House of Commons
(13 years, 3 months ago)
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Prayers
(13 years, 3 months ago)
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09:34 - The House having divided: - Ayes: 0 / Noes: 34 -
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Mr Greg Knight (East Yorkshire) (Con)
I beg to move, That the House sit in private.
Question put forthwith (Standing Order No. 163).
The House proceeded to a Division.
Mr Speaker
I ask the Serjeant at Arms to investigate the delay in the No Lobby.
Joan Walley (Stoke-on-Trent North) (Lab)
On a point of order, Mr Speaker. It relates to Standing Orders Nos. 11, 12, 13 and 14. Standing Order No. 12 states:
“Unless the House otherwise orders, the House shall not sit on any Friday other than those on which private Members’ bills have precedence.”
Standing Order No. 14, on the arrangement and timing of public and private business, states that
“government business shall have precedence at every sitting”
and paragraph (4) states:
“Private Members’ bills shall have precedence over government business on thirteen Fridays in each session”.
May I suggest, Mr Speaker, on the evidence of the time-wasting that we have seen not just today but regularly on Fridays, that, given that Members of the House come here to bring forward legislation—such as my Public Bodies (Sustainable Food) Bill, which is not mischievous and has not yet had a Second Reading and is unlikely to have one—it is time that this House, through the proper channels and the Procedure Committee, reconsidered how we deal with private Members’ business so that we can make progress and so that those Members of Parliament who are elected to this House have a genuine opportunity to get legislation on to our statute book? That is what the public expect of us.
Mr Speaker
I am grateful to the hon. Lady for her point of order and for advance notice of it. I have considerable sympathy for her and for other Back-Bench Members who have worked hard to bring their Bills to the House for debate. How today’s proceedings unfold is a matter for the House and the use of time and procedure is in the hands of individual Members. The Chair of the Procedure Committee is in the House today and he might welcome a memorandum from the hon. Lady setting out her analysis of the problem and the solutions that she proposes. I hope that is helpful both to the hon. Lady and to the rest of the House.
Mr Speaker
I shall take a very brief point of order from the right hon. Gentleman and we shall then proceed.
Mr Knight
Further to that point of order, Mr Speaker. I rise only to say that your conclusion is correct. I would welcome further discussions with the hon. Member for Stoke-on-Trent North (Joan Walley) and, indeed, we have already spoken in the margins of the Chamber to agree to do just that.
Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill
(13 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Greg Knight (East Yorkshire) (Con)
I beg to move, That the Bill be now read a Second Time.
It is an unexpected privilege to be here. I have signed the book for the ballot for private Members’ Bills every year since 1983, apart from four years when, due to the electorate, I was elsewhere. It therefore came as rather a shock to find that this year my name was in the top 20.
Of course, as the House will know, the ballot is only the start of the process, and today is only a little further down the long road that one has to take to seek to change the law of the land. Indeed, the statistics are not encouraging. I understand that only 10% of private Members’ Bills succeed, so a private Member’s Bill is a very fragile vessel. As I look around and see my hon. Friend the Member for Bury North (Mr Nuttall) in his place, and as I am aware that my hon. Friend the Member for Christchurch (Mr Chope) is in the building, I even wonder whether the word “fragile” is appropriate. Perhaps “brittle” is a more appropriate word. I hope that when I have explained the purpose of the Bill, they will decide that it is something they can support.
Joan Walley (Stoke-on-Trent North) (Lab)
I am most grateful to the right hon. Gentleman for his positive remarks about considering the issue of private Members’ Bills. Does he agree that one of the problems of our archaic system and how we deal with private Members’ Bills is that a great deal of filibustering goes on in this place, rather than action that makes our Parliament fit for purpose?
Mr Knight
If I may respond to that en passant, as it were, I accept that argument. The Procedure Committee has not yet considered this, but an argument can be made that we could consider bringing in a process whereby when a private Member’s Bill has had three hours of debate the question is then put. The Procedure Committee would wish to consider that option, although I would not wish to prejudge how it might decide to form its view on that proposition. That certainly could be done and it would mean that we would have more debates, which, in my view, is a good thing.
The next duty of anyone who comes fairly high in the ballot is to decide on the subject. Hon. Members basically make a choice in one of two areas. Either they choose a subject of great controversy or perhaps startling change and to have their day in the sun on Second Reading, knowing that the Bill will be opposed by the Government and even by the official Opposition and will be talked out, or they look for something less controversial but worthy in the hope that they can get it on to the statute book. I have to be honest and say that my first choice was to introduce a daylight saving Bill, but I was usurped by my hon. Friend the Member for Castle Point (Rebecca Harris), who was higher up the ballot and who, to her great credit, has successfully piloted her Bill to Committee. I wish her well with it. Because of her decision, I decided to look around for another less controversial but worthy proposition, and I decided that I wanted to introduce a Bill that would make our law fairer in some way.
I had cause to look at some of the recent work of the Law Commission and of the Select Committee on Justice—I am delighted to see that the Chairman of that Committee, the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), is in his place—and I observed some of their reflections on the forfeiture rule and the law of succession. I therefore decided on my present Bill. I accept that it is not likely to be the talking point of the week in the village pub, but it deals with three related areas where, in my view, a small change in our law is both warranted and desirable.
I must tell the House that due to the complexities of the subject, this will not be a speech full of soundbites. I shall give some background. The Bill seeks to amend the law of succession in England and Wales where a person disclaims—that is, rejects—an inheritance or is disqualified from receiving an inheritance by reason of the forfeiture rule. What is the forfeiture rule? It has long been a doctrine of the common law of this country and I think it is a good doctrine to which no reasonable person could take exception. It states that if a man or woman is criminally responsible for the death of another, neither he or she nor his or her elected representatives can be entitled to reap any financial benefit from that act. As Lord Justice Salmon said in the case of Gray v. Barr, which was reported in 1971, 2 All England Reports at page 974:
“it would in general, shock the public conscience if a man could use the courts to enforce a money claim either under a contract or a will by reason of his having committed such act”—
that is, the act of murder.
Experience has shown that there are some cases—they might be few, but they are hard cases—where the public conscience would not want the full forfeiture provisions to apply, such as those involving mercy killings, the survivor of a suicide pact initiated by the non-surviving party and perhaps a battered wife driven almost beyond the borderline of sanity by the cruelty of a violent spouse. In such cases, the criminal courts will normally have been merciful and might have not even awarded any custodial sentence in the criminal proceedings. It was to deal with these situations and cases like them that the Forfeiture Act 1982 was passed. That Act provides for discretion to be applied by the courts in cases of manslaughter—I emphasise the word manslaughter, because there is no discretion in cases of murder. In cases of manslaughter where mitigating circumstances exist, the courts can allow the forfeiture rule to be relaxed, where appropriate.
The current rule is defined in section 1 of the 1982 Act as meaning the rule of public policy, which in certain circumstances precludes a person who has unlawfully killed another or unlawfully aided, abetted, counselled or procured the death of that other from acquiring a benefit in consequence of the killing.
My Bill gives effect, with some modifications, to the recommendations set out in the Law Commission’s 2005 report, “The Forfeiture Rule and the Law of Succession”. The subject of forfeiture and succession was referred to the Law Commission following the very unsatisfactory case Re DWS (deceased) 2001. Briefly, the facts of that case were that a person, whom I will call P, killed both his parents, neither of whom left a will. The court had to decide who was entitled to inherit P’s father’s estate under the intestacy rules, which are specified in sections 46 and 47 of the Administration of Estates Act 1925. P was not allowed to inherit because of the forfeiture rule, which I have just outlined. However, P’s child, the grandchild of P’s victims, could not inherit in place of P, because under the intestacy rules P was still alive and therefore P’s child could not take an interest in the estate. In that particular case, the victim’s estate therefore passed to a sister, which was unsatisfactory because by the time the court reached its conclusion the sister herself had passed away.
The Law Commission considered that the outcome of that case was unfair, and I agree. Equally unfairly, however, a situation might arise in which a killer forfeited an inheritance under a will. I do not believe that allowing a killer’s children to inherit from the victim in those narrow circumstances would encourage anyone who would not otherwise do so to commit a murder or attempted murder. The alternative is to stay with our present law and disinherit innocent children, which is most unfair. In any event, the law offers protection to prevent a killer from benefiting from a forfeited inheritance that passes to a minor, because the court has power on application to appoint two trustees or more where a minority interest arises on intestacy. It also has the power to pass over any person with a prior interest in a grant of letters of administration and appoint someone else to run the estate.
Similar problems can also occur where a person disclaims an inheritance under a will or on intestacy. For example, where in an intestacy—to the non-lawyers among us, that means where there is no will to say what should happen to the estate—the person who disclaims is the only child of the deceased, the inheritance will bypass the child’s descendants, because grandchildren can only inherit from their grandparent if their parent dies before the grandparent, in which case the inheritance passes instead to the deceased’s other, but more distant, blood relatives.
Let me give the House an example of how that might arise. Let us say that A, the deceased, dies and leaves a fortune, money which he lawfully made from his ownership of a nightclub and casino. He does not leave a will, but dies leaving a son, B, and two grandchildren, C and D. B is a strict follower of Victorian values and is a devout Baptist Christian, unlike his father. His views are similar to those of the Southern Baptist Theological Seminary in the USA, which holds the views that God’s way is that we should earn what we get and that gambling is a sin. Because of those beliefs, B decides that he cannot in all conscience accept the legacy, so he disclaims—that is, he gives up his entitlement to money from his father’s estate. Under our law, in so doing he would prevent his own children, C and D, from inheriting, which applies even if they were to welcome the inheritance with open arms. Indeed, C and D might have embraced gambling as passionately as their own father had disowned it, but that would make no difference. Under our law, the inheritance would go elsewhere, which is neither right nor fair. That is why I am seeking to make a change with my Bill.
Jacob Rees-Mogg (North East Somerset) (Con)
If the strict Baptist did not want the money to go to his children, because he thought that
“the wages of sin is death”,
would he be able to take the inheritance and give it away, which would have the same effect as disclaiming, and therefore not lose his right to make that choice?
Mr Knight
B would be able to do that, although our law clearly states that one cannot refuse part of an inheritance—it is all or nothing. Once the decision is made, one cannot change one’s mind, unless others have not acted on one’s initial decision, in which case one can. The son would be at liberty to accept the inheritance and then give it away—indeed, he could give it to the church of which he was a member.
Stranger things happen where there is a will. If someone decides to give up something that they have been bequeathed in a will, what happens depends on the wording of the will. Such cases would need individual consideration.
Mr Christopher Chope (Christchurch) (Con)
I apologise to my right hon. Friend for not being here at the outset of his remarks, but I have indicated to him informally my concern that that particular aspect of his Bill may have the unintended consequence of creating a loophole, whereby people can avoid inheritance tax. In the example that he gave, the money would go directly to the grandchildren as a result of his Bill, which means that by disclaiming, B would be able to pass the money on to the next generation, whereas normally he would be able to do so only by incurring a potential inheritance tax liability, if he did not survive for seven years after so doing.
Mr Knight
Under our existing law, there are various reasons why people may disclaim an inheritance, and reducing one’s tax liability is already one of them. For example, someone might decide not to accept an inheritance, where it involved taking on a property that was subject to a long lease that included expensive repair covenants.
Many people in the world, as well as in this country, seek to reduce the amount that they pay in tax. Some seek to do it by concealing their wealth, lying to the authorities and completing inaccurate and misleading tax forms. They are tax evaders—they break the law, and when they are caught, they are properly punished. Others seek to lower their tax liability by making perfectly lawful decisions affecting their own position, which is called tax avoidance rather than tax evasion. There is nothing unlawful about tax avoidance, and I am surprised that my hon. Friend, who is a Conservative Member of Parliament, feels that it is somehow inappropriate.
If a person who is on their deathbed inherits a legacy, and they are worried that by accepting the money, which they will not have time to spend, they will incur a greater inheritance tax bill, I see nothing wrong with such a person disclaiming. If my Bill were law, disclaiming would mean that person’s disclaimed money going to their children, which would be all the better. That person would have reduced their tax liability in a perfectly lawful way, and what is wrong with that? I hope that on reflection my hon. Friend will decide that his point, which he might initially have thought was a good one, is not actually a good one.
Mr Knight
It could be a consequence, but it is not the prime reason behind the Bill.
When the Law Commission looked at the laws of succession, it highlighted the anomalous situation involving the children of a deceased minor. That is also covered by my Bill, which addresses the irregular situation in which the children of a minor who is entitled to inherit an interest in the estate of an intestate person, but who dies unmarried and without entering into a civil partnership before reaching 18, are unable to inherit their parent’s interest in that estate for no other reason than that the law says so. I think that is unfair and I will elaborate on this issue later.
First, let me comment on specific clauses in the Bill. Clause 1 would amend part 4 of the Administration of Estates Act 1925, which sets out how a deceased person’s estate is to be distributed in the absence of a will or to the extent that a will is not valid. Clause 1(2) would insert proposed new section 46A into the 1925 Act. Subsection (1) of new section 46A specifies that the new section would apply where a person, X, disclaims an inheritance or is disqualified from inheriting because of the forfeiture rule. Subsection (2) of new section 46A provides that for the purpose of deciding who should inherit X’s interest in the deceased’s estate in those circumstances, X should be deemed to have
“died immediately before the intestate.”
That overcomes the rule in current intestacy law, under section 47(1) of the 1925 Act, that children cannot inherit if their parents are still alive. That Act, which is still on our statute book after all this time, was drafted and introduced by the first Earl of Birkenhead, who I believe is the subject of one of your forthcoming lectures, Mr Speaker, which I hope to attend.
The effect of the reform is that if a person disclaims or is disqualified under the forfeiture rule, the inheritance to which he or she is no longer entitled will go to the next person listed in the order of priority in section 46 of the 1925 Act, even though the person who disclaimed or suffered the forfeiture is still alive. Subsection (3) of new section 46A provides that the new rule would not limit the court’s power under section 2 of the Forfeiture Act 1982, under which the court has powers to modify the effect of the forfeiture rule where the offender has not been convicted of murder, for example by allowing the killer to inherit all or part of the estate. The circumstances in which the court would exercise that power would be the examples I gave earlier, in the case, perhaps, of a mercy killing, in which the deceased was the instigator of the act and the loving relative was complying with their wishes. The rule introduced by new section 46A gives way to any order made by the court under section 2 of the Forfeiture Act, which would override it.
Clause 1(3) would make a consequential amendment to section 47(1) of the 1925 Act. Section 47(1) defines the statutory trusts for descendants or intestacy, providing that no grandchild or remoter descendant may inherit if his or her parent is still alive when the intestate dies. That is clearly inconsistent with proposed new section 46A, which would treat the offender as has having died before the deceased. Clause 1(3) would therefore insert “(subject to section 46A)” into section 47(1) to ensure consistency with the new rule.
Clause 1(4) makes another consequential amendment, inserting a new subsection, 4A, after section 47(4) of the 1925 Act. New subsection 4A states that subsections (2) and (4) of section 47 are subject to new section 46A.
Section 47(2) of the 1925 Act currently provides that where no descendant of the intestate attains a vested interest by reaching the age of 18, marrying or entering into a civil partnership under that age, the estate is to be distributed as if the intestate had died without issue. Section 47(4) applies a similar rule to the statutory trust for siblings or issue of siblings, defined by section 47(3). For the same reasons as apply in relation to the amendment made by clause 1(3), new subsection 4A will ensure that sections 47(2) and 47(4) are consistent with the new rule.
Clause 2 deals with disclaimer or forfeiture of a gift under a will, and makes analogous provision to that made by clause 1 in relation to intestate succession. It inserts a new section after section 33 of the Wills Act 1837 and makes one consequential amendment to that section. In both those situations, the will is to be interpreted as if the person disclaiming or the person forfeiting had died immediately before the testator, the effect of this being that the person next entitled to the property will be able to inherit. I would not want, in any proposition I put before the House, to tamper with the express provision of a will, and this Bill would not do that. The general rule I have mentioned gives way to a contrary intention shown in a will. That is consistent with section 33 of the Wills Act, which also gives way to a specific contrary intention in the testator’s will. The new rule in clause 2 would, as with clause 1, give way to any order of the court made under section 2 of the Forfeiture Act to give relief to the killer from the effect of the forfeiture rule where the court decided that was appropriate.
Clause 3 deals with the death of a single parent aged under 18, in relation to which there is an anomaly in the law of intestacy. Where a child, C, of a deceased who dies intestate is entitled to a benefit but dies under the age of 18 without having married, but leaves a child or children, the law is unfair to that grandchild or grandchildren. Currently, C’s benefit does not pass to his or her children because by dying an unmarried minor, C does not attain a vested interest in the intestate’s property under the intestacy rules and therefore has no interest to pass on to his or her children. In such cases, the inheritance passes instead to the intestate’s other, more distant, blood relatives. That clearly discriminates against the children of single parent minors. Since 1991, illegitimacy has not been not a bar to intestate inheritance, and such children qualify as grandchildren of the intestate. This problem would not arise if the child-mother was married, or if the grandchild or grandchildren were catered for in a will. The law of intestacy discriminates against illegitimate grandchildren: they are penalised because their mother is young and unmarried and because the deceased failed to make a will.
Some people—I hope none of them are in the Chamber—may feel that this bizarre rule is good news because it is a clear case of the law encouraging marriage and acting as a disincentive to young, unmarried girls becoming pregnant. I do not accept that argument, because although the present law prevents the children of unmarried teenage mothers—and fathers, come to that—from inheriting any interest that their parent may have had in the estate of the intestate person, they can inherit in other ways and can inherit other property.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
An even more telling point is that someone who has got into that situation without taking any precautions is, to put it mildly, extremely unlikely to be aware of this bizarre provision of the law.
Mr Knight
I accept that point absolutely and completely. The effect of the law does not produce the outcome that the intestate person in most cases would have wished anyway, and my Bill seeks to correct that anomaly.
There are a number of ways in which the state can and should seek to dissuade teenage pregnancies, but using the law of intestacy should not be one of them. I am not convinced that after a night out at a disco or bar, just before the moment of unprotected sex—perhaps in the back of a car—two young teenagers are going to feel in any way dissuaded from having sexual relations, and possibly thereby conceiving a child, by the expectation that they may die before reaching 18 or marrying, and thereby disinherit an unborn child that they might or might not be about to create. I absolutely agree with the comments made by the Chair of the Justice Committee.
We hope that most children are brought up in a loving relationship. Let us think of the poor child, who has an unmarried mother who is killed before she reaches the age of 18. What does the state say to the child? “Because of these circumstances, you will not be helped; you will not be able to inherit money that you would have inherited from your grandparents if your mother had reached the age of 18.” Clause 3, therefore, inserts new subsections (4B), (4C) and (4D) into section 47 of the 1925 Act. I remind the House that that Act lists what happens on intestacy. The subsections inserted by the clause deal with the situation of the young child of an intestate who dies under the age of 18 without having married or formed a civil partnership. As C is a minor at the date of Y’s death in the example, his or her interest in Y’s estate will be held in the statutory trusts imposed by the 1925 Act.
On commencement, clause 4(4) provides that only deaths occurring after the commencement of the Bill will be covered by it. Knowing, in this cost-conscious age in which we live, my hon. Friends’ concern about the financial implications, I draw their attention to the fact that the implementation of the Bill is not expected to impose any additional burden or to increase any other public expenditure.
Mr Chope
My understanding is that the Bill incorporates part of the recommendations of the Law Commission, which were going to be legislated for by the Government, but the Government decided not to legislate for those because they said it would be too expensive to do so. How is that action by the Government consistent with what my right hon. Friend says—that nothing in the Bill would add to the costs to the public purse?
Mr Knight
My Bill is not precisely the same as the Bill proposed by the Law Commission; I have made a number of changes to it. I stand by what I just told the House. I am sure the Minister will deal with this point in further detail if it is felt that I am incorrect, but I suspect that the reason my hon. Friend the Member for Christchurch (Mr Chope) is confused is as follows. The Law Commission suggested that special trust provision for minors in forfeiture cases be set up, and when the Ministry of Justice consulted on the special trust provision proposals, which may have played a part in the issue of cost, several criticisms were made of them. Some consultees doubted that they were necessary, and I understand that the Ministry of Justice—I stand to be corrected by the Minister—re-examined those proposals with the Law Commission, and they both then changed their mind and agreed that the proposals were unnecessary. I have not suggested otherwise because I take the view that the law already provides protection for minors’ inheritances. That may answer my hon. Friend’s point.
Mr Knight
I am doing that for the simple reason that I have confidence and trust in the coalition Government and I saw no reason to seek to override them on so footling a matter. If the Minister tells the House that he supports the Bill—which I hope he will in a moment—I expect him in good faith to see that the Bill is brought into effect as soon as is reasonably possible. Because I have confidence, particularly in this ministerial team, I decided to leave it to the Government to make that decision.
Sir Alan Beith
I return to the point that the Law Commission had made. Its recommendation about creating trust provisions—originally with the Public Trustee—arose from an anxiety that money should be administered without benefit, particularly indirect benefit, to a killer. Although that could have been done by private trustees rather than the Public Trustee and without public cost, its original thinking was that something along those lines was needed. Is the right hon. Gentleman confident that he was right not to include it in the Bill?
Mr Knight
I think so, because the court has power to determine who manages an estate, and I would have thought that that power was sufficient. If the court felt that the estate was being manipulated by an incarcerated prisoner—the father who had murdered the grandparent—I would have thought that the courts would have power to intervene and take over the management of the estate. That was why I did not include those provisions in the Bill, particularly when I noted that there had been further discussions between the Ministry of Justice and the Law Commission and that they had both reached the conclusion that the special trust provision was unnecessary. I assumed, and still do assume, that because that was where the debate ended up, we need not bother with that extra tier of bureaucracy in the Bill. However, should the Bill be given a Second Reading and should evidence to the contrary arise, I am happy to look at the matter by way of possible amendment to the Bill—although I hope and believe that will not be necessary or desirable.
On public manpower, I tell my hon. Friends that no change in the work load of any Government Department or agency is anticipated if the Bill is implemented. Usually, Ministers have to make a statement about compatibility with the European convention on human rights. I am delighted to say that this is not a Government Bill, so it does not require a statement under section 19(1) of the Human Rights Act 1998. However, if it did, my understanding of that Act is that the provisions of the Bill are compatible with the convention in any event.
The Bill extends to England and Wales, and as my hon. Friend the Member for Christchurch has said, it will come into force when the Minister so determines should it pass through all its stages in both Houses. I am sure, if he supports the Bill, that he will not stand in its way.
The Bill is merely intended to make our law fairer, by removing technicalities that run contrary to the general policy of the law of succession. It will allow direct descendants to inherit ahead of more distant relatives on intestacy. Where there is a will, the Bill will allow the people whom the deceased intended, or could be assumed to have intended, to take the inheritance if the deceased’s first intended recipient does not. More importantly, the Bill will produce an outcome that is fair, rather than one based on legal technicalities.
I am most grateful for the courteous and helpful assistance that I have received from the Minister, his departmental team, Officers and servants of the House and members of the Law Commission to whom I have spoken. I am also grateful to the Justice Committee, which has indicated its support for the measure, and for the comments made by its Chairman, my right hon. Friend the Member for Berwick-upon-Tweed, whom I am delighted to see with us today. Finally, I am most grateful to all hon. Members for giving me a fair hearing today. I hope that they will in due course give this modest but worthy Bill a Second Reading.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
I congratulate my right hon. Friend the Member for East Yorkshire (Mr Knight) on introducing the Bill and on his lucid presentation of a complex matter. Of course, as he indicated, the background is that a draft Civil Law Reform Bill was published in the last Session of Parliament and the Justice Committee studied the Government’s request in some detail. His Bill takes up a significant part of the draft Bill. Meanwhile, the Government have decided not to proceed with it.
I received a letter, dated 16 December, from the Under-Secretary of State for Justice, the hon. Member for Huntingdon (Mr Djanogly), who is dealing with the debate today, indicating how grateful the Government were for the Justice Committee’s report, but he said that
“as the draft Bill does not contribute to the delivery of our key priorities, we have decided not to take it forward.”
