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Oral Answers to Questions
(13 years, 1 month ago)
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Bill Esterson (Sefton Central) (Lab)
1. What assessment he has made of the effects on the economy of the trade in mortgage-backed securities and collateralised debt obligations.
The Chancellor of the Exchequer (Mr George Osborne)
The rapid increase in mortgage-backed securities and collateralised debt obligations contributed to a build-up of excessive and unstable levels of private debt in the UK in the years running up to the financial crisis. Although we would wish to see a properly regulated securitisation market reopened to help with lending, this must happen under a much more effective supervision regime. That is why we are abolishing the failed tripartite system and have restored to the Bank of England the responsibility for monitoring overall levels of debt in the economy. We have already established a new Financial Policy Committee to assess risks to the stability of the system, such as the emergence of excessive debt.
Bill Esterson
Although I accept the analysis in the first half of the right hon. Gentleman’s answer, I wonder whether the fact that financial services companies donated 51% of all funds to the Conservative party has led to a conflict of interests that prevents adequate regulation.
Mr Osborne
I think that I pointed out in an earlier exchange that an ex-Lehman Brothers and RBS banker contributed to the leadership campaign of the shadow Chancellor, so if the hon. Member for Sefton Central (Bill Esterson) wants to make that point again, and if you would allow, Mr Speaker, perhaps he could intervene.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Does the Chancellor agree, as I do, with the Governor of the Bank of England in asserting that if we are to avoid another banking crisis in this country, we must have a complete separation between commercial and investment banks, which of course create these collateralised debt obligations?
Mr Osborne
If my hon. Friend will allow me, I will keep my personal views on this matter private while we await the publication of the independent commission that has been set up to look at this issue, and which I, the Business Secretary and the whole House will have to consider. It is producing its interim report in April, and will produce a final report in September. Let us remember that the commission was set up by this Government to ask the difficult questions of the kind that he is asking, because we are determined not to repeat the mistakes of the past.
Sheila Gilmore (Edinburgh East) (Lab)
2. If he will bring forward proposals for a scheme to provide looked-after children with a savings account or trust fund funded by contributions from the Exchequer; and if he will make a statement.
The Chancellor of the Exchequer (Mr George Osborne)
In October, the Government announced that we will create a new tax-free children’s savings account to be known as the junior ISA. We expect the accounts to be available from this autumn, and will be setting out details of how they will work next week. As the hon. Lady and the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who is my constituency neighbour, will know, Barnardo’s and Action for Children have proposed that these accounts be used to support saving for looked-after children. I know that these children face particular challenges, and I can tell the House that the Department for Education will work with others to make the necessary funding available to ensure that we can provide the support that they deserve. We will work with charities and interested parties to develop detailed proposals funded by the Government, so that junior ISAs can best support these children.
Sheila Gilmore
There were warm words on this last summer when the child trust funds were abolished, and there are warms words now, but will the Chancellor tell us when such a savings scheme, backed by the Government, will be introduced for looked-after children?
Mr Osborne
I have just announced the money for the scheme that the hon. Lady asked me about, and we will now engage with Barnardo’s and Action for Children. I have seen their report, “On Our Own Two Feet”, and we will provide the funding to make the scheme a reality for looked-after children.
Mr Edward Timpson (Crewe and Nantwich) (Con)
As chairman of the all-party group on looked-after children and care leavers, I warmly welcome my right hon. Friend’s announcement today. Is he aware that the proposal has widespread cross-party support? The fact that the Government have listened to all representations and taken steps to make provision for the most vulnerable children in our society is extremely welcome.
Mr Osborne
I thank my hon. Friend for those words of support. I know that he has personal experience, through the work his family have done with children in care, of the contribution that society can make to helping these children. Frankly, all Governments have struggled to provide a decent level of care for the children to whom we owe the greatest obligation. As I said, I will engage with interested Members of Parliament, particularly my constituency neighbour, the right hon. Member for Wythenshawe and Sale East, and the two charities that produced the report to make this a reality and get it up and running as soon as possible.
Mr David Hanson (Delyn) (Lab)
May I remind the Chancellor that he broke his original election promise—a promise he made in the general election and ripped up on 3 January—to provide a trust fund for the poorest third of families? I welcome his announcement today, but we will look at the detail. We pushed on this issue in Committee on the abolition of the child trust fund Bill, and my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) has pushed outside that Committee. We welcome this announcement, but can the Chancellor say what that contribution will be and, given that this is a Department for Education issue, as he has said, whether the provision will extend to Scotland, Wales and Northern Ireland, as the trust fund originally did?
Mr Osborne
First, of course we will ensure that the scheme is available across the UK, although the exact design has to be determined with the charities. I have listened to the case made not so much by those on the Opposition Front Bench—if the right hon. Gentleman does not mind my saying so—but by the right hon. Member for Wythenshawe and Sale East and the two charities concerned. The sum of money involved will be around £5 million.
Paul Goggins (Wythenshawe and Sale East) (Lab)
There is a bit of good neighbourliness breaking out on the eve of the Budget. I welcome the announcement that the Chancellor has made this afternoon. Three quarters of young people leaving care do so with no savings whatever, yet they are expected to be almost totally self-reliant. As ever, the devil will be in the detail, but I am certainly prepared to work with the charities and his Ministers to ensure that we get a scheme that is effective in giving support to care leavers.
Mr Osborne
I thank the right hon. Gentleman for his support—we are one big happy coalition on this issue. I will ask Treasury officials to engage with him so that we get this right. We have to work in a way that is not bureaucratic, but gets money to those who really need it. Having looked at the issue, I think perhaps the best route is to work closely with the charities that know the sector best. Let us work together and make the scheme work.
Albert Owen (Ynys Môn) (Lab)
3. If he will estimate the revenue to the Exchequer attributable to receipts from the increase in the standard rate of value added tax on road fuel.
Vernon Coaker (Gedling) (Lab)
5. If he will estimate the revenue to the Exchequer attributable to receipts from the increase in the standard rate of value added tax on road fuel.
The Economic Secretary to the Treasury (Justine Greening)
The VAT forecast is estimated on an aggregate basis, as registered traders are not required to record in their VAT return the type of goods or services on which VAT has been collected.
Albert Owen
I agree with the Prime Minister that VAT is a regressive tax that hits the poorest hardest. Today’s figures show that the rise has also pushed up inflation, hitting people in their pockets and at the pumps. Will the Treasury team look again at the VAT rise on fuel—which is hurting motorists, hauliers, businesses and families across the country—and reverse it?
Justine Greening
I welcome the hon. Gentleman’s concern for motorists. However, I note that when the VAT rise passed through Parliament on 13 July 2010, he did not vote against it. I assure him that the Government are looking at what we can do to support motorists, hauliers and businesses with the cost of fuel, but I have to say that his party’s proposal on VAT is illegal, unworkable and unfunded.
Vernon Coaker
Does the Minister agree with the Transport Secretary—who, on the “Daily Politics” show on 2 March, dismissed the rise in VAT as a spurious argument—or does she agree with my constituents that by adding £1.35 to the cost of filling up a 50-litre tank with fuel, the VAT rise is the wrong tax at the wrong time?
Justine Greening
Perhaps the hon. Gentleman should talk to his former Prime Minister, Tony Blair, or the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor, who both said that our decision to raise VAT was necessary to tackle the huge deficit that was left by his party. Again, if he is so concerned about the VAT rise, how come he did not vote against it last July?
Michael Fallon (Sevenoaks) (Con)
Will my hon. Friend confirm that the Government inherited plans for six increases in fuel duty from their predecessor, four of which have yet to come into effect? Of all the groups of people who are quite reasonably concerned about the increasing cost of fuel, surely the least qualified is the Labour party.
Justine Greening
My hon. Friend is absolutely right. In fact, the previous Government introduced 12 duty rises during their time in office. As he pointed out, they also legislated for a further six rises, bringing in the fuel duty escalator, and these would have been on top of inflation rises. It was absolutely amazing to see the Labour party table a motion last week bemoaning the amount of tax that motorists are paying, when they legislated for all—
Mr Speaker
Order. I am grateful to the Minister, but we must concentrate on the policy of the Government.
Stephen Williams (Bristol West) (LD)
I am sure that the Chancellor will respond to the concerns of the motorist tomorrow in a fiscally responsible and environmentally sustainable way, but does the Minister agree that road fuel duty is a blunt instrument for taxing motoring, and that what we need in the long run is a more flexible, market-oriented mechanism for taxing road use?
Justine Greening
Obviously, my hon. Friend has his ideas about how he would like to see motorists being taxed in relation to the environment. He will be aware that the way in which vehicle excise duty is structured encourages motorists to purchase and use cars with lower emissions.
Ms Angela Eagle (Wallasey) (Lab)
On the day that diesel prices have hit a new high and inflation has jumped higher still, making the squeeze on living standards even worse, why do not the Government admit that they got it wrong on VAT and give struggling working people some much-needed support by reversing the Tory VAT rise on petrol, which would take 3p off the price of a litre? Just do it!
Justine Greening
The hon. Lady says, “Just do it!”, but she should know that that is simply not legally possible. She fully understands that. The reason that the Opposition are talking about that is that the fuel duty rises that are coming through were legislated for by Labour, so they are desperately looking for something to say about an issue that they themselves created. She knows that her policy on the VAT rise is illegal, totally unworkable and completely unfunded. Labour wants to take seven years to support motorists; we want to see what we can do to support them now.
Charlie Elphicke (Dover) (Con)
Will the Minister tell us by how much duty has risen in recent years, and whether the person who put the duty up is in the House today?
Justine Greening
When the Labour Government came to power in 1997, fuel duty was 36.86p per litre. By the time they left office, it had risen to 57.19p per litre. As I am sure my hon. Friend is aware, one of the architects of those tax rises was then the chief economic adviser to the Treasury; he is now the shadow Chancellor.
Lindsay Roy (Glenrothes) (Lab)
4. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.
Mike Gapes (Ilford South) (Lab/Co-op)
8. What assessment he has made of the effect on levels of employment of the increase in the standard rate of value added tax.
The Chief Secretary to the Treasury (Danny Alexander)
The Government have taken urgent and unavoidable action to tackle the deficit and to put the public finances on a sustainable footing. That is essential for jobs and growth. Raising the standard rate of VAT is an important element of the plan and, in November, the Office for Budget Responsibility’s forecast, which took full account of the VAT increase, was for total employment to rise by 1.1 million in 2015.
Lindsay Roy
I thank the Minister for that answer. Will he tell us what impact the VAT rise has had so far on himself and his family?
Danny Alexander
The VAT rise of course leads to increased prices in the shops, and that affects everyone in the House.
Mike Gapes
The Chief Secretary to the Treasury had a meeting—a crisis meeting, according to The Daily Telegraph—with senior retailers a few weeks ago. Was there any discussion of the impact of the VAT rise at that meeting?
Danny Alexander
I did indeed meet senior retailers from the British Retail Consortium and we discussed a whole range of issues in a private meeting. If the hon. Gentleman is interested in the consortium’s views, he should listen to what its director general said on 20 October, the day of the spending review. He said that delays in public expenditure cuts
“would just store up more pain for later, risking increased borrowing costs, higher taxes and more job losses.”
Alec Shelbrooke (Elmet and Rothwell) (Con)
Which does my right hon. Friend think is the lesser evil: a rise in VAT that does not apply to food or children’s clothes, or taking almost 1 million of the lowest paid workers out of income tax altogether?
Danny Alexander
I certainly think that our Government have got their priorities right when it comes to lifting the burden of income tax on low-income workers. The increase in the personal allowance by £1,000, which will come into effect in April this year, will ensure that 880,000 low-income workers will no longer pay income tax. Furthermore, 23 million basic rate taxpayers will see a tax cut of £200 next year.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
Has my right hon. Friend considered the letter sent to him by the chair of the tourism group of the Sutherland Partnership, which outlined the importance of tourism for employment in the area and the barriers that VAT is creating, particularly in relation to road fuel? Is there anything that the Government can do to mitigate that effect?
Danny Alexander
I have seen that letter and, as a fellow highland MP, I am fully aware of the impact that high fuel prices have on families and individuals. We have already taken steps to deliver a 5p duty discount to island communities, and I hope that we will be able to do what we can tomorrow, but that will be a matter for the Chancellor to announce in the Budget statement.
Andrew Stephenson (Pendle) (Con)
7. What fiscal measures he has taken to support economic growth in the manufacturing sector.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
12. What fiscal measures he has taken to support economic growth in the manufacturing sector.
The Chancellor of the Exchequer (Mr George Osborne)
Manufacturing is now expanding after years of contraction. In order to support it, the June Budget contained four reductions in the main rate of corporation tax and a cut in the small companies rate from 21% to 20%. The manufacturing sector is expected to gain over £250 million annually when the package is fully implemented. We have committed ourselves to 75,000 more apprenticeships and nine university-based centres for manufacturing. Tomorrow’s Budget will set out further details of the Government’s plan for sustainable, private sector-led, balanced growth.
Andrew Stephenson
On Friday I visited Kirk Environmental, a company in Nelson that specialises in turning waste into electricity and usable biogas. It is experiencing rapid sales growth internationally, is recruiting more locally, and is at the forefront of the United Kingdom’s transition to a low-carbon economy. What incentives is my right hon. Friend providing to encourage such companies to invest more in Pendle and in the United Kingdom?
Mr Osborne
As I am sure my hon. Friend knows, in the spending review we allocated £860 million to the new renewable heat incentive, and earlier this month, in the House, my right hon. Friend the Secretary of State for Energy and Climate Change announced the introduction of the first phase of the scheme. It provides financial incentives to support a range of technologies and fuels, including those involving the use of biogas. I hope that that will help excellent companies such as Kirk in my hon. Friend’s constituency.
Stephen Metcalfe
Does the Chancellor regret the fact that manufacturing declined by 50% under the last Government? What plans has he to reverse that trend as we rebalance our economy, so that companies actually start to make things again in the United Kingdom, as they are already doing in South Basildon and East Thurrock?
Mr Osborne
My hon. Friend is right. The share of manufacturing in our economy halved during the years of the Labour Government. However, there is good news today: the CBI industrial trends survey shows that total order books are growing for the first time in three years. We are determined to move from an unbalanced economy that placed all the bets on the City of London to an economy that grows across the regions and in all sectors.
Mr Andrew Love (Edmonton) (Lab/Co-op)
The trade-weighted exchange rate has fallen by 20% in the last few years. Manufacturing has not increased as much as we expected, and there are even worse figures for the investment industry. What is the Chancellor doing to ensure that we gain the advantages of that exchange rate depreciation?
Mr Osborne
I do not know why Opposition Members want to talk down the British economy. What the chief economist at the CBI said contrasts with the hon. Gentleman’s remarks about manufacturing. The chief economist said:
“The outlook for UK manufacturing output growth is very encouraging.”
We are going to support manufacturing. We have the corporation tax cut that I announced in last June’s Budget, and we have the new centres for innovation and manufacturing. We are going to help manufacturing, whereas Labour shrank manufacturing.
Barbara Keeley (Worsley and Eccles South) (Lab)
Talking of making things, a small manufacturing firm in my constituency is investing in the development of a new engine. If it moved into production, hundreds of jobs would be created in the 15th most deprived area in the country. Will the Chancellor tell us why the Government have cut Labour’s investment allowances, which would be just the thing to help and support a small and vital manufacturer like the one in my constituency?
Mr Osborne
Manufacturers, including the one to which the hon. Lady has referred, benefit to the tune of £250 million from the reductions in corporation tax that we announced in the June Budget. That is what we have done to support British industry. As I have said, under the Labour Government British industry shrank: while the share of the economy taken by financial services grew by a third, the manufacturing share halved.
George Freeman (Mid Norfolk) (Con)
Does my right hon. Friend agree that, as we see signs that business confidence in the economy is being restored, tomorrow’s Budget presents a key opportunity to support the high-technology entrepreneurs who put their own wealth at risk in starting the businesses of tomorrow?
Mr Osborne
Yes, we will support enterprise and innovation in tomorrow’s Budget, but my hon. Friend will have to be patient and wait until then to hear about the precise measures that are involved.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Manufacturers up and down the country and the whole House are awaiting the Chancellor’s long-delayed growth strategy to be published tomorrow, but I have a copy of that document with me today. It says:
“Growth comes first for this Government”
and that their strategy will
“underpin private confidence, investment and job creation.”
The Chancellor has no need to worry however, as I will not be handing this document to the press. I read it last night and, frankly, there is nothing in it worth leaking. Has this document been audited by the Office for Budget Responsibility? Is the Chancellor really clear that getting rid of maternity and paternity rights and enterprise zones will boost jobs and growth in our economy? Is this going to be enough to stop the Budget growth forecast tomorrow being downgraded for this year and next?
Mr Osborne
I am not sure that that is the document in question—but if the right hon. Gentleman hands it over, I will have a look—because we are not getting rid of maternity and paternity rights, so I do not know where he got that from. Besides, I have a copy of his document, and it contains all the spending commitments he has been making. If he cannot control his own Front-Bench colleagues, how on earth is he going to control the nation’s finances?
Ed Balls
Is this really the best the right hon. Gentleman can do? I bet he will have Treasury officials scrabbling around all afternoon trying to deliver a further 1p cut in corporation tax tomorrow and a further tax cut for the banks. Let us wait and see. The fact is that a year ago inflation was low and unemployment was falling, and a year on, as we see today, inflation is up to 4.4% and borrowing is higher than a year ago, not to mention unemployment. If the Chancellor will not listen to me, will he listen to his colleague who said:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”?
The Business Secretary was right. Why will the Chancellor not listen?
Mr Osborne
The right hon. Gentleman really needs to brush up on his question practice, but let me say this to him: the idea that we were somehow left a fantastic economy by the Labour party is quite the most ludicrous claim in the country, and the only reason he makes it is because he was responsible for the economic mess that left this country on the brink of bankruptcy.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
One of this country’s great manufacturing success stories is world-leading subsea engineering that has grown up on the back of investment in the North sea oil and gas industry, based in my constituency but working throughout the United Kingdom. What reassurance can the Chancellor give my constituents that the Government will build on their constructive relationship to ensure a fiscal regime that maximises investment in North sea oil and gas production and exploration and that boosts the manufacturing that supports that?
Mr Osborne
Of course we want to ensure that we prolong the life of the North sea fields. One area on which we can work with the industry is ensuring greater certainty about decommissioning costs and about the tax regime that was operated under previous Governments and how that will apply over the next 10 years. I hope to work with the industry on that.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
9. If he will review the pace of proposed reductions in public expenditure to take into account GDP figures for the fourth quarter of 2010.
The Chief Secretary to the Treasury (Danny Alexander)
I welcome the hon. Lady to the House. The short answer to her question is no. Of course, growth in the final quarter of last year was disappointing, but, as we always said, the recovery in the early stages would be choppy. Deficit reduction is the essential precondition for growth, and the OBR’s November forecast stated that we would see growth in every year of the forecast.
Debbie Abrahams
Will the Chief Secretary explain to my constituents who are either unemployed or facing redundancy how his Government’s catastrophic economic policy is in the interests of the country? Clearly, we are not all in this together.
Danny Alexander
I hope the hon. Lady will take the opportunity to explain to her constituents that it is the legacy of the previous Labour Government that has caused the enormous mess and all the problems in our economy. They left us with the largest Budget deficit in Europe, and one of the largest in the world. Countries in our position have to take the sort of action we have taken, or risk being in a much deeper mess. If that is what she is advocating, I suggest she tells her constituents.
Margot James (Stourbridge) (Con)
We are spending £120 million a day on debt interest—£1 billion by the end of next week. How many representations has my right hon. Friend received from reputable international and national organisations advising him to slow the pace of deficit reduction?
Danny Alexander
None. The hon. Lady will be aware of the report that the OECD published last week, which strongly endorsed our plans. Its general secretary, Angel Gurría, said that the fiscal position we inherited was “clearly unsustainable” and that the
“consolidation measures and plans that the”—
Government—
“have put in place were therefore vital.”
I agree with that.
Chris Leslie (Nottingham East) (Lab/Co-op)
Today’s inflation figures show a sharp leap in the retail prices index to 5.5%, the highest level in 20 years. That hits not only living standards, but public service expenditure plans. Is the Chief Secretary sticking to the coalition agreement guarantee of real-terms growth for the NHS in each year or is he resolutely sticking to his plan A, regardless of economic realities?
Danny Alexander
We are sticking to the spending plans that we set out in the spending review, and that is the right thing to do. Of course I understand that inflation has an effect on people’s living standards, which is why it is particularly important to emphasise the increase in the personal income tax threshold—£1,000 extra on the threshold—that comes into force this April, which will put £200 back into the pockets of hard-working people in this country. That is the action this Government are taking to help people through these difficult times.
Stephen Phillips (Sleaford and North Hykeham) (Con)
10. By what date he expects revenue to the Exchequer to match levels of public expenditure.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Excluding capital expenditure, the Office for Budget Responsibility forecasts revenue to exceed current expenditure by 2015-16. This is further evidence that this Government believe that the country should live within its means.
Stephen Phillips
I am grateful to my hon. Friend for that answer. The shadow Chancellor was reported as saying in Saturday’s The Daily Telegraph:
“The idea that Labour profligacy caused the crisis is utter tosh.”
Does my hon. Friend agree that the only tosh to be seen in that statement is the suggestion that Labour had not created the mess we are in? Is it not the case, as the CBI has said, that the previous Government’s target of balancing the budget by 2018 was set too far off to—
Mr Speaker
Order. We are asking about current policy, and some of these questions are simply—[Interruption.] Order. We have got the gist.
Mr Hoban
My hon. and learned Friend is absolutely right, and a number of organisations, both at home and abroad, have criticised the lack of ambition of the previous Chancellor’s plans. That is why the Obama Administration, the International Monetary Fund, the OECD, the Institute for Fiscal Studies, the CBI, the Governor of the Bank of England, 35 leaders of British businesses, the European Commission, the World Bank, three major credit rating agencies and the world’s biggest bond trader have been backing our plans—the only person the shadow Chancellor can find to back his is The Guardian.
Tony Lloyd (Manchester Central) (Lab)
Public expenditure is to be matched by revenue in 2015, but has the Treasury made any estimate of the amount of growth and employment that will have been forgone by these policies of making too-deep cuts too quickly?
Stephen Hammond (Wimbledon) (Con)
Does my hon. Friend agree that real progress on growth has to be made through not only matching expenditure, but cutting the deficit, and that the OECD says that the only way we will get future growth is by ensuring that the deficit plans are continued and this Government pursue their policy?
Mr Hoban
My hon. Friend is absolutely right. The OECD is one of a number of organisations that have supported our plans. The IMF has said:
“The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability.”
That theme continues to come across from international organisations, which demonstrates that we are on the right track to get this economy growing again and ensure that Britain continues to live within its means after a decade of a Labour Government who maxed out on the nation’s credit cards.
Helen Goodman (Bishop Auckland) (Lab)
11. If he will (a) prepare and (b) publish an assessment of the relative effect of his forthcoming budget on women, families and ethnic minorities.
The Exchequer Secretary to the Treasury (Mr David Gauke)
Consistent with the approach taken at the June Budget, the Government will publish analysis on the Budget’s overall impact on households across the income and expenditure distributions in the Red Book. The Budget is an overall statement of economic policy containing a wide range of measures, and it is not possible to make a robust assessment of its overall impact on specific groups.
Helen Goodman
I am surprised by that answer. Since the general election, the Government have made 17 distinct cuts to tax credits and child benefit, which are paid to women. Tomorrow, the Chancellor will announce increases in personal allowances, which will benefit millions more men than women. Does the Minister think it is fair that money should be taken from women to give it to men?
Claire Perry (Devizes) (Con)
Is the Minister aware of my freedom of information request from last September which found that the previous Government never carried out an equalities impact assessment—not in the March Budget, the December pre-Budget report or the March 2010 Budget? They never did it either.
Mr Speaker
Order. I am sorry but I must repeat, and I hope that the message will be heeded, that questions must be about the policy of the current Government.
Mary Macleod (Brentford and Isleworth) (Con)
Does my hon. Friend agree that raising the income tax threshold, protecting spending on the NHS and increasing spending on social care will definitely benefit women?
Kerry McCarthy (Bristol East) (Lab)
The Chancellor chose to hit women three times as hard as men in his Budget last year and now, as living costs rise and the public sector is slashed, he wants to hit them yet again by changing the rules around maternity and paternity leave and flexible working in small companies. Is it really women whom the Prime Minister has in mind when he talks about taking on the enemies of enterprise, and can the Minister reassure the House that it will not be women who bear the brunt of tomorrow’s Budget?
Amber Rudd (Hastings and Rye) (Con)
Does the Minister agree that the fact that we are not cutting the NHS will really support women because they are so often carers in their family and it is so important that we support them in that important role?
Anas Sarwar (Glasgow Central) (Lab)
13. What assessment he has made of the effect on road fuel prices of the increase in the standard rate of value added tax.
The Exchequer Secretary to the Treasury (Mr David Gauke)
How much of the rise in the standard rate of VAT is passed on to consumers is a commercial decision for retailers.
Anas Sarwar
I thank the Minister for that answer. Treasury Ministers are very wrong to suggest that the calls to scrap the VAT increase on fuel is illegal and unworkable. There is precedent for it: the French President recently got a derogation from EU laws for French restaurants. Will this Government stand up for UK families who have been hard hit by the rise in fuel costs and look for derogation powers on fuel duty?
Richard Graham (Gloucester) (Con)
In terms of the value for money of decisions taken by the Treasury, whether on road fuel tax or other things, does the Minister agree that one of the best value creations of this Government has been the increase in apprenticeships, which is widely appreciated around the country? Does he agree that apprenticeships are critical both to our growth strategy and to the reduction of youth—
Mr Speaker
Order. I am sorry, but that question suffers from the disadvantage that it bears absolutely no relation whatever to the question on the Order Paper.
Mr Peter Bone (Wellingborough) (Con)
May I suggest a much quicker way of changing the VAT rate without that being illegal—by pulling out of the European Union?
Mr Speaker
I have to say that that was not much better, but the Minister may have a go.
Mark Lancaster (Milton Keynes North) (Con)
14. What recent representations he has received on measures to reduce the budget deficit.
The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government have received a number of representations for the Budget referring to the need to reduce the budget deficit. In addition, the Government’s strategy has been endorsed by a number of organisations, including the OECD, which said in January that the Government should
“stay the course…The fiscal situation in the UK absolutely requires this approach”.
Mark Lancaster
The Government’s plan to eliminate the deficit by 2015 is in stark contrast to the Darling plan, which was simply to reduce it by half. What assessment has the Minister made of the likely impact of the Darling plan on the level of debt and the cost of servicing it?
Mr Hoban
If we had continued with the previous Government’s deficit reduction plan, debt would still be rising in 2015, not falling, meaning that we would have to spend an extra £3 billion in one year on debt interest while still having to make spending cuts. The lack of ambition in the previous Government’s plan put our credit rating at risk, thus threatening the prospect of higher interest rates and putting a brake on the recovery.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
When such representations were being made, was the Minister conscious of the effect that these cuts might have on young people in our country? Did he look at last week’s level of unemployment among young people? When will his Government do something for young people in this country?
Mr Hoban
The legacy left by the previous Government was that youth unemployment was continuing to rise. The other problem with which the Opposition left us was that our children and grandchildren would have to pick up the tab for Labour’s mismanagement of our economy. We need to get the deficit down to create the foundations for economic growth to ensure that more young people are back in work.
Duncan Hames (Chippenham) (LD)
The Chief Secretary to the Treasury has certainly received representations from me on such measures, including about the estimated loss to the Exchequer of more than £100 million due to tax avoidance through low value consignment relief on VAT. Will the Minister at least confirm that the Government’s conclusions on that will be shared with us in tomorrow’s Budget?
Mr Kevan Jones (North Durham) (Lab)
15. What recent assessment he has made of the effect on economic growth of the spending reductions set out in the June 2010 Budget.
Mr Geoffrey Robinson (Coventry North West) (Lab)
16. What recent assessment he has made of the effect on economic growth of the spending reductions set out in the June 2010 Budget.
The Economic Secretary to the Treasury (Justine Greening)
The independent Office for Budget Responsibility’s November economic and fiscal outlook takes into account the spending plans set out in the 2010 spending review. The hon. Gentlemen ask about a recent assessment, and I can tell them that the OBR will publish an updated forecast alongside tomorrow’s Budget.
Mr Jones
Durham university’s economic model shows that between 45,000 and 50,000 individuals will lose their jobs in the north-east of England as a direct result of public expenditure cuts, including 20,000 in the private sector. What message does the Minister have for those individuals and also for the 10.2% of the north-east population who find themselves unemployed?
Justine Greening
Coming from a Labour Member, given that unemployment rose during his party’s time in government, people will find that pretty hypocritical. The only way in which we will get sustainable jobs and a sustainable economy that is not as reliant on the public sector will be to carry out our deficit reduction plan. The hon. Gentleman will hear more about our growth review tomorrow.
Mr Robinson
Is not the Minister aware that all the independent indicators and forecasters suggest that there will be a sustained period of low growth below forecast, and that almost every single economic indicator is going in the wrong direction? Can she not therefore see that the Chancellor’s plan is simply not working? Why are the Government in denial about that?
Justine Greening
I simply do not agree. As we have heard, every independent forecaster is backing our fiscal consolidation plan. The hon. Gentleman talks about evidence, but the retail sales volume grew strongly in January. The Chartered Institute of Purchasing and Supply purchasing managers index grew faster in January than analysts expected, while manufacturing reached a record high. Only today, the CBI industrial sector survey says that orders are going up. Our economy is rebalancing over time, and although the hon. Gentleman says that there is no evidence for that, there is such evidence. There is job creation, and that is what we will need if we are to turn our public finances around.
Jacob Rees-Mogg (North East Somerset) (Con)
Is it not the case that the Government’s debt reduction plan is absolutely right, as we see in the gilt market and the country’s credit rating? Is it not also true that, throughout history, coalition and Conservative Governments clean up the economic mess left by socialists?
Justine Greening
My hon. Friend is right. The consequence of that economic mess is that Labour Governments always leave unemployment higher than when they came into office. It is always that that we seek to tackle. He is right that there is no alternative plan. We have heard about a defunct plan for VAT and petrol, but we have not heard from the Opposition any plan to tackle the deficit. They said they would have some thoughts. Clearly, they are totally thoughtless.
Sajid Javid (Bromsgrove) (Con)
The Government inherited the largest budget deficit of any major country, yet today the UK enjoys one of the lowest interest rates of any major country. Does the Minister have an explanation for that?
Justine Greening
My hon. Friend is right to point out that the previous Government maxed out the country’s credit card. Worse still, they want us to hand on those debts—their debts—to our children and grandchildren. The reason that we have been able to enjoy lower interest rates for our borrowing than countries such as Ireland is that the markets know that we have a plan to get our public finances back into shape. That is benefiting this country every day.
Tom Brake (Carshalton and Wallington) (LD)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability of the economy, promote growth and jobs, reform banking and manage the public finances so that Britain finally starts to live within her means.
Tom Brake
More than 1,500 people in Sutton will be taken out of paying income tax altogether from next month as a result of the increase in the tax threshold. What estimate has the Chancellor made of the number of people who will be taken out of paying tax altogether in 2015, when the tax threshold is increased to £10,000?
Mr Osborne
I think my hon. Friend is getting a little ahead of himself. The commitment is to a real-terms increase in the personal tax allowance in each and every year. People will have to wait for the Budget tomorrow. The increase of £1,000 in the personal tax allowance has taken 900,000 people of out of tax.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
T4. Writing in The Independent at the end of 2009, the then shadow Chancellor said:“If I become Chancellor, the Treasury will become a green ally, not a foe.”Will that pledge be reflected in tomorrow’s Budget?
Mike Freer (Finchley and Golders Green) (Con)
T2. The Financial Services Authority’s mortgage market review stated:“Our existing regulatory framework has been shown to be ineffective”and that“regulatory reform is needed to reduce the probability and severity of future financial crises”.Does the Minister agree?
The Financial Secretary to the Treasury (Mr Mark Hoban)
My hon. Friend is right. The mortgage market needs reform, but it needs stability as well, which is why I welcome the statement by the FSA today. It says that it will not introduce reforms this year and will take into account overall economic stability before it introduces any further changes. It has also made it clear that lenders should not pre-empt any conclusions from its review.
Bill Esterson (Sefton Central) (Lab)
T5. Can the Chancellor confirm that between 1990 and 1997 the proportion of tax paid on a litre of fuel rose from 59% to 75%? Can he also confirm that the proportion of tax paid then fell by more than 10% between 1997 and 2010?
Mr Osborne
What I can confirm is that Labour left us with six duty rises. Now they are wriggling desperately to find some excuse to get off the hook they put themselves on.
John Pugh (Southport) (LD)
T3. Can the Chancellor tell me when the Treasury’s detailed investigation of the feasibility of incorporating a general anti-avoidance rule in British tax law will conclude?
The Exchequer Secretary to the Treasury (Mr David Gauke)
My hon. Friend is right to highlight the matter. We have asked Graham Aaronson QC to undertake a study on the matter and he will report in the autumn.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
T6. Following the announcement last week by Lloyds of more job cuts, many of them in my constituency, to a work force who have showed total loyalty to the company, and as the Government own a large percentage of the company—a company that made more than £2 billion profit last year—will the Chancellor intervene to protect people’s jobs and livelihoods, and stop the constant drip-feed of job losses by Lloyds?
Mr Osborne
Of course we are concerned when people lose their jobs, including in the banking sector, but what Lloyds is undergoing is the process of merging HBOS with Lloyds bank, which was waved through by the previous Government.
Dr Julian Huppert (Cambridge) (LD)
T7. I have had the privilege of talking to the Chancellor about a charter for entrepreneurs that I drew up, based on discussions with entrepreneurs in and around Cambridge. I am sure he will not want to pre-empt what he will say tomorrow, but can he say that he has looked carefully at some of those issues, in particular reforming the enterprise investment scheme and enterprise management incentives, and making research and development tax credits easier for small companies?
Mr Osborne
I have a copy of the hon. Gentleman’s document here. He has some excellent ideas on promoting enterprise and entrepreneurs. He will have to wait until tomorrow to see how we respond to them.
Mr Geoffrey Robinson (Coventry North West) (Lab)
T8. Can the Chancellor not see that the figures —current and forecast—for inflation, unemployment, growth, borrowing and even the deficit are all way off his target? Can he not see that the plan is not working, or is it a sad case of him not wanting to see?
Mr Osborne
What I would say to the hon. Gentleman is this: we inherited a record budget deficit and there was no credible plan to deal with it. We put a plan in place and it is supported by the international community. The result of all this is that we have interest rates that are closer to Germany’s, despite having been left a deficit that is bigger than Portugal’s or Greece’s.
Mr Andrew Tyrie (Chichester) (Con)
Will the Chancellor make every effort to keep the House informed about the cost of our operations in Libya by providing an estimate at the earliest opportunity? Will he also tell us whether those costs will be funded from the Ministry of Defence budget or drawn from the Treasury reserve?
Mr Osborne
My hon. Friend alerted me to the fact that he might ask this question. The House will understand that it is too early to give a robust estimate of the costs of the operations in Libya, but I can say that they should be modest compared with some other operations, such as Afghanistan. The MOD’s initial view is that they will be in the order of tens of millions of pounds, not hundreds of millions. I can tell the House today that whatever they turn out to be, the additional costs of operations in Libya will be fully met from the reserve.
Mr Kevan Jones (North Durham) (Lab)
T9. The Chancellor said on Sunday that the present financial difficulties were the result of “a decade of overspending”, so can he tell the House why in July 2008, 11 years into a Labour Government, the then Leader of the Opposition, now the Prime Minister, told the CBI conference“we are sticking to Labour’s spending totals”?
Mr Osborne
What we did on coming into office was set out a credible plan to reduce the budget deficit that has moved this country out of the financial danger zone. One month ago, the shadow Chancellor told his entire Front-Bench team not to make any spending commitments, and after that they committed to more than £10 billion of spending commitments. They have opposed £50 billion of the cuts. It is completely incredible, and that is why they cannot find any reputable organisation in the world to agree with them.
Mr Douglas Carswell (Clacton) (Con)
How high would inflation need to be before we halted further quantitative easing, stopped printing money and raised interest rates?
Mr Osborne
The Bank of England’s Monetary Policy Committee is of course independent. It is set a target by the Chancellor, and I expect the Bank to pursue that target.
Graeme Morrice (Livingston) (Lab)
T10. Contact a Family and the Children’s Trust have been campaigning for a change to the current rule that suspends disability living allowance payments for children under 16 once they have spent 84 days in hospital. The cost of this is around £3 million, compared with the overall deficit reduction measures of £80 billion. As this is a financially driven measure, will the Chancellor undertake to discuss the funding issue with colleagues in the Department for Work and Pensions so that some of the most severely disabled and sick children and their families continue to receive the financial support required when they need it most?
The Chief Secretary to the Treasury (Danny Alexander)
The Secretary of State for Work and Pensions is bringing forward proposals to reform the disability living allowance system and replace it with a new personal independence payment. I am sure that he will have heard what the hon. Gentleman said and will be very happy to discuss the matter with him.
Greg Mulholland (Leeds North West) (LD)
The previous Government’s beer duty escalator was damaging to pubs, ill-considered and did not raise the revenue that it should have done. Considering that the Prime Minister has said that he wants this to be a pro-pub Government, will we get some good news for pubs tomorrow?
The Economic Secretary to the Treasury (Justine Greening)
The hon. Gentleman will have to wait until tomorrow’s Budget, but he will recognise that in the emergency Budget last year we left beer duty frozen.
Stewart Hosie (Dundee East) (SNP)
The Chancellor knows that the long-term solution to the spikes in fuel prices is a stabiliser or a regulator, and hopefully we will hear about that tomorrow. However, is he aware that the price rises in fuel over the past four of five weeks equate to an additional £1,000 a year for running every truck in the country? Does he not agree that that is hugely inflationary and utterly unsustainable?
Mr Osborne
Of course, the very sharp rise in the world oil price has posed a challenge to lots of economies—all but the oil-exporting economies. That is one of the headwinds currently facing the global economy. Specifically on fuel duty and other issues, the hon. Gentleman will have to wait for the Budget.
Andrea Leadsom (South Northamptonshire) (Con)
Will my right hon. Friend undertake very carefully to consider improving the diversification of financial services provision in the way that United Kingdom Financial Investments Ltd divests itself of taxpayers’ shareholdings in the banks?
Mr Osborne
I am very happy to consider a number of ideas that have been put forward, but we have not yet reached that stage. If we sold the bank shares today, we would still be making a loss as a nation. That is an indication of the scale of the banking crisis. When we come to put those banks back in the private sector, I am sure that there will be a healthy debate in this Parliament and elsewhere about how we treat the proceeds.
Andrew Gwynne (Denton and Reddish) (Lab)
Ministers will be aware that there is a sunset clause in the Debt Relief (Developing Countries) Act 2010, which comes into effect in June. Does the Treasury have a view about renewing this important landmark legislation, which tackles the worst abuses of vulture funds?
Jesse Norman (Hereford and South Herefordshire) (Con)
Is my right hon. Friend aware that the Governor of the Bank of England confirmed to me recently in the Treasury Committee that without the current austerity measures, our international borrowing rates would be some 3% higher?
Mr Osborne
Of course, the Governor of the Bank of England is one of many people who have pointed out that there was no credible plan when we came into office and that we have put a credible plan into place.
Mr Chuka Umunna (Streatham) (Lab)
The Chancellor and other Ministers have cited investor confidence as the reason why they cannot revise their original plan for fiscal consolidation, but Jonathan Portes, the immediate former chief economist at the Cabinet Office, said:
“This is not a justification, economic or otherwise, for”
not changing policy. He said that
“it relies on an odd view of market psychology, one that says markets have more confidence in governments that never adjust policy, even when it is sensible, from an economic perspective, to change course.”
Why is he wrong?
Mr Osborne
Our country’s credit rating was on negative watch when we came to office and as a country we did not have a credible plan to reduce the budget deficit. Since that plan has been put in place we have been able to see the effects because our market interest rates and our spreads over bunds have come down. We have interest rates that are closer to Germany’s despite, as I have said, having a budget deficit left to us that was higher than either Greece’s or Portugal’s.
Richard Harrington (Watford) (Con)
Would my right hon. Friend the Chancellor like to inform the House which organisations have made representations to him that the deficit should be halved over the course of this Parliament?
Ian Paisley (North Antrim) (DUP)
The Chancellor might know that my constituent, Jenifer Herald, employs 40 people in Northern Ireland in a number of Subway cafés. The chief executive officer of that company has written to the Chancellor to say that inconsistent VAT policies for toasted sandwiches are damaging the growth of that industry. Does the Minister intend to review how VAT applies to toasted sandwiches and does he, like me, want to get his toasted sandwiches at a reasonable price?
Mr Aidan Burley (Cannock Chase) (Con)
Is the Minister aware that according to the Institute for Fiscal Studies, if we only halve the deficit rather than close it completely over the lifetime of this Parliament, we will spend an extra £10 billion on interest? Does he think that that is money that would be better spent on schools and hospitals in this country rather than foreign investment bankers?
Mr Osborne
I certainly do. This country is spending £120 million a day on debt interest, which is now one of the largest items of Government spending. These are taxes we raise from people and money we borrow to pay debt interest. The truth about Labour’s plan is that it would mean billions of pounds more in debt interest—something that will become clear later in the Parliament.
Jim McGovern (Dundee West) (Lab)
I am sure the Chancellor and his Front-Bench colleagues will be aware of the recent Scottish Affairs Committee report on the computer games industry in the UK, which states that there are “compelling reasons” for introducing tax relief. Will he tell me, the House and people in my constituency, where the industry is very important, just what progress has been made?
Mr Gauke
That industry, like other industries, will benefit from the policies that we have introduced to ensure that we grow more strongly and have pro-business policies. On video games tax relief, we looked at it and did not feel that it achieved good value for money for the taxpayer.
Jessica Lee (Erewash) (Con)
May I welcome the recent visit by the entire Cabinet, including of course my right hon. Friend the Chancellor, to the city of Derby, near my constituency? Manufacturers and wealth creators have been waiting for a long time for some support in the east midlands, and I would be grateful if my right hon. Friend could set out what plans are in place to assist that important area.
Mr Osborne
At that meeting at Rolls-Royce, John Rose made a very compelling case for how little we had done as a country to support our manufacturing sector. We will set out policies tomorrow to assist, and we have already, as I said, put in place four annual reductions in the corporation tax. More broadly, we have to get away from a model of growth that was pursued over the last decade—based on excessive debt, and growth in one sector, the City of London, in one corner of the country, the south-east. We must have more balanced and sustainable growth in the future.
Ian Murray (Edinburgh South) (Lab)
Does the Chancellor of the Exchequer recall saying at the end of 2007:
“Today I can confirm for the first time that a Conservative Government will adopt these”—
Labour’s—
“spending totals…to…the year 2010-11”?
Does he regret calling the article, “Tories cutting services? That’s a pack of lies”?
Mr Osborne
We got into office in 2010-11, and we abandoned those spending plans for the years ahead.
Stephen Barclay (North East Cambridgeshire) (Con)
The Chancellor has a strong commitment to open and transparent government. Will he therefore ask his officials to look again at the number and value of special severance payments paid by foundation trusts, which must be reported to his Department but which his Department is not currently willing to disclose?
Danny Alexander
I should be very happy to look again at the matter and to talk to the hon. Gentleman about it.
Mr Speaker
Order. As usual, demand has exceeded supply, but I am afraid we must move on.
Petition
Mark Tami (Alyn and Deeside) (Lab)
The petition is of residents of Alyn and Deeside and neighbouring areas, totalling some 3,000 persons.
The petition states:
The Petition of residents of Alyn and Deeside,
Declares that Peter Jones, a 24-year-old former pupil of Alun School, Mold, died in hospital following an attack by Gafyn Thomas Denman, 21, who is from the Mold area; notes that Gafyn Thomas Denman was found guilty of manslaughter and was jailed for 40 months for an unprovoked attack; further notes that, at the time of sentencing, Judge Merfyn Hughes QC explained that his hands were tied by the sentencing guidelines in cases of “one-punch” manslaughter such as this.
The Petitioners therefore request that the House of Commons urges the Government to review sentencing guidelines for those convicted of manslaughter so that sentences can better reflect the severity of the offence.
And the Petitioners remain, etc.
[P000905]
Student Visas
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Mrs Theresa May)
The UK has a worldwide reputation for providing quality education to overseas students, and Britain is rightly the destination of choice for many people wishing to study abroad, but under the previous Government the student visa system became the symbol of a broken and abused immigration system. Labour claimed that it had capped unskilled immigration at zero, but it was happy just to sit back and watch as unskilled migrants abused the student route to come here. We had too many people coming here to work and not to study, we had too many foreign graduates staying on in the UK to work in unskilled jobs, and we had too many institutions selling immigration, not education.
We want to attract only the best and the brightest to Britain. We want high-quality international students to come here, we want them to study at genuine institutions whose primary purpose is providing a first-class education, and we want the best of them—and only the best of them—to stay on and work here after their studies are complete. That is exactly what we are doing across all the immigration routes: tightening up the system, tackling the abuse and supporting only the most economically beneficial migrants.
I have already announced and begun to implement our plans to limit economic migration—cutting the numbers by more than one fifth compared with last year. I will return to the House later this year with a consultation that will set out proposals to break the link between temporary migration and permanent settlement. I also intend to consult on changes to the family migration route. I will be bringing forward proposals to tackle sham marriages and other abuse, promote integration and reduce the burdens on the British taxpayer. We aim to reduce net migration from the hundreds of thousands back down to the tens of thousands.
The most significant migrant route to Britain is the student route, and we must take action there, too. Immigration by students has more than trebled in the past 10 years, and it is now far larger than immigration through the work or family routes. It is unsurprising that more and more overseas students are attracted by our world-renowned higher education institutions, but there has also been an increase in abuse in the private further education sector.
Students now make up the majority of non-EU migrants: including their dependants, they accounted for about two thirds of the visas issued last year under the points-based system. When Labour introduced the current system in 2009, almost a third more student visas were issued that year than the year before—an increase from 230,000 to 300,000. Numbers were so high that the UK Border Agency had to suspend student applications in some parts of the world because it could not cope with the demand, and much of that demand was simply not genuine. We have so-called students turning up at Heathrow airport who cannot answer basic questions in English or even describe what their course is about. One institution has an intake of 90% international students and asks only for GCSE-level qualifications to do a supposedly degree level course. Another college’s own sales agent actually helped a student to cheat in their entry exam. Legitimate colleges should still be able to recruit legitimate overseas students, but we need to stop the abuse and return some common sense to our student visa system.
