5% of GDP, we recognise that public debt is still far too high. Although productivity growth has shown signs of improvement lately, we want to foster the environment to allow it to accelerate. The tax policies in this Finance Bill support that strategy.

The Bill is an important lever in this Government’s legislative programme. A focus on helping young people get on to the property ladder, improving productivity and business investment and continuing our robust efforts to prevent tax avoidance and evasion is at its heart.

Home ownership is a near universal aspiration. However, it is a dream that is increasingly difficult to realise for many of our young people. Affordability is the underlying problem. Consequently, at the Budget, the Chancellor announced a housing package designed to boost supply to put the housing market on a more equitable footing in the longer term. On Monday, the Prime Minister reiterated her commitment to meeting the housing challenge and announced an overhaul of the planning system to deliver more homes in the right places.

However, the Government also want to act in the short term. That is why the Finance Bill permanently scraps stamp duty for first-time buyers purchasing properties worth up to £300,000. On average, first-time property buyers will save nearly £1,700. This means that 80% of first-time buyers will not pay stamp duty at all, and 95% of all first-time buyers who pay stamp duty will benefit from the changes. Over the next five years, this relief will help over 1 million first-time buyers.

Last year, productivity grew by 0.7%, as measured by output per hour. At the autumn Budget, following weaker than expected growth, the OBR downgraded its estimates for the trend of productivity growth to 1.2% per year. Productivity is the best way to sustainably raise and maintain higher living standards and grow GDP. Since 2010, the Government have introduced a set of reforms intended to bolster the dynamism required from our modern and international economy. This includes unlocking over £0.5 trillion in capital investment—funding the biggest rail modernisation programme since Victorian times and major infrastructure projects such as Crossrail and the Merseyside Bridge, supporting businesses by cutting corporation tax to 17% in 2020, increasing access to finance through the British Business Bank, and improving skills through investment in apprenticeships and the introduction of T-levels.

However, we must go further. The Finance Bill does precisely that, encouraging additional business investment by supporting the UK’s dynamic, risk-taking businesses. The Government are a committed partner of the business community. We are, and will continue to be, a world-leading place to start a business. However, due to the lack of finance, some of the UK’s potentially most innovative new businesses are struggling to scale up. That is why we conducted the patient capital review, which reported on these barriers to growth. It concluded that knowledge-intensive companies, which are particularly R&D intensive, often require considerable upfront capital. In response, the Government set out a £20 billion investment and tax incentive action plan. As part of the plan, the Finance Bill works to make more investment available to higher-risk, innovative businesses by doubling the annual limit on how much investment these knowledge-intensive companies can receive through the enterprise investment scheme and venture capital trusts scheme to £10 million, and doubling the limit on how much investors can invest through the EIS to £2 million, providing that anything above £1 million is invested in knowledge-intensive companies.

Within a decade, these changes will produce £7 billion of new and redirected investment into growing companies. On top of this, the Government are stimulating productivity growth by increasing funding in research and development. At the Budget, we extended the National Productivity Investment Fund to £31 billion, and increased the R&D investment element of that by a further £2.3 billion. To complement these and other efforts, the Bill will also increase the rate of the R&D expenditure credit from 11% to 12%.

To achieve a balance in the tax system, the Bill narrows the scope of the bank levy, so that, from 2021, UK and foreign head-quartered banks will only be taxed on their UK operations. Crucially, this provision works in conjunction with the broader package of reforms to bank-specific taxes announced between 2015 and 2016, which includes an 8% surcharge on bank profits over £25 million. The package is forecast to raise an additional £4.6 billion from banks over the current forecast period.

Finally, the Bill continues and strengthens the Government’s work clamping down on tax avoidance and evasion. Since 2010, the Government have introduced more than 100 avoidance and evasion measures. We have secured and protected over £175 billon of extra tax revenue that would otherwise have gone unpaid. As a consequence, the UK’s tax gap stands at just 6%—one of the lowest in the world.

At the Budget, the Chancellor announced a further package of measures expected to raise £4.8 billion by 2022-23. The measures in this Bill constitute part of that Budget package and include provisions to make online marketplaces more responsible for the unpaid VAT of their sellers, close loopholes to ensure individuals with offshore trusts cannot avoid paying UK tax on payments or benefits taken from that trust, extend disguised remuneration rules to include close companies, and clamp down on waste crime by bringing illegal waste sites into scope of the landfill tax. These measures and others like them demonstrate the Government’s enduring commitment to ensuring that taxes are paid.

