Charter for Budget Responsibility

Debate between Richard Fuller and Darren Jones

Wednesday 29th January 2025 Commons Chamber

[Darren Jones]

I was always enamoured of your arguments, Madam Deputy Speaker, as I continue to be today. I look forward to the prospect of many interventions from Members across the House as part of this important debate, and I encourage the shadow Chief Secretary to intervene.

[Richard Fuller (North Bedfordshire) (Con)]

I am grateful for the opportunity to intervene. Can the Chief Secretary to the Treasury confirm whether the OBR validated his £22 billion claim?

[Darren Jones]

The OBR was very clear, as Members will see in its publications in the House of Commons Library, that the spending plans announced by the previous Government were—to quote the chair of the OBR in his evidence to the Treasury Committee—a “fiction.” The OBR forecast provided to the Government made it clear that had the in-year spending pressure been reported transparently, the last forecast under the previous Administration would have been “materially different”. That shows that the lack of transparency on in-year spending was a secret held by only a few Ministers in the last Government, and neither the public, Parliament, we in opposition nor the OBR knew about that problem. That is why this Government have already legislated to bring forward additional strengthened powers for independent checks and balances and transparency, and we have committed to sharing in-year spending pressures with the Office for Budget Responsibility so that we never end up in a situation like the one we inherited.

The Chancellor’s autumn Budget put the public finances back on track, and we will keep them there. Our commitment to sound public finances is non-negotiable. Our new charter for Budget responsibility, underpinned by the new fiscal rules, ensures a more transparent fiscal framework and provides a stable foundation for growth. Today I will outline the changes that we have made to the charter for Budget responsibility, as published in draft at the autumn Budget 2024 and laid before this House last week.

Fiscal rules are a key part of the UK fiscal framework. At the autumn Budget in 2024, the Chancellor confirmed the Government’s fiscal rules as set out in our manifesto, which will play a vital role in unlocking investment. These rules will put the public finances on a sustainable path and prioritise investment to support long-term growth. They consist of two rules: the stability rule and the investment rule.

The stability rule aims to move the current Budget into balance so that day-to-day spending is met by revenues, meaning that the Government will borrow only for investment. We will meet this rule in 2029-30, until that becomes the third year of the forecast. From that point on, we will balance the current Budget in the third year of every Budget, held annually each autumn. This will provide a tougher constraint on day-to-day spending so that difficult decisions cannot be constantly delayed or deferred, as they were under the last Government.

I am sure the House would recommend that the Government should live within their means. That means that public services have to be able to live within their budgets, and it means that tax revenues have to pay for day-to-day spending. Never again will we end up in the position the country ended up in under the last Government, when every week and every month the country borrowed more and more in order to pay the day-to-day bills. That is why when hon. Members on the Opposition Benches complain about the debt burden this country is having to deal with, they should look in the mirror, because they built up that debt burden. The people responsible for filling up the country’s credit card just to pay the bills every month, even in advance of the pandemic, were Conservative Ministers. That will never happen under a Labour Government because of our clear fiscal rules. It is why for the first time in 17 years we are doing a zero-based review of all public spending, not once done under the last Administration but done in the first spending review of this Labour Government.

Secondly, our investment rule requires the Government to reduce net financial debt, defined as public sector net financial liabilities, as a share of the economy. Public sector net financial liabilities is an accredited official statistic, produced by the Office for National Statistics since 2016; based on international statistical guidance, it has been forecast by the OBR since that time. The Institute for Fiscal Studies has noted that the metric offers a

“more complete picture of the Government’s financial position, while removing some of the perverse incentives associated with a narrow focus on PSND”—

public sector net debt.

This rule keeps debt on a sustainable path while allowing the step change needed in investment by targeting a measure of debt that captures not just the debt that Government owe, but financial assets that are expected to generate future returns. By targeting net financial debt for the investment rule, the Government are prioritising investment to drive long-term growth while getting debt falling as a share of the economy.

The move to net financial debt will be supported by a comprehensive set of guardrails to give confidence that there are rules around the investments the country can make. Like our stability rule, our investment rule will apply in 2029-30 until that year becomes the third year of the forecast, and from that point onwards net financial debt will fall in the third year of every forecast.

The move to net financial debt means that at the autumn Budget the Government were in a position to confirm public investment that will be £100 billion higher over the forecast period compared to the previous Government’s plans. I am pleased to say that in its autumn forecast the OBR confirmed that the Government are on track to meet both fiscal rules two years early, in 2027-28, displaying the Government’s commitment to sound finances.

The Chancellor has asked the OBR to produce a forecast on 26 March, which will assess us against these rules once again. Our commitment to these fiscal rules is iron-clad. The UK has changed its fiscal rules in the past more than any other country, but this Government know that stability matters. That is why the new charter sets out clearer circumstances under which the fiscal rules can temporarily be suspended through a new strengthened escape clause. The new escape clause requires a decision on suspension be supported by the OBR’s analysis so that the rules can be suspended only with sufficient justification.

As well as new fiscal rules, the updated charter for budget responsibility includes a set of wider reforms that ensure a more stable and transparent fiscal framework. Because fiscal responsibility is so central to this Government’s mission, the first piece of legislation passed in this Parliament was the Budget Responsibility act 2024. It delivered our manifesto commitment to introduce a fiscal lock. I do not think Members on either side of the House need reminding of what happens when huge unfunded fiscal commitments are made without proper scrutiny and key economic institutions such as the OBR are sidelined. We will not let that happen again. The fiscal lock therefore guarantees in law that from now on every fiscally significant change to tax and spending will be subject to scrutiny by the independent OBR.

The charter sets out the details of how the fiscal lock will operate. As well as the new guiding fiscal principles to move towards only borrowing for investment and to keep debt on a sustainable path, the OBR will monitor progress against a dashboard of key debt sustainability metrics to ensure the Government are taking a broad view of fiscal sustainability. A broader view will allow the Government to form a full assessment of the sustainability of the public finances and support us in seeking to improve sustainability over time.

We are also enhancing fiscal and economic stability by confirming in the charter today that the Government’s intention to move to one major fiscal event per year will be honoured, giving families and businesses certainty on tax and spending plans, as will the requirement on the Treasury to conduct regular spending reviews every two years and setting spending for at least three years, ensuring public services have certainty on their funding and that spending decisions cannot again be repeatedly delayed. In addition, it guarantees a three-year rolling budget for the OBR, to support its independence. We are further strengthening fiscal transparency and accountability by accepting all the recommendations of the OBR review of the March 2024 forecast for departmental expenditure limits, including to improve the spending information the Treasury shares with the OBR.

The OBR is widely recognised as providing independent, credible and high-quality analysis. It is a guarantor of economic stability. Going forward, the Treasury will provide the OBR with information on the in-year position, allowing it to forecast underspending and overspending against departmental expenditure limits where appropriate. This will ensure the unfunded pressures identified at the public spending audit never happen again. We are a Government who will consider the impact of our current spending decisions on future generations, and to show how the long-term health of the public balance sheet is bolstered by sound investments, the charter requires the OBR to report on the long-term impact of capital investment and other policies at fiscal events.

Finally, I turn to the welfare cap, which we are also debating today. The Government are retaining the welfare cap within our fiscal framework to support our ambitions to keep welfare spending sustainable in the medium term. The OBR will assess whether the new cap has been met at the first fiscal event of the next Parliament. The latest OBR forecast judged the previous welfare cap to be breached by £8.6 billion, following a trend of forecast breaches by the previous Government. This is clearly an unsustainable path for welfare spending. This breach underlines the inheritance left by the previous Government: a failure to control welfare spending and to bring forward radical reform, and, crucially, a failure by the last Government to support people to get the treatment or skills they need to return to work.

--- Later in debate ---

[Richard Fuller (North Bedfordshire) (Con)]

As the Chancellor scours the nation turning over every stone in her desperate effort to mitigate the damage from her choices in last year’s Budget of broken promises, it falls to the Chief Secretary to the Treasury to keep his face straight as he lectures the House on the importance of fiscal responsibility. He has shown the performative skills of one of the greats of the west end, but his mouthing of the words of economic stewardship, even as his audience of wealth creators get up out of their seats and leave the show, leaves few of us impressed. They know what the British public know: that this is a Treasury team and a Government who, day after day, create more problems and, day after day, demonstrate that they are clearly out of their depth.