I am not unsympathetic to the Government’s decision not to proceed with the draft Bill in this Session. It is complex; it would require a lot of ministerial time and attention; and the Department has many urgent priorities to deal with. But I hope that the Government have not closed the door on sorting out some of the laws with which it deals.
Much of the draft Civil Law Reform Bill related to bereavement and dependency damages and damages in respect of gratuitous care under the Fatal Accidents Act 1976. It was complex; the Justice Committee did not agree with it all; and further work clearly needed to be done. I hope that that work is not brought to a complete halt by the decision not to proceed in this Session and that it can be taken forward in other Sessions. Of course, if that does not happen, it raises yet again a question that we have come up against several times: why have a Law Commission, which consumes considerable public resources in doing detailed and careful work on laws that need to be improved and brought up to date, if its recommendations are not implemented? Judicial time, as well as public expenditure, is involved. The record of successive Governments in implementing Law Commission recommendations is not very good.
However, into the breach has stepped my right hon. Friend to deal with laws that are significant to a small number of people. By definition, those few people are in pretty serious and challenging circumstances, particularly where a killing has taken place in the family or where a death—indeed, a death of a minor—has occurred. Those are awful family circumstances in which we want the law to be helpful, not unhelpful.
When a person dies without a valid will in England or Wales, intestacy laws determine who will inherit his or her property. Succession law is generally aimed at benefiting descendants in preference to other, more remote family members, and the order for doing so is set out in the Administration of Estates Act 1925—spouse, children, parents, siblings, half-siblings, grandparents, aunts and uncles, and half-aunts and uncles—and when no relative survives, the deceased’s money goes to the Crown.
Currently, the common law forfeiture rule prevents a person convicted of an unlawful killing from benefiting from the victim’s death, irrespective of whether the victim had made a will. Murderers are always prevented from benefiting from their victims’ deaths, but the court has discretion over whether to apply the forfeiture rule in cases of manslaughter or other forms of unlawful killing.
A child who has murdered his or her father cannot therefore inherit the father’s estate, even if he made such provision in his will. His or her children—the victim’s grandchildren—also cannot inherit because section 47 of the Administration of Estates Act 1925 and section 33 of the Wills Act 1837 require the death of the parent before the child can inherit from the grandparents.
The impact on a grandchild when his parent forfeits a grandparent’s estate under the forfeiture rule was heavily criticised in the case Re DWS in 2001, where a father had murdered both his parents. Both grandparents died without a will, and the Court of Appeal held that it had no power to treat the father, who was disqualified from inheriting by reason of his crime, as deceased, which would have allowed the grandson to inherit. The estate therefore went to other relatives. That led to the issue being referred to the Law Commission.
In such unusual circumstances, children who are indirect victims of a grave crime are denied the support that the murdered person would have wished them to have. Either they have expressed that wish in a will, or, having failed to do so, everyone realises that that is what the deceased person would have wanted. Added to the loss of a loved family member comes the loss of the benefit that that family member would have wished them to have.
The Bill would deem the person who disclaimed an inheritance or who is precluded by the forfeiture rule from inheriting as having died immediately before the deceased, unless the relevant will contains a contrary provision. Property would therefore to go to grandchildren, rather than more distant relatives, unless the deceased has explicitly excluded them from inheriting the estate in the will—a “deemed predeceased rule” is the legal term.
My right hon. Friend was also dealing with, and referred to, another anomaly: the case of the unmarried minor who has a child but dies without having married or entering a civil partnership. The Bill will allow the child to inherit in those circumstances by deeming that the parent died before the person from whom he or she was inheriting.
All that closely follows the Law Commission’s recommendations in the 2005 report, “The Forfeiture Rule and the Law of Succession”. That leaves only the commission’s recommendation that, if as a result of its other recommendations, property devolves on or is held for a minor descendant of a killer, the court should have the power to order that the property be held by the public trustee, who should administer it in order to avoid benefit to the killer.
There was a reason for that recommendation. Professor Hugh Beale, the law commissioner who led on the report, told the Justice Committee:
“We were worried that somehow the killer might benefit indirectly or directly by, as it were, either being able to get hold of some of the trust money, perhaps by influencing the trustee or possibly by encouraging the trustee to take on responsibilities which otherwise the killer himself or herself would bear: maintenance responsibilities”,
for example. The Government’s original draft Bill would have enacted that recommendation with a minor alteration: the court would have been required not to appoint the public trustee, but to consult the public trustee, who could then advise on a more suitable private trustee. Professor Beale described that as an “eminently sensible change”.
Concerns were raised by witnesses about the loose drafting of the relevant clause, which referred to
“an infant who is a child or remoter descendant of the offender”.
We recommend that the Government re-examine the drafting of what were then clauses 15 to 17, in the light of comments from the Bar Council and the Law Society. We expected all minors to receive suitable protection under the draft Bill. We said that we shared the Law Society’s concern that nothing should be done to impair the validity of existing wills. We welcome the proposal to ensure that minors who inherit under that provision have their inheritance protected. Whether there is a problem that ought to be dealt with, and could be dealt with without creating secondary problems, is worthy of at least some further consideration in Committee.
The primary argument against changing the law as proposed in the draft Bill, referring to the provision about minors, was discussed in an earlier intervention: the idea that the forfeiture rule could have a deterrent effect. The concept of deterrence is stretched at the best of times. Many crimes are committed with total unconcern for the consequences that might follow if someone were detected and brought to justice. The remotest and weirdest notion of deterrence would arise in circumstances when a child was conceived unexpectedly by a minor who did not then get married or enter a civil partnership—deterrence coming into play at that point is plainly absurd. The Law Commission took the view that killers were unlikely to be influenced by such changes in the law. That consideration is completely outweighed by the injustice that would be done to the deceased, whose property would be inherited by more distant relatives, and to the innocent children.
It was the effect of the present rules on innocent children in particular that influenced me in supporting the Select Committee view that the Law Commission proposals should be implemented. However, more generally, as I said in my opening remarks, we are concerned at the poor record of implementing Law Commission proposals. Our report said, at paragraph 194:
“We believe the delay in legislating on Law Commission recommendations is not only demoralising for that organisation but leads to a waste of limited resources because case law can change the legal context while recommendations await implementation requiring further consideration of the proposed changes. The last 10 years has seen a vast amount of criminal justice legislation introduced by the Government. In contrast, civil law measures have sometimes being neglected, to the public detriment.”
We are all grateful to the right hon. Member for East Yorkshire for filling part of the gap. In wishing his Bill success, I hope to prompt the Government not to neglect the area of civil law.
Robert Flello (Stoke-on-Trent South) (Lab)
I congratulate the right hon. Member for East Yorkshire (Mr Knight) on bringing the Bill to the House. I know the pressures and pitfalls associated with promoting a private Member’s Bill all too well, following my own experience with the Sustainable Livestock Bill. I hope that his hon. Friends will be somewhat pithier in their contributions when debating his Bill than they were on 12 November. I particularly noted the right hon. Gentleman’s opening remarks. Parliamentary observers—those outside the Chamber—will have seen the usual suspects in the House today and will know that we are probably in for a long sitting.
Robert Flello
I always like to be generous and, indeed, I thank the right hon. Gentleman for supporting my Bill on 12 November. I wish, sadly, that some of his colleagues had felt the same way.
The right hon. Gentleman did an extremely good job; he gave a valuable explanation, with examples that clarified the existing law and its application. I also congratulate the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) on his usual measured and thoughtful contribution to the debate. I concur that further consideration in Committee would be valuable to look at some of the detail. Despite 40 minutes or so of the right hon. Member for East Yorkshire introducing his Bill, some issues still need to be teased out in Committee.
If enacted, the Bill would address the concerns raised by the Law Commission in its 2005 report, “The Forfeiture Rule and the Law of Succession”. The report proposed amendments to the law as it stands, whereby grandchildren of a deceased individual are disallowed from inheriting property and suffer from what might be described as the sins of their parents being visited upon them if the parents were responsible for the murder of the deceased. The current law disinherits grandchildren of the deceased when their parent forgoes their inheritance, and it also applies when the parent is an unmarried minor on inheritance and dies without attaining majority, or marrying or entering a civil partnership.
The report’s headline recommendation was that a deemed predeceased rule be used when a child or relative has either murdered the deceased or opted to disclaim the inheritance, thereby forfeiting their entitlement to it. The child would be considered to have died shortly before the parent, and the law would then allow for the grandchild to inherit.
As the debate over the rights and wrongs of assisted suicide continues, and cases of patricide and matricide sadly continue to occur, the Bill is timely, and the Opposition believe it addresses a clear injustice. Indeed, the previous Labour Government accepted the recommendations of the Law Commission report, and in December 2009 produced the draft Civil Law Reform Bill which, among other things, incorporated those recommendations. The Bill was welcomed by the Justice Committee and it is disappointing that the current Government chose not to proceed with the measures in it.
I welcome the Bill introduced by the right hon. Member for East Yorkshire and I am pleased that he has used his favourable draw in the private Members’ ballot to bring forward legislation that reflects the combined wisdom of the Law Commission, and indeed the previous Labour Government. The Bill would take forward, with some modifications, clauses in part 3 of the Civil Law Reform Bill and despite the Government’s decision not to take forward that draft Bill, I am pleased that the Front-Bench team have—I believe—indicated that they do not oppose the Bill before us today.
The forfeiture rule is, of course, part of the wider principle that an individual should not profit from a crime they have committed. The previous Government strengthened that principle through such legislation as the Proceeds of Crime Act 2002, and the Labour party in opposition continues to support it. The forfeiture rule prevents an individual from inheriting property from someone, through a will, when they have unlawfully killed the deceased or unlawfully aided, abetted, counselled or procured the death. The rules as they stand would disallow a grandchild of the deceased from inheriting anything in such a situation—a rule the Bill seeks to amend.
The Law Commission report stated that the law as it stands is unfair for three reasons: grandchildren should not be punished for the sins of their parents; it is more likely that the deceased would have wished to benefit the grandchildren than other relatives; and the general policy of intestacy law is to prefer direct descendants to siblings and other relatives—to make an exception under the forfeiture rules is inconsistent with that policy.
The Bill introduces the deemed predeceased rule suggested by the Law Commission, whereby the child is considered to have died before the parent, and I believe it would address the Law Commission’s three criticisms. It would mean that unless stated otherwise in a will, a deceased person’s property would be distributed as though certain individuals—one who disclaims a gift, forfeits a gift, or a single parent dying under the age of 18—had died immediately before the deceased.
It is worth further mentioning the last of those three individuals—the single parent dying under the age of 18—as it is commendable that the right hon. Gentleman has used his Bill to address that anomaly. The current law states that when a parent dies leaving minor children, the “vested interest” of that child cannot be passed to their own children if they die before the age of 18. That is deeply unfair, so the Opposition welcome the inclusion of those provisions in the Bill.
As the debate over assisted suicide develops, or considerations as yet unknown become more important, future parliamentarians may find themselves debating the matter again. Unfortunately, when legislation is introduced to close a loophole or address a fairly narrow issue, it can in turn create new loopholes or additional issues. Those concerns notwithstanding, the Opposition have no objection to the Bill and we hope to see it proceed to Committee for further and more detailed scrutiny.
I again congratulate the right hon. Member for East Yorkshire on introducing the Bill. If it is pushed to a Division, I hope that a sufficient number of Members will join me in voting in favour of it.
Mr David Nuttall (Bury North) (Con)
I remind the House that I am a solicitor and notary public, although I no longer hold a practising certificate for either profession.
I congratulate my right hon. Friend the Member for East Yorkshire (Mr Knight) on using this opportunity to introduce his Bill in such a selfless way. Few could have anticipated that debate on a Bill with as dry a title as Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill would have resulted in references to unprotected sex in the back of a motor vehicle; that will certainly enliven those who read Hansard, I am sure.
I thank my right hon. Friend for clarifying, in response to an intervention by my hon. Friend the Member for Christchurch (Mr Chope), the difference between tax avoidance and tax evasion. All too often in recent months, Members on both sides of the House, including those on the Treasury Bench, have got those two terms muddled up, and have muddled them in the minds of the electorate. Historically, there has been a clear division in law between tax avoidance and tax evasion. If the Bill comes into use, by way of a disclaimer somebody might say, “That’s tax evasion, or avoidance,” but there is a big difference between the two terms, and I am grateful to my right hon. Friend the Member for East Yorkshire for making that clear.
Many Members, if they had come fifth in the private Members’ Bill ballot, would understandably be tempted to go down the road of popularism, and to use the opportunity to jump on whichever bandwagon happened to be passing. It says a great deal about the public-spiritedness of my right hon. Friend that rather than go down that path, he used the opportunity that he gained in the ballot to bring before the House this Bill, which, with the best will in the world, can be described only as a legal and technical measure. As I shall mention later, it has gone through what can only be described as a very long and tortuous period of gestation to be with us this morning. The Bill may be a technical measure, but it could affect many people in years to come. Many a family may well be profoundly grateful for the changes to the law of succession that the Bill seeks to introduce.
So what problem does the Bill seek to solve? Essentially, it would prevent grandchildren from being punished for the sins of their parents. In common law, it has long been the rule—often referred to as the forfeiture rule—that when someone unlawfully kills a person, they cannot benefit from the person’s estate. In short, they cannot inherit property from the deceased person whom they have murdered or otherwise unlawfully killed. Of course, even non-lawyers may be familiar with that common-law rule, as it has featured in many a murder mystery story over the years. Fans of Agatha Christie-type whodunnits may well have come across the rule as part of an interesting subplot to many a gripping yarn.
The forfeiture rule is an example of the general legal principle that a person should not be allowed to profit from his or her crime. That general common-law rule was, of course, enshrined in the Forfeiture Act 1982, which has been mentioned. I should like to clarify that the Act makes it clear that when someone is convicted of murder, the court has no discretion over whether to enforce the rule; it is only when a person is convicted of manslaughter that the court is given discretion over whether to apply the forfeiture rule in full.
As the House will be aware, a person who dies without making a will is said to have died intestate. When someone dies intestate and leaves no spouse surviving, but only a child, the law would, in the ordinary course of events, provide for that child to inherit the mother’s or father’s estate, but of course, in accordance with the rule to which I just referred, a problem arises if the son or daughter has unlawfully killed their parent.
That is more or less what happened in what is usually referred to as the leading case on the subject, which set in train the whole sequence of events that led to the Bill being brought before us this morning, and that is the case Re DWS (deceased), which was eventually quoted in the Court of Appeal in 2001. To understand the background to the Bill, I submit it is essential that the facts of that case, and the details of the judgment given, be examined, because it gives the best explanation of why the Bill is so essential.
In 1993, the son, whom I shall refer to as RS, murdered not one parent but both—Mr and Mrs S. Neither Mr nor Mrs S had made a will, and they were survived not only by their son, the murderer, but by his son—their grandson, T. T was a minor, and claimed in the court action the estates of his grandparents through his mother, who was acting, in legal terms, as his next friend, as he was of course too young to bring the action himself.
To understand the case fully, it is essential that we know what other surviving relatives there were. Mr S did not have either parent surviving him, but he did have his sister, Winifred. Sadly, by the time the case was heard, Winifred had died; she died in April 1995. The House will recall that the murder took place in 1993. Her estate was therefore represented by the persons who became the first, second and third defendants in the action. Mrs S was in a similar position; she did not have a surviving parent, but she did have a brother, Jack, and a sister, Gladys. However, although they both predeceased Mrs S, the sister, Gladys, had two children, who became the fourth and fifth defendants in the case.
The proceedings on behalf of T, the young grandson, were launched in 1995. T, through his mother, sought grants of administration covering the estates of both his grandparents, and he sought a declaration that he was entitled to those estates once he reached the age of 18. The grants of representation were made, and the only issue with which the judge—His Honour Mr Justice Blackburn, in the first instance—had to concern himself was the entitlement of T to the estates. It was accepted at the trial that the son, R, was disqualified from benefiting from his parents’ estate under the principle of public policy enunciated in a number of cases, the leading case being the 1892 case of Cleaver v. Mutual Reserve Fund Life Association.
As Mr S died intestate, the devolution of his estate fell to be determined in accordance with the provisions of sections 46 and 47 of the Administration of Estates Act 1925. Section 46(1)(ii) states:
“If the estate leaves issue but no husband or wife the residuary estate of the intestate shall be held on the statutory trusts for the issue of the intestate”.
When Mr S died, he left issue in his son, RS, and his grandson, T. With RS ruled out because of the forfeiture rule, the question was whether the grandson could inherit. I cannot put it more succinctly than the trial judge, who said:
“The plaintiff’s entitlement arises, if at all, under the statutory trusts set out in section 47(1)(i).
Under the terms of that provision, however, the plaintiff, as the son a child of the intestate, can qualify only if he is within the definition of: ‘issue living at the death of the intestate who attain the age of eighteen years or marry under that age of the intestate who predeceases the intestate’.
On its face therefore, section 47(1)(i) requires:
(a) that as issue of a child of the intestate, the plaintiff should
(i) be living at the death of the intestate”—
which of course T was—
“(ii) attain the age of 18 or marry under that age”—
although that was not yet achieved, the grandson might have gone on to do so—
“(b) that his father, RS, being a child of the intestate, should have predeceased the intestate”—
which was not the case. The judge concluded:
“Literally applied, therefore, the plaintiff cannot satisfy the conditions laid down for him to take.”
The counsel instructed to represent T, Mr Barlow, submitted that the crucial section 47(1)(i) should be construed as though RS had predeceased his father. Not surprisingly, the judge rejected that submission:
“Persuasively though the argument was put, and sympathetic though I am to the plaintiff’s plight, I cannot accept Mr Barlow’s submissions. In my view the relevant authorities do not justify such an approach. If anything they assume that as happened of course, the offender must indeed be taken to have survived his victim.”
It was then necessary to determine whether Winifred’s executors—the House will recall that Winifred was the murdered man’s sister—should inherit. The difficulty was that, if her estate was to benefit, compliance with section 46(1)(v) was required. That provision requires the intestate to have died without husband or wife, or issue or parent. However, there was issue, because both the son, RS, and the grandson, T, had survived. There were two possibilities for the court to consider.
First, as the conditions set out in subsection(1)(v) had not been satisfied, Winifred’s estate could not take, in which case, the estate of Mr S would pass to the Crown as bona vacantia. In view of the current state of the public finances, some people in the Treasury may well think that there ought to be more cases in which the Treasury stands to benefit, but that was not a matter that the court took into account. Secondly, notwithstanding the non-satisfaction of the conditions required for the operation of that subsection, the next available class could nevertheless take, where a person from an earlier class, although in existence, is disabled from taking.
Although it appears from the situation that prompted those questions that Winifred’s estate was entitled, it was not one that, according to the research undertaken by counsel, had been the subject of a decision in any previous reported case. The question had arisen—and had been considered in the context of a disclaimer, rather than in the application of the forfeiture rule—in the case Re Scott (deceased) and Widdows v. friends of the Clergy Corporation in 1975. I do not propose to go into the facts this morning; suffice it to say that the decision in that case was that if one class of potential beneficiaries had disclaimed, and there were no members in subsequent classes, that did not prevent members of a class with a lower entitlement from inheriting.
Mr Knight
My hon. Friend is dealing with two important cases, but does he agree that they illustrate that our intestacy provisions are defective, and that the Bill seeks to put that right? The intestacy rules are a default mechanism, designed to help people who did not make a will, by channelling their property to their nearest blood relatives. Those cases show that there is a defect in that mechanism that is enabling further, distant relatives to benefit in those narrow cases, which is something that the Bill seeks to put right.
Mr Nuttall
My right hon. Friend is absolutely right. Reading in even more detail the transcripts of those judgments, it was clear to me that the judges, certainly at first instance and again in the Court of Appeal, struggled with that dilemma, because they knew that in cases of intestate succession the will of Parliament was that the closest issue to the deceased should inherit, whereas the operation of this rule meant that more distant relatives were taking. In the case Re DWS, they concluded reluctantly that, with the best will in the world, they could not override the wording of the 1925 Act.
The judge decided that the case provided a common-sense if not entirely logical answer to the problem arising from RS’s disqualification from benefit. The Treasury was not represented in that case and decided that it would not even appear, so I think that the judge was looking for a way to ensure that at least someone in the family benefited, which is why he seized on the case of Scott as a way out. He stated that, if necessary—and he did not think that it was—the same result could be achieved by implying that the words “capable of taking” were added after the words “no issue’” in section 46(1)(v). The inclusion of those words was another way around the problem.
When I read the details of all the cases, it seemed rather odd that the judge was prepared in effect to add the words “capable of taking” into an Act. However, when it came to the previous rule, there was no way round it. Had he not made that decision, and found a way to get round the forfeiture rule, perhaps we would not be here today and there would be no need for the Bill. As a result of that approach, the estate of Mr S did not pass to the Crown as bona vacantia, but to Winifred’s executors.
That, of course, all led on from a murder in 1993. The case began in 1995 and reached the Chancery Division at Newcastle-upon-Tyne in March 1999. The decision was appealed on behalf of the grandson and the case went to the Court of Appeal in November 2000. Three years later, in July 2003, the Department for Constitutional Affairs asked the Law Commission to review the relationship between the forfeiture rule and the law of succession. In particular, the terms of reference specified that the review should be carried out with reference to the difficulties highlighted in the case Re DWS (deceased).
Mr Knight
Will my hon. Friend confirm that there was no suggestion at all in the case Re DWS that the grandchild had in any way aided and abetted the murder? He was an innocent potential beneficiary who lost out. Indeed, I believe that at the time of the murders the grandchild was only two years of age.
Mr Nuttall
I was not aware of the precise age of the grandchild, only that he was a young minor. I apologise: the preamble to the law report does state that RS had a two-year-old son, so it is fair to say that at that age he was entirely innocent. His mother, as I mentioned earlier, was acting on his behalf to ensure that he would not suffer as a result of the acts of his murderous father.
The Law Commission embarked on an investigation of the matter. It was asked to explore ways in which the law might be reformed to prevent the apparently unfair outcomes of the sort that occurred in that particular case. In October 2003, the Law Commission published a consultation paper entitled “The Forfeiture Rule and the Law of Succession”. It was in July 2005—another two years having passed—that the commission published its report. We can see how the years passed—it was 10 years since the start of the case and 12 years since the original murder.
In the introduction to its report, the Law Commission stated:
“It is clearly right to exclude a murderer from inheriting, but it seems unfair to exclude the murderer’s children as well. This outcome appears arbitrary: it is not based on public policy, but it is a by-product of the way the intestacy legislation is drafted.”
The Law Commission’s recommendations in its report of July 2005 were, first, that there should be a statutory rule that when a person forfeits the right to inherit from an intestate through having killed that intestate, the rules of intestate succession as laid down in sections 46 and 47 of the Administration of Estates Act 1925, as amended, should be applied as though the killer had died immediately before the intestate.
The Law Commission recommended, secondly, that when a person forfeits a benefit under an intestacy through having killed the deceased, but as a result of the reforms, property devolves on or is held for a minor descendant of the killer, the court should have the power to order that the property be held by the Public Trustee, who should administer it so as to avoid benefit to the killer. Thirdly, when a person forfeits a benefit under a will through having killed the testator, the will should be applied as though the killer had died immediately before the testator unless the will contains a provision to the contrary.
The fourth recommendation was that where a person forfeits a benefit under a will through having killed the deceased, but as a result of the reforms property devolves on or is held for a minor descendant of the killer, the court should have power to order that the property be held by the Public Trustee, who should administer it so as to avoid benefit to the killer. Fifthly, when a person disclaims an inheritance either under a will or under the law of intestacy, the inheritance should devolve as if the person disclaiming had died immediately before the deceased. The sixth and final recommendation was that when a person loses a benefit under intestacy by dying unmarried and a minor but leaves children or remoter issue, the property should devolve as if that person had died immediately before the intestate.
