(7 years, 5 months ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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I congratulate the hon. Member for St Austell and Newquay (Steve Double) on securing this important debate. Colleagues have already referred to pubs in their constituencies; if I started doing that, I would have more than 100 to read out, and no one else would get an opportunity to speak. I will not play favourites towards any of them, but I will say that in Chesterfield, our night-time economy is incredibly important to us. I welcomed the liberalisation of licensing hours as a punter, although I must say that as the parent of a 19-year-old I am less enthusiastic than I used to be about our pubs being open until 6 o’clock in the morning.
None the less, pubs are an important part of our economy. When we reflect on their importance, as other Members have done, we must reflect on the contribution that they make to the economy and the community, and the contribution that they make as employers. They employ young people, and predominantly women, which is important to areas where the economy needs more help.
This debate is specifically about beer duty. Understandably, hon. Members have taken the opportunity to reflect on some of the other issues facing pubs, but beer duty is an important issue, and I am glad that the hon. Member for St Austell and Newquay reflected on it. It sends a message from the Government about the importance of pubs to our communities, our society in Britain and our sense of national being. Beer is one of those iconic products of which I think all of us in Britain feel proud.
It is also important to reflect on the fact that if the Chancellor announces something about beer duty today but simultaneously puts pubs through the mill on business rates, not many will raise a glass. Beer duty needs to be seen alongside the impact of VAT and the potentially serious impact of business rates. The previous Chancellor deservedly got credit for cutting beer duty, but we should also remember that he raised it through the beer duty escalator. He came to power in 2010, and it was 2013 before he got rid of it; he milked it as well as abolishing it. It is important to see his record in that broader context.
As the chair of the all-party parliamentary group for pubs, I work closely with the hon. Member for Weaver Vale (Graham Evans) and his all-party parliamentary group on beer. We all collectively recognise the importance of pubs in our communities and our economy. In the spirit of working together with that group, I join him in calling for the Minister and the Chancellor to recognise the value of pubs in the Budget, and to ensure when considering beer duty and business rates that publicans will raise a glass to the Chancellor on Wednesday.
I thank colleagues from all parties in the House for what has been a typically vivid and enthusiastic debate. It has been wonderful to hear so many fantastic pubs and breweries—both large and small—getting a name- check today in the House, which they deserve. I will not repeat them all, because there were so many mentions of people’s local star businesses, but I pay tribute to all of them. Debates such as this one are so valuable, because they allow Members to bring real colour to a debate about duty by demonstrating the impact that duty has had or could have on businesses in their own area.
I particularly thank my hon. Friend the Member for St Austell and Newquay (Steve Double) for opening this debate on behalf of our hon. Friend the Member for Gower (Byron Davies). I know that my hon. Friend the Member for St Austell and Newquay and others here are advocates for the important role that pubs can play; we have heard today about pubs’ community role, as well as their wider economic role.
I congratulate both the all-party group on beer and the all-party group on save the pub for the work they do. Of course, the all-party group on beer is led by my hon. Friend the Member for Weaver Vale (Graham Evans), who took us through his own extensive history of pubs. However, bearing in mind that he was born in 1963, I hope that his experience of Boddingtons in the 1970s came very much at the end of that decade and not at the beginning.
I noted that my hon. Friend the Member for St Austell and Newquay said that it was important that this sector was not overlooked. I can reassure the pub and brewing industries that their interests are never overlooked in Parliament; they have fantastic advocates in Parliament, who are passionate and articulate champions, and they come from up and down the country and from all parties. As a result, industry concerns are regularly brought to the attention of Ministers. I myself have taken part in debates such as this one as a Back Bencher; I responded to similar debates as the Minister with responsibility for public health; and now I am responding to this debate today as the Minister with responsibility for tax.
I will try to respond to as many of the issues raised this morning as I can without repeating some of the points that others have made. As I am sure Members will realise, I cannot pre-empt anything that my right hon. Friend the Chancellor will announce tomorrow. [Interruption.] I will resist all blandishments on that front.
Turning to beer duty rises, the Government of course recognise the importance of the UK pubs sector and its contribution to promoting responsible drinking. I mentioned my previous role as Public Health Minister. In that role I made the case for pubs as advocates of responsible drinking. That was not always the most straightforward thing to do, because there is always a balance in reconciling the undoubted problem our country has with alcohol in some regards against the fact that we love our pub and brewing industry. Actually, pubs are very much the answer in that regard. They bring together those two ambitions: they encourage people to drink responsibly while at the same time doing all the other good things they do, such as providing employment and contributing to community life.
As we have heard, the sector’s footprint covers every constituency across the country. If I am allowed one namecheck, it is for the fantastic Sambrook’s Brewery in my constituency. Along with other Members, I managed to get one of my local ales into the Strangers Bar. I know that many of us have taken that opportunity over recent years. We appreciate the contribution that all breweries—large and small—make to local economies and the wider beer market. The rise in the number of small breweries has increased diversity and choice in the beer market and promoted consumer interest in a much larger range of beers, which has benefited all brewers and the industry as a whole.
We have heard about the action taken on the beer duty escalator since 2013. My right hon. Friend the Member for Tatton (Mr Osborne) deserves the praise he has been given for that. A pint of beer is 10p cheaper than it would have been had the beer duty escalator not been ended in 2013. That has disproportionately benefited pubs, given that two thirds of the alcohol sold in pubs is beer. The British Beer and Pub Association—it stays closely in touch with Members and briefs them—feels that the action taken since 2013 has increased confidence. I heard that in person from the head of a well known brewery who came in as part of the delegation led by my hon. Friend the Member for Weaver Vale last week. As my hon. Friend the Member for Devizes (Claire Perry) said, when we talk to people involved in the industry, we can hear the impact that confidence has. Sometimes it is hard to put an exact figure on its impact on a particular part of our economy, but I have heard that from people.
The BBPA estimates that more than £1 billion is being invested by brewers and pub owners each year, and that impacts on employment decisions across the supply chain. I draw the House’s attention to the ways in which the Government have supported the innovative domestic brewery industry other than by duty cuts and freezes. The shadow Minister noted them in his contribution, and they include supporting the employment of younger people through some of the changes made there, boosting research and development for small and medium-sized enterprises and reducing corporation tax on company profits from 28% in 2010 to 19% from April. In 2020, it is moving to 17%. Cutting the tax on profits encourages reinvestment and innovation.
Does the Minister recognise that there is a real debate about the value of a reduction in corporation tax on the profits that businesses make as compared with the fact that we have the largest corporate property tax in all of Europe? We are expecting businesses that often are not making a profit to see their business rates tax bill go up and up.
The hon. Gentleman brings me to the next section of my speech, which is about business rates. I am not surprised that colleagues across the House have raised that issue. We recognise that business rates can represent a high fixed cost for some businesses. I will not rehearse all the facts about the 2017 revaluation. I think we all acknowledge that there was a long gap between revaluations, but I emphasise that for those who face an increase in business rates as a result, there is a £3.6 billion transitional relief scheme. It will support them by capping and phasing in rises in bills. The Chancellor has already said that he is working with the Secretary of State for Communities and Local Government to provide additional support for the hardest hit businesses.
As the hon. Member for City of Chester (Christian Matheson) and others have said, pubs are valued for business rates around the idea of a fair maintainable turnover. An approved guide on the valuation of public houses for business rates has been agreed between the Valuation Office Agency and all five bodies representing pubs, including the British Beer and Pub Association and the Association of Licensed Multiple Retailers. That formula has been agreed, and that is a welcome step that provides more certainty for pub operators over their business rates bill.
It is also worth noting that in the Budget 2016, the Government announced a £6.7 billion business rates reduction package to benefit all ratepayers. I draw the House’s attention to the switch of the annual indexation of business rates from the retail prices index to the main measure of inflation, the consumer prices index, from April 2020. That will represent a cut every year from 2020. In 2020-21, that benefit will be worth £370 million, and it will grow significantly thereafter.
I will turn to a number of the issues raised by Members. A number of people have made the case—I am familiar with it and recently had the chance to hear it in person from industry representatives—that duty cuts boost Exchequer revenues. It is fair to say that even if we allow for other additional tax revenues, the industry analysis we have seen shows that duty cuts still have a net cost to the Exchequer. For example, because the public finances assume an increase by RPI each year, the duty changes from Budget 2013 onwards are estimated to have reduced total alcohol duty receipts by £800 million for 2016-17. That implies that to make up for that, Government would have to raise taxes in other areas of the economy, cut spending elsewhere or increase the deficit. I put it on record that cuts and freezes have a real impact on how the public finances account for things.
A number of Members have raised the issue of lower duty rates on low-strength beer. I recognise some of the challenges around the point at which that line is drawn and around brewing to that level. High-strength beer is taxed more than the equivalent low-strength product, but the 2.8% threshold is set by European Union law and is being reviewed by the Commission at the moment. In the industry meeting, we explored the impact and discussed where the threshold should be.
Members have rightly discussed the challenge around the on-trade and the off-trade and discussed how pubs can encourage responsible drinking. Current rules do not permit the Government to apply a different tax treatment to the same product. We cannot tax alcohol sold in shops at a different rate to alcohol sold in pubs, but we recognise the role that pubs play in promoting responsible drinking. In 2014, we took action on very cheap alcohol by banning sales below duty plus VAT in England and Wales.
(8 years, 5 months ago)
Commons ChamberOn page 84, line 15.
Let me turn to the subject of today’s debate, which is infrastructure and devolution. Those issues will still matter a year from now—indeed 10 years and 100 years from now. In “The Wealth of Nations”, Adam Smith spoke of three fundamental duties of Government: the defence of the realm, the maintenance of law and order, and a third duty that he described as follows:
“the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit would never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”
We can therefore take it from the father of free market economics that there is no contradiction between faith in free markets and public investment in infrastructure. Indeed, they support one another and this Budget shows how.
The Budget announces new infrastructure investments in every part of the country—from Crossrail 2 in London to High Speed 3 for the northern powerhouse. There can be no more tangible demonstration of our belief in a one-nation economy.
I will not give way.
Not for us the discredited model of a one-city economy, because much as we value London it is wrong to rely on a single centre of wealth creation. Instead, wealth must be created and retained in communities across our nation —hence our ongoing commitment to HS2, a north-south axis linking London to the midlands engine and to the northern powerhouse. Quite literally, we must go further. We must build the vital east-west links needed to unlock the full potential of our great cities beyond London.
The Pennines might be the backbone of England, but frankly they are not the Himalayas. Some of our nation’s greatest cities stretch like a string of pearls across the north—and they can and should be drawn together. That is why this Budget strikes out in a new direction with the key announcement on HS3.
No, I am going to make some progress, given the time constraints.
This is a transformative project. In particular, it provides the prospect of a better, faster line between Leeds and Manchester.
I can certainly confirm that. It is a welcome development that we are following the traditions of our Victorian predecessors with the great revival of railway building, which is so important for the south-west that my hon. Friend so ably represents.
I am going to make some progress.
In order to make these investments, we need to continue to make savings. The failure to control current expenditure means not just more borrowing, but that less is available for capital expenditure—a double dose of debt for our children and grandchildren, with financial debt compounded by infrastructure debt. The decisions that we make must be for the long-term good of the nation. This Government are therefore determined to draw upon the very best advice available, including that of Lord Heseltine, who will chair the Thames Estuary 2050 Growth Commission, and that of Lord Adonis, the chair of the National Infrastructure Commission, whose excellent work has informed many of the decisions made in this Budget.
It is a pleasure to be called early in the debate and to follow the two Front-Bench speeches—particularly the quite superb opening speech by the Secretary of State. I pay tribute to him and his team of Ministers, who serve us really well.