Although relatively short, this Bill is significant in both ambition and substance. It supports young people buying their first homes, drives productivity by encouraging business investment and ensures tax is paid where it should be—all of this without stifling competition, encumbering the market or hindering growth. This is a Government committed to prosperity and committed to the future. I commend the Bill to the House and beg to move.

--- Later in debate ---

[Lord Bates]

My Lords, I may have overshot the mark in my opening speech by being a little optimistic. I congratulate the noble Baroness, Lady Kramer, and the noble Lord, Lord Davies, on having well and truly rebalanced that perception. There are two potential reasons why there was not a long list of speakers for the debate. One could be a lack of interest, but the other reason could be that there is broad support across the House for the measures in the Bill before us —the House itself can judge whether or not that is true.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, could it be perhaps that noble Lords wish to speak in the next debate, which they see as more important?

[Lord Bates]

That is one possible explanation, but your Lordships have always been assiduous in their attention to matters such as the Finance (No. 2) Bill before us.

Let me try to address some of the points that were raised. The first point was on the argument about growth. We were the joint fastest-growing major economy just as recently as 2016. Of course, there has been a level of uncertainty as a result of the British people’s decision to exit the European Union; that is understandable and most people would recognise it. However, I do not see 1.7% as being a miserable or pathetic rate of growth, or that other OECD competitors with rates of 1.9%, 2% and 2.9% are experiencing extraordinary rates of growth. We entered into this cycle of growth out of the recession of 2008-09, much earlier than others. Therefore, we are at a different stage of growth. But to be able to say that we have grown for 20 consecutive quarters—five years of growth—and that manufacturing has grown for eight consecutive months, which is the longest continuous streak for 30 years, is surely reason for a degree of optimism.

The noble Baroness, Lady Kramer, asked about NHS funding. The Budget provided an extra £6.3 billion of new funding for the NHS, and we are committed to increasing the NHS budget by a minimum of £8 billon in real terms over the next five years. This is a significant first step towards that. The NHS is seeing over 2.9 million more A&E patients every year compared to 2010 and treating 57,000 more people every year for cancer, giving the UK its highest ever cancer survival rate. The noble Baroness asked whether we would have a hypothecated tax for health. Of course, we have such a tax in the sense that 20% of NIC receipts go directly towards the National Health Service.

On the point about housing provisions not bringing about changes, if the measure on stamp duty were taken alone, that might well be true, but it will help a million first-time buyers. Surely that has to be welcomed. In the wider context, the fact that employment is at almost record levels, with 3 million more people earning a salary than in 2010, must also be helpful for the housing market, because it means they have a salary with which potentially to buy. But that is not enough, and it is why we said that stamp duty was one element of that. Another element was to go towards our aspiration of building 300,000 new homes each year.

Let me turn to investment—I think the noble Baroness said that business investment had “fallen off a cliff”. Again, that might be overstating it a little. Business investment contracted by 2.6% in the year to the EU referendum, but grew by 2.5% in the year since. The OBR forecast is for business investment to grow by 2.5% in 2017 and 2.3% in 2018-19, which is a different approach. A key element of that was extra funding of £31 million for the productivity investment fund. That will make a significant contribution, as will businesses investing in themselves, which is the most successful form of business investment. The corporation tax rate has fallen from 28% to 19%, which means that small, medium-sized and large businesses have more money to invest in their own businesses and their own futures.

The noble Lord, Lord Davies, referred to the equality briefing. It was under this Government that we became one the first countries to introduce gender pay gap reporting. The gender pay gap for full-time employees is at a record low. Building on this, the Budget announced steps to boost female enterprise and innovative trials to support women returning to work. The number of women in work is at a record high of 15 million, an increase of 1.4 million since 2010, of which 80% were full-time. The gender pay gap for full-time employees is at a record low of 9.1%.

There are reasons to recognise that we need to be prepared to strengthen the economy to make more it competitive internationally so that we make a success of Brexit for Britain. The people who do that will be the workers and businesses of this country. This Bill strengthens measures to help them by reducing their taxes, increasing incentives to invest—especially in knowledge-intensive industries—and helping young people to achieve their aspiration of getting on to the housing ladder. These are all reasons why I am happy to commend this Bill to the House.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time, and passed.