[Darren Jones]

As the shadow Minister and, I hope, the House knows, I am a humble man and am always ears-open to advice, wisdom and feedback on how we can do things better. Given his opening remarks on fiscal stability, I wonder whether he has any reflections to offer the House from the time of his party being in government and, indeed, from his time in the Treasury under former Prime Minister Liz Truss about what went wrong and what we might do differently.

[Richard Fuller]

The Chief Secretary to the Treasury, like so many on the Labour Benches, loves to talk—almost fondly—about the former Prime Minister Liz Truss. Well, at least she knew her time was up after 50 days; we are stuck with the Chancellor for five years.

When it was noted a few months back that the entire Labour Cabinet could barely scrape together a year’s worth of business experience between them, it was thought to be just a curiosity. Little did we know it was an early warning sign of their lack of suitability for the task of managing the British economy: business confidence down, job losses up, consumer confidence in the gutter and Government debt spiralling further upwards—and they are just getting started.

There are, of course, potential benefits from the investments that are being announced today. We share a desire for a more competitive, less regulated economy based on a passion for free enterprise, but while Labour celebrates the exodus of millionaires from our country, we recognise that it represents a loss of skills, lower job creation, and the evaporation of potential future taxation to support public services. While Labour sees the attack on family farms and family businesses as a vital part of its warped class-war ideology, we recognise that putting family at the heart of enterprise is a critical piece of our nation’s proud heritage of freedom.

[Richard Fuller]

My friend, the Liberal Democrat spokesman on economics, makes a fair point about the impact of trade agreements on family finances. However, as she knows, that is very different from the pain that farmers are feeling right now about Labour’s attack on the ability of families to pass on their farm to their children—it is different in scale and in type. It is a damaging policy by the Labour party that we know, or at least hope, that Labour will change in due course.

I am sure that today, the Chief Secretary to the Treasury is also engaged in a series of phone conversations with his departmental colleagues as, ahead of the March update on the OBR’s financial forecast, they review what it will mean for their departmental expenditures. As he has those difficult phone conversations, I say to the Chief Secretary that we stand ready to support effective steps on prudent financial responsibility.

[Darren Jones]

On the point of prudent financial responsibility—[Interruption.] I think the House is interested in a long and detailed debate this evening, so it is important that we dive into the details. On this issue of prudent fiscal responsibility, the hon. Gentleman presumably welcomes our fiscal rule that day-to-day costs will be met by revenues, as opposed to having to borrow money all the time to pay those day-to-day costs. That is something that consistently happened under the last Conservative Administration, which was a mistake in the context of fiscal responsibility, was it not?

[Richard Fuller]

I am aware that the Chief Secretary to the Treasury is interested in a prolonged debate today—I am not sure whether that is because of the content of the debate, or for other reasons. I would say gently to him that writing rules is different from following rules, so he will be judged by this House on how he meets the rules that he has set. My purpose today is to cover some of those rules, and I will have some comments on them, but first, although we will be having a separate debate on the welfare cap, the Chief Secretary to the Treasury made some points about it. My hon. Friend the Member for Faversham and Mid Kent (Helen Whately) will respond formally on that issue, so these are just my thoughts, really.

The welfare cap, of course, was introduced in 2014 by Conservative Chancellor George Osborne, who recognised the particular difficulties with forecasting and managing certain welfare budgets. At the 2014 Budget, he explained his rationale:

“Britain should always be proud of having a welfare system that helps those most in need, but never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work. In future, any Government who want to spend more on benefits will have to be honest with the public about the costs, will need the approval of Parliament, and will be held to account by this permanent cap on welfare.”—[Official Report, 19 March 2014; Vol. 577, c. 785.]

George Osborne’s initiative has shown its value over the past decade, and it is right that the new Government are following its intent in principle and, one hopes, also in practice. Our task today is to listen to the explanations for the breaching of the welfare cap for fiscal year 2024-25 and the rationale for the particular limits that the Chief Secretary’s Government will set on the welfare cap for future fiscal years through 2029-30.

As the Chief Secretary said, in October, as part of the first Budget of the Parliament, the OBR provided its assessment of the status of welfare spending compared with the cap that was set in 2024. That assessment was an excess of £8.6 billion, which indicated a breach. With the country now spending over £156 billion on welfare every year and with the obvious pressures on public expenditure, there should be a determination to find savings in the welfare budget. Indeed, that was the intention of the Conservative party at the last election, with a commitment to reduce expenditure by £12 billion through better targeting of disability benefits, amending the levels of payments for those whose disabilities would not routinely be expected to lead to additional life expenses, overhauling the fit note process, and introducing tougher sanctions on those who shirk the opportunity to work and contribute to society.

But the Labour Government today appear to be set on a different course, with a pathway for the welfare cap that is up, not down, growing from this year’s cap of £137 billion to reach £195 billion by 2029-30. That is a 42% increase in the welfare cap. It is important to note that at the same point in the last Parliament, when the Conservative party set the rules on the welfare cap, that increase was limited to 15%.

[Darren Jones]

rose—

[Richard Fuller]

That difference between 15% and 42% is important, is it not?

[Darren Jones]

It is important. I think we should reflect on what some of the drivers are behind the increased spend in the welfare budget, because the evidence is very clear. For people who can be—and indeed wish to be—economically active but are in receipt of universal credit support and other forms of payment, the main reasons are being unable to get access to the treatment they need in the health and mental health services space or being unable to access training opportunities for the jobs that are available in the market. Without diving too much into the weeds, that is the issue about the difference between the approach to austerity in day-to-day resource spending—where we cut spending to frontline public services—and annually managed expenditure.

[Richard Fuller]

That is all very well, but the Chief Secretary is talking about the wrong budget. He is talking about increases to the health budget or changes to aspects of the DWP budget; he is not talking about why this Government are allowing an increase of up to 42% in welfare payments in this country. That is a different issue. It shows laxity on the part of the Government. Serious questions need to be asked, and I am sure will be asked, in the next debate.

Let me return to the charter for budget responsibility, which was established by former Chancellor George Osborne as part of the Budget Responsibility and National Audit Act 2011. On Second Reading, the Economic Secretary to the Treasury explained why the measure was necessary:

“We inherited the largest budget deficit in our peacetime history, we inherited a budget deficit forecast to be the largest in the G20, and we inherited the largest structural deficit in the whole of Europe.”—[Official Report, 14 February 2011; Vol. 523, c. 746.]

She did not have to make up numbers, as this Government have done, about some fanciful black hole; these were facts, and my former colleague, Justine Greening, was telling the truth to the nation.

Indeed, truth is the foundation upon which any charter for budget responsibility is based. Let me be clear: when the Chancellor said on 13 November 2023 that she was

“not going to fiddle the figures or make something to get different results”,

the fiscal rules included in this charter demonstrate that she was not telling the truth. In this charter, the Chancellor has changed the rules on the measurement of debt from public sector net debt, or PSND, excluding the Bank of England, to public sector net financial liabilities, or PSNFL. This fiddling of the figures opened the taps for the Chancellor to borrow more, even while our debt to GDP ratio stands at historically high levels following the pandemic and the Ukraine war.

The Guardian newspaper, which I am sure the Chief Secretary reads avidly, reported on 24 October 2024 that if my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt), the former Conservative Chancellor, had acted similarly to the current Chancellor, his fiscal headroom would have ballooned from £9 billion to £49 billion, but he knew better than the current Chancellor.

The Chancellor has even had to create her own name for things, just so that she can claim she is getting debt falling. She said in her Budget statement that she will call PSNFL

“net financial debt, for short.”—[Official Report, 30 October 2024; Vol. 755, c. 823.]

The reality is that the proper measure of Government debt, as per the previous fiscal rules, is rising in every single year of the forecast. The OBR has confirmed that on the previous definition, which she had said she would keep to, the fiscal rules are being broken. At the last election, Labour said it would get debt falling, and the Government continue to claim that they are delivering that. They are doing nothing of the sort. Let us be very clear: debt is rising, and it is forecast to continue to rise. We will be spending nearly £50 billion more on debt interest over the next five years as a result of their first Budget alone.

There are also concerns about the rolling three-year targets for the rule that the current Budget should be in surplus and the rule that debt—the Government’s dubious definition of debt—should be falling as a share of the economy. Like the water and fruit for Tantalus, the rules permit these reasonable targets to remain just out of reach every time—they are always there but never met. To extend my similes, the charter rules are to the Chancellor and the Chief Secretary as St Augustine regarded self-control: “Grant me chastity and self-control, but not yet.”