This was a Budget for small businesses and enterprise as much as anything else. I welcome the doubling of small business rate relief and the increase in the maximum threshold for relief from £12,000 to £15,000. I really welcome the reduction in corporation tax, the capital gains tax changes, and particularly the 10% rate on long-term investments in unlisted companies, which will do a great deal for start-ups and business angels. I also welcome the stamp duty changes on commercial properties and the abolition of national insurance for the self-employed.
The other day, I worked out that this is the 40th Budget, including emergency Budgets, that I have been privileged to listen to, but this is without doubt one of the best Budgets, if not the best Budget, for small businesses, enterprise and wealth creation in our communities.
The Opposition have accused the Chancellor of favouring the rich, but let us hang on a moment. In the last financial year, the richest 1% paid 28% of all income tax. That is really quite staggering, and it completely undermines the Opposition’s argument.
Like other Conservative Members, the hon. Gentleman seems to be celebrating the fact that, under a Government that have seen the rich get much, much richer and the poor get much, much poorer, the rich are actually starting to pay more tax. Would it not be better not only if the top 20% paid more tax, but if the bottom 20% actually got wealthier rather than poorer?
I am grateful to the hon. Gentleman for that intervention; he and I get on very well together, and I respect his views. However, I would refer him to the comments by Paul Johnson, the head of the Institute for Fiscal Studies, who pointed out that, over the past few Budgets, higher earners have
“seen huge reductions in pensions tax relief”,
as well as a host of other measures, such as a “clampdown on buy-to-let”, and that they have been “squeezed in other ways”. He points out that this Budget’s impact on income distribution has been “incredibly modest”. That underscores the point that this is a fair Budget and, indeed, one for all our constituents and communities.
In the few minutes I have left, I want to touch on the devolution proposals. I support devolution. The flexibility that comes with making Government money available at the local level and responsive to local aspirations makes sense. I will certainly look carefully at the Secretary of State’s proposals for the combined authority in East Anglia. However, I would ask the Minister who winds up to confirm whether the £30 million a year is new money and whether the £170 million for housing will be spread over 30 years or treated on an annual basis. Could we have a look at that?
I certainly support the idea of devolution, but I am sceptical about the idea of elected mayors, for the following reasons. Back in 2000 and 2001, I was one of those politicians who were vehemently opposed to the now Lord Prescott’s proposals for regional assemblies, on the grounds of extreme cost and empire building. I also took the view that they would probably lead to the demise of the shire counties. I therefore regard the plan to bring in elected mayors with extreme suspicion. We are going to have to look at the cost very carefully. I remember when we discussed the plans for police and crime commissioners four years ago, and the view was that they would cost very little. It was said that the chairman of the authority—who is now called the police and crime commissioner—would sit in the police headquarters at no extra cost, but our PCC now costs £1.37 million and has a large number of staff in a separate building. He has built a mini-empire. The cost of the 41 PCCs across the country comes to £52 million.
(8 years, 5 months ago)
Commons ChamberThe impact assessment has been published today. That is important. The Bill has already received some scrutiny in Committee. The Sunday trading proposals were introduced in Committee; they were not in the Bill on Second Reading. The Bill started not in this place but in the House of Lords. Therefore, the Sunday trading measure received no scrutiny in any of the stages in the House of Lords.
Following the consultation, we were promised that the impact assessment would be published, as we would expect with any measure, not least such an important and controversial one. The impact assessment was published today, and it includes several paragraphs about the family test, for which I and others have asked for some time. Back in October, I asked when the family impact test would be published, and I was told that it would be published before the Committee stage. In February, I asked again when it would be published, and I was told that it would be published alongside the Government’s consultation response. That did not happen. After that, I was told that it would be published shortly. It has been published today. I do not think that is acceptable.
I pay tribute to the hon. Gentleman for his consistency on this subject. He stood for election in May. He will have known that some Conservative Members would have liked to bring forward such a measure. He must have been reassured that it was not in the Conservative manifesto. As a democrat, how would he be able to face his constituents if he had chosen to vote for the measure, given that his views are so well known and that the Conservative party had not put it in its manifesto?
I am a lawyer by profession, and I believe that the hon. Gentleman has asked me a leading question. Plainly, the measure was not in the manifesto. Not only that, but the Prime Minister confirmed on 20 April 2015, in the middle of the campaign, in a letter to the “Keep Sunday Special” campaign:
“I can assure you that we have no current plans to relax the Sunday trading laws. We believe that the current system provides a reasonable balance between those who wish to see more opportunity to shop in large stores on a Sunday, and those who would like to see further restrictions.”
That pretty much sums up my position, on which I have been consistent. The Prime Minister appeared to share my position back in April.
(9 years, 6 months ago)
Commons ChamberMy hon. Friend makes a powerful point. I agree and I shall come on to that a little later in my speech. We have had an ever-moving, ever-changing story about what the Government or members of the Government knew or did not know and the questions that they asked or did not ask about HSBC. That goes to my central issue of trust: trust is being undermined in our tax system, which absolutely depends on it.
The Government have tried to trumpet their record in recent days, but I am afraid that it is not the great source of pride that they have been trying to pretend it is. We know that the tax gap—that is, the difference between how much tax should be collected and how much is collected—rose from £31 billion in 2009-10 to £33 billion in 2011-12 and now to £34 billion in 2012-13, which is the information available for the latest year.
Alongside the appalling impact of the tax gap on our public services and the public finances, does my hon. Friend agree that it has a massive impact on the businesses that are playing by the rules and paying their taxes? To stand up for law-abiding businesses and say that everyone should pay their taxes is not an anti-business argument but a profoundly pro-business one.
My hon. Friend makes an incredibly powerful point. All businesses and all individual taxpayers need to know that the tax system is based on a level playing field, that nobody is getting away with gaming the system, and that when the system is being gamed we have robust measures to deal with it. That is profoundly pro-business and it is also in the interests of individual taxpayers, UK plc and our economy as a whole.
(9 years, 8 months ago)
Commons ChamberI am pleased to have this opportunity to bring to the House’s attention a matter of significant importance to employees in my constituency who were transferred out of Royal Mail to the IT services provider Computer Sciences Corporation and, I suspect, to many other employees who were transferred out of the public sector. Changes to lump sum pension allowances introduced by the Chancellor in his 2013 Budget have had a catastrophic impact on my constituents’ pension pots and created an accidental discrimination that fits neither the principles nor the spirit of the transfer of undertakings protocol, otherwise known as TUPE.
The aim of this debate is to follow up letters I have exchanged with the Financial Secretary to the Treasury. I feel that his replies thus far have failed to grasp the full unfairness of the situation or to offer appropriate remedy. I aim to show the House that, as the mechanism currently stands, there is gross unfairness towards workers who have been transferred out of public sector pension schemes. I hope that the Minister, when she responds, can explain to my constituents why they have been hit with such a significant tax bill, often on revenues that they have not even yet received, and what further steps the Government can take to ensure that former public sector workers are not unfairly disadvantaged by an arbitrary decision they made several years ago.
Royal Mail has had a long tradition in my constituency. Back in the 1960s, as part of a move to get Government organisations out into the provinces, Royal Mail moved thousands of head office staff up to Chesterfield. It brought with it a Barbara Hepworth statue and a welcome number of high-skilled and pretty well-paid jobs. Royal Mail has been a key employer in the town ever since. The Loundsley Green housing estate was built specifically to house the influx of new workers. However, while it remains an important employer today, many staff have subsequently been transferred out and do the same or similar jobs working on the Royal Mail account on behalf of private outsourcing companies.
The workers whose case I am raising today were transferred from Royal Mail to the IT firm Computer Sciences Corporation Ltd—CSC—in 2003 as part of a contract to outsource all Royal Mail’s IT to the company and retain all the 1,713 staff under the TUPE protocol. At that time, employees had a choice either to leave pension contributions that they had already paid within the Royal Mail pension and start a new separate corporate pension with future contributions with their new employer, or to transfer all their contributions to a new CSC pension and subsequently pay into that. The only choice that appeared to face workers was whether their pension contributions would be safer in one scheme or another and where they would be most likely to get a decent return on the pension contributions to which they were entitled.
Many workers—it is not clear how many—elected to keep their pre-2003 contributions within the Royal Mail scheme and open a new CSC pension with future contributions. However, a combination of the changes to the allowance regime—which was dramatically reduced in October 2010 and further reduced in subsequent Budgets—enforcement of TUPE rights, previous changes made to the allowances on what are perceived to be temporary pensions, and Treasury guidance on what constitutes a temporary pension has led to huge costs being applied to workers made redundant from CSC in recent years.
Revelations in Computerweekly.com about the efforts that CSC has made to stem losses on its involvement with the Royal Mail account suggest that 63% of the staff who originally transferred from Royal Mail into CSC have now been cut. Although exact numbers are not known, it is believed that the majority have left the business completely. That suggests that some 1,082 employees could be affected in this case alone. Some of those will have chosen to move into the CSC pension scheme and will not be affected in the same way.
There appear to be two different ways in which workers have been disadvantaged. First, I would like to raise the case of Michael Randell. Michael had worked for Royal Mail Group for well over 25 years, during which he had saved for his retirement by contributing into the pension scheme. Mr Randell is now 53. Under the terms of his employment, had he remained a Royal Mail employee he would have been entitled to take his pension under early retirement provision if he had left the firm over the age of 50. Therefore, in order to comply with TUPE, CSC arranged to make a notional payment to source an equivalent pension value until he is 60, when he will move on to the Royal Mail pension. Mr Randell’s usual pension contributions are less than £5,000 per year, but when he is made redundant, this one-off notional payment—which would effectively buy an annuity for the next seven years to comply with TUPE regulations, from CSC’s perspective—is classed by the Treasury as a one-year contribution to a second, in this case temporary, pension. In practical terms, it is not a second pension—it is a continuation of the first pension that he has from doing the same job with two separate employers.
At a time when the Government rightly ask employees to put money aside to save for themselves in retirement and to plan ahead, this group of workers, who did precisely that, are being caused huge problems because, back in 2003, they made a decision about which pension scheme they should choose to contribute to, yet they could not possibly be expected to have had foresight as to the implications of that choice.
The intention of the Government’s proposals was to target richer pensioners. In 2010, the hon. Member for Fareham (Mr Hoban) announced:
“It will be targeted at those who make the most significant pension savings. An annual allowance of £50,000 will affect 100,000 pension savers—80% of those will have incomes over £100,000.”
Unfortunately, as Mr Randell’s case has shown, the policy has also hit those on lower incomes with reasonable pensions. The Government have accepted the possibility that individuals on lower incomes could in exceptional circumstances face a sharp increase in the tax charged on their pension, but as I have demonstrated, such moderate language does not reflect the significant numbers that might be affected or the size of the impact on their pension planning.
The second example involves the group of CSC workers who were made redundant in 2012. That was part of a global redundancy programme in which CSC laid off 640 workers. The workers had their CSC pensions taxed as second pensions, whereas if, back in 2003, they had decided to transfer their pensions into the CSC pension scheme, it would all have been seen as the same scheme.
CSC attempted to honour its commitments to its employees by ensuring that they still received as employees of CSC what they would have been entitled to if they had remained with Royal Mail, but that led to those individuals being treated as though they had two separate pensions, although in practice they have been employed in the same job throughout that period. The issue is about how public sector workers whose employer changes, even though their job does not change, are seen as having two different jobs. Although TUPE should protect them from being worse off as a result, in practice they are not protected.
The Treasury viewed the money as having been paid all at once, even though it was received by the workers annually over many years, and the way in which workers’ pensions are taxed by the Treasury meant that people on decent but not in any sense exceptional salaries faced huge tax bills—more than £200,000 in one case that I have heard of—on income that they had not necessarily received.