Green Finance

Lord Bates Excerpts

Monday 5th March 2018 Lords Chamber

[Lord Teverson]

To ask Her Majesty’s Government what plans they have to issue a sovereign green bond to support the United Kingdom’s position in the global green finance market.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government support development of the corporate green bond market. The Green Finance Taskforce is considering recommendations in this field. The Economic Secretary and the Minister for Energy and Clean Growth met the task force on 26 February to discuss emerging recommendations.

[Lord Teverson (LD)]

My Lords, I understand the point about corporate green bonds, but a year ago France issued a €7 billion green sovereign bond, and Poland did so before that. We are starting to lose our position in this market, not just in Europe but globally. Surely at this time it is really important that the City leads in this area. This would be simple and getting on with it now would involve no extra cost. Will we do so?

[Lord Bates]

We have said that we are open to that. It is one option being looked at by the Green Finance Taskforce, and it feeds into the work of the Green Finance Initiative in the City of London, which is doing great work in this area. However, we should not overstate the extent to which we are being left behind. We are in a position where some 63 green bonds in seven currencies listed on the London Stock Exchange, amounting to £20 billion—that figure represents an increase of 93% between 2016 and 2017. However, we will keep all options open and listen to the advice that we are given.

[Lord Flight (Con)]

My Lords, will the Government consider allowing local authorities to raise funds by bond issues, particularly in areas of environment expenditure?

[Lord Bates]

Many of those areas are for the local authorities concerned to look at. One thing that we have introduced is the clean air fund, which was announced by the Chancellor, and some £220 million will be available specifically to help local authorities in that area, but of course local authorities are able to come forward with their own proposals, should they choose to do so.

[Lord Davies of Oldham (Lab)]

My Lords, the House will be concerned that the Minister’s main reply was that we are looking at this issue. France, Belgium and Poland have already acted, and certainly the next Labour Government will act promptly on the question of a green fund for the necessary control of climate change. Why are the Government always thinking about and considering things and looking at proposals when others act?

[Lord Bates]

We are thinking about it because there is quite a lot to think about. The issue is, first of all, whether the Government should be launching these bonds while the market itself is growing quite dramatically. Five years ago, there were virtually no green bonds, or a very limited amount, but now their issuance is $160 billion globally, with some $200 billion predicted for this year. That is happening. Secondly, the Debt Management Office would have to look at whether there is a sustainable demand for hypothecated bonds, in this case. It is not something that we have tended to issue, nor have previous Governments—we tend to operate through gilts. Therefore, it is right that we listen to the expert advice that we receive and then act upon it.

[Baroness Kramer (LD)]

My Lords, I encourage the Government to take on board the warnings that Paris and others are surging ahead in this market because of their willingness to establish that base through green sovereign bonds. I suggest to the Minister that ordinary people would like the opportunity to invest in green and sustainable investments. Will the Minister turn to the NS&I and ask it to make available for ordinary people a scheme that would let them invest in some sort of green investment or savings scheme?

[Lord Bates]

The last point in particular is very interesting and it is certainly worth the NS&I looking at it. Again, that comes within the remit of the Green Finance Taskforce. It was asked to look at intuitional barriers to green finance but also at retail. All that is very much in its remit, and we would encourage it to look at those issues.

[Lord Mountevans (CB)]

My Lords, given my understanding that there is no cost premium for a sovereign green bond, and given the very positive signal that issuance from the UK Government would carry, will the Minister acknowledge the benefits that this would have for pump-priming the market, as with the sovereign sukuk, for encouraging other public sector issuance—for example, municipal green bonds—and for boosting the creation of green finance skills in financial institutions?

[Lord Bates]

A lot is being done to pump-prime the market at the present time. Some of the issuances that have already taken place or been announced, such as that from Barclay’s and the Thames tideway tunnel, have been part of the stimulation and growth packages that we referred to. That is why we have the task force, why we are very pleased to be partnering with the City in the Green Finance Initiative and why we should take its advice and act upon it.