The following year, in 2006, the then Labour Government accepted the Law Commission’s recommendations and included the provisions to implement them in part 3 of a draft civil law reform Bill which they put out for consultation in December 2009. Seven of the eight respondents to part 3 of the consultation on the Bill supported the reforms and agreed that the new law would be fairer and simpler to operate.
Lyn Brown (West Ham) (Lab)
I have been listening with rapt attention to this modern-day “Bleak House”, although I am sure the hon. Gentleman will agree that the prose is not quite as eloquent as that of Charles Dickens. Given that the Bill proposes a remedy to the particular difficulties that the hon. Gentleman has highlighted in the cases that he has placed before us, is he not prepared to accept the Bill and allow it fair passage through to its Report stage?
Mr Nuttall
I certainly wish the Bill well. I am about to express my concern at how long it has been held up in the legislative process. The report from the Justice Committee referred to that.
Jacob Rees-Mogg
I am loth to disagree with the hon. Member for West Ham (Lyn Brown), who always makes fine points, but on this occasion may I encourage my hon. Friend to give us a full explanation so that we can thoroughly understand why the Bill is necessary? Legislation is a big and weighty matter and should be brought in only for major issues where there is real concern. We need to understand that, and I am grateful for the fullness of my hon. Friend’s explanation, which I hope will be even fuller.
Mr Nuttall
I am extremely grateful to my hon. Friend for that intervention. The Bill would not be before the House had it not been for the original case. It raises the question how many other cases in solicitors’ offices throughout the land have been determined on the back of that Court of Appeal case without ever going to court because the solicitors would say, “We know what the law is because of the Court of Appeal ruling in that case.” Many cases may have been dealt with in that way.
It has now been 18 years since the murder, and 10 years since the judgment, which raises the question of how fast we have progressed with the matter.
Mr Nuttall
I am grateful to my right hon. Friend for that helpful information. If we extrapolate from that, disregarding the fact that the legal proceedings took six years from their launch to their conclusion, we can calculate that in the past 10 years around 2,000 cases have been affected by the delay in bringing the matter to fruition.
My right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) referred to the evidence that Professor Beale gave to the Justice Committee when it prepared its sixth report, which was part of the pre-legislative scrutiny procedure for the draft Civil Law Reform Bill. Professor Beale had indicated the difficulties in implementing the Law Commission’s recommendations. With regard to limitation periods, one problem was that the delay had been so long that new cases had come along in the meantime and changed the legal position.
The Secretary of State for Justice at the time, the right hon. Member for Blackburn (Mr Straw), had accepted that there had been delays in implementing the Law Commission’s recommendations. He said that the draft Civil Law Reform Bill had “been in process” since he had been at the Ministry of Justice. He said:
“One of the difficulties… is that this is an important measure but there have always been other… demands on the legislative programme in the past which have meant that it has been squeezed out, because it is worthy—I actually think very important in terms of what it is doing—but it has not been seen as such a high priority.”
I am sure that those affected by that in the 2,000 cases would think that it is an extremely high priority. He continued:
“That is the honest trust about it… There has also been an extensive period of consultation.”
Well, he is certainly right there. He continued:
“The original proposals, for example, in respect of damages following fatal accidents, which were in the Law Commission proposals, have themselves been refined since then. But if you are saying: ‘Does that take 11 years?’, the answer to that is no.”
There are clearly problems with the procedures. If the case highlights anything—it is perhaps something that the House should look at—it is how the recommendations of the Law Commission are put into legislation. The Minister might have something to say on that later.
The Justice Committee did much pre-legislative scrutiny on that draft Bill and produced an excellent report on it, so it is interesting that the coalition Government have now announced that they do not intend to proceed with it. Were it not for the good fortune of the decision by my right hon. Friend the Member for East Yorkshire to adopt the Bill after his name was drawn in the ballot, I wonder how long the work of the Law Commission and the subsequent legislative scrutiny of the Justice Committee would have languished in the parliamentary waiting room.
If the Bill passes into law, the position would be clarified by virtue of the inclusion of proposed new section 46A, which provides that where a person is entitled to inherit on an intestacy but has either disclaimed their right or is precluded from inheriting by the forfeiture rule, that person is to be treated as having died immediately before the intestate. Clause 2 makes a similar provision to cover cases in which a person dies having left a will and a beneficiary under that will either disclaims or is precluded from inheriting by virtue of the forfeiture rule. Clause 3 provides that in the tragic case of a single parent under the age of 18 dying intestate and leaving a child or children surviving, the estate of the intestate—
Jacob Rees-Mogg
Would my hon. Friend explain a little more about the circumstances under which a testator could leave provision that would not be affected by the Bill? I have been unable to work out how a person who is murdered could have expected and anticipated that in their will. Would he elaborate on that point?
Mr Nuttall
My hon. Friend makes an excellent point. One of the problems is that the affairs of a person who is murdered are left hanging in mid air. If they have not made a will, their affairs might be left to the vagaries of the intestacy laws. If they have made a will and have been murdered by their son, law might provide for the estate to pass to that son anyway.
Mr Knight
My hon. Friend, like me, is a lawyer, so I hesitate to suggest this to him, but is not the answer to that question that any good will has a default position? If a testator gives to a son a share of the estate, which might be a 100% share, and that son then murders the testator, thus becoming prohibited from inheriting under the forfeiture rule, a good will would state that in the event that a son does not inherit, the estate should go to person A, B, C or whoever. Does my hon. Friend agree that a well-drafted will should cover that eventually? In my view, a will that does not do that and merely gives money to one person, without stating what will happen if that person cannot inherit, is an appallingly drafted will.
Mr Nuttall
My right hon. Friend is absolutely right, and I am sure that my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) has taken that comment on board. It was exactly the point I was about to make. I would add that I am sure that professionally drawn wills would, in the vast majority of cases, make further provision for substitution. As I know from experience, many wills are made at home—home-made wills—in which case people might not be so careful or think that it is even necessary to think beyond their nearest and dearest. They simply write their will at home, with two witnesses, and leave it at that. In such circumstances, if that person had an only child and that child murdered the testator, there would of course be nothing that the testator could do about it. However, if the person dies within a year of the act, it can still be classed as murder. The person might linger and still have appropriate testamentary mental capacity to make another will and change it. I could imagine those circumstances arising, although I accept that they would do so rarely.
Clause 3 provides that in the tragic case whereby a single parent under 18 years old dies leaving a child or children surviving, the estate of the intestate is distributed as if the single parent had died immediately before the intestate. That point was covered adequately in the comments of my right hon. Friend the Member for East Yorkshire.
My right hon. Friend thinks that the issue will affect 200 estates a year, but in future many thousands of estates will benefit from the proposals in the Bill. One thing is certain: many families will be for ever grateful that this measure was brought before Parliament. I certainly wish it well, I am pleased to see that Members on both sides of the House support it, and I trust that it will have the support of the whole House.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I, too, congratulate my right hon. Friend the Member for East Yorkshire (Mr Knight) on his success in last year’s ballot on private Members’ Bills and, indeed, on his good judgment in deciding to introduce the Bill before us. I am happy that he went for, as he put it, the worthy and uncontroversial option. Let us hope that that remains the case. It is uncontroversial but certainly not uncomplicated.
In presenting the Bill, my right hon. Friend was supported by the Chairman of the Justice Committee, my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who it is good to see here today, the hon. Members for Cardiff West (Kevin Brennan), and for Birmingham, Yardley (John Hemming), my hon. Friends the Members for Stone (Mr Cash), for South West Devon (Mr Streeter) and for Bridgwater and West Somerset (Mr Liddell-Grainger), the hon. Member for Rhondda (Chris Bryant), my hon. Friend the Member for Christchurch (Mr Chope), the hon. Member for Mansfield (Mr Meale), and my hon. Friends the Members for Croydon South (Richard Ottaway) and for Shipley (Philip Davies)—a good cross-section of the House.
Today, we have thoroughly debated an unusual but important aspect of succession law, and we had strong contributions—from my right hon. Friend the Member for Berwick-upon-Tweed, my hon. Friends the Members for Christchurch and for North East Somerset (Jacob Rees-Mogg), and the lawyer’s eye of my hon. Friend the Member for Bury North (Mr Nuttall)—that brought out many of the complexities of the succession law, even though the principle seems relatively straightforward.
My right hon. Friend’s Bill, as has been mentioned, will implement the main recommendations of the Law Commission in its 2005 report, “The Forfeiture Rule and the Law of Succession”, making the law of succession simpler and fairer. The purpose of the law of succession in this context is to decide who should get what from the estate of a deceased person. The Law Commission reached its conclusions after a public consultation in 2003, and its recommendations were accepted by the then Government in November 2006, subject to minor modifications. Those proposals were then included in the draft Civil Law Reform Bill, which was published for public consultation and pre-legislative scrutiny in December 2009. The pre-legislative scrutiny was conducted by the Justice Committee, which published its conclusions in its sixth report of the 2009-2010 Session of the previous Parliament, under the title “Draft Civil Law Reform Bill: Pre-legislative Scrutiny”.
Before the previous Government could reply to the Justice Committee, the general election was called. We all know the events that followed, but for the purposes of our debate today what matters is that my right hon. Friend was returned as the Member for his newly formed constituency of East Yorkshire. When the ballot for private Members’ Bills was subsequently held, he was fortunate enough to draw 20th place.
Mr Nuttall
I think that, in fact, my right hon. Friend was a little more successful: he was drawn fifth.
Mr Djanogly
I am very grateful for being put right on that point, so fifth place it was. My right hon. Friend could no doubt have chosen any one of numerous topics from his own extensive experience without consulting anyone, and I am sure that it would have been a topic well worth debating and, perhaps, legislating on. Instead, however, he decided to consult the Law Commission and ask whether any of its recommendations, as he said earlier, were suitable for a private Member’s Bill and unimplemented. Those discussions led him to the commission’s draft law reform (succession) Bill, which was published in the Commission’s 2005 report, “The Forfeiture Rule and the Law of Succession”.
The provisions of that draft Bill had, by the time my right hon. Friend was considering what to do with his place in the ballot, been published with minor modifications as part 3 of the draft Civil Law Reform Bill. Those provisions, which my right hon. Friend adjusted in the light of the response to the distribution of estates provision in the draft Civil Law Reform Bill, form the basis of the Bill that we are debating today.
As the Minister responsible for the general law of succession in England and Wales, and as a Minister in the Department that sponsors the Law Commission, I am doubly pleased to be able to announce the Government’s support for this Bill on the law of succession; and I was pleased to hear from the hon. Member for Stoke-on-Trent South (Robert Flello) that the Opposition support the Government’s position in that context.
My hon. Friend the Member for Christchurch asked why the commencement date is not three months after Royal Assent, and the simple answer is that that is to allow the professionals and others to prepare for commencement: there will be wills to be re-looked at and so forth. Before considering the substance of the Bill, I should like to record the Government’s thanks to the Law Commission for its work on the forfeiture rule and the law of succession.
Law Commission Bills are by their nature likely, legally speaking, to be very technical, and this Bill is no exception. There is more to a law reform Bill than technical accomplishment, however; we have to be sure that it delivers the desired policy outcome effectively and efficiently. In that respect, the Bill has the additional advantage of having already in effect been carefully scrutinised by the Justice Committee. I know that my right hon. Friend the Member for East Yorkshire has paid careful attention to the Committee’s conclusions, and I thank my right hon. Friend the Member for Berwick-upon-Tweed, who as Chairman of the Justice Committee considered the draft Civil Law Reform Bill and, I am delighted to say, has returned to that role in the current Session. I am also grateful to the other hon. Members who served on that Committee with him when they scrutinised the draft Civil Law Reform Bill.
My right hon. Friend the Member for Berwick-upon-Tweed, the hon. Member for Stoke-on-Trent South and my hon. Friend the Member for Bury North asked in different ways about the Law Commission’s wider Bill and the Government’s attitude to the commission. The Government are committed to ensuring that the law is modern, simple and accessible, and we hold the commission’s work in high regard. I am confident that the measures flowing from the Law Commission Act 2009, both the protocol and the duty to report annually to Parliament, along with the new House of Lords procedure for Law Commission Bills, will help to improve the implementation rate of commission proposals. A higher rate of implementation will help to ensure more effective and accessible law, delivering better value for money as valuable Law Commission work is put to good use.
Five reports have been implemented or received Royal Assent over the past year: those on the rules against perpetuities and excessive accumulations, third parties’ rights against insurers, trustee exemption clauses, on reforming bribery and parts of its murder, manslaughter and infanticide reports.
My hon. Friend the Member for Bury North also asked what we are doing about the wider Civil Law Reform Bill issues. Decisions not to take forward the Law Commission’s excellent work are always difficult, and they are not taken lightly. It is a difficult time at the moment, and the Government have to be realistic about what they can achieve when there are other pressing priorities and a reduction in resources.
A great deal of the Law Commission’s work requires primary legislation to implement it, and it is very difficult at present to secure parliamentary time for legislation that is not a high priority or that does not deliver significant financial savings. Deciding not to take forward the proposal in the Law Commission’s reports on damages, personal injury, medical, nursing and other expenses, claims for wrongful death and pre-judgment interest on debts and damages, was not easy. However, in the current financial climate we need to focus our resources on delivering key priorities.
Having said that, I think that the new protocol on best practice between the Government and the Law Commission, agreed in March last year, should help. The protocol aims to ensure that the Law Commission takes forward only projects to which Departments are fully committed; that there is a close working relationship during the project; that the Law Commission produces impact assessments looking at the costs and benefits of proposals; and that Departments respond quickly once the Law Commission reports.
The Law Commission will soon be putting forward proposals for its 11th programme of work. That will be the first programme agreed in the light of the new protocol, and I am confident that it will assist in reducing delays both in responding to the Law Commission when proposals are accepted and in implementing them.
However, neither the Law Commission nor the Justice Committee could function as effectively as they do without the support of those who respond to consultations and calls for evidence. The experts who give freely of their time and experience are perhaps the unsung heroes of law reform work. It is invidious to single out organisations or individuals, but I note that the Law Society and the Bar Council replied not only to the Law Commission’s 2003 consultation and the Ministry of Justice’s 2009 consultation, but gave evidence to the Justice Committee in 2010.
I would like to thank all those who have replied to the Law Commission, the Committee and my own Department over the years. Unsurprisingly, the Bill does not reflect all their views, but I can assure them that their comments were all carefully considered and taken into account. I am confident that this Bill would command the support of the overwhelming majority of them.
I will now explain why the Government are supporting this Bill. Obviously, we are pleased that the Bill represents a return on the investment of public money in the Law Commission. The Government are committed to ensuring that the law is modern, simple and accessible. Usually, and properly, it is the Government who introduce Law Commission Bills; there is, however, no reason at all why the introduction of Law Commission Bills should be the preserve of the Government alone. Indeed, I would encourage hon. Members who in future years find themselves well placed in the ballot for private Members’ Bills to consider whether they might imitate the example of my right hon. Friend and discuss with the Law Commission whether any of its Bills might be suitable for debate. My right hon. Friend has set a very good example, and I thank him for that.
However, more fundamentally, the Government support this Bill because it will make the law fairer. To understand what is wrong with the law, it is necessary to go back to 1994 when a certain individual was convicted of the murder of both his parents; various hon. Members have referred to the incident. He was described in the press as an “evil conman” and
“a grasping son who repaid his parents’ lifelong devotion by bludgeoning them to death”.
He duly received two life sentences, but it is not the monstrosity of his crimes that underlie the Bill before us today—rather, it is what happened to his parents’ property, which was apparently worth more than £1 million and highlighted the problem with the law.
Apparently, the killer’s parents had made it clear to their son that they would not provide for him on their deaths; they would provide only for his young son, their grandchild. To go back to the point made by my hon. Friend the Member for North East Somerset, if only they had made clear wills in favour of the grandchild, their apparent wish to support him would have been accomplished. However, no wills were found and their property was distributed according to the statutory intestacy rules.
Mr Denis MacShane (Rotherham) (Lab)
On a point of order, Mr Deputy Speaker. We are being informed by television that Mr Andy Coulson, one of the most important figures in Her Majesty’s Government and one of the Prime Minister’s closest aides, is now resigning. As the House is sitting, I believe that it would be appropriate for the Prime Minister to come to the Commons, explain why that is happening and give the public the full details here in the House of Commons, rather than burying the news on a day when, frankly, an awful lot of other news is taking place. This is the Commons, where the Prime Minister should—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. That is not a point of order, as the right hon. Gentleman, who has long been a Member of the House, knows. The fact that a member of the Prime Minister’s staff has resigned has nothing to do with the House.
Mr Deputy Speaker
Order. Before we get carried away, I should say that that has absolutely nothing to do with the House. Neither of the points made is a point of order.
Mr Djanogly
I am delighted to pull the House back to the important issue of succession.
I was just saying that the property of the killer’s parents was distributed according to the statutory intestacy rules. The intestacy rules are a default regime; they apply where a person has not exercised his or her right to make a will or to the extent that his or her will is not valid. Their aim is to safeguard the deceased person’s family by providing for them from the deceased person’s estate in a manner that is thought to mirror the wishes of the average person had he or she made a will.
Generally speaking, an intestate estate will pass to the surviving spouse or civil partner and the deceased’s children first, but if the deceased is not survived by either of them, then other blood relatives of the deceased will inherit the estate in a strict order of priority set out in section 46 of the Administration of Estates Act 1925, as amended. I am not going to read out the rules, but if any hon. Members wishes to know more about them, I shall provide the information.
When there are no known eligible blood relatives to inherit, the estate is dealt with by the Treasury solicitor. On receiving the estate, the Treasury solicitor will make full inquiries into the estate and will advertise for eligible kin in the hope of distributing the estate. If there appear to be no eligible kin, or none can be traced, the estate becomes “bona vacantia” which means “ownerless goods” and it will pass to the Crown, the Duchy of Cornwall or the Duchy of Lancaster, depending on where in England or Wales the deceased lived.
When a minor inherits on intestacy, the property to which they will be entitled is held on trust. The terms of that trust are specified in the intestacy rules. Basically, the trustees will hold the property for the benefit of the child until he or she reaches the age of 18 or marries or enters a civil partnership under that age.
All that may seem relatively straightforward, and hon. Members could be forgiven for thinking that the grandchild in the DWS case would have inherited their property on reaching the age of 18, or marrying or forming a civil partnership before then, but there is a devil in the detail and, sadly, there was a family dispute that led to litigation. That culminated in the decision of the Court of Appeal in 2000 in the case Re DWS (Deceased). By that time, it was agreed that the son himself could not inherit because, as he had murdered his parents, the forfeiture rule prevented it. The forfeiture rule is a common law rule, applying the general rule of public policy that a person is not able to benefit from their wrongdoing. It is illustrated by the 1892 case of Cleaver v. Mutual Reserve Fund Life Association, when it was held that a person is not entitled to benefit from the estate of a person he or she has unlawfully killed.
A person who is convicted of the unlawful killing of another, or of aiding, abetting or counselling another to do so, is automatically disqualified from inheriting from his or her victim under the forfeiture rule. However, persons convicted of manslaughter or other offences less serious than murder may still be permitted relief to inherit the victim’s property by the court under the Forfeiture Act 1982.
The question for the court in Re DWS (deceased) was who would receive the grandfather’s property. Had the son died before his father, the property would have gone to the son’s only child, who was aged only two at the time of the murder and was also the grandfather’s only grandchild. However, the son—that is, the killer—was not dead, but merely disqualified from inheriting because of the operation of the forfeiture rule.
The relevant provision of the intestacy rules setting out the statutory trusts contained in the Administration of Estates Act 1925 provides that the grandchild will inherit only if his or her parent has already died. The court accordingly decided that the law did not allow the grandson to take the property. Instead, it was decided that the property would have to go to the estate of the dead grandfather’s sister, who had also died by the time of the court case. Thus, in this situation, not only is the killer disqualified from inheriting, but so also are all the killer’s direct descendants. The Court of Appeal expressed concern that this may have been an unforeseen and unintended consequence of the present intestacy rules.
In July 2003, the then Department for Constitutional Affairs, whose responsibilities in this regard have been assumed by the Ministry of Justice, asked the Law Commission to review the relationship between the forfeiture rule and the law of succession. The terms of reference were as follows: first, that in conjunction with its work on illegal transactions, the Law Commission should review the relationship between the forfeiture and intestacy rules; secondly, that the review should be carried out with reference to the difficulties highlighted in the case of Re DWS (deceased) and should explore ways the law might be reformed to prevent apparently unfair outcomes of this sort; and, thirdly, that the review should also consider any ancillary areas of succession law that might produce analogous outcomes—for example, disclaimer and attesting beneficiaries.
In October 2003, the Law Commission published a consultation paper, “The Forfeiture Rule and the Law of Succession”, which considered the problem raised in Re DWS, and discussed whether a similar problem arose in other contexts. The consultation paper provisionally proposed that in cases such as Re DWS there should be a “deemed predecease” solution—that is, where a person forfeits a benefit on intestacy through having killed the deceased, the estate should be distributed as if the killer had died immediately before the deceased. The Law Commission also proposed that the deemed predecease rule should apply where a gift under a will fails because of the forfeiture rule.
Sir Alan Beith
It is perhaps worth placing on the record—the Committee specifically sought to inquire into this—that the deemed predeceased rule has no other legal effect. In other words, determining that someone is deceased for the purposes of inheritance does not affect any other legal provision or right relating to them.
Mr Djanogly
I thank my right hon. Friend for setting out that important point. If that were not the case, it could have serious knock-on effects for other cases.
The Law Commission received responses to the consultation paper from 31 individuals and organisations. Those included leading academics in the field of succession law; the Society of Legal Scholars, Property and Trusts Section; a number of individual judges, including Lord Justice Sedley, one of the members of the Court of Appeal who had heard the Re DWS case, whose response wholeheartedly endorsed the Law Commission’s proposed solution; the Association of District Judges; specialist solicitors from leading firms; the Inland Revenue; the Bar Council; the Law Society; and the Chancery Bar Association. Most of the respondents agreed that the current law was unsatisfactory, that in Re DWS (deceased) the grandchild ought to have inherited, and that a “deemed predecease” rule would be the best way of achieving this.
The Chancery Bar Association must, however, be singled out for particular mention. It spotted that there was an analogous, albeit rare, circumstance, elsewhere in the law of intestacy, that should be addressed. This arises from the fact that where a child inherits from a parent or other relative on intestacy, that child’s interest is held “contingently” on the statutory trusts under the intestacy rules.
In July 2005, the Law Commission’s final report, “The Forfeiture Rule and the Law of Succession” was presented to Parliament. The report recommended that a “deemed predecease” solution should apply in three situations. First, where a person disclaims or forfeits the right to inherit from a person who has died intestate, the intestacy rules should then be applied as if the killer had died immediately before the intestate. Secondly, where a person disclaims or forfeits a benefit under a will, the will should be applied as if the killer had died immediately before the testator, unless the will contains a provision to the contrary. Thirdly, where a person loses a benefit under an intestacy by dying unmarried and a minor, but leaves children, the property should devolve as if that person had died immediately before the intestate. The Civil Law Reform Bill incorporated provisions to this effect, subject to minor modifications relating to the role of the public trustee, which for reasons I shall explain, need not concern us now.
I hope this explanation of the genesis of this Bill makes clear the problems that it is trying to address. The overall point is that in the three circumstances identified— forfeiture, disclaimer and the rights of the children of a minor heir on intestacy—the detail of the law does not produce the desired result. The general policy on intestacy is that once the interest of any spouse or civil partner has been satisfied, the property of the deceased should pass to closer blood relatives before more distant ones: the children of the deceased, for example, should be preferred to siblings of the deceased.
Where there is a valid will, the general policy of the law is that the wishes of the testator—the person who made the will—should determine who is to inherit what from the estate of the deceased. That gives effect to the principle of freedom of testamentary disposition, which lies at the heart of our succession law in England and Wales, and which was referred to by my right hon. Friend the Member for East Yorkshire and others.
The effect of the Bill will therefore be to change the law in the three areas mentioned, so that it is consistent with the general policy of the law. First, as was highlighted in the 2001 Court of Appeal decision in Re DWS (deceased), where a person forfeits an inheritance on intestacy because he or she has killed the person from whom he or she would have inherited, his or her children will also be disinherited. The forfeiture rule thereby disinherits not only the criminal but also the innocent grandchildren of the victim.