It is too early to know the total number of people who will be sucked into this unfortunate state of affairs, but taking into account how many have moved from the public sector to the private sector, it might be very high. That raises important questions about the extent to which the Government fully understood the impact of the changes they made to the annual pension allowance when they made them.
The Treasury document, “Restricting pensions tax relief through existing allowances: a summary of the discussion document responses”, revealed:
“The nature of DB schemes means that some individuals on moderate incomes could exceed the AA—particularly where they are in final salary DB schemes and see spikes in pension accrual… The Government is committed to managing impacts on these individuals as far as possible.”
One of these solutions was to allow individuals
“to carry-forward unused annual allowance from up to three previous years, to offset against contributions in excess of the AA in a single year.”
However, the Government recognised that in exceptional cases such mitigation would not be sufficient. The Financial Secretary made that clear in correspondence with me. He said at the time that the Government had consulted on options to give individuals and schemes more flexibility over the payment of charges. On 3 March 2011, the Government announced that individuals with annual allowance charges of more than £2,000 would be able to elect for the full liability to be met from their pension benefit. That obviously made it easier in the short term, but in practice it still means that individuals will lose out, as they receive a lower pension than they otherwise would have done. The fact that they are still taking money out of their future earnings to pay a bill does not seem to fit with the principle of the Government’s measures.
It is ironic that this debate is taking place on the day that the House has again debated the Taxation of Pensions Bill, because the Bill was a missed opportunity to address the plight of TUPE-ed public sector workers who face the unfairness that I have highlighted. The Government have thus far fallen short of the action that is required. The measures that have been put in place are compensatory, but they do not compensate fully. They mean that the workers of CSC and probably many other former public sector workers will lose out on the pension to which they should have been entitled.
The further stages of the Taxation of Pensions Bill provide an opportunity to establish cross-party support for further analysing the effect that pension changes have had on CSC workers, and for setting out a framework in which the unfair nature of the situation can be tackled. I hope that that might happen in another place, as I suggested on Report. The Government’s approach to reforming pensions tax relief was supposed to be based on ensuring that fairness was maintained, but it appears that a loophole has developed that could, in some cases, lead to people losing thousands from their pension.
I would be grateful if the Minister recognised that the measures to alleviate the problem are sticking plasters that aim to provide compensation or to reduce the damage of the proposals, and that what is required is for people who are perceived to have had two jobs, when in reality they had one, not to have to choose to pay a tax bill, which they would not have faced if they were still in the public sector, either all at once or from their future pension income. I look forward to hearing her response on this important issue. I recognise, in bringing this matter to the House, that the Government’s intentions were positive. However, when unintended consequences arise, it is our responsibility to evaluate them and, hopefully, to work together to deliver a fairer outcome for our constituents.
(9 years, 8 months ago)
Commons ChamberIt is a pleasure to be here this afternoon for Report stage and Third Reading, and I do not think I can quite do justice to the excitement and delight that I felt when I saw that the final stages were indeed to be taken straight after the autumn statement. I am sure that is a view shared by the Minister, who will also be grateful for this miraculous feat of scheduling. Given the vast numbers who have turned out to hear us this afternoon, the excitement is obviously broadly shared across the House.
This is a serious Bill, however, and we have serious matters to discuss this afternoon, so I will now turn to the content of new clauses 1 and 2. There is a certain symmetry to the scheduling of today’s proceedings, because the reforms in the Bill were first announced in the Budget statement and we are now discussing the Bill’s final stages alongside the autumn statement. We should be impressed—if that is the right word—by the speed with which the Government have rushed through these very significant pension reforms, although, given that we will now rush through something else even more quickly as a result of the autumn statement, perhaps I should have waited to hear that statement before writing that line in my script for this debate.
My hon. Friend has congratulated the Government on the speed with which they have brought in these measures. She will be aware that I have secured an Adjournment debate later today on the unintended consequences that have been visited on some of my constituents as a result of previous hastily introduced pension legislation. The Government have attempted to undo that legislation but, unfortunately, without any great success. Will my hon. Friend therefore temper her praise and reflect on the fact that hastily introduced pension legislation can often have unintended consequences?
I thank my hon. Friend for his intervention. If I had continued my speech for another couple of lines, he would have understood that my praise was somewhat tongue in cheek, given what I am about to say about the haste with which the measures have been introduced, about the impact that that has had, and about the concerns expressed by the industry. I know that my hon. Friend is taking up these issues on behalf of his constituents and putting them forward very seriously. We still do not know all the unintended consequences that will result from this Bill and the Pension Schemes Bill, which has now gone through the House, and that is one reason why I want to speak to the new clauses today.
At least one of the new clauses will seem familiar to those who had the pleasure, as I did, of serving on the Bill Committee. We have been consistent in our approach to the reforms. We have always said that we supported the principles of greater freedom and choice, but only when that leads to better outcomes for consumers. That is why we have consistently called on the Government to give us evidence that they have undertaken the appropriate assessment and analysis of the impact and potential consequences of the reforms. This also relates to what my hon. Friend has just said. For as long as we have pressed the Financial Secretary to the Treasury to provide that information, he has politely but firmly refused to do so. We on this side of the House are nothing if not persistent, however, and it would be remiss of us not to make one final attempt to bring the Government round to our way of thinking and to persuade them to accept our new clauses.
In a moment, I shall ask the Minister some questions on the figures that have been published today, but first I want to refer to some of the points that have been made about the speed with which the Bill has been taken through Parliament. Comments have been made in briefings and submitted in evidence as we have approached Third Reading. For example, the Association of British Insurers has stated that
“it is becoming increasingly clear that the first phase of the introduction of these reforms will be delivered in a period of regulatory uncertainty.”
The impact of that will be felt by the constituents of my hon. Friend the Member for Chesterfield (Toby Perkins). The ABI goes on to say:
“There is still a lack of clarity about what is expected of anyone offering retirement products from next April.”
I will come back to those points in a moment. The Bill has had thorough scrutiny, but a number of issues remain that we wish to pursue.
New clause 1 calls for a Treasury review within two years of the reforms coming into force on 6 April 2015, detailing the impact of the Bill on Government revenues, with particular reference to opportunities for tax avoidance and national insurance contributions avoidance. In Committee, we tried to get more details and figures, and the comments of John Greenwood and others were often quoted, particularly those relating to concerns that the Bill could allow individuals to divert large sums into their pensions through salary sacrifice. Those individuals would then be able to take as much as they wished from that pension in the following year, as 25% would be tax- free and the rest would be charged at their marginal rate, with no money deducted through national insurance contributions. Although the introduction of the money purchase annual allowance rules is supposed to prevent that, the reduced £10,000 limit is activated only after the pension has been flexibly accessed for the first time.
The Association of Accounting Technicians has raised concerns about this, saying:
“In the first year, before the £40,000 allowance is lost, individuals over the age of 55 will still have the scope to save tax and NI on the full £40,000, provided they have the necessary earnings, less their existing pension contributions. Where an individual flushes (passes) an extra £30,000 through pension rather than drawing salary they will achieve a saving of £3,600 in employee NI, more than £1,500 in income tax and, also, £4,140 in employer NI (13.8%) in the first year. A total loss to the public purse of £9,240. The “Freedom and choice in pensions” rules mean this money can be withdrawn immediately if an individual is over 55. This fact means that there will not be clear distinction between salary and pension for this age group.”
I have some questions for the Minister about that. Does he agree that the Bill, as it stands, would afford additional scope for tax avoidance of the type outlined? I know we have discussed this matter in Committee, but it is important to probe it until the last possible moment.
I am pleased to take part in the Report stage of a Bill that we discussed at some length in Committee, as my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) will know. She has led for us throughout with such conscientiousness and command of detail that we probably do not need to labour further the points that we have pressed on the Minister. I am pleased that the hon. Member for Arfon (Hywel Williams) has added to our thinking on new clause 2 by suggesting that the effect on the housing market, in particular, should be kept under strict review.
I fear that the Minister is not going to accept either new clause, so I ask him to make a clear statement on the areas where the Bill is likely to have an impact, with potentially severe economic consequences. In the light of the Chancellor’s autumn statement earlier today, we see just how severe the problems on the deficit and Government borrowing are. If the Bill is going to have a further major impact in terms of tax receipts—which are already disappointingly low, as the Minister himself must recognise, being very well acquainted with that area of the Treasury’s affairs—it needs to be regularly reviewed.
In pushing for the changes we propose, we are merely doing what any responsible Opposition may do. I am surprised that the Minister is so reticent about sharing these important matters with the House. As the hon. Member for Arfon said, the consequences in the housing market could be quite severe, particularly in the buy-to-rent sector. In Committee, I mentioned to him anecdotal information that I had received from the housing market in strongly Conservative areas such as Buckinghamshire. House prices are already rising, and this aspect needs to be reviewed.
The point that we made very strongly throughout the Committee stage is that this is an unknown area where there is a fear of scams and abuses emerging—mis-selling and such things that have characterised so much of the industry in the past. Even now, we are still clearing up some of the mess from those previous schemes that went so horribly wrong. Not only that, but looking at this from the point of view of economic management, big sums are involved. I have talked to pension fund and investment fund managers, and they are looking forward to it.
As my hon. Friend the Member for Kilmarnock and Loudoun has made clear, we welcome the Bill. We are not opposed to it in principle, but we want to make sure that it has the effects that are foreseen as regards flexibility and making greater independence available to very many people throughout the country. It is in the spirit of not just avoiding abuses, but ensuring that the Bill does not become counter-productive or have exactly the detrimental consequences that other Bills of this kind have had that we urge the Minister to accept, even at this late stage, both new clause 1 and new clause 2. I am grateful to have had the opportunity to repeat that point on Report.
I do not intend to detain the House unduly, but I want to speak briefly in support of new clause 1, tabled by my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson). I also do not intend to give too much advance notice of my Adjournment debate, which I will have the pleasure of holding later and to which I know that the House is looking forward with considerable interest.
My hon. Friend made an important point about the haste with which some of the changes have been introduced and the impact that that can have. The Government may be entirely well meaning, but such changes can have unintended consequences, and I shall refer to some of them in more detail later.
If I had been contacted by my constituents and had a response from the Minister a few weeks or months earlier, there might have been an appropriate opportunity to propose that the issue was looked into in relation to the Bill, but perhaps there will be an opportunity to consider such issues in the other place.
It is a great pleasure to follow my hon. Friend the Member for Coventry North West (Mr Robinson), who speaks with tremendous knowledge on these issues. He was absolutely right to focus on the way in which some industries operated in the past, and the extent to which the financial services industry had some very negative selling practices back in the deregulatory period of the 1980s. I am pleased that the industry, with Government assistance, has very much got its house in order.
We would be well advised to think about the impact of the changes on the professionalism of very important industries such as financial services. If decisions are not taken in professional enough a way, they can have massive effects on people at the time in their life when they take their pension. Back in the 1980s, there was a huge explosion of private pensions, with people—mineworkers or teachers—advised to give up their pensions. They were told, “No, if you give up your pension, you can opt in to one of these private schemes, with 15% growth every year.” There was a huge mis-selling scandal.
I previously worked—briefly, and largely unheralded—in the financial services industry. I was not necessarily particularly suited for the job, which highlights a point about people being invited into the industry. They were dragged into it on the basis of knowing friends that they could go and sell pensions to. People with very little knowledge came into the industry. Their business plan was based on phoning all their friends and relatives to encourage them to give up their pensions in reliable public sector or other schemes and to go in to private schemes. There was of course a huge explosion, and many of the people in the schemes were seen to have been given very poor advice.