The current system is based on a sponsorship regime that trusts educational institutions to assess the quality and ability of students, and puts the responsibility on the institution to ensure that the student is in fact studying and obeying the immigration rules. That trust has been well placed in some sectors: universities, independent schools and publicly funded further education colleges mostly take their sponsorship duties seriously and act responsibly. But some, particularly in the private FE sector and parts of the English language college sector, are not exercising the due diligence we expect. Those institutions make up the largest single group on the sponsor register. The sector is essentially unregulated; those institutions are not subject to a statutory system of education inspection and can offer any type of course they like. Although some of them are legitimate, for many their product is not an education, but immigration, together with the ability to work here.
It is absolutely clear that the current regime has failed to control immigration and failed to protect real students from poor-quality colleges. That is why the proposals I am announcing today are unashamedly targeted at the least trustworthy institutions. Our proposals protect the interests of our world-class universities, protect our leading independent schools and public FE colleges and, ultimately, are in the best interests of legitimate students.
In future, all sponsors will need to have been vetted by one of the approved inspectorates—Ofsted and its devolved equivalents, the Quality Assurance Agency or the relevant independent schools inspectorate—and all must become highly trusted sponsors. Once they achieve that status, private colleges offering quality, bona fide training programmes of genuine educational value will be able to continue to recruit legitimate international students. All current sponsors who do not meet the requirements will be allowed to stay on the register for a short period from April 2011. During that time they will be limited in the number of students they may sponsor. They will first have to apply for highly trusted sponsor status and accreditation. They will then be required to achieve highly trusted sponsor status no later than April 2012, and accreditation by the relevant agency by the end of 2012.
As well as cracking down on bogus colleges, we will crack down on bogus students. Students who want to come here should be able to speak English, to support themselves financially without taking paid employment, and to show that they are coming for study, not for work. So we will toughen up the entry requirements. First, we will strengthen the evidence that students need to demonstrate that they have the financial means to fend for themselves. Secondly, we will streamline the requirements for students from low-risk countries and prioritise resources on high-risk students. Thirdly, we will toughen up the rules on English language competence. Those coming to study at degree level will have to speak English at upper intermediate level; others will have to speak English at intermediate level. UKBA officers will be given the discretion to refuse entry to students who cannot speak English without an interpreter and who do not meet the required minimum standards. Let me be clear: you need to speak English to learn at our education establishments; if you can’t, we won’t give you a visa.
If someone is coming to the UK as a student, study should be their main purpose, not work. So we will end permission to work during term time for all students other than those at university and publicly funded FE colleges. Students at public sector FE colleges will be allowed to work for 10 hours per week in term time, and students at university for 20 hours per week. We will reduce the amount of work that can be done on work placement courses for non-university students from 50:50, as now, to two thirds study, one third work. At present, students on courses of six months or more can bring their dependants with them. In 2010, over 31,000 student dependants came here. We will remove this right for all but postgraduate students at universities and Government-sponsored students.
Coming to the UK to study for a course should, by definition, be a temporary step, so we will limit the amount of time that students can spend in the UK. Too many students who originally came here for short courses have been staying for years and years by changing courses, often without showing any tangible academic progress. We will limit the overall time that can be spent on a student visa to three years at lower levels, as now, and to five years at higher levels. There will be exceptions for longer courses such as medicine and veterinary science, and for PhD study, but no longer will students be able to stay here and switch from course to course to course.
We want the best international graduates to stay and contribute to the UK economy. However, the arrangements that we have been left with for students who graduate in the UK are far too generous. They are able to stay for two years, whether or not they find a job and regardless of the skill level of that job. In 2010, when one in 10 UK graduates were unemployed, 39,000 non-EU students with 8,000 dependants took advantage of that generosity.
We will therefore close the current post-study work route from April next year. In future, only graduates who have an offer of a skilled graduate-level job from an employer licensed by the UK Border Agency will be allowed to stay. Post-study migrants must be paid at least £20,000 or the appropriate rate for the occupation, as set out in the relevant code of practice, whichever is higher. That will prevent employers from recruiting migrants into skilled occupations but paying them less than the going rate. We estimate that had this measure been applied last year, it would have halved the numbers staying in the UK through this route. We will not impose a limit on that group next year, but we will keep the position under review. If the number of foreign students entering the labour market as post-study workers increases significantly and unexpectedly, we will ask the Migration Advisory Committee to look at how abuses can best be addressed. That would potentially include the introduction of a separate temporary limit on post-study workers.
As we restrict the post-study work route, we will ensure that innovative student entrepreneurs who are creating wealth can stay in the UK to pursue their ideas. The message to the brightest and the best students around the globe is clear: Britain’s world-class universities remain open for business.
We recognise the need to implement these changes in a staged manner that minimises disruption to education providers and students. We will therefore implement the measures in three stages, starting with new rules, which will be laid by the end of this month. I will publish the full details shortly.
The package of measures that I have outlined today is expected to reduce the number of student visas by between 70,000 and 80,000—a reduction of more than 25%—and it will increase the outflow of foreign students after they have concluded their studies. There will be a proper system of accreditation to root out bogus colleges; tough new rules on English language skills, financial guarantees, working rights and dependants, to root out bogus students; and new restrictions on post-study work to make sure that all but the very best return home after study. This package will stop bogus students studying meaningless courses at fake colleges, protect our world-class institutions, stop the abuse that became all too common under Labour, and restore some sanity to our student visa system. I commend this statement to the House.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
I thank the Home Secretary for the half-hour’s advance sight of her statement, as has become the form for the Home Office. Helpfully, however, we were, of course, able to read about the main changes in the newspapers this morning. As has become the form for this Government, we were also able to read opposing stories in opposing newspapers. The Business Secretary briefed the Financial Times that the policy had been completely changed so that he could support universities in expanding the number of their foreign students; the Home Secretary promised The Sun that the policy meant slashing foreign student numbers. Different policies for different papers, policies changing all over the place, and an unseemly row at the heart of the Government—such is the chaos at the centre of the Government’s immigration policy for students.
The Home Secretary is right to say that migration makes an important contribution to our economy, the strength of our business and our vibrant society. She is also right to say that migration needs to be properly controlled to sustain social cohesion and an effective labour market. She will recognise the importance of the higher and further education sector to the British economy. Non-EU students contribute an estimated £5 billion to the UK economy, support thousands of jobs in teaching and related areas, and make education an extremely important export industry. It is important that we recognise that economic value in providing workable migration policies. She will know that the Home Affairs Committee stated in its important report that it
“would caution against measures which could be detrimental to a thriving, successful industry.”
Does she recognise, too, that CentreForum has said that moves to tighten the restrictions on overseas students will risk nearly 12,000 jobs in education and another 12,000 in the wider economy?
Some of the damage has already been done. Anecdotally, some universities are already noticing a significant drop in applications from foreign students as a result of the signals being sent out by the Home Secretary’s consultation. Does she believe that the 80,000 drop in student visas to which she has referred will consist entirely of visas for bogus students on bogus courses, or does she believe that some legitimate students, too, will be put off as a result of the measures that she has announced?
We agree that we should not tolerate bogus colleges and fake students. People who want to come to this country need to play by the rules. That is why the Labour Government introduced a system of highly trusted sponsors through our respected universities, and we support measures that will build on that, so long as they are introduced in a workable way. It is also why we closed 140 bogus colleges.
Can the Home Secretary tell the House how the UKBA is going to increase its checks on colleges and students when it is facing staff cuts of 9,000?
What is the Home Secretary’s position now on pre- degree courses? In the consultation she said that she would introduce substantial restrictions on pre-degree level courses being covered by tier 4 visas, but there was silence from her on that issue in her statement today. Can she confirm that she has now ditched that proposal to remove pre-degree level courses?
We also agree that there should be appropriate restrictions on students’ employment. It is welcome that the Home Secretary has taken into account some of the evidence about the international competitiveness of UK higher education, but she put that into the context of trying to help youth unemployment. Is not the truth that her figures will mean restricting post-study work permits for non-EU students by about 19,000 at a time when youth unemployment is nearer 1 million? If she were serious about tackling youth unemployment she might be talking to the Chancellor about reversing some of his cuts, and reinstating the future jobs fund. Is not the truth that this policy is not about youth unemployment or bogus courses, but about hitting higher education because she cannot meet her promise to cut net migration to tens of thousands over the course of this Parliament?
What is now the Government’s policy towards foreign students studying bona fide courses at legitimate institutions? Does the Home Secretary want their number to increase or fall? The Business Secretary has said of the higher education sector:
“It’s an export industry; we want to grow it.”
But the Home Secretary has said that she wants the numbers cut. The Business Secretary wants more foreign students, and she wants fewer. If Britain’s major universities and colleges, faced with nearly £3 billion of cuts, decide to expand their courses and double the number of legitimate foreign students paying full fees in order to subsidise British students, will she support them or not? If they increase their legitimate students by 80,000, will she support them or not?
Finally, will the Home Secretary tell the House what the position is on student visitor visas, which she did not mention? Will she confirm that although she is restricting tier 4 student visas, in December she increased the number of students and courses eligible for student visitor visas? Will she confirm that under that visa, people can still apply for non-degree courses that are not run by highly trusted sponsors and do not have any minimum language requirement? Will she confirm that she has done nothing to prevent an increase of perhaps 80,000 in student visitor visas, and will she admit that the people on those visas will not be included in the net migration figures? Does that not expose the real con at the heart of her policy? Although she is making restrictions in one area, she is increasing the student visitor visas in another area that does not count towards her net migration targets.
The Home Secretary promised that she would put an end to non-EU students working once they had finished their course: the plan is ditched. She promised that she would put an end to non-EU applicants taking courses that were not degrees: that plan is ditched. She promised a new border police force, and that is still on the Conservative party website, but instead the Government have cut 5,000 staff from the UK Border Agency.
Time and time again policies are switched backwards and forwards, and in the end, it is all because the Home Secretary knows she cannot meet the promise that she made to cut migration numbers to the tens of thousands by the end of this Parliament. Is that still her target, will she still deliver it by the end of this Parliament, and is it not time she made policies that are in the interests of British universities, the British economy and a sensible, controlled migration policy, rather than taking risks with an important export industry for the sake of promises she knows she cannot keep?
Mrs May
I have to say that I am incredibly disappointed by the right hon. Lady’s response—but to be fair to her, there was one bright spark in it: she actually gave a statement on Labour’s immigration policy, which she has failed to do for two months. She said that the Labour party agreed that migration should be properly controlled. Sadly, however, in every other statement that the Opposition have made, be it in response to this announcement or the announcement on curbing the number of non-EU economic migrants, they have refused to support the measures that will bring about that proper control. We see that policy approach from the Labour party in relation to other things as well, such as public spending. The Opposition say they want to do something, but do not support anything that would enable it to be done.
The right hon. Lady made an amazing series of statements and asked an amazing series of questions. It would have helped her if she had actually listened to my statement and looked at it properly before she responded. She asked me whether it is still our aim to reduce net migration from the hundreds of thousands to the tens of thousands, but as Hansard will confirm, the answer to that was on page 3 of the text of my statement. The very sentence I used was, “We aim to reduce net migration from the hundreds of thousands back down to the tens of thousands.” I said that in my statement; she did not need to bother with that question.
Let me go through the right hon. Lady’s other points. I find it difficult to take some of her statements. She said that the previous Labour Government targeted bogus colleges, but listening to her, one would have thought that immigration was fine under the previous Government—that it was controlled, and there were no problems with abuse of the student visa system. I could take such things from her a little better if the number of student visas had not increased by a third to 300,000 when the Labour Government closed tier 3 of the points-based system. They were not controlling the student visa system or immigration at all. Because of their lack of control, the most recent figures show net migration of over 200,000 in the last year. Far from Labour controlling that, it was going up under the previous Government.
There are one or two other facts that the right hon. Lady might like to reconsider. She claims that 9,000 staff have been cut in the UKBA, but that is not the correct figure; the correct figure is around 5,000. She said that the Government were not going to do anything about courses below degree level. The whole point of the private FE college sector is that it offers courses below degree level. We intend to remove the bogus courses, colleges and students so that we can do what her Government failed to do: deal with and control immigration.
The right hon. Lady made a lot of statements about the importance of universities to the UK. Yes, universities are an important part of the UK economy. That is precisely why the measures that I have introduced take great pains to ensure that we protect universities. We are protecting universities, our independent school sector and public sector FE colleges, and we are ensuring that those who want to come here as legitimate students on legitimate courses of study at legitimate institutions can do so. We are doing what she failed to do: we are cracking down on the abuse.
Mr Speaker
Order. A great many hon. and right hon. Members are seeking to catch my eye. I should like to accommodate everyone who has an interest, but brevity is vital if I am to have any realistic chance of doing so.
Mr Graham Brady (Altrincham and Sale West) (Con)
Thank you, Mr Speaker. I have an unremunerated interest as a governor of Manchester Metropolitan university.
Will my right hon. Friend clarify two points? First, what is her view of students progressing from courses on English for academic purposes to degree courses? Secondly, what about those progressing from proper undergraduate degree qualifications to postgraduate courses within the same or other British universities?
Mrs May
I thank my hon. Friend for his question, because it enables me to clarify a point about students who currently do so-called pathway courses for English language. One of the points made clear to us by the university sector was that it often has arrangements with colleges to allow students without the required level of English to come and learn it at a pathway college and then progress to university. They will be able to continue to do so, but the students entering the college must be sponsored by the university. The university’s highly trusted sponsor status will cover those students, and undergraduates who wish to progress to postgraduate studies will be able to do so. Our requirement for progression is that it is clear that academic progression is taking place, and obviously moving on to postgraduate study is exactly that.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
As a lifelong expert in hyperbole, I advise the Home Secretary to ease off on it in the message to undergraduate and postgraduate students across the world. Some £25 million will be lost to the university of Sheffield and Sheffield Hallam university from legitimate overseas students in the coming year. Will she promise the House that in taking the necessary tough measures in one area she will change the hyperbole and send the message to legitimate students across the world that they are welcome in the United Kingdom?
Mrs May
As I said in my statement, the message to the brightest and best students around the globe is clear: Britain’s world-class universities remain open for business. However, as I have said to the university sector, we need to work together to ensure that that positive message is the one given, not the negative one given by the shadow Home Secretary.
Nicola Blackwood (Oxford West and Abingdon) (Con)
I welcome the Home Secretary’s statement, particularly on the retention of a reformed post-study work route, on which I was especially keen. Given her estimate that the reforms will lead to about 80,000 fewer student migrants, does she believe that our world-class universities, such as the two excellent universities in my constituency, will still be able to recruit the brightest and the best, which is what our economy so urgently needs?
Mrs May
I thank my hon. Friend for her question, and for the considerable interest that she takes in the university sector. I can assure her that the proposals we have introduced today will ensure that universities are protected and will continue to be able to attract the brightest and best students from across the world.
Mr Frank Field (Birkenhead) (Lab)
I welcome the Home Secretary’s statement, particularly on behalf of my unemployed constituents who are desperate to find work. Given that the numbers coming in and leaving the country are crucial to the whole debate, when will she be able to come to the House and announce a system for border controls that counts people in and counts them out again?
Mrs May
I thank the right hon. Gentleman for his question. This is an issue in which he has taken a long-standing interest. I will give two answers to his question. The e-Borders system, which is being put in place, is partly working at the moment; complete application will come in 2015. In the next couple of months we will also make proposals on settlement, in which I know he has taken a particular interest.
Tom Brake (Carshalton and Wallington) (LD)
Does the Home Secretary agree that higher education in the UK is world class, and that our top institutions should remain open for business to genuine students, but that bogus colleges, which provide nothing more than an excuse for entry into the UK, should be forced to close their doors promptly?
Mrs May
My hon. Friend is absolutely right. The package that we have introduced today will protect our universities, which provide a world-class education. Students should want to come here for that quality of education, and we need to crack down on bogus colleges. It gives the UK a bad name when people see that they can come here supposedly as students but not get a proper education.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
It is estimated that the loss of income to higher education resulting from the Government’s current policies on the issuance—or non-issuance—of tier 4 permits for pre-university pathway courses is costing higher education an enormous amount of money. I waited in vain during the Home Secretary’s statement for clarification on the position pending the announcements. Will she make it clear whether tier 4 applicants can now come here to do pre-university pathway courses?
Mrs May
The hon. Gentleman is correct: I did not mention that in my statement; I referred to it in response to my hon. Friend the Member for Altrincham and Sale West (Mr Brady). Pathway courses for students without the correct level of English to enable them to study at university will continue, but the student will need to be sponsored by the university concerned—the highly trusted sponsor.
Mr Mark Field (Cities of London and Westminster) (Con)
In recent years I have been on the advisory board of the London School of Commerce.
I want to ask the Home Secretary about post-study work, as did my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood). I have slight reservations. Given the excellence of our offering and the idea that we will get some phenomenally innovative students from across the globe who will go back as ambassadors for this country, has any research been done in the Home Office showing that we might lose some of those students to places such as the United States or Australia, or are we confident that the changes will have no such adverse impact?
Mrs May
I am happy to tell my hon. Friend that there is no evidence that that will be the upshot. Our system is similar to those in operation elsewhere. It is wrong to say that the United States has a formal post-study work route; it does not. There are some abilities for people to stay and do some work in the United States, but they are different. Indeed, in some ways our requirements will continue to be less tough than those in countries such as Australia.
Keith Vaz (Leicester East) (Lab)
I thank the Home Secretary for keeping to her promise to publish her proposals after the Select Committee on Home Affairs had published its report last week. I hope that she found the report helpful. There is much to welcome in her statement—we recommended action on bogus colleges, reform of the post-study route and better accreditation—but will she look at the two most important recommendations, on whether students are migrants if they come here genuinely to study and then to leave, and on the issue of data? Unless we have proper data, we can make only flawed policy.
Mrs May
Obviously one is always looking to improve the quality of the evidence on which policy can be based. As for whether students are migrants, we use the internationally accepted United Nations definition of “migrant”, which is somebody coming to stay for over 12 months.
Mr James Clappison (Hertsmere) (Con)
I warmly welcome the package that the Home Secretary has announced today and her determination to tackle the problem of bogus colleges and bogus students, which the Home Affairs Committee has been warning about for a long time, but on which no action had been taken. She has announced that she will return a measure of independence to entry clearance officers, which is welcome. Will she consider returning to them—as recommended by the Home Affairs Committee and Migrationwatch—the wider discretion that was removed under the points-based system, which would be in the interests of both facilitating genuine students and keeping out bogus students?
Mrs May
Having spoken to UK Border Agency officers at points of entry, I am conscious of the frustration that they have felt at not having the discretion to deal with people whom they have plainly seen were not coming here as bona fide students, so I am pleased to restore a degree of discretion to them. My hon. Friend tempts me to go further than that, but that is not a path down which I intend to go at the moment. There were some issues raised about the greater degree of discretion available previously, but we are constantly looking at our immigration system and the way in which UKBA officers operate.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I welcome the continuation of the notion of trusted status among the universities. When the Home Secretary finesses the rules, will she ensure sufficient scope for universities to take into account the realities of the circumstances that face them? In some areas of science and engineering, students come here with weak English but amazing skills and the ability to learn very quickly. Equally, some post-doctoral or postgraduate students come here with spouses who do not speak English. Will she ensure that universities have the capacity to deal with all those complex cases?
Mrs May
We have already introduced some English language requirements for people coming here to marry somebody in the UK, but the English language requirement relates to the postgraduate student who will be at university, not to a spouse entering as the dependant. It has been put to me that there are potentially a small number of cases of people who are extremely bright, but who do not have the correct level of English. My answer to that is twofold. First, it will be open to those people to go through a pathway course to the university. However, secondly, we will retain a small margin of flexibility where academic registrars have an individual student who is particularly brilliant but whose English they do not think will improve to the necessary level within the time scale required.
Nicholas Soames (Mid Sussex) (Con)
May I congratulate the Home Secretary and her Minister of State on this important and long overdue measure to put right years of neglect in the system? After the system has had time to settle down, will she consult the Migration Advisory Committee and ask for any recommendations it might have on how to tighten up on bogus students?
Mrs May
I thank my hon. Friend for his welcome for the statement. We are asking the Migration Advisory Committee generally to look annually at the immigration arrangements that we are putting in place, but it will be consulted, as I made clear in my statement, if we find that the number of students staying on for post-study work rises unexpectedly and significantly. We would ask the MAC to look into such a situation and to determine whether any abuse was taking place, and that could include the possibility of a limit.
Pete Wishart (Perth and North Perthshire) (SNP)
Will the Home Secretary tell us what the tone has been of the representations that she has received on this issue from the Scottish universities and the Scottish Government? What have they said about the funding issues and about the competitive situation? The Home Secretary knows that we do not have a fixation with immigration in Scotland; in fact, we are experiencing a structural fall in population numbers. We also have no evidence of bogus colleges. Will she consider an exemption for Scotland, so that any unforeseen consequences of her announcement today do not impact on our universities north of the border?
Mrs May
During the consultation, we had discussions with the Scottish Government and the Secretary of State for Scotland. He and I spoke about the concerns that Scottish universities had raised with him, one of which related to students who had an entrepreneurial idea and wished to stay on to launch a business. That is why we are ensuring that, within the post-study work rules, there will be a possibility to protect student entrepreneurs.
Lorraine Fullbrook (South Ribble) (Con)
The shadow Home Secretary claimed last month that, under the points system, “a lot of progress” was being made. Will my right hon. Friend assess the progress that Labour made in controlling migration?
Mrs May
I thank my hon. Friend for her question. The answer is a very short one, because Labour did not make any progress in controlling migration, as we saw from the fact that it closed tier 3 of the points-based system, as though that would have some magic result for immigration, and all that happened was that the number of student visas went up instead.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Given that a substantial segment of the economy of the city of Manchester depends on the success of its world-class universities, one of which occupies the biggest campus in western Europe, and that those universities have already begun to cut courses as a result of other Government policies, can the right hon. Lady assure Manchester that her policies will not irrevocably damage the city’s economy, which is already suffering dreadfully under this Government?
Simon Hughes (Bermondsey and Old Southwark) (LD)
I thank the Home Secretary and her Cabinet colleagues for listening to the representations of the university communities. As the questions of exit visas and bogus colleges and the success of our students and universities are a continuing matter of concern for the growth of the British economy, will my right hon. Friend and the Business Secretary undertake to report back annually to Parliament on this matter, to ensure that the successful import of academics into this country can continue?
Mrs May
I can assure my right hon. Friend that we will be giving regular reports to Parliament on what we are doing on the immigration system. People will also be able to see what is happening with other aspects of the system, as I have said; I shall be coming back to Parliament to discuss those as well. I am absolutely clear that what the coalition Government have announced today will ensure that our universities can continue to attract students from across the world and to provide world-class education.
Joan Ruddock (Lewisham, Deptford) (Lab)
Some of the brightest and best international students attend Trinity Laban, the dance and music conservatoire in my constituency. Will students who wish to progress from undergraduate to postgraduate studies have to return home to obtain visas, and will students be able to work in this country if they are offered a job paying less than £20,000 a year, which is possible? Many have international careers ahead of them.
Mrs May
Let me deal with the right hon. Lady’s second question first. A code of conduct will be agreed between the UKBA and the Department for Business, Innovation and Skills—obviously the Home Office will look at it as well—and will set out the requirements for the post-study work route. I outlined those requirements briefly in my statement, but it will be necessary to consider particular sorts of occupation and the appropriate rates applying to them. As for the right hon. Lady’s first point, no, those students will not be required to return home.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I warmly welcome my right hon. Friend’s statement, and congratulate her on her approach. Can she assure me that she will be tough and allow only legitimate institutions on to the highly trusted sponsor list? That would of course benefit us in the United Kingdom, but we must also be fair to students who come to the UK to study.
Mrs May
My hon. Friend has made an extremely important point. It will not benefit the UK if people throughout the world who have received the message that they can come here and be given an education end up in a bogus college. We will certainly be tough on highly trusted sponsor status. We will ensure that there is proper accreditation in terms of the educational qualifications and educational standard that colleges must offer, while the UKBA will look into whether they are observing immigration rules.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
What level of English language qualification will be required for students attending English language schools? I understand from the proposals that even students taking short courses will require an intermediate-level qualification. If that is the case, will it not prove damaging to many genuine colleges that make an important contribution to the economy in our constituencies?
Mrs May
The requirements will be B2 for university-level study and B1 for below degree-level study, so there will be a B1 requirement for the pathway courses. As the hon. Gentleman will know—this enables me to answer a question asked earlier by the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) —we are piloting a system enabling student visitor visas to remain valid for 11 months. The right hon. Lady appeared to suggest that they were included in the migration figures, but they are not.
Mrs May
They are not included in the migration figures, and they are therefore not covered by my statement. However, as the hon. Gentleman will probably know from discussions in which he has engaged in the past with, among others, the Minister for Immigration the requirements of the English language colleges were of particular concern to us, and we have dealt with that by piloting the extension of the visitor visas.
Dr Julian Huppert (Cambridge) (LD)
I declare an interest as a member of the university of Cambridge, one of the three excellent universities in my constituency.
I welcome the changes that the Home Secretary has announced, because the original proposals in the consultation would have caused a great deal of harm to much of our education industry. I was interested to hear what she said about student entrepreneurs. How will that system operate? Will it form part of the post-study work system, and will it apply only to new applicants? Will we be telling students who came here expecting a particular set of post-study work rules that they will be changed while they are in the middle of their studies?
Mrs May
We will make absolutely clear when the new post-study work route proposals will be implemented. Students will have reached various stages in their courses, but there will be a specific point at which the post-study work route requirement is introduced. Those who are already studying in the UK and may have expected to stay will still be able to stay, provided that they obtain graduate-level jobs. It is the qualification level for the jobs that will change.
As for the arrangements for student entrepreneurs, we are considering how best to position them in the immigration system. I hinted earlier that they might form part of the post-study work route, but we might consider other routes. The intention is to enable a student who is graduating from university and who has a first-class idea to set up a business and put that idea into practice, and I think it right for us to do so.
Roberta Blackman-Woods (City of Durham) (Lab)
I understand the right hon. Lady’s concern to reduce abuse in the visa system, but what is she doing to ensure that the measures announced today do not simply send a message to bona fide students applying to legitimate institutions that they are not welcome, especially as that would create huge problems for our excellent universities and colleges?
Mrs May
What I am doing at every possible opportunity is saying that our universities are still open for business to overseas students. I have said at every stage, both throughout the statement and in response to a number of questions, that the whole point of what we are proposing is to protect the universities while dealing with the bogus colleges. I think that is the right approach, and I hope it meets with agreement across the entire House.
Mr Brian Binley (Northampton South) (Con)
I welcome the general thrust of the statement, and my constituents will be delighted to hear about it. I particularly welcome the statement that Britain’s universities are open for business to the brightest and best, but I must tell the Home Secretary that that perception does not hold good in China. In fact, the Chinese think we are closed for business. What specific measures will the Home Secretary take to improve that situation?
Mrs May
I thank my hon. Friend for his opening comment, but I do not think that there is any reduction in the number of applications from Chinese students wanting to come to the UK. However, as I have said in answer to a number of other questions, we are absolutely clear about the purpose of what we are announcing today, and I have talked with the university sector about the responsibility that it also has for ensuring that the message is given that UK universities are open for business.
Pamela Nash (Airdrie and Shotts) (Lab)
Which criteria will the Home Office use to differentiate low-risk and high-risk origin countries, and will they change as a result of today’s announcements?
Mr Rob Wilson (Reading East) (Con)
I also welcome the Home Secretary’s statement, as will my constituents. She will be aware of the recent Home Affairs Committee report, which noted from the evidence taken that the student visa system was likely to remain leaky until an effective method of counting students in and out of the country was established. She has already said something about that to the right hon. Member for Birkenhead (Mr Field), but can she say a little more?
Mrs May
There are various aspects of that particular issue, of course. In addition to the response I gave to the right hon. Gentleman on the e-Borders system, I might add that the UK Border Agency will, as part of its assessment of whether institutions can become highly trusted sponsors, examine whether they ensure that their students go home after their period of study. That is another way in which we will try to ensure that the issue is addressed.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I serve on the external board of Birmingham university’s business school and I must tell the Home Secretary that both Birmingham university and Aston university are experiencing a reduction in the number of applications, so her message is not being heard. May I challenge her a little further on post-study work? Is she working with business schools on that, because they have very specific requirements, and if we lose sight of them, we will harm ourselves greatly?
Mrs May
We have been discussing with business and the university sector what might be the appropriate criteria for the post-study work route, and the message both those sectors have given me loud and clear is that if international students graduating from UK universities are to go into a job, that should be a graduate-level job.
Mark Reckless (Rochester and Strood) (Con)
Three months ago, the Home Secretary proposed closing the post-study work route, expressing concerns that it was adding to graduate unemployment. Will she explain to unemployed graduates in my constituency why she now says that foreign students can stay on, so long as they take a graduate job earning at least £20,000 a year?
Mrs May
We have looked at the balance of interests among universities, the UK economy, businesses and, of course, those currently resident in the UK who are graduating from UK universities and looking for jobs. That is why we have not said that graduates can stay on under the terms of the current post-study work route, which allows them to stay on and go into unskilled jobs or stay on and not be in employment. We think it is right that the brightest and best should have an opportunity to stay here for a limited period of time, but they must be in a skilled graduate-level job. We have been absolutely clear, however, that if the numbers unexpectedly or significantly increase, we will ask the Migration Advisory Committee to look at how we can ensure that abuses do not continue—if that is happening—and that could include limiting the numbers.
Tony Lloyd (Manchester Central) (Lab)
The Home Secretary will get support—not least from me—for her previous answer, because it is important to get that balance right. Will she clarify something for me? One of the things involved in the post-study work route that she has described is a system of UK Border Agency licensing. If that is to exist, will those who operate it be properly trained and will they operate with proper flexibility? That has not always been the case in the past. Does she recognise the point made by my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) that for some graduate professions, such as the performing arts and dance, the £20,000 limit could be impossible to attain in post-study work?
Mrs May
I am happy to say to the hon. Gentleman that we are not creating a new process at the UKBA; it already has such a process for tier 2 of the points-based system. The UKBA is used to operating the system and to discussing with business and others the appropriate codes of conduct and measures within those codes, in order to ensure that people stay on in the right level of job. The UKBA is well used to employing a degree of flexibility in dealing with occupations that do not fit into a more stereotypical approach in terms of levels of salary.
Pauline Latham (Mid Derbyshire) (Con)
May I welcome the Home Secretary’s decision to ensure that all sponsors will now need to be accredited by the relevant body and become highly trusted sponsors? Can she confirm that that will also apply to universities and in particular to the university of Derby in my constituency?
Mrs May
Yes, I am happy to say to my hon. Friend that universities are highly trusted sponsors and will need to continue to be so. As they are audited by the Quality Assurance Agency for Higher Education, they fall into that definition, as I set out in my statement. I would expect our universities to continue to be highly trusted sponsors.
Paul Blomfield (Sheffield Central) (Lab)
I welcome the Home Secretary’s recognition of the importance of the post-study work route as a significant part of this country’s attractiveness to international students compared with our competitor countries, but I fear that her proposed changes will not go far enough in convincing potential students that this country really is open for business. Would it not be better to take the advice of the vice-chancellors of both the Sheffield universities in my constituency, which is that we should simply exempt highly trusted sponsor institutions from any changes to the post-study work arrangements?
Mrs May
As I said in response to an earlier question, both the universities sector and the business sector have indicated in my discussions with them that they think it is right that the post-study work route should allow to stay on only those individuals who are going into graduate-level jobs. The hon. Gentleman says that the post-study work route is an important attraction for international students in deciding to study in the UK. Frankly, what should attract international students to the UK is the quality of education provided by our universities.
Mr Robin Walker (Worcester) (Con)
The Home Secretary is absolutely right to crack down on bogus colleges, which are at the heart of this problem, and I welcome her assurance that legitimate colleges can continue to attract legitimate students. One such highly trusted institution in my constituency is the university of Worcester. How will she ensure that highly trusted universities of that sort can continue to attract the best and can benefit from these changes overall?
Mrs May
First, as I have just said, I expect the universities to continue to retain their highly trusted sponsor status and therefore to be open to attract individuals to come from overseas to study at them. Many universities have done a very good job of advertising themselves and promoting the quality of education that they can offer. It is for the universities and for us to be absolutely clear in saying to people that our universities remain open for business and provide a first-class education.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Liverpool’s three universities attract approximately £66.6 million in gross income from international students. That income is a significant driver for Liverpool’s economy and is absolutely vital at a time when university funding is being so drastically cut. Will the Home Secretary please expand on what the tougher entry requirements for demonstrating international students’ financial means will be and can she guarantee that the proposals will not prevent genuine students from coming to study in Liverpool?
Mrs May
The proposals will not prevent genuine students from coming to study, but we do need to look at things such as documents provided by banks to ensure that they are genuine institutions that are genuinely backing up the financial claims being made by individuals who come here to study. It is in nobody’s interests to allow people to use documents that are not legitimate when they apply for a student visa to come to the UK. As regards the three universities in Liverpool, as I have made absolutely clear, they will continue to be able to attract international students.
Mr Stewart Jackson (Peterborough) (Con)
I congratulate the Home Secretary on facing down some of the hysterical hyperbole from the Opposition, parts of the media and parts of the further and higher education sector. On English proficiency and integration, will she please work with our colleagues across government to address the very specific issue of the hundreds of millions of pounds spent by British taxpayers on translation and interpretation services—a non-statutory duty—and to reduce such expenditure in these financially straitened times?
Mrs May
My hon. Friend is taking me down a road that goes beyond the Home Office’s area of responsibility, large though that is. I fully accept the thrust of his comment about the importance of people being able to speak English, which is precisely why we introduced a requirement last year that those who come here to marry or join a partner should be able to speak English to a particular standard.
Ian Paisley (North Antrim) (DUP)
I welcome much of the sentiment in the Minister’s statement. Will she facilitate a meeting with representatives of Queen’s university Belfast and the Royal Victoria hospital? They provide many opportunities for students to come and learn about medicine and then to go into those teaching institutions and provide services to many of our patients in Northern Ireland.
Stephen Mosley (City of Chester) (Con)
One popular scam involves students deliberately failing their examinations repeatedly in order to retake them and hence prolong their stay in the UK. What action is my right hon. Friend proposing to tackle such scams?
Mrs May
I referred in my statement to students who stay on and move from course to course but I had not got as far as those who deliberately, as my hon. Friend suggests, fail their exams. There will be a time limit on how long someone can stay in the UK—three years for a below degree-level course. The limit will be extended for postgraduate studies and to accommodate those who are doing medicine and longer courses, but there will be a limit on the number of times that someone can try that ruse.
Mr David Nuttall (Bury North) (Con)
One in five of the students granted a student visa in 2004 was still here in 2009. Will my right hon. Friend please confirm whether the measures in her statement will end that type of abuse of the system?
Roger Williams (Brecon and Radnorshire) (LD)
Universities across Wales will welcome today’s statement, particularly as the right hon. Lady has been able to address so many of their concerns. Will she commit to maintaining the dialogue with the vice-chancellors that has proved so productive over the past couple of months so that we can ensure that the proposals deliver in the way that they are intended?
Mr Marcus Jones (Nuneaton) (Con)
I strongly welcome the Secretary of State’s statement, particularly as I have learned that in one private college there was no classroom tuition whatever and there were so-called work placements up to 280 miles from the college. Does she agree that it is important that student visa holders should be studying and not working?
Stephen Hammond (Wimbledon) (Con)
I congratulate my right hon. Friend on her statement, which will be warmly welcomed by the legitimate private language college sector throughout the country. There are a number of such legitimate colleges in Wimbledon, so will she outline the changes that she expects that they will need to make to comply with her statement?
Mrs May
A process will be set out for those legitimate colleges by the UK Border Agency. It will be necessary that they apply for highly trusted sponsor status and for accreditation, and we will set out the time limit for that application process soon. They will need to receive highly trusted sponsor status by April 2012 and educational accreditation by the end of 2012.
Mr Aidan Burley (Cannock Chase) (Con)
Last and hopefully not least, I am sure that I am not the only Member of the House who is astonished by how widespread the abuse of the student visa system has become. May I ask the Home Secretary whether our policy to reduce net migration from hundreds of thousands to tens of thousands is supported by the shadow Home Secretary?
Points of Order
Mr John Spellar (Warley) (Lab)
On a point of order, Mr Speaker. Have you received any communication from Vodafone to explain its poor network coverage in the Westminster area since last Friday? Fortunately, I am on another network, but other Members are experiencing irregular reception and failing to get Rapide messages, which is quite unacceptable. Are you able to do anything about the situation, which is highly disruptive to the work of the House and its Members?
Mr Speaker
I fear that that is not a point of order and that the right hon. Gentleman perhaps entertains unrealistic expectations of my powers, although I take his point in the constructive spirit in which he volunteered his remarks. I have received no communication from Vodafone on this important matter. However, I think that I am right in saying that it would be of interest to the Department for Business, Innovation and Skills, representatives of which, I hope, will get to hear of what he said.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
On a point of order, Mr Speaker. During Treasury questions, the shadow Chancellor of the Exchequer, the right hon. Member for Morley and Outwood (Ed Balls), brandished what he claimed to be a leaked copy of a Government document due to be published tomorrow. Is it in order for Government documents that have been obtained illicitly to be brought into the Chamber or, indeed, to be referred to?
Mr Speaker
I am grateful to the hon. Lady both for her point of order and her courtesy in giving me advance notice of it. Not only was that courteous, but it gave me the chance to look into the matter, as she would wish. “Erskine May” is helpful on the subject, and I quote from page 443 for the benefit of the hon. Lady and the House:
“There is no rule to prevent Members not connected with the government from citing documents in their possession, both public and private, which are not before the House, even though the House will not be able to form a correct judgment from partial extracts.”
Whether or not, in the words of the late Lord Birkenhead, we are any the wiser, I hope that we are at least, as a result, somewhat better informed.
Miss Anne McIntosh (Thirsk and Malton) (Con)
On a point of order, Mr Speaker. You are the custodian and guardian of the courtesies and conventions of the House, so I would be most grateful for your guidance on a matter of which I have given you advance notice. Is it not customary for an hon. Member to inform another Member in advance of a visit to their constituency? Was it sufficient, for example, for the shadow Secretary of State for Environment, Food and Rural Affairs simply to announce at DEFRA questions that she intended to visit, for political reasons, a forest in my area? Would it not have been normal for her to write in advance to inform me of the matter? I am sure that this was an oversight on her part, but your guidance would be most helpful.
Mr Speaker
I am grateful to the hon. Lady for her point of order. The answer is that if a Member is visiting the constituency of another Member on official or public business, it is courteous for them to notify that other Member of their intention to visit, preferably reasonably in advance. This convention has been breached on both sides of the House, and I hope not to have continually to make the point that it is really a matter of elementary courtesy that we should adhere to this convention.
If there are no further points of order, we come to the ten-minute rule motion, for which the hon. Member for South Northamptonshire (Andrea Leadsom) has been patiently waiting. May I appeal that Members who are leaving the Chamber do so quickly and quietly so that these important matters can be addressed?
Dangerous and Reckless Cycling (Offences)
Andrea Leadsom (South Northamptonshire) (Con)
I beg to move,
That leave be given to bring in a Bill creating new offences of causing death or serious injury through dangerous or reckless cycling; to make provision regarding minimum sentencing and fines for those convicted of such offences; and for connected purposes.
I am a keen cyclist and I heartily support the many people who leave their cars at home and cycle to work and school. Over the last few years, there has been an upsurge in cycling, which is a great way to keep fit and healthy and a green initiative that I fully welcome. Let me be clear from the beginning that it is not my intention to criminalise cyclists or to discourage people from using their bikes.
In fact, in the vast majority of cases, it is the cyclists themselves who are the victims on our roads when they are killed or injured by motorists who simply fail to spot them. The penalties for dangerous or careless driving for motorists are as they should be—very strict. Occasionally, however, it is the cyclist who injures or kills while riding their bike, and this is the area I want to address today. At the moment, the punishment for cyclists falls far short of the crime, and I believe we need to update the law so that all road users are equally protected and take equal responsibility for their actions.
I want to tell the House the tragic story of Rhiannon Bennett, the beloved daughter of Michael and Diana Bennett, who was knocked down and killed by a cyclist in your constituency of Buckingham, Mr Speaker. I am grateful that you are presiding over this ten-minute rule Bill. I know that you are aware of this case, Mr Speaker, and that you have been very sympathetic to Rhiannon’s family, for which I also know they are grateful.
In April 2007, Rhiannon Bennett was walking with friends on the pavement near her home. She was 17 years old. A cyclist approached the group at speed, jumping from the road to cut across the pavement, yelling “Move, I’m not stopping!”. He was travelling so fast that the group had no time to react. He hit Rhiannon, knocking her over and smashing her head against the kerb. She was rushed to hospital with severe head injuries, but she died six days later.
It is not possible fully to explain the grief that Rhiannon’s parents, Michael and Diana feel—but the pain did not end there. They had to sit in Aylesbury magistrates court at the trial of the cyclist, a man who lived just around the corner from them, and hear the verdict of the court. He was convicted by the magistrates of dangerous cycling and his punishment was a fine of £2,200. There was no prison sentence. Mr and Mrs Bennett did not just lose their daughter; they had to go through the pain of discovering that their daughter’s reckless killing did not merit a prison sentence. We should just imagine what would happen if a motorist drove on to a pavement and killed a teenager. If the driver had walked away with only a fine, there would have been a national outcry.
The police and the Crown Prosecution Service had an alternative to the dangerous cycling charge. The Offences Against the Person Act 1861 carries a section on “drivers of carriages injuring persons by furious driving”. It declares:
“Whosoever, having the charge of any carriage or vehicle, shall by wanton or furious driving or racing, or other wilful misconduct, or by wilful neglect, do or cause to be done any bodily harm to any person whatsoever, shall be guilty of a misdemeanour, and being convicted thereof shall be liable, at the discretion of the court, to be imprisoned for any term not exceeding two years, with or without hard labour.”
The Act is still in force, but for obvious reasons it is little used. It was developed to deal with the century during which horses pulled carriages and coaches, and is now completely out of date. From what little information I have found on it, this law is rarely, if ever, invoked. In any case, the CPS found that the charge of dangerous cycling was the most appropriate in Rhiannon’s case. There are other offences, such as manslaughter and grievous bodily harm, that could theoretically be used against a cyclist, but these are also rarely appropriate in the case of road accidents.
What is needed is an offence that fills the gap in the law and provides a charge that reflects the seriousness and the consequences of a cyclist’s actions. In other words, an updated law is required so that cyclists can be charged with similar offences and given similar punishments to those that motorists currently face. For a motorist, causing death by dangerous driving carries a penalty of one to 14 years in prison; causing death by careless or inconsiderate driving carries a penalty of up to five years in prison. We need to give justice to the small number of pedestrians killed each year by dangerous cycling, by applying similar penalties to those that exist for causing death by dangerous driving and causing death by careless or inconsiderate driving.
It is worth making it clear that the cyclist who killed Rhiannon Bennett was most definitely found guilty of a crime. The problem of achieving justice arose because there simply is no charge that is appropriate to the crime. The Crown Prosecution Service even acknowledged this when it stated:
“The real problem is the fact that as yet there is no offence of causing death by dangerous cycling.”
The cyclist responsible for the death of Rhiannon Bennett was convicted of dangerous cycling and fined £2,200. His bicycle was worth an estimated £6,000, almost three times the amount of his fine. I have not met anyone who considers this to be fair punishment for someone found guilty of a crime in which a young girl died. There need to be a charge and an offence that reflect the reality of what is happening on our roads and pavements in the 21st century.
The idea of creating a new law to deal with this problem was last considered in 2005 by the Ministry of Justice, which decided that no such law was required at that time. Six years later, with the growing number of bikes on our roads, more and more cycle lanes being introduced and the introduction of excellent schemes that I take advantage of myself, such as the cycle hire scheme in London, we need to look at the matter again, and I ask the House to support the Bill.
Question put and agreed to.
Ordered,
That Andrea Leadsom, Amber Rudd, Dan Byles, Damian Hinds, Mark Lancaster, Harriett Baldwin, Mary Macleod, Chris Heaton-Harris and Margot James present the Bill.
Andrea Leadsom accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 4 November 2011, and to be printed. (Bill 168).
Budget Responsibility and National Audit Bill [Lords]
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move amendment 1, page 1, line 13, at end insert—
‘(d) the Treasury’s objectives in relation to economic policy and policy for the advancement of jobs and growth in the UK economy.
(e) the means by which the Treasury’s objectives in relation to economic policy will be attained (“the growth mandate”).’.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 3, in clause 4, page 2, line 20, at end insert
‘and the impact of Treasury policy on jobs and economic growth’.
Amendment 4, page 2, line 26, at end insert—
‘(c) an assessment of the extent to which the growth mandate has been, or is likely to be, achieved and the impact on employment and economic growth within all regions and nations of the United Kingdom.’.
Chris Leslie
It is fitting that we are discussing the Bill the day before the Budget. I understand that there are particular reasons, which the Minister will no doubt explain to the House, why the Bill needs to receive Royal Assent this evening, before we reach Budget day, so I am conscious that the ministerial clock is ticking. I pay tribute to the Public Bill Committee, whose members scrutinised the Bill in what I regard as sufficient detail.
Essentially, the first half of the Bill sets out the establishment of the Office for Budget Responsibility, and the second half makes a series of changes to the National Audit Office governance arrangements. It is fair to say that the Committee spent less time on the second half of the Bill, as the House had previously scrutinised many of those measures, but for various reasons that legislation was not included in the wash-up before the last general election. Most of our attention today will focus on the OBR.
Clause 1 relates not specifically to the OBR, but to the creation of a charter for budget responsibility. As we know, the Government have their reasons and rationale for making this set of legislative proposals. It was notable in Committee that Members were quizzical about why the charter for budget responsibility has been quite narrowly defined and why the OBR’s duties are similarly quite controlled and slimline. My view is that any realistic definition of budget responsibility must take account of the impact on jobs and growth of the wider economy and Treasury decisions on fiscal policy, particularly in the current context.