This problem is not confined to intestacy. For example, where there is a will that contains a gift specifying who is to inherit, if the first named recipient dies before the testator and that recipient forfeits his or her inheritance, the default gift cannot take effect because the recipient is still alive. Similarly, if there is a will giving a gift to a child of the testator without any further provision, the law implies a term that the gift will pass to his or her children if he or she predeceases the testator. If the testator’s child forfeits his inheritance, his or her children—the testator’s grandchildren—will not be able to inherit.
The same problem arises in both testate and intestate successions where the person who would be first entitled disclaims the inheritance. Anyone claiming through him or her will not be able to inherit. Let me explain the term “disclaimer” as that was raised by my right hon. Friend the Member for East Yorkshire, and discussed further by my hon. Friends the Members for Christchurch and for North East Somerset in the context of disclaiming gifts under a will. There was a further question as to why this needed to be done.
A beneficiary is free to accept or disclaim—that is, refuse—a gift that has been left to him or her in a will. The unwanted gift will form part of the testator’s residuary estate—the part of the estate remaining when all the specific gifts have been satisfied— unless, as is less usual, he or she has made a default gift in the event of a disclaimer. If the will does not make provision for the disposal of the estate, it will be distributed according to the intestacy rules.
My hon. Friend the Member for Christchurch went on to ask why that should be the case. Figures are not kept on the number of people who disclaim gifts in wills. However, in its consultation paper, “The Forfeiture Rule and the Law of Succession”—CP No. 172—the Law Commission commented that the usual reasons for disclaimer in will cases will either be to secure beneficial tax consequences or to enable the beneficiary to avoid inheriting onerous property such as a lease with repairing covenants. My hon. Friend then asked whether the disclaimer provision opens the way to evade inheritance tax. The answer is no, because in the example we have before us, the son could achieve the same results as a disclaimer under the Bill by varying the will or the intestacy rules. Deeds of variation can be used to vary the distribution of the estate for inheritance tax or capital gains tax purposes. That is only possible where all the original beneficiaries agree and the tax legislation permits it. These variations will often include disclaimers by some or all of the original beneficiaries, and the Bill simply enables the intended recipient to disclaim without thereby disinheriting anyone entitled to claim through him or her.
My hon. Friend the Member for North East Somerset then asked whether a disclaimer of inheritance can instead take the money and give it away. The answer is yes; the money would then be his or hers to do with as he or she wished, but he or she could not disclaim part of an inheritance, or having disclaimed, specify where the inheritance should go. That is for the deceased to say in a will or the intestacy rules, which act as a deemed will, if I can put it in those terms. So a beneficiary of an intestate estate is free to accept or disclaim the inheritance. When the disclaimer is a child of the deceased, the disclaimed interests passes to the child’s siblings. Clauses 1 and 2 of the Bill address those issues.
There is the rather unusual situation, which was spotted by the Chancery Bar Association—I take my hat off to the assiduous lawyer who noticed this one—in which if a person under the age of 18 who is prospectively entitled to inherit property under the intestacy rules, perhaps from his or her parent, dies before reaching the age of majority, leaving children but without having married or entered a civil partnership, those children cannot inherit in place of their parent. Right hon. and hon. Members used several interesting possibilities to explain how that could be put into practice, but that happens because the parent did not reach the age of majority or marry or form a civil partnership under that age. In more legal language, the parent did not attain a vested interest. That anomalous outcome, rare as it might be, discriminates against those children.
Clause 3 addresses that issue. In all three cases, the Bill would solve the problems by deeming the person who loses the inheritance to have died before the person whose estate is being distributed. That means that on intestacy, the children of the person losing out will be able to inherit under the statutory intestacy rules and, if there is a will, that the actual or deemed wishes of the testator will prevail. In short, the aim of the Bill is to try to ensure that the “right” people inherit. The Government support that aim.
I shall comment on the differences between the Law Commission’s draft Bill, published in 2005, and the equivalent provisions in the draft Civil Law Reform Bill, published in 2009. These issues were raised by my right hon. Friend the Member for Berwick-upon-Tweed, and my hon. Friend the Member for Christchurch touched on them, too. They largely derive from the comments of the Justice Committee and the people who gave evidence to it. Some of the changes are drafting changes, but others were more significant. The question arises of why they should have been left out of the Bill.
Although the Justice Committee welcomed the proposal to ensure that minors who inherit under the provision have their inheritance protected, several criticisms were made of the special trust advice chosen by the Law Commission to achieve that aim. On consideration of the responses to the consultation and the evidence to the Justice Committee, it has become clear that the special trust was unnecessary and would be problematic and expensive to operate. The existing law, which already imposes a trust and gives the court power to appoint alternative trustees and supervise those trusts, gives the property of minors adequate protection. We therefore believe that the Bill meets the concerns of the Justice Committee in that regard.
The Justice Committee welcomed the reforms and reached two conclusions. First, it stated:
“We welcome this clause as ending the current rule which penalises the children or other heirs of a killer who are themselves not only entirely innocent but are the people whom the deceased would probably have wanted to benefit from the estate in any event. We also welcome the proposal to ensure that minors who inherit under this provision have their inheritance protected.”
Secondly, it pointed out:
“We recommend the Government to re-examine the drafting of clauses 15 to 17 in the light of the comments made by the Bar Council and the Law Society. We expect all minors to receive suitable protection under the bill. Equally, we share the Law Society’s concern that nothing be done to impair the validity of existing wills.”
The main difference, however, as my right hon. Friend the Member for Berwick-upon-Tweed pointed out, is that the earlier draft Bills contained specific provisions intended to ensure that in forfeiture cases the criminal was prevented from gaining any benefit from the inheritance that would, under the terms of the draft Bill, pass to his or her children. Those special trust provisions attracted a good deal of criticism from witnesses to the Justice Committee and people who replied to the Ministry of Justice’s consultation on the draft Civil Law Reform Bill.
Two respondents—the Law Society and the Bar—considered that the safeguard provisions were not necessary because legislation already exists that would protect an infant beneficiary’s inheritance in forfeiture cases if such protection were to be needed. Both referred to section 116 of the Senior Courts Act 1981, which provides the court with discretion to pass over any prior claims to a grant and appoint someone else if by reason of any special circumstances it appears necessary or expedient to do so.
The Bar also mentioned section 114(2) of the 1981 Act, which provides that wherever a minority interest arises under a will or on intestacy, a grant should be made to a trust corporation or to two individuals, unless it appears to the court to be expedient that there should be a sole personal representative.
The same two respondents also expressed concern about the limited application of the safeguard provisions, which is restricted to the infant children or more remote issue of the offender, and only then if, as the Bar noted, the infant inherits by virtue of the reform rather than under, for example, a default gift in a will. It considered that there may be cases where court intervention is needed to prevent potential abuse of the inheritance, where those inheriting are infants but are not directly related to the offender.
The Bar also objected to the width of the power of the court to allocate any property in which the infant had an interest to the trust, and it raised a fundamental concern about the workability of the provisions, where both the infant and the disqualified person would inevitably benefit from the trust property—for example, where the former matrimonial home was held under the trust, and the infant and the disqualified person were both living there.
The Bar concluded:
“On balance, we consider the provision”
to safeguard an infant after forfeiture
“to be unhelpful, and likely to lead to increased expense in the administration of estates in circumstances which are bound to be tragic but are otherwise unpredictable.”
The Government have given particularly careful consideration to those comments, which we have discussed with the Law Commission and with Master Winegarten of the chancery division of the High Court, who was very critical of the special trust provisions. We agree with the Justice Committee that minors who inherit should have their inheritance protected and that all minors should have suitable protection under the Bill. However, it is clear from our more detailed consideration of how the special trust provisions would work that they are unnecessary, problematic and expensive to operate.
As my right hon. Friend the Member for Berwick-upon-Tweed pointed out, the Civil Law Reform Bill contained special trust provisions for children. He asked whether this Bill provides protection now that the special trust provisions have been taken out, an issue which I have dealt with. In our view, the existing law, which already imposes a trust to the benefit of minor children and gives the court power to supervise the administration of estates, gives effective and adequate protection.
Sir Alan Beith
My hon. Friend is giving a detailed analysis and providing fairly compelling reasons why the specific provisions involve many problems. However, it is not only the protection of the minor’s inheritance that is at stake, but the maintenance of the principle that the person who has carried out the murder should not benefit from that murder, which might happen indirectly.
Mr Djanogly
I take my right hon. Friend’s point. As we have discussed, I agree that there is the technical possibility of the murderer taking advantage, but it is far fetched. Indeed, my right hon. Friend has mentioned that that assumes that the murderer had a solid knowledge of the laws of succession, which would include the certain knowledge that they would spend many years in prison. As my right hon. Friend the Member for East Yorkshire pointed out, the Bill does not affect the forfeiture rule. In the light of the responses to the consultations by the Law Commission and the Ministry of Justice and the pre-legislative scrutiny by the Justice Committee of all those proposals, we do not believe that allowing a killer’s children to inherit from the victim will encourage people to kill.
Sir Alan Beith
My hon. Friend has misunderstood my point, which does not concern the absurd issue of deterrence. Someone who has committed a murder—they may even be in prison—may be able to evade financial responsibilities as a result of the provisions. It is not far fetched that those who have committed murder would seek to gain some benefit from the money that would rightly pass to their children under such provisions.
Mr Djanogly
I thank my right hon. Friend for making that clear.
The Law Society also made an important point about the wording of the provisions in new section 33A(2) of the Wills Act 1837, which would be inserted by clause 2(1) of the Bill. Earlier draft Bills provided that where a person disclaims, or is disqualified by the operation of the forfeiture rule from inheriting under the deceased person’s will, the will is to be construed as if that person had died immediately before the deceased, save in so far as there is any provision in the will about how the devise or bequest is to take effect. The Law Society thought that this “any provision” test was more demanding than the “unless a contrary intention appears by the will” test in other related statutory provisions, and the Bill now follows those other provisions. We hope that will provide consistency and simplicity.
We welcome my right hon. Friend the Member for East Yorkshire’s decision to make the Bill consistent with the Wills Act and I should add, for completeness, that the Law Commission is content with the Bill in its present form. We are very grateful to the Justice Committee and its witnesses, particularly the Bar and the Law Society, for drawing attention to these matters. The approach in the Bill is the right one. This is a small but worthwhile piece of technical law reform produced by the Law Commission. I applaud my right hon. Friend for taking up this serious topic and I wish the Bill a fair passage through this House and the other place.
Mr Knight
I shall be brief because I sense that the House now wants to hear from the hon. Member for Washington and Sunderland West (Mrs Hodgson).
I thank my ally, the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), and I am grateful for his support and the work that his Committee has undertaken. I am also grateful to him for agreeing to be a co-sponsor of the Bill. On the point that is still exercising him a little, I understand that the court does have power to appoint two trustees to take over an estate where they are concerned about a killer benefiting and where a minority interest arises. I hope that provision is sufficient.
I thank the hon. Member for Stoke-on-Trent South (Robert Flello) for reciprocating today the support that I recently gave to him for his private Member’s Bill. My hon. Friend the Member for Bury North (Mr Nuttall) made a comprehensive and wide-ranging speech and I am grateful for his support, coming as it does from a former practising solicitor. The lesson that every member of the public should draw from the remarks of the Minister and my hon. Friend the Member for Bury North, and from all the cases associated with this area of law, is that it pays to make a well-drafted will. However, the Bill seeks to prevent injustice occurring where a well-drafted will is not in place. I thank the Minister, I am delighted to have the Government’s support and I endorse all his remarks.
I shall not detain the House any longer except to say that what I seek to do is introduce a deemed, predeceased rule which means that a person who has killed the deceased person, a person who disclaims the inheritance and a person who dies a single parent under the age of 18 are all deemed to have died immediately before the deceased. The Bill will make the law fairer by removing technicalities that run contrary to the general policy of the law of succession. This is a complex area of law; I do not expect any publicity from the media about this Second Reading debate, but that does not matter to me. What matters is that the proposal is just, modest and, above all, fair. I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).
Sale of Tickets (Sporting and Cultural Events) Bill
(13 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I beg to move, that the Bill be now read a Second time.
The reason for my bringing forward the Bill should be obvious to hon. Members who have turned up today, even those who have done so perhaps only to oppose it. To demonstrate the problem, I will paraphrase from an article in The Times of 25 September 2010. At 8.50 am, Rachel Still switched on her computer and waited. At 9 am precisely, tickets for a gig by Brandon Flowers in London were to go on sale. A few minutes before 9, Rachel logged on to the ticket website and began the repetitive formula for buying tickets. At 9.1 am she was told that the gig had sold out. Her friends told her that they had received the same message at 8.57 am, before the tickets were even officially released. Within minutes those same tickets were appearing on secondary websites at prices way above the £25 face value, the cheapest one being £74. A survey showed that of the 2,300 tickets sold, 616 were instantly re-advertised—more than a quarter. No doubt there would be more to follow closer to the date too, as it is common practice to drip-feed more tickets on to the market at a sufficiently slow pace to keep the prices high.
That situation plays out time and again in homes up and down the country—ordinary fans trying in vain to get tickets, only to find that they have sold out within minutes. The disappointment is then compounded when they see that the touts do not have the same problems as they do in finding large numbers of tickets. I know all this because it has happened to me and to my teenage children, and I know we are not alone.
When I first tabled the Bill, after the private Member’s Bill ballot, the media attention prompted lots of people to write to me, expressing their support for action to tackle ticket touting. They ranged from academics to ordinary fans, and all had a story to tell. The story that stood out most prominently, though, was that—
Mrs Hodgson
Not at the moment. There will be plenty of chances for Government Members to speak. We have plenty of time, and I will give way when I have got further into the substance of my speech.
The story that stood out most prominently was that of a gentleman who used to work at a media event venue, which I will not name. He told me that it was common practice for the box office managers to cream off all the best seats to sell to touts at a mark-up of 50% before they even went on sale. Then, when the tills opened, they would simply put in the face value and issue a receipt for them all. I suspect security has improved since those days, but there is no doubt that the levels of reward on offer and the lack of regulation mean that many tickets never even reach the legitimate market at face value.
Even the big players in the secondary market recognise that, from the consumer’s perspective at least, there is a massive problem with this market. I quote Graham Burns, chairman of the Association of Secondary Ticket Agents, who said in a Sunday Times article in November:
“The ordinary fan is screwed. The decks are stacked against them. Try and buy a front-row seat at a bestselling concert at face value. It can’t be done.”
The aim of the Bill is to redress that balance—to give consumers back the power and to help event organisers choose how they want their tickets to be available and for how much.
While I initially approached the Bill from a fan’s perspective, I quickly got a better picture of the industry’s perspective as I met people who had got in touch about it, but I think the most strikingly unjustifiable part of the secondary market is the resale of charity tickets. Later in my speech I will go into some detail about the experience of the Teenage Cancer Trust, but I came across another, briefer example in The Sunday Times. Like the Minister’s boss, I too am a fan of some of Rupert Murdoch’s news output.
That example was the sale of Help for Heroes tickets. The gig was at Twickenham in September, and featured Robbie Williams, Gary Barlow and Tom Jones, who had freely given their time and names to support an incredibly worthy cause. Tickets for the event were being touted on secondary websites at an average of £106, despite the fact that the face value of an ordinary ticket was £46.75 and that the tickets clearly said on the back that they were not to be resold. The touts are earning more than the charity here, and if any hon. Member can convince me that that is right, I will happily withdraw my Bill and sit down.
Philip Davies (Shipley) (Con)
I wonder who the hon. Lady sees as the victim. If a charity wants to sell tickets at £46 each and someone pays £46 each, the charity gets all the money that it expected to get. The fact that someone is prepared to pay more to someone else for that ticket does not take any money away from the charity. It still gets exactly the same amount as it bargained for when it sold the tickets. It makes no difference to its income whether the person who paid £46 for the ticket uses it or sells it on to someone else.
Mrs Hodgson
The charity does not get the whole £46. On average, with overheads and so on, charities reckon that they get about half the ticket money. The tout or whoever sells on the ticket, which clearly states on the back that it must not be resold, makes six or eight times more than the charity. The artists, who have given their time freely, intend that any money that comes on the back of their time and from the ticket should go to the charity. I find it quite shameful that the hon. Gentleman can say that such a practice is fair when the charity intends to help teenage victims of cancer. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Hon. Members should work through the Chair, rather than talk across to each other.
Jacob Rees-Mogg (North East Somerset) (Con)
I thank the hon. Lady for being both gracious and generous in giving way a second time so quickly. If the charity fails to sell its tickets for the market price, which is £106, that is its fault. It ought to investigate other ways to sell its tickets, such as eBay, to maximise its return, rather than our introducing a harsh legislative measure.
Mrs Hodgson
The charity decides on the price based on the genuine, ordinary fans whom it wishes to attract. It is often aware that the price is sometimes below the market value, but the reason is that it does not want to attract only people who can afford to pay £106. It wants to attract a broad cross-section of people. It does not just want elite people in the audiences at such events. I will give further examples in due course.
Ian Austin (Dudley North) (Lab)
Does my hon. Friend share my surprise that Government Members support a system that excludes their constituents from having access to a free and open market, in which they can compete with other people to have proper access to tickets? Why does she think that they are in favour of their constituents not being able to buy tickets when they first go on sale?
Mrs Hodgson
That is an interesting point. Government Members have a lot of good arguments on the free market, but with regard to charity tickets, none of those arguments hold up. They should want such access for all their constituents, not just the ones who can afford to pay premium prices.
Mrs Hodgson
I would like to move on. I have a long speech, and I would like to get through the details.
I am, of course, aware that the issue has been considered on a number of occasions over the past five years. To be honest, the fact that it has been revisited so many times is testament to the fact that those who look at it keep coming to the wrong conclusions. Although I have read some of the contributions to the Culture, Media and Sport Committee’s inquiry, I still cannot understand how it arrived at its conclusion. The Select Committee and the then Government both concluded that fans wanted a forum in which they could buy tickets closer to the date of an event or sell them if they could not make it. I absolutely agree with that statement, but I disagree that that conclusion should allow the secondary market to carry on unregulated.
The key thing that both the Government and the Select Committee missed is that consumers also want a fair chance to get tickets at face value, and they do not want to be ripped off. I have a quote from a letter that my right hon. Friend the Member for St Helens South and Whiston (Mr Woodward) sent in his capacity as the then Minister with responsibility for the creative industries in response to my hon. Friend the Member for Glasgow North West (John Robertson), who is not in his place today, when he was campaigning on the issue way back in 2007. My right hon. Friend said:
“While consumers want a secondary market, they do not want to be exploited by individuals or businesses at their personal expense.”
But he then suggested that it was not in the public interest to legislate. I know my right hon. Friend the Member for St Helens South and Whiston; he is an intelligent man, so I can only think that once one becomes a Minister, there is sometimes a tendency to trust what the civil servants are saying a little too much.
Mrs Hodgson
No, I will not, if the hon. Gentleman does not mind.
Will the Minister tell us what his civil servants advised him ahead of this debate? I know my office provided them with advance sight of the Bill, so I hope they had enough time to come to a considered view. I look forward to hearing the Minister’s response—if his colleagues allow him to get in.
Coming back to the point, the Bill does not aim to do away with the secondary market. It aims to make the secondary market work in the interests of genuine fans, by forcing out the people who are there simply to profit from the hard work, investment and creative talent of the live entertainment industry, a sector that I am sure the Minister will agree has become extremely valuable to the UK’s economic vitality.
The role of the Government and of the House is to legislate in the public interest. The public interest does not lie in a few touts and the channels they sell through continuing to make obscene profits at the expense of the general event-going public and of the live entertainment industry. The public interest lies in the Government providing a statutory framework for the industry to use in the interests of fans where needed. That is exactly what the Bill provides for.
Before I come to the substance of the Bill and go through its various clauses, I take this opportunity to thank my fantastic and hard-working team who have helped me on my route to introducing the Bill to the House. In particular, I thank two people: Mike Forster, my researcher, who only started in August, so the Bill has been a huge part of his job; and David Hopper, previously my intern but now studying to be a solicitor, who did a lot of the groundwork behind the scenes on legislation around the world.
The Bill addresses the problem I laid out. It creates two new offences, but that is not the starting point. The starting point is the creation of a voluntary designation scheme under which those involved in putting on live entertainment events can apply for protection from the unauthorised resale of their tickets. If they apply for protection, it would be an offence for an unauthorised individual to be concerned in the sale of a ticket for that event at a price greater than 10% above face value. For such purposes, face value is the printed value plus any service charges levied by the appointed ticket agent.
Such an approach broadly follows that set out in the Queensland solution, of which hon. Members on the Select Committee on Culture, Media and Sport will be aware. In Queensland, tickets for any event held at certain major venues are subject to price caps on unauthorised resale. I want to broaden that provision out, because it would not touch a large part of the market, such as theatre or mid-sized and small gigs, which are just as lucrative for touts as stadium events—if not more so, because they occur on almost every night of the year in towns and cities throughout the country.
Clause 1 sets out how that system of designation could work. I am open to its refinement or to alternative suggestions from the Government or other hon. Members in Committee should the Bill be successfully voted through today.
Clause 2 sets out the offences, the first of which I have already mentioned. The second offence is the advertisement for sale and taking of payment for tickets that have not yet been released by the primary retailer. The issue is separate from that of the secondary market, coming as it does before even the primary market. Websites spring up offering concert tickets—a recent example is the Take That tour—that the person running the site obviously does not even have. It is a risk-free business, because the person gets a lump sum of cash to buy as many tickets as possible to satisfy the orders, and simply refunds any orders that cannot be satisfied. In some cases, such sites have simply not delivered the tickets and done a bunk with the money. Other laws cover such activities, but why is it still legal for those sites to offer tickets that they do not have, at the risk of many consumers being left short-changed and without tickets?
Clause 2 sets out the sanctions for the offences, which include a fine up to the level 5 limit on the standard scale. There was a case for going higher than that, as for many major operators, £5,000 represents a drop in the ocean of their business.
Lyn Brown (West Ham) (Lab)
As my hon. Friend knows, I am particularly concerned about the issue of ticket touts and the Olympic games. I do not feel that £5,000 is enough of a fine to deter unscrupulous touts. Does she agree?
Mrs Hodgson
I certainly do, and I shall come on to the Olympic games shortly. One of my suggestions is that we work with the Metropolitan police unit set up to tackle the issue. I am sure that my hon. Friend will meet it in the course of her work as a local MP. That unit also feels that £5,000 is nowhere near a big enough deterrent. There are measures in place, which I will come to in due course, but perhaps my hon. Friend will intervene on me again if I do not cover her point in detail.
I want to state explicitly that for the worst cases, the confiscation, under section 70 of the Proceeds of Crime Act 2002, of assets and cash thought to have been garnered through this activity should be considered. Clause 3 assumes an exemption from the limitations where the proceeds of an auctioned ticket are to be used for, or donated to, charitable purposes. Any exploitation of that assumption would obviously be investigable under the Charities Act 1993.
Philip Davies
The hon. Lady talks about her constituents and mine being exploited by ticket touts, but does she not accept that one of the worst exploitations in the whole ticketing market is carried out by promoters who sell tickets and then refuse to exchange them or give refunds? Somebody who buys a ticket and then finds that they cannot go to the event may not get a refund. In the secondary market, viagogo has a viagogo guarantee; if anything goes wrong, it guarantees people their money back. Surely that is giving people a better service than the primary ticket market does.
Mrs Hodgson
I shall come to that point, too; I shall mention that I encourage primary sellers to offer a refund service within a certain period—a cooling-off period, as it were. A lot of other online purchases are covered by these periods—a certain amount of time in which purchases can be returned. I met Rugby Football Union representatives, and that body accepts returns of all its tickets; the same is true of most tickets from the All England Lawn Tennis Club for Wimbledon finals. Most of these places will happily accept the tickets back and give a full refund, because they know that the tickets are highly sought after. [Interruption.] Not all are, but some key tickets are accepted back; the Minister is nodding.