The charter begins on shakier ground with a weaker Treasury team, but it remains an important part of our country’s fiscal framework. Under the rules of the House, the motion is not amendable, so we shall not oppose the measure. We do need fiscal rules, but we condemn the Government’s approach of fiddling the figures to add more borrowing. They promised that they would not, but, as so many times before, they have broken their promises once again.

--- Later in debate ---

[Darren Jones]

I thank right hon. and hon. Members for this afternoon’s debate. I will reflect on some of their questions and comments in winding up the debate.

To begin, I can provide assurance to the shadow Chief Secretary, the hon. Member for North Bedfordshire (Richard Fuller). He was concerned that the Labour party had misled the public. There could not be anything further from the truth. In the manifesto, the wording was very clear. We would have two fiscal rules: first, to bring day-to-day spending in line with receipts; and secondly, that debt would fall as a share of the economy. Those are our fiscal rules. Now, he is right that we defined debt at the Budget, but that did not change the fiscal rule. The fiscal rule is that debt should be falling as a share of the economy. That is the fiscal rule. [Interruption.] It is the fiscal rule; there is no debate about it. It is as clear as the letters on a page. As was alluded to in the debate, the Chancellor chose a well-established metric for debt—PSNFL, public sector net financial liabilities—which recognises the fact that a competent Government can invest in the country and get a return for the taxpayer.

[Richard Fuller]

The Chief Secretary to the Treasury is making a bizarre comment. The point is that the Chancellor stated in 2023 that she would not fiddle the figures. She has now changed the numbers. The definition of debt for public sector net debt excluding the Bank of England is different from her PSNFL. They are different. It enables the Chancellor to borrow more. That is fiddling the figures to achieve an objective. It is not the same, and she did not tell the truth when she said that she would not fiddle the figures.

[Darren Jones]

That is a very strong accusation, which I refute in the strongest terms. The Chancellor was very clear that debt would be falling as a share of the economy. That is the fiscal rule. As predicted by the OBR, we will deliver on that promise. It is right that the Chancellor chose at the Budget to define debt as public sector net financial liabilities. The big question is why. As the Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper) said, it is because having a Government with stability and competence at their core means that we are borrowing not to pay for out of control day-to-day spending, which I think everyone in the House would agree is an unsustainable path to higher debt burdens, but instead borrowing responsibly within guard rails for investments, predominantly alongside the private sector, to enable, for example, infrastructure delivery across the country or investment in businesses, for example, through the national wealth fund.

The reason that the public sector net financial liabilities debt rule is important in that context is because it reflects the fact that, where Government have an equity stake or have provided debt for non-commercial terms, there is a rate of return. The taxpayer receives some of the benefit of that investment and growth in the economy, which I am sure we would all welcome. There is the important difference about the type of debt. Under the last Administration, debt was spiralling out of control because the last Government could not pay their day-to-day bills. Everybody knows, whether they are running their household finances or the country’s finances, that that is not a sustainable thing to do.

That has changed under this Government. Debt will be for productive investment only and day-to-day costs will be met by revenues. Yes, that means that public services have to live within their means, and often that means difficult discussions in the spending review that I have to conduct with Secretaries of State, to which the hon. Gentleman alluded. However, all of us around the Cabinet table recognise not only the non-negotiable nature of the fiscal rules, which are the foundation of economic stability, but the prize of the modernisation and reform of our public services. He will have heard the Prime Minister and other Secretaries of State talk about just that fact. There is a huge amount of opportunity to achieve better outcomes for people at lower cost, not just through basic technology but by improving the way we deliver public services. That means delivering services designed around the person and how they wish to interact with the Government. It means that people can receive support from different Departments and different functions, and they can receive the information they need at the time they need it.

Let me give one example. In the constituency of my hon. Friend the Member for Filton and Bradley Stoke (Claire Hazelgrove)—just north of my Bristol North West constituency—I visited a community diagnostic centre. The CDC programme began under the last Administration, but we have committed ourselves to it. The provider works in partnership with the NHS trust, charging exactly the same rate as the hospital for a diagnostic scan. The company involved does not make profits in comparison with the hospital costs; it is the same NHS tariff rate. People can have MRI and CT scans, gastroscopies, and other tests. The centre is attached to a branch of Asda and there is plenty of free parking.

I asked the owners, “Why are you able to charge the same rates as the hospital in my constituency while running this service more effectively?” They said, “We are open for 14 hours a day from Monday to Saturday and for 12 hours on Sunday, we sweat the assets more than a hospital can, and we have new bits of kit with AI that are more productive to use”—which is why the Health Secretary wants to roll those out across the NHS. They also said that the customer service was the key driver for productivity, because customers could book their appointments and move them if necessary, they could visit the centre after work, and they could go there between shopping trips. Essentially, the service has been designed around the patient. Patients turn up pretty much all the time, and they are never not able to do so. That is just one example of the way we are modernising public services.

--- Later in debate ---

[Darren Jones]

I thank the right hon. Member for his question, because he invites me to talk the House through our infrastructure strategy. For the first time, we are bringing together Government plans on economic infrastructure, housing and social infrastructure in the same place. It means that when we go through the spending review in the Treasury, working with colleagues across Whitehall, we will be much better than the previous Government at taking place-based decisions. In the past, it was a bilateral discussion between a Department and the Treasury, with no dots being connected between different types of infrastructure. That has led to the failure to capture the growth potential in different places.

We will take a different approach and make sure that infrastructure investments relating to public investment are capped by the numbers set out in the Budget. That is the spending envelope that we have, and we have to prioritise those investments, but they will be based on driving growth and opportunity for people in the places in which they live.

My hon. Friend the Member for Reading Central made a great point about the Oxford-Cambridge growth corridor, the role of connecting some of our great universities, and unleashing the opportunity that exists between them. As I said to the House earlier, the living connectivity arrangements between Oxford and Cambridge are basically non-existent. By connecting these two hubs of innovation and investment, the opportunities are endless.

[Richard Fuller]

I have to be careful, because I have a significant constituency interest in this issue, but I want to ask a more general question about the role of infrastructure investments and the fiscal rules. East West Rail’s proposal to complete the railway line had a benefit-cost ratio of 0.3 in its last business case: building it would basically lose 70p of every pound of taxpayers’ money. Does the Chief Secretary to the Treasury regard that as a loss? If not, will there be a business case that shows that the project has a benefit-cost ratio that does not lose taxpayers’ money?

[Darren Jones]

That is a great question. All these infrastructure opportunities will go through both value-for-money assessments and growth assessments. The argument that we have been making today is that initiating projects such as the East West Rail line in a co-ordinated way with private capital, universities and our house building plans lifts the growth opportunities that come from those projects. That is why Patrick Vallance has been appointed as the champion of the growth corridor. We will take a whole-corridor view on the investments and the opportunities across different investments, regardless of whether they are public or private, but they will all have to go through value-for-money and growth assessments.

The infrastructure strategy will be a 10-year strategy. It will give a long-term view on economic, housing and social infrastructure, but they will be underpinned by longer-term capital budgets. The capital budget that we will set in June will be for four years, until 2029-30, but the normal approach, as set out in the charter, will be that the capital budgets will be for five years. As the House knows, we have committed to doing the next spending review every subsequent two years. In 2027, when we conduct the next spending review, we will have the 10-year infrastructure strategy but also pretty much 10 years of capital budgets being allocated for those projects. That is a hugely important signal to investors.

We are working with industry and investors on what the biannual pipeline might look like, so that we can publish in real terms the investable propositions, but also so that businesses know that work is coming if they invest in their supply chain or their workforce. That is a crucial part of unlocking investment in skills and training in our country. Much like we have just seen in the water industry, which has agreed a longer-term investment settlement, suppliers are already telling us that they are now able to invest in staff, training and capabilities, because they know that the flow of investment will be coming over a period of time. We are seeking to do that across a range of infrastructure in order to unlock the investment that this country needs.