We know that Her Majesty’s Treasury is currently grappling to acquire a growth strategy, some of which might have been left on a number of photocopiers around the building before Treasury questions, although I have not been party to the memo that my right hon. Friend the shadow Chancellor picked up—I will try to get hold of him later to see what was in it. Clearly, the real economy has clashed with the Government’s plan A, which they have refused to depart from, which meant that in the fourth quarter of 2010, as GDP figures show, the economy went into reverse and shrank. The Chancellor blames the wrong kind of snow, but evidently the Government’s approach to fiscal policy has created circumstances that have not only put the brakes on economic growth, but unfortunately seem to have put it into reverse.
When we debated clauses 1 and 4 in Committee, Members felt that it was important to try to challenge the notion that we should somehow have an Office for Budget Responsibility that confines itself to fiscal, deficit and debt issues, to the exclusion of other equally important indices drawn from the wider economy.
Mr Mark Field (Cities of London and Westminster) (Con)
The course of events that the hon. Gentleman describes is surely a tribute to the independence of the advisory body—the OBR—during its first phase following last June’s Budget, but does he not share my concern that if it were to have the increased powers, it would cease to be advisory and independent, which it should be, and in some way would become a challenge to Treasury policy? It is correct that it has relatively limited powers, but above all those powers should remain independent and advisory to the Treasury.
Chris Leslie
I understand the hon. Gentleman’s point about creating a third institution when it should be Parliament’s job to challenge the Executive and the Treasury on their policies. The point we want to make through the amendments is essentially that, simply to have a fiscal mandate in the charter for budget responsibility is inadequate. We feel that it is important to have a growth mandate to supplement the fiscal mandate in the charter and, more than that, that the Office for Budget Responsibility should also have a duty to assess the impact of the Treasury’s policies on the real economy, on employment and on growth. I do not think that that necessarily sets the office’s face against or in juxtaposition to the Treasury—it would simply give it absolute clarity that it had the right and appropriate remit to consider those wider real economic effects.
Mr Field
But there is already a clear monetary mandate in the hands of the Bank of England. Surely a growth mandate along the lines that the hon. Gentleman suggests would muddy the waters, if not necessarily between the Treasury and the OBR, then between the Bank and the OBR?
Chris Leslie
Perhaps this is where I differ from the hon. Gentleman. I think that a slightly dry and narrow focus on the accountancy issues in the draft charter for budget responsibility, as well as a monetary policy focus at the Bank of England and in the charter, with no or scant focus on the real economy—economic growth, employment and some of those very important issues that affect all our constituents—would be a deficiency in the role of the OBR.
Mr William Cash (Stone) (Con)
The shadow Minister and I took part in a debate the other day that goes to the heart of these questions. Does he not agree that although fiscal policy is regarded—with qualifications as the result of the motion the Government put before the House the other day—as exclusively a matter for the House of Commons, unfortunately and disastrously, European economic governance affects the question of growth and the issues that go with it? Does he not agree that his proposals would be overtaken by the proposals that are going through the European Union?
Chris Leslie
I understand where the hon. Gentleman is coming from. I hope that he would acknowledge that we have tried to table a constructive set of amendments because we do not believe that a purely fiscal mandate for the Treasury or the OBR is wide enough. His view is that growth and fiscal policy will also be influenced from beyond these shores and especially by European Union policy. That may well be true.
Mr Cash
I do not wish to correct so much as to advise the hon. Gentleman that my position is exactly the opposite. Fiscal policy remains in this House and should do so, despite what the Government did the other day, and economic growth should also be determined here and not in other arenas. In the Public Bill Committee, he referred to judicial authority as a result of the interpretation of the statutory duties imposed in this place. Does he really want the Supreme Court to apply its determination of its ultimate supremacy over both fiscal policy and economic growth?
Chris Leslie
No, I do not. That was one reason why we raised this issue in Committee. The Bill sets out tests on the responsibilities of the OBR and the Treasury yet there was not really an adequate response from the Minister about the justiciability of those tests. For example, the Minister gave no cut-and-dried answer to the question of a member of the public who might wish to sue the OBR on its efficiency or effectiveness, what sort of legal process that might entail and where it would eventually go. The hon. Gentleman makes an important point.
In a cynical moment in Committee, I raised an eyebrow about the fact that 10 clauses are necessary to establish the OBR. I queried whether we needed 10 clauses to do that. The Bill contains a number of embellishments that, in a more sceptical moment, made me suspect that it was slightly padded out to make it appear to be a grander piece of legislation when a couple of clauses and a schedule would probably have done the trick. Perhaps I was unfairly cynical.
Kelvin Hopkins (Luton North) (Lab)
The hon. Member for Cities of London and Westminster (Mr Field) draws a useful parallel with monetary policy and the Bank of England, but in reality the bank’s Monetary Policy Committee currently interprets its remit flexibly because of the state of the economy. If the committee interpreted its remit rigidly, it would raise interest rates, because inflation is above the target level. It is not doing so, however, because it is sensibly looking at the wider interests of the economy.
Chris Leslie
My hon. Friend is entirely correct, and I am glad that the Bank of England is being flexible, but absolutely, if such mandates are set out rigidly in legislation, as the mandate is before us, and if they are interpreted as they currently are, it is hardly any wonder that the Treasury has a blinkered view of the economy and is obsessively—some might say, fetishistically—focused on deficit reduction and debt to the exclusion of almost any other facet of the economy. What we need right now is a flexible approach to economic policy which can take account of environmental and external facts, jobs and growth, and those are the issues we are raising today.
John Mann (Bassetlaw) (Lab)
I thank my hon. Friend for giving way on the point about flexibility. Where does he think the 2% inflation target, set for the Bank of England, should be, not least in the context of the Japanese economic crisis, with the pressures on US dollars and the insurance industry, and with the potential for rapidly growing inflation, which might require the 2% figure to be reconsidered imminently?
Chris Leslie
Of course, those issues are in the hands of the Chancellor. He has a Budget tomorrow, and I do not know whether he is thinking of revising his monetary policy mandate, but I would be very surprised if he were. My hon. Friend will notice, however, because I know he follows the small print of the Budget and of financial documents, that in the small print the Treasury has chosen for its GDP deflator, when it comes to public expenditure, an inflation rate of 1.9%, which is slightly at odds with the fact that the retail prices index is 5.5%. Again, the cynic in me would suggest that the Treasury has chosen that approach, because to do otherwise would blow a hole in the middle of the Government’s financial plans.
John Mann
I thank my hon. Friend for generously giving way a second time. The reason for exploring the issue is in this “charter”—this grandiose term—set out before Parliament. Chancellors might change their point of view, perhaps sensibly, if they look at the real economy, but how hamstrung will a Chancellor be in the future if some back-dated charter has been agreed but is itself too restrictive and requires change? Is not the measure before us rather a stranglehold—purely presentational—that could come to haunt this or future Chancellors?
Chris Leslie
My hon. Friend suggests that the measure is phantom paraphernalia, enrobing the creation of the Office for Budget Responsibility simply to give it a sense of grand importance, and in fact it could have deleterious consequences. That is certainly one crucial reason why we felt it important to table the amendment, stating that at the very least there should be a broader set of mandates within the charter, and that a growth mandate would be especially important.
Chris Leslie
Before I give way to the hon. Gentleman, I just want to point out that in Committee we debated the remit of the Office for Budget Responsibility and whether it should be broader and take account of wider economic and social policies. So, for example, we tested out the notion of whether the OBR could have responsibility for assessing the impact of Treasury policy on child poverty, or whether it should have responsibility for assessing the impartiality of the local government finance settlement.
One promise in the Conservative party’s localism paper, which came out before the general election, was to have the Audit Commission undertake an independent test of whether there was impartiality in the settlement. That has been dropped subsequently.
Chris Leslie
It has been dropped, and that is indeed something that we should come back to at another point.
This time, on Report, we thought, “Let’s look as strategically as anybody could possibly want to,” and having a growth mandate—a responsibility for growth and employment—and assessing the impact of Treasury policy seemed quite unobjectionable, at least to me when tabling the amendment.
Mr Field
It would probably be unwise for these provisions to be too wide. The credibility of inflation targeting would be undermined if the target were to be changed even on an irregular basis, if at all. As the hon. Member for Luton North (Kelvin Hopkins) said, the remit of the Bank of England covers not only inflation targeting but the greater interests of the overall economy. The latter remit is less well known than the former, but it is the reason interest rates have stayed at a very low level given the high levels of RPI and CPI that we are experiencing.
Chris Leslie
I would recommend that all hon. Members take a look at the draft charter for budget responsibility, which has several interesting facets. I have no doubt that the Minister will explain, in layman’s terms, what is meant by a
“rolling, five-year forecast period”
in relation to the cyclically adjusted current balance. Some hon. Members might find it difficult to envisage how that rolling forecast will operate in principle. Many of us can understand the concept of a fixed year or a fixed date against which a set of targets are to be judged, but if the horizon shifts continually, that is different. It would be interesting to hear the Minister explain that when she responds.
Mr Cash
I am sure that the hon. Gentleman also has in mind clause 6(3), which imposes the following obligation:
“The Office must, in the performance of its duty…act consistently with any guidance included in the Charter”.
As he well knows, I am rather particular about the words used in legislation. I like to know, first, what they mean and, secondly, what their consequence would be; I do not think that is unreasonable. I worry about the extent to which he would effectively be taking away from this House or, for that matter, from the Minister, any responsibility whatsoever for any aspect of the running of the macro economy. I have sympathy with his objective, but I am worried about how it fits into the framework of these provisions.
Chris Leslie
I would not want the hon. Gentleman to misunderstand the point of our amendment. It would, in essence, ensure that the charter for budget responsibility had a wide enough definition to give the new Office for Budget Responsibility, if it is indeed an independent body, more latitude to look across the wider set of economic indices and make its analysis and assessment of the impact of the Treasury’s policy on the ground—in the real world and the real economy—instead of looking merely at the desiccated issue of deficit reduction.
Stewart Hosie (Dundee East) (SNP)
I understand why the hon. Gentleman wants this provision, and I am not unsupportive. I am worried that he would conflate the work of the OBR with that of the Financial Policy Committee. We should remember that the FPC is charged with looking at the macro economy, which may well mean looking beyond monetary policy—the responsibility of the Monetary Policy Committee—and the macro-prudential. It might be able to look at the other aspects that he is expecting the OBR to look at, and that could muddy the waters even further. Does he see the potential for conflict between the OBR, with the role that he wants to set, and the FPC, with the role it is likely to have?
Chris Leslie
I understand where the hon. Gentleman is coming from. As I understand it, however, the Government, in creating the Financial Policy Committee at the Bank of England, propose to give it a particular responsibility for macro-prudential regulation. That is quite different from the role of the OBR, which, as an analytical and assessing independent body, will have a duty to provide comment and analysis on, and a degree of scrutiny of, the proposals of the Treasury and, more narrowly, the Treasury’s policy in relation to the accounting aspects of fiscal policy alone. If we are to have an Office for Budget Responsibility—or, as some hon. Members have suggested, the equivalent of the Congressional Budget Office, with some kind of parliamentary Budget office, which we will discuss later—it must be an independent body, so it must have the indisputable right to comment on the Treasury’s policies writ large on macro-economic and fiscal policy. I do not feel that there is necessarily a conflict with the Government proposals on changing financial services regulation, although we have not yet seen their proposals, and we do not really know what powers they intend to vest with the Bank of England on macro-prudential regulation. We will come to that another day.
I will explain why I think it is important that we focus on the concept of a growth mandate. It is not something that was just dreamed up by the Opposition. The Engineering Employers Federation has also called for a growth mandate to supplement the fiscal mandate in the charter for budget responsibility and in the Budget. It states that a growth mandate would
“send a powerful signal to business in the forthcoming Budget that government has a clear strategy to address the barriers to growth”
and calls for
“a Parliament long programme to deliver on it.”
Terry Scuoler, the chief executive of the EEF, has said that a growth mandate should be introduced to
“report on the progress at each Budget in the same way it does with the Fiscal Mandate.”
The EEF also states that
“like the Fiscal Mandate, the Growth Mandate should span the lifetime of a parliament with each subsequent Budget and policy announcement showing further incremental progress.”
The EEF makes a good point about the impact on the industries that it represents, which are in the real economy. Ultimately, that is what matters to our constituents.
Kelvin Hopkins
In line with that, would it not be sensible to ensure that the members of the OBR, when they are appointed, represent a range of views? The Monetary Policy Committee has hawks and doves, who have widely differing views on what should happen to interest rates. Equally, there ought to be voices in the OBR putting the case for the real economy, as well as simply for the Budget.
Chris Leslie
That is absolutely right. The Government have given the concession to the Treasury Committee that it can hold pre-appointment hearings for three of the five members of the OBR board. That is, of course, welcome.
Chris Leslie
We debated that point in the Public Bill Committee. Having consulted the Treasury Committee Chair subsequently, I understand that it has to weigh up how much time it has for such matters versus other things. That may well be a matter for the Treasury Committee to revisit. I urge it to ask for the ability to appoint all five members, not least because the two non-executive members who will not have a pre-appointment hearing are essentially appointed by the Chancellor of the Exchequer. To ensure their impartiality beyond doubt, it would seem necessary for the Treasury Committee to have the right, if it saw fit, to scrutinise all five.
John Mann
As a member of the Treasury Committee, I wholeheartedly back the principle that all five members should be scrutinised appropriately, not least because of the point that my hon. Friend the Member for Luton North (Kelvin Hopkins) made about ensuring that there is the maximum possible specialist input, including from the labour market, in the decision making. Let us scrutinise all five.
Chris Leslie
I look forward very much to those pre-appointment hearings and the reports of them. It is important to have people who understand the real economy. That is the gist of our amendments. We are worried about these matters.
Chris Leslie
If the hon. Gentleman will allow me, I will make a little progress, because I want to ensure that other Members have the chance to comment in this debate.
One reason we feel it necessary to put the concept of a growth mandate in the charter for budget responsibility is our anxiety that the current Chancellor of the Exchequer and Treasury are slightly blinkered when it comes to growth and employment. We know that in all probability, the Chancellor will announce tomorrow that the OBR is to downgrade the growth forecast. [Hon. Members: “No!”] Yes, my hon. Friends may be shocked at that piece of advance news, but apparently it says on the front page of the Financial Times today that the growth forecast for 2011 will be downgraded from 2.1% to 1.8%. The British Chambers of Commerce has also downgraded its 2011 gross domestic product forecast and is now expecting GDP growth of only 1.5%, down from a forecast of 1.9%. Other consensus forecasters are moving in the same direction.
Ian Murray (Edinburgh South) (Lab)
Will my hon. Friend explain to the House, and particularly to us new Members, whether the OBR has reduced its forecast at any other time in the past year?
Chris Leslie
It is a one-way journey, unfortunately. The OBR started with high expectations of growth soon after the general election, and at every stage at which it has made adjustments, the spiral of the economy’s growth prospects has descended.
Thomas Docherty (Dunfermline and West Fife) (Lab)
Like the Lib Dem poll rating.
Chris Leslie
Possibly, but in a more tragic and important way that affects real lives and real people. It does not really matter what happens to the Liberal Democrat poll rating, but growth falling behind and diminishing as unemployment rises is a really important issue in the real world.
Stewart Hosie
May I bring the hon. Gentleman back to the amendment for a second? I am sure he is not suggesting that the OBR should have any role in setting the fiscal mandate. I understand why he wants the consideration of growth to be part of its mandate, but the Treasury Committee stated that the OBR’s commentary function
“should be one of informing public debate through disseminating better understanding of fiscal policy and long-term economic trends, identifying possible risks”
and so on. Those long-term trends would inevitably include growth. Although none of us would want the OBR to comment on individual policy measures, even the Government’s response—I certainly do not defend them—states that the OBR would be
“examining and reporting on…the long-term impact of the Government’s decisions.”
Again, that would include their impact on growth. Does the OBR not already have the ability that he is looking to give it?
Chris Leslie
I suspect that the Economic Secretary will make that point in her retort, when she eloquently resists all amendments, as is her usual pattern of behaviour. However, it is not clear enough that growth and employment are matters that the OBR can comment on and analyse. I absolutely would not want to give it the power to determine the mandate, but the Treasury should be big enough and ugly enough to withstand commentary from such an independent body.
Mr Cash
May we park that matter for now, without in any way undermining the hon. Gentleman’s main point about judicial authority? What he said in the Public Bill Committee was completely right—if we impose a statutory duty, we have to accept that the courts will adjudicate.
That is important enough, but how would the hon. Gentleman reconcile clause 6(3), which states:
“The Office must, in the performance of its duty…act consistently with any guidance”
under the charter with, for example, European directives that will emerge under the 2020 strategy? Under his proposals, which would prevail?
Chris Leslie
The growth mandate that we are suggesting would be a responsibility of the Treasury, not of the OBR, but it would give the OBR a duty to have regard to whatever else was in the charter. Simply inserting the fact that the Treasury had to follow a growth mandate would give the OBR the right to comment on the Treasury’s performance in respect of that mandate. Whether there are European or other influences on the Treasury’s policies and performance is a debate for another time, I suspect.
Chris Leslie
I am quite sure that there are influences, but we tabled the amendment to draw out answers to some of these questions.
John Mann
One statistic that is not currently provided by the OBR is its projection of the number of new employees entering the country from abroad, including from within the EU. The amendment might mean that the OBR must provide that statistic, which is important in social and economic policy. At the moment, the OBR gives only a general figure from which we cannot deduce, without more detailed and hidden questioning, precisely how many new jobs come from abroad. My understanding is that currently, 700,000 to 800,000 of the new jobs being created will involve EU migrants. What does my hon. Friend say to that?
Chris Leslie
If the OBR is to do an adequate and holistic job in commenting on economic prospects, it surely needs the clear and explicit right to comment on employment policy, growth policy and so forth. My hon. Friend is absolutely right to raise the issue of employment and jobs. The most recent figures show that the jobseeker’s allowance claimant rate is 8% of the population, which is a 17-year high, and a prediction of 2.6 million unemployed. Again, that is likely to be revised upwards by the OBR when it comments on the forthcoming Budget.
My constituency, Nottingham East, symbolically passed the 10% claimant count rate, which is a very depressing milestone. For those reasons, and because long-term unemployment is increasing so quickly—it is up 24% in the last year—and more than one in five young people between the ages of 16 and 24 are out of work and on the dole, surely we need the charter for budget responsibility to include a growth mandate, and for the OBR to have the ability to assess the impact of the Treasury’s polices on jobs and growth.
Geraint Davies (Swansea West) (Lab/Co-op)
The Bill states:
“It is the duty of the Office to examine and report on the sustainability of the public finances.”
The sustainability of public finances involves three factors: tax, spend and growth. In tomorrow’s Budget, the Chancellor is expected to say, “This is a Budget for growth with very little change in tax and spend,” but it would be remarkable and ridiculous if two massive parts of the sustainability of public finances were not properly accommodated within the OBR.
Chris Leslie
My hon. Friend is absolutely right. It would be such a pity if this edifice—the OBR—did not scrutinise the things that the Government know they are vulnerable on, and on which their policies are deficient. The Government do not have a strategy for growth and jobs, and we need the OBR to be able to expose that. Growth has a number of drivers—
Chris Leslie
I will not, if my hon. Friend will allow me, because I want to focus on what the OBR needs to take account of.
The Economic Secretary to the Treasury (Justine Greening)
I have been listening to the hon. Gentleman for a while, but I want to draw his attention to the OBR’s economic and fiscal outlook, which was published in November last year. I do not know whether he has looked at that, because it contains 50 pages that consider the forecasting issues about which Opposition Members are raising concerns. I thought I would mention that because I get the impression from what he is saying that he has not read it.
Chris Leslie
Quite the contrary. Perhaps that was published in the free phase when the OBR, untrammelled by legislation and existing in the ether, as it currently does—we are post-hoc legislating now—had its moment of freedom when it could comment on such things. If the Bill locks the OBR into a narrow band of responsibilities and duties, it is reasonable to worry that it will be limited to commenting on a certain number of aspects. I accept absolutely that, as the Minister says, fiscal policy is affected by growth, and that therefore the OBR has an implicit right to comment, but that has not been made clear enough, which is a sign that she still does not understand the centrality of growth and employment policy to what the Treasury should be pursuing.
Kelvin Hopkins
My hon. Friend is right to focus on the importance of flexibility and the ability to deal with the problems he has described in his constituency. However, the hon. Member for Stone (Mr Cash) made a useful point about the EU’s arrangements, under which a completely independent central bank with no democratic controls sets interest rates that might or might not be appropriate for different nations. There are Maastricht rules and a rigid currency that cannot be flexed by countries that need to do so. Our situation is so much better because we have preserved a degree of flexibility so that we can manage our economy in the interests of our people.
Chris Leslie
Indeed, and we should pay tribute to the previous Prime Minister for maintaining and establishing those freedoms and that independence. However, you would rule me out of order, Mr Speaker, if we departed too much from the amendments.
A growth mandate is necessary on the four principal components of growth. The Government’s strategy on consumer spending is falling apart by the day. The nationwide consumer confidence index published this week showed a record low among the general public. One reason consumers are losing confidence is the possibility of VAT going to 20%. Real disposal incomes are falling back to the 2008 level, and median income is falling more than at any time since the 1980s. John Lewis reported falls in sales last week, Debenhams is saying that trading conditions are tough, credit levels are contracting, and from April onwards, of course, some of the tax credit changes and other changes will take money out of the pockets of consumers. We know therefore that on the consumer spending components of growth the Government have already lost control of a decent growth strategy.
On business investment, banks are still slow to lend to high-growth businesses. More than 20% of commercial real estate loans are in default or in breach of their covenants, and the much-trumpeted national insurance holiday that Ministers offered to new start-up businesses has not been taken up to the extent predicted by Ministers, owing to the complexities they have imposed on the arrangements. The Government’s growth strategy currently seems to depend on a number of odd assumptions, including that it is the fault of employee rights, which need to be eroded to boost growth. That is the kernel of their growth strategy.
On planning law, the Government are sometimes localist and sometimes not; sometimes they devolve powers but sometimes they do not want to give certain powers to councils. Their approach on planning is confused. Will they relax Sunday trading laws? There is speculation all over the place. There is even confusion over business rates. The Minister’s colleagues in HMRC have issued 40 different consultations, discussion documents, updates and responses on tax changes since the previous Budget, which, as many businesses complain, brings uncertainty and confusion. And to cap it all, with the abolition of the regional development agencies, they have created these local enterprise partnerships, with no clarity about their role or budget. We will see tomorrow about the enterprise zones, but on business investment the growth strategy is very deficient.
The Government are relying totally on an export-driven miracle to be the salvation of their growth strategy, yet if the Treasury predictions are correct we would need the highest export growth every year for the next three years, which last occurred in 1974, I think. That means, for example, that our exports to the USA would have to triple or our exports to China would have to grow twentyfold. That is not a growth strategy, but a prayer for a miracle.
To cap it all, we know what is happening with public sector expenditure. The rush to reduce the deficit so deep and so fast is causing great harm to the growth prospects of the economy and taking out a number of posts, particularly in parts of the country that are least resilient.
Amendment 3 would add to the Office for Budget Responsibility’s duties the requirement to assess the impact of Treasury policy on jobs and economic growth. Defining responsibility as such a purist, accountancy-type concept is to take a slightly dry and aloof approach, which seems to us irresponsible, given the real-world impact on people, jobs and society. We need to ensure that the OBR is a more rounded organisation that is grounded in the real economy, not just a narrow, bean-counting institution that looks at statistics or just one aspect of economic policy. It needs to be strategic, predictive, competent and authoritative, and it can do that only by having a duty to analyse the Treasury’s impact across the board. That would be one way of creating longer-term sustainability for the Office for Budget Responsibility, beyond the Government’s current plans for deficit reduction.
Amendment 4 would give the OBR a duty to assess the impact of growth in our regions and nations. We know that the Government’s spending cuts are hitting less prosperous parts of the country disproportionately. The disparities in our economy are growing as a result of the Government’s policies, and clearly that is harmful. Indeed, we saw that in the unemployment statistics this week, for example, with 27,000 more people made redundant in the west midlands and 8% unemployment in my region of the east midlands.
Stewart Hosie
We have indeed seen unemployment statistics, which show unemployment in Scotland falling for three months in a row, employment rising for three months in a row and construction up massively, specifically because of decisions taken by the Scottish Government to re-profile capital expenditure. How would the OBR relate, for example, to the Scottish Government on the different routes that they had taken over the same period? How would that technically work?
Chris Leslie
If the OBR could explicitly comment on employment and growth policy, it would be able to look at the different tactics employed in the economic policies of the different regions and nations. If there were good or poor policies in different corners of the country, the OBR would be able to analyse and pass comment on them.
Stewart Hosie
The hon. Gentleman is being generous in giving way, but I am quite keen to probe on this issue. What he has said makes perfect logical sense, but at that point the OBR would be commenting not on UK policy, but on regional or national policy. If it were commenting on a micro-policy, rather than policy at the UK level, would that not put it in difficult political territory?
Chris Leslie
If a policy were having a significantly adverse effect on jobs, such as some of the policies pursued by the current, Tory-led Government, it would be useful to have an independent, authoritative budget office to comment on that and to flag it up—to put out a red alert, as it were—as something that parliamentarians ought to comment on. I would not have a problem with that level of commentary. We should be big enough to cope with that level of challenge, audit and scrutiny. We would not be giving the OBR any power to make decisions; the point is simply to shine a spotlight on Treasury and Government policies.
Chris Leslie
If my hon. Friend will allow me, I will not give way. I have been speaking for rather a long time and I want to stop, but hon. Members may wish to make their own comments individually.
Clearly we need a proper growth strategy, but a growth mandate would also help. We need to start focusing on future growth industries and maximising our comparative advantage. We need to cast forward with a growth strategy not just for a decade, but for several decades. We need to focus on skills and, yes, a fiscal strategy, but we also need to focus on job creation, and a growth mandate with the clarity for the OBR to make its own assessments would certainly be a step in the right direction.
Mr Cash
Some time before the general election, as the financial crisis was developing—particularly in relation to the banks—there was a certain amount of talk about the idea being put forward by the then Opposition for an office for budget responsibility. I remember participating in some of those debates, and saying that I thought that it was an extremely good idea to have a much clearer picture of how we organised our finances. However, at that time the true level of debt was not being revealed by the then Government. We had reason to believe that the actual amount of debt was very different from what was being put forward. That had significant repercussions for the question of how we should deal with it. The OBR, or whatever else was going to be put in place, would have had to deal with the reality of the debt.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman knows what I am going to say. I do not want to spoil what he is going to say on Third Reading, so it might be better if he stuck to the subject of the amendments. That would be more useful to us at this stage.
Mr Cash
I am very glad to be able to follow that advice. In order for the provisions contained in the amendments to be inserted in the Bill, it is essential for the House to be aware of the implications of judicial authority, the assertions of the Supreme Court in that context, and the sovereignty of Parliament. There is, for example, the question of fiscal policy and the charter, which is set out in clause 1(2) and to which the question of economic growth and job creation would be added by the amendments. Clause 6(3) states:
“The Office must, in the performance of its duty under section 4, act consistently with any guidance included in the Charter by virtue of this section.”
I am deeply worried about the legal status of the charter in this context.
As for fiscal policy, I remind the House that the other day, probably for the first time since 1640—Pym and Hampden and all that—the Government passed a motion saying that we were only primarily responsible for it. I voted against the motion—as did my hon. Friend the Member for Bury North (Mr Nuttall) and a number of others—but the whole House should have voted against it, because in fact we are exclusively responsible for fiscal policy, and that is what the Bill is supposed to be based on.
What worries me particularly is the inconsistency with fundamental questions that are in the background, involving the primacy of European law, sovereignty and judicial authority. I need make no further points, because in a nutshell, if those issues cannot be reconciled with what is in the Bill, and if the duties of the Office for Budget Responsibility are to examine and report on the sustainability of the public finances, to prepare “fiscal and economic forecasts”, to make assessments and analyse sustainability, and to act consistently with the charter as a matter of law, we are surely entitled to ask: which law will prevail?
Obviously, I agree with all the ideas that are being presented. We all want an efficient economy, we all want jobs and we all want growth. We cannot survive without growth, and we cannot generate the revenues to pay for the public sector without that growth in the private sector. What worries me is that all those ideas are being imposed through a Bill, rather than through the judgment of Ministers who are accountable to the House of Commons, and should not be required to refer back to the judicial authority of the courts or the alleged primacy of the European Union.
I fear that we are embarking on one of those Lewis Carroll-type situations. I am reminded of “The Hunting of the Snark”. Members may recall the phraseology. We know that we want it, we know it is there, but the question is, what is it going to do? I have a serious problem with the Bill for that reason. I fear that we are engaged in a process of wishful thinking rather than achievement, and that we are being locked into a withdrawal from parliamentary accountability—and, as some Members may know by now, I regard that as the ultimate test of our democratic system.
Ian Murray
It is a pleasure to follow the hon. Member for Stone (Mr Cash). At the end of his contribution he referred to wishful thinking. Labour Members certainly think the Chancellor’s gamble with the UK economy is wishful thinking. The recent reduction in GDP came as a shock to everyone, and serves to highlight some of the wishful thinking indulged in by those on the Treasury Bench.
I think that everyone supports the establishment of the Office for Budget Responsibility. One of the best measures taken by the Labour Government was the courageous step of making the Bank of England independent. We have all seen the benefits of that, in good times as well as bad, as it can now make decisions for the benefit of the economy, rather than the benefit of the Government.
In the establishment in law of the OBR, the Bill should focus on more than just deficit and debt issues. Clause 1(1) states that the Treasury must look at
“the formulation and implementation of fiscal policy and policy for the management of the National Debt.”
That narrow focus takes us away from what we need most, which is economic growth. It does not even give the OBR the ability to take account of various specific objectives the Government may want to achieve, such as on child poverty or unemployment, or in terms of the impact on the economy of decisions made by the Chancellor and his team.
Justine Greening
To reassure the hon. Gentleman, may I point out that the OBR is free to consider the impact of any Government policy on the sustainability of the public finances? It therefore does have the discretion to conduct analysis that it may think necessary to assess whether the public finances are in a sustainable state.
Ian Murray
I am grateful to the Economic Secretary. As I have said previously in the House, she is one of the more capable Ministers, but she does occasionally fail to see the wood for the trees, and I would point out to her that the OBR’s remit is purely fiscal, and its fiscal forecasting may not always take into account what is happening on the ground in all the local communities that we represent.
That brings me neatly to my next point, which is about independent forecasting. That is certainly no panacea, nor is it a substitute for the judgments made about the public finances by the Chancellor and Prime Minister. We need to be able to hold the Government to account on the accuracy of the forecasts and the consequences of the judgments and choices that they make. The Conservatives have repeatedly claimed that the Labour Government fiddled the figures, but that is not borne out by the statistics published by the Library. In all the years before the crash, in only two years did the growth forecasts fall below the range that the Treasury had published, so the Treasury was dealing with those issues. The Government are wrong if they believe that the OBR would have prevented a crisis, or that it will protect us from the consequences of some of what in my view are the Chancellor’s misjudgments.
Stephen Williams (Bristol West) (LD)
If the OBR is such a good idea, why did the previous Government not introduce it during their 13 years in office? But leaving that aside, will the hon. Gentleman concede that if we had had an office for Budget responsibility in the last Parliament, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) would have found it much harder to dismiss warnings about the economy overheating, because those would have come from an independent office such as that created by this Bill?
Ian Murray
I am grateful to my hon. Friend; I get on very well with the hon. Gentleman, so I consider him to be my hon. Friend—
Ian Murray
That may not please every Labour Member, but nobody is objecting to the setting up of the OBR. My point is about the previous Government’s record: in only two years did the growth forecast fall below the range that the Treasury had published. I am not claiming that the OBR does not do sterling work.
That last intervention brings me neatly to my point about what the OBR has been able to do. It serves as a strong antidote to the propaganda about the figures that we have been hearing from the Government. The OBR said that because of the actions of the Labour Government, the deficit in 2009-10 was more than £20 billion less than had been expected. It also said that under the Tory-led Government’s plans there would be 110,000 more people on the dole by the end of this Parliament than would have been the case under Labour’s plans. Those are the OBR’s figures, which is why I am so delighted that it was set up—the hon. Member for Bristol West (Stephen Williams) can check the figures if he wishes. The OBR forecasts based on Labour’s plans until the election were that the economy would grow by 2.6% in 2011, whereas the figure under this Government spirals down to 2.1%—and even that may be reduced when the Chancellor speaks at the Dispatch Box tomorrow. So the OBR has been a good antidote to the propaganda that we have heard from those on the Government Benches.
Andrew Bridgen (North West Leicestershire) (Con)
I welcome the fact that the OBR is in place. Does the hon. Gentleman think that if it had been formed back in 1997, it would have advised the Labour Government against increasing the national debt by a stonking £74.9 billion in the boom years between 1997 and 2004?
Ian Murray
One would have thought that the three interventions I have taken were scripted across the Chamber, because the hon. Gentleman leads me to the second point in this part of my speech. I was talking about the deficit and the national debt, so let us dispel some of the propaganda in the OBR’s reports. He is welcome to read both them and the fantastic summary of performance indicators in the economy that the Library has produced. This point shows why it is incredibly important that the OBR should examine a wider set of figures, rather than just fiscal and national debt. Public sector net debt was down to 36.5% of gross domestic product in 2007-08, compared with the 42.5% that was inherited in 1996-97. Most of that borrowing was to do with financing capital investment, and not day-to-day expenditure as the Conservatives claim.
Stewart Hosie
Unfortunately that is not quite true, because the bulk of the capital expenditure took place through the private finance initiative. If memory serves, the outstanding balance on the credit card for that is £200 billion—of which, under the Labour Government, two thirds was off the balance sheet.
Ian Murray
The figures are there for people to see. I am delighted that we have had a contribution from the hon. Member for Dundee East (Stewart Hosie) on this subject, because in the past four years of Scottish National party government not one brick has been laid to build new infrastructure in Scotland. They have refused even to set up anything to do with building public infrastructure.
Mr. Deputy Speaker (Mr Lindsay Hoyle)
Order. We are not going to be drawn into the party politics of Scotland. Let us stick to the amendment.
Ian Murray
Thank you, Mr Deputy Speaker. I will resist the temptation to have another go at the Scottish National party in the Chamber, and will take your guidance.
I shall finish on two quick points. First, the level of borrowing before the financial crisis did not cause the recession. Every country in the world was affected, so it does not take a rocket scientist to work out that it was a worldwide financial crisis. The coalition Government’s propaganda—
Ian Murray
I may just carry on, as I know you are trying to get through the speakers, Mr Deputy Speaker.
The coalition would have us believe that the previous Government were responsible for the economic crisis in, to name but a few countries, Germany, France, the US, Japan, Greece, Portugal, Spain, Italy, Iceland, and that member of the arc of prosperity, Ireland.
Finally, I want to give a human story and show why there is a need for a growth factor mandate at the OBR. On Sunday in my constituency I met a family who raised the spectre of what the Government’s changes mean for them and the problems that they face as a result. The OBR reflects these issues in the figures it produces, but not in terms of growth. That family gave me a list, which follows on from a list given to me by someone at Her Majesty’s Revenue and Customs: they have listed the cost of all the changes to their family budget, which amount to a loss of £4,000 a year. One member of the family earns just into the upper tax bracket, and his partner works part-time and tends to look after the children. When the national insurance increase and the child benefit cut—because he is a higher tax bracket earner—are taken into account as well as the increase in VAT and pension contributions, the overall consumer prices index increase to pensions, his public sector pay freeze, the extra cost of fuel going into the car, the increase in utility bills, food inflation and general inflation in the economy, it all has a rather hard-hitting effect on the family budget. That is why I think the amendments are sensible, and why the OBR needs a growth mandate to get the Chancellor out of a hole—because he does not have a plan B, and it does not really look as if he has a plan A, either.
John Mann
I shall speak solely to the excellent amendment that my hon. Friend the Member for Nottingham East (Chris Leslie) so eloquently put forward. In doing so, I shall argue why it is in the Government’s interests to accept the amendment. I am certain that by the end of my speech the Minister will wish to accept it and will accede by nodding that she will do so.
The amendment is a pro-Government amendment and would be pro-Government whoever was in government, because unlike the usual party-politicking that we tend to get on Report, particularly early on, the amendment is a highly pragmatic and practical amendment to a process that, as the Government stated when they set up the OBR, was itself meant to be independent, practical and pragmatic. The shame is that we could be in a Public Bill Committee given the paucity of the number of Members present to debate this rather important Bill and an area of the economy that is the most fundamental issue that we face, along with every other Parliament in the world. I know we will not have a green Budget tomorrow, but today the green Benches are largely empty of hon. Members ready to participate in and listen to the debate. That is an indictment of the confidence that Back Benchers from both halves of the coalition have in their Government's economic policies on the verge of the Chancellor’s second Budget.
We have an opportunity to shape the independent analysis that will sit alongside this and all future Budgets, including when, at some stage, the coalition parties are in opposition—although I appreciate that the Liberals are, in essence, already in opposition. It is extraordinary that so few of them are present. If I were a Liberal now—I never will be, but if I were—I would be thinking, “Here is an opportunity, with this amendment, to try to have a smidgen of influence over this tawdry Government.” That smidgen of influence is entirely lacking now, because the Liberals are nothing more than lapdogs to the Tories’ economic policies.
I shall illustrate my point with two examples, the first of which concerns the labour market and issues such as immigration and why it is so relevant to what the OBR is not doing and, I believe, will not do in its report that will be presented with the Budget tomorrow. When assessing job creation, it is essential from a Treasury and from a social policy point of view to ascertain precisely what new jobs there are. In doing so, work should not be broken down to the micro-level of particular kinds of jobs, as policy makers do not need to know that. However, they do need to know about the people who have entered the labour market and were not in it before. If it is projected that just over 1 million jobs will be created in this Parliament, it makes a world of difference if those jobs are taken by young people coming into our economy from the accession countries of eastern Europe, perhaps on a temporary basis, to participate in those elements of growth in our economy rather than being taken by the domestically resident, unemployed, underemployed, retired or partially retired population.
The economics of this issue are as important to decision making as the social policy side, which I am sure all hon. Members will recognise is very important. If the majority of jobs being created are semi-permanent, service sector-based jobs in the south-east, particularly in London, and if they are filled by people from overseas, there will be economic and social consequences. One economic consequence will be an overheating of the London and south-east economies.
The failure to take that into account in economic planning was by far the biggest fault line under the previous Labour Government. It is foolhardy of the current Government, with the cheering on the Conservative Back Benches that there has been, to do exactly the same thing given that a tool has been created that would allow that objective analysis—if it were allowed to do that job. If the OBR’s report tomorrow gives a breakdown of where jobs are coming from, how many are in the south-east and London, and how many are new jobs going to people coming into the country for the first time, that will give us far greater certainty about the economic and social consequences. Some of those economic consequences, as well as social consequences, will be an overheated housing market in London and the south-east, which has previously been an impediment to certain forms of growth and to those who have wished to get into the labour market but have not been able to do so.
Stewart Hosie
The hon. Gentleman makes an interesting point about the nature of employment, but I am not sure whether the growth mandate to which amendment 1 refers would help. There were years under Labour in which there was net growth, but the Labour Government still managed to lose 1 million manufacturing jobs in those years—this was before the recession—and I am not sure how the growth mandate would have helped to inform us that we had lost those jobs, given that net growth was being identified and, presumably, reported on, as it would be by the OBR.
John Mann
We, like other countries in the western world, are losing manufacturing jobs because of our refusal to deal with Chinese imports and the consumer myth of buying ever cheaper from China. The inherent trade imbalances and problems that accrue as a result will come back to haunt us, and while I know that the Government will want to allocate time to discuss that vital subject in the near future, it is slightly outside our present debate.
The hon. Gentleman is partly right and partly wrong. While it would be wrong to discuss policy issues relating to the economy now, if the statistics had been broken down at that time to allow his assessment to be made more accurately, it is rational to assume that the situation could have been debated more regularly and in a more informed way. That might have had a positive impact for Opposition Members such as him as well as Labour Back Benchers. Indeed, such information might also have informed the previous Government’s policy making, which explains why amendment 1 is in the Government’s favour.
We need to know about job creation and what jobs are available not only in London and the south-east, but in other parts of the United Kingdom. I have talked about immigration, but there is an equally vital factor for economic and social policy: the blurring, albeit for rational reasons, of retirement age. We have to consider early retirement, late retirement and the retirement age itself, as well as the vital question of pensions. Some employers in areas such as mine have deliberately targeted getting the over-60s back into employment. That is perfectly rational, and it is good for those people, for the social economy and, perhaps, for the economy overall. We need the information, however; not because that is a bad thing, but because we need to know whether the new jobs in our regions and constituencies are getting those people who are deemed to be retired into the labour market, as opposed to people who are not working—whether they want to work or not. If we are to crack the problem of those who choose not to work, or who are incapable of getting work—again, the rational employer goes for the person with work history—such understanding will be vital to our economic and social policy. I put it to hon. Members that the rational employer is far more likely to employ a 67-year-old with an excellent work history who is re-entering the labour market, perhaps in a part-time job, than a 57-year-old who has been unemployed for 10 years.
The decisions taken by employers and those individuals who wish to re-enter the labour market are not necessarily matters for us, but the consequences of their decisions are important to us, and especially to economic policy making. An understanding of the precise breakdown of new jobs and job losses is fundamental to economic policy making. Several of the economic assumptions that can be made about consumer behaviour, pensioners and wage demands flow from such analysis. That is why, as a slight aside, it would be foolhardy not to give the Treasury Committee a role in all five OBR appointments, because such a role would ensure that if a Chancellor were so foolish as to skew the appointment process towards people with a certain mindset or from a certain discipline in economics, as opposed to trying to achieve a balance, that Chancellor could be corrected through appropriate cross-party decision making. I am talking about any Chancellor—the present one, whoever replaces him in future reshuffles and our Chancellor, when we are in power. It is vital that there is an evidence base that stands independent of the Government so that we can all decide how to vote on the various measures that the Government bring forward. How can we possibly make an informed decision otherwise, except by political instinct, which is important but insufficient compared with having all the information?
I am therefore puzzled by why the Government are not leaping to thank my hon. Friend the Member for Nottingham East for tabling the amendment. Labour Members might see the fact that his approach would help out such a Tory Government as somewhat treacherous, but this is clearly the new politics. It is coalition gone mad when a Labour Front Bencher is putting forward a proposal that would help Conservative Back Benchers, the handful—a tiny number—of Liberals who are anywhere near government and the Government themselves.
Let me give another example about policy making. Who knows what will be determined about petrol policy tomorrow, but that is a good example of something that should be covered by the OBR’s analysis. We need to know what has happened, including in the past, so that we can assess the impact of VAT on petrol, as well as on petrol duty, and the changes to petrol duty itself. The Chancellor might decide not to cut the price of petrol and yet not to increase it further, even though the price paid by drivers such as myself has gone up by ten quid since he became Chancellor. If he decides not to increase the price further, we will need to see a breakdown of the relevant information. We could go back through history, although I can guarantee that such a consideration will not be in the report that the OBR produces tomorrow. I could assist the office, however, because I have statistics that demonstrate that 70% of the existing tax on petrol was brought in by Conservative Chancellors since 1973. One might ask why Conservative Chancellors pick on the motorist to such an extent, but that is a debate for tomorrow rather than today, although I know that you, Mr Deputy Speaker, and others in the rural community will want to know why that is the case.
The point, in the context of the amendment, is that we must know precisely what is going on. I imagine that Conservative Back Benchers would be shocked to find out that Conservative Chancellors are responsible, as of today, for 70% of the tax on petrol. If the OBR had the mandate, however, those statistics could be laid out for us at every Budget and the pressure would be on. The pressure would, of course, be on Labour if the reverse had been the case and Labour Chancellors such as my right hon. Friends the Members for Kirkcaldy and Cowdenbeath (Mr Brown) and for Edinburgh South West (Mr Darling) had been responsible for the rise.
Andrew Bridgen
I applaud the hon. Gentleman’s honesty in saying that Conservative Chancellors are responsible, because there is no doubt that Labour Chancellors have been extremely irresponsible. [Interruption.]
John Mann
I struggle with the humour, Mr Deputy Speaker.
The facts cannot be hidden. The facts about immigration cannot be hidden because they can be rooted out. My point is that the facts should be there and they should be presented. The facts on the semi-retired, part-retired, would-be-retired, past-retired and those back in the labour market are not there, but they would help with some of our social policy making and, I repeat, are vital to our economic policy making.
When it comes to the price of petrol and the level of tax on it, I imagine that some Greens and others—there are not many Green Members, of course—would see those statistics as important for social policy. As I have said, however, I am mainly interested in economic policy. I am interested in knowing about the impact in my area on small businesses as well as the larger businesses that rely on vehicles. I used to rely on vehicles when I had my own small family business, driving lorries across Europe. We know how much it costs to fill up, but as a new MP entering Parliament in 2001, I would have been interested in challenging Labour Chancellors over what they were going to do with the historic tax on fuel that had been imposed by their Conservative predecessors, particularly between 1979 when it was 6.6p and 1997 when it was about 45p—the biggest increase in petrol duty anywhere in the world. I appreciate that statistics can be embarrassing to Governments.
Stephen Williams
The hon. Gentleman objects to taxes on fuel—we hear a lot from many Labour Members about their objections to different tax rises by this and previous Governments—so where does he think that the tax burden should fall, given that billions of pounds are raised by fuel duties?
John Mann
I will have to resist—not because I am not keen to respond, but because I see immediately that Mr Deputy Speaker does not want me to stray into taxation policy. This is about the statistics, and the statistics are fascinating when we know that Labour Chancellors have put up petrol duty so little in comparison with Conservative Chancellors. We know why: it is because we are on the side of industry and of business. We have not said that enough; we have not been proud enough to say it, and we need to say it far more.
When it comes to economic decision making and the ability to have comparators, the statistics are vital. That is why I emphasise that, in essence, amendment 1 is a pro-Government amendment. I predict that, at tomorrow’s Budget, the Office for Budget Responsibility will not provide such analysis. It is wrong that it will fail to do so, but its excuse will be that it does not have a mandate. We have an opportunity to put that right. I look to the Minister to nod to show that she is going to accept this excellent amendment in order to strengthen decision making and to be on the side of the motorist and those who want a proper debate on the labour market and jobs in this country. I commend the amendment to the House.
Geraint Davies
The amendment is essentially about making growth a centrepiece of the Office for Budget Responsibility—for very obvious reasons. The OBR’s remit, as set out in clause 4, is to
“report on the sustainability of the public finances”.
That sustainability consists of tax, expenditure and growth. We are not saying that the OBR makes no implicit consideration of growth, but that growth needs to be made a much more central part of the information available for our deliberations.