We recognise what the Government are attempting to achieve, and we support their aims of having greater flexibility for the industry, allowing people to be put back in charge of their investment and ensuring that they have the freedom to decide what to do with the money that they have saved. However, we are also aware of why the annuities method of accessing pensions that people had invested in was introduced. We as a society decided that, in an age when people were living longer and longer, we wanted people to make provision for themselves and, having done so, to buy something that provided a regular income that they could rely on.
If we have a scheme in which people decide what to invest their pension funds in, but, with the best of intentions, those investments go wrong, the people who we thought had provided for themselves in later life will come back to the state and say, “Unfortunately, the investments that I made with my pension pot have gone wrong and I have run out of money.” That will have an impact on the Government. We recognise what the Government are attempting to achieve, but it would be sensible to have a review of how it is working, the impact of the changes on the behaviour of investors, the impact on Government revenues, the impact on the broader economy, and what behaviours are being encouraged and introduced by the changes.
I am sure that the hon. Gentleman will accept that there is also a reputational danger for the industry in general and for the entire system of retirement pensions if people who make honest and sincere investments find that the returns are non-existent or that the investment itself disappears, and find themselves not being at leisure in their 70s, but working, like people I know.
Absolutely; the hon. Gentleman is right. There was a huge rush of those issues coming to light at the back end of the last century, when people who believed that they had saved into corporate pensions found that the company had disappeared and so had their pension.
When we are debating these issues and supporting the Government in this important initiative, we must be conscious that it must not end up with people effectively gambling with the income that they will rely on, without being aware of the risks. It is important that protections are in place to ensure that when people make such decisions, they have the information and know what they are letting themselves in for. It must be clear not only what impact it will have on them and their future, but what impact it will have on Government resources and revenues.
The FCA risk outlook of 2014 stated:
“Retirement income products and distribution may deliver poor consumer outcomes”.
That means that the Government recognise the dangers that we are highlighting, which adds more weight to the call of my hon. Friend the Member for Kilmarnock and Loudoun for a review of the impact on Government revenue and a review of who is affected, with a
“distributional impact, by income decile of the population”.
The other thing that we must all be conscious of is that this change must not result in an industry that services only the very rich. Financial advice is important. If it becomes the preserve of the very rich, many people will be left out of the market, especially the self-employed, who often see their business as their pension and so never go down the route of choosing financial services products.
In supporting my hon. Friend’s call for a review of the impact of the changes, I wanted to flag up the debate that we will be having later and to put it in the context of the taxation of pensions. I have secured today’s Adjournment debate on the impact of such measures on public sector workers who transferred to the private sector when their public sector job was transferred. They are protected under transfer of undertakings protocols. However, as many staff at CSC in Chesterfield who previously worked for Royal Mail discovered, when they were made redundant, the changes hastily introduced by the Government in 2012-13 meant that although they left their pension with Royal Mail when they were transferred and opened a new pension with CSC, that new pension was treated as a second pension. As far as they were concerned, they sat in the same desks and did the same job. The name above the door may have changed from Royal Mail to CSC—although in this case it did not in practical terms—but those staff were classed as having two different jobs and therefore two different pensions.
My hon. Friend makes an important and relevant point. We are putting power in the hands of individuals to decide what they do with their retirement pension pot. We are also ensuring—I shall touch on this in a moment—that guidance is available. It may well be that after careful consideration, people conclude that they do want to assist a family member to get into the housing market. That is a choice for them, and I do not think that we here should necessarily condemn such a choice: it might be precisely the right thing for people to do for them and their family.
As part of the new regulatory framework for financial services, we have introduced the Financial Policy Committee, as I was saying, and we have given the FPC strong powers to tackle any threat to financial stability, including a broad power of recommendation, which it used in June 2014 to address risks stemming from mortgage lending and sectoral capital requirements that apply to residential mortgage lending. The Government have consulted on granting the FPC powers of direction over macro-prudential tools for the housing market and aim to legislate for these new powers next year. In line with the new regulatory framework, the FPC is best placed to monitor the housing market and take action, if required.
Let me pick some other points raised in the debate, most of which it would be fair to say were familiar. I was asked whether people would understand the tax consequences involved. The guidance will help consumers to understand the tax implications of their choice of pension, and in addition, the Financial Conduct Authority has published near final rules that will require providers to supply their customers with a description of the possible tax implications when they apply to access their pension funds.
On extortionate draw-down charges, the FCA’s retirement income market study will be published shortly. In June, the FCA expanded the scope of this study to include consideration of products in the new flexible landscape and to identify any competition risks and potential consumer detriment. The guidance guarantee will be relevant here.
It was suggested that people might be charged too much tax without realising it. As with all PAYE income, the tax position will be reconciled at the end of the tax year. All the income received by an individual that was taxed under PAYE will be brought together, and the correct tax will then be calculated. If there was an overpayment, the extra amount will be repaid, and if there was an underpayment, HMRC will contact the individual. People will not be subject to self-assessment solely because they have flexibly accessed their pensions, nor will they have to claim a refund in order to receive it.
I have already touched on the matter of how the new flexibilities will affect entitlements to benefits, but let me say now that the Government want to ensure that the choice that people make between taking their pensions as income—that is, purchasing an annuity and keeping more of their pension as capital—and drawing it down periodically, for example through a drawdown product, will not have a significant impact on how they are assessed for social care support and how their means are assessed for social security purposes. New regulations and statutory guidance on the Care Act 2014, which were published on 23 October, include details about the charging rules for care and support.
Today we announced a change in the rules for people above pension credit qualifying age who claim means-tested benefits. The notional income amount applied to pension pots that have not been used to purchase an annuity will be reduced from 150% to 100% of the income of an equivalent annuity—or the actual income taken, if that is higher—in line with the rules for care and support.
Let me now deal with an issue that was raised by the hon. Members for Kilmarnock and Loudoun and for Chesterfield (Toby Perkins). I shall not try to anticipate the response that my hon. Friend the Economic Secretary to the Treasury will make to the Adjournment debate that the hon. Gentleman will initiate later, but I can say that these matters are not being rushed. We have consulted extensively on the implementation of the policy, and there is widespread support for the changes. We are working closely with industry to ensure that it is ready for April 2015, and have been doing so since the announcement was made. We are making good progress in delivering the changes that are needed through both our Bills.
I realise that the Minister does not want to predict the outcome of a debate to which we all look forward with such interest, but will he tell us whether the taxation of pensions element of that debate could be considered during further stages of the Bill’s progress?
We are reaching the end of the Commons process, or at least I hope we are. We believe that the Bill delivers the reforms that are necessary to implement the policy announcement that the Chancellor made in the last Budget. We believe that these are good reforms, and we believe that the new flexibility in the pensions system is to be welcomed and will encourage greater savings. Let me add that some perceive Opposition Members’ desire for a review as the precursor of a possible reversal of these changes by the Opposition, were they to be in government. I would not like that to happen, and their proposals create a degree of uncertainty.
I hope that, in the light of the explanations that I have given to the hon. Member for Kilmarnock and Loudoun, she will not press her new clause to a Division, but if she does, I will certainly oppose it.
(10 years, 1 month ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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I beg to move,
That this House has considered the e-petition relating to making Eid and Diwali public holidays.
Mr Bayley, it is an honour to serve under your chairmanship for the first time. Jai Shree Krishna, Salaam Alaikum, Namaste and Shalom!
This e-petition was not my idea and I cannot claim ownership of it. However, I will explain why I have agreed to be the Member who sponsors it and makes sure that it is debated in the Houses of Parliament. I am the MP for Harrow East, an area of enormous diversity of culture and religion—in fact, I would claim that it is the most diverse constituency anywhere in the country, containing people of all religions and from every country on the planet.
I celebrate all the religious festivals in a number of ways. I join my Hindu friends at all their various festivals, including Diwali—or, to use the term more appropriate for my constituency, Deepavali. I join my Muslim friends at Eid, my Jewish friends for Rash Hashanah and Hanukkah, and my Christian friends for Christmas, Easter and other celebrations. I join my Sikh friends for Vaisakhi and my Chinese friends for Chinese new year. I also celebrate many other occasions throughout the year with all kinds of groups within my constituency alone.
I myself am a committed Christian, but it is probably fair to say that I am a Chrinjew—a Christian with Jewish roots and a deeply embedded friendship with the Hindu religion. I believe that Harrow East is a beacon of everything that is positive about the enormous cultural diversity of London and the rest of this country. Being the MP for the area has given me a broad insight into the question of holiday observances. When this petition was forwarded to the Backbench Business Committee, I felt it was my duty to ensure that it received full and due attention in the House.
Given all the pressures on the parliamentary timetable in the run-up to the recess that is just about to start, it was important to bring this matter forward now, within the required timeline of three months. That is why the Backbench Business Committee has taken the unusual step of scheduling this debate in Westminster Hall on a Monday afternoon, when it is not normally open. If we had not scheduled the debate for today, the petition would have fallen and no debate would have taken place. If that had happened, we would have lost a great opportunity to debate this matter in Parliament and there would have been enormous dissatisfaction for the people who care about it passionately.
Consideration should be given to whether we, as a culturally diverse nation, should start public holidays for non-Christian religions. Such consideration raises all kinds of issues, which I will briefly touch on today. First, I will address some of the main objections to the idea straight away. The Government response to the e-petition was:
“Whilst we appreciate a new national holiday may benefit some communities and sectors, the cost to the economy remains considerable and any changes to the current arrangements would not take place without a full consultation.”
I do not disagree with having a consultation or with the need to ensure that there are benefits to a public holiday. Such concerns are valid. According to the Centre for Economics and Business Research, each public holiday costs £2.3 billion per day due to losses in retail, commercial, service and other industries. If that estimate is correct, we are looking at an overall economic cost of just less than £5 billion if the Muslim faith and the Hindu faith were to be given one specified public holiday each.
Further, the centre believes that annual output would be raised by £19 billion if all public and bank holidays were scrapped. Accountants RSM Tenon had an even higher estimate, reckoning that £30 billion would be recouped if we cancelled all public holidays. However, that is not likely to happen; I cannot believe that any Government would ever dare to cancel Christmas.
We cannot make a case for or against further public holidays just on the basis of money; if we did, we would not have any at all. Saying that is not to diminish the response of the Department for Business, Innovations and Skills to this petition, but to make the case that there are bigger considerations than just the cost.
I thank the hon. Gentleman for securing this debate. He may be about to mention this, but will he clarify something? Is he saying that we need two extra public holidays or that he wants to reallocate existing bank holidays so that they come at the right time to recognise these festivals?
I thank the hon. Gentleman for his intervention. I will come to the issue of the number of public holidays and how they should be apportioned in a few minutes. If he allows me to develop my points a little further, all will become clearer.
Another contentious issue is the fact that both Eid and Diwali have unpredictable timings. They fall on different days every year, but so does Easter; Easter is not a fixed time in the calendar, but we schedule that without too much difficulty. It is also useful to consider that Eid and Diwali fall at times of the year that are currently devoid of public holidays. Eid al-Fitr, which marks the end of Ramadan, comes around the end of July, while Diwali comes towards the end of October or the start of November, depending on the phasing of the moon. Public holidays at those times would work well in giving workers an even spread of celebratory days off.
This e-petition attracted the signatures of 122,991 people, which I believe makes it the largest e-petition that has come to central Government since e-petitions began. That demonstrates that this issue is an important concern for a significant number of people in this country. Furthermore, it is probably worth mentioning that a responding e-petition, which called for the status quo to be maintained, has not even received 40 signatures yet. So the groundswell of opinion certainly appears to be in favour of this particular move.