Financial Assistance to Ukraine Bill

Debate between Richard Fuller and Darren Jones

Committee of the whole House
Wednesday 18th December 2024 Commons Chamber

[Darren Jones]

I welcome the hon. Gentleman’s encouragement, which I take in good faith. He will know that these matters are multilateral and subject to negotiation with other allies and G7 colleagues, but he will also know, as I am sure the whole House does, that we go into 2025 with a strength of resolve across those G7 countries to do all that we can to help Ukraine continue to mount its defence against the illegal invasion from Russia.

Any other payments beyond the extraordinary revenue acceleration loans to Ukraine or any other country that are unrelated to the ERA scheme are not covered by the provisions of the Bill; this money is in addition to other grants and payments that have been referred to in the House previously.

The clause contains provision for the UK to provide funding towards subsequent arrangements that are supplemental to, modify or replace the ERA. This provision allows for flexibility in the unlikely event that the scheme itself should significantly alter. It is not intended to be used without this change in circumstances.

Clause 2 simply sets out the short title of the Bill.

[Richard Fuller (North Bedfordshire) (Con)]

I thank the Minister for opening the debate. The Conservative Government were a vociferous advocate for mobilising Russia’s frozen sovereign assets to support Ukraine. We drove G7 and European partners to try to coalesce around the most ambitious solution possible to achieve that outcome. The announcement on 22 October marked progress on that journey and is a step in the right direction. We understand that the Government’s position is that the United Kingdom’s contribution should be earmarked for supporting Ukraine’s military expenditure, including on air defence, artillery and other equipment. The Opposition would support that. We need to persevere with our efforts to put Ukraine in the strongest possible position to counter Russia’s unprovoked and illegal invasion.

Matters since Second Reading have been fast moving, so let me pose some questions to the Minister. Since Second Reading, the United States has given Ukraine $20 billion, funded by the profits of frozen Russian assets. That economic support forms a significant part of the overall $50 billion package agreed by G7 member nations and announced in June. The US Treasury said that it had transferred the $20 billion to a World Bank fund, where it will be available for Ukraine to draw. Money handled by the World Bank cannot be used for military purposes.

The US Administration had initially hoped to dedicate half the money to military aid, but that would have required approval from Congress, which the President did not seek. Perhaps the Minister can update the House on what discussions the UK Government have had with the US Administration, Canada and the European Union about the use of funds provided for military purposes. Are any strings attached to the funds that will be provided by the UK? As the US has already provided its share of moneys anticipated in the G7 package, can the Minister advise the House on the timing of the UK’s contribution? I think it was made clear on Second Reading, but it would be helpful to have an update, given the move by the US since then.

As the Minister and the Government have advised, the loans that the UK will pay will form part of the extraordinary revenue acceleration loan agreement by the G7. The loans that the UK will provide will be repaid by the Ukraine loan co-operation mechanism, established by the European Union under regulation 2024/2773 on 24 October. The ability of the UK to have its loans repaid depends in large part on a decision by the European Union to maintain its freeze on Russian assets. The EU renews Russian sanctions every six months, and efforts to extend that to a three-year review cycle were rebuffed by Hungary earlier this year. Will the Minister confirm that there is a risk, in the event that the EU does not extend its sanctions on Russia, that the costs of the loan will be borne by UK taxpayers, and what mitigations he might consider if that situation arises?

Finally, the EU controls more than two thirds of Russia’s $300 billion of sovereign assets that have been frozen by western allies following Russia’s full-scale invasion of Ukraine. Of those EU-held frozen assets, 90% are held by the Belgian-based financial services company Euroclear. The profits from the EU-held assets, estimated to be between $2.6 billion and $3.2 billion per year, have been used to arm Ukraine and finance its post-war reconstruction. We understand that the EU’s top diplomat, Kaja Kallas, said in an interview with The Guardian on 12 December that the European Union should use the billions in frozen state assets to aid Ukraine. She emphasised that Ukraine had a legitimate claim for compensation, and described the Russian assets held in the EU as

“a tool to pressure Russia.”

The Minister responded to earlier interventions, but can he confirm the UK Government’s position? Has he discussed the matter with the EU and Belgium, and does he have any plans for the UK to go further on the use of those assets?

International Trade and Geopolitics

Debate between Richard Fuller and Darren Jones

Thursday 20th April 2023 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

I beg to move,

That this House has considered international trade and geopolitics.

I thank right hon. and hon. Members from across the House, and the Backbench Business Committee for granting the debate today. I declare my interests as set out in the Register of Members’ Financial Interests.

I applied for this debate because I am concerned about Britain’s standing in a world that is changing more quickly than we appear to be responding. From trade and industrial policy to innovation and skills, we have just sticking-plaster policies and no long-term economic plan. There is no strategy for UK plc that shows the path to prosperity, and I hope this debate may trigger some answers from the Government on their plan to drive economic growth within the UK and through exports abroad.

The era of increasing globalisation that we have come to know over the past decades is coming to an end. We are now in an era of economic retrenchment, higher levels of state subsidy and new forms of partnership between the public and business, but how is the UK responding? Ministers are merely saying to competitor countries, “This is not how you’re supposed to play the game,” but they are not listening, and we are losing. There are several factors underpinning these changes: geopolitical competition between China and the United States; war in Europe and security tensions in Asia; the need for democratic nations to show their people that our system of government can deliver good jobs, good pay and prosperity; the net zero transition; and the technological arms race in both its military and civilian contexts.

Based on current data, our direction of travel as a country is not a good one. Only this morning, the Government announced that the UK fell from being the fifth largest exporter of goods and services in the world in 2020, to seventh in 2021. Our trade deficit has ballooned from £2.3 billion to £23.5 billion, meaning that we are exporting fewer goods and services, while being increasingly dependent on other countries for our own supplies. According to the International Monetary Fund only last week, the UK is set to have one of the worst economic growth projections of the seven most advanced economies. Even Russia, to our shame, is projected to experience better economic growth than we are.

Our drop in exports to the European Union, coupled with the Government’s deeply short-sighted decision to agree a trade deal that blocks the sale of most UK-based services to the EU, while allowing the EU to sell services to us, has been a structural blow to the UK economy. In that context, our high levels of national debt, which have increased year on year since the Conservatives came to power in 2010, have put us in a fiscally precarious position. The Government should be ashamed of their record on UK national debt. We all remember David Cameron and George Osborne telling us that the Conservatives would fix the roof while the sun was shining. But what do we have now, 13 years after those promises to the country? A national debt that is projected to be larger than the entire size of the UK economy. A national debt that has increased year on year—yes, in response to covid and the energy crisis, but it was also increasing year on year before those crises.

[Richard Fuller (North East Bedfordshire) (Con)]

It is a great pleasure to be part of this debate and to listen to the hon. Gentleman, and I hope he will not mind me picking him up on this point. He kindly acknowledged that the sizeable increase in UK debt is due to the response to covid, and I do not think he has concerns about the major schemes that comprised that. He also talks about the increase in debt that occurred in the intervening years. Will he accept that for each of those intervening years, the Labour party was calling for more expenditure and more debt?

[Darren Jones]

The hon. Gentleman and I, perhaps surprisingly, share something in common, in that we would like to get the national debt under control. He will recognise that his party was in government for each of those years from 2010 when debt increased, year after year. The Opposition can come forward with policy proposals, but he must take some responsibility for the fact that the Conservative party was in government, taking decisions that resulted in a significant amount of national debt before covid and the energy crisis, due to the mishandling of Brexit, the inadequate trade deal with the EU and to the failure of austerity economics, which cut our public services back to the bone without adequate investment to create opportunities for economic growth in the future.

One might have assumed that in that context, the latest form of Conservative Government would wish to do everything they can to underpin, support and incentivise growth in the UK economy. Their most whizzy recent announcement has been the UK’s entry to the comprehensive and progressive agreement for trans-Pacific partnership for trade in Asia—a trade arrangement that is estimated to grow the national wealth by only 0.08%. It is a trade arrangement with 11 countries, nine of which we already have a trade deal with, and one that will pose due political challenges to the UK as China seeks to join it too.

--- Later in debate ---

[Darren Jones]

I thank the hon. Lady for giving that suggestion to those on the Treasury Bench, and perhaps the Minister can answer when she responds to the debate.

[Richard Fuller]

rose—

[Darren Jones]

I have two examples that are relevant to intervention of the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), but I will give way one more time, for old times’ sake.

[Richard Fuller]

It’s not that old-time! As the hon. Gentleman will realise, the Benches are not replete with Members for his debate, so I hope he will continue to be generous.