Justine Greening
Clause 5(1) states:
“The Office has complete discretion in the performance of its duty under section 4”.
Does the hon. Gentleman think that that is somehow insufficient to provide the OBR with the absolute discretion it needs to do any analysis it wants to fulfil the main duty he mentioned?
Geraint Davies
Having complete discretion is useful, but the word discretion means that something remains a matter of discretion—these things do not have to be done. The OBR has the discretion to go around looking at whatever it likes, but the amendment is saying something different—that the centrepiece of our economic future is economic growth. That has belatedly been recognised by the Chancellor, as we will see in tomorrow’s Budget, when he will say, “I have done all the tax and spend, but, oh no, everything is going wrong because growth is going down the chute, so I had better belatedly do something about it.” The previous Government had sent us on a trajectory of positive growth, albeit that it was a fragile recovery after a financial crisis. The Chancellor has seen that we are going into negativity, so he has scratched his head and realised that growth has something to do with the public finances.
We have been lambasted by Conservative Members who say that the deficit is terrible and Labour left the cupboard bare. They conveniently forget that, as reported by all the economic forecasters, including the Institute for Fiscal Studies, two thirds of the £84 billion deficit came from the international financial crisis. That was not Labour’s fault. When Conservative Members suggest, “Oh, well, we should have had more regulation”, they seem to forget that when we created the Financial Services Authority to introduce more regulation, they said they wanted self-regulation and complained about red tape. In fact, it would have been much worse had it not been for the Labour Government. Furthermore, that regulatory hole in the armoury was commonplace across the globe. That is why Governments in Greece, America, Spain and elsewhere have had problems dealing with the financial deficits they inherited. Obviously, we were more vulnerable to sub-prime debt, as we know because the financial sector is larger in Britain.
Let us get away from the myths about why we have the deficit and deal with the challenge of how to get rid of it. We get rid of it by striking a proper balance between growth, making savings over time and ensuring that the bankers pay their fair share. It is convenient for the Conservatives to say that there is only one way of achieving the task. Instead of having a balanced approach to maximising growth, making the bankers pay their fair share and making credible savings that are realistic over time and would halve the deficit in four years, Conservative Members say, “No. We don’t want to halve the deficit in four years; we want to get rid of it in four years, and we do not want to use growth or involve the bankers. The bankers are our mates after all, so they can have some more money. What we will do is make the cuts twice as fast in just one way—through savaging public sector jobs and services.”
Then, remarkably, growth starts to recede so that the sums no longer add up, as there is obviously an interrelationship between private sector growth and public sector funding. Thus they suddenly realise that they have to do something about growth. The amendment is about recognising that the centrepiece of macro-economic planning and fiscal responsibility is growth. It is all very well for the Minister to say, “Oh well, the OBR will have absolute discretion; it can look at growth if it likes, but if it doesn’t want to, it doesn’t have to.” That is the problem; its eye is off the ball. We need to get the finances in proper balance without destroying communities, which is what Labour Members stand for.
Stewart Hosie
If I may take the hon. Gentleman back, he mentioned Greece and banking regulation. Can he explain to the House how the failure of Greek banking regulation had anything to do with the sovereign debt crisis, and what on earth the amendment, which is about a growth mandate, has to do with that?
Geraint Davies
I will try and speak more slowly. My point was that the international financial crisis affected all countries’ debt, not least that of Greece. Obviously, it has its own banking system, underneath the European Central Bank. There was a common cause for many of the deficit problems around the globe. It was not uniquely Labour’s fault, as the Government make out. The amendment seeks to clarify the factors that are generating the fiscal future, including growth.
Justine Greening
The hon. Gentleman keeps talking about the deficit as though it was something that descended upon us. The bottom line is that the UK had a structural deficit. That means that his Government were spending more money on public services than was being generated in taxation, even in the good years, so we were never going to be in a position to start paying off any of our debts, which is why the markets got so concerned about continuing to lend to us. That is a structural deficit, and it is a fact, even if the shadow Chancellor will not accept it, and that is why we have to have a deficit reduction plan in place.
Mr Deputy Speaker (Mr Nigel Evans)
Order. This is a fascinating debate, but not for today. If we could get back to the specifics of the amendments before us, perhaps we could make some progress.
Geraint Davies
I am grateful for your advice, Mr Deputy Speaker, and for the Minister’s intervention. In a way, her intervention makes the case for having growth at the centre of the OBR. I am sure that when she reads her words, which I appreciate were spoken with some emotion and anger, she will wish that she had picked them more carefully.
When we look at the facts and strip out the impact of the international financial crisis, which is about £84 billion in terms of our structural deficit, there was a residual deficit, to which the hon. Lady refers. There was an excess of expenditure over income, but that was taken into account in future planning. There was a savings plan from the previous Chancellor, as she knows, to cut the deficit in half in four years. That was not exclusively reliant on cutting public services and jobs. Rather, it relied on stimulating growth.
The OBR’s estimates of growth have been downgraded. Those higher levels—2.6%—would have provided more fuel to get the deficit down. I recall that the projected deficit in the pre-Budget report was £30 billion less than had been predicted previously. In other words, growth had been occurring faster than was thought. Now it is growing less fast—in fact, it is growing negatively.
Justine Greening
Just on the off-chance, I wonder whether the hon. Gentleman would be able to set out what the £14 billion of cuts were that his party was planning to start in April.
Mr Deputy Speaker (Mr Nigel Evans)
Order. We are going much wider than the amendments. Could we please confine our comments from now on to the amendments before us?
Geraint Davies
The point I was making before I was distracted was why there should be growth in the OBR. What were the previous Government’s plans to get the deficit down? That is what the hon. Lady asked. It is important to recognise that the plans that we had were largely growth plans, which will now not be taken up. I shall give one simple example.
The Government said, “We’ll cut some expenditure. We’ll cut the regional development agencies.” So there I was, going to speak to UK Trade and Industry which, as Members know, is the marketing operation for Britain abroad, about encouraging inward investment and trade with foreign countries. I was talking to UKTI in Germany, as it happens—
Geraint Davies
No, in Welsh. I was in Dusseldorf, talking on behalf of the Welsh Affairs Committee. This is relevant, Mr Deputy Speaker. UKTI had been marketing Britain, and various German companies had been saying, for example, “We want to invest in a food and drinks factory. We want these skills and this site, and ideally these grants and these communications.” That would have been put on a computer platform and pulled down by regional development agencies to encourage inward investment. I asked what was happening now, and was told, “All these bids are coming forward for creating jobs in the UK, and the RDAs are not pulling them down because they have been abolished.”
That is a simple example of how the cuts in administration and red tape are stopping quality jobs being created in Britain. The cuts undermine growth and are false economics. To answer the question about where we would cut the deficit, Labour would reduce the deficit by encouraging growth and jobs. I was talking to a business man last week in Swansea. He said, “I run a business. Why are the Government always talking about cuts? If I was making a loss and wanted to cut my costs, I would not sell my tools. Yes, I’d keep my costs down, but I’d invest in sales.” The Government’s position is like paying off the mortgage by selling the furniture, rather than getting a job. That is ludicrous.
That is why growth as the centrepiece of the Office for Budget Responsibility is so important. To release the entrepreneurial spirit and focus it on export-driven growth is the primary aim of Labour, but not of Government Members, who have let down business.
Stewart Hosie
I am trying to understand the amendment. To have a growth mandate in the OBR would have allowed it to explain precisely where the £57 billion of cuts every year under Labour from 2013-14 onwards would have come from. Is that correct? The growth mandate would have explained where the £57 billion of fiscal consolidation would have come from. Is that correct?
Chris Ruane
No. The hon. Member for Dundee East (Stewart Hosie) is listening too slowly.
Geraint Davies
There was never any suggestion that the OBR could miraculously conjure up the optimum strategy, which has not even been launched by the Opposition, to solve the deficit problem more effectively. The Government are struggling with a one-string bow. They said, “We’ll get the deficit down by sacking everyone quickly,” forgetting that that would grind growth into the ground. We need to evaluate the changes in policy and particularly cuts in growth-creating capacity.
The problem might not be RDAs. It might be that we are undermining the capacity of our universities to ensure that the most able students are not deterred from going and that they become future growth generators and entrepreneurs. It might be the failure to provide connectivity between industry and universities to ensure that good ideas are commercialised and that there are opportunities for clusters of SMEs around universities. There are lots of ideas that can be calibrated for their impact on the public accounts. This move is an attempt to refocus all our minds on the importance of engines for growth, instead of cutting the legs away from the players.
Stephen Williams
Given that the hon. Gentleman wants growth-led manufacturing and university clusters, does he welcome the announcement made last week by the Business Secretary and the Deputy Prime Minister of technology and innovation centres around the country, including the composites centre in Bristol?
Mr Deputy Speaker (Mr Nigel Evans)
Order. We seem to be skiing off-piste every time there is an intervention and trying to tempt Mr Davies on to territory that is not relevant to the amendment.
Geraint Davies
I am grateful for your guidance, Mr Deputy Speaker, because I would not want to be tempted in the least. I will resist temptation.
The focus of the amendment is very much on the important area of growth. As I have mentioned, the important opportunity is to refocus our entrepreneurial activity on export-driven growth. For example, in the Budget tomorrow the Chancellor might announce tax breaks for investment in small and medium-sized enterprises, which I would welcome. I do not think that he will, because he does not particularly care about SMEs; he will just say something about not giving mothers and fathers rights to see their children. The fact is that, with regard to the engines of growth, the liquidity has been taken out by the banks, which are just rebalancing their balance sheets. They should be pressurised into providing the fuel to allow the entrepreneurial engine to move forward, because so many companies have full balance sheets but no cash flow because the banks are letting them down.
It would also be a good idea to have a tax break for investment in SMEs in order to push things forward, as that way people could put in their own money and it would produce a better rate of return from the point of view of the business and venture capitalists. I do not think for one moment that the Chancellor will announce such a tax break—he does not have the imagination—but if he did, that could be factored into the growth figures for the OBR, because obviously the money we would spend on the tax break would be recovered from business growth, particularly if it was targeted at export-driven, high-quality manufacturing.
Andrew Bridgen
Does the hon. Gentleman believe that the OBR, had it existed before the financial crisis, would have been able to tell the previous Government that much of the growth they were claiming was actually a mirage? That growth was driven by a Government who were spending more than they were gaining in taxes and so creating a deficit. To pick up on a point made by the hon. Member for Bassetlaw (John Mann), they were also exporting manufacturing jobs to the far east and importing cheap goods, which was having a deflationary effect on our economy, allowing interest rates to be kept artificially low and feeding a housing bubble that was getting ever bigger. When it burst, that was when it all happened.
Geraint Davies
I am glad that the hon. Gentleman is wearing a badge saying that he has a GCSE in economics, but I doubt it.
On a serious point, I have already accepted that prior to the financial crisis there was a marginal deficit to be confronted, and it was going to be confronted through growth initiatives. We have since had the financial crisis, and the important thing now is to move forward with ideas for investing in growth. Clearly, there are big questions on tax and spend and where those will be deployed. Many new ideas might emerge in the Budget, such as a windfall tax on the energy giants, whose profit margins have suddenly increased by 38% because they did not adjust their prices when costs changed and so ripped off Britain’s consumers. That is obviously a legacy of the previous Conservative Government’s privatisation and the lack of controls.
There is money available to invest in growth and services and to close the deficit gap. The point about the amendment is that we must put growth centre stage, as that will enable us to move forward in a balanced way, rather than in the narrowly defined way that the Government prescribe. With those thoughts, I will give other Members the chance to make their own unique contributions.
Chris Evans (Islwyn) (Lab/Co-op)
After the epic speeches from my hon. Friends the Members for Bassetlaw (John Mann), for Swansea West (Geraint Davies) and for Edinburgh South (Ian Murray), I will keep my comments succinct and tight, and I will try to keep to the amendment.
The most important thing about the amendment is that growth is key and that there must be some plan for growth. It is all very well saying, as many Members have, that there is no plan B, but it seems to me that there is no plan A. There is no rationale for a plan A or a plan B. It is important to know what that rationale will be. We need to know how the Government reach their decisions.
I am going to say something quite shocking: I do not believe that the majority of people in this country care about the deficit. Government Members can call me a deficit denier all they want, but I believe that when people are sitting around their kitchen tables at night they are most concerned about their jobs, their borrowing, their mortgages and their houses. That is what keeps them awake at night, not the deficit. Yes, the deficit is important.
Mr Marcus Jones (Nuneaton) (Con)
Does the hon. Gentleman think that people such as me who are parents of young children do not worry about the deficit and the legacy that the Labour Government left their children and mine?
Chris Evans
If I was in the hon. Gentleman’s position, I would be more worried about whether I will have a job in four or five years’ time. That is what most people are concerned about, but they are concerned about what will happen in six month’s time—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I will tell Members what I am concerned about: no one is talking to the specific amendments before us. If it is at all possible for you, Mr Evans, to mention the amendments now and again, that really would be very useful.
Chris Evans
Thank you for your advice, Mr Deputy Speaker—I have not been here very long.
Getting back to the amendment, it is important that we have the rationale for growth and know how the Government reach their decisions. We cannot talk about this in the microcosm of a dry subject of forecasts. We cannot debate forecasts in this House; we can only debate judgments on how the Government arrive at those policies.
Geraint Davies
The hon. Member for Nuneaton (Mr Jones) mentioned his children. Surely the important point about growth and the amendment is that if we invest in his children, in their education and in the opportunity to go cost-effectively to university, to add value and to promote future growth, that is the future they can look forward to. That is why his children are probably a bit disappointed that he supported the increase in tuition fees. Let us have growth.
Chris Evans
I totally agree. If I may digress a little from the amendment, it is all very well paying off the deficit, but if there is no economy at the end of it we can forget about it all and worry about all our futures. I have tried to keep my comments brief and say in closing that I support the amendment because we need to know how the Government arrive at their decisions so that this House can properly scrutinise them.
Justine Greening
I am pleased to have the opportunity finally to respond to some of the points that have been made and to the amendments that have been tabled. It is important to say first that I very much welcome the contribution that Members not only in this House but in the other place have made to get the Bill to its current stage. Despite the debate we have had on growth, which of course is important, I think that there is broad support across the Chamber, as there was in the other place, for what the OBR is intended to do and for setting up such an office that can work effectively.
All the amendments relate to growth, so perhaps we have stared the debate that will no doubt continue tomorrow after the Budget. We believe that economic growth and job creation are absolutely vital, and Members will see tomorrow that that is a core part of the Budget. I agree with many of the comments that have been made about why we need to see growth as part of the Budget. I want to take the time to clarify some points that have been raised.
The debate so far has been about policy and strategy, but the OBR is not a policy-making body; it is there is look at the forecasting and produce the official forecast for the UK Government. It is precisely not intended to make policy. One of the things we have been very careful to do in setting out how the clauses and the charter work is ensure that the OBR’s independence, impartiality and transparency, which are also vital, are not compromised.
Geraint Davies
Having said that, will the hon. Lady accept that some of the OBR’s responsibility should be to forecast what it regards as the impact of policy changes from the Chancellor? For example, if he was to announce suddenly that he will let the private sector deliver public services so that entrepreneurial capacity will be taken out of export-driven growth and put into making easy money out of monopoly-provided public services, would it not be right for the OBR to say, “Hold on, that capacity has gone over there so our growth will go down”?
Justine Greening
I hope I can provide some clarification. The OBR has the freedom to consider the impact of policies on sustainable public finances, including employment policies. If the hon. Gentleman looks at some of the forecasts the OBR has already made, he will see forecasts for employment, average earnings, ILO unemployment, the percentage of the claimant count and, of course, growth. Hon. Members talked about the OBR’s assessment of growth and what it will show over the coming years. The OBR is already producing an awful lot of the analysis that hon. Members want to see, but it is fair to say that today’s debate will—I hope—be of interest to the OBR in understanding what information and analysis it might feel it needs to provide to convey what it wants to, which is some assessment of the economic growth forecast for this country.
Let us be clear that the duty of the OBR is very clear and is set out in clause 4. It should examine and report on the sustainability of public finances but, as hon. Members have said, Government policy clearly impacts on that. By definition, the OBR will consider how policy impacts on the sustainability of public finances.
John Mann
From what the Minister is saying, I presume that if the OBR—or even the Treasury Committee, but the OBR in particular—were to say that it was unable to provide the analysis that it would like to because it was not sufficiently resourced, that would be seen as a serious question for the Government to address.
Justine Greening
The hon. Gentleman will be aware through his role as a member of the Treasury Committee that when the chair of the OBR, Robert Chote, was asked whether he felt it was sufficiently resourced he said he felt it was. The hon. Gentleman will also be aware that one reason we have carved out sufficient money not just for this year but for the whole spending review period, which will be reported on separately, is to ensure that the OBR understands that it is sufficiently resourced not just for this year but for the years ahead, so that it has that certainty about its resource base to do the work it needs to do.
John Mann
That is a vital point, because Robert Chote was speaking as the first permanent employee. Others are now employed by the OBR who might have different perspectives and priorities. There is a critical question: if the OBR feels restrained by resources, will that become a politically contentious issue as regards objective statistics? Presumably, in such a case, if the OBR was kicking up about being unable to provide the detail in independent statistics, the Government would regard it as vital to address that resource need.
Justine Greening
I can go back to the reply I just gave the hon. Gentleman. The charter and the Bill clearly set out the OBR’s duties and Sir Alan Budd, as the interim chair, produced his report and talked about what he thought that the duties of the OBR should be, about its resourcing and about how it should be run. Of course, we reflected many of those comments as we introduced this Bill to set up the OBR. If we take that together with the fact that the permanent chair, Robert Chote, has said that he does not feel that there will be an issue with resourcing, we can be relatively confident that the OBR will be adequately resourced to fulfil the duties clearly set out in the Bill.
Let me turn briefly to the amendments. They all concern growth and the problem is that they start to stray into the OBR’s becoming bound up in policy rather than analysis. Amendment 1 would require the charter to include the Government’s economic policy objectives and the means by which that objective would be attained—what has been called a growth mandate. The charter, however, is a fiscal policy document that transparently sets out the fiscal policy framework. The purpose of the charter, the OBR and the Bill is to create the fiscal policy framework that supports the Government’s delivery of our fiscal policy objectives. Rightly, the charter focuses on fiscal policy issues, as was the case with the previous Government’s code for fiscal stability.
Geraint Davies
In conversation with the Institute for Fiscal Studies, I asked various questions about growth and its calculations and it was pointed out to me that the IFS was in essence made up of micro-economists who were aggregating up to deliver predictions about Government fiscal outputs. I respect what the hon. Lady is saying, but it seems to me that she is basically saying that the OBR will be doing something very similar. It is very easy to make such predictions if we say, “Assuming that everybody is still employed, that we have taxed them this and that they spend that, this will happen.” What is more difficult is to model the impact of individual policies in a Budget on growth and hence on the public finances. The hon. Lady is giving us some reassurances, but I think the point of our amendment was to push her to say that this would become a priority for the OBR so that we could have a richer understanding of the growth scenarios in the future. I appreciate that some of that is done, but we want more.
Justine Greening
Ultimately, a key clause—I think clause 5—sets out that it is at the OBR’s discretion to decide how to carry out its duty. A fundamental building block of the OBR’s credibility is its independence. I assure the hon. Gentleman that the risks he mentions, such as the concern that the OBR might not carry out robust analysis, are mitigated by other safeguards in the Bill. For example, one duty of the OBR will be to produce a report on the accuracy and robustness of its forecasting. As he will be aware, there are also non-executive directors who will be there on a day-to-day basis to challenge how effectively the OBR works and every five years, at a minimum, there will have to be a completely external peer review of the OBR’s workings.
I think we have managed to strike a balance by setting up the OBR in the way I have described—on the one hand by giving it independence, so it has that key element of credibility, and on the other by including some safeguards, in terms of its structure, its management and the review, so that, if for some reason it does not produce the quality of forecast that we need, those safeguards will be in place to ensure that we tackle the issue. Let us not forget that the OBR is accountable not just to Parliament, but to the Chancellor, because it produces the official forecasts.
Finally, amendment 4 suggests another new related role for the OBR, which as we have heard would be to assess the Government’s growth mandate. As I said in response to amendment 1, the Government seek to achieve their economic policy objectives through a range of policy tools and frameworks, not just through fiscal policy, but the OBR has been established to increase the credibility of the Government’s economic and fiscal forecasts and to hold the Government to account for their economic and fiscal policies.
That highly valuable role is recognised by a wide range of domestic and international commentators. The hon. Member for Swansea West mentioned the Institute for Fiscal Studies, and it warmly welcomed the establishment of the OBR, which, through its role, has already provided forecasts of key economic variables. In its November report, the OBR set out forecasts for the next five years, covering a range of key macro-economic variables, such as GDP and its forecast growth, inflation, employment, average earnings, unemployment and the output gap. In addition, the OBR will have the freedom to consider the impact of Government policy on economic growth and employment within our regions and nations, and in line with its main duty. I therefore consider all the amendments to be unnecessary, and I hope I have addressed the issues that hon. Members have raised.
Mr Cash
I do not want to put my hon. Friend on the spot, but I am troubled by a motion that the Government tabled in relation to a European document. I have an idea that they did not really mean to do so, but I just want to make the situation completely clear. The motion said that the Government and the House of Commons were only primarily responsible for fiscal matters and direct taxation. Will the Minister be kind enough to get that out of the way, so that we might now know that they are exclusively and solely, not merely primarily, responsible?
Justine Greening
I do remember the motion to which my hon. Friend refers. We were trying to be very clear, as he will be aware, and no doubt deeply unhappy, that some aspects of our fiscal and taxation system—for example, VAT—are set in relation to a broader pan-European directive. As we have discovered, that is one reason why the Opposition’s policy on reducing VAT on fuel alone is simply illegal, and I hope I can reassure him that we were trying to be very clear that it is primarily the UK Parliament that takes those decisions.
Perhaps I can reassure the rest of the House that growth is already an integral part of this Government’s approach to turning around our country’s public finances and economic fortunes. I understand why the amendments have been tabled, but they are unnecessary.
Chris Leslie
I am grateful to the Minister for her generosity in at least admitting that our debate and amendments will be of interest to the Office for Budget Responsibility. Indeed, I hope that is the case. We have tried our best on many occasions, and my hon. Friends the Members for Bassetlaw (John Mann), for Swansea West (Geraint Davies), for Edinburgh South (Ian Murray) and for Islwyn (Chris Evans) in particular have in plain terms tried to impress upon the Treasury Minister our anxiety that the Chancellor, in his blinkered obsession with hasty deficit reduction, risks harming the wider society and economy, particularly when it comes to jobs and economic growth. We have said that on several occasions, and it was important to reiterate the point today.
I understand, however, that the Minister has explained that the implied terms of the Bill do, indeed, allow for the OBR to focus on economic growth and employment matters. The Opposition hope that the OBR, at least, will do so, even if there is a deficiency in the Government’s strategy on the matter. We will no doubt debate those questions more, in terms of substantive policies, over the coming days.
The Opposition feel that fiscal policy cannot be looked at in isolation from economic growth, because the two are inextricably linked, and we will continue to make that point, even if Ministers seek to separate them. For the time being, however, I do not feel it appropriate to push the amendment to a vote, so I am happy to withdraw it. I think the Minister has heard the point. My hon. Friend the Member for Bassetlaw has accused me of tabling pro-Government amendments, and for that reason alone I should take them off the Table, given that we have other matters that the House will want to consider on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2
Annual Budget documents
Chris Leslie
I beg to move amendment 2, page 2, line 14, at end add—
‘(5) The Treasury must place in the House of Commons Library the costing methods and assumptions underpinning all revenue implications and projections of each Budget announcement.’.
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss amendment 6, in clause 8, page 3, line 29, at end insert ‘subsequently’.
May I remind the House that by contrast with the amendments in the previous group, which were very narrow, these amendments are very, very, very narrow? I do not want Members to consider that a challenge to see how long they can make a speech on the amendments. May I also remind the House that we have several days ahead of us when we will be able to talk about the economy, growth, jobs, taxation—and they start tomorrow?
Chris Leslie
It is early, Mr Deputy Speaker, but I understand your point about the ticking clock.
Amendment 2 seeks to require the Treasury to place in the Library the costing methods, models and assumptions that underpin all the revenue projections, implications, yield estimates and so forth from each Budget announcement. Hon. Members will know that the Red Book produced at each Budget contains a number of costing projections, and there is always a fantastic table somewhere towards the end of the document which gives a sense of the revenue gains or losses, depending on each tax or public spending measure in the Budget.
In Committee, it became clear that the Office for Budget Responsibility will have the right to gain some insight into the detailed methodologies that the Treasury uses to underpin the assumptions and costings. The methodologies are therefore publishable, because they can be transferred to the OBR, and all that amendment 2 seeks to do is to share them with the wider world, and in particular with Parliament, because if hon. Members are to scrutinise effectively the assumptions on which the Chancellor makes various decisions, the methodologies and costings used to underpin those calculations should be transparent.
In order to support full and proper scrutiny, and to ensure that we can debate those Budget decisions effectively, we think it a reasonable request that the Treasury should place those costings and methodologies in the Library. It would be inconsistent, given the Prime Minister’s protestations about
“a new generation that understands and believes in openness, transparency, accountability”,
for those models not to be in the public domain. We should not have to rely on freedom of information requests to elicit such information from the Treasury; if the OBR has it, so should Parliament. The amendment is very simple, and we should not simply have to have faith to trust the Chancellor’s judgments. If we are to have such transparency, we should all be able to see right through to the methodologies, and perhaps to challenge and test them.
Amendment 6, on a different matter, seeks to ensure that the OBR, when it does publish its reports, gives those changes to Parliament first. If hon. Members look in the Bill, they will see a simple clause that states:
“The Office must—
publish the report,
lay it before Parliament, and
send a copy of it”—
I am not sure whether it is to be sent first class—
“to the Treasury.”
All our amendment seeks to do is to place the word “subsequently” after the words “Parliament, and”. In other words, Parliament should have those reports first and the Treasury should get them subsequently—although I do not particularly mind if it gets them at the same time.
Stewart Hosie
Amendment 2 calls for the OBR’s reports to be published. The Treasury Committee said:
“The OBR should have discretion in the models it uses in drawing up its forecasts. It is a matter for the organisation itself as to whether it is content to use is the Treasury models, or wishes to make changes. Whatever course the OBR takes, there would be benefits in it being as transparent as possible about the models it uses.”
I assume that that would also include the assumptions that underpin those models. The Government’s response was positive. They said that they would
“provide the OBR with full access to Treasury and other forecasting models, as well as support to scrutinise and develop these models.”
Again, I assume that that means the assumptions that underpin the Treasury models and whatever other modelling it wishes to undertake. The hon. Member for Nottingham East (Chris Leslie) said that the OBR could take those models and assumptions from the Treasury, and he is absolutely right about that.
The OBR currently publishes a number of assumptions. For example, the impact multipliers were included in the June 2010 report, showing the one-for-one impact of capital expenditure cuts. Reports at the time of the Labour Government published assumptions about oil prices, and North sea corporation tax and petroleum revenue tax was used to calculate those yields. Given that several such assumptions are already published, and that the OBR can take all those assumptions, models and changes and create new ones, does it have the discretion to publish what it sees fit? Would it not be better to have a guarantee from the Minister that it will not unnecessarily withhold assumptions where it is important for us all to have transparency? Instead of the Treasury putting the material in the Library, we should ensure that the OBR has the ability to do that, so that we have the information and can come to a proper, reasoned view on whether we believe its figures.
That is a simple question, and I am sure that the answer is yes; I certainly hope so. There is no reason why we should not have that transparency so that we can all guarantee the efficacy of the reports that the OBR produces.
Justine Greening
On amendment 2, the Government are committed to increasing transparency in public life. That transparency is essential to good fiscal policy, as the hon. Member for Dundee East (Stewart Hosie) said. In fact, the Government already provide the costing methods and assumptions for policy proposals. Those were made available in policy costings documents at the last Budget and spending review, and copies were made available to the House. That is a step change in transparency in fiscal policy making. Specifically in relation to the OBR, the additional transparency referred to in the amendment is already required by the statutory charter for budget responsibility, which says at paragraph 3.9:
“The Budget Report shall provide, at a minimum: an explanation and costing of the impact of all significant fiscal policy measures introduced by the Government since the last Budget and an explanation of the methodology used to cost the fiscal impact of each of those measures”.
In relation to the Bill, I draw the hon. Gentleman’s attention to clause 4(6), which explicitly refers to the OBR’s reports being clear in explaining the factors that it took into account when preparing the report—not only the assumptions that he mentioned but the main risks that it considered to be relevant. So there is a safeguard not only in the charter but in the Bill to ensure that there is transparency about how the official forecasts have been arrived at.
On amendment 6, the OBR is accountable to Parliament in order to enhance Parliament’s ability to hold the Government to account for fiscal policy. The OBR’s forecasts and analysis will be laid directly before the House. The budget responsibility committee will be appointed with the consent of the Treasury Committee, and will be available for scrutiny. There will be separate reporting to Parliament of the OBR’s expenditure, and, as many Members have already discovered, relevant written questions will be answered by the OBR. The OBR is also accountable to the Chancellor, reflecting its role in producing the official forecast, which will form the basis of the Chancellor’s Budget decisions.
Herein lies the challenge to Labour Members. The OBR will provide the Government with timely access to the information necessary to reach policy decisions ahead of fiscal policy events. The Treasury Committee recognised that in its report last year, when it said:
“Involvement In the Budget process necessarily involves close contact between the Treasury and the OBR”.
Close working also means that the OBR has access to all Government information to ensure that its conclusions reflect the most accurate and up-to-date information. It is therefore right that the OBR provides the Government with pre-release access to its forecast in order to ensure the accuracy of both it and the Budget documents, which are published simultaneously.
It is also right that there is transparency in the approach to the sharing of information. The OBR has chosen to follow the well-established pre-release practices put in place by the Office for National Statistics. I can assure the House that this arrangement does not compromise the OBR’s independence. It is an approach that has worked well for the ONS. The OBR has been transparent about when reports have been shared. It confirmed in its November “Economic and fiscal outlook”:
“We have come under no pressure from ministers, advisers or officials to change any of our conclusions.”
The OBR’s access to Government information distinguishes it from other UK forecasting organisations, and ensures that the Chancellor and Parliament are provided with the most up-to-date information regarding the latest UK economy and public finance figures.
I understand the rationale behind amendment 6. However, given the practicalities of the OBR’s accountability to the Chancellor and its role in producing the official forecasts, we feel that it is better for it to act on its own decision to follow the ONS pre-release guidelines. I will resist both amendments.
Chris Leslie
I am getting used to the hon. Lady’s resistance to our amendments. One day we will persuade her to accept even the smallest, most generous Opposition amendment, but perhaps not to this Bill.
I understand the points that the hon. Lady made about amendment 2 and costings. I know that there have been attempts to broaden access. If and when we hit obstacles or refusal to publish, we will come back to her to try to get more information into the public domain. However, I accept that she is committed to a particular direction of travel, so we shall not press the amendment.
On amendment 6, the Minister seems to understand that several members of the Public Bill Committee might have hoped for an Office for Budget Responsibility that looked more akin to the Congressional Budget Office or a parliamentary budget office, and was a little bit closer to the legislature and less cosy with the Executive. She knows why we want that. If the OBR places absolute primacy on its independence and impartiality, we must surely move away from any perceived suspicion that it is too close to or cosy with the Executive of the day.
We know that there is due to be a review of the OBR within a number of years. How that review will take place is a bit of a moot point, but we will come to that in due course. The Economic Secretary understands that we will be watching carefully for circumstances in which the OBR is too close to the Chancellor of the Exchequer. It is vital for it to remain distant from, and impartial between, the political parties. It must also have a good dialogue with Parliament.
Those are the important points that we wanted to make, and we know that the OBR will be listening to this debate. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Third Reading
Queen’s consent signified.
Justine Greening
I beg to move, That the Bill be now read the Third time.
As we have heard, this is an important Bill. It puts the new Office for Budget Responsibility on a statutory footing, and puts in place reforms to the corporate governance of the National Audit Office.
As part of a new and enhanced fiscal framework, the OBR is being established to make independent assessments of the public finances and the economy. For the first time the judgments underpinning the official forecast will be determined by independent experts, not Treasury Ministers. Since the coalition was formed last year, every official forecast for the economy and the public finances has been produced by the independent OBR. When the Chancellor presents his Budget tomorrow, it will be accompanied by the OBR’s official forecast. The establishment of the OBR has been welcomed by the International Monetary Fund and the OECD.
The main duty of the OBR, as we have heard, is to examine and report on the sustainability of the public finances. The Bill makes it explicit that the OBR has complete discretion over how it carries out its statutory duties. That is a broad remit. It is not limited to forecasting, but the OBR will be required, as a minimum, to produce economic and fiscal forecasts at least twice a year; make an assessment of the likelihood of the Government meeting their fiscal mandate alongside those forecasts; publish a sustainability report at least once a year; and publish a report on the accuracy of its forecasts at least once a year.
The OBR must perform its duty objectively, transparently, impartially and on the basis of Government policy. Those principles will protect independence and ensure that there is a clear separation between analysis and policy making. Analysis is rightly the domain of the OBR, but policy making is the responsibility of publicly elected Ministers.
The charter for budget responsibility will set out further details on the OBR’s remit. A full draft was published in November, and a final version will be laid before Parliament once the Bill has come into force. The OBR will report directly to Parliament on the public finances. The budget responsibility committee will be available for Select Committee scrutiny. The OBR’s forecasts and analysis will be laid before the House. On funding, there will be separate reporting of the OBR’s expenditure in the estimate that the Treasury presents to Parliament. In addition, the OBR will be able to submit an additional memorandum, alongside that of the Treasury. As we have heard, written questions will be passed to the OBR to be responded to. All those measures will enhance the ability of Parliament and the public to hold the Government to account for their fiscal policy.
The OBR will have its own legal identity, and will be a civil service employer, to allow appropriately skilled staff to move easily to and from the OBR. The OBR’s executive responsibilities will be led by the three-person budget responsibility committee. Its members will be appointed by the Chancellor, and the Bill provides the Treasury Committee with a veto over their appointment and dismissal. The Chancellor has said that he is giving the Treasury Committee that veto to ensure that there is no doubt that the individuals leading the OBR are independent and have the support and approval of the Treasury Committee. All staff will report to the chair of the OBR, and that person will control the hiring and firing of staff. To provide support and constructive challenge, there will be at least two non-executive members. Advertisements for those members will be issued shortly, so that they can be in place before the summer recess.
Part 2 of the Bill modernises the governance of the National Audit Office. It will strengthen the resilience and integrity of that body, which is best placed to assess the Government’s use of public funds at this time of fiscal constraint. It builds on the recommendations of the all-party Public Accounts Commission’s 15th report and has commanded support on all sides of this House. The provisions passed through the House in substantially the same form in the previous Parliament, when they were considered as part of the previous Government’s Constitutional Reform and Governance Act 2010, just before the election.
The Bill has benefited from much parliamentary scrutiny. Before it was introduced, the Treasury Committee produced a detailed inquiry into these matters. I am pleased to say that the Bill is very much in line with the recommendations made in that report. I thank the Committee for the interest it has taken. When the Bill was introduced in the other place it received extensive debate. The Government tabled a number of amendments to bolster the OBR’s remit and to enhance the arrangements for the scrutiny of its work, which were welcomed.
Finally, the Bill has been debated at length in this House. I thank all hon. Members who have spoken and participated, in particular the Opposition spokesmen, the hon. Members for Bristol East (Kerry McCarthy) and for Nottingham East (Chris Leslie). I hope that hon. Members will agree that even though we have not reached a meeting of minds on some of the detail, there is much more on which we agree in principle.
The Bill is a key part of the Government’s fiscal reforms. It will provide an independent assessment of the public finances and the economy, with official forecasts from independent experts, not Treasury Ministers. The Bill will provide a strong institutional foundation for the future through the OBR, and I commend it to the House.
Kerry McCarthy (Bristol East) (Lab)
The Opposition support the Bill. It has been debated at length in the other place and in this House on Second Reading, in Committee and—perhaps at greater length than some of us anticipated—on Report today.
Not much has been said during the passage of the Bill about part 2, which relates to the National Audit Office. That is not least because it implements the measures that were introduced in the Constitutional Reform and Governance Act 2010. It is fair to say that there is widespread agreement on part 2.
As was clear in previous proceedings, there is similarly common agreement on the creation of the Office for Budget Responsibility and on placing it on a statutory footing. We did, however, table a number of amendments in Committee to challenge some of the details of how the OBR will function, as one would expect from the Opposition. In particular, we addressed the concern that has been expressed inside and outside this House that the OBR may not turn out to be sufficiently independent from the Government. For the public to have confidence in the OBR, it has to be seen to be independent. That is why we proposed measures that would have made it more accountable to the House and measures that would have increased the role of the Treasury Committee. We also wanted to ensure that the division between the Treasury and the OBR in terms of staffing and premises was enshrined in law. We are grateful for the assurances that the Economic Secretary gave in Committee on those points. We also welcome her promise that substantive details of the contact between OBR staff and the Minister’s special advisers and private office staff will be published.
We were also concerned about the potential overlap between the OBR’s responsibilities and the Bank of England’s economic forecasts. We therefore proposed that the Bill provide for a memorandum of understanding to ensure that there was clarity from the outset for all parties. I urge the Economic Secretary to ensure that the memorandum is subject to proper scrutiny in this House. I hope that the OBR and the Bank of England will in time formally agree their working relationship.
We consider that a crucial way to secure the independence of the OBR is to ensure transparency in its funding so that the budget responsibility committee is not at the mercy of the Treasury and vulnerable to the whim of the Chancellor. Comparisons with other countries were made earlier. In Canada, the Parliamentary Budget Officer published two critical reports of the Government in its first year. It is difficult to divorce that from the fact that its budget was frozen, despite promises that it would be increased by a third. Some people would say that that was not a coincidence.
Likewise, Sweden has a similar organisation to the OBR in its Fiscal Policy Council, which reported that its resources were not sufficient to enable it to carry out its remit properly. In response, the Minister for Finance suggested that the council’s budget be cut. We obviously want to avoid a situation like that, and we have received assurances from the Economic Secretary that the OBR’s funding is secure for the next five years. We very much welcome that.
Much of the OBR’s decisions and remit will be based on the charter, so it is disappointing that we have not had the opportunity to scrutinise the revised charter today alongside the Bill given that it is so central to the OBR. The Economic Secretary has assured us that it will be published promptly after Royal Assent, which we expect in no time at all, so we look forward to a full debate on the charter in the Chamber before too long.
Although we support the principle of the OBR and the Bill, we have reservations about how the OBR will work in practice. A major concern is the Treasury’s insular conception of economic policy and sustainability, which seemingly allows it to focus narrowly on the deficit and to ignore the consequences of its own policies. Rising unemployment, rising inflation, as seen in today’s figures, and falling growth are not sustainable and cannot be ignored, so we hoped that the Government would allow the OBR the latitude to take into account those crucial determinants for the long-term recovery, even if the Treasury will not. Unfortunately our amendments were rejected, so we could not enshrine that in the Bill, but we hope that a truly independent OBR will include those matters in its remit. The House may well return to the definition of “sustainability” and the issue of intergenerational fairness when we come to debate the revised charter.
During Labour’s last Budget, the present Prime Minister was fond of claiming that our growth forecasts did not match those of the independent experts. In fact, they were consistently much more reliable than he made out. He concluded:
“What we need is a proper independent office of Budget responsibility, which we would set up to set independent forecasts and to keep the Chancellor honest.”—[Official Report, 24 March 2010; Vol. 508, c. 268.]
I agree with the present Prime Minister, for once, about the need for that, but as is so often the case, the reality does not match his rhetoric. Now we have the OBR, but its independence has been undermined by the release of favourable figures in time for a recent Prime Minister’s Question Time.
Moreover, the British Chambers of Commerce has described the OBR’s growth forecasts as “too optimistic”, and despite the Prime Minister’s concern that official forecasts should match those of independent experts, it seems that other independent experts disagree with the Government’s independent experts. In February, the consensus forecast for 2011 was 1.9% growth, which was downgraded to 1.8% in March, whereas the OBR forecast was a more optimistic 2.1%. The discrepancy increases for next year’s forecast. The consensus forecast is 2.1%, compared with the OBR figure of 2.6%, which it has already had to downgrade once thanks to the Government’s policies.
The differences between the OBR and consensus forecasts could be critical. The Institute for Fiscal Studies, which the Government seem to respect on the occasions when it says anything favourable about their policies, has reported that they will fail to achieve their fiscal mandate to
“achieve cyclically-adjusted current budget balance by the end of the rolling, five-year forecast horizon”
if growth does not meet the OBR’s central economic forecast. Whether the Chancellor will achieve his fiscal mandate is clearly in the balance, and although he may use the OBR figures, it would be a great mistake if we held the OBR responsible for whether he fulfils that mandate. Only the Treasury can determine that.
Fundamentally, and finally, we have to remember that the Bill places no enforceable obligations on the Chancellor for responsible fiscal policy. The OBR can report on the state of the economy, and its analysis will no doubt be very valuable, provided it is genuinely independent. However, the Government already have a track record of ignoring expert advice and indisputable evidence that their policies are failing.
The British Medical Association and almost every health organisation that we care to think of warned against the Health Secretary’s reckless experiment with the national health service, but with the Prime Minister’s full backing, he ignored the evidence and carried on regardless. The IFS published independent research proving that the Government’s June Budget and comprehensive spending review would disproportionately hurt women and children and the most vulnerable people in our big society, but the Chancellor ignored the evidence and carried on regardless.
The Office for National Statistics reported that unemployment had reached a 17-year high and that youth unemployment was at its highest level ever, and the OBR itself reported that the Tory-Liberal Democrat plans would mean 110,000 more people on the dole by the end of this Parliament, but did the Chancellor and the Secretary of State for Work and Pensions review their policies in the light of that evidence? No, they ignored the evidence and carried on regardless.
The OBR downgraded growth forecasts after the coalition’s emergency Budget, and again as a result of its comprehensive spending review, and the economy contracted by 0.6% in the last quarter of 2010, proving that the Government’s policies had undermined the economic recovery, but the Chancellor ignored the evidence and blamed it on the snow. The question for the House is whether we can do enough to secure the status of the OBR so that ideologically driven Ministers cannot just disregard its reports.
Kerry McCarthy
No, I am just drawing to a close.
I urge the Minister to ensure that the principles of objectivity, transparency and impartiality are respected, particularly when she lays the revised charter before the House. Most importantly, we seek assurances that Ministers will actually listen to the evidence provided by the OBR and respond accordingly.
When the Chancellor came to office, unemployment was falling, growth was predicted at 2.3% for this year, inflation was lower and falling, and borrowing had come in £20 billion lower than was forecast in 2009. I do not need to tell the House again how the Chancellor has reversed that recovery, but that is the context in which we must consider the role of the OBR. The office is intended to report on responsibility, but it cannot guarantee responsibility. That is the Chancellor’s role, and it is about time he realised it.
Stephen Williams
This is a short but very important Bill which I hope will change the conduct of economic debates. Of course, we have a Budget and days of economic debate starting tomorrow. I do not know whether the former Prime Minister and Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), is going to be with us in person, but I am sure that his parliamentary ghost will be with us as we remember Budgets from previous years. We remember his earlier Budgets and his close relationship with Prudence, and we remember that after the 2001 general election was safely out of the way, spending soared. So began the structural deficit, long before the intervention of the banking crisis.
I remember listening to those Budgets, autumn statements and pre-Budget reports year after year, both in a professional environment before I became a Member of Parliament and, from 2005, as an MP. I remember listening to the then Chancellor’s reports of rosy growth and nirvana ahead of us. We heard a bit more of that today from my neighbour, the hon. Member for Bristol East (Kerry McCarthy). One would swear that the current Government had inherited a golden legacy in May 2010 rather than the catastrophic public finances that we are actually having to cope with.
Mark Tami (Alyn and Deeside) (Lab)
Does the hon. Gentleman recall that at the time, the Liberal Democrats were attacking the Government by saying that they were not spending enough, not that they were spending too much?
Stephen Williams
I recall very well that from 2001 onwards I and my colleagues, whether candidates or Members of Parliament, were saying that the Government should spend more on health and education, but we actually said where the money was going to come from. It may not have been popular, and it did not lead to great electoral success in 2001, but we said it should come from an increase in taxation, not from building up a structural deficit over the next six years.
We all remember the Budgets back then—they were essentially a combination of forecasting, policy, boasting and spin. That is why the OBR is so welcome. In the Budget tomorrow, the Government will take political responsibility for the difficult decisions that we have to make. I welcome that, and I welcome the scrutiny of it. It will be based on a separation of forecasting by independent experts and policy making by elected politicians.
There will certainly be no scope for boasting, and I think it will be some time yet before the coalition Government can take credit for rescuing this country from the dire economic circumstances in which we find ourselves. I cannot promise a complete absence of spin—that would be asking too much of all of us—but we will have a Budget based on independent forecasts and sound political judgment, and it will be a better Budget for that.
Mr Andrew Tyrie (Chichester) (Con)
The Chancellor took a major step by handing responsibility for fiscal forecasting to an independent body, and he took an equally bold step by asking it produce a long-term assessment of the strength of the public finances. He could have opted for a validation model, and instead he has gone for something much more adventurous.
The first inquiry of any significance that the Treasury Committee undertook after it was reformed at the start of this Parliament was on this subject. Rather than wait for the Government to come forward with a draft Bill, we took the initiative and tried to make some suggestions on how we thought it should look. We set eight criteria as minimum requirements for the new body, which for the most part the Government met. I thank the Treasury team for their co-operation in doing what they could to accommodate the Committee’s points.
Absolutely crucial to the success of the new body will be its credibility on independence. To achieve that, some new, groundbreaking arrangements have been made in the relationship between parliamentary Committees and the Executive. The Bill establishes a statutory veto for the Treasury Committee over the appointment of the chairman and executive members of the OBR. This is the first time that a Select Committee has been given such a veto over public appointments, which reflects the importance of cross-party parliamentary oversight of the OBR’s work, and the need for people of the highest calibre and independence to take on the job of running the OBR.
The Treasury Committee has already held its first appointment hearings for the OBR committee, and endorsed the appointments of Robert Chote, Stephen Nickell and Graham Parker. We also welcomed the appointment of two non-executive members. We were particular eager that there should be non-exec oversight of the work of the executives. The non-execs will provide an important check to ensure that the OBR lives up to its requirement to act transparently, objectively and independently.