Islam and Hinduism are the second and third largest religions in the UK respectively, after Christianity. Combined, they account for 6.8% of the population, with the trend of their growth increasing. The Muslim population is predicted to increase by 8.2% by 2030, due to a higher than average birth rate among Muslims and increased immigration from Muslim countries. In Manchester, one in 10 school days were missed due to religious occasions for Muslims, which raises concerns about educational attainment in that particular community. With young Muslim men currently twice as likely to be unemployed as other young men, according to the Office for National Statistics, this has to be of paramount concern; it is an issue not only in that community, but in the whole community.
In 2013, the average unemployment rate for young people in all minority ethnic groups, who are typically from these faith communities, jumped from 33% to 37%, according to the Department for Work and Pensions. Young people of faith should not be put in the position of having to choose between their religious festivals and their education; that is not good for them and it is not good for the country or the economy as a whole.
With regard to all Muslims and Hindus who are working and contributing to our economy, is there not an argument to be made about the validation that would come with a sense of recognition? Would it not be a statement that we, as a nation, embrace these religions and the people who hold them dear and are ready to recognise their place in our society? Creating these public holidays would be an important step towards promoting the understanding and tolerance of different faiths, not only at home but abroad. We want other nations to look to the UK for a good example of positive integration, and highly skilled prospective immigrants to consider coming to our country with the sense that their faith is a respected part of their identity.
That is particularly important for the Muslim community, who have been the target of all kinds of hate campaigns and abuse because of the sins of a very small minority of extremists. To give a snapshot of the problem, I should say that ChildLine reported that 1,400 people—an increase of 69% of students—claim that they have suffered racial and Islamophobic bullying.
Education is important, as is societal acceptance, and public holidays are not just for the few; they are a national event that everybody can take part in, regardless of whether they subscribe to a particular faith or to none. The argument has to be made that educating a wider section of the population in the traditions and holidays of different religions in such a widespread way would be valuable in helping to normalise the integration of those faiths into our cultural identity. It would be valuable in promoting cohesion and peace among the religions in our country, as it would not place preference for one over another.
I realise that this argument prompts a question: why only create public holidays for Hindu and Muslim festivals? Why not also add days for other religious groupings as well? At the last count, in the 2011 census, there were 2.6 million Muslims, 800,000 Hindus, 420,000 Sikhs and 260,000 Jews in this country. Although this petition focused on the former two groups, I do not see why it should not be expanded to include other popular major religions. Just because Judaism already has some festivals that coincide with the Christian holidays—for example, Passover and Hanukkah—does not mean the Jewish religion should not have its own public holiday for Rosh Hashanah or Yom Kippur. If we stay away from the cost issue for the moment and look at the ulterior social benefits involved, why not? Why not give each of these main faiths an honoured place in our calendar?
To acknowledge the intervention by the hon. Member for Chesterfield (Toby Perkins), I should say that it is a sad fact that the UK has fewer public holidays than everywhere else in the world, apart from Mexico and China. We have eight public holidays, including the two at Christmas and Easter, over four-day periods, which are tied to the Christian faith.
Looking at the national picture, the economic recovery that the Conservative-led coalition Government have secured, against all the odds, means that the UK is now set to overtake France to become the fifth largest economy in the world by 2022, according to the Centre for Economics and Business Research. I would say that whether that occurs is contingent on gaining a Conservative majority next year, but of course we are on the up and I trust that our coalition partners will continue to join us.
Looking at the economic league tables and comparing the number of public holidays that nations have, we should be able to come to some conclusions about how much public holidays affect our economic performance. The United States has 10 public holidays; Japan, the third largest economy in the world, has 15 national public holidays, with another one recently approved, giving it double the number that we get; Germany, in fourth place, gets nine; and France has 11. I will refrain from making the old joke that half of every day in France is a public holiday, but suffice it to say that our next door neighbours and competitors have more holidays than we do. It is hard to make the case for economic concerns based on those numbers.
Some schools of thought hold that the economy is actually boosted by allowing the work force to have time away from work, which can be in the way, to shop or enjoy sports activities or observe faith-related events. After all, a happy work force is a productive one, as the old adage goes. It is impossible to tell the economic benefit of or the economic damage done by a public holiday, as there are simply too many factors involved. However, no one can doubt that national morale is important and, like it or not, people of different faiths are very much a staple part of our work force and our national cultural identity.
Just as the Christians get to enjoy the traditions associated with Christmas—an early morning start to open presents, joining family and friends in celebration and the traditional feast—so should our second and third largest faith groups be able to do the same on one or two days of particular importance.
In the departmental response to this e-petition, it is also stated, as a matter of rejection, that the
“current pattern is well established and accepted”.
That is true. However, I would argue that traditions have to be made, not just maintained. We have had British Muslims and British Hindus for decades. It is not a case of creating a new tradition; it is a case of observing traditions that already exist here on a more widespread basis—of validating the cultural heritage of all sections of our society, not just the majority.
Let us not forget that people from minority backgrounds still find it a great deal more difficult to have any sort of visibility in public life. I recently instigated the all-party group on British Hindus in an attempt to give that community in particular a way to make their concerns better represented—in politics, at least. I have met Hindus from various parts of the world who have taken the creation of the group as a positive sign that the political establishment no longer intends to ignore their needs.
Being such a peaceful, hard-working, well established and therefore integrated community has in some ways worked against British Hindus, as they were allowed to feel invisible for far too long. However, the truth is that establishing an all-party group is only one small part of what needs to be a far greater effort to ensure that our minority faith communities gain that sense of belonging that the majority take for granted.
Hon. Members who are interested will have noted that an effort is already being made in both Downing street and Parliament, generally, to observe holidays such as Eid and Diwali properly. I expect that many colleagues in the House have attended these occasions and supported them. They are popular, lively, joyous events that I enjoy getting involved with each year. There is something to be said for everybody embracing the heritage of these cultures, even if for only one day a year, and it would be nothing but a positive step to have our observances replicated nationally. If the Prime Minister can take time out to celebrate these occasions and the communities they belong to every year, why should not the rest of us?
The extremely high number of signatures gained by this e-petition should not go unheard in Parliament and by Ministers, because it is not simply about having more public holidays—although more of those would certainly be welcome, regardless of what they are for; it is about the meaning behind them. It is about giving an overwhelming indication that our minority communities are not just on the fringes of our society any more, but are a part of who we are and what our nation will become in future.
To have an Eid public holiday and a Diwali public holiday, as a starting point, would send a simple, straightforward message that transcends any cultural or language barriers. It would be a mark of modernisation in this globalised world for Britain to recognise non-majority faith holidays so decisively. Indeed, it would be unprecedented. I am not suggesting a flurry of new holidays, so the Minister can sit happily for the moment. All religions have many different festivals and occasions that are marked through the year and, if we had a public holiday for all of them, no one would have time to work. I am merely suggesting a single day for each, so that every part of our community is celebrated and able to celebrate fully, without having to sacrifice time in education or work.
I should be grateful if the Minister provided a fuller analysis of the Department’s causes of objection to this e-petition and responded to my points on the many and varied positive aspects of introducing these holidays. Some 122,000 people deserve a better answer than a vague excuse regarding costs and established traditions. I look forward to the responses from the Opposition spokesman and the Minister on this important subject that I believe is without precedent.
Before congratulating the hon. Member for Harrow East (Bob Blackman), it is important to note that people are watching this important debate, which is being held in the House because it was proposed by a huge number of signatories. I know that many hon. Members wanted to contribute. However, it is unfortunate that the timetabling means that it is happening at exactly the same time as the statement in the main Chamber on the appalling travesty that has happened in Ukraine, and the incredibly serious situation that continues in Gaza and that is causing a huge amount of widespread concern. Unfortunately, a large number of people who would have been in this debate are listening to that statement. As a result, it is left to me to respond to the debate.
I congratulate the hon. Gentleman on introducing the debate. He did so in a constructive manner, with a good deal more conviction and power than he showed with his recent penalty at White Hart Lane. None the less, he introduced the debate in a way that many people will have appreciated and respected. I place on record my pleasure at having the opportunity to speak under your chairmanship, Mr Bayley—I think it is the first time I have done so.
The debate is on an incredibly important matter. I am responding as Labour’s shadow small business Minister and, in doing so, I will take a moment to reflect on the huge contribution made by people of Muslim, Hindu or Sikh faith, not just to our society, social integration and the diversity of our country, but to our economy, which it is equally important for us to recognise. As I go to small business consultations up and down the country in my capacity as the shadow small business Minister, I am unsurprised but always blown away by the massive contribution of our south Asian communities and the huge number of businesses they have set up. There has been huge growth in the number of small businesses in the past 25 to 30 years, and it is no coincidence that that has coincided with a big increase in the number of members of those communities. Their contribution to our community and our economy is recognised, as is their contribution to our sense of diversity. On this day when England have sadly been trumped at cricket by India at the home of cricket, in front of what appeared to be tens of thousands of Indian cricket supporters—that loss would never have happened in Nasser Hussain’s day—it is important to recognise that contribution.
The hon. Gentleman referred to the festival of Eid al-Fitr, which is also known as the feast of fast-breaking. It marks the end of Ramadan and the start of a feast that can last up to three days in some countries. It is one of Islam’s two major festivals and involves many Muslims waking up early and praying, either at an outdoor prayer ground or a mosque. I know that the decorations that go with the festival and the people dressed up in their finery are a sight to behold. One lesson across all religions, and for those of all faiths and none, is that it is a festival where old wrongs are forgiven, money is redistributed to the poor, special foods are prepared and families and friends get together to share the feast—they share in not only a very spiritual time, but a time of great celebration. It is a joyous occasion, but underlining all that is that it is a festival of worship and praise. It is important to get that on the record.
Diwali is also known as the festival of lights. Anyone who has been involved in or invited to a Diwali celebration knows that it is a truly magical occasion, celebrated by Hindus and Sikhs. It refers back to the day that Rama returned to his people after 14 years of exile, during which he fought and won a battle against the demons and the demon king Ravana. The festival of lights symbolises that victory over evil—the victory of light over darkness, which has parallels in many other religions. I put on record the importance of these festivals to the two largest religious groups in this country aside from Christians. It is incredibly important to recognise that.
I will respond to some of the points that the hon. Gentleman made. He mentioned his constituency, which has tremendous diversity, and he rightly hit on one of the issues that faces us. As we become an increasingly diverse country and we see bigger communities—not just Muslim and Hindu, but Sikh, Jewish, Chinese and those of people from across Europe—if we go down the path of saying, “Everyone across the entire country should take time off for their festivals,” we may find that that path is never-ending. It is difficult to make judgments on which groups we would recognise by introducing time off for us all to celebrate with them. Is there a better approach to trying to recognise across all those religions and groups of people that their needs should be respected and that businesses and employers should try to work around those? Just because the Chinese community is smaller, it does not mean that its festivals mean less to them than festivals mean to Muslims and Hindus. That is one circle that the Government will find difficult to square, and we recognise that.
The hon. Gentleman also mentioned the fact that the festivals come at irregular times in the Gregorian calendar. He made the point that Easter comes at irregular times and that we manage to accommodate it. The truth is that the Easter festival has Good Friday and Easter Monday, so it always comes around a weekend. It naturally fits into being part of a long weekend, and that is a consistent feature. That is not to say that the irregularity of other festivals is impossible to get around, but it is an important issue.
The hon. Gentleman also made the point that many Muslim children take time off because of festivals. He then argued that, because they are falling behind educationally in some areas in comparison to children of other religions, the response should be that other children have that time off. I suggest that that possibly answers an important question with the wrong answer. Perhaps we should think more specifically about how schools can work more productively to recognise that some children will on occasion be off school because of festivals. We should look at how we can work with them to catch up outside of that time. It goes in the opposite direction of Government policy to say that all children should have more time off from school by creating an extra bank holiday when the problem that that tries to address is that children from those communities are already taking that time off. It would fly in the face of other Government policies.