The hon. Gentleman has put his finger on an important issue, and this could be an informative debate on both sides. He has just mentioned one potential conflict between this country’s trade engagements and those of others, regarding our engagement with the European Union and with CPTPP, and different paces of change when dealing with net zero. As Chair of the Business, Energy and Industrial Strategy Committee, will he give the House a little more detail on his thoughts about what this country’s pace should be, and in particular his views on the carbon border tax?

[Darren Jones]

I will do so briefly so that I do not test the patience of the Chair too much, given the number of pages I have left to read before the end of my speech. My initial observations are that it is in the UK’s interest to be a global leader on the net zero transition, both because that is the right thing to do and because it is a significant industrial opportunity, and that we should be partnering with the European Union to do so through our trade deal. In my view—I have not taken evidence on this; it is just my view—that would generate a larger rate of return for the British economy and British people than some of the other opportunities that have been presented.

--- Later in debate ---

[Darren Jones]

Once again, my hon. Friend is absolutely right. That is why the European Union has responded to what is happening in America, but what do we have here in the United Kingdom? I tried to be generous to the Government in a collegiate fashion, but the only thing I could find that allowed me to give the Government credit was the recent establishment of the Office for Investment, whose job it is to secure inward investment to the UK. But it has no budget.

As I understand it, when two American businesses looked at the UK as an investment destination, they did not know who to contact. Was it the Department for International Trade, the Department for Business, the Department for Transport, the Treasury, the regional mayor or the local council? The Germans, meanwhile, put together an inward investment package with significant incentives and the Americans presented a map with different options in different states, topped up with significant federal incentives. In the UK, we have an Office for Investment whose job it is to go around Whitehall, cap in hand, trying to put together an offer within existing budgets. The tragedy is that the reason those companies were looking at the UK in the first place was that we have great natural resources: huge potential for low-carbon fuel energy supplies, great industrial clusters, world-leading research and development, and great pools of highly skilled labour. But we just did not compete and we lost out on both investments.

Let me take another example, which we have already talked about: the semiconductor industry. The United States is securing multibillion dollar inward investments, as too are the Europeans. As my Committee concluded in its recent report, while we will never have end-to-end supply chains in the UK, we should be collaborating with our American and European allies to agree that the UK invests in the parts of the supply chain where we excel: chip design and advanced compound semi- conductors. Britain can play a crucial exporting role within a multinational supply chain. So when the Government take decisions to decline or unwind Chinese-linked investments, such as Newport Wafer Fab, they must follow through with finding new investment and new owners. Instead, we have a semiconductor strategy that is now even more delayed than it was already because, as it was reported, Ministers cannot decide who is going to announce it. Meanwhile, other countries are racing ahead of us.

It seems to me that we have Ministers stuck in the headlights of a changing world, convinced that the best thing to do is for the state to get out of the way and let the free market fix our problems, praying that someone, somewhere might find the sunlit uplands of post-Brexit Britain that Conservative Prime Minsters promised to deliver—while our competitors race ahead of us. The question, therefore, is what should we do about it? Beyond the obvious points of having a proper industrial policy, ideally a stable Government, a stable economy and a stable policy framework; beyond the obvious point that we continue to fail to highlight the importance and value of the service economy to our exports—we are the largest exporter of services in the world after the United States—and beyond the obvious point that we must improve our trade deal with the EU, what can we do that is new, global and in Britain’s interests?

We should be leading the debate about a new model of multilateral co-operation between democracies. We clearly already collaborate on defence matters, but what we define as critical supply chains or as critical national infrastructure, what we think resilient supply chains should look like to create economic security for our countries, and how we collaborate as allies and partners to show that democracies will continue to prevail over authoritarian regimes—those issues warrant a new partnership, a new model of multilateral working. It is in Britain’s interest to lead that debate and to play a central role in it.

Some will understandably say that there is a risk of decoupling the existing post-war institutional frameworks. My response is that this is already happening and that Britain can do little to stop it. That does not mean walking away from the UN, the World Trade Organisation or the G7—of course not. And it certainly does not mean Britain should play fast and loose in breach of agreed global rules. But it does mean that we must respond to lead and to influence what happens next.

If this Government had a real mission-led approach to the UK economy, we would see co-ordinated strategic action from No. 10, the Treasury, the Foreign Office, the Department for Business and Trade, the Department for Science, Innovation and Technology, and others. But we do not. We do not see that because the Prime Minister does not have an answer. He cannot tell us what our path to prosperity is, what he thinks our unique selling points as a country are, or how Britain will maintain its standing as one of the largest, most advanced economies on the planet.

I have had the good fortune, over the past few years, of being able to represent our Parliament in many countries. From Brussels to Washington, Sydney to Tokyo and elsewhere, I keep being asked, “Are you guys okay? What’s happening to the UK?” It is embarrassing and it must stop.

[Richard Fuller]

Absolute rubbish.

[Darren Jones]

It is a factual statement. The hon. Member is chuntering from a sedentary position, as I think we say in this House, but I can assure him and the House that on many occasions that is the exact conversation people have had with me.

I hope that the Minister, when she responds, will be able to inform the House, on behalf of the Prime Minister, how this latest round of Conservative Ministers are going to clear up the mess of all the former ones over the past 13 years. The Minister and I know that the opportunities for the UK are there to be taken; that the British people have within them the drive, energy and potential; that our islands and our seas give us the potential not just to lead the net zero transition at home, but to export it abroad too; and that our greatest minds, entrepreneurs and universities mean we can ride the wave of the technological revolution in the interests of the British economy and the British people. We can achieve all those things, but only if Britain has a Government with the leadership, the ideas and the energy to start delivering. I look forward to the Minister’s response.

--- Later in debate ---

[Richard Fuller (North East Bedfordshire) (Con)]

It is a great pleasure to have listened to the contributions so far, not least the contribution just made by the hon. Member for Liverpool, Walton (Dan Carden). I echo his words about the opportunity to strengthen connections, particularly for our young people, between our country and countries in Latin and South America. The area is often overlooked by Government and it is not high on the list for teachers or in what is learned in schools. His calls on the issue are very welcome. On Monday, at the University of Cambridge, I had the opportunity to talk to a group of Argentinian politicians. From their country’s perspective, I know that is something they would welcome as well.

Madam Deputy Speaker, here is my point: it is an afternoon, we have plenty of time, it is an incredibly interesting and broad debate, and it will not have escaped your attention that the Government Benches are not crowded with participants. Therefore, I beg the indulgence of Opposition Members to make a number of points on a series of areas. [Interruption.] The Minister is asking that they be quality contributions, so I shall therefore make my speech even longer.

I will start by addressing some of the points made by the Chair of the Business, Energy and Industrial Strategy Committee, the hon. Member for Bristol North West (Darren Jones), who I think is one of the most talented Members of this Parliament. He and I do have some strong disagreements, sometimes on principle and sometimes on practice. Let me start with two words that encompass the fundamental disagreement we have: industrial strategy.

To the Chair of the Select Committee, industrial strategy is the elixir that somehow unlocks the growth in our economy that proves elusive to all others. Not only that, it is industrial strategy as conceived by the Labour party that somehow has the unique ability to generate growth that perhaps could not be accomplished in other ways. I have always found that intellectual position interesting. When I went to business school and we were given a chance to give three words to describe ourselves to other students, I decided to call myself “arrogant”, because actually at that age—I know it is hard to believe now—I was quite arrogant. But I would never have the arrogance to think that my unique perception of an industrial strategy was the right way to galvanise growth in this country. On that issue, the Chair of the Select Committee and I differ. I would like to hear what he has to say.

[Darren Jones]

The hon. Gentleman is generous in giving way, but as he has put words into my mouth on the record, I ought to correct him, if I may. From our Select Committee’s work on industrial policy and from my comments on that work, it should be clear that I am not somebody who believes that the state is where wealth is created or that the state is in the driving seat of a growing economy. However, when the private sector, which creates wealth, is driving down the road at speed and trying to win the race for workers, customers and shareholders, I recognise that somebody needs to build the public infrastructure for it to succeed if the road runs out.

That opportunity for the state to play an important role in partnership with business is what I refer to as industrial policy. Might I say that it is why so many businesses are talking to the Labour party right now? They are asking for such a partnership with the Government, as opposed to having a Government who stand out of the way and hope the free market will solve all the problems.