DfID Projects: Women and Girls

Lord Bates Excerpts

Thursday 22nd February 2018 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join noble Lords in paying tribute to the noble Lord, Lord Loomba, for securing what has become an annual debate. He managed to put international widows on the agenda with the UN community by securing their own day. We recognise his contribution to achieving that and he is mirroring it in your Lordships’ House by putting this debate firmly on the agenda. We look forward to it and the issues that it raises.

It has been a wide-ranging debate and the noble Lord was right to begin, particularly at this time, by reminding us of the sexual exploitation and abuse allegations that have been made against some of our most important and respected charities. He summed it up perfectly when he talked about people in power abusing the powerless. That is exactly what has been going on, and that is what we need to ensure that we tackle.

My noble friend Lord Smith talked about the role that women can play in peace and security-building, the challenges of tackling practices such as FGM and the situation facing the Rohingya. The noble Lord, Lord McConnell, humanised the debate by bringing in some difficult encounters that he had had with young women in countries such as Liberia, Iraq and the Philippines. I was also grateful for his account from the Gambia, because it offered some hope for the future.

The right reverend Prelate the Bishop of St Albans reminded us of the important work which the church does in many such societies and gave the example of the Mothers’ Union. As we mark the centenary of women’s suffrage, he helpfully reminded us to remember with humility our journey towards gender equality in this country. The noble Baroness, Lady Sheehan, drew our attention to women with disabilities and older women and the challenges which they face. Finally, the noble Lord, Lord Collins, rightly stated that we cannot limit our conversation about gender equality to sustainable development goal 5: it is integral to all the goals, and a challenge to us as to what more could be done in technical and vocational education and social and cultural change.

Gender equality is a top development priority and as such a priority for the UK. Achieving gender equality and empowerment of all girls and women is the right thing to do and is in our national interest. It is fundamental to building prosperous economies and peaceful and stable societies, and to achieving the sustainable development goals.

In recent decades, the world has made significant progress towards gender equality. However, as my noble friend Lord Smith reminded us, girls and women are disproportionately affected by poverty. Globally, 63 million girls are out of school; one in three women is subject to physical or sexual abuse in their lifetime; women make up only 23% of representatives in national parliaments; and nearly half of the 245 million widows worldwide are living in poverty. Again, I pay tribute to the work of the Loomba Foundation in advancing the cause and caring for widows in our society and around the world.

UK gender equality is providing leadership which drives global commitments and results. I recognise that this did not originate in 2017, as the noble Lord, Lord Collins, said: the UK has been consistently advocating such measures back to the days of Clare Short and the formation of the Department for International Development. In 2016, we initiated the UN Secretary-General’s High-Level Panel on Women’s Economic Empowerment, which delivered unprecedented commitments from Governments, businesses and development institutions to give more women safer, more productive job opportunities. In 2017 we hosted a Family Planning Summit which secured global commitments to giving an additional 120 million women and girls access to modern contraception.

Since 2011, DfID’s work has been driven by our strategic vision for girls and women. Our work has been underpinned since 2014 by the UK’s International Development (Gender Equality) Act, which means that we mainstream the consideration of gender equality across all our programming. The results we have achieved through UK aid-funded programmes are making a difference.

DfID focuses on the areas which are the most critical for empowering the poorest women and girls: quality education and decent job prospects. Since 2011, UK aid has helped more than 5 million girls attend school and improved access to financial services for more than 36 million women in the poorest countries.

At the same time, we help tackle the barriers preventing women and girls achieving their potential. We know that women, particularly more vulnerable women such as widows, face more barriers than men to secure stable livelihoods because they are less likely to have education, training, property rights and access to the labour market. That is why, from 2015 to 2017, UK aid reached 9.8 million women with water, hygiene and sanitation programmes, enabling them to attend school or engage in economic activity where they once would have been prevented doing so by undertaking household chores such as collecting water.

The help we give women and girls to live free from all forms of violence and abuse so that they are safe in the home, at school and in the workplace is one reason why the recent allegations against those charities have had such a devastating impact on confidence—because preventing violence against women and girls has been so much at the core of what DfID and the UN agencies have been about. The fact that we should uncover these things happening in crisis situations is unforgivable.

I was asked by the noble Lord, Lord Collins, and the noble Baroness, Lady Sheehan, what we would do at the 5 March meeting which we will be hosting for NGOs and charities, and whether we would co-operate with the two inquiries now under way by the Charity Commission and by the International Development Select Committee. Of course the answer to that is absolutely. We will make our own internal inquiries as well, as I mentioned earlier this week.