The hon. Gentleman made a number of points with which I strongly agree. One of them was that a recognition of the significance of the festivals—he was talking about that in the context of a public holiday, but it is important to recognise their significance anyway—is part of a recognition that Muslims’ and Hindus’ faith is an important part of their contribution to our country and their make-up. We cannot celebrate their contribution, as we all do across the House, without recognising that those festivals are an important and integral part of their faith and that their faith is an integral part of their being. I am glad that he put that point on the record. It is one that I absolutely support.
The hon. Gentleman pointed out that Britain has fewer public holidays than most other countries, but that is potentially misleading due to the difference between public holidays and the number of days that workers have away from work. On the basis of what he said about happy workers being productive workers, he will celebrate that the previous Labour Government introduced the statutory right to a minimum of 20 days holiday. An analysis of the number of days of holiday that employers allowed their workers versus the number that they took placed the Japanese at the bottom of the list with an average of 16 days allowed holiday per annum. Next were those from the United States with 17 days, then came New Zealanders with 19.5 days, Canadians and Australians came next with 20 days, and the Swedish and the Germans were found to have 27.5 days. Those from the United Kingdom have an average of 28 days.
The UK figure usually means a minimum of 20 days plus eight statutory holidays, so we are actually slap bang in the middle of the range of days that employers in major economies allow employees to have. While the hon. Gentleman is right to say that we have the lowest number of days when we are all off on the same date—as someone who has recently been attempting to book a summer holiday, I am conscious of the fact that it is not always a good thing for us all to have holidays at exactly the same time—it is important to put it on the record that our number of holidays is not extreme one way or the other. Having claimed that he was not going to do so, the hon. Gentleman made a bit of a jibe at the expense of French workers. It is almost as if he shares the view that the French do not know the meaning of entrepreneur, but I am sure that he would not want to go down that route. It is important to recognise that this country is neither uniquely blessed in terms of holidays, and nor are we are we particularly badly off when compared with most of our competitors.
The hon. Gentleman said one incredibly important thing—that a happy work force is a productive work force. He said it in the context of a bit of a party political statement, but I share his view. He will be as disappointed as I am that productivity has fallen significantly over the past four years, that we have a surfeit of zero-hours contracts, that an ever-increasing number of people are leaving work and heading down to food banks, and that the number of people in work and in poverty is increasing. Huge numbers of people in my constituency and many others are earning less in insecure work and are paying more for the things that they rely on. The Opposition therefore share his concern about productivity and about doing more to make work pay. The issue’s time has come and it will be a central part of the Labour party manifesto. He was right to say that the issue is important, but my opinion differs on whether the Government have a tremendous track record.
On the substantive points in the hon. Gentleman’s speech, the question of how many bank holidays we should have is not new. Creating new bank holidays is not simple, which the previous Government found out when considering the creation of a new bank holiday for St George’s day. It was also a problem when there were plans to create a VE day bank holiday. The plans were eventually not followed through because of the difficulties involved.
The hon. Gentleman mentioned the cost implications, and it is fair to say that the margin of error is pretty broad. Some argue that there would be a net benefit to the UK economy of as much as £1.1 billion, but some believe that the economy would face a net loss of £3.6 billion. The most recent Department for Culture, Media and Sport assessment that I have seen suggests a £1.2 billion loss to the economy. He rightly referred to the report from the Centre for Economics and Business Research, which contains different figures, but the cost implications are important.
The irregular nature of the suggested new Eid and Diwali public holidays would also pose particular challenges. It is important to recognise that the UK has significant numbers of Sikhs and Jews and growing populations of other religions, so our response to the debate has to be about how to do more to recognise their contributions. We should work with employers to ensure that they bear important festivals in mind when allocating work and shifts. The Department for Business, Innovation and Skills should show leadership, working with organisations such as British Chambers of Commerce and the Federation of Small Businesses, in particular in areas that have smaller numbers of people from those religious groups and where awareness might not be so great. It may well be that people of all faiths in Harrow are aware of Eid and Diwali, but there may be less awareness in other areas with smaller but no less important communities of people who celebrate such festivals. As a result, employers in such areas may not be thinking about how they work with people of all faiths to ensure that they get the opportunity to celebrate their festivals.
I have several questions on this incredibly important topic and am interested in the Minister’s response. What assessment has she made of the number of bank holidays in Britain? What assessment have the Government made about whether holidays are spaced in the most effective way? Is the balance right? What discussions have the Government had with business groups and trade bodies to maximise the opportunities for Muslim, Hindu and Sikh worshippers to celebrate their festivals? What efforts have been made to promote awareness of different faiths and of the importance of these festivals among employers?
Has any review of bank holidays taken place under this Government or are there plans for such a review? What is the Government’s latest assessment of the benefits and costs to the UK economy of additional bank holidays? What are the Government’s thoughts about ensuring that bank holidays fall on days on which the largest number of people will want to celebrate, so that they are seen as inclusive rather than exclusive? How can the Government use bank holiday policy to bring different communities together?
In conclusion, I look forward to hearing to the Minister’s response to those questions. I thank the hon. Member for Harrow East for securing the debate and for the manner in which he introduced this incredibly important topic. It may be that we are not able to deliver precisely what he calls for, but I hope that the debate has provided an opportunity for us to recognise the issues facing people in Hindu, Muslim and Sikh communities, and for us to think not only in legislative terms, but also about Government guidance and leadership, to ensure that the maximum number of people get to celebrate such festivals. This country should continue to be diverse and we should go as far as we can to recognise people of all faiths, and to ensure that their right to celebrate their faith is not economically or culturally undermined in any way. This important debate should be a stepping stone towards greater diversity and social cohesion. If we are able to achieve that, it will have been a very important debate indeed.
(10 years, 2 months ago)
Commons ChamberIn 2010, the Chancellor said that, by now, the economy would have grown by 12%. It has actually grown by half that amount. That is why the deficit has not come down and why people are worse off. The Chancellor would have been well advised to take the sound advice in 2010 and not choke off the economic recovery. He should take the sound advice of the IMF now and look at ways to improve housing supply and to tackle the woeful productivity performance over which he is presiding.
The Chancellor acts as though he is the only person who has delivered growth, but we already had growth when he came to power. When there was light at the end of the tunnel, he spent two and a half years building more tunnel. Finally, now that we have growth—after everyone else—he says, “Haven’t I done well?”.
My hon. Friend’s description of the historical record since 2010 is correct. However, the real issue is why we still have such low investment and why living standards are still falling. The jobs that we are creating are not delivering rising living standards for working people. We have only to look at the election results from a few weeks ago to see the potential challenge to Britain’s place in the world if we do not understand those forces.
The Chancellor says that the economic plan is working, but who is it working for? It might be working for his friends who he used to go boozing with at the Bullingdon club, but working people in my constituency find that it is harder and harder every single month to make work pay. What will the Chancellor do to make work pay under his Government?
That is what is so revealing about the Labour party’s performance in the past half hour. The shadow Chancellor started by reading out the article in the New Statesman this morning and trying his piece on new politics, but within about 10 minutes it all descended into Bullingdon club jokes, and the hon. Member for Dudley North (Ian Austin) having to withdraw his comment. The shadow Chancellor then descended into the normal slapdash that we have got used to in the House. Incidentally, there is a striking echo of what went wrong with the Leader of the Opposition’s speech at the beginning of the Queen’s Speech debate. That is because he is unable to engage in the serious economic argument about what needs to happen in this country.
(10 years, 5 months ago)
Commons ChamberAt a time when people are facing a choice between heating and eating, the sight of those ignorant, braying public school boys on the Tory Benches during the response by the Leader of the Opposition showed the contempt that they have for the serious issues that people in my constituency are facing. The speech by my right hon. Friend the Member for Doncaster North (Edward Miliband) spoke far more to the real issues faced by my constituents than did the hour-long lecture that we heard from the Chancellor today.
This is the Chancellor’s fourth Budget and people in Chesterfield know what to expect: a recovery for the few, not the many; a denial that the cost of living crisis is engulfing British families under his watch; and a steadfast refusal to take action on the key issues facing our economy. He said today his core purpose was the economic security of people in Britain; well, he has a funny way of showing it. He should know that despite the increase in the tax threshold, the combination of the VAT increase, the failure to take action on uncompetitive markets, the low wage, low security economy he is creating, and the slowest recovery in history mean that people are poorer under the Tories.
For those feeling the pinch, as families are £1,600 worse off under this Government, there was precious little here. For families struggling with the cost of child care, there was a promise that after five years of rising prices things will get better if only people are fool enough to vote for the Tories a second time. For those who cannot afford a deposit as house prices spiral, there is nothing about tackling the lack of supply but further measures that could increase the prices. For the small business owner desperate to grow and branch out but who has been refused loans by all the major high street banks, there is nothing about the access to finance crisis.
These stories are all too familiar to people in Chesterfield, but their plight is not a by-product of the Chancellor’s plan; it is the Chancellor’s plan. He thinks that Britain’s economy can grow only by winning a race to the bottom, but an economy built on insecure work, zero-hours contracts, and fewer rights in the workplace is a castle built on sand, trapping people between an insecure workplace that seems to say that working people should just be grateful for any work they can get and a benefits system that shatters their dignity and crushes their spirit.
The Chancellor said that each job makes a family more secure. Well, not under this Government it doesn’t, because many of the 5,000 people who rely on food banks to feed them are in work. The increase in the number of people in work and in poverty is a national disgrace. Under this Government work is not the route out of poverty it once was.
The Chancellor promised us the pain he inflicted on our families would be worth it because two parties had come together to eradicate the deficit, but today we learn that his central purpose—the reason we put up with this Government—which is deficit eradication is still £90 billion away. We should remember what the Office for Budget Responsibility told us back in 2010. It told us that by the end of this Parliament we would have seen growth of 14.6%. Well, from quarter four of 2010 until now growth has been just 3.5%. The deficit will still be £75 billion by 2015-16. The Chancellor’s failure means he has increased the national debt more in three years than Labour did in 13 and he has failed in respect of the cost of living for working families and he has failed to take action on the energy companies.
We know from a ComRes survey released just this Sunday that a pitiful 9% of the public say their ability to pay their monthly bills has improved since the Chancellor entered No. 11 Downing street, and what about yesterday’s Survation poll showing that, when the poll was restricted to people in work, Labour held a 17% lead? Let there be no doubt which is the party for workers. The Chancellor’s priorities could not be clearer: take food from the mouths of families living in poverty to fund a £100,000 cut for his friends in the City earning over £1 million a year.
As shadow pubs Minister it would be churlish of me not to welcome the Chancellor’s temperance when it came to alcohol duty this year, although we should remember both that he is the Chancellor who raised most from the beer duty escalator that he kept for three Budgets, and that his increase in VAT added more to the cost of a pint than the increase in beer duty has done.
On business rates, what we have seen is a Conservative con trick: a £1,000 discount while the underlying rate of business rates is going up—a bomb waiting to go off under the high street recovery. In two years’ time those levels of business rates will have continued to go up and the discount will just disappear if anyone is foolish enough to vote for this Government again. Businesses’ key concerns in respect of the Budget were crystal clear: all the major business groups’ Budget submissions said there must be action on access to finance, yet we have seen absolutely nothing.
This Government are in denial. They cannot understand why people are not thanking them for the recovery they are delivering, but the truth is people know that evidence of the recovery is not appearing in their pockets. We desperately need a jobs guarantee, and Labour’s jobs guarantee will not only take young people off the scrapheap, but it will end the cycle of hopelessness that sees young people trapped in life on the dole. They will not be further impoverished by benefits sanctions, but will have a positive role that says to the young, “You should be at work. We’ll fund the job, you’ve got to take it.”