[Richard Fuller]

The hon. Gentleman reinforces my point. He is suggesting that if a company chooses to use its shareholders’ money to drive down a road that runs out, somehow taxpayers should pay for the extension of the road. The whole point of capitalist markets is that it is a business’s responsibility if it makes incorrect allocations of capital and its shareholders lose money. It is the job of business and business leadership to have the insight to understand how best to create value for shareholders in the long term.

Businesses are now coming to smart Labour Members—who are desperate to show that after years of hating business the Labour party now thinks prawn cocktails are a nice idea—and saying, “Can you spare us a few bob, mate? We’d like to support your party and we’ve got this really sexy thing we want to do, but frankly we don’t want to use our own capital because we know that the Labour party in government will be suckers enough to use taxpayers’ money to pay for it.”

--- Later in debate ---

[Richard Fuller]

The hon. Lady is right that businesses like certainty—that is absolutely true. Setting a direction, inasmuch as it creates certainty, is useful; more than that, it is a strong part of the foundations. If we go on to talk about climate change in this debate, it may be that questions about national and international strategies and about what our response should be to issues among British businesses, businesses in other countries and multinationals will drive us apart again.

[Darren Jones]

May I invite the hon. Gentleman to reflect, for the benefit of the House, on his recent involvement in the Conservative report on the reform of economic regulators? I was afforded the courtesy of being shown the embargoed report, but I am not sure whether the embargo has now been lifted and I can talk about the report directly.

[Richard Fuller]

indicated assent.

[Darren Jones]

Oh, I can. Very good. The report recognises—I invite the hon. Gentleman to confirm or contest this point—that industrial policy is not just about money, but about policy direction, about regulation by economic regulators and about creating the conditions for business to prosper, for entrepreneurs to create businesses and for innovators to innovate. Industrial policy, as I refer to it, is not about somebody in the Treasury writing a cheque for businesses that should get their money from elsewhere, as the hon. Gentleman suggests; it is about the broader competitive market that needs to be created. Of course the Government and Parliament have a role in creating optimal circumstances for businesses to succeed. Does the hon. Gentleman recognise that?

--- Later in debate ---

[Richard Fuller]

I do. Again, the hon. Gentleman is showing that there are a number of areas in which we can find agreement on the details.

Let me focus on the point about regulatory policy, because it is an important one. A group of Conservative MPs have put together a report calling on the Government to look at how we deal with the stock of regulation, the process of making regulation and my particular area of interest, the accountability of regulators for performance. As Chair of the Select Committee, the hon. Gentleman will be well aware of our interactions with our regulators. Effective regulation, by which I mean regulation that is regularly, systematically and rationally appraised, plays a role in the competitive advantage of the United Kingdom. It is an area that we have locked away, saying, “It’s not nationalisation, it’s not the free market—it’ll do okay.” Those days need to come to an end, because too much of our economic output happens in sectors that are subject to regulators whose performance directly affects the ability of our country to compete.

[Darren Jones]

indicated assent.

[Richard Fuller]

The Chair of the Select Committee nods. It is nice to have an area of agreement.

Let me move on to the second area about which the hon. Gentleman spoke: the Inflation Reduction Act and the associated EU measures. As he well knows, that Act represents a $370 billion commitment of US federal funds, or their equivalent in tax credits. It followed the Infrastructure Investment and Jobs Act of 2021, which meant $1 trillion of investment, not only in infrastructure but in green energy. By purchasing power parity, the US economy is approximately six times the size of the UK’s. An equivalent response, which is what the hon. Gentleman says we need, would essentially require writing a cheque for £40 billion, £50 billion or £60 billion. If industrial strategy is not about expenditure, what are we supposed to be doing to compete, other than putting in that amount of money? There seems to be a part missing.

The hon. Gentleman also spoke about inward investment and said that we should be sharpening up our act. He is absolutely right. In countries such as Germany, which he mentioned, the package on offer to those who are interested in investing is not just a financial package, but a coherent one. When someone looks into making an inward investment, there are people to sort out all the Government intricacies for them at a single point on day one. That is how the UK did it when Margaret Thatcher was leading efforts with Lord Young, but over the intervening years we have made things a little too complicated and we have not found our way. I would be interested to hear the Minister address that point; it may not be directly in her remit, but it would be interesting for all hon. Members present to know the Government’s view. What are the Government doing to make sure people know that the UK can take a foreign company from thinking it wants to invest in this country to actually getting going and investing in this country, whether that involves, say, bricks and mortar or servers? What can we do to make that easier?

I know this sounds as though I am picking the hon. Gentleman’s speech apart. I am not picking it apart but asking questions about it, and I trust he is happy with that. He talked about economic security and collaboration. I think the short-term version of that is called friendshoring, which essentially means saying, “Let us conduct a geopolitical review of important strategic supply chains, and then let us be smart and make sure we are doing business with countries that are our allies.” That is a massive change, because there is no clarity about what the extent of friendshoring areas should be. Does this apply only to strategic industries determined by the United Kingdom, or is it imposed on the United Kingdom because other friends think we should be doing business with someone else? Are we prepared as a country to outsource the way in which British companies do business to the Government of the United States?

--- Later in debate ---

[Richard Fuller]

Obviously not with Russia. We have already imposed substantial trade sanctions on Russia, and I think there is consensus in the House about what our response should be when one country invades another. However, to conflate Russia with China, which has not, as far as I know, invaded another country, is to move into a different area. My point is philosophical: the United Kingdom’s history of success has been as an open trading nation, and the current push, in this country and others, for us to engage in friendshoring strikes me as a significant change from the way in which, historically, we have created wealth.

[Darren Jones]

The point I made in my opening remarks was that we should recognise, with some humility, that Britain can have only so much influence on these global trends. The hon. Gentleman is inviting us to conclude that were we to do more deals with our friends and allies, as I have suggested, those arrangements would be dictated by other countries; I think he was alluding to the United States of America. My response to that is that Britain should therefore lead the debate, and be involved in how this is developing across the world. If we just sit back and wait to see what happens, we will end up having no influence over the way these things are being designed, which, by definition, will be dictated by others who are leading the global debate. I am suggesting that we, as a smaller country, have global clout, and should be convening and leading that debate.

[Richard Fuller]

That is a brilliant point well made, and characteristic of the hon. Gentleman’s understanding and grasp of these issues. He has put his finger on it. I, for my part, am merely raising questions and concerns about the perils of doing something that others may see as somehow buttressing our national security and doing what is right by us. This is not a road we can go down without trade-offs, and there will be some significant trade-offs if we take that road. However, I think the suggestion that we should be an active participant while those discussions are going on is very sensible.

Let me return to the question of money, and the current issues involving the so-called Inflation Reduction Act and the EU. A significant proportion of the funds spent by other countries are being spent on what I would term competitive discovery, which means looking at possible solutions when we do not yet have the solution to a problem. I would place that at the higher end of the risk investment spectrum, and would therefore approach it with caution. It is like dotcom for the green era—not in all sectors, and not all the money is being used for that purpose, but a considerable amount of what we need to do if we are to achieve net zero will require money to be spent on the discovery of solutions.

I am leery of the idea that British taxpayers’ money should be stacked up in competition with taxpayers’ money from EU member states and from the United States. Let me use that dotcom analogy again. When there is a big rush of substantial amounts of funds into discovery on a global scale, yes, there are winners, but an enormous amount of capital is wasted on losers. We have heard, in other debates, Members pushing us to do what President Biden is doing, or saying that we should be doing the same as the EU. Politicians need to remember that that means taking taxpayers’ money which could be spent on education or healthcare, and putting it in the casino of winners and losers in the green tech revolution. We need to be very cautious about spending money in that way.

Action on Climate Change and Decarbonisation

Debate between Richard Fuller and Darren Jones

Tuesday 5th July 2022 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

Thank you, Mr Deputy Speaker. I intend to speak for less than 10 minutes, if that is helpful. I start by thanking the Environmental Audit Committee for securing the debate and for sharing with the Business, Energy and Industrial Strategy Committee, which I chair, the load of scrutinising net zero delivery across Government. I thank the Backbench Business Committee for granting this time on the Order Paper, and I thank the Clerks who support the work of our Select Committees day to day; without them, we would not be able to scrutinise the Government as effectively as we do. I welcome back to the shadow Front Bench my constituency neighbour, my hon. Friend the Member for Bristol East (Kerry McCarthy), in her new role as the shadow Minister for climate change. I look forward to her summing up later.