Mrs Hodgson
Some are, and later in my speech I shall say that as part of the legislation, there could be discussions with primary ticket sellers and event organisers about ensuring that they offer a refund facility.
Let me come back to the clauses of the Bill. Clause 4 relates to the sale of tickets on the internet by touts. It is not my intention to require the active monitoring of adverts placed on websites by sites’ administrators; after all, the practicalities involved would be prohibitive. However, where that monitoring is done, either by the event organisers or the police, the Bill places a duty on the administrators of those websites to take down in a timely manner any adverts thought to be in contravention of clause 1—that is what will happen with regard to Olympic tickets—and to co-operate with any investigations of touts who have been using their services. Again, failure to comply would incur a fine up to the level 5 maximum.
Clause 5 places a duty on the Secretary of State to consult the industry on two things. The first is the establishment of a voluntary code, under which primary ticket agents would offer refunds on tickets within a certain time frame, just as other internet retailers are subject to distance-selling regulations; that exactly covers the point mentioned by the hon. Member for Shipley (Philip Davies), who is now not listening to the debate. Secondly, the Secretary of State should consult the industry on whether the creation of an official ticket exchange facility would be beneficial for consumers—both those who have spare tickets to sell, and those who want them. Primary agents and sites through which the secondary market operates would be happy to engage in that process and work towards creating a fairer marketplace for fans. The remaining clauses relate to interpretation provisions and the commencement and jurisdiction of the Bill, and require no explanation.
The House will be interested to learn that, in drafting the Bill, I consulted officers from Operation Podium extensively, and I thank them for their input. Members with an interest in preparations for the Olympic games—my hon. Friend the Member for West Ham (Lyn Brown) has such an interest as a constituency MP—may be aware that Operation Podium is being carried out by a team in the Metropolitan police dedicated to tackling crime associated with the games. Half of that taskforce is concerned primarily with working with Olympic organisers and the industry to tackle touting of Olympics tickets under the powers set out in section 31 of the London Olympic Games and Paralympic Games Act 2006, which builds on provisions relating to football tickets in section 166 of the Criminal Justice and Public Order Act 1994. The 2006 Act decrees that no reselling may take place by unauthorised retailers, and sets up a ticket exchange facility whereby genuine fans can sell tickets on to other fans at face value. That is the ideal model, and could easily be replicated if the political will was there.
Officers from Operation Podium told me that the secondary market is estimated to be worth up to £1 billion a year—money that is not being used to support grass-roots sports, artists or investors in live entertainment. Much of it will not go to the Treasury, save for a bit of VAT on charges levied by the websites that the touts use. They also told me that as the previous Government and the then Select Committee on Culture, Media and Sport had effectively given the measure the green light, it has been increasingly exploited by organised criminal networks, both UK-based and international, as a result of the vast sums of money on offer. The implication is that a large portion of that estimated £1 billion is being used to bankroll other crimes, such as drugs, trafficking, money laundering and so on. Tackling touting would therefore choke off a stream of income for those networks, which is just one reason for the measure that has been suggested to me since I began work on it.
The Minister for Sport and the Olympics (Hugh Robertson)
I looked at this issue carefully when we were in opposition. It was alleged that ticket touting was used as a means to launder the proceeds of crime. I specifically asked the Metropolitan police about that about 18 months ago, when the then Select Committee and the previous Government were looking at it, and they said that there was no firm evidence to support that allegation. If the hon. Lady has that evidence, I urge her to bring it forward.
Mrs Hodgson
I certainly will do so, and I will pass on all the correspondence that I have received from the senior Operation Podium officer. I do not think he would want me to name him on the Floor of the House, but he has met officials from the Home Office—I know that that is not the Minister’s Department—to discuss the issue. I am sure he would be delighted to meet the Minister and explain how things have moved on quite considerably since the then Government and Select Committee looked at them. I have used the term “green light”. The decision that my Government, and the cross-party Select Committee made was seen as a green light to the criminal fraternity to begin to exploit the whole market. I am sure that the officer would meet the Minister in a flash, because the police need to get the situation right before the Olympic tickets go on sale in March. He would be thrilled to know that the Minister wanted to meet him.
Given the large amounts of money that could be made on premium tickets for major finals, the police do not believe that the sanction for individuals caught touting tickets for the Olympics—a level 5 fine, as I mentioned—is a sufficient deterrent. As I said, many people would regard it as just an occupational hazard, pay the fine and carry on straight away selling more tickets. That issue is addressed by clause 2(6), which emphasises prosecutors’ ability to consider whether the case should be looked at by a Crown court under section 70 of the Proceeds of Crime Act 2002, so that touts know that £5,000 is not the absolute maximum that they can be fined.
Mr Nuttall
Is the hon. Lady saying that she has decided to restrict the offence to level 5 because of an order under the Proceeds of Crime Act? Why not a higher level?
Mrs Hodgson
It could be higher, but a level 5 offence is laid down in the Olympics legislation, which I have used as the basis for the legislative framework of the Bill. It was deemed an appropriate level. However, as I said, officers at Operation Podium have said they do not consider that strong enough. They would like to talk to Ministers about the current legislation and the possibility of extending it to other entertainment industries, such as those I am speaking about.
Officers have also pointed out that the mainstream secondary marketplace—the websites that consumers tend to trust, such as viagogo, Get Me In! and eBay, as we have just heard—do not prevent professional touts from selling on their websites. A member of the public contacted me on Twitter when they heard about the Bill to say that they had once received an e-mail which was obviously intended for regular sellers on one of those sites, recommending that they buy tickets for certain events from the primary retailer purely in order to sell them on through such a site.
Whether that is true I cannot be certain, but there seems no reason for that person to lie to me. If it is true, it shows that at least one of those websites actively encourages touting and sees itself more as a broker than as a fan-to-fan exchange. Many of these organisations now call themselves ticket brokers. viagogo is the only one of those sites to get in touch with me about the Bill. Unfortunately I was not able to meet its representatives, but a member of my office, Mike Forster, did. They told him that a majority of their sellers sell fewer than six tickets a year so could not be considered big operators.
That is fair enough, but I still question whether a person selling tickets to six events a year is doing so as a genuine fan who cannot go to those events. Perhaps some of them might have been unlucky, and things seem to crop up whenever they buy tickets for a gig, but I would hazard that many of them are simply amateur touts without the time and infrastructure enjoyed by some of the bigger operators. That leaves the rest of the traders who are selling tickets to more than six events a year—there can be little doubt that those people are doing it as a deliberate money-making exercise, rather than just disposing of surplus tickets.
The police officers I met also raised the issue of how some of the big operators acquire so many tickets. What they said echoed some of the reading that I have done on the subject. The more IT-literate Members among us will know what I mean by a botnet. For those who do not, it is a network of computers—maybe the ones that we all have at home—which have been infected by a virus that allows the originator of that virus to control the terminal. It is a valuable commodity for hackers. Sometimes they are hired to carry out denial of service attacks on websites, and direct so much traffic to a particular website that it buckles under the strain. Members may remember that an anonymous group used this tactic to bring down sites such as PayPal and MasterCard after these withdrew their services to the WikiLeaks website just before Christmas.
The same method can be used in conjunction with numerous credit cards and bank accounts to evade the systems that primary retailers have put in place to stop one person buying up lots of tickets. I read an article on the technology news website The Register in November, which chronicled the case of a gang of touts in the US using Bulgarian hackers to buy scores of tickets automatically to gigs such as Bruce Springsteen, as well as Broadway musicals and major league baseball games. They were eventually indicted on charges of hacking, but by that time they had been operating for seven years, selling an estimated 1.5 million tickets, earning them $25 million. That is not small change.
This practice is of course illegal, but the vast profits to be made mean that it is an attractive and simple way for professional touts to do business, and it is very difficult to detect amid the usual high levels of traffic that a primary ticketing website gets when it first releases tickets for a major event. That illustrates that fans and touts are not competing on a level playing field when buying tickets, which is why such large numbers of tickets reappear almost instantly on the secondary market. That also illustrates why it is difficult for primary ticketers to take the lead in preventing touting. They already do a lot that they should not have to do, such as limiting the number of tickets that can be bought in one go and using word-recognition software, but the problem keeps getting worse. If computer whizz kids can hack into the Pentagon and GCHQ, finding a way around security on a ticket website is child’s play.
Those involved in Operation Podium have welcomed the Bill and see it as a necessary measure to tackle the criminal and organised elements that dominate the secondary market. They know that it can be policed—a point that I am sure Government Members are ready to bring up—because they are policing it now in preparation for Olympics tickets going on sale. They know that they can police it across borders because they are doing so now. The Olympics legislation does not limit jurisdiction to processes that happen solely on British soil, because the internet allows people to get around that easily. The Bill will follow that precedent. Those working in Operation Podium know that this is the right way to go, and I hope that their professional judgement will be taken into account by the Members.
Philip Davies
Does the hon. Lady not see that there is a potential problem with restricting the resale value to just 10% of the original ticket price? It is much easier to manage that on the internet than to do so for touts standing outside stadiums. There is no way to tell how much people in a local pub might have sold a ticket on for, so that the safeguards of the secondary market on the internet would be lost as the tickets were resold. We are not going to get rid of the secondary market—like prostitution, it will always be there—but it will just shift from the internet to the street, where there will be fewer safeguards for the purchaser.
Mrs Hodgson
As the hon. Gentleman says, we cannot get rid of the secondary market, just as we cannot stop people selling stolen goods, but because legislation says that receiving stolen goods is illegal, the vast majority of the general public do not participate in such activity. Once legislation makes it clear what is allowed and what is an underground activity, public opinion and hearts and minds will change. That will happen with the Olympics tickets and the Bill.
The hon. Gentleman suggested that 10% is not fair, but the tickets for the Olympics will have no mark-up at all. They can be refunded through the Olympics authorities, in which case they will go to a fan on a waiting list and no mark-up will be allowed at all. The Bill recognises that there are sometimes other associated costs, such as postage or credit card fees, which is why it would allow the 10% level, which is what Queensland permits, too. If we were right to do that for the Olympics tickets, I cannot see why it is not the right thing to do for other ticketed events.
Sajid Javid (Bromsgrove) (Con)
I am intrigued to know why the hon. Lady selected 10%, rather than 20%, 30% or 40%.
Mrs Hodgson
We had a long debate about that, and 10% was deemed to be sufficiently small that there would be no profit. The people we are talking about buy huge numbers of tickets, and I am sure that the hon. Gentleman can work out that the bigger the percentage, the more lucrative it is for the number of tickets they buy up. Keeping the percentage small restricts the amount of extra money they can make on top and so removes the incentive for touts to participate in that activity.
I must return to the substance of my speech, if hon. Members will allow me. The Bill also has wide-ranging support from the live entertainment industry. The hon. Member for Hove (Mike Weatherley) and I met several people involved in the business last night. In particular, I spoke to Ron Smallwood—the manger of Iron Maiden, no less—who has been trying to push the matter up the agenda for many years. He said:
“When Iron Maiden tickets went on sale late last year for an extensive arena tour of the UK this coming summer, thousands upon thousands of tickets at much higher average price than face value appeared across these secondary sites within days… Do they really expect us to believe that even a small number of these were bought by people who suddenly—the day after they bought the ticket—found they couldn’t go to a concert some 9 months away?... This is one story of many…it is sheer piracy and must be stopped to protect the real fans and the performers.”
Last night I also met the manager of the Arctic Monkeys, Ian McAndrew—
Mrs Hodgson
I know. It was very enjoyable, and Mr McAndrew, who welcomed the Bill, summed up the situation succinctly, saying:
“Ticket touting is a substantial and thriving parasitical economy, which exploits both music fans and those stakeholders who are investing in putting on live entertainment.”
I could not have come up with a better soundbite myself, and I like to think that I am a fully fledged politician.
I have also been working extensively with the Sport and Recreation Alliance, formerly known as the Central Council for Physical Recreation, because the issue affects sport as much as, if not more than, musicians and other artistes, and I thank Dom Goggins and James MacDougall for their help in putting the Bill together. For those Members who do not know, the Sport and Recreation Alliance is the umbrella organisation representing the national governing and representative bodies of sports in the UK, including the Football Association, the Rugby Football Union, UK Athletics, the Ramblers and the Royal Academy of Dance.
Touting mainly affects the big sporting showpieces, such as international games and tournament finals, which national governing bodies run, investing any surplus they make in promoting grass-roots and associated programmes that are aimed, in particular, at increasing participation and instilling healthy lifestyles among school-age children. Such bodies want those children to be able to experience top-class sport, like most live events, with their families, and that is why—to respond again to the hon. Member for North East Somerset (Jacob Rees-Mogg) and his point about the market price—they set the majority of their ticket prices artificially low.
Philip Davies
I am very interested to hear the hon. Lady say that sporting bodies set their tickets at ordinary prices that fans can afford. Does she not accept, as it emerged a couple of years ago, that the Rugby Football Union did not put any tickets at all on sale to the general public for the Six Nations matches? For someone who was not part of a local rugby club or one of the sponsors, there were no tickets available. There were no tickets for ordinary rugby fans to buy on the open market. That is hardly delivering much of a service to genuine fans.
Mrs Hodgson
I contest that point, because the reverse is true. That body would have released tickets to clubs throughout the country, and they are full of genuine fans—and full of genuine fans who participate in the sport. So that does give people the chance to access tickets and gives kids who play the sport the chance to watch their heroes, without the tickets going on to the open market, where the touts buy them up and sell them on to the highest bidder.
Ian Austin
Is my hon. Friend as perplexed as I am why Government Members would rather see touts buy up tickets in bulk, excluding ordinary fans from the market, than see those tickets available to ordinary fans through clubs? Is that not bizarre?
Mrs Hodgson
It is bizarre—but not surprising. I know that not all Government Members will agree, and if any who do not would like to intervene I shall be more than happy to give way.
Mike Weatherley (Hove) (Con)
Does the hon. Lady agree that what my hon. Friend the Member for Shipley (Philip Davies) just said reinforces the point that those who have the creative talent should be the ones who utilise the tickets in such situations? That is an exact example of our point regarding ticket touts: the person who provides the creative talent should have some control over who goes to watch such events. I am grateful to my hon. Friend for making that point on our behalf.
Mrs Hodgson
Definitely. I do not think that the hon. Member for Shipley (Philip Davies) quite realised he was helping our cause when he made that intervention, but I thank him for doing so.
The situation to which I referred opens up the market to touts. They buy tickets at the low price that the governing body has decided to sell them at, and by selling them on at a profit they deprive fans of lesser means of the opportunity to enjoy top-class sport.
Sarah Newton (Truro and Falmouth) (Con)
Does the hon. Lady agree that in this House we sometimes struggle to find issues of relevance to young people and their families? Here we have an issue that is incredibly important to teenagers who are passionately involved in sport, which we hear many Members applauding and wanting to promote. Those interested in the creative industries are also relevant. Is it not vital that we listen to and encourage those young people and reflect their concerns in the legislation that we make in the House?
Mrs Hodgson
Definitely; I certainly agree. I am so grateful for that intervention. If the hon. Lady wants to make any further interventions, so that it is not just my voice that everybody hears today, I would be grateful.
Faced with this situation, it would be no surprise if sports simply put up their prices to squeeze the touts out, but they do not want to do that—and as we have heard, we do not want them to do that and teenagers do not want them to do that. Sports need to create a sustainable level of interest, and pricing the vast majority of families out of top events would certainly negate that ambition.
What sports want is to be protected by a regulatory scheme such as the one set out in the Bill. Only the sports that experience problems with touts would opt in to be covered. That would mean that it would not be the overarching, top-down imposition on the industry that some Government Members may try to argue it is. It would mean the Government doing what the Government should do: stepping into the market when they are needed to ensure that it operates in the best interests of the majority, especially of young people.
Tim Lamb, chief executive of the Sport and Recreation Alliance, summed up the position from the perspective of the sports that he represents. He said:
“Ticket touts are simply exploiting sport and their gain is everyone else’s loss.”
He could not be more right. I have also had positive feedback from Festival Republic, best known for putting on the Reading and Leeds festivals every August, which has been campaigning prominently on this issue for years, and from See Tickets, a major primary ticket agent. See has worked with the organisers of the Glastonbury festival to ensure that passes for the festival are impossible to sell on, by requiring pre-registration and photographs of the ticket holder to be printed on the ticket. That is effective, but completely impractical for the vast majority of live events and not something that organisers should have to invest in.
The interesting thing about See is that it has nothing to gain from the Bill. It gets paid for selling tickets, whether to touts or genuine fans, yet it still sees the huge unfairness in how the secondary market has developed. Rob Wilmshurst, See’s chief executive, said:
“The live entertainment industry provides cultural and economic benefit to the UK and needs support. Ignoring this issue again will further diminish customer trust in the market and therefore the contribution the industry makes in general to the country.”
Again, that is an insightful comment from someone who knows the industry better than any of us in the Chamber, as has been the case with all the feedback that I have relayed to hon. Members today. If those figures and their peers support the Bill or any action to make the situation fairer, it is incumbent on the Government to listen to those calls and at least re-examine the impact that the secondary market is having on live entertainment.
Simon Davies, chief executive of the Teenage Cancer Trust, was also at the meeting that I had last night. I also met him and his team late last year to discuss the Bill. I put on the record my sincere thanks to them for their support and input into the process. For those Members who are unaware of the work done by the Teenage Cancer Trust or who think that it is fair for touts to take money away from such work, I shall explain. The trust funds and builds specialist units in the NHS that cater for the specific needs of young people and teenagers who suffer from cancer, bringing them together so that they can socialise with and support each other through the most difficult time that one could ever imagine. On top of that, the trust funds a network of teenage cancer specialists and nurse consultants, to pool knowledge and expertise and provide tailored support to the young people. I am sure that all hon. Members would agree that it is an exceptionally worthy cause.
Mrs Hodgson
I shall be interested to see how the hon. Gentleman is going to explain his opposition to that.
Philip Davies
The hon. Lady talks about the Teenage Cancer Trust, but as she is probably aware from her research, where tickets are sold for a charity event and the charity contacts a company such as eBay to point out how much money is going to the charity, it can request that eBay insists that the seller passes at least 20% of the profit back to the charity. The Teenage Cancer Trust is one charity that has done that with eBay, gaining a kick-back and an increase in its income from the secondary market—more than it would have done if the tickets had simply been sold on the primary market.
Mrs Hodgson
They should not necessarily have to raise that issue with eBay to get the money back. What is more, the charity told me last night that it does not want venues to be full of people who can afford to pay the prices that the touts charge for tickets. That is not the purpose. It wants genuine fans to come along—not venues full of elites, paying hundreds and hundreds of pounds.
Mrs Hodgson
No, I am going to carry on.
A large part of the fundraising activities to support the trust’s wonderful work is the running of a series of live entertainment events at the Royal Albert hall, featuring major artists and comedians who give their time for free to support the trust. Last summer, in its 10th year at the Royal Albert hall, it put on nine spectacular gigs featuring Suede, the Who, Noel Gallagher, the Arctic Monkeys, Jimmy Carr and Noel Fielding. As a big fan of talent TV shows, I would particularly have enjoyed seeing JLS, Diana Vickers and Lemar perform on the same night. I see that some Conservative Members are looking confused about some of these names. If they see me afterwards, I will certainly explain any pop culture references that they do not get. I might even be able to put together a compilation CD for them.
All these artists freely give their time—as well as that of their support crew—their energy and their talent to support what they view as a worthy cause, but it is not simply a case of artists giving up a night off. Doing a gig in London lessens demand for any other gigs in London that they might have planned close to that date. It could be that they cannot perform in London again for a few weeks or even months, so their participation is a genuine expression of their desire to help the cause. These big names could easily have done other things to earn money on the night they performed. The very fact that they are involved means that demand for tickets is huge.
Even though the Teenage Cancer Trust knows that demand for its events could allow it to sell the tickets at a higher price, it wants the events to be affordable to the average fan. As at almost all live entertainment events, tickets are sold at a price below what the market will bear, because organisers recognise the fact that the sustainable approach to putting on live events is to allow as many genuine fans as possible—and especially as many young people as possible—to attend. Quite apart from any moral or ethical consideration, that makes good business sense, building a long-lasting relationship with fans, which could not be achieved if they felt that they were being ripped off or could not even begin to get on the first rung of the ladder.
Regular-priced tickets to extraordinary events run by the Teenage Cancer Trust are put on sale with all the standard technological measures in place to combat touts. Like all other big events, they sell out in the space of a morning—sometimes in an hour or two. On the same day, without fail, hundreds of those tickets reappear on secondary websites at massive mark-up prices—well over double their face value.
Mrs Hodgson
No, I am going to carry on.
Assuming that about half the face value of the ticket represents the profit that the Teenage Cancer Trust makes on these events—by profit, I mean, of course, the money that goes to help young cancer sufferers—we can conclude that a tout selling for double the face value is making double the amount that the charity is making. Double face value, of course, is a conservative estimate. That price might be got by buying from a tout outside, part way through the gig, but anyone buying through internet channels either just after the tickets go on sale or just before the gig would be extremely lucky to get one for just double the price. Simon Davies said last night that some of the premium tickets went for four times their face value, meaning that the tout got six times the amount raised by the charity.
Do hon. Members really think that a situation in which private touts can earn more than the charity is satisfactory? Do they really think it right for individuals to be able to exploit the demand created by freely given hard work, the good will of a charity and the selfless giving of artists? I do not, and I would be interested to learn whether any hon. Members can intervene to explain why that is right, other than by just repeating what they have already said, which is, “It’s the free market.”
On that basis alone, I ask any hon. Members who have turned up to talk out the Bill with frivolous and self-indulgent speeches to think again.
Mrs Hodgson
I do not think that I am making a frivolous or a self-indulgent speech.
I ask such Members whether any of them have talked to their constituents about their intention to block this Bill. If they have, I would be interested to know what they heard. If they spent their Fridays out and about meeting their constituents, rather than habitually causing parliamentary mischief, they might have a better idea of what their constituents sent them to Parliament to do.
Philip Davies
I commend the hon. Lady for leading with her chin on that particular point, because all the surveys carried out on this issue fly in the face of what she thinks. I do not know whether her constituents are a rare breed compared with the rest of the country, but in an ICM poll of 1,000 people, 86% agreed that if they have a ticket to a sporting event, concert or other event, then they should be allowed to resell it. It is therefore the hon. Lady who is flying in the face of public opinion, not me.
Mrs Hodgson
My Bill would not stop them from being able to resell a ticket. My Bill would allow them to resell that ticket if they have genuinely bought it and genuinely cannot go to that gig or other event, and it would even allow them to resell it with a 10% mark-up for their trouble.
To bring my speech to a conclusion, my Bill sets out a blueprint for addressing the pernicious issue of ticket resale.
Graham Jones
I have wanted to make the following point for quite a while. There is a tax revenue issue in respect of secondary selling that needs to be addressed. A lot of the people concerned are operating in the black economy, making substantial amounts of money. The secondary market needs to be dealt with; we need to do something about it. Some of these people can be very friendly, but they are making an awful lot of money, and I make the assumption that certainly those who sell tickets outside venues do not pay any tax; rather, they are simply operating for themselves, cash in hand.
Mrs Hodgson
I thank my hon. Friend for raising that point. I did not address it at length, although I did touch on the fact that the Exchequer was not receiving any revenue from this billion-pound industry, apart from a small amount of VAT that some of the exchange sites levy. Every working person in the country has to pay tax through Pay-as-you-earn, but these touts, some of whom are making huge sums of money, are certainly not paying any of it.
Mrs Hodgson
I will not. I suspect that the hon. Gentleman might want to say, “Therefore, we should regulate touting and get these people to offer to pay pay-as-you-earn on their income.”
Mrs Hodgson
I will give way to the hon. Gentleman, in order to hear what he has to say.
Sajid Javid
I thank the hon. Lady for being so generous with her time and giving way for a second time. First, I want to say that this is the first Friday on which I have turned up. I am not going to make a habit of it, but I am very glad that I am present today, because the hon. Lady has made this a very exciting afternoon, whereas I was a bit worried that I might have been bored.