This was the Chancellor’s last chance, but, again, when the moment arrived he flunked it. Trapped in an analysis of Britain’s problems that is fundamentally wrong, it is hardly surprising he came up with the wrong answers. People struggling with the cost of living yesterday will still be struggling tomorrow. Parents kept out of the jobs market by the cost of child care have been told to hang on until 2015. For big business struggling with access to finance, absolutely nothing. This Government have run out of ideas; let’s have an election.
(10 years, 6 months ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Like Bournemouth, which is a fantastic place to go on holiday, my hon. Friend’s intervention was fantastic. I am coming to that point in a bit. I have had many enjoyable holidays in Bournemouth.
I am grateful to the hon. Member for North Swindon (Justin Tomlinson) for giving way and to the hon. Member for Bournemouth East (Mr Ellwood) for his comment. We support greater flexibility for different authorities, but can we ensure that Derbyshire gets the warmest months?
Derbyshire is also a fantastic place to go on holiday. Let us champion every constituency. I think that we are on safe ground, with cross-party support, when championing the UK tourism industry.
We need to be 100% sure that there are not some unscrupulous operators, but predominantly we need to focus on the two other areas of discretion and flexibility. On discretion, there is already confusion among a lot of parents. A lot of parents have contacted me to say, “We have triggered fines. We feel that our decision to take our children out of school was justified, but the school came back and said, ‘Under the new rules, there is absolutely no discretion; you will be fined’.” As a Government representative, I have almost felt obliged to apologise on behalf of the Government.
At one school that has made the new rules clear, the chair of governors said, “No. Actually, there is discretion. We, through the pastoral team, will look at those parents whose children have excellent attendance records and are achieving well in school and we will look at why they might be taken out of school, for a funeral, say, compared to a holiday without educational benefits, and it would be weighed up.” Clearly, there is confusion and that needs to be resolved.
There is the assumption that there is pressure from Ofsted because it looks at attendance records when rating a school. If a school decides to say that, because of cost and work pressures, it will allow a good level of discretion, its attendance records do not look good. That also needs to be considered, because that would be a disincentive for a school to apply common-sense discretion.
I think that all hon. Members would agree that, perhaps, discretion should apply where children are doing well and where parents work during school holidays. My hon. Friend the Member for Portsmouth North (Penny Mordaunt), who is a champion for the armed forces, highlights one career, but I am sure that there many others, in all our constituencies, where parents can take their children on holiday only during school time. We have all noticed the cost of peak holidays.
There are some challenges. I have been contacted by teachers who say that they do not like being in the firing line and having discretion, because if they feel that the child should not be given time off they are the ones who are blamed. Sometimes there are reasons why that should not be so. I have also been told that, in the past, when there was discretion about 10 days or 10 sessions, some parents felt that it was an automatic right to have that every year, even if the child was struggling. There was never a case of a parent saying, “You’re absolutely right. I’ll now withdraw that request.” It would create heated discussion. If we are to consider discretions, clear guidelines, which were suggested earlier, are an absolute must.
We must also consider teachers, because although discretion can help pupils and parents, the teachers would not have discretion to take time off during terms. That is not necessarily a complete, one-size-fits-all solution.
I am a big fan of flexibility in this regard. One big suggestion is flexible term times. About a year ago I was contacted by a resident, Nicki Mitchell, on this issue. I suggested flexible term times and was asked, “What happens if you have a child in a primary school and another at a secondary school, and they have different term times? That will make it even harder.” A number of residents have contacted me and said that such flexibility exists in Europe and that it is done by county or region. We might decide that the south-east goes a couple of weeks earlier and the south-west goes a couple of weeks later. However, in Europe it is done in rotation, so it is not always the south-west or south-east first. Not only would that help parents and children, but it would probably help the tourism industry, because almost regardless of what it charges it can fill up at peak time, but the rest of year it faces a real challenge. Spreading that across the year would be helpful.
If we cannot manage flexible term times, another suggestion is extending the school year by two weeks and allowing everybody automatically two weeks’ worth of discretion throughout the year. That would probably be incredibly unpopular with teachers, who would then face an extra two weeks, but I thought that I would mention it.
It is a pleasure to serve under your chairmanship, Dr McCrea. You have only just joined us; I assure you that you have missed an excellent debate. I will attempt to do some sort of justice to it, in my own modest way, but you might chose to read Members’ words for yourself later.
I congratulate the hon. Member for Birmingham, Yardley (John Hemming) on bringing the issue for debate and on the way in which he presented it. The strength of opinion that has been articulated in the debate, the size of the petition and the testimony we have heard from hon. Members clearly show how important the matter is and how right he was.
A couple of hon. Members have reflected on the fact that the Minister is from the Department for Business, Innovation and Skills and I am responding as a shadow BIS Minister. The initial petition looked very much at the business aspect of the matter, but the hon. Member for Birmingham, Yardley was right to say that the whole aspect of the debate has changed since the initial petition first went on to the e-petition system. That was reflected in the debate, which did not dwell much on the business aspect but focused much more on educational policy. That perhaps leaves me at a slight disadvantage.
The issue is of great concern for my constituents, many of whom have taken the opportunity to raise it with me at my weekly surgeries, by e-mail and at the school gate. I did a summer survey in which I raised questions about the changes, which demonstrated powerfully to me how strongly people feel about the matter. We all know how desperately difficult it is to get that balance between the fact that we want our children to be in school at all the right times and the huge increase in the cost of holidays during the school breaks. It was therefore no surprise to me that 150,000 people across the country took action by signing the online petition and demanding that MPs discuss the issue. That is why we have had so many valuable contributions from Members on both sides of the House. I will touch on those in a moment.
A situation has been created in which many families who have not previously faced the dilemma of how to afford an annual summer holiday now find themselves financially squeezed and wondering how to do so. All of us know how important holidays together can be for a family. We are an incredibly time-poor nation, and, often, many people are stretched. We struggle to have time with our families given the huge number of pressures on us, so family holidays are incredibly important. It is tremendously difficult for people when they feel that their opportunity to go on those holidays has been removed. We all recognise how important the issue is.
The hon. Member for Birmingham, Yardley was right to say that this is another demonstration of how powerful e-petitions can be. It has shown how issues that we do not immediately see as significant can have their significance powerfully demonstrated to us by our constituents. The response of people to the e-petition demonstrated the importance of this issue.
The hon. Gentleman also raised the issue of staggering holidays, something to which many hon. Members referred. That is an important part of the whole equation. Colleagues in the Department for Education have been looking at that issue and exploring how greater flexibility can be given to schools. The point was made powerfully that we do not want a parent such as myself, with one child in secondary school and one in primary school, to find that their children’s schools have holidays at different times. Perhaps we can try to stretch out the holiday season on a more systematic basis, recognising that although we are not blessed with sunshine all year round in this country, as some areas are, we could none the less stagger holidays to take a bit of pressure off.
The hon. Gentleman also referred to the fact that this issue has been debated in this place since the mid-1960s. It is interesting to question why people feel so strongly about it now. The broader pinch that people are feeling at the moment and how the holiday market has changed in recent years, as well as the recent changes to Government education policy, are perhaps some reasons why what has been to an extent a hoary old chestnut for 40-odd years is now being raised powerfully.
The hon. Member for Portsmouth North (Penny Mordaunt) suggested that discretion does exist—a point repeated a moment ago—and the hon. Member for Solihull (Lorely Burt) raised the important question of what constitutes exceptional circumstances. We heard examples of circumstances that have not been considered exceptional. My hon. Friend the Member for Wirral South (Alison McGovern) spoke about a child with autism whose parents might have specific reasons for not wanting to be on holiday when resorts are most crowded, and asked whether such a case would be considered exceptional.
My hon. Friend the Member for North East Derbyshire (Natascha Engel) highlighted the case of someone whose child had a brain tumour; that was not considered by the head teacher to be an exceptional circumstance. The hon. Member for New Forest East (Dr Lewis) highlighted the case of someone who was exceptionally busy during school holidays because of the kind of business they ran, but their circumstances were not considered exceptional.
It is clear that there has been a change of policy. The Government have communicated that quite deliberately, and it is their right to do so. However, exercising that right has had an impact because of how the policy has been implemented. One aspect of today’s debate that I have found interesting was that no contributions have been made by any hon. Members from Scotland—unless we count Corby as representative of that nation. That is not entirely surprising, because Scottish schools have holidays at a different time of year and Scottish people probably benefit quite nicely from the fact that they all go on holiday in July, when prices are cheaper than they are for us in England. That is an interesting observation.
I will now reflect on some of the other contributions to what I think has been an excellent debate. My hon. Friend the Member for North East Derbyshire said something that was repeated by many colleagues: across the House we all agree about the importance of children being in school, and recognise the disadvantage there is to children when they are out of school, for whatever reason, for any sustained period. None of us is saying that we think it is good for children to miss huge amounts of their schooling. We are all always conscious of our responsibility in this place to ensure that our children have the best opportunity to be successful at school. However, we also have to recognise that there is a cost of living crisis, with families feeling the pinch, and that we need to do what we can to support them in those circumstances. My hon. Friend powerfully highlighted the reality faced by time-poor, financially stretched families at this time, and the difficult circumstances that they face.
The hon. Member for North Swindon (Justin Tomlinson) spoke about the strength of feeling and support on this matter, and he was right to do so. He also raised the issue of whether there will be a greater amount of discretion for a child who is going to a funeral than for someone who wants a holiday without educational benefits; how the policy is being applied shows that there is a difference between such cases. He also touched on one of the devilishly difficult parts of the judgment call on the matter when he called for clear guidelines but more discretion. That is what we all want to an extent, but we should recognise the central contradiction in that.
The hon. Member for Bournemouth East (Mr Ellwood) spoke up for the tourism industry, as we would expect. He spoke about the escalation in cost for popular events, referring to the London Olympics and the fact that in attempting to maximise their opportunities some people potentially priced themselves out of business and ended up falling victim to what they thought would be good times, as they had been too ambitious about what they could charge. I do not know whether he has turned his attention to the frankly extortionate cost to hon. Members of bed and breakfast accommodation in Manchester at the time of the Labour party conference. I have recently tried to make a booking and discovered that Manchester in September is far more expensive that one would expect.
The hon. Gentleman has made my point for me: Bournemouth is better suited for party conferences.
I congratulate the hon. Gentleman on repeating my suggestion.
It is usual during winding-up speeches to talk about what has been mentioned during the debate, but I will talk about what the hon. Member for Birmingham, Yardley did not talk about: the tourism industry. An important point that some colleagues mentioned is that holiday accommodation is available for 52 weeks a year, or slightly less, and there is pressure to push the customer base into a shorter and shorter period. The petition refers to profiteering holiday companies exploiting people, but that is not the reality. If a crude cap were introduced, they might retain the current price in August but they would be unable to reduce the price in April. The important question is whether people would be better off or whether those who can go away at different times would not get cheaper holidays.
The hon. Member for East Hampshire (Damian Hinds) confessed his sins—it is always good for a Member of Parliament to do that. If he did not quite ask for forgiveness, he at least offered mitigating circumstances. The debate involves the many people who cannot go away during school holidays, as well as the many who can go away only during school holidays—for example, teachers and anyone who works in the education sector and so on. If we increase the pressure, we will push up the cost of their holidays too. The debate started 18 months ago, or 40-odd years ago, depending on how people look at it, but certainly prior to the proposed changes, which, if anything, will push prices up further. What was a problem 18 months ago will be an even bigger problem in a year or two.
My hon. Friend the Member for Leeds East (Mr Mudie) asked why we are talking about the matter now and why it has become so important. I will touch on that, but in his broader view of the debate he said that he supported the petition but not necessarily the proposed remedy. That reflected what many other hon. Members said.