My focus today is primarily on delivery, because effective delivery ensures value for taxpayers’ money. The Conservative party generally believes that sending policy signals through targets or departmental strategies will be enough to ensure that the market does the heavy lifting as we transition to net zero by 2050. On this subject, it is wrong. Ministers will no doubt point to a long list of targets, strategy documents, incentives—for example, contracts for difference—and research funding allocations, all of which are admirable and welcome. But as the Climate Change Committee concluded last week in its annual report to Parliament, Ministers must think much more about the role of the state in ensuring the delivery of their net zero ambitions, be that from Whitehall or through partnerships of local authorities—and always, in my view, in partnership with the private sector and local communities.

Unfortunately, the Department for Business, Energy and Industrial Strategy is not very good at that. According to the National Audit Office’s review of the delivery of major projects in the Department, 11 of the 15 major projects were deemed to have significant issues that required management attention, or major risks that put the successful delivery of the project in doubt or, at worst, caused it to be deemed unachievable. They include amber warnings for the smart metering implementation programme, costing £20 billion; the social housing decarbonisation fund, costing £4.6 billion; the public sector decarbonisation scheme, costing £1.1 billion; the local authority delivery of the green homes grant, costing £500 million; the heat networks investment project, costing £376 million; and the home upgrade grant for energy efficiency and low-carbon heating work in low-income, off-gas grid homes. There were significant worries about each and every one of those major projects, and, of course, there was a big red warning against the now defunct green homes grant. In fact, the only major programme to receive a green rating from the National Audit Office was the geological disposal facility programme, costing some £12.7 billion, for the long-term management of radioactive waste. For that, I suppose we should be grateful.

In short, there is a delivery problem in Government at a time when the state needs to get more involved in delivery. That is why the Climate Change Committee has called for stronger coordination and delivery, not just in BEIS but through Downing Street and the Cabinet Office, and for contingency planning to be urgently put in place if the current strategies are not delivered as intended. From BEIS, we must see more detailed delivery plans and technology road maps for the delivery of net zero electricity by 2035—something my Committee has started to look at in a new major inquiry—as well for hydrogen production, carbon capture and storage, and industrial decarbonisation.

The No. 1 priority for the Department in relation to our net zero target requirement is, of course, the energy efficiency of our buildings. Buildings account for 20% of emissions in the UK, and the targets the Government have set themselves are very significant in terms of carbon emissions reductions by the mid-2020s. The Government will not hit their net zero target without insulating our buildings and reducing our need for energy, and they will not insulate our buildings without being more directly involved in delivery. This should be a national programme, street by street in every community, co-ordinated nationally in partnership with local councils. That will, of course, cost a lot of money, and public funds should be targeted at households that need it, whether they are on low incomes or require more expensive works to be done because of the nature of their homes.

The current plan from the Government is, unfortunately, to move the same amount of money around again, instead of properly funding a national insulation programme. The money allocated to the failed green homes grant was partly reallocated to the public sector decarbonisation scheme and to the gas boiler replacement voucher scheme. According to the Secretary of State’s evidence to my Committee last week, that is being re-reallocated back to a general energy efficiency programme to be announced in due course.

[Richard Fuller]

I hope the hon. Gentleman will indulge me if I take him back to the street-by-street proposal, which three hon. Members have mentioned. What if an individual does not want that change to their house? What will the public policy be? Will we force people to make the change or will we allow free riders? I wonder what his answers are to those intriguing questions.

[Darren Jones]

There are two points to make. On consumer awareness generally, although there is very significant support for action on climate change, polling shows that most consumers do not realise that that means replacing their gas boiler and insulating their homes. Part of the net zero strategy for Government should be to try to engage with homeowners, tenants and the public about the work that needs to be done, but they have failed to introduce any effective engagement programme with the public. The concern is that when people do not want to do the work, that will cause a lot of anger among the public, and that will undermine our ability to reach net zero.

The use of public funds is also very important, because the disposable income of an average household, once we take away rent or housing costs, is around £9,000 a year. As we have heard, however, we are asking people to spend £10,000 to £20,000 on their home. How on earth can we ask a family with an annual disposable income of £9,000 to spend £20,000, when there is no support from the state or councils and when the banks are not even offering low-cost energy-efficiency financial products to help people who want to make these investments? That is why the Government need to be more involved in thinking about delivery. I suggest having incentives and behaviours that nudge people in the right direction, so that the vast majority of people feel able to do what they want to do and support the national effort to tackle climate change.

Forensic Science Regulator and Biometrics Strategy Bill

Debate between Richard Fuller and Darren Jones

2nd reading & 2nd reading: House of Commons
Friday 25th September 2020 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

I beg to move, That the Bill be now read a Second time.

Further to the Minister’s point of order, I am sure I speak for the whole House when I express our condolences following the tragic death of a police officer in Croydon overnight. For most of us, it is impossible to comprehend what the officer’s family, friends and colleagues must be going through this morning, and the thoughts and prayers of everyone in the House are with them.

Like other Members who have had the strange fortune of winning a parliamentary raffle for private Members’ Bills, I spent the first weeks of this strange year being inundated with submissions making the case for the noblest crusades and the worthiest causes, as well as some of the strangest. I realise that, at first blush, the minimal changes proposed in this Bill may seem a little arcane or marginal, but my purpose today—to give the Forensic Science Regulator the statutory powers necessary to do its job—is, in reality, an urgent and necessary one for the functioning of our criminal justice system.

Access to high-quality forensics is vital so that victims and defendants get the justice they deserve, prosecutions are successful and our system commands and justifies the public’s confidence. Poor-quality forensics, as noted by the regulator, has without doubt lead to the failed prosecution of criminals and a failure to secure justice for victims. As it stands, the market for providing forensic services is flawed, with grinding delays, gaps in capacity and skills and a lack of real competitiveness. The first step in fixing it is to enable the regulator to enforce effective standards, which I hope the House will support me in doing today. It will not take a forensic scientist to note that the title of my Bill also anticipates action on the biometrics strategy, which is no less essential but will have to wait for another time, and I will speak more about that later in my speech.

The profusion of acronyms that, of necessity, opens the Forensic Science Regulator’s annual report gives some sense of the range of scientific disciplines and expert processes on which our justice system must rely. It incorporates not only crime scene investigation but digital forensics, drugs and toxicology analysis, firearms and ballistics, the comparison of tool marks and footprints, as well as DNA and fingerprints. For even the most established forensic practices, the maintenance of high standards is vital to the course of justice, but rapid advances in technology continue to reshape the tools with which forensic scientists can collect, store and analyse evidence and data, as well as the nature and complexity of the crimes they are working to combat. We therefore rely on experts to do that work for us and to present it in a way that is intelligible, accurate and reliable. As the regulator’s report observed last year:

“Courts should not have to judge whether this expert or that expert is ‘better’, but rather there should be a clear explanation of the scientific basis and data from which conclusions are drawn, and any relevant limitations. All forensic science must be conducted by competent forensic scientists, according to scientifically valid methods and be transparently reported, making very clear the limits of knowledge and/or methodology.”

Isolated slip-ups in the science threaten to imprison the innocent and exonerate the guilty. The potential for ubiquitous failings—made more likely by shortfalls in skills, expertise and funding—risks not only isolated miscarriages of justice but the integrity of the entire system. The stakes, therefore, are uniquely high. Plainly in such a world we should expect robust, mandatory and enforceable quality standards for the providers of forensic science, matched with an oversight regime with the independence, the teeth and the resources to do its job.

That insight is what inspired the creation of the office of the Forensic Science Regulator in 2007-08. It was tasked with enumerating those standards, ensuring the quality of providers and processes, assessing the soundness of the scientific techniques being used, and monitoring the competence of the individuals carrying them out.

In its inaugural mission, the Forensic Science Regulator was tasked to

“influence the strategic management of UK forensic science to place quality standards at the heart of strategic planning”.

That, among other issues, formed the seeds of the regulator’s present shortcomings. It can encourage police forces and their providers to seek accreditation, but it cannot compel compliance. It can establish assessments but not enforce their results. It can advise the Government of the day, but it does not weald any power on the market.