I want to say what my constituents might think of this proposal. I think they would believe that if they have genuinely and honestly come by a ticket and they wish to sell it, Government should impose no restrictions on what price they can sell it for, and on how they can sell it.
Mrs Hodgson
Well, such restrictions are law of this land now; that is what will happen for Olympics tickets. Someone who buys an Olympics ticket will not be able to sell it on for however much they choose, even though it is theirs. The Government have decided that those are premium tickets which are so desirable that they cannot just go to the highest bidder, and that instead they must be redistributed. A precedent has already been set, therefore.
Hugh Robertson
On a matter of fact, for a small number of major international tournaments it is a requirement of the bid that ticket touting is outlawed. For the Olympics, it is an International Olympic Committee regulation that has to be agreed to as part of the bidding. I am pretty sure, although we have not bid formally for a cricket world cup, that the same regulations would apply to an International Cricket Council 50-over cricket world cup. The same applies to football competitions, but that is for reasons of security, not ticket touting.
Mrs Hodgson
I thank the Minister for that clarification. If the IOC made that stipulation, it will have been for very good reasons. I sincerely hope that Members and the Government will consider those reasons, because they are as valid for the IOC as they are for this great country of ours.
We should remove the financial incentive that drives the activities of the major operators and give the police a way to go after those whom they suspect are involved in other criminality. The Bill is sufficiently light touch, I believe, not to harm any promoter, artist or other investor who does not wish their event to be covered. If they do not opt in to the scheme, or if they come to a commercial arrangement with a secondary retailer, the fans will know that that is an active decision. Nobody will be forced to opt in and have such regulation covering an event. If a commercial arrangement with a secondary retailer were made, at least some of the mark-up would go back to the artists or the sport.
Graham Jones
When it says on a ticket that it is not transferrable, can that be enforced in law? If that is the case, are the Conservative Members who have spoken encouraging people to break the law? The tickets that I buy pretty much always say, “This is not transferable.” Can my hon. Friend clarify?
Mrs Hodgson
As far as I am aware, tickets for the major charity events all have on them “not to be resold” or “not for resale”. Some will say that they are non-transferable. Yes, such people probably are breaking the law—certainly in the case of charity tickets—but there is no mechanism for bringing them to book.
Philip Davies
The hon. Member for Hyndburn (Graham Jones) has made a fair point. Some tickets do say that they are non-transferable and it is for those promoters, if they wish, to take to court anybody who they find in breach of that to enforce the non-transferable status. The hon. Lady and the hon. Gentleman might want to reflect on the reluctance of promoters to do so. They might discover that that reluctance is born out of the fact that a court would probably find such an approach to be a restriction in trade and that the term “non-transferable” was not enforceable.
Mrs Hodgson
That would be because there is no legislation on the statute book to say that that is a criminal offence. That is why people feel that they are powerless, and they are looking to us to do something about it.
Of course, I would prefer a blanket ban, like the one for Olympics tickets, but having consulted as widely as possible, I accept that it should be for individual stakeholders in the sector to decide how they want their tickets to be sold. I accept that there is a role for a secondary market, but that secondary market must operate in the interests of fans, not touts. Should the Bill go into Committee, I would be more than happy to talk to the Government about whether a different approach might work better. After all, the Minister has vast resources and scores of able minds, including his own, at his disposal. I am certainly open to working with him and his officials on a way forward, provided that the outcome is fairer to fans, artists and everyone else who invests in the live entertainment industry. I hope that he will not reject their concerns out of hand today.
If the Minister does reject those concerns, and if this Bill is not successful, the bad feeling about the secondary market, which is damaging the reputation of the entire sector, will not go away. The situation will not get better without Government intervention—and that of the Minister, I hope. I know that because I have seen how far the situation has developed since the Labour Government and the Select Committee last considered it and effectively, as I have said before, gave the touts a green light to continue by doing nothing to stop them. The Government and Parliament were wrong to come to that view, and I hope that a fresh set of Ministers will come to a different conclusion.
As touts got that green light, the primary market has naturally adapted to step in to the secondary marketplace —and why should it not do so? I do not condone the practices of Get Me In and Ticketmaster, if they are true, and I do not like the fact that artists such as Madonna auction premium seats or that some sports give their premium seats directly to secondary retailers, but one cannot blame them given the situation. If a tout can make that money, why should it not go to the people who put on the event? Indeed, it would be preferable to have it that way, particularly in the sporting world, where extra money means extra grass-roots investment. That is not an abstract hypothesis about how the primary market will go. That is what is happening right now, with many events at the O2 arena selling premium tickets at much higher prices than regular tickets.
My Bill seeks to limit the involvement of touts in the ticket market, which will provide less of a reason for anyone in the industry to feel that they must resort to such practices, thereby increasing the likelihood of a genuine fan being able to buy a ticket at face value with their saved-up pocket money. The only people who benefit from the current situation are a few professional touts. Whether they are linked to other crimes, and whether they use hacked computers or other underhand methods to buy their tickets, is beside the point. However they do it, they are manipulating the supply of tickets to exploit demand created by the talent, hard work, good will and investment of everyone involved in putting on live entertainment. Despite contributing nothing, they reap vast sums. As the manager of the Arctic Monkeys has said, it is “a parasitical economy”. It is the most distasteful expression of free market capitalism, because it creates a few big winners and countless big losers. If enacted, the provisions would be popular, because they are a proportionate attempt to redress that imbalance. I commend the Bill to the House.
Mike Weatherley (Hove) (Con)
I refer hon. Members to my entry in the Register of Members’ Financial Interests.
I congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson) on introducing the Bill and on allowing the House to have a lively debate.
Before I get on to the reasons why I—perhaps surprisingly—support the Bill, a little background is in order. At university, I was fortunate enough to attend a speech by the late Sir Keith Joseph, who changed my life. The speech was about free markets and, although I was studying business studies, I had the preconception that it would be boring—how wrong I was, because I was blown away by the arguments. I am a Conservative, because I believe that the free market is far and away the best method by which efficiently to allocate resources. Risk needs to be rewarded, and consumers should have the ultimate say on how products are delivered and at what price. In 90% of cases, the market should decide.
My second interest in the Bill stems from my love of live music and sport. Music and other forms of creative expression are vital to the British economy. I have delivered a number of speeches in the House about the importance of the music industry to the country for overseas earnings and suchlike. The performing arts and sport sustain employment and tax revenues, which benefit all our citizens. There is, however, a blight that creams off revenues by exploiting an imperfect market and contributes nothing to the creative copyright holders. That blight consists of those who profiteer by exploiting excess demand.
Ticket touts who take advantage of availability do nothing to promote our creative industries, and this is one of those rare examples where the Government need to step in to protect creative persons. There are five conditions for the formation of a perfect market, such as perfect knowledge of alternatives and so on. One of those conditions concerns the availability of supply. That is fine for physical products, which can be increased or decreased according to demand—for example, when manufacturing output is turned up, supply increases and the equilibrium price is found again. However, where supply is based on an individual, it is impossible for the number of hours in the day or the number of days in the year to be increased. A performer cannot be in two places at the same time. An imperfect market is then created, and prices rise due to a shortage of supply.
The question is whether intermediaries should be able to take advantage of that imperfection against the wishes of those providing the service. I certainly hope that everyone present in the House today recognises the value of copyright protection to the creative industries. If anyone does not, I suggest that they review the conclusions of the Gowers report, which agrees that intellectual property, and thereby the wishes of the creative person as to how their product is produced, marketed and used, should be protected. The copyright owner should retain control of their product.
Philip Davies
The problem with this line of argument—the comparison with general intellectual property—is that with other forms of intellectual property infringement, the person producing the goods or services loses out. With ticket touting, the promoter does not lose out because if they are selling 50,000 tickets at £20 each, they are hoping to get £1 million, and whether or not a ticket tout buys those tickets and sells them later they still get their £1 million, so they do not lose out financially.
Mike Weatherley
I am grateful to my hon. Friend for making that point, to which I shall give a specific answer later.
The issue is who owns the product that people are going to see. My view is that the copyright owner who produces the good, whether it is a concert or a sports event, is the owner and should have control of it for various reasons. There are many reasons why a business might want to price at below full market value—in specific sectors, market penetration is one such reason; reward for loyalty is another. Football is a good example. There is differential pricing in stadiums, but clubs depend on their regular, grass-roots fan base, and this is recognised in the lower prices in certain sections. Many clubs have a young persons’ section at half-price. They could easily charge full-price for that section, but they do not. If the argument of free market enterprise were applied to those tickets, young people would buy them and sell them on at a much higher value, but the club does not want them to resell those tickets at a higher price, as it knows they could, because it wants to encourage a loyal fan base and benefit the community.
Philip Davies
It is interesting that my hon. Friend uses football as an example because as the Minister said, the restrictions on ticket touting in football are to do not with ticket touting but security. Even so, an increasing number of clubs not only allow but actively encourage season ticket holders to resell their tickets through the secondary market when they are unable to go to a particular match.
Mike Weatherley
I have spoken to various football authorities about this, and the reason they allow the selling on of season tickets is that they recognise that people must have a mechanism for reselling if they cannot go to a match. However, the football authorities would not want someone to sell their season ticket for a particular match at 10 times its value. I happen to be going to a Chelsea-Manchester United match later in the season, but I have not paid 10 times the value of that ticket: I have been given it by a season ticket holder who cannot make the match. That is entirely proper.
Graham Jones
The hon. Member for Shipley (Philip Davies) raised the security issue, and I am somewhat confused by the way he contradicts himself. Surely, with football, there is a problem with ticket touting allowing people with football banning orders to access a match moments before it starts or while it is going on. However, that point is contrary to the one he made about the restraint of trade, which he says should not be allowed. Does the hon. Member for Hove (Mike Weatherley) agree that it is important to have some control over touting? When considering access to football grounds and the potential for violence, it is important that touting is legislated against.
Mike Weatherley
I am grateful to the hon. Gentleman for making that point. It is entirely accurate to say that the selling on of football tickets is problematic because of the segregation of supporters. That is well recognised by all concerned and is just one reason why the promoters of any event might want to restrict to whom tickets are being sold. There are other reasons, and I shall give a good example of one that relates to Conservative Members in a moment.
An hon. Member explained to me that that restriction would not apply to house building—that a developer who builds houses should be free to sell to people, and those people should be free to sell on again. Of course that is true, but if, for charitable reasons, the developer wants five of those houses to go to Cancer Research nurses, they are quite within their rights to say, “We will only sell those on in future to Cancer Research nurses” and restrict the free market into the future as to where those houses go. I see that as no different from the owner—the creative industry person who creates the product—deciding what they want to do with their product into the future. It is essential, therefore, that the owner of the skill or creative talent, or supplier, has a say in who the end user is—but not in all situations. The Bill does not cover every event, and the promoter or band who wish to cover their event have to so designate it.
It is impossible to restrict onward selling without having a mechanism for refund, and the Bill not only allows for a refund but allows on-sale at a premium, be that 10% or double face value or whatever has been decided in the final stages. I am going to a concert tonight—The Cult at Hammersmith Apollo—and my colleague has a spare ticket. He is going to on-sell that ticket at face value, and he should be able to do so. I see no reason why, in that situation, he should not. There are no crowd control or exploitation issues.
However, our discussion relates to those ticket agents that advertise sporting or music events later in the year—sometimes before tickets are even on sale—at 10 times face value. They buy in their hundreds and sell on at huge profits. It is possible to buy Chelsea tickets for later in the season right now, although they are not on sale—and incidentally, as everyone knows, the premier league has a rule on selling at face value only. That is a clear example where the free market for ticket sales is not advantageous. We have mentioned the Olympic games; a non-profit clause is enshrined in its arrangements as well.
There are other cases where the issuer reserves the right for tickets to be non-transferable—train and plane tickets, for example. I expect that when hon. Members sell tickets for a fundraising dinner, they reserve the right to object to a replacement being issued. Can they imagine tickets for the forthcoming Conservative ball, which are £400 each to raise funds for the party, being bought up by touts and sold on at £1,000 to lobbyists, or others, whom they may not necessarily want in their midst? Of course not. The point is that the person giving the function restricts the number of tickets, and insists on the person buying attending or getting permission to transfer. It is right and proper that the person providing the event has some say in that.
On the face of it, ticket touts provide a free-market service, but scratch a little deeper, and for some events that is a misguided and counter-productive service. The touts are exploiting a market abnormality to the detriment of the wishes of those who put on the event.
The proposals in the Bill are fair, in that selling at a small premium is allowed and not all events are covered. Only those wishing to be bound by the rules need apply. If the artist is happy for their tickets to be sold at a premium, that is fine. I slightly disagree with the hon. Member for Washington and Sunderland West, who said that Madonna would sell at a premium on an auction. I think it right and proper that she be allowed to do so; that is a free-market thing, and she has control of her product to do what she wants with it, but if she has decided that she wants to sell it at a certain price, that should be respected by the copyright owner.
Sarah Newton
Does my hon. Friend agree that we have rightly, as a coalition Government, focused on wanting to support free enterprise, to create a lot more jobs in the private—
Mr Deputy Speaker (Mr Nigel Evans)
Order. The hon. Lady should be speaking through the Chair. I find it difficult to hear otherwise.
Sarah Newton
I am sorry; of course, Mr Deputy Speaker.
Quite rightly, the coalition Government have focused on supporting small business, private enterprise and growing jobs in the private sector. Does my hon. Friend agree that the Government should be listening to such an important and growing sector of our economy as the creative industries? They have identified this practice as being problematic and standing in the way of them growing this successful business and creating new jobs in our economy.
Mike Weatherley
My hon. Friend makes a very good point. If a business wants to develop its products, it might underprice in the market for a number of reasons, as I have said, one of which could be market penetration. If someone wants to develop a fan base and encourage people who might not necessarily come to watch their events or try their commercial products, they will often use prices far below market value to get people to try them for the first time. A lot of ticket promotions do that specifically for concerts, sporting events and so on. Small businesses and small events that are trying to grow their business can have very good reasons why they might want to carry on a market penetration for a long time into the future. I thank my colleague for her intervention.
The price that the creative copyright holder wants to charge should not be a judgment for the House or any external body. If a biscuit manufacturer wants to give away biscuits for sampling purposes, we should respect that. We should not say that touts can buy them up and sell them on. As my hon. Friend said, we should help that business to develop its market. We should not be judgmental about what it does for commercial reasons. Let us not kill the goose that lays the golden egg. Let us listen to the music managers, football clubs and those who provide creative services—I have met no one who is against this measure—and get behind the Bill to the benefit of the country in the long term.
Ian Austin (Dudley North) (Lab)
I congratulate my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson). She is a brilliant MP and a formidable campaigner. I remember her relentless and successful campaign to pilot and promote free school meals to all children. Now she has ticket touts in her sight. If I were them, I would be very afraid. I completely understand why she has introduced the Bill. She is in touch with the people whom she represents. She understands ordinary people’s worries. She has listened to the concerns of ordinary sports and music fans who want to get a fair crack of the whip when buying tickets to watch the bands whom they love or the teams whom they support. As she said, every parent knows just how keen their kids are to see their favourite groups or watch their sporting heroes, but they are being priced out of the market by people who make mass purchases and exclude ordinary fans. For that reason, we should look very closely at what she proposes.
It is fair to say that many organisations in sport and the arts—as well as charities such as Teenage Cancer Trust, to which my hon. Friend has referred—are concerned about this issue. Many governing bodies have told me that they want proposals that will ensure ordinary grass-roots fans have access to tickets. I, too, want to ensure that ordinary fans have access to the primary market and that tickets are not bought up in huge numbers the minute they go on sale by organised gangs in the way that she described. I believe in open, free and fair competition. I want free access to fair markets. Free markets are underpinned by open access and fair competition. It is particularly important to ensure that any suggestion of organised criminals being involved and any question of links to the funding of criminal activity or laundering money for criminal operations are investigated and prevented immediately.
Philip Davies
On fair access, may I give the hon. Gentleman a scenario to find out what he makes of it? I might really want to see an event, but am unsure whether I can do so because of my work or family commitments. By the time I have sorted them out and rung up, the event might be booked up because it has sold out in a flash. Does he not recognise that, as a true fan, my only possible opportunity to go to that event would be provided by some form of ticket tout? If no ticket touts were available, I would be excluded from that event. They might charge a price that I do not want to pay—that is my choice, and I can make that decision—but they are helping genuine fans who have other commitments when tickets go on sale to buy them.
Ian Austin
I understand that, like me, the hon. Gentleman was educated in Dudley, but given the nonsense that he is speaking today, he wasted his time there. The Bill would not eradicate the secondary market. It would not prevent tickets from being sold on; it would simply limit the price. That might or might not be the right thing to do, but is he saying that the secondary market is perfect and that he can guarantee that there is absolutely no abuse, fraud, illegality or criminal behaviour? Is he saying, for example, that no one prints fake tickets, which cause all sorts of problems?
Such issues should be considered, but the hon. Gentleman and his colleagues, with their juvenile antics—the usual nonsense and behaviour that bring the House into disrepute every Friday—are preventing them from being examined. My hon. Friend’s proposals might not be the right ones, but we should consider them in Committee. We should examine the Bill, listen to all the experts and take appropriate measures, but the hon. Gentleman is preventing that from happening.
Philip Davies
I am rather surprised at the hon. Gentleman’s fake outrage, because I posed a perfectly legitimate question. Most people watching would conclude that his reaction was juvenile. He talked about fake tickets being printed, but surely someone in his position would accept that such fraud is already illegal. If he is not aware of that, I worry for him in his new position.
Ian Austin
Of course such things are illegal, but they are happening. We should examine—[Interruption.] New technology and all sorts of things change markets all the time. We should not say that we are not prepared to look at the issues to see whether changes ought to be introduced—whether regulation might work—to make the markets operate more effectively and give ordinary fans greater access to them. The hon. Gentleman is trying to prevent that by talking the Bill out. That is a disgrace and he should be ashamed of himself.
Sajid Javid
I am confused about the hon. Gentleman’s position. He started by supporting the Bill, or implying that he supports it.
Sajid Javid
Perhaps not, but the hon. Gentleman can correct me. He talks about free and fair markets, but he cannot support a Bill providing for a maximum 10% premium on resale and at the same time support free and fair markets. For the record, can he tell us the view of the official Opposition? Do they support the Bill or not?
Ian Austin
The hon. Gentleman has obviously not been listening. I said that I completely understand why my hon. Friend the Member for Washington and Sunderland West introduced the Bill. I believe in open, free and fair competition. I want ordinary fans to have proper access to the markets. There is clear evidence of abuse, with suggestions of organised criminal activity, people printing fake tickets and the rest. I am interested in looking at measures that could best deal with such things, opening up markets and ensuring free and fair access for ordinary fans. As I said, my hon. Friend’s proposals might do that, but there are strong views out there, so we should listen to all the experts and take a view. However, the hon. Gentleman and his colleagues are trying to prevent that debate by talking the Bill out.
Sajid Javid
With respect, I am not talking anything out, I am debating.
The hon. Gentleman is not making any sense. It is not clear what he thinks. Presumably, he had time to consider the Bill before coming to the House today. Does he support it or not? The question is straightforward. Hopefully, he can give a straightforward answer.
Ian Austin
I support the Bill going into Committee so that it can be examined in detail and we can find solutions to the problems identified by my hon. Friend. That is pretty clear from the three times that I said it.
I am interested in whether registration or membership schemes—selling tickets through clubs—can promote access for ordinary fans. I am interested in how new technology can facilitate the sale or resale of tickets free from fraud and illegitimate or illegal ticket touts. I want to explore how safety and security can be enhanced to tackle people who rip fans off through ticket fraud or online scams—selling tickets they do not have, printing fake tickets or claiming that a ticket is for a seat at the front when it is actually right at the back.
I urge the Government to allow the Bill into Committee, so that we can discuss it, examine the detail, listen to all the experts in sport and the arts, talk to people in the ticket trade and look at how new technology can promote safety and security. As I said, there might be other ways of tackling the problems and safeguarding access to live entertainment and sport.
Times are tough now for ordinary, hard-pressed working families. We have a good case for seeing how we can open up the market and ensure that exciting and enjoyable events are not taken out of the reach of ordinary people. I pay tribute to the extraordinary campaigning energy of my hon. Friend and wish the Bill fair passage to Report. The system is clearly not perfect. The market should be opened up and any illegal or criminal involvement should be tackled.
Sajid Javid (Bromsgrove) (Con)
I congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson) on bringing the Bill forward. She has raised important issues that are worthy of discussion in the House. My understanding, although I may be corrected, is that the issue has come up before through private Members’ Bills in previous Parliaments. However, in the interests of a full debate, it would be good to make a robust argument against what she proposes.
The Bill is flawed, in that it really does not understand the most basic laws of supply and demand. I do not think that one can buck the free market, or that it is the role of Government to get involved in free transactions. Let me make it clear that the issue is not about fraudulent transactions or criminal activity; as my hon. Friend the Member for Shipley (Philip Davies) said earlier, such activity is already illegal. This is about people legitimately getting hold of tickets in an honest way, and not prohibiting them from trying to sell those tickets at a profit, whatever that profit might be. In fact, such activity is probably an excellent example of the enterprise culture and of what a classic entrepreneur does, as long as—I emphasise this point—they get the tickets legitimately.
Ian Austin
Does the hon. Gentleman think that there are any problems associated with the secondary market at the moment? Can he guarantee that there is no involvement in criminal activity or fraud, and no online scams? If he cannot guarantee that, does he think that any consideration should be given to dealing with those problems?
Sajid Javid
I thank the hon. Gentleman for that intervention. Of course I cannot guarantee that; no one can guarantee that any market is free from criminal activity. The Bill will do nothing to stop criminal or fraudulent activity, because even if one put restrictions on sale prices and made certain practices illegal, it would not mean that any criminal or fraudulent activity going on at the moment would stop.
Sajid Javid
I will in a moment, but I shall just finish answering the hon. Gentleman’s point.
Philip Davies
The hon. Member for Dudley North (Ian Austin) is trying to talk the Bill out.
Sajid Javid
Yes, and we should not do that. The hon. Member for Dudley North (Ian Austin) has had ample time in which to speak. The point that he is missing—this is why I was confused by the speech that he gave from the Opposition Front Bench—is that if the concern is about criminal and fraudulent activity, and activity that is clearly wrong, there are already laws in place for that. If those laws are not strong enough, or Members think that changes should be made to them, that is a completely different argument from what is being proposed today. One of the key proposals in the Bill is to limit the resale price in the secondary market at a premium of only 10% of face value.
Mrs Hodgson
Does the hon. Gentleman not recognise that limiting the price at which a ticket can be resold will remove the incentive for people to buy huge numbers of tickets, and will remove the large amount of profit in, and the size of, the secondary market? There is nothing wrong with reselling tickets, but we are trying to limit the amount of profit that can be made. Also, does he not recognise that no income tax is paid on any of those earnings by the entrepreneurs he talks of?
Sajid Javid
The hon. Lady seems to suggest that anyone who earns a profit over a certain margin must be engaged in some kind of criminal or fraudulent activity, and that is clearly not the case. I hope that she accepts that, as has been mentioned, many ticket touts—perhaps the vast majority—are legitimate, have got the tickets in an honest way, and are not engaged in any kind of criminal or illegitimate activity at all.
Jacob Rees-Mogg
I wonder whether my hon. Friend might cast his mind over the issue of people buying up large numbers of tickets. Is that not actually enormously to the advantage of promoters of events, who are guaranteed a certain number of sales—the tickets may not be sold on subsequently—and get their cash flow early on? It is not simply a case of the practice disadvantaging the personal shopper.
Sajid Javid
My hon. Friend makes a fair point. In some cases, that can be advantageous, but I accept that where there is clearly very high demand, there are sometimes good reasons to restrict the number of tickets that an individual can buy.