Non-execs provide an opportunity for two-way traffic. If the OBR chairman becomes a patsy, they have a good chance of alerting the Treasury Committee at an early stage. If the Chancellor or the Treasury lean on the chairman too much, the non-execs offer a first line of defence. If the OBR chairman gets carried away and starts to offer a running commentary beyond his brief on the overall conduct of fiscal policy, the non-execs, as a first port of call, can say, “Steady on.”
The Committee looked carefully at how the OBR’s success ought to be measured. Economic forecasting is an imprecise art, and success on that cannot necessarily tell us much. To be seen as successful, the OBR must provide clear, impartial forecasts and a commentary that improves public debate on the key issues. It must guard against optimism and pessimism, and above all, it must avoid being drawn into political controversy. The Treasury Committee will monitor how the OBR fulfils those performance criteria. We will watch carefully and speak up if we feel that the OBR is not doing its job properly.
Of course, ultimately and simply, the OBR will be judged on the quality of its publications and its responsiveness to reasonable requests from Parliament or the Government for information or work. A few weeks ago, I wrote on behalf of the Treasury Committee to the OBR chairman to seek further information on the treatment of privatisation receipts in the accounts. Frankly, I was not encouraged by his reply. These are early days, and I very much hope that there is more responsiveness to future requests.
In two ways, the Government did not fully implement the Treasury Committee’s recommendations. The Committee asked that an independent group accountable to Parliament be set up after five years to review the OBR’s work. We said that among other things, that group should examine whether the model for the forecasting body chosen by the Chancellor was the right one in the light of experience. To make that judgment, the group would need to examine both the validation model and the much more independent model—the fully independent model—implied by the Congressional Budget Office in the United States. I think, and the Committee concluded, that judging which model is best should be done after a period of experience of the OBR’s work, which is why we suggested the five-year review. I urge the Government to agree, on a non-statutory basis, that the five-year review should report directly to Parliament rather than to the Government via the non-executives, as the legislation currently envisages.
One other proposal in the Treasury Committee report is that the OBR should retain the ability to assess the robustness of the fiscal plans of major political parties in the run-up to an election. That would enhance the quality of debate and take us forward from the world of claim and counter-claim on Labour tax bombshells and Tory stealth cuts and so on, which often leave the public perplexed and do not necessarily move the debate forward much. Although the Bill does not rule that out, it strongly discourages such a role.
I understand the OBR’s reluctance to get involved in anything that could prejudice its appearance of independence, but I hope the door is not completely closed to the idea. Public understanding of what is at stake in elections could be enhanced by the OBR’s involvement. Furthermore, the need for such scrutiny might make parties more careful with their claims and improve their pre-election proposals. I hope we can return to that idea when the OBR’s reputation for independence has been firmly established after a run of years—that could also form part of the five-year review to which I alluded.
Overall, the Treasury Committee was greatly heartened by the degree of engagement from the Government and from the Opposition over the creation of the OBR. That demonstrates that the Select Committee corridor can influence policy rather than just offer critiques of it, which I hope marks a way ahead for improving legislation more widely.
Question put and agreed to.
Bill accordingly read the Third time and passed, with an amendment.
Sentencing Guidelines (Manslaughter)
Mark Tami (Alyn and Deeside) (Lab)
The petition is of residents of Alyn and Deeside and neighbouring areas, totalling some 3,000 persons.
The petition states:
The Petition of residents of Alyn and Deeside,
Declares that Peter Jones, a 24-year-old former pupil of Alun School, Mold, died in hospital following an attack by Gafyn Thomas Denman, 21, who is from the Mold area; notes that Gafyn Thomas Denman was found guilty of manslaughter and was jailed for 40 months for an unprovoked attack; further notes that, at the time of sentencing, Judge Merfyn Hughes QC explained that his hands were tied by the sentencing guidelines in cases of “one-punch” manslaughter such as this.
The Petitioners therefore request that the House of Commons urges the Government to review sentencing guidelines for those convicted of manslaughter so that sentences can better reflect the severity of the offence.
And the Petitioners remain, etc.
[P000905]
Driving Test Centres (Closure)
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
I am very pleased to have secured this important debate on behalf of my constituents in Cumnock and Girvan. I will shortly present to the House a petition signed by thousands of local people who are against the closure of driving test centres there. A pattern is being repeated throughout the length and breadth of the country, with dozens of closures over the last two years. Many closures have happened without any consultation with those directly affected or the local community. As many hon. Members have said, including those who signed early-day motion 1294, which is in the name of the hon. Member for Angus (Mr Weir), such closures are against the Government’s own policy of localism.
The overall policy of the Driving Standards Agency has national implications. The proposed closure of the Cardiff office will involve a loss of 70 to 80 jobs. Union members in the DSA already have very low morale resulting from pay restraint, and attacks on redundancy terms and possibly pensions. There is now a commitment to strike action following a ballot of union members. Are the closures driven by a rationalisation programme, which is referred to in documents that, I believe, have been leaked into the public domain? Those documents mention a wish to move from 350 to 400 current testing locations, not all of which are full time, to about 150 main centres. Alternatively, does the rationalisation of test centres into a network of multi-purpose test centres make a more attractive package for a future privatisation?
The Minister’s public statements appear to indicate that his plan is to take testing to the customer by sending examiners to casual hire locations to deliver tests. He talks about testing from libraries, community centres and the like, but in many parts of the country these facilities are being closed as well. There are potential problems with, for example, operating out of supermarkets in terms of what facilities may or may not be made available, dedicated parking slots, suitable test routes and whether there would be too much congestion in and around retail parks for the tests to be uniform and fair. Having said that, if this leads to an appetite to revisit the closure decisions in Cumnock and Girvan, I will welcome it, and I intend to raise practical ways in which this could be done.
I would like to concentrate my remarks on the two centres in my constituency and the resultant loss of local service. Both are in rural areas, both are only too familiar with the never-ending withdrawal of local services and both have suffered from structural changes. In Cumnock, the closure of deep mining devastates the community to this day, and in Girvan, which is a seaside town, there has been a downturn in tourism as people have increasingly taken holidays abroad. Both town centres have been decimated and are in need of urgent regeneration, and in the case of Girvan even the local swimming pool has closed.
It would be difficult to overstate the strength of local feeling in both these communities at what they see as continual neglect and particularly a lack of understanding and empathy about what it is like living in a rural area and the difficulties of accessing services. However, given that it is my privilege to represent both communities, I am also very much aware of their resilience and ability to look at constructive solutions to problems.
I want to highlight my disappointment at how these closures were handled in my constituency. There was a consultation process of some four weeks basically over the Christmas holiday period, which was totally inadequate and frankly reprehensible. There was never any intention in my view to acknowledge—far less to listen to—local opinion. I hope that the Minister will feel able to redress that situation this evening. I am proud of the representations both communities have made, and I congratulate them, including those who took the time and trouble to collect signatures for a substantial local petition with the help of local Labour councillors.
What response did they get to their representations? On 3 December 2010, Mr Jonathan Hall from the Driving Standards Agency corporate correspondence unit replied to Girvan community council:
“Decisions on the number, location and size of centres must therefore take into account affordability, existing levels of demand and the Agency’s service level travel-distance criteria, where most customers travel no more than 7, 20 or 30 miles to their nearest test centre, depending on the population density of the area.”
How does that tie in with localism? I will go on to say why I think those distances are unreasonable in these two specific cases.
I will also challenge other comments made by DSA corporate services and by the Minister, but before that I would like to highlight a number of questions and points made to me by local people. In areas where local jobs and small businesses are struggling already, the livelihoods of local driving instructors are now under threat. Whatever the DSA says about a full licence allowing a person to drive on any public road, not simply those on which a person was trained or tested, the reality is that most people prefer, at least for some of the time, to practise near a test centre. Those in Ayr and surrounding areas will still be able to do this, while those in the rural area will not. I believe this is discrimination as well as a diminution of rural services, as I have already stated.
For reasons of familiarity, people will not want to take their lessons in areas where they are not sitting their test. To take a driving test on an unfamiliar route is an extra problem for any learner driver. If that is not the case, why do instructors make a point of taking their customers to streets they know are part of the test runs in their area? If learners know the route of their driving test and have driven it numerous times with a driving instructor, they are surely much more likely to pass the test. Driving instructors in the rural areas in my constituency will lose business to those in Ayr. Girvan, for example, had a driving test centre in the town for more than 60 years. It can take 45 minutes to drive to Ayr, which is a fact I am very familiar with because I do it often. Having a driving lesson and another 45 minutes to drive home can come to two and a half hours for an hour’s lesson. Taking public transport to lessons with a local driving instructor in Ayr is not unproblematic, because transport is often not that frequent and adds to cost. For that very reason it is essential for many people in these rural areas to drive for access to education and employment.
The DSA is obviously unaware of the logistics around Cumnock and Girvan and has taken the decision to close the facility purely on a theoretical basis of mileage. Many rural villagers already need to travel some distance to get to Cumnock or Girvan in the first place. As one constituent told me:
“My local test centre is Girvan, but I live a further 15 miles away and the total mileage I would have to travel to the Ayr Driving Test Centre is 37 and a half miles.”
I want to say a word about the new Ayr multi-purpose test centre, which is to serve Cumnock and Girvan following these closures. I welcome the new facility and lobbied the then Government to make sure it went ahead. It is great to have a new super-duper facility in any area, but it should not be at the expense of services to rural areas, especially when there are other ways of cutting costs. The DSA conducted 789 tests at Cumnock and 268 at Girvan in the last financial year. I think that I have made it clear that the decision should not just be about numbers, but it is recognised in both these communities that driving tests being conducted in the areas could be less frequent. However, can the Minister confirm that the same examiner passes through Girvan once each week to go to Stranraer?
Surely a common-sense solution could be found here. Both communities have suggestions for maintaining a reduced service at little cost in accommodation. East Ayrshire council has unanimously agreed, on a cross-party basis, that it will look at offering the premises it owns in Cumnock at a peppercorn rent. Girvan community council has acknowledged that there is no need for an examiner every week given the numbers, but that every four to six weeks would suffice. I said earlier that these communities are proactively seeking a solution, rather than just talking about it. Will the Minister be prepared, as the Prime Minister has done in other cases, to look at this again, given the good will there is to seek an agreement?
My worry about what is being done by the DSA is that in rural Scotland, the test demand may not be sufficient to justify a proper test centre. However, these people pay the same fee as those in more populous parts, so why should they get a lesser service? All this, as I have tried to indicate, could add to the costs of learning to drive and increase the problem of unlicensed driving, which has road safety implications and will impede the economic development of areas already hard hit by the current economic situation. I look forward to the Minister’s reply, which I know will be followed closely by my constituents, and I hope that he can suggest a positive way forward.
The Parliamentary Under-Secretary of State for Transport (Mike Penning)
I pay tribute to the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) for securing this debate. I am sorry but I am not responsible for swimming pools or libraries in her constituency—I believe it is a devolved issue that she needs to take up with the Scottish Parliament. However, I understand where she is coming from.
I was surprised to hear that the hon. Lady was campaigning so hard for the Ayr centre. What Ministers should have said at the time to the hon. Lady was that if the plans went ahead, there would closures in her constituency at the other centres, given the capacity that the Ayr centre was designed to have. That is a fact, and given the capacity of what was designed, that is exactly what is happening. If I had been the Minister, I would not have gone ahead with a programme of that size in Ayr, because—I agree with her on this—it is taking away a service from her constituency. I know that she has heard me speak before on this subject; indeed, she extensively quoted my views on where tests should be. They should be in the community—they should be a service to the community that the Driving Standards Agency provides, not a Soviet-style system that makes everybody come to us.
Mike Penning
If the hon. Lady does not mind, I will continue. It is unusual to give way in an Adjournment debate, because of the limited time we have.
I understand the concerns that have been raised, particularly by driving instructors, and I will try to deal with them. There are some big issues that we need to deal with, not least the many people who go out with someone who they think is a licensed and qualified driving instructor, but who is not actually qualified. That is an issue that I am taking up with the industry. It is wrong that people pay good money and in good faith, thinking that they have a fully qualified instructor, when what they have is someone who is just trained. Not all driving schools allow that, but it is allowable under the existing legislation, which I will look at carefully.
The hon. Lady is absolutely right about the service that is provided, within reason, in the kind of urban and rural communities that she and I serve. I accept that hers is a much larger rural community than mine, but I have many parts of the beautiful Chilterns in my constituency. I see lots of learner drivers, particularly at the weekend, learning how to drive on rural roads—as well as on urban roads—because that is a skill that they need to adjust to as they learn to drive.
We have reformed the test quite extensively in the short period in which I have been the Minister. One of the reforms that I have introduced is to ensure that instructors do not know exactly what the route is, because people can learn a route, but does that teach them to drive? The purpose of the test is to give people skills so that they can enjoy driving on the road, while at the same time ensuring that others are safe. What currently happens—the hon. Lady is absolutely right about this—is that instructors know exactly what the routes are, within reason. They take people round and round the circuit in their lessons, so that when they take their tests, they normally go along one of three or four routes, which they probably know back to front. We will stop the routes being published. We will develop new routes, so that instructors will not know what the likely routes are.
It is a testament to the hon. Lady’s understanding of her constituents’ needs that, as well as putting a petition together, the local authorities and the community have come together to look carefully at what the service provision needs to be and how it can be delivered. As she knows, neither I nor this Government is fixated on bricks and mortar. What I am interested in is the service being delivered to the community. I am not sure that the Public and Commercial Services Union is fully on board with that, but I am sure that we will get there eventually, because what it wants to do is the same as what I want to do, which is to provide a service to the community.
The previous Government’s policy was to implement a closure programme. I have suspended the closure programme while we address the question of how we can deliver facilities and tests to communities. I cannot go back on the campaign that the hon. Lady said she was so in favour of, but the new Ayr centre is now in place. It has a rather large capacity—much greater than the needs of Ayr—and was designed so that other areas would close their facilities, which would then come into a hub. I will not repeat myself too much, but I would not have done that, and it does not fit with this Government’s ideas of how we should deliver the service.
However, what I am doing—I have asked my officials to proceed with this, and they have already started—is speaking to local stakeholders, including councils in the areas where closures are taking place, to see whether we can deliver a service in the hon. Lady’s community that is not about bricks and mortar, but about tests being given. In two areas we are looking at delivering around 1,300 tests in the average year, with about 80% in one centre and 20% in the other. She is absolutely right that the figures suggest that we could send a tester every day—or every other day—to do one test, or we could bring the tests together in a package and have a tester arrive every four to six weeks. My figures indicate that it would be closer to every four weeks, particularly in certain parts of the year, when there tend to be more tests than in others.
It is crucial that the community understand that the service is for them. I know that my officials have been talking to the chief executive of the local authority about how we can facilitate that, which is something that the hon. Lady mentioned. As she is aware, in one case we were using a hotel in her constituency as a headquarters before we got a hub centre. I do not mind if it is in a hotel or a supermarket; indeed, if the libraries in her constituency stay open, I do not mind if it is based in one of their car parks or in a civic centre.
It is crucial that the service should be delivered locally, although let us remember that this is not all about the instructors. I stupidly sat next to my daughters on several occasions when the L plates were up, and it was the most frightening experience known to man—for them, I should stress, not for me. This debate is not all about instructors, but there is an industry out there and I am conscious of their needs. If everything is done in Ayr, there will perhaps be an issue with people looking to the Ayr driving schools rather than their local schools. I do not want everything done in Ayr; I want it done in the hon. Lady’s constituency. We are working hard to ensure that localism is delivered, because people pay for a service and they are entitled to it.
Let me quickly touch on some of the other changes to the test, which is vital to the hon. Lady’s constituents. I do not think that the test in its present form delivers what it is intended to, which is not a group of people who can pass a test, but people who have the skills that allow them—this is particularly true for young people—the freedom to enjoy the road while at the same protecting others. I have already said that we will ban the publication of routes, so that when people leave the test centre, the Sainsbury’s car park or the local council offices, they will not know exactly where they are going to go—clearly they will have to go left or right, but they will not know exactly where they will go after that.
At the same time, people who are learning need the skills for when they do not have someone sat next to them, as a companion or guide, or as someone telling them when they have done something wrong. Therefore, we are introducing a part of the test where people will be asked to go from one place to another without being told how to. They will have to find a route themselves by reading the road signs. Some people have said that they are concerned about this, and have asked whether people will fail their test if they go in the wrong direction. No, they will not; it is how they react to making a mistake that is crucial when we are trying to teach them how to be good drivers.
We have a massive issue in the whole of this great nation of ours with young drivers. That is one of the reasons their insurance premiums are so high. With two daughters, I am proud to say that lady drivers—and particularly younger lady drivers—are much safer than boy drivers. Indeed, 17 to 25-year-old girls are some four times safer than 17 to 25-year-old boys. We must work together to ensure that they have the skills that they need to go forward. One of the proposals that we have made is for qualified driving instructors to be able to use roads that learners do not usually use, particularly motorways. It seems ludicrous that someone can pass their test with someone else sitting next to them, then leave the test centre—perhaps the instructor will have taken someone else out on another test, in another car—and be legally allowed, on their own, to drive for the first time ever at 70 mph on a motorway. Frankly, they will probably be petrified—I know I was very frightened when I first went on a motorway, and I know my daughters were as well.
We are therefore looking at giving fully qualified instructors the ability to teach enhanced skills, including post-test. Indeed, a lot of work is being done with the Institute of Advanced Motorists, the AA and the RAC on what skills we can give people when they have passed their test, so that they face less of a liability in their insurance. That is the sort of steer and guidance that we need from the DSA and Government. It is not about regulating, but about giving people the skills that they need.
The hon. Lady asked me for an assurance that we will bring testing to her community. Yes, we will, and we will do it as soon as we can. Pilots have already started around the country. I hope that the union will support what is being done, because it will protect jobs rather than cause them to be lost. We will need people, albeit that they will not be sitting in a building. I remember the vicar of the first church I went to in my constituency saying to me, “It’s not about buildings, Mike. It’s about people. That is what the Church means.” The same applies to services in the community.
We need to deliver this much-needed service in the community, so that people can have the skills that they need—and at cost, so that they can afford them. In a rural community, passing the driving test is one of the great freedoms that we can give to young people. We need the skills to do that, and we need to bring that service to them at no extra cost to them. That is crucial. Buildings cost a lot of money. The hon. Lady mentioned a peppercorn rent, but in some cases, there might be no rent involved at all. Some commercial organisations might welcome the footfall that would come to them while people were waiting to take their test, if their location became known as the test centre.
I have an open mind on who should deliver these services. As I have said, discussions are going on in the hon. Lady’s constituency with her local authority, and I am more than happy to share with her after the debate the information on who we have been talking to. Perhaps she also has ideas about who we should talk to. We will deliver driving tests in the community, where they should be, rather than a huge distance away, which was the previous Government’s policy. I have inherited that policy, but I will not continue with it.
Madam Deputy Speaker (Dawn Primarolo)
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
National Insurance Contributions Act 2011
Budget Responsibility and National Audit Act 2011.
Question put, That this House do now adjourn.
Question agreed to.
Ministerial Correction
(13 years, 1 month ago)
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Foreign and Commonwealth Office
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Mr Hague
Iran, of course, is an exception to that. Iran has shown breathtaking hypocrisy in claiming to support freedom in the Arab world, while violently suppressing demonstrations and detaining opposition leaders back home—acts that we deplore. We want Iranian citizens to enjoy full civil, political and human rights, and all the benefits of an open relationship with the rest of the world, but that will require the settlement of the nuclear issue, where the ball is firmly in Iran’s court. Until Iran negotiates seriously on that issue, the international pressure on it will only increase.
[Official Report, 17 March 2011, Vol. 525, c. 499-500.]
Letter of correction from Mr William Hague:
An error has been identified in a statement given during my opening speech to the all day debate on North Africa and the Middle East on 17 March 2011.
The correct statement should have been:
Mr Hague
Iran, of course, is an exception to that. Iran has shown breathtaking hypocrisy in claiming to support freedom in the Arab world, while violently suppressing demonstrations and detaining opposition leaders back home—acts that we deplore. We want Iranian citizens to enjoy full civil, political and human rights, and all the benefits of an open relationship with the rest of the world, but the latter will require the settlement of the nuclear issue, where the ball is firmly in Iran's court. Until Iran negotiates seriously on that issue, the international pressure on it will only increase.
Westminster Hall
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Promotion of Women in Business
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Mrs Helen Grant (Maidstone and The Weald) (Con)
Balance is the centrepiece of science; it is the fulcrum of philosophy; and it is stability in society—light and dark, hot and cold, yin and yang. We need to balance the resources at our disposal in order to exist and grow. Good business managers embrace balance in so many ways—risk and return, investment and innovation, supply and demand. However, an imbalance that is common in business, the professions and politics is the one between men and women in senior positions.
That imbalance is often labelled a gender equality issue, but actually it is a business performance issue. Men and women bring different things to the business table, which are not mutually exclusive. Women can be great at multi-tasking; men can be cool under pressure and very spontaneous. Both have different attitudes towards risk and confrontation. However, if we put the two together, it is no surprise that gender-balanced businesses are more stable, more sustainable and more profitable. Those involved with such businesses tend to make better decisions about people, risk and customers. Let us not forget that women make 80% of consumer purchase decisions in many countries.
If we can share the best of what we have as men and women, our diversity will enrich us all. There are many barriers to progress. Business is a man’s world built by men and, because people tend to recruit in their own image, male imbalance prevails. In the home, women are still the primary carers, and the struggle to juggle domestic duties and a demanding job can be a major hurdle. Silly stereotypes have been created in relation to both domains. Men are characterised as being confident, aggressive and direct, while women are characterised as being kind, warm and gentle, and therefore as perhaps not having quite what it takes to tackle tough business decisions. The truth could not be further from the myth. However, even today, some people still argue that gender difference in attainment is simply because of personal choice, aspiration and preference.
Some Governments have already taken action. Eight years ago, Norway passed legislation requiring all public and state-owned company boards to be 40% female. Spain and France are now following suit. Norway has achieved its quota, but succession is now a problem. Board members typically come from senior management in private companies. However, in Norway, only 6% of those posts are held by women. Clearly, a root-and-branch approach is still required.
Gareth Johnson (Dartford) (Con)
I congratulate my hon. Friend on securing the debate. I know that the issue is very important to her. I hope that she agrees that we are striving for a quality of fairness. Does she also agree that we need to ensure that such fairness is not patronising to women and does not replace one form of apparent discrimination with another?
Mrs Grant
My hon. Friend makes a very good point—I could not agree more. I shall cover that issue later. I am grateful for his intervention.
In Britain, we have much to do. Only 5% of FTSE 100 companies have a female chief executive, and only 12% of board directors are women. Our Government have promised to promote gender equality, and I am encouraged by coalition policies on flexible working and parental leave. Lord Davies of Abersoch is leading a review on women on boards, and his report has just been published. He has got it just about right and is seeking to accelerate glacial rates of change without causing global warming. Recommendations include encouraging head-hunters to put more women on shortlists, requiring chairmen to explain why boards lack female representation, inviting investors to take more responsibility in holding their plcs to account on matters of gender balance and, importantly, introducing voluntary targets to raise the number of female directors in Britain’s biggest companies while not ruling out quotas.
Enforced quotas worry me. I am really, really sceptical about them, because such positive discrimination can demean a woman’s real value among her peers and alienate men. Some would also say that quotas treat symptoms, not causes, and there is some truth in that. Surely our aspiration must be the creation of fair, real and equal opportunities, where meritocracy wins the day. Change is coming, and whether it comes eventually through quotas or by more gentle pressure will be a matter for serious and ongoing debate. Even without legislation, some British companies are already committed to gender balance and a variety of methods are being used. Mentoring and sponsorship, setting targets and using best practice illuminated by the light of transparency can all work very well. Part-time working arrangements can improve female retention. In fact, any family-friendly strategy that allows women just a little more flexibility, especially when their children are young, can pay big dividends—and word gets around because women talk. On an individual level, women can help themselves, too. We may need to be more assertive in our approach and not be afraid to take credit for our achievements.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Lady on obtaining the debate. I promised my wife that I would be here this morning, because she is a business woman—it is more than my life is worth not to be. Although we perhaps have an issue around Government policy, does she agree that dealing with the matter should start earlier in life and that our colleges and universities could help to encourage women in entrepreneurship, so that things are more equal across the boardroom table?
Mrs Grant
The hon. Gentleman makes a very important intervention—I am sure that his wife will be proud. I could not agree more. Part of dealing with the problem is considering how to ensure that our girls—our young ladies—have much brighter, bigger, bolder, ambitious career advice when they are at school and university. The sky should be the limit—I agree with him completely.
I come back to men. Men, too, need to become better listeners. They need to learn to hear a woman’s voice and embrace the enlightenment of a broader horizon, because when courageous women and enlightened men—we have a few of those here today—come together, there is little that cannot be achieved. The non-believers should consider the following comment made by an all-male board member:
“Our board is really effective. We all think the same way. We all have the same views. Discussions are very short and we always reach the same conclusions”.
That all sounds very happy, but is that board healthy? Balanced boards are a noble aspiration, but there is a bigger picture. Boards are central in corporate life, but senior executives and managers create the wealth. That is where gender balance can be so effective. If we can recruit more women to those senior executive positions and train, nurture, promote and encourage them, then the transition to CEO and the board should be a much more natural step. In many ways, dealing with that is more difficult than dealing with quotas.
Enlightened leaders, both male and female, cast a lengthy shadow. Our Prime Minister, David Cameron, has set himself a target of one third of Ministers to be female by 2015. Likewise, a group of powerful London businessmen are aiming at one third female boards by 2015. A few weeks ago, the Financial Times published its list of the top 50 women in world business. Those women run organisations such as PepsiCo, Kraft Foods, Yahoo! and Xerox. Their success is cause for much celebration and they stand as much-needed role models. The aspirations of those leaders encourage millions. I take great heart in their initiatives, because it says to me that there is room at the top and the door is open.
In conclusion, this is an exciting time for the promotion of women in business, the professions and politics. Government have an important role to play, but legislation alone will not fix the problem. We need chairmen, chief executives, investors and head-hunters to all take action. The Davies report is a step in the right direction. I urge the Government to accept its sensible recommendations and to reconsider the whole issue of child care. Inadequate and unaffordable child care prescribes many women to the home, or to not having children. If some improvements can be made, many capable women will be released back into the working economy as taxpayers, entrepreneurs and wealth creators, which is exactly what our country needs at this difficult time.
Mary Macleod (Brentford and Isleworth) (Con)
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate on an issue that, for me, is all about aspiration and allowing individuals—men and women—to achieve their potential. We know that many women are stopped from achieving that potential, from being the best they can be and from delivering real value at senior levels in business. We need to do something about that.
I welcome the report from Lord Davies. He has looked at the issue in detail, involved many people in the discussion and come out with a good series of suggestions. I am a strong believer—as might be imagined from me being here—in the importance of having more women in business at senior levels. I worked for more than 20 years in the City in different sectors and have seen the lack of women at senior levels. I fundamentally believe that that is not necessarily because women are doing something wrong—although I agree with my hon. Friend that they can promote themselves better—but because there are serious issues about how we select women and people on to the boards in the City.
Anne Marie Morris (Newton Abbot) (Con)
Does my hon. Friend agree that part of the challenge is the structuring of the career path? We are all now living longer. If we could find ways of structuring career paths, whether in the corporate or professional worlds, so that men or women could go into it at different times, that might ease the problem. In the professional and corporate worlds, we see a hub at the age of 30 where it is either make or break—the same time that many women want to have their families. That puts on undue pressure and makes that decision much harder than it would be if we had a career span that was much longer, over the many years that we are going to be working.
Mary Macleod
I agree with my hon. Friend. There is not a one-size-fits-all way of doing things. Different women will have different career paths and will do things at different stages of their lives. We want the flexibility to adapt to those different career paths and still to allow people to get to the top levels in business. I have seen the lack of opportunity and meritocracy that currently exists in business. We are not drawing from the possible range of talent that exists. That means that organisations suffer, that business and the economy generally suffer, so the country suffers. We need to do something about that, because there is a huge untapped pool of talent.
Why is this issue important? As my hon. Friend the Member for Maidstone and The Weald has mentioned, some of the reports and studies are not only about aspiration, but performance. Studies such as one by McKinsey’s have looked at a range of statistics that show that companies with a higher proportion of women in senior management teams, in essence, outperform their rivals, with a 42% higher return on sales, a 66% higher return on invested capital and a 53% higher return on equity. There is improved decision making, as was mentioned. Such companies may also be more responsive to the market, make better decisions and have improved corporate governance.
The current position is an issue. Only 12.5% of directors of FTSE 100 companies are women and only 7.8% of directors of FTSE 250 companies are women. Some 52.4% of companies have no women on their boards at all. That is a disgrace. There are a few reasonably good examples. GlaxoSmithKline, in my constituency, has 38% of senior positions held by women. It is good that that has improved year-on-year in the past five years, and that it has improved at the different levels—whether manager, director, senior vice-president or vice-president. That is what we want to see: an ongoing improvement at all levels so that there is opportunity for all.
In so many organisations, the frustrating thing is that progress has plateaued. Contrary to the widely held myth, there is no evidence to suggest that there is a shortage of appropriately qualified women in the pipeline. There are plenty of women to take on board-level roles, but we need to start to change the thinking about what the requirements are. As Lord Davies said, we must promote on the basis of merit and skills. That is important if we want a true meritocracy, and to have true fairness and opportunity. Lord Davies’ report mentions getting companies to talk about and publish their figures. That is a great starting point and something that we absolutely should do.
Other measures that need to happen include the better mentoring and sponsoring of the next generation of executives. One programme that exists and works very well is the FTSE 100 cross-company mentoring programme. Many chairmen of FTSE 100 companies are trying that new mentoring approach that will help in the long term, because it aims to sponsor, nurture and mentor the next generation and help them with the skills and experience to get to the next level.
More also needs to be done with networking for senior women in business. A study by Higgs and Tyson found that almost half of the directors they surveyed had been recruited through personal friendships and contacts. That is probably something that we all recognise, so it is important to build up those networking opportunities.
We also need to fight media images and stereotypes. The more we can create, promote and highlight role models, the better it will be, because we want the younger generation of women to see that it is possible to get to the top of their business or sector, and that that will happen purely on the basis of fairness and merit.
Also, we should promote companies that have a good record on gender diversity and flexible working options, which, for some people, is important. We have to work with the chairmen of FTSE 100 and FTSE 250 companies so that, as Baroness Bottomley put it, they look through the window when recruiting boards and not in the mirror. That is something that needs to be adjusted so that, as my hon. Friend the Member for Maidstone and The Weald said, people do not recruit only those who are similar to them and who are already on boards but see the value of having new and different skills on boards.
Claire Perry (Devizes) (Con)
My hon. Friend is doing a fantastic job of setting out many of the challenges that need to be overcome, and how we might do that. Does she agree, though, that perhaps there is another approach, which is to think about how we actually structure roles? It is inevitably the case that those of us with families end up being torn in our daily lives. I have always thought that job shares—potentially having a Cabinet position as a job share—would send a powerful signal, allow women to achieve their best and also recognise the complexity of many of our lives.
Mary Macleod
My hon. Friend makes an excellent point. If there were job sharing in politics—there is no reason why the role of MP or Cabinet Minister could not involve a job share—we would show that we have made a real difference and made ground, and that there is no reason why that cannot happen in business.
The time has come to address the issue and really do something about it. It has been talked about for so long but very little has been done. The opportunities for business right now are too significant, at a time when we really need enterprise and growth, flourishing businesses, and more people creating their own business. We must do something about the issue. Women must be recruited to senior levels in business based on their merit and skills. Perhaps the definition and assessment of the skills that are required need closer attention, but I have no doubt that plenty of women with the right skills to take companies forward are waiting for the opportunity to do so. If we could let everyone, both men and women, aspire to be their best and achieve everything that they want, businesses across the country would flourish.
Julian Smith (Skipton and Ripon) (Con)
I join this debate as a head-hunter—I declare that interest—who, until recently coming into the House, worked on senior-level executive search assignments for global organisations. I am the employer in an all-women company and the proud husband of a wife who has just set up a business as part of a job-share situation. I am also a colleague of some exceptional new MPs on both sides of the House, many of whom are women. It is unfortunate that more of my Opposition colleagues are not here today.
As a small business owner, I have spoken frequently about the avalanche of regulation and red tape that hit small businesses over the 13 years of the Labour Government, and the impact of such legislation globally on Britain’s competitive position in respect of inward investment compared with Hong Kong, Asia and other international locations. As a head-hunter, I saw that people were beginning to hire in those locations rather than the UK as a result of our employment law.
Therefore, I was pleased that Lord Davies chose not to advocate legislation in his report, “Women on boards”, which came out in February. I add that I could not find a copy of it in the House of Commons yesterday when I sought one—that was not a great indication of the importance of the topic.
When I first sat on the Government Benches last May, I realised that never in my life had I been involved in something so male. When I reflected on the companies for which I had recruited as a head-hunter, I thought again about the stark differences between those that had seriously taken an interest in diversity and put it at the top of the agenda of their organisations, and those that had not. When I listened to the debate on UN Women, which I thought was one of the most productive and positive debates in this House, I resolved to try to play my part on this issue. I compliment my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this debate, and on all her work in this country and internationally—recently in Malaysia, I believe—on the issue.
Things have been improving, but progress is so slow. Statistics in the Lord Davies report show that 12.2% of directors of FTSE 100 companies are women, and that 7.3% of people on the boards of FTSE 250 companies are women. That is appalling. Our economy, which is on its knees, and which needs to use all its talents to get out of the current crisis and to deal with a competitive world, needs to address that. There are moral reasons as well: in a society that aspires to be equal, such statistics are not acceptable.
The best companies I have worked with in recruiting at senior level have not focused solely on women. Their big focus has been on diversity. They have been hard-wiring into their organisations the approach that it is not acceptable to come up with a shortlist of white males but instead it is better to come up with a diverse list of people and then select on merit. However, the number of organisations and companies that think that way is not as large as it should be, and we need to increase it over the next few years.
Andrea Leadsom (South Northamptonshire) (Con)
Recently, the Monetary Policy Committee announced that it was recruiting another white man, and that it was absolutely delighted—as, indeed, we all are—with the extremely talented gentleman whom it had chosen. In small print at the end, as an afterthought, it said that only one of the 27 applicants was a woman, and that it wished that more women had applied. Does my hon. Friend agree that it would be a good idea proactively to encourage more women to apply for senior roles?
Julian Smith
My hon. Friend makes an important point. There is a great deal of work to be done in the public sector as well as the private sector, but the Government now need to put significant pressure on the private sector, and not just on targets. One area I would advocate as well worth looking at is performance management generally in organisations. Can the Government do more to highlight those organisations that performance manage their staff and that look at things such as the approach that my hon. Friend the Member for Devizes (Claire Perry) suggested? Can we highlight, as well as company growth, those companies that manage their human resources positively?
Mary Macleod
Does my hon. Friend think that it is important to have real performance measures and that that should affect how people are remunerated? If they are not assessed on that, which might affect what they earn, people tend to forget about it. It is a nice-to-have, but there is no focus on it and nothing ever gets resolved. If people are actually measured on that and remunerated accordingly, something might change.
Julian Smith
My hon. Friend is absolutely right. The client that I worked with that did best in this area had such considerations hard-wired into compensation and promotion at all levels in the organisation, not just at board level. To get a pipeline of candidates for board positions, one has to work right down the organisation, at every level of management. In that organisation, the key question at every performance review was, “What diversity hiring have you done in the past six months?”
A relentless focus is required in the House and at every level of government. I am not convinced that having a unit on women and equality is the right way to go. We need this to be driven from the highest level in the Department for Business, Innovation and Skills, and we need to showcase with awards and in every way possible those organisations that are doing the right thing.
Julian Smith
The role of head-hunters is important. The reason for stressing companies is that head-hunters are driven by their fees, and if the underlying companies are pushing them, that is when there is a change in the approach of the head-hunters. I was pleased that Lord Davies advocated a voluntary code for head-hunters, and some are doing great work in this area, but we will probably end up having to look more closely at this unregulated part of the business world, and push hard if they do not move quickly on their voluntary code.
On parental leave, child care and other matters that have been discussed this morning, I hope that the Government, with their moratorium on regulations for small businesses, will advocate a frank conversation between employers and female employees. My best employee relationship was with someone I could talk to about her plans for child care and family development, and we interweaved her talent and desire to build her family with the business’s needs. That employee was paid more and performed better than any other person in my company.
As well as the Government’s role, there is a strong role for Parliament. There is a strong argument for setting up a new Select Committee for the lifetime of this Parliament to focus on women and diversity. It could be wrapped up at the end of this Parliament, but in the meantime it could be used as a vehicle to demonstrate that parliamentarians in the class of 2010 will ensure that we move the issue on, drag companies in and question them. We want to ensure that the matter is nailed once and for all.
My concern and my message to business, whether head-hunters, global businesses or small businesses, is that if we are still here in 2015 having these arguments about the paltry number of women in the senior echelons of our businesses, it will be very difficult for people such as me, as a great supporter of less regulation and red tape, to stand up and say that there should not be legislation and intervention. This Parliament has an opportunity, as does business, to go for it, and to make a substantial change along the lines of what Lord Davies said, but it must be done now. We must get on with it.
Lorely Burt (Solihull) (LD)
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate. I also echo the excellent suggestion of my hon. Friend the Member for Skipton and Ripon (Julian Smith) to introduce a Select Committee on women and diversity. The Minister will be listening carefully, and I shall make representations through the Liberal Democrats’ Business, Innovation and Skills parliamentary committee, which I co-chair.
We have heard excellent contributions this morning, and I need not reiterate why we must bother with women on boards. The aspiration of equal opportunities clearly does not work. It is 40 years since the Equal Employment Opportunity Act 1972, but still only 12.5% of members of FTSE 100 boards are women, and only five are run by women. Evidence shows that companies that increase the number of women in leadership positions outperform those that do not. Clearly, it is good for business to have more women.
On stereotyping, Martin Vander Weyer said in The Spectator on 26 February:
“Women are more risk-averse, less driven by raw competitive urges, and more likely to stay focused on generating steady returns; and those are precisely the qualities needed in non-executive directors to counterbalance the machismo of thrusting executives.”
Such stereotyping is dangerous. Not all women are like that, any more than all men are testosterone-fuelled risk-takers. We all have a bit of yin and a bit of yang in us, and it is important not to accept stereotypical opportunities.
Who is calling for change? Last year, the CBI called for a comply-or-explain policy for all businesses, and Viviane Reding, European Commissioner for Justice, is considering calling for quotas. She has started a five-year strategy to achieve 30% of women on boards by 2015 and 40% by 2020.
What are the problems? Many have been discussed this morning, and they include lack of flexibility, and linear advance patterns. My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) talked about whole-life careers. We now have many careers during our lives, and the idea that one must go from one step to another clearly does not work for women or for men.
The male culture of people of the same sex, who perhaps went to the same school or who even belong to the same club, is harmful in achieving diversity of view and opinion and opening up boards to new ideas in all sorts of ways. On nominations committees, we heard an expert speech on the position that head-hunters are in. They may be eager to please, but I welcome the voluntary code that is being promoted by Lord Davies.
There are many things we can do to help—for example, flexible working. I am delighted that the Government are committed to flexible working not just for women and not just for men with children, but for everyone, because quality of work and life makes people better contributors to the work force. We must recognise people for their contribution, not for the number of hours their coat is on the peg at work. I call that “presentism”.
Collaborative leadership styles would be much more positive and helpful in some circumstances, as would effective succession planning. Women respond really well to coaching and mentoring, and we are often our own worst enemies, because we do not recognise how good we are. I had to have a stiff talking to by a friend before I accepted that I would be good enough to become a Member of Parliament. Talent must be recognised in organisations. My hon. Friend the Member for Maidstone and The Weald referred to the leader of the Conservative party and said how well the Conservatives have done in bringing on women. One could argue about whether that constitutes positive discrimination, but the A list has certainly introduced a new generation of women MPs, and I assure you, Mr Caton, that there are no token women in this Chamber; they are all full-on, first-class Members of Parliament.
Mary Macleod
Does my hon. Friend agree that the Conservative party increased the number of its women MPs at the last general election partly because we had a leader overseeing the matter from the top? He promoted it and ensured that it was at the top of the agenda. The same must happen on boards. Does she agree that it is important for chairmen, chief executives and board members to say, “This is really important; we must do something about it.”? If that happens, something will be done?
Lorely Burt
I could not agree more.
I want to finish by referring again to Lord Davies. I have spoken about head-hunters and the requirement on listed companies to disclose annually the proportion of women on boards, how many are senior executives and how many are in the work force generally. That would shame a lot of companies into looking at the poor representation of women.
Lord Davies leaves formal quotas as a future possibility, but states that there is overwhelming opposition to them. Well, there would be. To require someone to comply would challenge the stereotypical grey men in grey suits. Will we need quotas? The Davies challenge is for the make-up of boards to include 25% of women within four years. I believe that we will probably need to move towards some form of quota system if boards do not comply with that. This is the last chance saloon for the grey men in grey suits.
Martin Caton (in the Chair)
I will now call Andrea Leadsom, but I advise the Chamber that five hon. Members wish to speak and I want to start the winding-up speeches by 10.40 am. We need more brevity and more speakers.
Andrea Leadsom (South Northamptonshire) (Con)
I, too, congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate. I start by saying that I absolutely love men. I have two beautiful sons and a nigh-on perfect husband, and I assure the Chamber that this debate is not about bashing men; it is about trying to promote more good and fantastic women, and even—let us face it—more mediocre women. In any society not everybody can be fantastic but everyone can achieve a lot more than they currently do, and that particularly applies to women. Let us bring on more women of all shapes and sizes, whether mediocre or utterly brilliant.
I want to be a tiny bit selfish and talk about my story. I represent a classic tale of someone who has suffered from the determination of society to promote one type of structure. My parents divorced when I was very young, and for a long time it was just me, my two sisters and my mum. My mother taught us that, “The world does not owe you a living; you get on and you do it for yourself, my girl,” and that was very much the mantra with which I grew up. My sisters and I were all driven to do well in our careers, while still loving men and having a place for them in our hearts. You can rest assured, Mr Caton, that my two boys are clear that women are their equals and every bit as good as them.
I went on to jump out of my political science degree and into the City with huge enthusiasm. I worked 60 hours a week and did all the things that the men did—I worked shoulder to shoulder, neck and neck, competing with the best of them. At the age of 30, I discovered the wonderful thing that was being married and having a child. When I was eight months pregnant—nobody could accuse me of concealing the fact that I was about to have a baby—I was promoted to be the youngest senior executive that Barclays had ever had. That was a huge privilege and honour and I was thrilled. I was also, however, about to have a baby.
I went away and had about three minutes’ maternity leave. I worked until two weeks before the birth and came back after less than three months. I was desperate to get back into the job, but I was knocked for six by the whole experience. Within a year of trying to hold down such an enormously challenging job, I spoke to my boss about whether it would be possible to do it part time. I will not name names, but the answer was, “We’ve managed without many women directors until now, and we certainly don’t need part-time ones.” I struggled on for another year, but two miscarriages later I gave up, went away and thought, “Right, I’m just going to be a mum.” I had a second child and worked as the managing director of a hedge fund. It might seem rather ridiculous to go from working in a mainstream bank to becoming a senior person in a much smaller organisation, but somehow that worked better. It involved less process and more interpersonal relationships, and people talking to each other and understanding what was necessary to get the job done. Even though I had an important position, it was understood that I also had other priorities.
My story is indicative of what so many women go through. They start off neck and neck, fighting on equal terms, but then something happens—they start a family and their career is never the same again. The past 10 years of my career were happily spent in a funds management organisation at senior level, but with no prospects of promotion because I was working part time. I recognised that and was happy to pay the price because being a mum has always been the most important thing in my life. At the moment, however, that price must be paid, which I do not think is right. It holds women back, and many women give up altogether. A wealth of evidence suggests that women deliberately apply for more junior jobs that do not meet or challenge their skill sets, simply because they want the time and space to raise their family. That is a tragic waste of talent, and I believe that so much more could be done.
I do not plead for quotas. As my hon. Friend the Member for Skipton and Ripon (Julian Smith) so eloquently said, employers should be encouraged to talk to their staff about what works for them. Such flexibility is not legislated for, but we need to get away from the situation where an employer can never ask someone if they are planning to have a baby, or whether they need to go to parents’ evening, because that is a taboo subject. Inadvertently, legislation and workers’ rights have made that an even more knotty topic, but if we could get away from that problem and arrive at a position where employers can talk to staff about their priorities and the things that they need to do, we would be in a much stronger position due to that mutual recognition.
In my office I employ a fantastic caseworker whose wife is about to have their second child. That is bearing down on us all, and we will accommodate his needs as a father. It is not just about women; it is about families. Accommodating the needs of families will go a long way towards improving the talent base in this country, and it will improve business across the board.
Brandon Lewis (Great Yarmouth) (Con)
I, too, congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this debate. Ever since I left university, I have worked in business, and over the past 10 years I have run a couple of businesses. I was not sure what I, as a man, could bring to the debate, but when I spoke to my hon. Friend yesterday, it suddenly occurred to me that for 10 years I have run a business with about 80 staff of whom more than 90% are women. That had not occurred to me in the context of this debate, because we did not go out looking to recruit women or in any specific area. I fully agree with the comments about discrimination made earlier by my hon. Friends. Discrimination is not acceptable, but equally, we do not want positive discrimination.
I agree with my hon. Friend the Member for Skipton and Ripon (Julian Smith) that we should not seek Government legislation that makes work more difficult for small and medium-sized enterprises. It is already difficult enough to employ more people under the existing regulations, which put companies off. The Government can set an ethos, however, and perhaps I can add my experiences to the debate, and say what it is we do that means we attract more women, and why that works so well.
Dr Julian Huppert (Cambridge) (LD)
The hon. Gentleman is right to say that there is a limited role for Government in terms of imposing rules. Does he agree that it is important to encourage mentoring? A lot of studies show that all people benefit from mentoring, and women do not get as much of that as possible. Organisations such as Enterprising Women do a lot to try to promote that aspect, and I hope that the hon. Gentleman will mention it.
Brandon Lewis
The hon. Gentleman is right. People across the board benefit from mentoring, and men are sometimes afraid of saying, “Look, I need a bit of help.” Some women I have worked with do that better and have benefited from it. Women hold top positions across my business. As declared in the Register of Members’ Financial Interests, my business involves a couple of schools and a nursery in which the head teachers are women. My administration team that runs the business is also made up of women. I have to say that they do a far better job now that I am not there interfering than was the case when I was. As an employer, we have appealed to women partly because primary education, on which we focus, tends to attract women. The tougher part of our job has been recruiting men into primary education, which is important because of balance.