Virtually since its creation, therefore, the office and the voluntary model of regulation centred on it have been visibly short of the teeth they need. It is operationally independent, but unable to compel the change that is required.

[Richard Fuller (North East Bedfordshire) (Con)]

It is a pleasure to serve with the hon. Gentleman on the Business, Energy and Industrial Strategy Committee, which he chairs. I am interested in his observations about the non-statutory powers since 2007-08. To what extent does he have evidence that the absence of statutory powers has had an impact on particular cases? That may be something he wants to speak about in more detail.

[Darren Jones]

I share the hon. Gentleman’s delight at serving together on the Business, Energy and Industrial Strategy Committee. The evidence speaks for itself, to stretch a metaphor when we are talking about evidence. The Science and Technology Committees in the House of Commons and the House of Lords, as well as the Government’s own reviews and the Forensic Science Regulator’s annual reports, have all pretty much concluded the same thing: where standards cannot be enforced by providers and the validity of the forensic process is brought into question in prosecution, miscarriages of justice will have followed. The forensics regulator has been pretty bold in making that case in her annual report to Parliament. That is why, I am pleased to say, there has been broad consensus on the measures brought forward in the Bill to ensure that she can enforce the standards for more providers of forensic services.

That is why successive Governments have been notionally committed to putting the regulator on a statutory footing for nearly eight years. Many right hon. and hon. Members have called for this for a long time. That is what underpinned the conclusions of the reports from the Science and Technology Committees in this House and the other place that I mentioned to the hon. Member for North East Bedfordshire (Richard Fuller).

Last year the Science and Technology Committee, of which I was a member, concluded in its inquiry on this issue that

“the Regulator—now more than ever—needs statutory powers.”

A couple of months earlier, the House of Lords Science and Technology Committee had said:

“It is hard to understand why…the Forensic Science Regulator still lacks powers they need… The Forensic Science industry is in trouble; such action is now urgent.”

The regulator herself said in the report:

“Legislation is urgently required to give the…statutory enforcement powers”

needed to do the job properly.

I therefore appreciate the Government’s willingness to co-operate in seeking to carry the Bill, and the support of the Minister and his officials in producing the Bill and the explanatory notes, and in helping to secure the Bill’s passage through the House today. It is especially important that the Bill does pass today, because the availability of these services on time and to reliable standards is often patchy.

When the then Government announced the wholesale closure of the loss-making Forensic Science Service in November 2010, the Science and Technology Committee warned that they had failed to give

“enough consideration to the impact on forensic science research and development (R&D), the capacity of private providers to absorb the FSS’s 60% market share and the wider implications for the criminal justice system.”

That warning has proved prescient. Today, many scientific processes are conducted in-house by police forces, but this is piecemeal in its extent.

--- Later in debate ---

[Darren Jones]

It is not for me to conclude on that issue in debate on a private Member’s Bill. My personal view, for what it is worth and to entertain the hon. Member’s intervention, is that one would not want an employee to be dismissed as a consequence, but they might receive further training to meet the accredited standard and be able to continue their duties. However, as I say, it is not for me to judge an employment issue in such a setting.

As a consequence of some of the points that the hon. Member raises, individual services are often outsourced by police forces, but a lack of clear incentives for providers to seek accreditation, given the overriding need to compete on price, has created a vacuum of accountability. Last year’s House of Lords Science and Technology Committee report set out the situation. Their lordships concluded:

“Simultaneous budget cuts and reorganisation, together with exponential growth in the need for new services such as digital evidence, have put forensic science providers under extreme pressure. The result is a forensic science market which is becoming dysfunctional and which, unless it is properly regulated, will soon suffer the shocks of major forensic science providers going out of business and putting justice in jeopardy… This is not just a budget issue: structural and regulatory muddle exacerbates the malaise. There is no consistency in the way in which the 43 Police Authorities commission forensic services. Some Police Authorities have taken forensic investigation predominantly in-house whilst outsourcing some services to unregulated providers. These actions call into question equitable access for defendants and raise issues over the quality of the analysis undertaken and the evaluation of the evidence presented.”

Their lordships therefore recommended that

“the Forensic Science Regulator should urgently be given a number of statutory powers to bolster trust in the quality of forensic science provision.” This is a multi-layered challenge that defies simple political or partisan characterisation, but the enduring message is that consistent standards, consistently applied, must be foundational to the effective provision of a forensic service across the whole country. Although forensic evidence is generally of good quality, the consequences of a market that is failing to perform that function to measurable standards are, of course, serious, specific and widespread.

The Home Office commissioned a joint review of the provision of forensic science, which identified a growing perception about the risk of unsafe forensic evidence and demonstrated the twofold impact of an inadequate enforcement regime. Some judges, the report noted,

“were not specifically aware of accreditation requirements or”

the Forensic Science Regulator’s codes of practice, and defence lawyers expressed concern that

“perceived compromises regarding quality standards meant that challenges to the integrity of forensic evidence presented in court could soon become routine.”

I think that it is of value for us to pause and reflect on that submission to the Government’s review. Defence lawyers had a concern that the forensic science process itself was being used as a mechanism to provide arguments in prosecution cases. Of course, the service itself should not be the basis for such submissions.

[Richard Fuller]

Frequently, regulators fall back on a requirement for statutory enforcement powers, citing that they are not in a position to be effective with the powers that have been given to them, whereas the issue could be that the regulators are not effective in using the powers that they already have. I admit that that is more usual in the economic sphere and there may be particular issues in the legal sphere, but in his research in preparing the Bill, has the hon. Gentleman reached any conclusions about how well the existing powers are being used versus the requirement for statutory underpinning?

[Darren Jones]

Yes, and the repeated conclusion, not just from the regulator but the other officials and bodies I have mentioned, is that the powers that the regulator has been given for some time—since 2007-08, when the office was created—are not sufficient to bring providers up to the accredited standard. There has been strong messaging, encouragement and co-ordination to try to bring providers up to the accredited standard voluntarily, but that has still not happened. After many years of trying, the regulator and others have concluded that statutory enforcement powers are required. On the evidence, that seems a reasonable request.

Corporate Insolvency and Governance Bill

Debate between Richard Fuller and Darren Jones

2nd reading & 2nd reading: House of Commons
Wednesday 3rd June 2020 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

I welcome the measures in the Bill, which will support struggling businesses during this difficult economic period, but, as other Members have said, this short-term relief needs to be followed quickly by a comprehensive recovery plan for the British economy.

For British businesses, this is a moment of genuine crisis. More than one in five companies across the economy, and an overwhelming majority of those in the worst affected sectors, have already been forced temporarily to cease trading. Survey after survey and the cases we have all encountered in our constituencies shed light on the depth of the anxiety that businesses and their employees are carrying about the coming months. I think there is an understanding across the House, therefore, that failure to act would have meant hundreds of thousands of fundamentally healthy businesses going under altogether, and that that would have been unacceptable.

In that context, the Bill’s time-limited provisions are a matter of necessity. The measures on wrongful trading, statutory demands, winding-up petitions and greater flexibility on governance constitute meaningful, if in some respects temporary, respite for struggling businesses. However, the urgency of responding to this crisis must not blind us to the deeper challenges that we face.

The measures we are debating will postpone the threat of insolvency, but giving workers and businesses real security about the future will require a more ambitious and better-targeted package of support. A significant majority of businesses that have continued to trade are currently reliant on some form of Government help. The success of that model has been its ability to deliver a one-size-fits-all remedy at pace, but the slowdown so far has been marked not just by its severity but by its unevenness.

The Business, Energy and Industrial Strategy Committee heard last month from the retail sector, for which the challenge is especially stark, with as many as a fifth of independent non-food retailers expecting to close for good and often in no position to take on additional debt. Tomorrow we will hear from the manufacturing and energy sectors, including aerospace, automotive and steel, whose needs are self-evidently of a different order, with a small number of major companies providing a significant percentage of British exports, but often reliant on a vast supply chain of small and medium enterprises, themselves in distress and in need of bespoke support. So as the economy reopens, the key measure of success for preventing insolvencies will be the Government’s ability to get help where it is required, on a sectoral basis, with a whole-supply-chain view.

[Richard Fuller]

It is a pleasure to serve on the Committee of which the hon. Member is Chair. I am interested to hear him talk about the differential impact on different sectors. He mentioned retail. Does he think that the Government’s policy to close retail was wrong?