Mike Weatherley
Does my hon. Friend agree that the people who should be making that judgment are the music promoters and managers, who almost unanimously say that the point made earlier by my hon. Friend the Member for Shipley (Philip Davies) is totally inappropriate, and that they do not like that way of selling? They prefer to sell directly to the fans, rather than to those intermediaries who distort the market for the type of person they want to come to the concert.
Sajid Javid
It is a varied market, and different promoters and creative acts will wish to sell their tickets in different ways. It could well be the case that they do not like selling tickets in bulk—that is their choice; no one is forcing them to do so—and if they wish to sell individual buyers a maximum of two or three a time, that is their choice. Equally, the price at which tickets are sold is their choice, and if a company or creative act is genuinely concerned about that, they always have the option to increase or reduce the price. That is how the free market operates.
Mike Weatherley
Is that not exactly the point? The copyright holder themselves can make that judgment. Many promoters restrict ticket sales to four or six at a time, only to find that 100 are on display through the software programmes that the hon. Member for Washington and Sunderland West (Mrs Hodgson) mentioned and that offer multiple ticket buying in different formats. If the promoter wants to offer a maximum of six to an individual, he should be allowed to do so.
Sajid Javid
I take the point that my hon. Friend is making, but I have already answered that question.
Ticket resellers act like classic entrepreneurs, because they fill a gap in the market that they have identified. They provide a service that can help people who did not obtain a supply of tickets in the original sale to purchase them for sporting and cultural events. As long as those tickets have been acquired genuinely and lawfully, it is an honest transaction, and there should be no Government restriction on someone’s ability to sell them.
Ian Austin
I am grateful to the hon. Gentleman for giving way again. Given that he was unable to guarantee that nothing could be done to improve the primary or secondary markets, will he guarantee that he will not talk out the Bill, so that it can go into Committee and these issues can be discussed properly by Members on both sides of the House?
Sajid Javid
I did not say that there could not be any improvements in the system. I have no intention of talking out the Bill, but I cannot guarantee the intentions of other hon. Members.
The hon. Member for Washington and Sunderland West referred several times to real or genuine fans, and to the fact that they cannot buy tickets because they are priced out of the market. She referred, too, to speculators. I do not understand what she meant by that, as I shall explain, and perhaps she will be able to clarify what she was implying. Her argument sounded far more anti-capitalist than anti-tout.
Let me explain by way of the example of a Wimbledon final. Only 10,000 tickets are available, but demand is three times as high—30,000 people want a ticket, which is not atypical by any means. If the tickets are priced at £20 a head and are sold in a secondary market at five times face value at £100 a head, who is being exploited and how? I assume that the hon. Lady would say that the ticket tout is exploiting people in that example by making a profit of £80.
Perhaps that could be avoided if the club priced the tickets at the outset so that there was not a mismatch between supply and demand by selling them, for example, at £100. If that is what the hon. Lady is suggesting, the corporation or company behind the club or event would make the extra profit. I would have thought that, as a socialist—I assume that she is a socialist—she would welcome the small man or the honest ticket tout who has bought their tickets legitimately and offers them for sale, making a profit for themselves, as opposed to the corporation making those profits.
Let me use a personal example. I was brought up in a part of Bristol called Bedminster. It is a working-class neighbourhood and, as a child, I lived near the Bristol City football ground. Many times at weekends I would pass the ground and see ticket touts trying to sell tickets. I would hear them offering their tickets, sometimes at prices that were multiples of the face value. Many of the touts were ordinary hard-working people. One may not have liked the look of some of them, and they may have seemed unsavoury to some people, but they were ordinary people providing a service in a legitimate way. I would rather be on their side than on the side of the large corporations.
Mrs Hodgson
The hon. Gentleman is talking about those salt of the earth-type individuals selling on tickets and doing a hard day’s graft for their little reward, but are they paying any income tax like the rest of us? Is he condoning black market activity? Does he think it is right for those salt of the earth types to stand outside selling tickets at Bristol or wherever, at mark-ups that my hon. Friend the Member for Dudley North (Ian Austin) considers rather high, and without paying any tax on that, unlike the rest of us?
Sajid Javid
I think the hon. Lady will find that most secondary market sales, such as those on eBay, are exempt from income tax and other such charges. If that is her concern, there is no reason to single out tickets, as opposed to other items that might go on sale in the secondary market. Although she described ticket touts as the salt of the earth, that is not a phrase that I used. I am not suggesting that some of those characters might not look unsavoury or that they might not have a tattoo on their head, for example, but that does not matter. As long as they have tickets that they acquired legitimately and they wish to sell them at a price that is higher than the face value, the Government have no responsibility to intervene.
The interests that the hon. Lady is representing are probably those of the chattering middle classes and champagne socialists, who have no interest in helping the common working man earn a decent living by acting as a middleman in the sale of a proper service.
Ian Austin
Setting to one side the ludicrous fantasy that tickets at Bristol City have ever gone at many times their face value, which is a total invention, the hon. Gentleman’s point is interesting. If he is saying that ticket touting ought to be allowed at football games, how could he prevent the admission of people who are subject to banning orders for causing trouble at football, how could he ensure the proper segregation of fans, and how could he guarantee public order in the grounds? He ought to be aware that ticket touting at football is illegal for precisely those public order reasons, as I am sure the Minister will confirm. Has he discussed with the police his desire for ticket touting to be allowed at football, and sought their advice?
Sajid Javid
I am sure the hon. Gentleman is aware of the current rules and regulations surrounding the issue. We are debating a Bill that seeks to change those rules and regulations. Perhaps it would be easier if I explained the role of a middleman using an example that is not as sensitive as that of tickets.
The hon. Gentleman may have sold one of his used cars in the past. If he wanted to sell a car, he could try and sell it himself, but most people would try to find a middleman to help with the process. They might go to a car dealer. Their car might be sold for £1,000 to a car dealer. If they learned that the car dealer who purchased their car and helped them went on to sell it a few days later for £1,500, they would not say that the car dealer had ripped them off by £500, because he had provided a service. A middleman in a ticket transaction provides a service no different from that, as long as—I stress this—he had acquired the tickets honestly. That is why we have a secondary market in the sale of tickets and will continue to do so. So long as the individual involved in secondary market transactions has acquired the tickets legitimately, they are providing a service that deserves to be rewarded.
The hon. Lady should understand, as has not been made clear today, that not everyone has the time to queue for a ticket, or leads a well-regulated life or knows months in advance, when tickets might go on sale, whether they can attend an event, and not everyone knows privileged insiders who can get hold of tickets that would otherwise be difficult to obtain. However, everyone, to a greater or lesser extent, has money. If a person wishes to devote a large part of their disposable income to see something that is disproportionately attractive to them, why should anyone else care and why should it be their business?
The hon. Lady seems to believe that touts are ruthless exploiters whom no one in civilised society should countenance. Nothing could be further from the truth. If the tout has come by his tickets in an honest way and offers a genuine service with a real risk of loss in the pursuit of profit, that is not a problem. As someone who believes passionately in the virtues of the free market and who is on the side of the ordinary, common working man, I respectfully oppose the Bill.
Philip Davies (Shipley) (Con)
I congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson) on bringing forward the Bill. I think we ought to be aware that ticket touts can lose money—on many occasions they do—as well as earn it. I will give an illustration: if a ticket tout had decided to buy up tickets for the Labour Benches today, hoping to sell them on at a profit to the supporters of the Bill, they would be badly out of pocket. What surprised me from the outset is that the hon. Lady, despite making such a passionate speech on how annoyed her constituents are about ticket touting and how passing the Bill was the most important thing anyone could do, has spectacularly failed to persuade any of her colleagues to attend. Had they considered it at all important, there would be at least 100 of them here to support a closure motion and guarantee that the Bill went into Committee, which the hon. Member for Dudley North (Ian Austin) is so anxious to see happen. I am afraid to say that I will not take any lectures on how important the Bill is to people across the country when the hon. Lady cannot even persuade her colleagues of its benefits.
I agree with my hon. Friend the Member for Bromsgrove (Sajid Javid): it struck me that the hon. Lady’s speech was more against capitalism per se than against any kind of ticket touting. She seemed to indicate—she will no doubt correct me if I am wrong—that to sell a ticket at a profit of more than 10% was verging on criminality and that it was completely unacceptable and outrageous. If it is the view of the Labour party that anyone who happens to sell a product at a profit of more than 10% is verging on criminality and is totally undesirable, it seems to me that many people will be interested to know that.
If the hon. Lady goes to any clothes shop and asks for the profit margin on the clothes being sold, she will find it is considerably more than 10%. In fact, she will find that the profit margin on anything in any shop will be considerably more than 10%. She seems to be saying she does not believe in the business world or capitalism at all, and the hon. Member for Dudley North, who is pushing for the Bill to go into Committee, seems to be endorsing that approach. I knew that new Labour was dead, but I had not realised it was dead to that extent. This really is old Labour with bells on.
Mrs Hodgson
I know that the hon. Gentleman is having sport with me, because he knows I am not saying that people should not be able to charge a mark-up of whatever percentage they choose in shops. That is not what I am saying at all. The principle would apply specifically to tickets for events whose organisers would choose to opt into the Bill. It would not cover every event, as the promoter would have to choose to opt in to be covered under the Bill’s proposals and so control the amount of money that those tickets are sold on for. That would mean that there would be more chance of genuine fans buying them at source. It would not stop genuine fans buying tickets at the last minute either, because genuine fans would still be able to get them through a resale, but there would not be the huge market that encourages tickets to be bought up at source within minutes of their going on sale.
Philip Davies
I heard the hon. Lady’s argument the first time around; I was not persuaded by it then and I am not persuaded by it now.
Before anybody suggests that I am going to talk out this Bill, I should say that it is absolutely my intention—in fact, it is a guarantee—to speak for less time than the hon. Lady did when proposing it. So I hope there will be no arguments about that.
Jacob Rees-Mogg
My hon. Friend will have to do that, because this particular business ends at 2.30 pm so the time available is obviously less.
Philip Davies
My hon. Friend spotted that, too, but the situation is beyond my control. If you, Madam Deputy Speaker, tell me—not for the first time—that I have to conclude my remarks, I shall accept your ruling with the good grace that I always show.
Ian Austin
I can assure the hon. Gentleman that new Labour is not dead. I said I believed in free markets, open competition and fair access for ordinary people. I want to ensure that the organised bulk-buying of tickets which excludes ordinary fans is prevented, so that ordinary people get a fair crack of the whip when it comes to buying tickets. When he thinks about it, he will find that that is a more free-market approach than his. It is the Opposition who are standing up for open access, competitive markets and free competition. If he believes that there are no problems at all with secondary markets, fair enough; but surely he can see that there must be some ways of improving them. My hon. Friend’s proposal might not be the best way of doing so, but I simply say that we should get the Bill into Committee so we can debate it.
Philip Davies
That is a perfectly fair point, but the hon. Gentleman did not manage to persuade his Government to adopt that approach when they were in office, as they killed the Bill when it last came up, so I am not entirely sure why anybody who is against it now should be considered a tyrant, because his Government killed exactly the same Bill in the previous Parliament.
New Labour clearly is not dead, because the hon. Gentleman seems to think that just by asserting something, it is therefore true: so if he says that he believes in the free market, it is therefore sufficient proof that the Labour party believes in the free market. I take a rather different view: I think our policies have to reflect our assertions. We cannot just say, “I believe in the free market” and then pass laws that completely fly in the face of the free market. I ask him for some consistency, so that his lofty words about believing in the free market might be followed up by action and policies that support them. I am afraid, however, that I cannot see any of that happening.
Mr Deputy Speaker, you are in a privileged position in this debate, because you were also on the Culture, Media and Sport Committee with me when we considered this matter two or three years ago. We conducted an interesting inquiry. The hon. Lady was absolutely right: not only did we find the secondary market to be perfectly legitimate, but her Government found exactly the same. She did not mention this point, but she will also be aware that the Office of Fair Trading has always made it clear that the secondary market for tickets is not only not a bad thing but actively works in the consumer’s favour.
That brings me to my hon. Friend the Member for Hove (Mike Weatherley), who says that the people who own the rights to an event—the promoters or, in his words, the holders of the intellectual property—should be free to determine such matters. That is a perfectly legitimate and respectable view to hold, but I do not agree. I was encouraged, nevertheless, as he said he was not really taking the consumer’s interests into consideration. They did not matter; what mattered was the intellectual property holder. That is a perfectly respectable view, but I do not agree. I think that the public—the consumers—are an important part of the process.
Mike Weatherley
My hon. Friend makes a good point, and I thank him for his comments, but does he agree that the point is not about the free market, which we all fully endorse and support, but about the ownership of the product, control over the creative product and the ability to determine whom one should sell to and deal with?
Philip Davies
I agree with my hon. Friend on many things, but not on this. I believe that if I sell a product to somebody else who hands over the money that I have asked for to purchase it, I have ceded that product to that person. That is the whole point of the free market. If somebody goes into a supermarket, buys a product and sells it on, I do not believe that the supermarket should have a go at that customer for doing that; once it had sold it, it was that person’s to do what they wanted with it.
The issue comes up in all sorts of things outside sporting and cultural events. We did not have time to go into other matters during the speech made by the hon. Member for Washington and Sunderland West, but I would be interested to know how she feels about them.
To save any misunderstanding, I make it clear that I am not arguing from a personal interest perspective, but there is often a big hoo-ha in the press when a limited edition of designer handbags goes on sale in Selfridge’s or some other big department store, and there is a huge queue outside to buy the 25 available. Alternatively, Buzz Lightyears go on sale at Christmas—everybody wants one, but there are hardly any left. Massive queues form outside overnight. The lucky 20 dash in and buy the few available and within five minutes flat the product is on eBay being sold at 20 times the price because the person who bought it knows that there is a much bigger demand than the shop was able to accommodate.
I am not entirely sure whether the hon. Lady or the hon. Member for Dudley North are suggesting that, from their party’s perspective, it is the Government’s job to start regulating all these matters, so that if somebody buys somebody else’s intellectual property and then uses the free market to sell it at 25 times the price, the Government should stop that. If the hon. Lady or the hon. Gentleman are suggesting that, I should like them to stand up and say so; if they are not, perhaps they will explain what the difference is between somebody who buys a ticket to an event and somebody who buys a limited edition of a Buzz Lightyear, a handbag or anything else. Perhaps my hon. Friend the Member for Hove could do the same. I see no difference at all. It seems to me that once the Government go down the road of controlling the market in tickets, they are opening up the floodgates, or a slippery slope, of intervening in every single nook and cranny of the commercial world.
Mr Nuttall
That raises the interesting question of what would happen in the stamp market. People often buy stamps, especially commemorative issues, for the purpose of holding on to them for a number of years in the hope of selling them on for a profit.
Philip Davies
My hon. Friend’s question helps to illustrate the point: where would it end if the Government went down such a road? Where would it all end indeed?
It does not surprise me at all that the Labour party wants to interfere in every nook and cranny of everybody’s lives—what they buy, how much they can sell it on for and all that kind of business; that is its raison d’être as a political party. However, I hope that the one thing that the coalition Government will not do is adopt that kind of socialist agenda. That would be very worrying indeed.
The hon. Lady talked about how popular the issue was among the general public, if not among her own colleagues. However, I take issue with the notion that the reselling of tickets is unpopular; I am not entirely sure that there is a great deal of evidence to suggest that. ICM conducted some opinion polls on this matter. As I mentioned earlier, 86% agreed with the statement:
“If I had a ticket to a sporting event, concert or other event that I could no longer use then I should be allowed to resell it”.
Some 83% agreed with the premise:
“Once I’ve bought a ticket it is my property and I should be able to sell it just as I can any other private property”.
That point was made by my hon. Friend the Member for Bury North (Mr Nuttall). Some 86% agreed:
“It shouldn’t be against the law for people to resell tickets that they no longer want or can’t use.”
The hon. Lady, or her cheerleader on the Front Bench, made the point that the Bill would not ban the resale of tickets, but simply restrict the price at which they could be resold, and that therefore the opinion polls were irrelevant. However, the same opinion poll also found that 56% agreed that the price of a ticket should be determined only by what they were willing to pay, which seems to fly in the face of the hon. Lady’s argument that everybody in the country is appalled by the current situation and that something needs to be done about it. Perhaps she has taken only a small or a biased sample of opinion; if she has a better mechanism for opinion polls than ICM, she should share it with the organisation. Furthermore, 61% agreed that the second-hand or secondary ticket market enables real fans to get hold of tickets that they would otherwise have missed out on. Contrary to the hon. Lady’s contention that most people think that the secondary market stops real fans getting their tickets, 61% of people think the exact opposite.
Mr Nuttall
My hon. Friend has just mentioned the term “real fan”, while earlier we heard a number of references to “ordinary fan”, “average fan” and “biggest fan”. Is he aware of a definition for any of these terms?
Philip Davies
My hon. Friend makes a good point about what constitutes a “real fan” in these matters. If somebody is prepared to pay £2,000 or £5,000 for a ticket to a concert, I would argue that it provides the best example of a real fan. Nobody is going to pay that kind of money for a ticket to an event in which they are not really interested. It seems to me, then, that the free market and ticket touting help the real fans to find their way to the front of the queue rather than get clogged up by people who might be buying on a whim because the tickets are rather cheap.
The hon. Lady says that she is trying to help the organisers and others to sell the tickets for the benefit of real fans, but perhaps she should reflect a bit further. Some of the concert and sporting promoters should also reflect on the part of the ICM opinion poll showing that 71% of people agreed that too many tickets for major sporting and cultural events were allocated to corporate sponsors, hospitality packages and VIPs. On this particular matter, I tend to agree with my hon. Friend the Member for Hove, who would presumably say that these are their tickets and they are entitled to give them to whomever they want. I would not gainsay that in this particular case. It is a bit galling, however, for people to be lecturing everybody on how they want the real genuine fans to have the tickets at a price they can easily afford when they are some of the worst when it comes to real fans not getting their tickets, because of the “prawn sandwich brigade”.
Mike Weatherley
Would my hon. Friend care to meet some of the music managers with me and be lectured by them? Perhaps we could also invite some real and true fans to come along to express their opinion so that we get a breadth of viewpoint. I wonder whether the Minister would also like to accompany us on this particular venture.
Philip Davies
My hon. Friend makes a tempting offer and it would be churlish of me to turn it down, so I look forward to receiving that invitation. I am encouraged: the longer I speak, the better the invitations I get. That encourages me to keep going a little while longer. I do not mind the free market—if anyone has a better offer, I would be prepared to hear it. I can assure my hon. Friend that I have already heard these arguments, as the Select Committee heard the views of promoters. I suspect that even the mere mention of my name to a certain Harvey Goldsmith is likely to give him a near-heart attack. Some of the spats that he and I had—not just in the Select Committee, but on radio interviews afterwards on the issue—seem to have done his health more harm than good. I am certainly aware of the arguments, but I was not persuaded by them.
My hon. Friend the Member for Bury North made a good point about who the real fans are in this case. Who are we trying to protect? Who are the people who are losing out as result of ticket touting? I have never worked out who the losers are, but they are certainly not the promoters. They do not lose out in any shape or form from ticket touting and nor do the artists.
Mr Christopher Chope (Christchurch) (Con)
Is my hon. Friend sure that the promoters are not losing out? They could be selling their tickets at a higher price, and if they are worth more on the open market than the promoters are selling them for, then they are losing out.
Philip Davies
If my hon. Friend does not mind my saying so, he states the obvious. Obviously, if the market would guarantee a higher price for the tickets and the promoters were to sell them at a higher price, they would make more money. My point, however, is that that is their choice. If a promoter has 50,000 tickets to an event and chooses for one reason or another to sell them at £20 per ticket, their ambition is to bring in £1 million from the sale of those tickets. Rather than ticket touts causing a problem for the promoters, I assert that they are helping, because the more tickets they buy, the more likely the promoters are to sell the amount of tickets required for them to raise the sum of money for which they have budgeted. The ticket tout is therefore helping the promoters reach their targets. If there is no ticket touting, the promoter is not going to bring in more than £1 million; the tickets will still all be sold for £20 each. That is the only income the promoters are going to get, so they are certainly not losing out.
Ian Austin
I would like the hon. Gentleman to address the central question; it has not yet been dealt with. Is it fair that individuals are excluded from the market because cartels buy up the tickets in bulk and then rig the price? That is not a free market. Is the hon. Gentleman saying that that is fair? If he agrees that it may not be fair, and that it may need to be looked at, why is he not going to help get this Bill into Committee?
Philip Davies
I do not accept the hon. Gentleman’s assertion that ticket touts prevent people from accessing tickets. I would make the opposite point. Tickets for an event might sell out in five seconds flat, before a genuine fan has the chance to realise they were on sale or before they could check whether they could get time off work or child care. If they later realise that they can go to the event and there were no ticket touting, they would have no chance of going to the event. The only mechanism that enables them to have a chance to go to the event is the secondary market. It may well be that the price the secondary market charges is more than the person is prepared to pay, but that is their choice. If the ticket touts were not there to offer their services, that person would not even have that choice in the first place. It is therefore my assertion that ticket touting gives the genuine fan more access, rather than restricts it.
Ian Austin
I am not arguing with the points the hon. Gentleman makes about the secondary market. I am simply asking him this: is it right that people should be able to use technology to buy up all the tickets right at the outset, prevent anybody else from having a fair crack of the whip, and then fix the price? That is not a free-market solution.
Philip Davies
I am not aware that the hon. Gentleman in his speech or the hon. Member for Washington and Sunderland West (Mrs Hodgson) in her Bill advocate that these provisions should be limited to people who buy huge quantities of tickets over a website. This is a principled point about people selling tickets at more than a 10% mark-up, however they come by them.
I always thought that the Labour party believed in the redistribution of wealth from rich people to poor people. I thought that was the way they wanted to go. I am therefore a bit flummoxed by what has been said. A constituent of mine who has not got a great deal of money but is a great fan of cricket might buy a ticket to the cricket world cup final for, let us say, £25. They then go to the pub where a fellow says, “Do you know what? My lifetime ambition is to go to the cricket world cup final but I cannot get a ticket as they have sold out. I am so keen, I would give £3,000 to get a ticket.” My constituent might then think, “£3,000 for this ticket! All my Christmases have come at once. This fellow has obviously got far more money than he knows what to do with if he is prepared to pay £3,000 for my ticket.” That would be an example of great redistribution of wealth from rich people to poor people. The richer people are giving the money to the poorer people for a commodity that they want to sell. I would have thought that Labour Members would be all for that kind of redistribution of wealth. What on earth has happened to them? They have given up being new Labour, and now they have given up being old Labour.
Mrs Hodgson
The hon. Gentleman is making a flamboyant and interesting speech in his usual manner, and he may have made some valid points. I suggest that he allows this Bill to go into Committee and perhaps allows the Minister to speak in the last 10 minutes available. I am sure that the Minister has prepared something and has some pearls of wisdom to offer that I really want to hear and that should be on the record. Will the hon. Gentleman allow the Minister to speak so that the Bill can pass to Committee?
Philip Davies
It was the hon. Lady who spoke for an hour, not me. If she had shown some discipline during her speech, we might well have got on to the Minister. We might yet. However, the more interventions she makes the less chance I have of getting beyond my opening remarks.
Joan Walley (Stoke-on-Trent North) (Lab)
On a point of order, Mr Deputy Speaker. Further to my point of order earlier this morning, is this not just one more example of the filibustering and archaic procedures that are preventing genuine private Members’ Bills from receiving scrutiny in Committee?
Mr Deputy Speaker (Mr Nigel Evans)
I know how frustrating Fridays are for those who have Bills that are down the line, but my job in the Chair is, if a filibuster takes place, to stop it immediately. That is not the case and the hon. Member for Shipley (Philip Davies) is in order.
Philip Davies
I am grateful, Mr Deputy Speaker, and I am glad that you think that the points that I have made are relevant to the Bill. I am genuinely disappointed that Opposition Members do not wish to engage in a debate. I thought that that was the whole point of Bills going through Parliament—that we debated them. When I have finished making the points I have to make I will, in customary fashion, sit down. I always thought that that was the way that debates worked in this place—that people spoke until they had finished and then they stopped.