We strive to help the most vulnerable and marginalised women and girls at risk of being left behind, including widows, but also women with disabilities and those living in conflict and crisis. We are investing in improving even further our ability to reach the most marginalised. In order to know who is at risk of being left behind and why, DfID is investing in data which can be disaggregated on the basis of sex, age, disability status and geography, as the noble Baroness, Lady Sheehan, urged us to do. This will be very helpful in shaping programmes for the future. We are working with partners, including the UN and the World Bank, to improve gender statistics more generally, and are producing world-leading research and evidence on how best to support the most marginalised women and girls as a global public good. Through DfID’s research and innovation programme, What Works to Prevent Violence against Women and Girls, we have found that in South Sudan intimate partner violence is the most common form of violence experienced. Even during conflict, the most dangerous place for a woman can often be in her own home. That cannot be right; it must be the focus of our interventions.

UK world leadership on gender equality is a powerful feature of global Britain, with values at its core. UK public interest is at a high this year with celebrations of the centenary of many women’s suffrage here, to which the right reverend Prelate referred. In March, the Secretary of State will launch a new strategic vision for gender equality, and I will ensure that this debate is brought to the attention of the Secretary of State as we finalise the draft. This will set the agenda for stakeholders across the world, making sure that we all build on the gains that we have made and accelerate progress to make discrimination and inequality a thing of the past for all women and girls, leaving no one behind and paying particular attention to the most marginalised and vulnerable.

Let me turn to some of the specific questions I was asked. The noble Lord, Lord Collins, asked about sexual and reproductive health. In 2015, the UK made a commitment under Every Woman, Every Child that, in humanitarian crisis situations, DfID calls for proposals that require the sexual and reproductive health and rights of girls to be considered. That statement has already been made, and we stand very much by it.

The noble Baroness, Lady Sheehan, asked about data disaggregation and whether it included older people. I think that I have already mentioned that it does—and more needs to be done. She asked a very specific question about the CSSF. I do not have the answer to that with me at the moment, but I shall certainly write to her on that matter. She also asked about the upper age limit of 49. Again, that is one that has just escaped the officials, so we will include that in writing, too. The Girls’ Education Challenge is a programme that we are immensely proud of, in the effect that it has had in getting some of the most disadvantaged and vulnerable girls into school—and keeping them there, because we know what a profound difference that makes to development. It is now in its transition phase, whereby we learn from what has happened and seek to improve on it in a future programme.

My noble friend Lord Smith and the noble Lord, Lord Collins, asked about the Rohingya. The UK recognises the plight of Rohingya women and girls, and has provided counselling and psychological support that will reach over 10,000 women suffering from the trauma of their experiences, and over 2,000 gender-based violence survivors. My noble friend also asked about FGM, and of course we had an international day on FGM just a week or two ago. We are the largest donor regarding FGM, with a flagship regional programme of £35 million over five years and an additional £12 million commitment on Sudan.

I repeat our gratitude to the noble Lord, Lord Loomba, for securing this debate and thank noble Lords for their commitments. We shall ensure that this important work continues into the future.

Gaza

Lord Bates Excerpts

Wednesday 21st February 2018 Lords Chamber

[Baroness Tonge]

To ask Her Majesty’s Government what assessment they have made of living conditions in Gaza.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the UK is very concerned about Gaza. We assess that around 1.6 million people are in need of humanitarian assistance. Households are receiving only five to six hours of electricity per day, there is limited access to safe water and power shortages are impeding health provision.

[Baroness Tonge (Non-Afl)]

My Lords, I am glad that the Minister has such an understanding of what is going on in Gaza. Let me add that it is so good to see him in his place.

[Baroness Tonge]

However, with all these things that we hear are going on in Gaza, does the Minister agree that its people have now for 10 years been suffering cruel and degrading treatment, which amounts to the collective punishment of nearly 2 million people, more than half of whom are children? How long must this go on? How long will it be before our Government take some action?

[Lord Bates]

We are taking immediate action in the sense that we are providing humanitarian aid. The assistance that we are providing to UNRWA is helping some 1.1 million of the 1.9 million people who are there, but I have to say that the parties to the conflict must be the parties to the solution. There is an opportunity here in Gaza for its people to recognise the state of Israel, to renounce violence and to accept the agreements that are there to allow the situation to normalise and progress, as has happened in the Palestinian Authority areas. It is a desperate situation and we call on all those people to put the children, the women and the people of Gaza at the heart of their concerns.