The hon. Member for Suffolk Coastal (Dr Coffey) focused on the semantics of “special” and “exceptional” and seemed to question whether there has been a change in policy. The previous Government introduced fines for people who took their children out of school without authorisation. The Secretary of State was clear that he wanted his direction following the statutory instrument to be seen as a change of policy. Head teachers saw it as that, and many in my constituency wrote to parents saying that the policy had changed and that there would be no discretion other than in narrow and exceptional circumstances. That was clearly the intention of the Secretary of State’s policy.
The debate has been consensual and sensible. It has shown that we all believe strongly and passionately that it is vital for our children to be in school for the maximum amount of time, that standards should be resilient and that parents should recognise their responsibility. We recognise that the present situation is desperate because prices have risen faster than wages in 41 of the last 42 months, and families are feeling the pinch. We are discussing another aspect of that cost-of-living crisis. I intended to give some examples of how prices have increased, but many hon. Members have alluded to that so I need not do so. However, the extent of price differences during the high and low seasons is huge and the success of the e-petition calling for swift action is not surprising.
The Association of British Travel Agents has made it clear that price fluctuations are the commercial reality of running a business in a seasonal market, and we understand that. The hon. Member for East Hampshire asked whether the Labour party is proposing a crude cap and rightly gave some reasons why that would be difficult. We do not have a price control policy at a macro level, but that does not mean that there is never a reason to look into whether there is a properly functioning competitive market. I will touch on that.
Many parents believe that they are exploited by the holiday industry, which uses the tight limits on when they can travel to overcharge them, and the huge cost differentials reflect that. However, there have been no thorough studies of the issue in recent years, so it is hard to get to the bottom of the problem and the extent of exploitation. The lack of such a study seems at odds with the Government’s intention of addressing consumer protection concerns. I should be grateful if the Minister commented on whether the apparent contradiction of one group of consumers apparently paying over the odds to subsidise another group is questionable under our consumer protection laws.
Consumer law has strong protections to ensure that the public are charged a reasonable price for a service. That presumably includes arranging a holiday, and does not exempt the law of supply and demand. That is an interesting question for the Government. The purpose of the Consumer Rights Bill is to make those rules clearer, but there is a glaring omission because it does not give consumers or consumer groups any power to access the information they need to check whether that is the case. Does the Minister accept that the only way to resolve that confusion more broadly is to have a proper analysis of holiday prices, and do the Government plan to conduct such research? Was there any research prior to the change of policy?
The situation demonstrates the consequences when there is no organisation to stand up for the rights of consumers as a group. The hon. Member for Birmingham, Yardley suggested that an Offonholiday regulator might not be the answer, but it might be worth considering a broader consumer rights body to act as a useful brake on exploitative practices. Most people accept that the rules of supply and demand will ensure that prices are higher at peak times, but many believe that the extreme divergence in prices is unfair.
Is the hon. Gentleman saying that there is something in the operation of some elements of the travel industry market over and above that which can be coped with by the current competition arrangements?
That is a valid question. A broader study would provide better information to establish whether that is the case. In July 2012, the Office of Fair Trading concluded a two-year investigation and found that two travel giants had struck deals with a hotel group to restrict smaller agents’ ability to offer discounted hotel rooms. Expedia admitted afterwards that it had
“engaged in cartel conduct in breach of the law”.
In 2013, a discount hotel site alleged that it was forced out of the market after attempting to undercut rivals by offering cheaper prices. There have been allegations of cartel-like activities, and those involved should be investigated and pursued rigorously. Only when we have open, competitive markets can consumers have faith in the prices that they are paying. That is important and entirely legitimate. At the same time, although we recognise that market forces exist, we do not say, “There is never anything to look at”, in the context of whether those markets are being fairly operated. We stand absolutely resolutely on the side of consumers and would be willing to investigate whether action is necessary to ensure that they get a fair deal in the travel market.
The abolition of the Office of Fair Trading, which would have looked at this issue, has highlighted the fact that a gap now exists. There is not another appropriate body that can do what the OFT did. The Competition and Markets Authority is focused on competition and not on outcomes for consumers, and therefore does not complete the same work. Does the Minister share my concerns about the lack of an appropriate body? Does she think that that makes it more likely that consumers will get a raw deal in future?
Other things can be done to support the tourism industry. We recognise that the issue is not only about tourism overseas, but very much about tourism here in the UK. We know that the VAT increase to 20% placed our tourist industry at a competitive disadvantage compared with many of our European competitors, and that the huge increase in business rates over the past three years has had a big impact on many small businesses in the hospitality and tourism industry.
I apologise to my hon. Friend for missing the beginning of his speech, but I had a previous engagement. On the point he just made, does he agree that just as small travel businesses are disproportionately affected by some of those issues, particularly in terms of VAT, small businesses in the hotel and guest house industry can be as well? That is another facet of a complicated debate. I have had representations in my constituency from hoteliers and guest house owners who are concerned about the issue.
My hon. Friend makes the important point, exactly as one might expect of a Member of Parliament for Blackpool, that the tourism industry is not immune to what is happening in the wider economy. It struggles when people do not have money in their pockets. The industry recognises that people are facing a cost-of-living crisis, but it is also facing a cost-of-doing-business crisis and paying ever higher business rates and ever higher energy prices. That impacts on the prices that people have to charge to make a profit. My hon. Friend makes an important point, which fits in precisely with the one I was making.
To reinforce my hon. Friend’s point, I should say that many small hoteliers want to offer cheaper deals but are held back, not only because of the costs of doing business, but because their cash flows are impeded by large travel websites they supply to. My hon. Friend the Member for Streatham (Mr Umunna) has highlighted the totally outrageous way in which large organisations, effectively through being perpetrators of paying late, force small businesses to bankroll them. The issue of late payments is incredibly important and has a real impact on the tourism industry and the cost we end up paying as consumers.
The previous Labour Government created an interest rate penalty for large firms that delayed payment to their small suppliers. The next Labour Government will further tackle the issue of late payments, which will be very important to small businesses in the tourism industry here in the UK, and will hopefully also be part of easing that cost-of-doing-business crisis.
In conclusion, I strongly welcome this thoughtful, useful debate. We must ensure that markets are fair. We also have a responsibility in this place to respond when our constituents tell us that the Government’s policies are causing problems. In this debate, each of us has reflected on the difficult decisions that we face, between wanting to make sure that all children are in school for the maximum amount of time and recognising that people are feeling the pinch, that there is a cost-of-living crisis and that we need do all we can to help people, not exacerbate the problem.
I shall come back to the point about the schools regulations if my hon. Friend will bear with me. If he is not satisfied with my comments, he can come back to me.
There is another important element to consider in respect of the prices in this sector, and it was mentioned by the hon. Member for East Hampshire. During peak periods, the UK industry is in fierce competition with those of other countries, whose consumers want to go on holiday to the same destinations. That competition for limited facilities means that costs rise—it is not all being driven by consumers in the UK—and those costs are reflected in the price put to the consumer. As this is a Europe-wide market, consumers are similarly affected in other countries across Europe. As a result, Governments across Europe have decided that protection is needed for consumers in the package holiday sector over and above that provided by general consumer protection law.
I hope that what I say now answers a point made by the hon. Member for Chesterfield. One of the key protections in the package travel directive is the requirement that those arranging and selling package holidays and package tours have in place protection for consumers against their insolvency. That additional protection is an area in which we in the UK were leaders. The air travel organisers’ license—ATOL—system was brought in before the European regime as a result of the huge growth in the UK of the package holiday market in the 1970s and 1980s.
The extra protection is considered necessary because those operating in the package travel market are deemed to be more at risk of insolvency than businesses in other sectors. That is because the business model in the holiday industry is based on predicting demand and committing to those predictions in advance. I mention that because it is further evidence of the extent and level of competition in that market—the industry is forced by those pressures to price as competitively as it can. There is considered to be a higher risk of insolvency in that sector because the margins are thin and because the market is so competitive.
The Minister describes the pressures on the market, and we have heard that there was no impact assessment because it was considered that there would be no impact on the industry. Given that the change was introduced after people had booked their holidays and after the holiday companies had set their prices, does she think that it was right to say that there would be no impact whatever on the industry from the change?
I cannot comment on the impact assessment done by the Department for Education, but I will come back to the point about the regulations. I think it is wrong to say that the 2013 change was a significant change in the law, but I will come back to that in a minute.
Hon. Members will have gathered from what I have said that I am not convinced that businesses in the holiday market are treating consumers unfairly in the way in which they price their products. It is pressures in the market that cause the fluctuation in prices that some have concluded is unfair. However, the hon. Member for Chesterfield raised allegations of cartel-like behaviour. If hon. Members come across allegations of that nature, they should be referred to the Competition and Markets Authority for investigation. That is what it is there for, or at least it will be from 1 April. Cases like that involving Expedia, which the hon. Member for Chesterfield mentioned, were dealt with by the Office of Fair Trading, but will in the future be dealt with by the Competition and Markets Authority. However, the CMA will also have a role in keeping markets under review for breaches of competition law and consumer detriment, so it has a broader remit. It will also have a role in dealing with consumer enforcement issues when an issue has nationwide implications. This would be an area where that could be considered.
The hon. Member for Leeds East (Mr Mudie) asked about discussions between travel agents, the holiday industry and the Department for Business, Innovation and Skills. BIS is in regular contact with the holiday industry on a very wide range of issues—that is the relationship—and my officials will of course raise the points that have been raised in today’s debate when they next meet representatives of the industry, so we will ensure that hon. Members’ views are fed back.
Having said that, I am very sympathetic to those who struggle to afford a holiday in peak season. I appreciate that the difference in price between off season and high season can be very significant. If people have children, it becomes increasingly expensive and difficult to take holidays, and I appreciate that the problem places an extra burden on families. I also completely agree that family holidays are enormously important. They give children opportunities to relax and unwind and create lasting memories, as well as building family relationships and broadening the experiences of children. I have very fond memories of taking holidays as a child with my grandparents and parents and I am sure that everyone in the room would say the same. It is important that children are able to have those experiences and benefit from them.
Clearly, in all of this, the dates of the school holidays are critical. It has been suggested that pressures on the industry might be alleviated by extending the periods during which families can take a holiday, thereby spreading the demand over a longer period. We have heard that idea mentioned today, and it is put forward not only by those who want cheaper family holidays; it is also supported by many in the industry. We have also heard it said a lot today that the rules on school attendance are too strict. Almost every hon. Member who spoke discussed that. People have suggested that schools should be able to approve families going on holiday during term time. Others believe that it would help if schools had different term dates. I shall come back to that point, but, on the issue of absence, despite the clear value that a family holiday can have for children and also for parents, the Government’s view is that a good education is more valuable for pupils in the long run and that getting a good education depends on regular school attendance throughout the school year.
We have heard a lot about the change in regulations in 2013. The hon. Member for Suffolk Coastal (Dr Coffey) gave a very useful summary of the legal framework. I found it quite illuminating and am sure that a number of other colleagues did as well. What the Government did in 2013 was remove the misconception held by some parents that pupils were entitled to 10 days’ absence for holidays per year. There was actually no entitlement in the previous regulations—that was not what they said. We have clarified that school heads should accept a request for a leave of absence only in exceptional circumstances.
We have heard a number of examples of cases in which requests have been turned down by head teachers. Many of them are very distressing, but I clearly cannot comment on individual cases, not knowing the full details. Let me make it clear that the Government have not said that any absence is not possible. We have given head teachers the discretion to make that call. In addition, we have not specified what constitutes exceptional circumstances, as we believe that cases need to be considered individually. A number of hon. Members mentioned the need to trust head teachers, and that is exactly what the Government are trying to do—we want to ensure that head teachers have the power and discretion to look at the individual circumstances of an application and take them into account.