When I was a council leader, I was always proud that I had a council group with very good balance. My hon. Friend the Member for Maidstone and The Weald made the point that for any business or organisation, it is balance that makes it work. The balance of men and women in my council group was about 50:50. I was very proud of that and made a big point of it, because we achieved it before many authorities could get anywhere near it. We also had people from different walks of life and different business backgrounds. They ranged from a councillor of 18—the youngest councillor in the country—through to councillors in their 70s. It was the balance of members—members who agreed with one another and members who did not—that made it a more powerful team.
In my business, it is the balance that works, and flexible working also appeals. As we are an educational establishment, we have a slight advantage, in that we can advertise jobs for people who want to work only in term time to fit with their families. More men might consider that, too. This is a time when we are looking for more opportunities for men, and men are sometimes afraid of admitting that they want to spend more time with their families. I am sure that many of us in the Chamber would fall into that category, if we could. However, the ability to work in term time—the ability to work part-time hours—has meant that we have attracted women, which is benefiting our business. Our turnover of staff is extremely low. I think that in the 10 years that I ran the main administration team, we lost only one member of staff, who went on to a promotion elsewhere and has been very successful as a result. Business can consider those issues. This is about achieving a good balance across the board, with different types of input from people with different backgrounds, from men and women, from different age groups and from people with different professional backgrounds.
With regard to being flexible about work, the hon. Member for Solihull (Lorely Burt) made the point about “coat peg hours”—a phrase that has stuck with me for many years. When I first qualified in law, I spent some time in a law firm and it always struck me as bizarre that the lawyers, particularly in the corporate law departments, seemed to feel that they had to be in the office from 8 am until 10 pm or later just to prove that they could be there. They were sitting in a square box, staring at a wall, doing work that they could easily have been doing at home, probably more productively.
Therefore, I have always taken a different view with people in my company, whether they are men or women. What interests me as a boss is that the work gets done and is of high quality. Unless there is a particular time demand, I am not interested in whether it is done at 8 am in an office or at 8 am in someone’s home. With the way communications work these days, businesses should think outside the box and be more open-minded about allowing staff, of whatever background and sex, to do their work to the best of their ability and not be so focused on “coat peg hours” and sitting in an office for the sake of being seen to be there. That in itself would be a big step forward for business.
If we can do nothing else in the next few years but encourage businesses to be more open about their working practices to allow people to be more flexible in that respect, we will see more women in business and certainly more production for business, without the need for legislation. I agree wholeheartedly with what hon. Members have said about how business has an opportunity now to make progress on this issue and to have more diversity across the board. Otherwise, we will end up having to look at more legislation, something which all of us who have been in business agree that business can do without.
Caroline Dinenage (Gosport) (Con)
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing the debate, which is incredibly valuable. We have heard some excellent contributions and some interesting ideas, particularly the idea about job shares in the Cabinet.
I endorse the comments made by my hon. Friend the Member for South Northamptonshire (Andrea Leadsom). Every mum faces huge dilemmas in her everyday working life. Productive women are those who feel that their family life is respected.
I wanted to take part in the debate to talk about the untapped potential of women as entrepreneurs. As a business owner myself, I have experienced at first hand the challenges that women face in starting their own companies. It is a world dominated by men. I have experienced for myself the days of walking into a trade show or a builders merchant and it being a bit like the saloon in the wild west where everyone stops what they are doing and turns round to look at the strange being that is among them. When four of the five dragons from “Dragons’ Den” are male and men such as Richard Branson and Alan Sugar fly the flag for UK entrepreneurship, it is not surprising that less than half of businesses are started by women. The stereotype of the ambitious, ruthless male entrepreneur needs to change.
Women can bring a huge amount to business and the economy. Worldwide, women have been shown to be successful and conscientious business leaders. In microfinance initiatives in Africa, 90% of female entrepreneurs plough the profit from their businesses back into the community, compared with only 50% of the men. In the UK, we have inspirational women such as Deborah Meaden and Tamara Mellon, who prove that it is possible for women to succeed in starting their own business. With women making more than 70% of household purchasing decisions, they surely know what the market wants. So why are those inspiring business women so few and far between?
Anyone starting a business will face daunting tasks. They must win over potential investors, persuade their family that it is worth it and, perhaps more importantly, persuade themselves that they are capable of succeeding. That is often the most insurmountable hurdle for women—summoning the self-confidence to take on that task and that risk.
I am involved in a fantastic project in my constituency of Gosport. It is called AWESOME—all women entrepreneurs supporting opportunity and motivating their expertise. It brings budding female entrepreneurs together to provide a network of support. Despite having brilliant ideas, they tend to hold themselves back, perhaps due to a fear of rejection. It is almost as though they regard their business idea being rejected by a potential customer as a rejection of themselves. They have difficulty separating themselves from their business idea.
Mrs Grant
My hon. Friend makes a very important point about confidence. I agree that there is a fundamental confidence issue for us, which has come from years of sexism. Does my hon. Friend agree that if there were more female role models, that might help to correct the situation?
Caroline Dinenage
Absolutely. That is exactly right and it is the point that I was going to make and probably will in a second. Even when a woman succeeds, the challenges posed by approaching a bank or taking on greater responsibility sometimes prevent her from taking those steps and expanding the business to its full potential. I have seen so many women who have got to a certain stage and thought, “I don’t know whether I can take that final step,” and have then just stopped where they are. It is tragic to see that amazing potential go to waste, especially when our economy desperately needs the passion, hard work and vision of all entrepreneurs, but particularly female entrepreneurs. We just need to find a way of unlocking that talent.
By bringing female entrepreneurs together, as we have in Gosport, a network of moral support is created that allows a woman’s true passion for her business to shine though. Women say that they cannot do the hard sell. They say that that is the one thing they cannot do. They say, “I can’t do the hard sell. I can’t go into business.” However, when they are asked to talk about their businesses, their passion and enthusiasm for their product sells it for them. I could tell hon. Members about the number of times that I have walked out of a meeting, having subscribed to things that I did not even believe I needed—including a cat sitter when I do not even have a cat. They are incredible saleswomen, but they do not know that they are doing it.
Successful business women get involved in the group to which I am referring. They inspire confidence in those starting out and help to overcome the little barriers and difficulties that hold people back. We need to develop a network of such groups throughout the UK. They are self-started; they are not funded; and they are just self-help groups. We need to develop a network of such groups throughout the UK to ensure that in every constituency women are getting the support that they need.
Most importantly, we need to foster a culture of female leadership. We need to inspire and build self-confidence in people from a young age, whether that is done through debating clubs or programmes such as Young Enterprise. I did Young Enterprise at school. The business that we had was called Big Time and designed clocks—given my reputation for timekeeping, people find that quite surprising.
We also need to tap into the potential of the media and popular culture in promoting entrepreneurship. I visit many schools in my constituency, and nearly every time I ask the kids what they want to do when they leave school. Very rarely does a girl say to me either that she wants to start a business or that she has an entrepreneurial idea, yet so many want to be actresses, models and performers, which always staggers me. We need some more positive business role models in the media. After all, why should only Alan Sugar have an apprentice?
There will be great benefits for women and for the economy in promoting female-led business. It will bring fresh ideas and different qualities to the business world, while allowing women to set their own hours and agendas, which is what we are talking about. Entrepreneurship is not the preserve of men. It is our responsibility to ensure that women have the support and confidence to be entrepreneurs.
Anne Marie Morris (Newton Abbot) (Con)
Many of the points that I might have made have been made already, given that I am speaking towards the end of the debate, but perhaps I can dwell on a couple of them and give them a little more thought.
In an intervention earlier, I raised the idea of flexibility over career timing. The ability to start a career later—perhaps after having children—is often not open to those of us who work in the City or the professions. I agree with other speakers that that is perhaps not something that can be legislated for; rather, it is about creating the right environment. We need to look at the issue, however, because we will all live longer and need to work longer. This is not, therefore, just a women’s issue, but a cross-gender issue.
Brandon Lewis
I am sorry to delay my hon. Friend, but having had two children, my wife has gone back into work and successfully set up her own business, in exactly the way my hon. Friend has described. Does my hon. Friend agree that part of the issue is the need for us all to highlight the fact that such things can be done? More women, and indeed men, would then realise that being a certain age does not mean that they cannot achieve something and do something new. Highlighting such things would raise the profile of this issue in the way that my hon. Friend has.
Anne Marie Morris
I absolutely agree. That is absolutely right. However, the real challenge is changing that culture.
My second point builds on the idea of confidence and experience. I welcome the idea of a Select Committee, which would be a first-class way of encouraging more thought on this issue. I was delighted to hear about the FTSE 100 mentoring programme, which sounds like a first-class initiative. The challenge is to have more role models and better mentoring programmes—I agree that they should be for men and women—and to help rebalance individuals, so that they have the broad suite of skills that we all need.
In that respect, perhaps I can dwell on men for a minute. If we look at what is happening in schools, we see the reverse of that. Boys’ results are not as good as girls’. Girls are tenacious and exam focused, and they are good at the process involved in passing exams. More and more women are going into the professions, and more women than men are going into the junior level—not the top level—of medicine and law. Leaving aside the leadership issue, we therefore also have a problem with the gender balance in those professions. We need to help men to go into those professions and to compete, just as we need to help women to go into the corporate world and compete there. The gender balance in the professions and corporate life is completely different.
One of the challenges facing us is that the skills that make people successful in the corporate world are not embedded at school, and I suspect that that may be an issue for the Secretary of State for Education. The issue is which skills we need people to gain at school to help us right the imbalance that I have described. Another challenge is to ensure that we have better integration between school and the workplace. One of my frustrations is that the children we talk to about the requirement to do work experience talk about it as if it were a tick-box exercise; there is no real sense of the role they will have in the workplace. Indeed, there is still a bit of a sense that the expected option is to stay at home.
Anne Marie Morris
That would be very helpful. In the same way that we have looked at the intellectual aspects of education, including issues such as the English baccalaureate, we are now looking at the skills aspects of education through the Wolf report. I agree that we need to develop a fundamental understanding of these issues among boys and girls at school. I do not have an answer as to how we can more effectively integrate business into education, but the issue absolutely needs to be resolved.
My third point relates to child support, which is a real issue. Partly, it is about money, but is also partly about culture, expectation and provision. A number of organisations are looking at crèches, part-time working and job sharing. However, it is one thing to look at introducing such provisions and to recognise that they are the right thing to do, but another thing to work out how to make them really effective. There is a bit of a tick-box approach, with people thinking that they have ticked the box because they have a crèche. In that respect, I was really struck by the comments of my hon. Friend the Member for Skipton and Ripon (Julian Smith). What is important is the ability to sit down and have a meaningful conversation about how we can work together and take on board the fact that, biologically speaking—certainly in our lifetimes—only women will have children. The question is how we make a different outlook more of a reality, and a Select Committee could probably sensibly spend some time looking at the issue.
When I was thinking about today’s debate, I remembered that we had a married man’s allowance in the old days, and I wonder whether a working mother’s allowance might be appropriate in the modern world. I put that out as a thought, and I appreciate that the piggy bank is a little empty at the minute, but such a proposal might be food for thought. We need a holistic approach to the fact that women have the babies. We need to integrate that and enable women to contribute in the workplace, which is crucial.
My final point relates to the corporate issue. I was impressed by what I read in the report to which a number of contributors have alluded. Diversity is certainly key. I agree that it would make a lot of sense to ensure that the numbers of women coming through an organisation are published in the accounts. Although I agree that we do not want more bureaucracy, such a process would not be a big issue for the top FTSE companies. We have information about the very senior women, because of the reports to Companies House, but we need to see the progression planning, and we will not get it without information about the women coming through the organisation. That is what I would describe as a nudge, rather than a push. I agree that legislation is not the answer, because we need to shape and encourage. Once organisations begin to see that there is a spotlight on the issue, it will begin to make a difference.
The real difference in corporate life will come, however, with the review of the governance code, which is important. How do we ensure that we are really talking about diversity, not trying to right the gender balance? We have to acknowledge that women want to be recognised for the different skills that we bring. I would almost like to see job descriptions that show that companies have thought through the different skills that they need and how roles might work slightly differently to encompass the broader range of skills that are available through employing women. When we look at the governance code, we could try to give some guidance on what might go into it. We are not talking just about men and women, but about the qualities of good management. If we can articulate that, it would be a good way forward. However, I am conscious of the time, so, on that note, I will conclude my contribution.
Nia Griffith (Llanelli) (Lab)
I warmly congratulate the hon. Member for Maidstone and The Weald (Mrs Grant) on her excellent opening speech and on securing the debate. I thank the many Members who have contributed in a positive way. There is much that we can agree on in terms of the need for encouragement, mentoring, sponsorship, role models and enterprise awareness, and those are very much the steps we need to take.
Ensuring that women can participate as fully as possible in business and enjoy full recognition of their abilities and potential is vital not only to promote a more equal and just society, but to make the best possible use of their skills to increase wealth creation and make a more prosperous society. Women are, of course, involved in many different types of business, from the self-employed woman who works just a few hours a week to the woman with the busy corner shop or the woman working in the very largest of companies. Many of the difficulties they face are not necessarily specific to women. Generalisations over the huge diversity of business can be misleading, and there are, of course, many excellent examples of good practice and success stories.
Over the past 30 years, women’s employment has significantly increased and women are making a greater financial contribution than ever to family incomes. Therefore, it is not surprising that more women’s jobs, particularly jobs in the service sector, have been affected in the current economic crisis than in previous recessions. With the expected job losses in the public sector likely to affect women disproportionately due to the high concentration of women in the public sector, it is important that the Government do more than simply hope that the private sector will grow. There needs to be a clear strategy for growth and encouragement for women to take up jobs in the private sector, particularly those who have not worked there previously.
During Labour’s time in office, we introduced measures that have supported women. We extended maternity leave and introduced paternity leave. We also introduced the right for parents and carers to request flexible working, and many speakers today have mentioned its importance. There is more to do to ensure that employees and employers are aware of the right to request flexible working. It can be daunting to be the first in a workplace to make the request. Many women are worried that such a request might harm their career prospects or make them look half-hearted about work. Properly managed, flexible working, such as changes in working hours to allow a parent to drop off children at school in the morning, can result in the mum or dad feeling much less stressed and better able to concentrate on their work. For some women, it can make the difference between continuing in work and having to leave a job.
Lorely Burt
I agree with all the points that the hon. Lady has made. Is it not good that the Government are introducing flexible working for everyone, because that deals with the stigma of asking? Anyone can ask for flexible working, whether they are picking up their children or going to the golf course, so it is seen as part of the norm and not a condescension for someone because they happen to be a parent.
Nia Griffith
Indeed, the opportunity to have flexible working is extremely important. That is why it is particularly perturbing that news is coming through of an exemption for microbusinesses. That effectively denies employees in businesses with fewer than 10 employees the right to request flexible working. I question the Government’s rationale for making that exemption. They seem to be saying that denying employees that right will somehow stimulate growth in the economy.
If we cast our minds back a few years, we will remember that the Prime Minister, in his speech to the 2007 Conservative party conference, spoke about flexible working:
“Companies that have adopted this have found that they are able to grant the request in the vast majority of cases, they have actually found that productivity has gone up, profits have gone up, staff morale has gone up and keeping staff is easier.”
So what exactly has changed? Will the Minister explain what sort of analysis his Government have done that suggests that flexible working hampers growth? What economic impact assessment did his Government do before deciding the exemption for microbusinesses? How will this move impact on women in business? How is it compatible with the Prime Minister’s promise when he was in opposition that a Government whom he led would be the “most family friendly ever”?
The loss of the right to request flexible working will affect both men and women, but at the moment, it is likely to affect women far more widely than men. It will be yet another obstacle to women being able to combine work and family responsibilities. It might mean some women giving up work altogether, or it might deter women from seeking promotion. Was an equalities impact assessment undertaken on the exemption decision, and if not, why not? We are getting used to the Government breaking promises, and that action is usually accompanied by some sort of lame explanation, so I am curious to learn how denying employees the right to request flexible working will stimulate growth in the economy. To most people, it just looks like a backwards step.
When in office, the Labour Government introduced the Equality Act 2010, which not only streamlined the law by replacing nine major pieces of legislation and around 100 statutory instruments with a single Act, but introduced measures to create a more level playing field and make life fairer for women. Those measures include requiring gender pay reports, using public procurement to improve equality, extending the use of positive action in the workplace, and protecting carers from discrimination—although that, of course, applies equally to men and women, the reality is that women are more likely to be carers. Can the Minister confirm that his Government will implement in full all the measures in the 2010 Act?
We, on the Opposition Benches, welcome the work undertaken by Lord Davies of Abersoch in producing the Department for Business, Innovation and Skills report, “Women on Boards”. In particular, we welcome his recommendations that UK-listed companies in the FTSE 100 aim for a minimum of 25% female board member representation by 2015, that FTSE 350 companies set their own challenging targets to ensure that more talented and gifted women can get into top jobs in companies across the UK, and that those targets be set in the next six months and chief executives review the percentage of women they aim to have on their executive committees in 2013 and 2015.
The question is how we ensure that companies really make progress. The lesson from Norway, which is often quoted as having 40% women on boards, is that it does not happen simply by exhortation. That was tried first, but it took quotas to achieve the 40%. It is not nice to be accused of being on a board solely to make up a quota or to be used as a symbol that a company is addressing gender equality, but companies need to ask themselves exactly how appointments to boards are made. Does the process stand up to scrutiny? Is the best person for the post appointed? It may be that the best person for the post may not even be encouraged to apply. I hope that the recommendations in the report will make companies look very carefully at the whole pattern of promotion within the organisation, as many hon. Members have suggested, and identify whether there are factors, such as particular types of socialising after work, which tend to exclude women. It may be that much more subtle forces are at work, which amount more or less to that well documented tendency to select people like oneself.
What exactly will the Government do to ensure that the recommendations in Lord Davies’s report are fully implemented? Will the Government require companies to disclose each year the proportion of women on boards and in senior executive positions, and the proportion of female employees in the whole organisation, as recommended by Lord Davies? Will the Government insist on the disclosure of meaningful information about the company’s appointment process, as recommend by Lord Davies? How will the Government take forward the recommendation that a
“combination of entrepreneurs, existing providers and individuals needs to come together to consolidate and improve the provision of training and development for potential board members”?
The situation of part-timers needs particular attention. Some women find that they need to go part-time to combine work and a family. Other women would like to work part time, but are afraid of the consequences of doing so, knowing that too often going part time will set them back a long way in the pecking order. I have employed women part-timers, and have always found that their attitude to work is anything but part time. They invariably give over and above what is required for the hours they work. We need companies to take a serious look at how they deal with employees, largely women, who are working fewer hours than the full working week. Are they included in decision-making meetings? Are they encouraged to further their careers and seek promotion while remaining part time? Are they given training opportunities? Are they allowed to work part time only if they can find a person with whom to job share to replicate the exact pattern of a full-time post? Is part-time working considered appropriate only in the lower ranks of the company?
What is happening in other countries? In Spain, gender equity laws passed in 2007 obliged IBEX 35 firms to get a minimum of 40% women on boards in eight years. France passed a Bill applying a 40% quota for female directors by 2016. In Germany, the Justice Minister has threatened legislation if boards do not achieve a better balance in the next 12 months. Can the UK also move forward and can that be done without introducing quotas? Will the Government give companies sufficient encouragement to make the necessary changes voluntarily or will we find ourselves back here in two, three or four years’ time ruing the lack of progress?
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
This has been an excellent debate, and I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing it. We heard some powerful speeches, in which Members showed their experience and knowledge of the matter.
One of the key things mentioned by my hon. Friend, which was picked up by others, is that it is not only about equality but about business performance. I shall stress that aspect because I believe that the issue is about growth. We have the Chancellor’s Budget tomorrow. I believe that the Budget and other such measures are aimed at improving corporate performance and thus the performance of the wider economy.
My hon. Friend spoke of the extra benefits and skills that women bring to the boards of our great companies—their attitude to risk, how they manage employees and how they think about customers. She was right to say that the studies cited in Lord Davies of Abersoch’s report and elsewhere are unequivocal on the subject. The evidence is unambiguous that having more women on boards improves corporate performance.
The debate focused on the leadership of women on boards, following Lord Davies’ report. It was good to see such widespread welcome for his report. We also heard about practical support for women and families in the workplace and about supporting women entrepreneurs. I shall try to cover all those aspects. Before doing so, however, I make two further comments on my hon. Friend’s speech.
First, my hon. Friend reminded us of the Prime Minister’s aspiration for a third of Ministers to be female by 2015. Her speech may be an early suggestion that she is heading for promotion. Secondly, she made the important point that men need to listen to women in this debate. One of my favourite books when reading on the subject at university was a book about men and women in conversation called “You just don’t understand me” by Deborah Tannen, a socio-linguist. Listening to each other, particularly across sectors, is most important. We need to understand each other.
It is not only about listening in this debate, as we try to improve business and Government performance on the matter, but about putting that message across in the workplace, with employers and employees listening to each other and having grown-up, adult conversations. Indeed, many of the concerns that lie behind what was said this morning can be addressed in a way that does not require legislation or regulation. My hon. Friend spoke well and to the point.
Many Members spoke of legislation and non-legislation, and it is important that we realise the power of the nudge—the power of the non-legislative approach. That is one reason why I was keen to publish what has been called the employers charter. It sets out what employers can do under current legislation, and gives examples of the sort of conversation that employers are allowed to have with their employees—for example, about maternity leave and workers’ plans. It is important that we change some people’s perceptions about employers. Actually, employers have rights if they behave reasonably, and they can therefore work productively with their employees.
Right-to-request legislation, which was mentioned today, is a sort of nudge. It is about enabling employers and employees to have a conversation about flexible working. I have some concerns about the way in which the previous Government implemented right-to-request legislation. They took a prescriptive approach, and some employers find it rather regulatory and over the top. However, the Government are committed to right-to-request legislation. We will consult on it in due course. As I made clear in a written statement—
Mr Davey
In a moment, but first I want to reply to my hon. Friend. The hon. Lady may want to intervene if she does not like my answer.
When we consult on extending the right-to-request legislation to all employees, we will also consult on whether there should be an exemption for micro-businesses. That may be appropriate because conversations are more easily had in small businesses. As my hon. Friend the Member for Skipton and Ripon (Julian Smith) said, by and large smaller firms are better at having such conversations than larger companies. We will listen to people when we consult; the hon. Lady may believe too much of what she reads in the papers.
Nia Griffith
The question is whether people have the right to request flexible working. As everyone who has spoken today has been very much in favour of the right to request it, and as no one is obliging anybody to grant it, what is the difficulty with insisting that micro-businesses do the same as every other business?
Mr Davey
The hon. Lady anticipates our consultation document. I believe that we will get the balance right, and better than the previous Government did; their approach was over-prescriptive. Indeed, that points out one of the differences between the two parties. I regret to say that for the vast majority of this debate, the hon. Lady was the only Labour Member here, but the Labour Government seemed often to think that the only way to secure progress in this area was through regulation and legislation. Sometimes that is needed, but it is often not necessary. For example, the employee engagement taskforce led by David MacLeod and Nita Clarke, which is business-led and is trying to promote best practice in employee engagement, and the employers charter that I mentioned earlier both take a non-legislative approach, and that can have a big impact.
Other questions raised this morning relate to the wider debate, particularly on how to take forward Lord Davies’ report. That report focuses not only on Government but on companies, their chairmen and chief executives and on the head-hunting industry. However, it recommends how the Government should ask quoted companies to report on their performance on this matter. We will be publishing proposals on improving narrative reporting following our consultation—the document was published in July 2010—and that issue will be included. I assure hon. Members that the Government strongly welcome the report, which paves the way to massive improvements in this important matter, on which the previous Government did little.
The hon. Member for Llanelli (Nia Griffith) asked whether the Government were taking forward measures in the Equality Act 2010, but she may have missed the fact that most of its provisions were brought into force on 1 October 2010. We have concerns about one or two areas, particularly to do with section 78, which provides for mandatory reporting on gender equality, and we are working with business to see whether we can take a voluntary approach, which we think is right. While we engage with business on that matter and try for a voluntary approach, we will not commence, amend or repeal section 78.
Another matter raised by the hon. Lady was that child care is inadequate and often unaffordable. I am proud to say that, in the spending review, the Government did not merely maintain spending on that but increased the opportunity for child care, particularly for the young of deprived families. Our commitment in that area is strong.
That brings me to the debate about maternity leave, paternity leave and parental leave. We will be consulting on that later this year. We already have a lot of legislation on the matter, but it does not work terribly well. It is inflexible, gender-biased and it does not work with the grain of many companies. Our consultation paper will take forward the coalition agreement, and I believe that we can achieve a win-win by making things more flexible for employees and employers. We want them to work better together to ensure that we have more family-friendly workplaces, but that it does not come at a cost for employers.
It has been an excellent debate. I pay tribute to my hon. Friend the Member for Maidstone and The Weald. I believe that the House could play a critical role. I do not know whether we could go for the Select Committee option put forward by my hon. Friend the Member for Skipton and Ripon, but I am sure that he will want to raise the matter with the Leader of the House. It certainly received support this morning.
Regional Development (North-East)
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Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
At the risk of making this Adjournment debate appear like the alternative Budget for the north-east—or of the hon. Member for Middlesbrough South and East Cleveland—I warn the Minister that the breadth of coverage of this speech will be large. However, I am sure, as I know my hon. Friends are, that such a diverse speech can only partially cover the wide sectoral diversity that has been achieved in 13 years of patient investment in the region by the previous Labour Government.
Let me give the Minister a brief overview of some of the issues of concern that face my region. I hope I speak for all parliamentary representatives of the north-east region when I say that a north-south divide still exists in England; it is deep, long term, continuing and persistently separates a nation on the basis of where an individual is born and raised, without due regard to the exceptional talent at hand within the boundaries of the Tees and the Tweed. Indeed, the current economic gap—which is perpetuated by the current economic climate—between the north-east and the rest of England is likely to widen, with the serious economic and social consequences that that entails.
PricewaterhouseCoopers’ analysis of the comprehensive spending review indicates that the north-east will be disproportionately hit by spending cuts and job losses. Unfortunately, the coalition Government’s hope that private sector growth alone will fully compensate for such consequences ignores broad economics and, therefore, looks highly unlikely. Indeed, with the Government doing less—or rather, intervening less—in the north-east in particular, the economic position of the region will be made far worse, not better. The coalition Government are not supporting with adequate institutional arrangements or money their declared aim of rebalancing. Rebalancing without the support of adequate resources is a recipe for failure.
Ministers have consistently disputed the need for proactive regional policy or strong Government intervention. That stands in stark contrast to what happened this time last year, when the parties in the current coalition, unaware of the then Labour Government’s actions behind closed doors, called for direct state intervention in Teesside Cast Products. They disingenuously confuse and coalesce the logic of the “crowded-out private sector” with a laissez-faire, sideline observing position, away from the crucial brokering of integral business deals necessary for a burgeoning and diverse manufacturing sector.
For my sub-region within the north-east, “primers”, or large industrial foreign and domestic investments, still dictate the pace of a regional economy outside a city. They historically work in our region, and our region, more than most in England, wants them. The new orthodoxy, rooted to agglomeration, relies on the purely local—almost parochial—delivery of economic planning. I do not decry that in its entirety, but for local partnerships with very limited resources, manpower, expertise, clout, cash and perspective, to deliver will be difficult and will only get more difficult.
Localism and equity are not the same thing. If the objective is to ensure that northern authorities have the resources both to support their local economies and to provide local public services, the greater the extent to which the business rate is devolved, the more extensive the equalisation scheme that would be needed. Such a policy approach remains spatially blind, with absolute priority given to the destruction of existing regional economic structural drivers, such as the regional development agencies, which is simultaneously delivered cap-in-hand with grossly exaggerated local government budgetary cutbacks in the north-east. It is evident that, for this Government, deficit reduction takes primacy over economic rebalancing and any notion of localism.
RDAs were emasculated before any local enterprise partnership was fully set up, allowed to root itself or to be fully financed in and around the expectations of the present Government. That is not the fault of the LEPs—in my case the Tees Valley LEP—because the structures, finance and guidance were delivered to them by the Government. A plan to allow LEPs organically to transform themselves and direct themselves—or perhaps that is the lack of a plan—has been the Government’s prevailing philosophical hobby, rather than occupation. However, that is a smokescreen. It only proves again that deficit reduction takes primacy over any economic rebalancing, and trumps any new trumpeted localism for this Government.
If we are to make LEPs work, they must be properly funded and have access to funds. They should not have to bid with raffle tickets for funds from a regional growth fund—such a fund is less than the total budget for a still non-defined mutualisation model for post offices—that is suffering under the gross weight of demands. LEPs need a proper funding apparatus, whether localised or national in source.
The rush to condemn the RDA within the crucible of the coalition’s gaze has been pursued with a vigour that borders on an almost McCarthyite zealotry. On 12 October 2010, the Minister said:
“The economic divide between the Greater South East and the rest of England is as wide today as when the RDAs began their work. That by any measure is a failed policy.”
The case against One NorthEast totally and utterly reduced it to a list of failings, without due or proportionate regard to its obvious successes, which, unfortunately, did not come to light until after it had effectively been dismantled. Many of the coalition’s policies, including the new homes bonus and impending reforms to the business rate, are likely to favour the south over the north, and the north-east in particular. Recent spending decisions in key areas such as science and technology largely favour a strong southern bias.
The bias in research and development towards the south is cumulatively increased when areas that produce traditional industrial products, such as Teesside, require further state investment, such as grants for business investment schemes, job creation programmes, and public sector relocation. If that investment is not forthcoming, the north-east will remain behind the curve in comparison with its sister regions in England.
James Wharton (Stockton South) (Con)
The hon. Gentleman speaks very passionately on the subject; none the less, I find it hard to agree with some of his comments. He says that the north-east is falling behind, but since mid-August there have been announced almost 26,000 new private sector jobs, investment worth some £9 billion and private sector contracts worth £1.5 billion. The north-east economy is booming in some areas, and that should be welcomed. Far from falling behind the rest of the country, we are showing all the signs of powering ahead, rebalancing our regional economy and getting the private sector up and running again.
Tom Blenkinsop
The hon. Gentleman is a strong advocate for Stockton South and a worthy adversary indeed. He is right: Teesside has a fantastic industrial economy and many new projects have opened up across the region, in his own patch as well as my own. However, those jobs will be created over a certain time period. Many of those were to have been announced before the general election, but for a number of reasons the announcement was halted until after the election was called. It would be false to say that One NorthEast did not have a prime role in bringing those businesses to our region. As a former union official in the steel industry, I know how much One NorthEast has worked with both Governments in trying to get Sahaviriya Steel Industries into the region. What I am trying to say is that a list of failings was produced but there was never an equitable list of positives and negatives when we were assessing RDAs.
We strongly require support for the emergence of a range of different financial sources for infrastructure development, including the green bank, and a greater localised and decentralised source of capital explicitly held for manufacturing entrepreneurship. That will allow risk-takers to take those industrial strides around the existing capital and skills inherent in the cultural demographics of our region. I hope that, unlike the Secretary of State for Energy and Climate Change, the Minister will consider a manufacturing green bank that works with the agencies to deliver the technology and product design that will give us green technologies—working and operating out of Edinburgh, the Secretary of State’s preferred location—rather than holding debates on “green” ISAs or other financial products that simply have the term “green” before them. That green finance must be aimed at manufacturing and not solely at financial high-street products if the Government’s own agglomeration policy is to be pursued for manufacturing.
However, I understand where the Government are coming from on industry. Agglomeration is fine, but industrialised clustering works even better, as we have seen in Germany and the Netherlands, when industry has its own access to funding to implement its own decisions, or when financiers are educated in industry and are located nearby, as documented in yesterday’s Financial Times. However, that connection between finance and industry is still vague and I very much doubt that Ministers at DECC and the Treasury are concerned about it at present, as both Departments appear to have a more obvious preoccupation with carbon floor pricing than with industrial finance. Carbon floor pricing, which I will discuss later, is perhaps the most important issue for Teesside.
I also challenge the Government’s huge assumptions about another topic that I will discuss later: export-led growth. It is obvious to any man and woman in the street that all Governments at any point in time want export-led growth. A healthy balance of trade is integral to a modern industrialised economy. However, we have to be vigilant about the economic mood music emanating from Asia at present.
Enterprise zones—an issue particular to my area—are the Thatcherite reprise of this Government. The enterprise zones policy is not wholly bad, but previous examples have shown that they are best used in certain sectors such as retail and finance. Our financial capitals are established overwhelmingly in London, although Leeds has developed in that regard in recent years. A previous example of enterprise zone growth in the north-east is evident at Gateshead’s Metro centre. However, what we do best on Teesside is not best suited to enterprise zones, and they ignore the broader view of industrialists in the port and chemical sectors.
I also want to look at particular areas in my constituency, such as our local high streets in Middlesbrough, Guisborough and East Cleveland.
Ian Lucas (Wrexham) (Lab)
I promise not to intervene often, as many Members are here for this debate. My hon. Friend mentioned my home town of Gateshead, and the Metro centre, which was viewed as a tremendous success in the 1980s, when it was initiated. However, did not the Metro centre have a profoundly negative effect on Gateshead town centre? That is the real danger that exists with any introduction of enterprise zones. They might assist a very small geographical area, but they might also create what is almost a wasteland outside their boundaries.
Tom Blenkinsop
I thank my hon. Friend for his intervention and I have to agree with him. Obviously, there are benefits from enterprise zones. They bring a certain percentage of business in, but they also displace existing business. I will go into that issue in more detail later.
What can we do for small and medium-sized businesses and the self-employed? I have already talked to the Minister about that, and I believe my comments were received very positively. Ultimately, however, the direction of the north-east must be viewed from the perspective of the north-east. Until our region has more command of its economic destiny, it will continually have to bid against other English regions and Scotland and Wales for attention and investment.
Economic development in the north-east is a subject of deep concern to my constituents and the people of the wider region. Indeed, it should also be of concern to all the people of the UK, because without shared growth our country can never travel the road to prosperity. In the coalition agreement last year, the Prime Minister and the Deputy Prime Minister said:
“We both want to build a new economy from the rubble of the old. We will support sustainable growth and enterprise, balanced across all regions and all industries”.
That was and is an admirable pursuit, but my constituents are not seeing words being translated into action. In contrast, despite the north-east having the highest proportion of workers in the public sector of any English region, the Conservative-led Government have vague plans for growth in the north-east’s private sector, while simultaneously attacking its public sector base and the businesses—small and medium-sized, as well as self-employed—that thrive as a result of that public spending. The Prime Minister and the Deputy Prime Minister may have likened the economy under the last Government to “rubble”, but the last Government understood the regions and gave real teeth to regional development.
For example, the north-east regional development agency—One NorthEast—was one of those rarest of things: a public body with almost unanimous support that attracted praise from public and private sectors alike. However, a subtle criticism I have of the agency is that the region should have capitalised on the opportunity that it provided to take strides on its own. With a regional assembly that is democratically legitimate, our region would certainly be in a stronger position to attract business as well as to retain it, rather than witnessing what we are seeing in some areas: a partial and gradual leakage of industry from our region.
Praise for One NorthEast is well deserved. An independent report by PricewaterhouseCoopers showed that regional development agencies return £4.50 to regional gross value added for every £1 spent, if allowance is made for the expected persistence of economic benefits. Furthermore, the National Audit Office’s independent performance assessment concluded that One NorthEast was performing strongly. So why has it been abolished, especially after the Business Secretary said that the regions could decide what best suits their area? The only answer can be that the Conservative-led Government’s business policy is dictated from an informed position, but one that looks from London. It is a policy that will work, but not for all, and is ultimately submerged in an ideological fervour. It is formed not by regional or local opinion but Whitehall dogma. However, I reiterate that I do not believe that Ministers are stupid or ignorant of economics; they are simply applying a view that does not have a kernel within my region, and which does not redistribute wealth.
One NorthEast is the body that helped to set up and support the North East of England Process Industry Cluster, which made £1 billion gross value added in six years with just £3 million of public support. However, in addition to the scrapping of One NorthEast, we have now seen the abrupt end to the emergency package devised for Teesside in the wake of steel job losses. That fund targeted jobs growth in the chemicals sector, particularly in the growth area of agri-chemicals, as an alternative to lost steel jobs. Obviously, we have had the excellent news of the investment by SSI at Teesside Cast Products. However, that emergency jobs scheme has been axed, even though it is still allocating work and has £18 million in uncommitted funds that could have been used to support and enhance the objectives of NEPIC members’ companies.
Now we hear that a long-standing and successful job creation fund, which in the past decade has helped to create many hundreds of thousands of jobs in areas such as the north-east, is to be axed by stealth. That fund—the grants for business investment scheme, under the name regional selective assistance—has been responsible in the north-east for pumping £112 million into poorer parts of the region, helping to create 25,000 jobs. In various forms and under successive Governments, the scheme has been in place since the late 1960s. It survived the Heath years, the 1970s Labour Governments and even the Thatcher and Major years, as well as the following Blair and Brown Governments. Despite differences of economic policy, all those Administrations recognised the value of regional selective assistance. Throughout that whole post-second world war period, that element of consensual “Butskellism” remained and only now has it been totally dismantled.
The Chancellor has announced the creation of at least 10 enterprise zones across Britain, in a scaled-down revival of Margaret Thatcher’s flagship urban renewal programme of the 1980s. The Chancellor hopes that those zones, which will offer simpler planning rules and corporate tax breaks, will accelerate development in areas that already have high growth potential. They will not simply be created in areas of physical decline. However, sceptics believe that they could be ineffective and that the appeal of the tax breaks will be limited by the fact that only £100 million of Government subsidy will be available, spread over four years.
The Chancellor’s announcement is part of a wave of initiatives to be unveiled by Ministers before the Budget tomorrow, all of which are intended to prove that the Government have a coherent strategy for growth. He will announce at least 10 zones, which are expected to be chosen by Ministers on the basis of submissions by councils and business leaders. To address fears that this is a top-down initiative that might sideline town halls and local enterprise partnerships, the Chancellor will say that local authorities will be able to keep all of the business rates that they raise in the new zones.
However, retention of the business rates will almost certainly benefit a number of London and south-east areas. In fact, the special interest group of municipal authorities, or SIGOMA, analysis of 2009-10 settlement-based grants showed that the top 10 councils to benefit are Westminster, City of London, Surrey, Hertfordshire, Hillingdon, Hampshire, Camden, West Sussex, Kent and Essex. The London boroughs of Westminster, Hammersmith and Fulham, Kensington and Chelsea, and the City of London will gain £1.6 billion in total in local spending, whereas the north-east, north-west and Yorkshire will lose out by £760 million in total.
The Chancellor insists that the coalition’s initiative will shift growth from London and the south-east to other regions, and he says that it contrasts with what he claims was Labour’s attempt to micro-manage the economy. He told his party’s spring conference in Cardiff:
“Our approach is different: tax breaks and less bureaucracy, not quangos and more regulation.”
James Wharton
As I sense that the hon. Gentleman might be moving on in his speech, it is important to put very clearly on the record that, although he and I disagree about enterprise zones, there is a great deal of support right across Teesside for the campaign to get an enterprise zone in our local area. That support comes from not only me and the hon. Member for Redcar (Ian Swales) as local MPs but Ray Mallon, the mayor of Middlesbrough, and business people such as Steve Gibson, who is the chairman of Middlesbrough football club, as the hon. Gentleman knows. Moreover, the local enterprise partnership is extremely keen to secure an enterprise zone. It is important that the Minister hears those comments, which should be on the record. We really want an economic zone, although I acknowledge that the hon. Gentleman, who represents a neighbouring constituency, has a different view of the success of such zones from me.
Tom Blenkinsop
Yes, I know Steve Gibson—I am a season ticket holder at Middlesbrough FC. I partially agree with what the hon. Gentleman has said. Local authorities, business leaders and LEPs have to work within the frameworks and structures that they are given, and they have to make those frameworks and structures work. However, this is a broad debate about the policy, and if I did not talk about the economic implications of the policy, I would not be doing a proper service to my constituents.
Reviving enterprise zones will prove ineffective, even if that aim is achieved at less cost than that of the 1980s model and the zones are redesigned for today’s circumstances. The Work Foundation and the Centre for Cities think-tanks argue in recently published reports that zones created under the now Lady Thatcher and Sir John Major created too few jobs and were too expensive. The Work Foundation has said that such zones typically created only a three-year boost before areas lapsed into depression, and that up to four fifths of jobs were simply displaced from other areas, often within the same town.
London’s Isle of Dogs—now Canary Wharf—was among the most successful of 38 enterprise zones created between 1981 and 1996, but others in places such as Middlesbrough, Speke, Hartlepool and Swansea left a less impressive legacy. The EEF manufacturing association has said that the policy sounds like a return to the past. The rhetoric deployed by the Government indeed sounds attractive, but I signal real caution and suggest to them and to supporters of enterprise zones that they reacquaint themselves with Teesside’s history in the 1980s. Enterprise zones offer potential relief on local business rates, reductions in corporation tax or national insurance contributions, tax credits or capital gains allowances on investment in premises, and the relaxation or fast-tracking of planning processes and capital expenditure subsidies. Did that work in the ’80s throughout the north-east, and throughout all sectors and, more importantly, will it work now in 2011? I had a look at my old economics notes from Teesside university, and all the evidence from the past suggests that enterprise zones did not work, and possibly will not again.
Locally, Middlesbrough’s Riverside Park, which has since been very successful, was designated as an enterprise zone, but all that happened was a rush to get speculative office development off the ground with no tenants and no businesses to fill the new buildings. That, of course, did not worry the developers, who simply benefited from the tax perks from building in an enterprise zone and allowed the empty buildings to be used to make artificial losses, which reduced the total taxation on their developments elsewhere. Such experiences, bar perhaps the Metro centre and Black and Decker in Durham and the London Docklands, were admitted as a failure at the time by the Thatcher Government. In their official evaluation, the Government admitted that between 1981 and 1986 they poured £300 million into the scheme but created only 13,000 new jobs nationally, which equates to £45,000 of public cash per job at the mid-1980s value of sterling. The same study also stated that enterprise zones mainly encouraged job displacement rather than real new jobs, and it showed that 25% of new jobs in enterprise zones were displaced from within the same town.
Repeated today, that type of local displacement risks seriously destabilising our local economy, as it involves artificially enticing businesses into what could be seen as less competitive areas within the same town. On the face of it, it might seem obvious that lower taxes boost business, but that was not borne out by experience. It quickly became clear for the majority of small businesses that their biggest concern was about making a profit in the first place, and about the risks associated with achieving that, rather than about tax on revenue or profit. Questions of rent, skilled workers and access to markets were more significant than a temporary lifting of a tax burden in a specific area rather than across the board.
The only people who benefited in the 1980s were the developers, not wealth-creating manufacturing businesses. We should not dismiss out of hand any proposals to encourage job creation and, for the sake of my area, if the plan goes ahead I will wish it every success, but the evidence of actual gain is thin indeed. Some already established businesses and their owners might see it as a helpful tax avoidance scheme, but that only benefits the already rich by possibly multiplying their wealth and does not create any added value.
Guy Opperman (Hexham) (Con)
I congratulate the hon. Gentleman on securing the debate, because it is a very helpful process. I have listened for 23 minutes now, and there is a great deal of criticism of what is being tried by the Government but no alternative being put forward. I look forward with great interest to hearing what the alternative will be—
Guy Opperman
The hon. Gentleman says that, but someone has to pay back the £120 million-a-day debt. Speaking as the son of manufacturers who have been in the industry for many years, what the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) describes is not necessarily how my family have found it.
Tom Blenkinsop
I will come on to discuss the alternatives. We have seen borrowing increase by £2 billion, and certain policies, which I will come on to later, have economic effects on the national economy, and more profoundly on that of the north-east. Those effects will be part and parcel of the package due to inflation, and the retail prices index is currently running at a 20-year high. Such national policies are being put in place to deal with the deficit, but they seem to do only that, rather than presenting a progressive or prospective economic plan.
Turning to industry, chemical firms with major operations on Teesside, as well as our local steel producers Tata, have grave and well-founded concerns about industrial growth policy. I am, of course, talking about carbon floor prices. A consortium of firms, including SABIC, Lucite International and GrowHow, has recently criticised the Government’s energy strategy, justly claiming that it hinders the competitiveness of UK manufacturers more than any employment regulation or tribunal. The implementation of a minimum price for carbon will add a minimum of 20% to energy-intensive users’ energy bills. If the policy is implemented, our nearby EU competitors will no doubt exploit the situation, as will competition further afield. The policy will hinder further inward investment, and might lead to the departure from our region of good companies that provide long-term, well-paid, skilled work. EU competitors have attempted and then pulled away from equivalent policies. Changes to the carbon reduction commitment scheme, which amount to a £1 billion tax, will also delay green investment and hurt small downstream industry that aids steel production in the UK. Ultimately, potential and existing investors will move abroad to less efficient and less green arrangements, which will not benefit our economy either nationally or regionally.
Alex Cunningham (Stockton North) (Lab)
Yesterday evening, some other MPs and I met some of the major companies in the energy-intensive industries, many of which are in our constituencies in the north-east. The Government plan to have carbon capture programmes, but none of them takes into account the specific needs of those industries. Does my hon. Friend believe that the Government should think again, and instead of just concentrating on energy plans concentrate on the needs of industries as well?
Tom Blenkinsop
My hon. Friend hits the nail right on the head. Whatever policy we have—an agglomeration policy, or a slightly different industrial policy—the energy factor, which I will go into in more detail later, will have a more and more profound impact on industry’s ability to retain and maintain its current position as well as to invest. Teesside is potentially one of the key areas in the country, never mind the region, for that investment, particularly in the chemical and steel sectors. My hon. Friend makes an excellent point.
Of anything that I say today, I beg the Minister to take that message about carbon floor pricing back to the Department for Business, Innovation and Skills, the Treasury and the Department of Energy and Climate Change, to block any moves that will hurt our north-east in general, and Teesside’s industrial core in particular. The announcement of a supposed regional growth strategy for the north-east as part of the comprehensive spending review is at best misleading and at worst a smokescreen to hide the deep cuts that will stunt economic growth in our region. The regional growth fund will also have to finance bids for housing and transport plans, so it is obvious that even a successful LEP bid to the fund will mean only a small slice of a very small cake. The fund was designed to redress the regional imbalance in the economy, so surely providing funds to companies in the affluent south-east will undermine its objectives.