[Lord Collins of Highbury (Lab)]

My Lords, the Minister mentioned UNRWA. We know that at the end of last year the US threatened its funding of UNRWA, which does such vital work. The EU and United Kingdom are the second and third biggest funders. What discussions have the UK Government had with the US Government to ensure that they do not follow through on the threat of withdrawing such significant funds from UNRWA?

--- Later in debate ---

[Lord Bates]

Our understanding is that of $125 million due to be paid to UNRWA in January, $65 million was withheld. We have made the consequences of doing that very clear to our US friends. We have also made clear our strong support for UNRWA. At the same time, the US rightly points out that it is responsible for a significant proportion of UNRWA’s budget. Whereas the UK, France, Germany and Saudi Arabia contribute around $60 million to $70 million, the US contributes some $360 million. The US has said that it wants more countries that are expressing concern about Gaza to reach into their pockets and put money into the situation as well. We continue to hope that the situation will be resolved very quickly, as we believe that the longer it goes on, the more damage it does to the people of Gaza and the Palestinian refugees for whom UNRWA is responsible.

[Baroness Warsi (Con)]

My Lords, is my noble friend familiar with the case of Ahed Tamimi, the teenage Palestinian girl currently in custody and subject to a trial behind closed doors? Have any representations been made by Her Majesty’s Government in relation to this detained teenager? Do they have any concerns about reports that she may be subjected to sexual violence while in detention?

[Lord Bates]

Those are very serious concerns. We are aware of the case. My noble friend will be aware, from her former distinguished role in the Foreign Office, that representations have been made. They have certainly been made at a diplomatic level. I believe they have also been made at a ministerial level but I will correct that if it is not the case. We remain very concerned about the situation and will be seeking its urgent resolution.

[Baroness Sheehan (LD)]

What representations have been made to the Israeli Government about the 54 Palestinian patients who, according to the World Health Organization, died while awaiting permits to exit Gaza for medical treatment in 2017?

[Lord Bates]

We continue to work through that, most importantly by trying to ease the effect of those restrictions. We are major funders of a body called the UN Access Coordination Unit. We are trying to work through that body to ensure that the majority of people who need medical treatment get access to it in a timely manner. But we remain very concerned about those reports.

[Lord Green of Deddington (CB)]

My Lords—

--- Later in debate ---

[Lord Green of Deddington]

My Lords, as a former chairman of Medical Aid for Palestinians, I entirely endorse the remarks of the noble Baroness, Lady Tonge. Do the Government realise the appalling effect of conditions in Gaza on Arab and Muslim opinion throughout the world? Do they give sufficient priority, effort and importance to tackling this abysmal situation? It has gone on for 10 or 20 years and it is appalling.

[Lord Bates]

I certainly echo the view that it is absolutely appalling. The suffering in Gaza is a shame on humanity. Of course, the question then is: what do you do about it and who can unlock this process? We believe that the parties to the conflict have to come together and, in the interests of humanitarian need, resolve their differences. We believe that there is a possibility. We recognise that Israel has taken some steps down this road recently by easing some of the restrictions on access to construction materials. There has been some movement in Cairo in Egypt—of course, Egypt blocks the border to the south as well—where there have been some efforts at reconciliation between Fatah and Hamas. All the elements are there. It is frustratingly close. To see so much suffering continuing is a tragedy.

[Lord Grocott (Lab)]

My Lords, given that the Government’s policy, and that of their predecessor, has for years rightly been to support a two-state solution, is it not something of an anomaly that we recognise only one state in the area? When will the Government give further consideration to the recommendation of this House’s International Relations Committee, which was that we should consider recognition of the state of Palestine? That would be a very significant step forward and give long-overdue dignity to the Palestinian people. When will the Government move in that direction?

[Lord Bates]

It is a very sensitive situation and the noble Lord is right to raise the point. The answer to the very influential report that was prepared is to say that that recognition will come when we believe that it will contribute to helping the peace process. Our belief is that recognition at this stage would not be helpful in the Middle East peace process, continued work on which is our primary concern at this time.