Philip Davies
My hon. Friend is ingenious as ever. That might be something that the Procedure Committee will want to consider. I suggest that my hon. Friend mentions it to our right hon. Friend the Member for East Yorkshire (Mr Knight). I shall look forward to that system being introduced.
I do not think that things work against the interests of the promoter. The promoter gets all the income that they were ever going to get in the first place, so the promoter is looked after. The issue is then whether things work in favour of the consumer. As I hope I have argued, the fact that the consumer can buy tickets right up to the end means that it works in their best interests, too. I must say in passing that if ticket touting is such a big issue for concert promoters and sporting promoters—if it is the be all and end all and the biggest single threat to their business—it is a wonder that they do not do more imaginative things to try to stop the antics of ticket touts. My hon. Friend the Member for Hove said that it should be up to them what they do, and it is. Perhaps, rather than selling all the tickets in one go right at the start so that they are sold out in five minutes flat, which provides a perfect market for the ticket tout because no tickets are on open sale, why not sell tickets gradually week by week, so that there are still some tickets on open sale right up to the day before the concert? There would therefore be no market for the ticket touts.
I do not think that the solutions to the problems lie with more legislation, but of course that is what the Labour party always reaches for. If Labour Members perceive a problem—for the avoidance of doubt, I am not saying that there is a problem—they think the only solution is more Government legislation, more Government interference and more of a nanny state. The solutions to these things are often in the hands of the promoters and I want to see an explanation of why more promoters do not sell tickets bit by bit, week by week and day by day, so that tickets are still available on the open market the day before. There would then be no market. Perhaps the hon. Member for Dudley North could explain what is wrong with that solution. I see that he does not want me to give way, so perhaps I have talked him round. Perhaps this is a triumph that I did not anticipate. He appears not to disagree with me, so I shall leave it at that.
I want to refer to the Office of Fair Trading. People seem to think that not allowing the person who owns the property to set the price will make the price more expensive for the consumer. I take issue with that, because when I had the pleasure of working for Asda, it challenged the net book agreement. I do not know whether hon. Members remember the net book agreement, which allowed publishers to set the price of books and which prevented anyone else from selling the book at a different price.
I presume that my hon. Friend the Member for Hove supports the net book agreement, because the book belongs to the publishers, who should therefore be able to force everybody to sell it at a particular price. At Asda, we thought that that was against the interest of the consumer, that it was a protection racket and that it flew in the face of the free market. We took our case to court to argue that we should be able to sell books at the price that we wanted to sell them at and that there should be a free market. After a lot of to-ing and fro-ing and a lot of expense, I am delighted to say that Asda won its case and the net book agreement was broken.
What has been the upshot of the end of the net book agreement? If the argument advanced by the hon. Member for Washington and Sunderland West holds, prices would have risen: people would have abused the system by charging all sorts of prices. The nice, kind publisher would have wanted as many people as possible to read the book, and would have sold at the cheapest possible price, while the nasty retailers would have hiked up the price to increase their profits. The exact opposite actually ensued. Since the net book agreement ended, book prices have decreased, so breaking that restriction worked in the best interest of consumers. I do not see the difference between books and tickets, because the principle is the same. The free market won out in the courts, and I hope that it will continue to do so.
Mike Weatherley
My hon. Friend has set out a good economic analysis. Does he accept that in commercial terms there is such a thing as price differentiation in different markets for various reasons by the producer for long-term commercial purposes?
Philip Davies
Indeed. My hon. Friend has made some perfectly reasonable points, but I happen to disagree with them. Most of the problems that he has identified can be solved by the industry itself, and I have made some imaginative suggestions. If ticket touting is such a big issue, tickets should be sold on the open market by auction, as my hon. Friend the Member for Christchurch has suggested, which would maximise income and get rid of ticket touts, who would have no business.
Mrs Hodgson
In the two minutes remaining, I wonder whether the hon. Gentleman will allow the Minister to say a few words.
Philip Davies
As I made clear at the start of my speech—I hope that I am considered to be someone who sticks to their word—I will speak for less time than the hon. Lady, and I intend to keep that promise.
Mr Nuttall
My hon. Friend may like to know that those who have spoken in favour of the Bill spoke for 85 minutes; even if he continues until 2.30 pm, those who oppose the Bill will have spoken for only 51 minutes.
Philip Davies
My hon. Friend is, with good reason, considered to be the expert on Friday rules, if I can put it like that. I am sure that the hon. Member for Washington and Sunderland West is grateful that he has not charged for his advice on getting her Bill through in future weeks. I commend his advice to her.
When the chief executive of the Office of Fair Trading gave evidence to the Select Committee, he did not just say that the secondary market was working in the best interests of the consumer, although he did say that. I add that the right hon. Member for Barking (Margaret Hodge) also said that when she gave evidence as a member of the Labour Government; she was a passionate supporter of the secondary market. The chief executive also made it clear that he considered that the secondary market also worked in the interests of promoters. Let me quote what he said—
Business without Debate
(13 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
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Bill to be read a Second time on Friday 1 April.
Public Bodies (Sustainable Food) Bill
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Hon. Members
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Freedom of Information (amendment) Bill
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Hon. Members
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Fire Safety (Protection of Tenants) Bill
Resumption of adjourned debate on Question (19 November), That the Bill be now read a Second time.
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Debate to be resumed on Friday 1 April.
Waste REcycling (End Use Register) Bill
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Safety of Medicines Bill
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parliamentary Standards (amendment) Bill
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Cycling in England
(13 years, 3 months ago)
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Dr Julian Huppert (Cambridge) (LD)
I am very grateful to have secured the debate and I thank the Minister of State for attending, particularly at the end of a week in which the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), made an important and encouraging statement on local sustainable transport. Many hon. Members will be aware of my passion for cycling. I believe I was the only Member of Parliament to cycle away from their count. Occasionally this passion has gone too far. At the turn of the year, I successfully tested the surface of a road while descending rather too fast around a bend, and fractured my humerus in the process, which is a rather less amusing injury than the name—or your expression, Mr Deputy Speaker—suggests. The section on cycle safety later in my speech might come with some sense of a wry smile.
Hon. Members may know that my constituency has long been at the forefront of cycling. Some 26% of its adult population cycle to their work or education—a figure comparable with the highest performing cities elsewhere in Europe. When I go to visit schools, it is always heartening to see how many pupils cycle or walk to school, although more could be done. I represent people who, for reasons topographical, historical and cultural, do not merely talk the talk, but walk the walk—or, rather, ride the bike. However, this is a wider debate about cycling in England generally, and I shall make several points about the Government’s general strategy and recent announcements. I will also ask some questions that I hope the Minister will answer later.
Why should we encourage cycling? There are a number of reasons: it is safe, healthy, cheap, convenient, fast, reliable, clean and green. Another reason, which I have noticed increasingly as a Member of Parliament, is that cycling around my constituency allows me to see the world around me and for people to see me. In a car, one is very much separated, whereas on a bike, one is very much part of the environment. There is much to welcome in the Government’s approach to cycling and to sustainable transport generally. I have already mentioned my hon. Friend the Under-Secretary’s statement on Wednesday, which contained a great deal of good news. Perhaps the most important announcement in it, apart from the local sustainable transport fund, which I shall come to later, is the £11 million of funding to Bikeability next year and the commitment to support it for the duration of this Parliament. Many people in Cambridge and elsewhere shared my concern about the Government’s decision to scrap Cycling England—a decision which I continue to find deeply regrettable, and which led to the title of this debate. We were particularly concerned that Bikeability, a vital training scheme and one that has worked wonders for cycling all around the country, was under serious threat. I am very pleased and relieved that the Government have committed themselves so fully to that scheme.
There are a number of other encouragements. I was especially pleased to hear about the possibility of greater powers for local authorities over traffic signs. Can the Minister confirm that that will allow, among other things, “no entry—except cycles” signs to be used? Contraflow cycling in appropriate one-way streets affords cyclists greater access to quieter streets, avoiding busier roads and making quicker journey times possible. We in Cambridge have asked for years for permission to use those signs, but it has been a struggle with Department for Transport officials until a recent trial was allowed. The current “low-flying motorbike” sign simply is not understood by many people.
There are also some specific issues that need resolving. Could the section of the Traffic Management Act 2004 that allows for enforcement of mandatory cycle lanes be brought into force? I believe it is the only bit that has not yet been implemented. Could the law be adjusted so that the presence of a vehicle in a cycle path or on a footway be taken as evidence that it was driven there, rather than appearing magically, as seems to be assumed at the moment?
One great thing about the headline story of the statement was the setting up of the £560 million local sustainable transport fund. The previous Government—Labour Members are noticeable by their absence—talked a very good game on green issues but destroyed their credibility with disastrous initiatives such as the third runway at Heathrow, which has now thankfully been jettisoned by the coalition. It is essential that a green thread runs through all Government policy if we are seriously to tackle climate change. We cannot rely on an occasional eye-catching idea here, an emotive piece of environmental rhetoric there, while business proceeds as usual. Local sustainable transport has a key role to play. If used correctly to support strong and well-designed bids, the fund will have a vital role to play in shaping our communities and reducing our reliance on expensive and unsustainable transport—but the Minister will realise that that is a big if. I have several questions to raise about how the Government intend to take the scheme forward.
The Department for Transport has produced a very useful guidance document, which I have in my hand, for those local authorities considering bids, and I would encourage local authorities to study it carefully. The assessment criteria for prospective bids are carefully set out in it. I am pleased that front and centre are the two policy objectives driving the Government’s approach: creating growth and cutting carbon. But as we all know, those two objectives can and do get in each other’s way at times. I hope the Minister will be able to clarify to what extent bids will be judged ultimately on cutting carbon, and to what extent on creating growth.
Perhaps the Minister might also find time to consider and address the other priorities flagged up in last year’s Cabinet Office report on urban transport, which found, interestingly, that the economic damage in cities, as a result of detriment to public health through vehicle crashes, poor air quality and physical inactivity from reduced walking and cycling, was three times greater than the effect of congestion alone, although those factors are far too often overlooked in transport decisions.
I hope the Minister and the Government will be sympathetic to the need for radical bids to reduce carbon emissions significantly, but I also believe the Department can and should do more to encourage such bids in the first place. The Department for Transport, along with the late Cycling England, produced a so-called hierarchy of solutions, which does an excellent job in establishing a cycle and pedestrian-friendly infrastructure —at least, it would do an excellent job if it was not virtually unknown among local authorities and widely flouted in practice. The Department should promote awareness of that policy among local authorities, as it is when they ignore it that we tend to see the type of cycle facilities that are often worse than useless. To take an obvious example, many local authorities still persist in creating poor quality shared-use cycle facilities on pavements, creating unnecessary conflict between cyclists and pedestrians. That is contrary to the guidance from the Department, which rightly focuses on reducing traffic volumes and speeds, redesigning junctions and reallocating road space. There clearly is a role for off-road cycle paths, but it must be good quality and not just a cheap alternative to road provision.
I welcome the Government’s guidance, although I wonder whether the Minister can give assurances that it will be put more strongly to local authorities bidding for this important fund. In particular, I take this opportunity to bang the drum for 20 mph speed limits in residential and shopping streets. They make a large difference to safety for children, cyclists and pedestrians but only a small difference to car travel times.
This is part of a wider point: a commitment to reducing road danger is needed. Nearly three quarters of people agree that the idea of cycling on busy roads is frightening, partly because road safety policies have for too long focused on making cycling look dangerous—for example, by excessive advocacy of cycle helmets—when we should be addressing the source of the danger. Slowing traffic is one way to do that; reducing traffic volume is another; and more cyclists lead to safer cycling.
Perhaps the Minister will also consider prosecution, sentencing, liability and awareness issues. In far too many accidents, the ready-made excuse, “I just didn’t see him, guv,” is invoked and too readily accepted. We must encourage the police and the Crown Prosecution Service to be more ambitious in the choice of charges and the decision to prosecute, so that judges and juries can decide whether an excuse is good enough. Driving with a reckless disregard for the safety of fellow road users should be treated very seriously. Will the Minister consider the use of proportionate liability? Putting the default onus on the more dangerous vehicle in a collision would protect cars from trucks, bikes from cars and pedestrians from bikes.
The frequent use of the “Sorry mate, I didn’t see you,” or SMIDSY, excuse also points to a lack of awareness among drivers. Many cyclists must simply feel invisible at times. Even in Cambridge, the lack of consideration shown by some motorists is shocking. Will the Minister consider including a cycling and pedestrian awareness element in the driving test, for example, that goes beyond the occasional video clip during the theory test?
Taking away the stigma attached to cycling by making our roads safer would be a positive step in encouraging those who would like to try it but feel intimidated or frightened. That would accompany the successful attempts by organisations, such as the Cyclists Touring Club, to encourage more cycling, particularly to work. Its workplace cycle challenge in Cambridge succeeded in encouraging 132 new cyclists on to the road in just two weeks. The cycle-to-work scheme, which was introduced by the last Government, deserves genuine praise. I should be interested to know whether the Government have any plans to build on the scheme’s success and to help to resolve the many concerns about what happens to the bike at the end of the scheme.
It is very important to encourage councils and businesses to provide the small essentials that make the difference to journeys, including convenient, safe and sheltered cycle parks at workplaces and town centres and things such as showers and lockers at work, so that people can travel and more easily be fresh for a day’s work.
I have previously asked questions, which are particularly relevant to the Minister, about the difficulties involved in bus and train transfers. The situation for cyclists who commute using other public transport as well remains grim. Problems continue with cycle parking at railway stations, and the Minister is welcome to come to Cambridge to see the problem for herself. Can she offer any further encouragement on the subject at this time, or at least an assurance that it will be given due importance in deliberations over rail and bus stock, routes and timetables? Will these issues feature prominently in franchise negotiations?
May I briefly draw the Minister’s attention to problems faced by the cycle-racing community, which has been championed by the hon. Member for Dudley North (Ian Austin)? Will she support the ongoing work between the Department for Culture, Media and Sport and her Department to redraft the outdated Cycle Racing on Highways Regulations 1960? Will she try to facilitate appropriate traffic signs for road cycling? Will she review the anomaly that motor rallies are allowed to take place on bridleways, but cycle racing is not?
As I said, I am grateful for securing this debate, which has achieved extra topicality as a result of Wednesday’s statement. The last time that I spoke on transport, the Under-Secretary of State described my speech as something of a wish list. I hope that I have succeeded in reining myself in a little more this time, although my natural enthusiasm for the subject sometimes overtakes me.
I shall finish on a suitably austere note: other cycling enthusiasts have noticed that the Government say in their sustainable transport White Paper that they plan to spend more money on developing their own cycle journey planner. Perhaps in the spirit of the big society, I point the Minister and her Department to the CycleStreets website, which already provides such a service, reliably and efficiently, and without requiring millions of pounds of Government subsidy. The website was developed by two of my constituents, both avid cyclists who are very much involved with the excellent Cambridge cycling campaign, and cost a total of about £40,000 to cover the whole country. I hope the Minister will consider the value for money of supporting and utilising their work, rather than inventing a new wheel. I look forward to her comments.
The Minister of State, Department for Transport (Mrs Theresa Villiers)
As is customary, I congratulate my hon. Friend the Member for Cambridge (Dr Huppert) on securing the debate and on his eloquent contribution and his passionate support for cycling.
I strongly agree that cycling generates important social, environmental and health benefits. The role it can play in relieving congestion, improving air quality and reducing carbon emissions is clear and well accepted. Regular cycling has other important benefits, in particular for health, reducing by half many chronic illnesses, including heart disease. Cycling can also help us to address the obesity problems that cost the NHS and wider society around £20 billion annually.
As well as the wider benefits, we should not lose sight of the simple truth that cycling can be a great way to get around—a convenient and low-cost way to make short journeys. The key question is how we can lift the barriers that deter people from regular cycling. The coalition agreement makes a commitment to supporting sustainable travel, including walking and cycling. The Department for Transport will be investing £58 million in cycling over the current financial year. Cycling receives further Government support through local transport plan funding to local authorities and the DFT grant to Transport for London.
On Wednesday, as we have already heard, the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), published a White Paper on local transport alongside bidding guidance for the new local sustainable transport funds. I thank my hon. Friend the Member for Cambridge for the support he has expressed for that important initiative. I believe the measures announced by my hon. Friend the Under-Secretary will prove to be a significant step towards realising two of the coalition’s most important objectives—creating growth and cutting carbon. The White Paper sets out how we can encourage the uptake of more sustainable modes locally, supported by the £560 million allocated to the new sustainable transport fund.
In answer to the questions put by my hon. Friend the Member for Cambridge about the relative importance to be placed on creating growth and cutting carbon, the answer is that weight will be given to both, taking into account each scheme’s overall merits. He will realise that in many cases similar actions can both generate economic benefits and cut carbon.
It will be up to local authorities to decide what goes into their bids, but the case for cycling is so compelling that I am certain many councils will want to include cycling projects in their bids to the fund. We therefore expect cycling programmes to attract substantial support from the new fund. We are strongly encouraging local authorities to work with voluntary and private sector partners when putting forward their bids. That will open up opportunities for the involvement of groups such as CTC, Sustrans and the Campaign for Better Transport.
As my hon. Friend pointed out, our first commitment in relation to the local sustainable transport fund is on cycle training. The coalition has confirmed Bikeability funding for the remainder of the Parliament, confounding some of the anxieties created by the abolition of Cycling England. Learning to cycle safely and confidently on today’s roads is a valuable life skill and a key part of our strategy to promote cycling. The national cycle training scheme currently receives funding of £11 million, providing up to 275,000 Bikeability training places. Earlier this week, we announced a further £11 million for Bikeability training in 2011-12.
To get first hand experience of Bikeability, I decided to have a go myself. I very much enjoyed being taught the level 1 and 2 courses by David Dansky of Cycle Training UK. At the end of the lesson, I certainly felt my hand signals had improved and were much more positive.
Recently published research demonstrates how highly Bikeability is regarded by parents and the children who take part in the scheme. Children reported to the survey that, after the training, they generally felt safer and more confident when riding on the road. It is clear that parents feel more confident allowing their children to ride on the road, because the child’s ability to judge risks will have been strengthened by the training they have received.
To complement our education programmes, we will set aside £13 million from the fund in 2011-12 for links to school, bike club and walking to school initiatives, delivering additional cycle parking and infrastructure changes for safer links to schools—something my hon. Friend mentioned.
In preparing their bids for money from the new fund, local authorities might well wish to emulate the approach taken in the cycling demonstration town programme, which has delivered impressive results. Darlington managed to double cycling in four years. In the first six towns that took part, there was an average increase of 27% in the number of people cycling regularly. Assessment of the programme indicates that the congestion, health and other benefits—benefits of the sort that my hon. Friend mentioned, to do with air pollution and the public realm—generated by the programme were three times greater than the amount of money spent on the programme.
My hon. Friend expressed concerns about problems integrating cycling journeys with public transport. Again, that could prove another fruitful source of ideas for local authority bids to the local sustainable transport fund. The bike ’n’ ride demonstration projects running over recent years are a model worth considering for the future. They have improved facilities for cyclists at rail stations run by South West Trains, Merseyrail, Northern and Virgin Trains. Hundreds of additional cycle parking facilities have been provided at stations run by those train operators, together with hire facilities at Waterloo, Richmond and Southport. That project complements wider Department for Transport work to support the establishment of cycle hubs at key rail stations, the hub in Leeds being the first to open, last September.
The announcement that I made earlier this week on a move to longer rail franchises will give train operators stronger incentives to invest in improving stations. That, of course, could include the provision of cycle parking. Chiltern Railways is an example of a longer franchise; it was able to deliver a considerable uplift in cycle parking places, but as we judge the bids coming in for rail franchises, we will certainly look at the ideas that bidders and train operators have for improving linkages with cycling, and for making it easier to integrate cycling into the rail system.
The Department continues to monitor the voluntary station travel plan pilot schemes, which can provide clear benefits to cyclists as part of efforts to integrate rail successfully with other sustainable modes of transport. My hon. Friend highlighted the cycle to work scheme; it continues to provide tax incentives that enable employers to help those who wish to switch to commuting to work by bicycle. A concern here is the judgment in the AstraZeneca case; the Government are currently looking at how that case might impact on the scheme to see whether we can resolve any resulting difficulties.
My hon. Friend rightly highlighted safety issues as being one of the barriers that can sometimes deter people from cycling. It is not really for me to start dictating to the Crown Prosecution Service about their decisions on prosecutions—I am sure that he anticipated that answer—but there are a range of other ways in which the Government can help to tackle concerns about road safety and cycling. First, of course, The Highway Code emphasises the importance of watching out for cyclists. I agree with my hon. Friend that strengthening driver awareness of cyclists should be an important priority in our continuing work to improve the driving test and driver training. It is already very much a focus of driver training and the driving test, but we acknowledge the continuing importance of that work.
Secondly, we encourage local authorities to make their roads safer for all users. We stand ready to offer advice on the options available, including the 20 mph zones that my hon. Friend supports. However, I am sure that he will agree that such decisions need to be taken locally, in the light of local circumstances. Thirdly, we are providing local government with the funding to improve cycle routes and networks through local transport plans and, in future, via the local sustainable transport fund.
My hon. Friend is right: we should be careful not to overestimate the risks associated with cycling, in case we find ourselves being part of the problem and deter people from doing more cycling. It is worth noting that the health benefits offered by cycling clearly outweigh the road safety risk. We still need to make our streets more welcoming to cyclists. The DFT’s “Manual for Streets” emphasises the importance of providing for cyclists and pedestrians. My hon. Friend is right to say that a user hierarchy recommended in that document places pedestrians and cyclists at the top. “Manual for Streets 2” was recently published after a lot of input from different stakeholders. My understanding is that those documents are heavily used by local authorities in their work on our roads and streets. The uptake of those documents is more extensive than my hon. Friend has been led to believe.
In response to my hon. Friend’s point about signage, I, too, very much welcome the trial of the “No entry—except cycles” sign. He is right: it has been a very long time coming. The results of the trial will be part of the signs review included in the White Paper which was announced this week by my hon. Friend the Under-Secretary. Like my hon. Friend the Member for Cambridge, I hope that that sign will be seen more widely on England’s streets in future.
As for road racing, officials from the Department for Transport, the Department for Culture, Media and Sport and the Home Office have been working with British Cycling and the Association of Chief Police Officers to explore ways of improving procedures for holding cycle races on public roads and addressing the issues that my hon. Friend rightly raised. My hon. Friend the Under-Secretary met British Cycling representatives earlier this week, and we have identified an existing legal power that enables the police to give directions for places at which traffic must stop for the race, and for cycle race marshals to hold a sign for that purpose. It is not sorted yet, but we hope that that might provide a solution to the major concerns expressed by the cycle racing community. Working with British Cycling, we have identified amendments to regulations to improve procedures for authorising cycle races, and the Under-Secretary is keen that they should be introduced.
My hon. Friend the Member for Cambridge concluded by expressing concern about the Department for Transport developing its own cycle journey planner when good websites such as CycleStreets are already available. Given the importance of the issue, there is room for Government action to complement the websites provided by the private sector, particularly given our focus on providing novice cyclists with the information that they need to encourage them to go out cycling, so that they are confident they can identify easier and safer routes.
We have begun to see real progress on cycling. My hon. Friend discussed the long history and success of cycling in Cambridge. London, too, is a great success story, as the number of cyclists in the capital has more than doubled over the past decade. Some 27,000 people now enter central London by bike every day. That shows that with the right measures it is possible to make a difference and create the right conditions for cycling to grow, generating the health, congestion, carbon and quality-of-life benefits that he rightly highlighted.
In conclusion, the 19th-century reformer and suffragette, Frances E. Willard, wrote in a preface to one of her books:
“She who succeeds in gaining the mastery of the bicycle will gain the mastery of life.”
I am not sure whether that overstates things, but there is no doubt about the benefits that cycling can bring for quality of life. I strongly recommend it to all hon. Members, and I look forward to working with my hon. Friend in encouraging greater uptake of cycling by members of the public.
Question put and agreed to.