I am also extremely concerned that the Government may well be turning away millions of pounds of EC funding for new economic initiatives and infrastructure projects, because their blunders over the winding-up of the regional development agencies means that they do not have the match funding for those job-creating schemes. On Teesside that is made worse, as the back-up service for a Tees valley LEP will rely on the existing Tees Valley Unlimited agency and its staff. However, that too has had £7 million of its £9 million budget slashed. There will also be a real terms cut of 9% to the science budget, which threatens to leave the UK behind international competitors such as the US and Germany, which are still increasing their science spending despite the economic climate. Even the Minister for Universities and Science said recently that scientific research contributes to long-term growth. If the Chancellor agrees with that, why are we not increasing the science budget like other countries?
The Government announced in the CSR that £1 billion would be provided to fund carbon capture and storage. According to Jeff Chapman, chief executive of the Carbon Capture and Storage Association, that will fund one project,
“but it’s not enough for four”.
I argue that the Wilton site, in the constituency of the hon. Member for Redcar (Ian Swales), is ideal for the project in many respects.
We must be able to capitalise on foreign export opportunities, yet we must not rely wholly on them. As I have said, this Government have given absolute economic primacy to deficit reduction. That has massive implications for a sector-led agglomeration anywhere in England, but it will particularly affect how potential foreign export purchasers view England, especially the north-east.
Chemicals are a major player nationally as well as locally on Teesside, and they make up more than 30% of UK economic exports. Teesside has massive potential, with projects such as Chain Reaction by PD Ports at Teesport and Hartlepool, agrichemicals as a new growth sector, petrochemical developments, SSI and Tata at Teesside Cast Products and many more.
US ambassador Louis Susman has questioned the wisdom of the Chancellor’s massive spending cuts, warning that they risk plunging Britain into a double-dip recession. His remarks echo those of leading economists at the International Monetary Fund, who said last week that the US and EU economies remain too fragile to absorb major deficit cuts, concluding that additional spending and tax breaks would be a much more sensible strategy. In an interview with The Daily Telegraph, Susman praised the Chancellor’s determination to eliminate the deficit within a single Parliament as “very admirable”, but warned:
“But the question is, is it too much, too fast? We worry about double-dip recession and the lack of growth.”
So do I.
China reported a trade deficit in February of £4.5 billion. Exports from China grew by 2.4%, which was less than expected, mainly due to the appreciation in value of China’s currency. However, growth in imports also decreased from an expected 30% to 19.4%. We must remember that under Labour, between January and August 2010, exports to China from the UK rose by 44%, which especially helped manufacturers. Between January and April 2010, manufacturers boosted UK exports by £21.3 billion. The demonstrable reduction in Chinese demand is having huge effects on other international economies that export or rely on exports.
The coalition Government must understand that an export-led growth strategy alone will not suffice. Besides the obvious structural unemployment issues—the skills of redundant public service workers in the north-east will not match the growing sectors, if any grow—manufacturing sector credit squeezes in China, the terrible floods in Australia that have limited coke exports, desperate earthquakes and tsunamis in Japan and ongoing events in Libya, Bahrain, Yemen, Saudi Arabia and the wider middle east and north Africa will affect an overly optimistic and wholly reliant British exports policy. Iron ore, steel, cotton and other commodities are peaking at extraordinarily high levels. More importantly, coal, gas and oil markets are peaking as Japan, China, and Germany re-evaluate their nuclear policies, which is already affecting our access to fossil fuels and their domestic and industrial usage and price. That will undoubtedly affect not just our north-eastern industry but our national export capability.
By betting the house solely on exports, we expose ourselves to a potential backfire. However, public sector investment and an export policy need not be mutually exclusive. Obviously, we can pursue an export policy while retaining our levels of public sector investment in the north-east. Again, however, an export policy with no real investment and no public sector expenditure belies the coalition’s policy of giving economic primacy to deficit reduction. We should not reduce the deficit at the price of our public sector and, in turn, of the small and medium-sized businesses in the north-east that rely on it.
The planned changes implemented so far include a rise in VAT to 20%, which will affect consumer spend. Businesses such as leisure, hotels, restaurants and retail will bear the brunt. Indeed, figures from the Office for Budget Responsibility stated today that the consumer prices index was at 4.4%, double the Tory-led Government’s estimates. I am a traditionalist, and as a former union officer I never dealt in CPI, but always in RPI. The OBR says that the retail prices index has risen from 5.1% to 5.5%, the highest in 20 years. Funnily enough, that was the last time there was a Tory Government. We have had the wrong kind of snow from this Chancellor, and now he claims, as he did on the front page of the Financial Times, that we have the wrong kind of inflation, causing him to have to borrow £11.8 billion, up from £9.5 billion last year. I thought that we were making cuts in order to reduce loans.
The effects of the Government’s policies resonate hugely, and nowhere more than in the north-east. R3, the association of business recovery professionals, regularly contacts me regarding time-to-pay arrangements for small and medium-sized businesses, especially given the impact of oncoming public sector cuts. Time to pay is crucial in the north-east to help the self-employed and small businesses currently in trouble to avoid insolvency and prevent the further private sector redundancies that will be inevitable after public sector cuts.
R3 surveyed 300 small businesses and found that one third relied wholly on public sector spending in one form or another. The survey was nationwide, and things will undoubtedly be more severe in the north-east. The situation will be more acute, of course, if interest rates increase on top of the inflationary figures estimated today by the OBR.
On behalf of small businesses, I welcome the Government’s potential simplification of tax, especially if national insurance and income tax are combined. However, the Government could go further for the north-east and its small businesses. High streets in ancient market towns such as Guisborough, Brotton, Loftus, Skelton, Saltburn and other East Cleveland villages need help. Some great small businesses are developing in my constituency. Coastal View, for example, is a new free monthly paper that advertises other local businesses. In south Middlesbrough, retail is also key at shopping areas such as the Parkway in Coulby Newham, Easterside, Marton, Marton Manor, Hemlington and Park End.
Self-employed women and men in my region need quick assistance. On behalf of small businesses, I ask the Minister this: rather than enterprise zones, could the north-east as a whole pilot a 5% VAT rate for construction? Evidence in France has shown it to have turnover benefits of 7%. The Government must act on VAT and fuel duty, and the consensus on that is cross-party, especially on fuel. The 5% VAT rate could be extended in turn to public houses, restaurants and food service in general, helping struggling small businesses while aiding our region’s burgeoning activity tourism economy. Similarly, VAT exemption rates could be lifted from £60,000 to £90,000 for small businesses and the self-employed, bringing in broadly the same revenues for the Treasury while giving small business a break. Again, that could be piloted in the north-east.
I give the Government credit for relaxing planning regulations to allow some commercial properties to be changed to housing accommodation. It might prove a more viable solution in rural areas of my constituency, particularly on certain high streets in East Cleveland. Even so, small businesses will become increasingly key in the fine economic blend of the north-east region.
I understand that I have raised many sectoral topics and a diverse array of issues, but I look forward to any response that the Minister can give.
Guy Opperman (Hexham) (Con)
It is a great pleasure to follow a fine, long and detailed speech that took us on a lovely journey through your constituency and touched on many local areas, but not on many others. I waited—I probably waited too long to intervene—for you to acknowledge that the £120 million-a-day debt with which the Chancellor must deal is something that you caused. It did not arise out of nowhere. I hope that it is accepted that whoever was in power—this applies just as much to your good selves as it does to us—would have had to deal with that debt. To ignore the huge debt that we must deal with when addressing the economics of the situation is unacceptable.
If I counted correctly, there were few things of which you were in favour: simplification of tax, a possible VAT cut to 5% and the relaxation of some planning regulations. In 35 minutes, almost no description of anything that we are doing did not chime with McCarthyite zealotry, which is the most eloquent and powerful description of what you were trying to do—
Martin Caton (in the Chair)
Order. Mr Opperman, you keep saying “you” and “your”. You are supposed to be addressing me, and you are ascribing to me views that perhaps I do not hold.
Guy Opperman
I apologise. That is entirely true, Mr Caton. I could not possibly comment on whether anybody had McCarthyite zealotry.
I have listened to the hon. Member for Middlesbrough South and East Cleveland and hope that he will advance the issue. It is wrong, however, to describe enterprise zones as a bad thing and to say that policies should be implemented in a way that ignores tremendous benefits. I am sure that my hon. Friend the Member for Redcar (Ian Swales) would describe the great benefits of Corus, and we should not ignore the fact that the North East of England Process Industry Cluster has come forward. All of those are good things.
Frankly, it is important, at this moment in time, to deal with deficit reduction. If there is a manifest difference between the proposals of the hon. Member for Middlesbrough South and East Cleveland and ours, it is about whether the deficit is the key or not. I suggest that, at a time in which we are in so much debt, the deficit is always the key, because if we do not address it, we will disappear into a situation akin to that of Greece or Portugal.
Tom Blenkinsop
I do not deny that the Government’s plans are sensible, have a point and a logic, and that they might work. The point is about who they will benefit. Is this yet more trickle-down economics, or are we genuinely talking about redistributive economics? Redistributive economics favours the north-east, but I am afraid that trickle-down economics favours the south-east. The Chancellor’s plans may indeed work, but to whose benefit?
Guy Opperman
The dispute between us is fairly stark in terms of the extent to which we have the potential to repay. My view is that the Chancellor is trying—this is not something he wanted to inherit—to address the £120 million-a-day debt and to be in a position to do that. I believe that he will take the issue forward and that there are real opportunities in the way ahead. I speak as the representative of a fundamentally rural constituency, but jobs are up and the points made by my hon. Friend the Member for Stockton South (James Wharton) are fair. It will be difficult, but I am absolutely certain that the Chancellor has the right policy.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this timely and important debate, and on his excellent overview of the north-east economy. Given the particular challenges faced in a region such as ours, and the already felt and anticipated impact of this Conservative-led Government’s policies, I could touch on so many issues in this debate. However, given that Newcastle airport is based in my constituency, I think it appropriate to address the important role played by aviation in the development of the north-east economy.
With about 3,000 people on site, the airport is the largest employer in Newcastle upon Tyne North. It contributes about £400 million to the north-east economy annually, and it handles more than 5 million passengers a year. The excellent service provided by Newcastle airport to domestic and international passengers has been nationally recognised by its peers, having been voted the best UK airport by the British Air Transport Association for two years running.
Indeed, the service provided by Newcastle airport has become increasingly important to the region’s economy over the years, with the growth of the tourism industry in the past decade or so being one of the real success stories for the north-east. Tourism is now worth nearly £4 billion to the region’s economy and employs more than 65,000 people, while the increase in visitor numbers to north-east England has been outstripped only by London in recent years. To give just one example of the airport’s impact on the north-east economy, the new Emirates route that launched in 2007 saw the region’s first ever scheduled long-haul route. It flies daily from Newcastle to Dubai, and it has opened up onward connections to more than 50 destinations around the world. It has also opened up a whole new tourism market for north-east England, leading to One NorthEast’s award-winning “Passionate People, Passionate Places” campaign heading as far afield as Australia and New Zealand to target those people who were then within easier reach of our region.
The Conservative-led Government’s cuts, however, and their decision to abolish our regional development agency, mean that north-east England no longer has the capacity to promote itself as a tourism destination either nationally or internationally. This situation and the abrupt end to the “Passionate People, Passionate Places” campaign have been rightly and roundly criticised in the region.
As the Minister should be aware, north-east England is also one of the few regions in the UK with a positive balance of payments—recently published figures indicate that the total value of north-east exports was £11.91 billion in 2010. At the same time, inward investment has played an increasingly important role in the north-east economy, creating or safeguarding more than 6,500 jobs in our region in 2009-10 alone, and levering in £720 million in capital. About 82% of the inward investment came as a direct result of One NorthEast. I hope that the Minister will reflect on that serious point.
Newcastle airport plays an important role in supporting the strength of the north-east export market and our foreign trading links, providing the region’s businesses with easy access to key international markets. Direct flights from Newcastle to Stavanger in Norway, for example, have proved crucial in supporting the development of the north-east’s offshore and subsea industries. Moreover, the Emirates link to Dubai, which I have mentioned, now provides easier access to commercial opportunities in China, the far east and India, as well as the middle east.
Another key area vital to the growth of the region’s economy is ensuring that we have the skilled work force of the future. I am a passionate supporter of vocational education and apprenticeships, which is why I tabled my Apprenticeships and Skills (Public Procurement Contracts) Bill. Recently, it was a pleasure to go to the airport and meet one current and one former motor technician apprentice—one at the start of their career, the other at the end—who have both trained and worked at the airport. I also pay tribute to the £3.3million Newcastle Aviation Academy, which was officially launched in 2009 having received investment from Newcastle college, One NorthEast and the Learning and Skills Council. This top-of-the-range facility, based at Newcastle airport, provides a wide range of training in all aspects of the aviation industry, including aircraft engineering, aeronautical engineering, and airport and airline management. It is exactly the sort of thing that the previous Labour Government invested in to support young people, rather than write them off, which is what some of the Government’s policies are doing.
Newcastle airport has, therefore, played an integral part in the north-east’s economic past, and will continue to do so in the future. However, a key, ongoing issue for the airport and north-east businesses has been the impact of air passenger duty and the Government’s proposals to move to a per plane duty. Notwithstanding the importance of ensuring a greener, low-carbon economy and the important part that aviation must play in achieving that, this and any other taxation policy must concentrate not only on increasing revenue for the Treasury and greening our economy, but on rebalancing our economy in a way that will not impact disproportionately on our regions.
The Newcastle Journal’s long-standing campaign, “A Tax Too Far”, has called on Governments, past and present, to recognise the disproportionate impact of APD on regional airports. It urges that APD or PPD be restructured in line with the impact they have on regions, compared with London, and for consideration to be given to reduced rates of APD for new start-up routes in and out of the north-east. The Newcastle Journal’s campaign has clear support from the business community. In January, the Emirates vice president for the UK and Ireland, Laurie Berryman, made it clear that larger airlines would be forced to consider their position at UK regional airports if APD becomes too great and passenger numbers fall. Moreover, earlier this month, the North East chamber of commerce wrote to the Secretary of State for Transport to call for an overhaul of the APD system, stating that it has a disproportionate impact on our region’s businesses. The NECC is calling for differential rates for regional airports, to replace the current blanket duty, in order to ensure that the north-east economy does not suffer and that its export businesses can continue to grow. As the NECC chief executive, James Ramsbotham, has pointed out:
“North East businesses already face heavier costs than their counterparts in other regions in order to access common markets due to high fuel prices, so addressing the anomalies that APD gives rise to will ensure that our exporting businesses have a much better chance of realising their potential.”
Of course, if differential rates of APD or PPD were introduced for regional airports, it would also reduce pressure on Newcastle airport’s already overcrowded south-east counterparts. In the words of Graeme Mason, head of corporate affairs at Newcastle airport:
“By freezing or reducing the rate of APD out of regional airports, the Government could, at a stroke, rebalance the economy, reduce the North-South divide, and take the pressure off the South East.”
An announcement on the issue is expected in the Chancellor’s Budget tomorrow. Will he recognise the regional impact of tax and provide a real stimulus for regional economies like ours in the north-east in his so-called “Budget for growth”? Like Newcastle airport, the North East chamber of commerce and many other north-east businesses, I—and I am sure my colleagues—await the Chancellor’s announcement tomorrow with great anticipation.
Ian Swales (Redcar) (LD)
I congratulate my hon. neighbour—as I suppose I should call him—the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate and on his powerful and very well-researched speech. He has done excellent work.
As we know, the north-east economy is largely founded on the historic industries of coal mining, ship building and steel manufacture. For decades, we have had issues with both the run-down of those industries and the run-down of employment in those industries, even those that continue. Although the news of the revival of the steel industry is very welcome in my constituency, I do not think it will employ 10,000-plus people again, which it did not so long ago. There has been a long history of assistance being given to the north-east in relation to various coal and steel closure areas and regional development grants. In the 1980s, I remember filling in the forms for regional development grants in a former life. There has been a long history of needing to do something about the north-east, and various Governments have continued that.
I accept the points made about the RDA. RDAs around the country have had patchy success. However, I think that even the other RDAs would recognise that One NorthEast was probably the best and most successful. I pay tribute to the former Minister for the North East, the right hon. Member for Newcastle upon Tyne East (Mr Brown), for his passion and advocacy both of RDAs and the region. Something we should all recognise in this place is that what divides us politically is far less than what joins us when it comes to regional issues.
The RDA did good work but, as I said in the recent debate in the House led by the right hon. Member for Newcastle upon Tyne East, we need to consider the study done last year by Experian and the BBC. They looked at 324 areas in the country in terms of economic strength and rated Hartlepool as 314th, Redcar and Cleveland as 319th and Middlesbrough last at 324th. Whatever else has happened, we have not driven the Teesside area up the economic league. The only time we had any significant urban renewal in Teesside was from 1987 to 1998, when we had Hartlepool marina, Stockton riverside and university campus, Teesside barrage and waterpark, Teesside retail and leisure park, and Middlesbrough riverside. That was the period of the flawed but, nevertheless, energetic and focused Teesside development corporation, which was scrapped by the Labour Government when they came to power. Much less has happened since in that regard.
I shall turn to transport. The Tees valley is the birth place of passenger railways. If someone were to ask in a pub quiz where the first passenger railway was, most people would say that it was Stockton to Darlington, which runs along the Tees valley. So where are we today with our railways? We still have a railway that runs from Darlington, almost touches Stockton and goes all the way through to Saltburn. It passes very close to the Riverside stadium, but does not stop there; it passes very close to Teesside retail and leisure park, but does not stop there; and it passes within half a mile of Teesside airport, but does not stop there. Is there another airport in the country that has virtually no public transport? The failure to even allow a railway that already exists close to Teesside airport to be part of the transport structure in the area shows that there is an awful lot to do. Middlesbrough is the largest town in the country without a direct link to London, which is another example of what is left to do. We have some real issues to deal with and real work left to do.
In business, I always used to say that one could tell whether a committee was any use, first, by how it was formed—did it form itself?—and, secondly, whether people attended it. Teesside Valley Unlimited formed itself as a private-sector led, private-public partnership about five years ago, because of the perceived needs of the Tees valley and the difficulties there. It is no surprise that that organisation was very quick out of the traps when it saw the opportunity to have a local enterprise partnership for the area. I know that that enraged some people further north and that it was felt to be a fragmentation of effort that may lead to outcomes that are not as good.
Alex Cunningham
I have always been a one region person. Although I congratulate the people of Tees valley on putting together the first LEP in the region, does the hon. Gentleman not agree that it is important that the north-east—the smallest region in the country—works closely together and has a tremendous partnership with our local authorities and other organisations in order to drive the region forward? We should not simply try to plough our own furrow, as some people would have us do.
Ian Swales
I was about to come on to that matter. I thank the hon. Gentleman for his question. Absolutely, we need one regional voice on a number of issues. This Government perhaps differ from the previous Government in that we do not see the need for such an approach to be prescribed in detail for every region. I hope that the existing structures can make decisions, create what they think they need and make it work. If there are two LEPs in an area, the Government are not prescribing that they cannot talk to each other and say, “Okay, let’s jointly work on this.” A good example is European funding. The Government have already decided to retain a regional focus for European funding, because that is what is necessary.
Tom Blenkinsop
The hon. Gentleman is an excellent advocate for the region, and it has been a pleasure working with him on getting steel back to Teesside. However, there are some fundamental problems with the LEP structure. Let us consider, for example, Hitachi. As he has rightly mentioned, that is a great success story for the region. How will small and medium-sized enterprises in the Tees Valley LEP that want to grow around Hitachi, which is not in the Tees Valley LEP, interact with the new LEP, the North East Economic Partnership and the other structures?
Ian Swales
I thank the hon. Gentleman for mentioning that. Not everything happens through Government agencies. Business is business. If I were running a business, or if I wanted to run a business in the Tees valley, and I knew that a train manufacturing facility was being set up 10 miles away, I would not need a Government agency to lead me to talk to people and make things happen. We have suffered from the idea that people wait to be told what to do, and that is a good example.
Tom Blenkinsop
That still does not answer my point. If an SME wants to get regional growth fund funding, which LEPs does it talk to? Does it talk to both? Does it also talk to the NEEP, or does it talk to the Department for Business, Innovation and Skills and the Treasury directly? It seems that the need for further meetings will increase, rather than decrease.
Ian Swales
Okay. I will be more specific for the hon. Gentleman. Clearly, if a business wants to base itself in the Tees valley and has customers—wherever they are—it should talk to the Tees Valley LEP. If those customers happen to be in the region, that is fine. I do not see a problem with that. As I have said, there is no law that states people cannot talk to each other.
An almost religious adherence to the regions has had some benefits, but it has also created some problems. In 2004, the people of the north-east firmly rejected the idea of regional government. Some of us regretted that more than others, but the decision was absolutely overwhelming—not just from the fringes of the north-east but from the heartlands of Tyneside and Wearside.
Ian Mearns (Gateshead) (Lab)
I welcome the hon. Gentleman’s point, but I think that he accepts that if he wanted to put together a worse set of circumstances to get a yes vote, it probably could not be done. Does he agree with that?
Ian Swales
Absolutely. One issue was whether central Government were prepared to release enough powers. I remember reading the document and being unimpressed by such statements as the “power to advise Ministers”, which did not strike me as a particularly powerful power, so I agree with that. Regionalisation, however, has had some impacts—I will come on to wider issues in a moment—on the Tees valley. For example, our area, which contains 750,000 people, has been deemed unable to run our own ambulance service, which has been moved out of the area. The fire service was about to be moved, and an attempt was made to try to get the police to merge with another organisation. We need to stand up strongly for what is a very natural, large area of population, and, sadly, regionalisation has not always helped.
[Mr Edward Leigh in the Chair]
I am not a “little Teessider”—my wife comes from Stanley, which is quite a bit further north. My right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) would not let me get through this debate without mentioning the dualling of the A1. Just in case hon. Members did not think that was going to happen, it has happened. [Interruption.] Sorry, the dualling has not happened. I have mentioned it on behalf of my right hon. Friend. It would be great if that dualling were to happen. I recognise that the north-east has a lot of coherence, though it seems a long way from the end of my constituency to the north of my right hon. Friend’s constituency.
The north-east has a lot of strengths. In many cases, we can work together. In other cases, it is not appropriate to work together. There are enormous strengths in terms of industrial background and the conversion of people and industries in those historic sectors to doing new things. We have people who are highly skilled, as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) has said. We already show, particularly through process industries and other manufacturing, that we can make and export things, and I know that the Government are very keen to see that happen.
On rebalancing the economy—yes, the process is redistributive, but as the hon. Member for Hexham (Guy Opperman) has said, what is it redistributing?—we know that the country has a huge economic problem at the moment. I welcome mechanisms such as the regional growth fund, but we have a massive issue in terms of small and medium-sized enterprises. I hope that the Minister will respond specifically to this point: 97% of the grants given out by One NorthEast were less than £1 million. That £1 million threshold has to be very short-term. If the board of the regional growth fund cannot consider hundreds and hundreds of projects, then we need a programme mechanism beneath that board.
Ian Mearns
It has been estimated in some quarters that the potential growth in supply chain jobs from the Hitachi development is as much as 7,000 jobs. There is very little chance, however, of 7,000 supply chain jobs in the north-east of England coming from the SME sector, if there is not much more flexibility in the distribution of the regional growth fund and in grants that are fit for the SME sector. At the moment, such grants are out of reach for many businesses.
Ian Swales
I welcome that intervention, which powerfully supports the point that I was just making. I hope that the Minister will respond to that point.
I would just like to mention two other issues that the Minister could perhaps touch on. One issue relates to energy prices.
Mr Edward Leigh (in the Chair)
Order. I hope to start the winding-up speeches at 10 minutes past 12, and the hon. Member for Stockton North (Alex Cunningham) wants to come in. Perhaps the hon. Gentleman will bring his remarks to a close.
Ian Swales
I will do that, Mr Leigh.
Energy pricing has already been mentioned by the hon. Member for Middlesbrough South and East Cleveland. I also want to press the Government on the Infrastructure Planning Commission. We have a large project in my constituency at the moment that must divide itself, completely artificially, in two. Part of the project is supposedly covered by the Infrastructure Planning Commission and part of it will be approved by the local authority. It is costing the business a fortune to fight two planning processes.
I will draw my remarks to a close now. Again, I congratulate the hon. Member for Middlesbrough South and East Cleveland. As I have said, there is a lot more that joins us on these issues than that separates us.
Alex Cunningham (Stockton North) (Lab)
I will cut parts of my speech to make your deadline, Mr Leigh.
In the past 10 years or more, there has been a radical change in the mix of industry, business and public service in the north-east. Much of that was led by One NorthEast, the regional development agency, and by forward-looking local authorities of all political colours working in partnership. The result was that the north-east was slightly less vulnerable when the world economic crisis hit us, but we still need major change and investment to ensure that the region does not slip way back to where we were in the 1980s and 1990s. The number of unemployed claimants in my constituency of Stockton North in February 2011 was 3,812. That is 9.2% of the economically active population aged 16 to 64, which is a good reason why we need growth not only for my constituency, but for the whole north-east, where 10.2% of people are unemployed.
I would like to make a final comment on the RDA—I am sure that many hon. Members will welcome my saying that. Other RDAs may not have been a resounding success, but One NorthEast was. It was an organisation that we could be proud of. It played a huge role in developing the region’s renewable industries and in helping local firms grow. More importantly for me was that it also put together strategic land and other assets—packages—to build on for the future. With the demise of One NorthEast comes the question of what will happen to its assets. I am very worried that the Government might be preparing a fire sale for billions of pounds of RDA assets, such as business parks and development land, or that they will just pool them into some central bureaucracy in London. We argue that local enterprise partnerships should have first say over the RDA assets, which would enable real local influence. LEPs currently have one hand tied behind their backs, with no dedicated funding stream to aid them with their start-up costs and initial research. That would give them a real boost and real clout. To deny them operating funds is like giving a child a toy and forgetting to put the batteries in it.
Tees Valley Unlimited, the new LEP in my area, has confirmed that it has submitted 20 bids to the Government’s regional growth fund, asking for almost £80m of support. If granted, I am told that those plans have the potential to create a significant number of jobs. However, as we know all too well, the total pot of money for the regional growth fund is not nearly enough at £1.4 billion over three years. In comparison, in 2010-11 alone, the RDA fund for one year was £1.4 billion. It is clear that the money will be spread thinly. In the first round, which closed in January, bids worth £2.78 billion were made to the regional growth fund. Clearly, many bidders will be disappointed tomorrow, when I understand that we will learn who has, and who has not, been successful.
On a more positive note, I was pleased to learn in October that the Government are committed to offshore wind and did not cut Labour’s £60 million investment in our ports to ensure that that part of the renewable industry is supported and encouraged to invest in the north-east. We have yet to see whether the Government will deliver on that. If we are to meet EU targets that require Britain to increase the proportion of electricity that comes from renewable sources, from 7% to 30% by 2020, the Government must do more on renewable industry. Despite rising unemployment and the sluggish economy, there are a few good stories in region. The Hitachi trains were mentioned earlier, and the campaign led by my hon. Friend the Member for Sedgefield (Phil Wilson) for investment from Sahaviriya Steel Industries in Teesside steel, will create or secure hundreds of jobs.
We wait to see whether there will be a Budget for real growth, backed by substantial resources when the Chancellor stands up tomorrow. Resources must be the key. A jobless recovery would be a disaster for our region, and without growth there will not be enough new jobs. So far, the Government have been much too focused on the Budget deficit, cutting too far and too fast. I hope that they have finally realised that without a genuine plan for growth and real resources, the economy will continue to be sluggish.
Ian Lucas (Wrexham) (Lab)
It is a pleasure to address colleagues under your chairmanship, Mr Leigh, for the first time, I believe. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this debate, and hon. Members on their interesting contributions. I wish we had more time, because I am sure that more could be added to the debate. I shall not deal with each of the speeches now but will refer to them in my comments.
It is imperative that the north-east has a strong voice in Parliament. The new generation of MPs who came into Parliament in the last general election are a powerful group who have contributed hugely to the voice of that region being heard in Parliament, and I am sure that they will continue to do that. That is enormously important when we know that regional assemblies have gone away for a while and that the Government’s focus is on local government.
The north-east is a powerful region. I was born there, and I am proud of the fact that I come from there. It has a distinct identity within England, and Ministers have to understand that. The voices that we have heard included that of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell), who spoke about Newcastle airport. She told us how important its development has been to the region and how it has introduced so many more tourists to the area. People are able to see what a beautiful region it is and what a superb place it is to invest in.
We heard from my hon. Friend the Member for Middlesbrough South and East Cleveland about the varied industries in the north-east, from the chemicals sector, which is long established on Teesside, through, of course, to coal, steel and shipbuilding, which, I am afraid is long gone. The demise of those industries under the previous Conservative Government largely forged my identity in politics. The concern of Opposition Members is that the policies that are being pursued by this Government are a rerun of policies in the 1980s. We profoundly disagreed with what happened and think that it is a mistake to repeat it.
The hon. Member for Wrexham—I am sorry, the hon. Member for Hexham (Guy Opperman)—made some succinct comments about the deficit. Labour Members accept that it needs to be reduced, but we remember that 3.5 million people were unemployed in the United Kingdom under the previous Conservative Government, as opposed to the 2.5 million who are unemployed now. All those people received benefits that were paid from taxpayers’ money, and largely funded by the benefits the Conservatives received from the North sea oil revenues that were available at the time. That waste and spending of public money will be repeated if this Government continue with their policies, which will create a lack of confidence in the economy and business community, and less demand in the economy, less consumption by people and a smaller market. All that will lead to increased unemployment, increased burdens on the state and the type of long-standing depression that we had in the ’80s and again in the ’90s, when unemployment reached 3.5 million again.
Fortunately, the north-east has developed its economy since the 1980s. There has been development in the constituency of my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) at the Clipper site, which is a magnificent site on the banks of the Tyne, and development of the low-carbon industry in the north-east with companies such as Romag, which brings so much benefit and forward thinking to industry.
I should mention at this juncture the appalling decision by the Government to bring forward the review on feed-in tariffs, which is hugely damaging for companies such as Romag. The Government purport to know something about business, but that review will result in a lack of long-term stability for decision making. Business complains so much about that. The Government are changing a successful scheme, bringing forward a review, creating instability and creating difficulties for successful businesses that are benefiting not from state support but from direct investment, often from outside the UK. The whole industry would welcome the Government’s looking at that again.
It is important that we accept that regional development agencies are no more. I have attended several debates, and know about the success of One NorthEast. The hon. Member for Redcar (Ian Swales) recognised it in an interesting speech. However, we are moving on. The Government, as they are entitled to, are talking about local enterprise partnerships now, and we need to ensure that they work for the benefit of the north-east region. We need to address what I consider to be some of the failings of LEPs.
The first failing is the lack of resources. LEPs cannot sensibly contribute to driving the region forward if they do not have the resources to set up and develop businesses in their area. It is important that the partnerships should have resources. Of course they need to work with other LEPs in the region, but it is interesting that the Government themselves are showing a lack of confidence in LEPs; for example, on the hugely important issue of broadband. The authority that will contract for the provision of broadband services in the north-east and other areas of England will not be the LEP but the local authorities in individual regions. Having so many contracting bodies trying to formulate an infrastructure for a communications industry will be complex and difficult, and relying on delivery by individual local authorities which may or may not decide to take forward applications to develop broadband services in their area is a big mistake. LEPs, which cover larger areas and which more closely involve business than some local authorities do, should have a role in formulating a policy to take that forward.
The instruments that need to be used by LEPs must be made available to them by the Government. That must include, to some extent, financing, and it must also include the ability at least to be involved in securing funding.
We have heard references to the regional growth fund. There is general agreement in this room that there should be a rebalancing of the economy. The irony of the regional growth fund is that it is not regional at all. Its approach is entirely centralising. It is based not on localities but on a small group of people in a centralised area making decisions for areas about which they know little. That is the tragedy of the operation of the regional growth fund.
We all know that the fund is too small. The number of bids that have been made to it do not correspond in any way to the money that was available through RDAs, and we all know, as the hon. Member for Redcar pointed out, that the limits on the application of money by the regional growth fund are such that many of the grants and support that were given to small businesses in the regions will no longer be available to them. That is an urgent issue that needs to be addressed by the Government.
The other urgent issue that needs to be addressed is the lack of investment by banks and regional bodies in business and industry. We heard a massive amount about that from the Government when they were in opposition—day in, day out—but it has largely disappeared from their public pronouncements. I regret that the only thing that this Government have done as far as investment in business is concerned is to extend Labour’s successful enterprise finance guarantee scheme, which was a strong support for business and industry at a time when it was difficult to secure investment and keep businesses going.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Will my hon. Friend give way?
Ian Lucas
I have only a minute left, so I cannot give way.
I remember being criticised by the Minister when I sat where he is sitting now, and I shall criticise him now, although he and I get along very well. I do not recall his criticising me for spending too much money at the time. I remember his criticising me for not getting money out more quickly in support of the car industry. I do not remember the Conservatives or the Liberal Democrats opposing the introduction of the car scrappage scheme, and I do not remember their opposing any of the support that brought fundamental investment to the UK and benefited regions such as the north-east. Only now do we hear their constant mantra. The Government’s problem is that they will not reduce the deficit. They are damaging the economy in the same way as they did in the north-east in the 1980s and again in the 1990s. I hope and pray that they do not make the same mistake again.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) not only on the debate, but on an interesting contribution. We may disagree about the outcomes and the analysis, but a debate on how to enable different parts of the United Kingdom to grow sustainably is important. This is the first time I have been described as a McCarthyite zealot, but I shall work my way through it, and the hon. Gentleman hinted that he was perhaps not fully serious. Nevertheless, I shall put that comment up on the wall and remember.
I thank other hon. Members for their contributions. We have had an excellent and balanced debate, and it has been helpful, not least because I shall be travelling to the north-east tomorrow night, and I am looking forward to meeting some of the businesses that have been referred to. On the tourism front, if I am allowed a couple of days off during the Easter holidays, I am hoping to start at the north-eastern end of Hadrian’s wall and to head westwards.
Alex Cunningham
I am pleased that the hon. Gentleman will spend some of his money in our tourist industry in the north-east of England. Is he aware that money to promote tourism in the north-east was choked off through the regional development agency this year, and that we saw an increase in the number of visitors to Yorkshire and Cumbria to the detriment of the north-east?
Mr Prisk
The hon. Gentleman started well, before coming to a money issue. We are looking not only at the need to deal with public finances, which my hon. Friend the Member for Hexham (Guy Opperman) accurately described, but at how they are organised as we change the landscape for public bodies. We must revisit the regional approach to tourism, allied with the RDAs’ work, which is what VisitEngland will do with local enterprise partnerships and so on. I greatly value the role of tourism, but I want to move on.
The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) referred to airports, and she will understand that as it is just 24 hours before the Budget, I would be wise not to pre-empt the Chancellor, not least if I hope to continue to be Minister of State, Department for Business, Innovation and Skills.
We all share the wish of the hon. Member for Middlesbrough South and East Cleveland that the north-east enjoys sustainable and long-term economic growth, which is certainly our overriding priority. We are seeking not only to tackle the public finances, as any incoming responsible Government would need to do, but to ensure that we have a new model for growth. In practice, that means not just rebalancing the geography, challenging as that will be—I will come to RDAs and LEPs—but ensuring more sustainable roles in different sectors.
The hon. Member for Wrexham (Ian Lucas) was a Minister, and we jousted when he was, but he and his colleagues were right when they established, for example, the sector skills council, Automotive Skills, so that the Government could be a better partner. We have continued it, and that sectoral role is important. In the Budget tomorrow, we will seek not merely conventional tax and spend, but to set out the detailed work that has been undertaken throughout Whitehall on a growth review looking at manufacturing, construction, retail and other core parts of the economy, so that we have an agenda and a strategy that is the most comprehensive, pro-enterprise and pro-growth Budget for a generation.
The hon. Member for Middlesbrough South and East Cleveland mentioned both at the beginning of his comments and later the role of small and medium-sized enterprises. Before I go into the specifics of the north-east’s economy and LEPs, it might be worth reminding hon. Members of the key changes that will help, and have already been announced, irrespective of what may or may not be said tomorrow. As hon. Members know, we are reducing corporation tax to 20p. We are doubling the threshold for small business rate relief, which is very important for businesses outside the greater south-east, so that for more smaller businesses that fixed overhead will fall instead of remaining as it is. Six months ago, we introduced the national insurance contribution holiday for new firms.
As the hon. Gentleman rightly said, we must encourage more entrepreneurs in the north-east. I have spoken to many SMEs throughout the country, and the shift in relief for entrepreneurs—10% capital gains tax—has given a boost to people who start a business, build a business and create jobs. Taking the limit up to £5 million is an important improvement.
Mr Prisk
With respect to the hon. Lady, other hon. Members have spoken and I should first respond to their points in the five minutes remaining.
The tax changes are important, and I hope that hon. Members recognise that they have been matched with a clear commitment to the Federation of Small Businesses on Friday that, for three years, microbusinesses—those with up to 10 employees—will have a three-year moratorium on all domestic regulation. Many SMEs have told me that the problem is not just one measure, but the fact that the Government constantly provide things to do when they want to get on and grow their business. That moratorium will be important, and it has been warmly welcomed. More will be said about the regulatory issue later.
My opposite number, the hon. Member for Wrexham—for a moment, I thought there had been a geographical shift when he referred to my hon. Friend the Member for Hexham as the hon. Member for Wrexham—talked about finance. He was right to say that there are issues. We have extended the enterprise finance guarantee, which is a scheme that needed to be extended, and we are proud that we have ensured an additional capital opportunity of some £2 billion. That should help about 6,000 additional viable businesses. We have gone further and put another £200 million to one side for capital for equity investment programmes. Those are important plans to help high-growth businesses throughout the UK. In addition, we have managed to secure from the banks a £1.5 billion growth fund to inject into SMEs. I hope that the hon. Gentleman recognises that those are important changes.
Mr Prisk
With respect to the hon. Lady, I have three minutes left. She did not make a contribution to the debate, and I must respond to hon. Members who spoke.
On the balance, there are challenges in the north-east, and no one denies that, but we should recognise that manufacturing there is doing well. A survey by British Chambers of Commerce shows that for the most recent quarter manufacturing grew most quickly in the north-east out of all the regions. Hon. Members have rightly referred to the decision on Tata Steel and Sahaviriya Steel Industries, and we hope that it will progress in the next few days or weeks, so that the agreement that was tragically mothballed a while back will be developed. Some 800 jobs will be created at the site, which will sit alongside the existing 700 jobs, but that is not all. There is a £420 million investment by Nissan, and the Hitachi development in County Durham, which are very welcome and very important.
I turn to RDAs and LEPs, where there may be a difference. No one denies that the RDAs, including One NorthEast, made successful and worthwhile ventures during their time—I accept that—but in 11 years, that agency received £2.7 billion to spend, and the reality is that the gap between the north-east and elsewhere grew. The reality of the gross value added—the measure per person—is that when it started it was approximately 83% of the national average in the north-east. Eleven years later, having spent £2.7 billion, it fell to 78%. It has not only not improved, but gone backwards.
There is a challenge, and the two partnerships that have been created, which I greatly welcome and am looking forward to meeting tomorrow and Thursday, have an opportunity to address their local priorities rather than what we think is best for them, which is an important shift. They can work together, as my hon. Friend the Member for Redcar (Ian Swales) has rightly pointed out, because they do not need Government permission to do so. I have every confidence that the business and civic communities will make that alliance and work together. We will set out the specific actions that they will be able to undertake. I will respond to my hon. Friend the Member for Redcar in writing about the regional growth fund.
The enterprise zones, which my hon. Friend the Member for Stockton South (James Wharton) has campaigned on—
Pakistan
(13 years, 1 month ago)
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Andrew Stephenson (Pendle) (Con)
In January, a cross-party group of eight UK parliamentarians, including myself, visited Pakistan to look at the challenges facing that country. Given the close historical, economic and social ties between our two nations—over 1 million people living in the UK trace their roots to Pakistan, and that country is on the front line in the war on terror—getting the policy towards Pakistan right is crucial to the UK.
The aims of the visit were to give UK politicians a better understanding of the democratic challenges facing our parliamentary colleagues in the national and provincial assemblies, to understand the impact of amendment 18 on the constitution, to energise existing bilateral links, and to learn more about the work of the UK Foreign Office, the Department for International Development and the British Council in Pakistan.
All those in the delegation hope for a longer and broader debate on UK Government policy on Pakistan in the future, and I am sure that other hon. Members in the Chamber will wish to participate in that. Today, however, I will focus my remarks on one specific issue: the murder on 2 March of Shahbaz Bhatti in Islamabad, and the plight of Christians in Pakistan.
During our visit, our delegation met Shahbaz Bhatti in the Ministry for Minorities. We discussed a range of issues, including interfaith dialogue and the murder of the Governor of Punjab, Salmaan Taseer, a Muslim politician who was killed by one of his bodyguards after he criticised Pakistan’s blasphemy laws. Shahbaz Bhatti was the only Christian in the Pakistani Cabinet, but he stood up for all minorities in Pakistan and wanted to see the tolerant, liberal and secular country envisaged by the country’s founding father, Jinnah, who said
“let all people worship freely in churches, masjids and temples.”
I will explain a bit more about Shahbaz Bhatti and his work. From 2008 until his assassination at the age of 42, he was the first Federal Minister responsible for minorities. At the time of his appointment, he said that he had accepted that post for the sake of
“the oppressed, down-trodden and marginalised”
of Pakistan, and that he would dedicate his life to
“struggle for human equality, social justice, religious freedom, and to uplift and empower the religious minorities’ communities.”
He added that he wanted to send
“a message of hope to the people living a life of disappointment, disillusionment and despair.”
During his time as a Federal Minister, Shahbaz Bhatti took steps in support of religious minorities. Under his guidance, the Government introduced for minorities affirmative action regarding 5% of all federal employment, and designated 11 August as a holiday to celebrate minorities. The sale of properties belonging to minorities while law enforcement authorities took action against them was banned, and a national campaign was launched to promote interfaith harmony through seminars, awareness groups and workshops. Shahbaz Bhatti initiated comparative religious classes in schools and universities, introduced a prayer room for non-Muslims in the prison system, and started a 24-hour crisis hotline to report acts of violence against minorities. He began a campaign to protect religious artefacts and sites belonging to minorities.
Shahbaz Bhatti, a Catholic, was also a critic of Pakistan’s blasphemy laws, and that was what led to his recent and untimely murder. He had been the recipient of death threats since 2009 when he spoke in support of Pakistani Christians attacked in the 2009 Gojra riots in Punjab, and those threats increased following his support for Asia Bibi, a Pakistani Christian who was sentenced to death for blasphemy in 2010.
Simon Danczuk (Rochdale) (Lab)
I thank the hon. Gentleman for securing this important debate and I have some brief comments. I accompanied him to Pakistan some weeks ago, and had the pleasure of meeting Shahbaz Bhatti. From that visit, we learned that the country is more progressive than one might have initially anticipated. Some laws are very progressive, such as the 18th amendment that concerns devolving power and money to provinces and regions. This Government, and the previous Government, could learn from that.
It is not for us to tell other countries what laws to have, but the issue with the blasphemy law is not so much the law itself but rather the interpretation of that law, both formally and informally. Formally, the penalties linked to the law are far too severe, and informally—this is the problem—
Mr Edward Leigh (in the Chair)
Order. This is an intervention. Please bring it to a close.
Andrew Stephenson
I agree with the hon. Gentleman. As he pointed out, we met Shahbaz Bhatti during our visit to Pakistan and we saw different sides to the country. Some things filled us with hope for the future, and some things led to real concern. That is why I hope that we can have a longer debate in which all hon. Members may participate fully and relate their experiences of the country.
Asia Bibi is a 45-year-old mother of five from Punjab province. She has become the first Christian woman to be convicted and sentenced to death, by hanging, under Pakistan’s blasphemy law. As of today, she remains in jail despite many people acknowledging that she was falsely accused of blasphemy, and repeated international calls for her release.
According to the BBC, on the day he was murdered, Shahbaz Bhatti was travelling to work through a residential district having just left his mother’s home, when his vehicle was sprayed with bullets. At the time of the attack he was alone and without any security. The group Tehrik-i-Taliban—the Pakistani Taliban—told the BBC that it carried out the attack, and it left pamphlets at the scene stating that it had done so because Shahbaz Bhatti was a “known blasphemer.”
The assassination was condemned by the Pakistani Government, whose spokesman stated:
“This is a concerted campaign to slaughter every liberal, progressive and humanist voice in Pakistan.”
President Zardari vowed to combat the forces of obscurantism and said,
“we will not be intimidated nor will we retreat.”
The Government declared three days of mourning and Prime Minister Gillani led a two-minute silence in Parliament.
Jim Shannon (Strangford) (DUP)
The hon. Gentleman will be well aware of Release International and Open Doors, two organisations that work on behalf of Christians in Pakistan, highlighting and cataloguing brutality against them by radical groups. Does he feel it is important for our Government to convey to Pakistan in strong terms that something must be done on behalf of Christians in Pakistan, to ensure that they are not subjected to authoritarian and critical blasphemy laws?
Andrew Stephenson
I agree. There are growing calls across the country from people of all faiths saying that we must engage more effectively with the Pakistani Government, and that the rights of all citizens must be respected, whether they are Muslim, Sikh, Hindu, Christian or of no faith at all. The rights of all Pakistanis must be respected.
Andrew Griffiths (Burton) (Con)
I thank my hon. Friend for securing this important debate. He will know that as vice-chairman of the all-party group on Pakistan, I was due to host an event with Shahbaz Bhatti in this House, just a few weeks before he was assassinated. Unfortunately, he had to return to Pakistan because of the instability of the Government. My hon. Friend will also know that I visited Islamabad recently. I am sure that, like me, he has received a huge number of e-mails and letters from the Pakistani diaspora in Britain, where people are equally outraged about the assassination of Shahbaz Bhatti. Does he agree that we have a responsibility to ensure that the voice of those people is heard, and that their condemnation is relayed to the Pakistani Government, urging them to take action?
Andrew Stephenson
I thank my hon. Friend for that point. I agree that we must work across faiths. I think that all people recognise that Shahbaz Bhatti was not just a Christian, but one of Pakistan’s most progressive politicians. His death is a blow not just to the Pakistani Christian community, but to all Pakistanis and to the nation of Pakistan.
Following Shahbaz Bhatti’s death, I tabled early-day motion 1518 not just to condemn his murder, but to recognise the work that he had done in Pakistan and to urge the Government of Pakistan to consider reviewing section 295 of the Pakistani penal code, commonly referred to as the blasphemy laws. I am pleased to see that as of this morning my early-day motion has gained the support of 82 other Members of Parliament.
The blasphemy laws were first introduced by the British in 1860 in a mild form that gave equal protection to all faiths and provided for a maximum sentence of two years in jail. Unfortunately, they were given their present form by General Zia ul-Haq in 1986. There is now a mandatory life sentence for desecrating the Koran and a death sentence for blaspheming Mohammed. Unlike the Racial and Religious Hatred Act 2006 in the UK, which prohibits people from stirring up hatred against religious groups or individuals on religious grounds, the Pakistani blasphemy laws protect the Islamic scriptures and the person of Mohammed from criticism or insult.
Although all of Pakistan’s population of 170 million people are subject to the blasphemy laws, it is worth remembering that religious minorities make up only about 4% of that number.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
I congratulate my hon. Friend on initiating the debate and on his work as chairman of the all-party group on Pakistan. I also congratulate my hon. Friend the Minister on his moving words last Thursday at the memorial service for Shahbaz Bhatti. Like other colleagues, I had met him; in fact, I met him two weeks before his untimely death and was extremely impressed by him. The practical point that I want to make is that it needs to be pointed out continually—I think that the hon. Member for Rochdale (Simon Danczuk) was coming to this point—that the majority of people affected by the blasphemy laws are Muslims. People use the laws quite often in vexatious business disputes to get rid of the person with whom they are arguing on a trumped-up charge, while they carry through the business deal that they wanted. If we are to win the hearts and minds of the Pakistanis, who are the only ones who can alter those laws, we need continually to be pointing out that yes, the treatment of Christians is appalling, but equally many Muslims in Pakistan suffer from the abuse of the laws by their fellow co-religionists.
Jason McCartney (Colne Valley) (Con)
It is a pleasure to speak under your chairmanship, Mr Leigh. I congratulate my hon. Friend on securing this important debate, which is about Government policy on Pakistan. I have visited Islamabad myself. I visited the Nowshera region, the flood-hit region to the north of Islamabad, in November and I went on to Kashmir—to Mirpur and Dadyal. I would therefore like to take this opportunity to hear my hon. Friend the Minister reaffirm the Government’s position—their stated thoughts—on the situation in Kashmir, because if we are to have security and peace and an end to the violent murder in Pakistan that we are hearing about, it would be a great asset—a great positive move forward—if there were peace and stability in Kashmir as well. That is a real cause of instability in the region.
Andrew Stephenson
I thank my hon. Friends the Members for Lancaster and Fleetwood (Eric Ollerenshaw) and for Colne Valley (Jason McCartney) for their contributions to the debate. My hon. Friend the Member for Lancaster and Fleetwood is exactly right to say that the majority of people affected by the blasphemy laws are Muslims. However, we have seen a disproportionate effect on some of the minority communities. Also, even simple allegations made under the blasphemy laws have quite often led to mob violence that has killed many hundreds in Pakistan before cases have ever come to court.
There was an interesting article by the daughter of Salmaan Taseer in The Guardian recently. Shehrbano Taseer wrote that
“more than 500 Muslims, 340 Ahmadis, 119 Christians, 14 Hindus and 10 others have been charged under the laws.
Thirty-two of those accused—and two Muslim judges—have been mowed down by Islamist vigilantes.”
That was before the trials were heard. It is worrying that religious zealots in Pakistan have now deemed man-made laws non-negotiable, with a very real threat of death hanging over anyone who disagrees.
I would therefore welcome the Minister’s comments on the blasphemy laws in Pakistan and, more importantly, as other hon. Members have pointed out, their abuse and misuse in the settling of scores and other disputes against Christians and other minorities in the country. I hope that he will agree that we should stand shoulder to shoulder with those of all faiths who want to see a debate about reform of the laws, so that they can no longer be used as a tool of oppression against Christians and other minority groups.
I met a group of Pakistani Christians on Sunday 13 March at Woodlands Road Baptist chapel in Nelson in my constituency. In addition to many Pakistani Christians who live in Pendle, such as David Dean, who organised the event, we were joined by others, including Canon Yacub Masih and Wilson Chowdhry from the British Pakistani Christian Association. I know that the Minister is aware that a number of Pakistani Christians live in Pendle, as some time ago, before the election, he attended an event at which some of them were present. I know that he will remember talking to them.
At the meeting, I heard from many about their shock at the murder of Shahbaz Bhatti, but also about their desire that his death should be a wake-up call not just for the Pakistani Government, but for the international community. Those at the meeting felt that there was no better illustration of the rising problems of anti-Christian discrimination in Pakistan than the murders of Salmaan Taseer and Shahbaz Bhatti over reform of the blasphemy laws.
Concerns were also expressed about whether the UK could not do more, given the amount of money that we give Pakistan in foreign aid. As the Minister will be aware, that issue was picked up by Cardinal Keith O’Brien last week, when he criticised the Government for increasing overseas aid to Pakistan to more than £445 million without demanding religious freedom for Christians and other minorities, such as Shi’a Muslims. Cardinal O’Brien was quoted in the press as saying:
“I urge William Hague to obtain guarantees from foreign governments before they are given aid. To increase aid to the Pakistan government when religious freedom is not upheld and those who speak up for religious freedom are gunned down is tantamount to an anti-Christian foreign policy.”
Although I share the cardinal’s concern about the plight of Christians in Pakistan, I am not sure whether withdrawing or cutting aid in response to Shahbaz Bhatti’s death would be the most productive thing to do right now. I would, however, welcome the Minister’s comments on what the cardinal said, because many people would agree with them.
To date, no one has been arrested and brought to justice over Shahbaz Bhatti’s murder, which makes matters even more painful for the religious minorities that hold him in such high regard. It is of course possible that the security services in Pakistan and the Government do not know who the killers are or where they are. However, with no one being arrested and held accountable for so many other incidents of violence against minorities, such as in Sangla Hill in 2005—
Jim Shannon
Does the hon. Gentleman share my concern and the concern of many that it seems that the gentleman who was murdered had requested a bullet-proof car and bodyguards just a few days beforehand? None of those requests was agreed to, and shortly after that he was murdered. Is there not concern about that as well?
Andrew Stephenson
Many have raised those concerns. Having visited Pakistan and seen the security available not just to Ministers but to all politicians in the country, at provincial level as well as national level, it strikes me as somewhat unusual, shall I say, that on the day when Shahbaz Bhatti was murdered, he had no security and no armoured car to use on the way to work.
That no one has been brought to justice for Shahbaz Bhatti’s death is a real concern for many. As I was saying, there have been so many incidents in the country— not just against individuals but much larger incidents, such as in Sangla Hill in 2005 and in Gojra in 2009, and no arrests have been made for those incidents.
In the time allowed, I have tried my best to describe the situation in Pakistan. I could have added numerous other incidents of persecution. Many were detailed to me by Pakistani Christians now living in this country. I believe that the only way in which we will see Pakistan become a liberal and tolerant nation, which values and treats all its citizens fairly, is through increasing rates of education in the country. I was therefore pleased to see an increasing focus on education in DFID’s recent aid review. The Minister may like to touch on that in his reply. The Government of Pakistan also need to do more to reverse the gun culture, to promote tolerance and to ensure that no part of the Government, the military or the security services appeases or supports extremists.
I pay tribute to organisations such as Christian Solidarity Worldwide, the British Pakistani Christian Association and many others, which do so much good work in promoting interfaith harmony and raising the profile of issues such as those I have outlined, which would rarely make it into the British press without their help.
By focusing only on Christian and minority rights, I fear I have painted a fairly bleak picture of Pakistan and its future, but that was not my intention. With the right leaders, things can and will change for the better. The country has so much potential, and we need to work with it to ensure that issues such as those I have outlined are resolved. In doing so, we will ensure that Shahbaz Bhatti did not die in vain, but gave his life to make Pakistan a greater and more tolerant nation.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
It is a pleasure to serve under your chairmanship, Mr Leigh. I thank my hon. Friend the Member for Pendle (Andrew Stephenson) for securing the debate. Many colleagues in the Chamber also went on the visit to Pakistan and share our communal passion for Pakistan, and I thank them, too, for their contributions.
Time is desperately short, and colleagues will understand if I am not able to answer all the questions that have been raised, but I do want to make some remarks. I also want to put on record my appreciation for my hon. Friend’s work as chair of the all-party group on Pakistan and for the fact that he raised this subject during the Commonwealth Parliamentary Association’s visit earlier this year.
Time is tight, so let me say just a couple of things about the relationship between our two countries before turning to the meat of my hon. Friend’s remarks. The United Kingdom and Pakistan are close and historic friends and partners, and that partnership is set to continue. Nearly 1 million British citizens claim Pakistani heritage. More than £1 billion of trade flows between our two countries each year. There are 1.4 million journeys between Pakistan and the UK each year. We are building on the many strong ties we share.
At the end of his remarks, my hon. Friend said that he had focused on one area of our relationship and that he feared he had given a negative impression of Pakistan, but I can assure him that those of us who are friends of Pakistan recognise that there are many parts to our relationship, and we will continue to build on our history, our extensive cultural and business links and all the deep family connections. My hon. Friend need have no fear that his remarks will be misinterpreted.
The Pakistani diaspora in the UK makes a huge contribution to our national life, including our Parliament, our schools, our legal system and our universities. Its members make a remarkable contribution in the media, business, sports, entertainment and many other areas. It is clear that the British Pakistani community has offered, and will continue to offer, much to this country.
Pakistan faces many challenges. Last year’s flooding prompted a huge outpouring of support from this country. That support came not only from the Government but from churches, mosques and every community in the UK. The Government provided £134 million, giving a very strong sense of support.
Our bilateral aid review indicates that UK aid to Pakistan is likely to more than double to an average of £350 million a year until 2015. That will help to tackle poverty and, with the Pakistani Government, build a stable, prosperous and democratic Pakistan. The country faces economic challenges, and we are working with its Government to tackle them. We support the difficult reforms that Pakistan seeks to introduce. We also have strong links in terms of combating terrorism, which afflicts us both and which has echoes in some of the issues that my hon. Friend raised.
My hon. Friend the Member for Colne Valley (Jason McCartney), in particular, discussed the situation in Kashmir. The Government’s long-standing position is that it is very much a matter for the Indian and Pakistani Governments to deal with, although we understand the wish for self-determination among the people of Kashmir. We continue to encourage the parties to do as much as they can to deal with the situation—it is clearly difficult, and that has been the case for a long time—so that Kashmiri people have the opportunities they seek. We will encourage that dialogue wherever we can, but it is not the UK’s position to mediate in that situation.
Let me turn now to freedom of religion, which was at the heart of the remarks by my hon. Friend the Member for Pendle. The many links between the UK and Pakistan mean that we engage with each other on many subjects, such as counter-terrorism, security policy, trade, development and the rule of law. A theme that underlies all that is human rights, which is critical to the conduct of UK foreign policy. It is as relevant to our relationship with Pakistan as it is to our relationship with many other countries. We do not shirk our responsibilities to highlight our concerns about human rights to our friends. We will raise our concerns about human rights wherever and whenever they occur, without compromise. We are improving and strengthening the work of the Foreign and Commonwealth Office on human rights. That will be underpinned by British values and by our support for democratic freedoms, universal human rights and the rule of law.
My hon. Friend has set out compelling reasons why freedom of religion and the rights of minority groups are issues on which we need to speak out. It is vital that the Government of Pakistan uphold the fundamental rights of all Pakistani citizens, regardless of their faiths or belief. Pakistan can benefit only if all its citizens can play a central role in society. All Pakistani citizens should be able to live their lives without fear of discrimination or persecution, regardless of their religious beliefs or their ethnic group. I can assure my hon. Friend and all hon. Members present that we regularly reinforce the importance of upholding those fundamental rights to colleagues at all levels in the Government of Pakistan.
The Government of Pakistan have taken some positive actions on the rights of minority groups. They have reserved quotas for minorities in the public sector and Parliament. They have set up a complaints procedure for those encountering discrimination or abuse. Through our lobbying and project work, we will continue to support those who wish to see reform in Pakistan. Worryingly, however, allegations continue that the blasphemy legislation is being misused against Muslims and non-Muslims. That abuse often results in prison sentences for those accused of blasphemy, and we continue to hear of cases in which those accused of blasphemy offences have died in custody.
As well as raising the wider issues of freedom of religion and minority rights, we continue to engage directly with the authorities in Pakistan in relation to Asia Bibi. She was found guilty under the blasphemy laws and is the first woman in Pakistan to be sentenced to death. We oppose the death penalty in all circumstances. In December 2010, I raised Asia Bibi’s case with the former Pakistani Minister for Minorities, Shahbaz Bhatti. I have also discussed the blasphemy laws with the Pakistan high commissioner in London. Baroness Warsi highlighted our position to the Speaker of the National Assembly in Pakistan when they met on 17 January.
Those who champion such values in Pakistan are now under threat. The assassination of Governor Salmaan Taseer in Islamabad on 4 January was shocking. He was a strong advocate of religious tolerance and of the importance of reforming the blasphemy legislation to prevent its misuse. The scenes of congratulation following his murder and the behaviour of the lawyers who strewed rose petals in the path of his killer outside the courts were sickening, and those involved are a lasting disgrace to their profession.
Shahbaz Bhatti spoke out courageously on the issue before us, and his assassination marked a new low point in Pakistan’s struggle against violent religious extremism. He was a powerful voice against extremism and a fearless voice for tolerance and respect for minorities. His death is a tragic loss for Pakistan and for us all. I met him on a number of occasions as a fellow Minister, and also as a believer in the rights of minorities and a Christian. I did all I could to support my friend in his difficult role and in his attempts to revise his country’s blasphemy laws. It is deeply saddening that his courage in urging peaceful, moderate change was met with such violence. This was an attack not only on a dedicated Government Minister but on the people of Pakistan and their future. I was proud to speak at his memorial service last week. Following his murder, the Prime Minister wrote to express his condolences to President Zardari. The Foreign Secretary, Baroness Warsi and I all made statements condemning his killing.
The Christian community in the UK is correctly very active in supporting the persecuted Church wherever it is under pressure. I commend the work of the Barnabas Fund, Open Doors and others in this field. As a member of the board of patrons of Christian Solidarity Worldwide, I understand these issues very well. The Government will take up cases and we will do more work, including, I hope, a Wilton Park conference.
I wish the solution was as simple as a declaration of freedom of religion that was instantly acceptable and enforceable in any society with which we have contact. However, the sad truth is that that is not the case, and nor will it be, no matter how loudly we shout about it. We are talking about conservative societies that are fearful of change. We are sensitive and patient in addressing their fears, and we recognise that our overt intervention may be harmful or dangerous. However, we wish to make sure that we continue to raise these issues and work with people in these countries in the way they think best, so that we can free people from religious persecution and fear. In that way, we can get to the position we all want. I commend my hon. Friend for raising this issue.
Cross-border Child Custody
(13 years, 1 month ago)
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Mr Frank Doran (Aberdeen North) (Lab)
I want to use this debate to highlight a case that shows that our legal system has badly failed one of my constituents, Mr Robert Bennett. I raised his case in an Adjournment debate on 4 December 2007, when there were ongoing legal proceedings in England and Scotland involving the custody of my constituent’s child. He has now exhausted all remedies in the courts, but there are legal issues that I want to discuss. I rely heavily on the advice given to my constituent by Mr Alan Inglis, a barrister and advocate, who has considerable experience of family law in the courts of Scotland and England.
The facts of the case are fairly straightforward. Mr Bennett married and had a child. The family lived in Aberdeen, and therefore were habitually resident in Scotland. Without Mr Bennett’s knowledge, his wife left the matrimonial home in September 2000 with the child and moved to London. He did not know her exact whereabouts and at no time did he consent to his daughter’s removal. A few months after Mrs Bennett left the family home, she commenced legal proceedings in Willesden county court, where she obtained an ex parte residence order and an order preventing Mr Bennett from removing the child from her care.
A key part of the law that determines such matters is the Family Law Act 1986. Section 41 is the key part here, and I can summarise its effect as follows: where a child under the age of 16 is moved from, for example, Scotland to England, as in this case, then in certain circumstances a court in England would have jurisdiction to deal with any issue relating to the child after one year has elapsed. One of those circumstances is set out in subsection (2)(a), which states that it is required to be shown that there is
“the agreement of the person or all the persons having, under the law of that part of the United Kingdom, the right to determine where he is to reside”.
In this case, that means both parents. Mrs Bennett had effectively abducted the child from Scotland to England, and Mr Bennett, as a legal guardian of the child, had not given his consent.
Mrs Bennett made her application to the court before the year set out in the legislation had expired, and Mr Bennett also entered appearance in the case within the time limit. Notwithstanding those facts, the judge in the Willesden court made an order in favour of Mrs Bennett. It is clear that none of the lawyers involved at that stage—the solicitors or the judge—properly understood the implications of the 1986 Act, or, for that matter, indicated that they were even aware of its existence.
Mrs Bennett’s solicitors had a duty to the court as well as to their client, and should not have raised the action, because any interpretation of the Act would make it clear that the Willesden court had no jurisdiction. The judge should not have granted the order, and Mr Bennett’s solicitors should not have neglected to raise the point of jurisdiction before the court, despite his explicit instructions. I should add that Mr Bennett took action subsequently against his solicitors for that neglect and received an award of compensation.
That was the first stage before the one-year period had expired. As the case moved through its various stages, it seems clear that none of the judges who later considered it looked very closely at Mr Bennett’s rights under the legislation as a parent and legal guardian of his daughter. The 1986 Act provides that
“Where a child…becomes habitually resident outside that part of the United Kingdom...he shall be treated for the purposes of this Part as continuing to be habitually resident in that part of the United Kingdom for a period of one year beginning with the date under which those circumstances arise.”
That section therefore applies only where the child has already become habitually resident in another part of the UK, and it postpones the legal effect of that habitual residence for a period of one year. Correctly construed, it does not operate as a time limit of one year on habitual residence as held later by the Court of Appeal in England.
Jim Shannon (Strangford) (DUP)
Is the hon. Gentleman aware of examples similar to the one that he clearly outlines? Is this an isolated case or do many others fall into this category?
Mr Doran
There are lots of examples of couples splitting up and moving to different jurisdictions, but, as far as I am aware, this is the only case in which the 1986 Act has not been properly construed—at least, that is my allegation.
In Mr Bennett’s case, for the child to have become habitually resident in England and, therefore, to give the English courts jurisdiction, both parents would have been required to consent, and even then there would have been a delay in operation of one year. There is ample legal authority to show that habitual residence cannot be changed by the unilateral action of a parent who shares parental responsibility with another. That is also the law in Scotland, and it follows that the courts in England have never had jurisdiction in this case because both parents had not given their consent.
Despite those facts, at every stage in the court proceedings in England, from the judge at first instance through to the Court of Appeal, section 41 has been interpreted as giving the English courts jurisdiction as soon as the child’s stay in England had exceeded one year. In its judgment, the Court of Appeal, through Lord Justice Wall, said:
“on the facts of this case Section 41 ceased to have effect in September 2001”.
As additional cover, the court also argued that even though there was no jurisdiction, the original decision was not a nullity. Lord Justice Wall said:
“The normal rule about orders, which on their face are regular, but which are in fact made without jurisdiction, is that they remain in force until they are discharged”.
He quoted the case of Hadksinson v. Hadksinson in 1952, but I am advised that it is questionable whether that case supports the Court of Appeal’s position. The ratio decidendi of that case is that there is an
“unqualified obligation of every person against…whom an order has been made by a court of competent jurisdiction to obey it until it is discharged”.
The difference between that case and Mr Bennett’s case is that the Willesden court was not
“a court of competent jurisdiction”.
I have been directed to “Halsbury’s Laws of England”—as a Scottish lawyer by training, I am not very familiar with it—and page 314, chapter 10 of the fourth edition says:
“Where a court takes upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing”.
When it was clear to Mr Bennett how the English courts were dealing with his case, he raised the issue in the Scottish courts by raising an action of divorce. I will not go through all the processes, but the case eventually reached the inner house of the Court of Session, having started its processes in the Aberdeen sheriff court. The inner house decision is directly in conflict with that of the Court of Appeal. Among other points, it noted that the order that initiated the proceedings in England was made without jurisdiction—a very clear statement. It agreed that the habitual residence of the child of a marriage cannot be changed without the consent of both parents. It doubted that the effect of section 41 of the 1986 Act was automatically to change habitual residence one year after an abduction. It recorded the failure of the English courts to hold a welfare hearing during the whole period when the matter was before them, despite a recommendation from Children and Family Court Advisory and Support Service that it was necessary, which is quite a serious matter. However, the inner house of the Court of Session also accepted that
“the Court of Appeal considers that the English courts have jurisdiction to make orders respecting the child with which this divorce action is concerned”.
The word “considers” is very important. The inner house does not cede jurisdiction, but recognises that the English court thinks it has jurisdiction. It is clear that the inner house of the Court of Session did not wish to get into a direct conflict with the English courts, and it has been tactful and diplomatic in the way in which it has questioned the decisions of the English courts.
Over the years, I have written to the Ministry of Justice and the Scottish Government about the apparent conflict in the law. I understand that meetings were held between representatives of the Scottish Government and the Ministry of Justice. I have not been formally advised of the conclusions of those meetings, although I received a brief letter from Scotland’s deputy Justice Secretary, who said that the meetings had concluded that section 41 of the 1986 Act did not require changing. It was as blunt as that. That view is probably correct.
As I pointed out earlier, the problem seems to be one of interpretation and application rather than the legislation itself. However, I am deeply concerned about the way in which the courts have acted in this case and the impact that the decision of the Court of Appeal could have in other cases. I find it extraordinary that all the lawyers involved in the initial proceedings in the Willesden court could either be so ignorant of the legal position in such cross-border cases or so easily misinterpret the legal position.
As the case moved on through the system, all the arguments that I have presented today were presented by Mr Bennett, my constituent. Part of the tragedy is that once he had discharged the lawyers who so wrongly advised him and who refused to carry out his instructions, Mr Bennett found it virtually impossible to find another solicitor to represent him, and he was forced to represent himself. He is a very single-minded individual and has become extremely knowledgeable in this area of law.
Reading through the various judgments, it is quite clear that the judges viewed Mr Bennett as an obsessive who was more concerned about legal principles or niceties than his daughter. I get the impression that he was not taken seriously. He desperately wanted contact with his daughter and felt that he was the more suitable parent to look after the child. He also strongly believed that it should be for the Scottish courts to decide the matter. It is probably fair to say that he was not learned in the law and did not treat judges with the respect that they are used to. He also became frustrated at what he believed was their refusal to consider his arguments.
I have had the opportunity to meet Mr Bennett and his child, who is disabled. He visited my office several times with the child on a previous matter. When we spoke about the difficulties that he was having with this case, I was in no doubt that he had a strong relationship with his daughter and was able to care for her. He and his wife—they are not divorced—split care between them, and he made quite a contribution to the care of the child in the household. Unfortunately, he never had the opportunity to have his side of the argument on residency or access considered by the court.
In Scotland, the inner house of the Court of Session made it clear that the court could have been obliged to consider the interests of the welfare of the child by carrying out the usual investigations and having an appropriate hearing regardless of the other issues in the case. The courts in England took no action in this respect. In addition, Mr Bennett was told by a legal adviser that if he tabled a motion on residency or contact, it would prejudice his argument on jurisdiction. He would effectively cede jurisdiction to the English court. That matter needs to be considered seriously by the Minister.
Cases such as Mr Bennett’s are not that unusual. What is unusual is his tenacity in pursuing this point of law. It is wrong that, in all the years while the English courts were considering the matter, no consideration was given to the interest of the welfare of the child—apart, of course, from Mr Bennett’s continuing interest in maintaining contact with his daughter.
I practised in the Scottish courts for a number of years, and family and child care law were my special areas of interest. I have not held a practising certificate since 1988 and do not claim any special expertise, but I do know that the guiding principle in all child care cases is and should always be the paramountcy of the welfare and interests of the child. Those interests cannot be met if a court has a case before it for about four years and does not itself inquire into that child’s situation. I am not significantly well versed in English law to know whether that suggested failure is a failure of the various courts in this case or a failure of the system, but I believe that the Minister should look into the matter urgently.
As I said earlier, Mr Bennett was put in an invidious position, because he was told by legal advisers that if he tabled a motion on contact or care and control, he would prejudice his case on jurisdiction. He should not have faced that dilemma. If they do not already have the power to investigate a child’s situation of their own volition—I suspect that they do—the courts in England should have that power, without prejudice to any other issue before them.
When there is a clear conflict between the decisions of the courts in England and Scotland, public confidence in the system requires there to be a proper inquiry. I do not know what understanding was reached by the Scottish and English civil servants who met to discuss this case, but I do know that nothing has been published. It is not enough to say that everything is okay and that everything is working fine, when clearly it is not. I should like a report published on the discussions that took place and on the details of the conclusions that were reached and why they were reached.
Of course, there is another way to resolve this case: to take the matter to the Supreme Court. That might seem appropriate, given the conflict between the two jurisdictions. Unfortunately, when Mr Bennett and his advisers—he now has legal advice—attempted to take the case from the Court of Appeal to the Supreme Court, his application was refused.
Without fully understanding all the mechanics, the idea that courts in Scotland dealing with the same circumstances and the same legislation could be in complete conflict with the courts in England is difficult for the lay person to understand. It is extremely regrettable that this important issue has not been considered by the Supreme Court. I know how important it is that politicians do not interfere in any way whatever with the judicial process, but I believe that a number of serious matters need to be fully considered, and the best place for that is the final court of appeal of both civil jurisdictions—the Supreme Court.
The issues that I have raised primarily affect my constituent and his daughter, who is denied access to her father. However, breakdown of marriage and movement between jurisdictions is not uncommon in our society. I believe that the courts in England have got the interpretation of the law completely wrong as it is applicable to this case. Now that the case is concluded, I hope that the Minister will agree that a serious injustice has been done and that Mr Bennett is fully entitled to feel that the legal system has let him and his daughter down badly. It is incumbent on our legal system and the Government to do something to correct the situation. As I said, changes do not necessarily need to be made to the Family Law Act 1986—unless section 41 can be amended so that it is more clearly understood, particularly by lawyers.
I ask the Minister to give serious thought to the matters that I have raised today, and to consider how we can move forward, so that the case of B v. B does not stand as a precedent to be applied in similar cases of conflict.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I congratulate the hon. Member for Aberdeen North (Mr Doran) on securing this debate. It has enabled him to raise the concerns of his constituent on the difficulties that can arise when a child is taken from the part of the United Kingdom where he or she is habitually resident. May I say how sensitively he put his constituent’s case? He did so in the personal context a concerned parent. That should not be forgotten.
At the outset, I should make it clear that in all cases involving a child’s upbringing—including where the child should reside and who should have contact with the child, as the hon. Gentleman rightly said—the court’s paramount consideration must always be the welfare of the child. The welfare of the child should be paramount in all cases involving decisions about his or her life. The welfare of the child is paramount in the law in all parts of the United Kingdom. English courts are required to consider the child’s situation and hear any application made by a parent; the courts can also make orders on their own initiative, as required under the Children Act 1989.
The Government appreciate that disputes about arrangements for children—for instance, where the child is to reside, contact and the continuing involvement of both parents in the child’s life—will be extremely upsetting for all concerned, and will frequently be damaging for the child. The Government firmly believe that it is in the best interests of the child for both parents to continue to be involved with his or her upbringing, and for both parents to have regular contact with the child, provided it is safe.
The Government are conducting a review of the family justice system in England and Wales, and one consideration is increasing contact between children and the non-resident parent following divorce or relationship breakdown. The serious problems that can arise for parents in maintaining a relationship with their children when a relationship has broken down will be increased if the child is moved from one part of the UK to another. There is then a cross-border element in the family situation. The hon. Gentleman made clear the distress caused to his constituent by the circumstances surrounding the removal of his child and subsequent events. When a child is taken without consent, it inevitably causes great distress for the parent who is left behind. The parent can also be left facing considerable difficulties in obtaining the return of their child. As the child has been moved from one part of the UK to another, the parent has to deal with the question of which court will have jurisdiction. The Family Law Act 1986 provides rules of jurisdiction in the different territorial parts of the UK. The primary rule is that the courts of the part of the UK where the child is habitually resident will have jurisdiction in any proceedings regarding the child. That much is clear.
Identifying habitual residence is a question of fact for the courts. However, the 1986 Act contains rules to prevent a person who removes a child from his or her habitual residence without consent from benefiting from that wrong. That benefit could occur if the person could take advantage of any change in the child’s habitual residence resulting from the unlawful move to claim that another part of the UK now had jurisdiction. Allowing jurisdiction to change immediately in those circumstances would encourage child abduction, which is clearly contrary to a child’s welfare. Lengthy disputes about which courts should hear a case delay resolution for the child and are also clearly not in the child’s best interests. It is important that clear rules exist to prevent abuse of jurisdiction through child abduction.
As the hon. Gentleman describes, section 41 of the Family Law Act 1986 deals explicitly with the situation in which a child under the age of 16 who is habitually resident in one part of the UK becomes resident in another part without the agreement of all the people who have the right to determine where the child should reside. In those circumstances, the 1986 Act provides that the child shall be treated as still habitually resident in the part of the United Kingdom from which he or she was removed for a period of one year from the date of removal. In practice, that usually means that the courts of the part of the UK in which the parent from whom the child was taken lives will have jurisdiction over any proceedings regarding the child during that year even if the child becomes habitually resident elsewhere. To ensure that children are always protected, a court in the jurisdiction in which a child is present can take urgent, provisional action to protect the child.
In that way, the 1986 Act promotes child protection; it discourages wrongful removal of children by removing any jurisdictional advantage that the person removing the child hopes to gain. The Act also provides an important protection for the parent who did not consent to the child being taken, as the person has a significant period of time in which to challenge the removal of the child and to make an application to the courts of the child’s original habitual residence for the child to be returned. Once jurisdiction is accepted by the correct court, it will consider the merits of the case in the light of the child’s welfare. That may or may not involve a return of the child to the original habitual residence. The court will consider with whom the child will live, and how contact with the non-resident parent should be supported.
Mr Djanogly
The hon. Gentleman makes a fair point, and I was coming on to that. However, I will say now that it is accepted that the original English without-notice decision was made without jurisdiction. However, there were numerous ways in which the order could have been challenged, either on the point of the lack of jurisdiction or on the terms of the order made. It must also be accepted that courts can make orders, and sometimes have to make orders, for the welfare of the child without all parties being informed of the application, if that is felt to be appropriate in the circumstances of an individual case. Such orders would usually be drawn up so as to provide for a review at an early stage—perhaps after seven days—so that all parties can make representations.
If the courts of the part of the UK to which the child has been taken make an order in respect of the child, then the parent who did not consent to the child’s removal can challenge that order in the court which made it on the basis that the court did not have jurisdiction to make it. It is very regrettable if an impression has arisen that to challenge the jurisdiction of the court to make an order is, by implication, to accept the jurisdiction of that court. That is absolutely not the case in English law, and indeed nothing in the 1986 Act seems to suggest it. The law is clear that to challenge the order in the court in England and Wales, which made it in this way, is not to surrender to or accept the jurisdiction of that court. This is a rule which is clear both at national and international level. However, even orders made without jurisdiction must be obeyed until such time as they are successfully overturned, and proper action must be taken to overturn them.
However, balancing the requirements of a child’s welfare requires that the rule in section 41 does not last indefinitely. Habitual residence is a question of fact for the courts to determine, and it is generally accepted, including in international law, that the interests of a child are usually best determined by the courts of the territory in which the child is habitually resident, as that court is best able to judge the child’s needs and situation there—the court is “proximate” to the child.
A year is a long time in the life of a child, especially a young one, and circumstances can change very quickly. If nothing is done in the original jurisdiction to address the removal promptly, and within the year at most, that child’s life will have moved on and courts need to be able to address the child’s situation as it is at the time any application is made. There seems to be little point in making the child’s habitual residence the primary rule of jurisdiction in the Act to ensure a close connection between the court hearing the case and the child’s actual situation, only then to refuse to acknowledge the reality of the child’s situation in determining jurisdiction because a non-consensual removal occurred quite some time in the past—even more so when that removal could have been dealt with promptly by the courts of the child’s original habitual residence had they been seized of the case by the left-behind parent within a year.
The hon. Gentleman has asked for the Government to examine this matter and consider a review of the provisions of the Family Law Act 1986. The Government do not consider that a formal inquiry would be appropriate here as the provisions of the law are quite clear and generally provide reasonable protection for children who are wrongfully removed. The Government do not believe that it is necessary to amend the provisions of the Family Law Act 1986. However, it is important that the provisions of the Act should be operated properly in practice and that the courts should follow its provisions as they determine the question of jurisdiction for proceedings.
The Government have undertaken to consider whether the question of jurisdiction regularly causes difficulties. Following the hon. Gentleman’s previous debate on cross-border contact issues in December 2007, officials wrote to the Law Society in England asking for its assistance in identifying the extent to which jurisdictional issues arose in cross-border cases and the extent to which they prevented people making substantive applications and having their cases resolved and whether any procedural or other changes might be required. Similar inquiries were made by the Northern Ireland Court Service with the Law Society of Northern Ireland, and by the Scottish Government with the Law Society of Scotland. Following receipt of the replies, officials have discussed the question of what further should be done to address the jurisdictional issues. Concern was expressed about the courts’ ability to deal with jurisdictional issues, particularly by Scottish colleagues.
I am not convinced that jurisdictional issues are preventing people from having their cases resolved. However, I fully accept that the sort of unfortunate circumstances underlying this debate today must be avoided if at all possible. We will consider whether anything more needs to be done.
The underlying question in all proceedings relating to children must be the welfare of the child or children concerned. The provisions relating to jurisdiction in the Family Law Act 1986 are intended to support the child’s welfare by deterring wrongful removal of children, but also by ensuring that the court with the closest connection to a child makes the decision about that child. Underlying the Act is the premise that it is normally better for decisions about a child’s upbringing to be made by the courts of the part of the UK where the child is habitually resident. That continues to be the case, even if the child was moved without consent.
The hon. Gentleman mentioned that the Scottish courts have criticised the English High Court. It is not for the Government to comment on the observations of a judge in deciding individual cases.
Mr Djanogly
I will certainly correspond with the hon. Gentleman on those issues. With that comment, I bring my points to a conclusion.
Civil Recovery (England and Wales)
(13 years, 1 month ago)
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Simon Hughes (Bermondsey and Old Southwark) (LD)
I am grateful for the opportunity given by Mr Speaker to have this debate and to the Minister for doing a back-to-back session by responding to two successive debates.
Colleagues who have looked at the Order Paper and seen that this debate is about civil recovery in England and Wales may not have realised immediately what the subject of the debate is. “Civil recovery” is not a phrase that people regularly use. I want to introduce the debate by giving two examples of incidents that came to my attention as an MP in Southwark and that precipitated my interest in the subject.
A constituent of mine came to me after her 15-year-old daughter was accused of stealing £6 worth of goods from a London store. The daughter was then sent a demand on behalf of the store from which she was alleged to have stolen those items asking for £137.50. The explanation given was that she was being asked to compensate the store for the £6 worth of items and to pay the rest of the costs of the administration, the store security and so on. Another constituent then approached me on behalf of one of her daughters, who had been with two friends at Primark. One of the three girls—not my constituent’s daughter—was accused of stealing, but demands for £87.50 were sent to all three girls on behalf of Primark. These two incidents alerted me to what I have since discovered is a very widespread practice.
Tom Brake (Carshalton and Wallington) (LD)
My right hon. Friend is right that this is a widespread practice. I want to draw to his attention to a very similar case involving a constituent of mine. She was stopped and accused of shoplifting. Nothing was found, and she was released by the police, but subsequently she received a letter from a civil recovery company saying that she needed to pay £70.
Simon Hughes
Like my hon. Friend, all Members of this House who are MPs for any length of time will discover, if they go through their casework files, that this practice is being brought to their attention. At the beginning of this debate, I unambiguously want to pay credit to the citizens advice bureaux and in particular to Richard Dunstan, who had done some work on this issue long before I became aware of it. On behalf of the CAB, he has brought together all the examples of this practice in the best possible place. As a result of his work, two briefings have been published by the CAB, which I recommend to colleagues and others who have an interest in this subject. The first, “Unreasonable demands?”, was published in December 2009, and the second, “Uncivil recovery”, was published in December 2010. The subtitle of the second briefing tells us succinctly what we are talking about. It is:
“Major retailers’ use of threatened civil recovery against those accused of shoplifting or employee theft.”
Colleagues in both the last Parliament and this one have shared my interest in this subject. In the previous Parliament, I know that Ian McCartney was particularly concerned about the issue, and in this Parliament I know that Baroness Hayter has already registered her interest in the subject. I am grateful to her for her continuing interest, which I think that she will want to pursue in the other place.
None of us who are here for this debate are defending shoplifting or employees who shoplift or take property from their employer. However, there are proper procedures, proper criminal processes and proper civil processes. What should not happen is that people who often are young—that is, under the age of majority—vulnerable, mentally ill, distressed or disturbed are intimidated, charged extortionate fees or threatened with what are, bluntly, bogus actions, either by the shops themselves or more frequently nowadays by those who are employed by shops to act for them.
I have discovered that this problem is significant. In each of the past three years, some 100,000 people have received one or more letters demanding a substantial sum of money as “compensation” for their alleged shoplifting or employee theft, and threatening civil court action and associated extra costs if the sum demanded is not paid promptly. Since 2000, more than 600,000 people have received such civil recovery demands, issued by one of a handful of agents acting for well known high street retailers such as Asda, Boots, Debenhams, Tesco and TK Maxx. In the great majority of those cases, the value of the goods or cash allegedly stolen was relatively low. If the accusation is of shoplifting, the value was just a few pounds. In four out of five cases, the goods were recovered intact for resale. In many cases, somebody was apprehended when they were accused of leaving a store with an item—for example, an eyeliner worth £2 or a grocery item worth £1.60—without having paid for it. They then paid for it and were released, but they still received the civil recovery demand later. Among those cases reported to the CAB, one in four of the recipients of such demands are teenagers, most of them aged between 14 and 16, and other recipients are particularly vulnerable.
In many cases, the alleged theft is strongly denied, so it is not always the case—indeed, it is normally not the case—that these allegations are accepted by the person who is charged. In some cases, there was clearly an innocent mistake; in other cases, there was an error; and in other cases there was confusion. However, it matters not, because these stores have behind them a small but growing army of lawyers and other companies that are making a hefty profit from this business.
There is a common feature in these cases. If the sum demanded is not paid, the threat of county court action is often repeated. There is a second threat and then a third threat, giving ever closer dates of notice. However, at the end of all these threats county court action does not materialise, because it was invalid and unjustified in the first place.
The most prolific civil recovery agent, a firm called Retail Loss Prevention, is the biggest player among a small army of players in this sector. It has confirmed that it has never successfully litigated a fully contested county court claim in respect of an unpaid demand. The CAB has also received advice, which I have seen, suggesting that there is no obvious legal authority for most of these demands. Taken together, those two facts suggest that the practice of threatened civil recovery relies on fear and/or shame, as well as ignorance of the law, for its effectiveness.
When I began thinking about how I would raise this issue, I wondered which Government Department I would, as it were, “summon to answer” to me in the first place, because it is very clear that this matter is not only the responsibility of the Ministry of Justice. However, I thought that I would start there, because it is a justice issue, and I am very grateful for the Minister’s presence today and for his Department’s interest in this subject. Shortly, I want to put to him some specific issues that I hope his Department can pick up, because I believe that it has a responsibility to do so and that it can do things.
There is no way that that we should continue to permit this system of civil recovery, and I hope that today’s debate will precipitate a working-together across Departments. Obviously, there is a Home Office interest in this issue and there is also an interest for the Department for Business, Innovation and Skills, as well as an interest for the Ministry of Justice, in trying to ensure that we shut down this business and make those who are involved, which are otherwise reputable major retail outlets, behave in a much more reasonable way.
Nobody condones retail theft. It is a big issue, and we need to ensure that stores are not pilfered and that there is the best possible policing of them. However, even if one accepts that retail theft is a big problem, the percentage of the money stolen from shops that is recovered by these means is a very small proportion of the total. So it is not as if the retailers involved are able to cover all their costs by doing this type of thing. I will turn to some examples.
Simon Hughes
I am grateful for my hon. Friend’s suggestion, and I hope that the Minister will address the areas that the Ministry of Justice can pick up. If over the next few weeks, with concentrated efforts in both Houses, we can get a coalition—as it were—of determination to do something, I, with my hon. Friend and others, will look for the earliest available opportunity to deal with the legislative changes that I think are part of the response that is needed.
On the protagonists, I have listed some of the major retail players, and I will now deal with the agents. In eight out of 10 of the cases reported to citizens advice bureaux the demand was issued by a Nottingham-based company called Retail Loss Prevention Ltd. Since 1999, that company has issued more than 550,000 demands on behalf of dozens of retailers, including Argos, E.H. Booth, Debenhams, Harrods, Iceland, Lidl, Matalan, Morrisons, Mothercare, Netto, Primark and Waitrose. The company retains some 40% of any money it recovers and the remainder goes to the retailer client. The owner and managing director of the company, who is being pursued by Citizens Advice and by others in the media, has said that the company is
“passionate in our belief that we are helping the community by going after the ‘soft’ criminals who are often seen as lower priority by the police”.
In seven out of 10 of the cases that have come to the notice of citizens advice bureaux, the demand was issued on behalf of one of just six retailers—Boots, TK Maxx, Tesco, Wilkinson, B&Q and Superdrug. The predetermined fixed sum demanded by RLP in most if not all shoplifting cases varies according to, and is determined by, the total value claimed of the goods or cash involved. If the value is between nothing and £10, the sum demanded is £87.50 and the 21-day settlement offer is £70; if the goods are worth between £10 and £100, invariably £137.50 is asked for, with a discounted 21-day-period amount; if the value is more than £100, £187.50 is asked for, with a quick-pay discounted amount of £150; and if it is more than £300, £250 is asked for, with a quick-pay amount of £200. It is clear that the company has never justified the legitimacy of its action. It has been asked persistently about the evidence for its actions, and it has repeatedly declined to produce any evidence that claims have regularly and successfully been pursued by means of county court proceedings.
The company has also clearly misrepresented the position. Until last November, RLP’s website stated that
“we have established operating procedures for Civil Recovery and agreed guidelines with the Association of Chief Police Officers (ACPO) and Association of Chief Police Officers Scotland (ACPOS)”.
However, in October last year, the assistant chief constable who leads on retail crime for ACPO wrote to Jackie Lambert at RLP stating:
“Whilst there may have been agreements in the past about exchanging data and operating civil recovery with ACPO…there are no such agreements in place now and indeed on several occasions over the last few years I and my colleagues have asked that such references be deleted. Please remove from your website any and all references which state or imply that RLP operates its civil recovery in agreement or cooperation with the Police Service. Clearly if you have an agreement with an individual force you could make reference to that, but I know of none.”
In November last year, ACPOS said:
“At no time have ACPOS entered into any formal agreement with RLP or assisted them in any civil recovery”.
The other players are Drydens, a law firm based in Bradford, Nottingham-based Civil Recovery Solutions and, more worryingly in a way, a Florida-based law firm, Palmer, Reifler and Associates, which is a major player on the United States civil recovery scene but is not regulated to practise in the UK and uses Wigan-based law firm Goddard Smith as its agent. Lastly, there is the London-based firm Civil Recovery Limited, which acted for only Tesco and was closely related to a security company called TSS, which supplies security guards to Tesco, Boots and other retailers. Civil Recovery Limited ceased trading last summer.
Penultimately, there is of course a civil wrong if someone steals something from someone else. There is a tort as well as a crime, and there is a breach of contract if an employee steals from their employer. I am not arguing that there might not be proper civil proceedings, but this is a contrivance. It is an intimidation, with the protagonists selling their services to the retail fraternity and then recovering a large amount of money under clearly false pretences. What please can we do about it?
I would like the following from the Ministry of Justice. I would like it to ask the Law Commission, which has a report in the pipeline, to ensure that it urgently reviews the entire law on civil recovery, with a view to eventually ensuring, by law if necessary, that civil recovery is limited to cases involving serious, determined and/or persistent criminal activity for which there has been a criminal trial and conviction. I would like the Ministry, as a matter of urgency, to prepare and disseminate public information and advice on threatened civil recovery, and in particular on the options available to people who might receive a civil recovery demand from Retail Loss Prevention, Drydens or other civil recovery agents. That could be done through the Government’s public information service—Directgov—citizens advice bureaux and other advice outlets.
I also want the Ministry of Justice to talk to the Solicitors Regulation Authority to see whether it needs to take further action to ensure that the civil recovery practice of solicitors, including employed solicitors, is consistent with the solicitors’ code of conduct. I would then like the Home Office, the Department for Business, Innovation and Skills, the retail industry and the police to identify and develop a range of alternative ways of dealing with those involved who, if they are young, mentally ill or vulnerable, are often better dealt with by cautions and the early stages of the pre-criminal procedure in my experience.
As the total amount recovered by the civil recovery agents for their retailer clients each year seems unlikely to be more than £16 million, the practice is clearly completely unacceptable, given that they say that they lose £4 billion every year as an industry. I hope that some major retailers will hear this debate and agree to review their practice. Most of all, it is clear to me that the practice has become an opportunity for great profit-making by a few at the risk of improperly influencing and intimidating people who ideally should not be in the criminal process, unless they are regular offenders, and certainly should not be the victims of communications that distort the facts, misrepresent the law and often put the fear of God into people who certainly do not have the money to pay large sums.
I hope that the Minister can be helpful, that he understands the importance of this issue to all our constituents, and that today will be the beginning of the end of this practice. I am very grateful to all those people who have brought the issue to the public’s attention, and I hope that there will be continued significant public reporting, until the practice is ended.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
I am grateful to my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes)for providing me with this opportunity to outline the Government’s position and the action being taken in respect of civil recovery.
The Government are firmly committed to working alongside business and trade associations to find effective solutions and responses to business crime, including retail theft. My right hon. Friend identified that civil recovery is dealt with by a number of Departments in addition to the Ministry of Justice—for example, the Home Office, in preventing and tackling retail crime; the Department for Business, Innovation and Skills, in retail business, sponsorship of Citizens Advice and employment relations; and both DBIS and the Office of Fair Trading, in consumer protection legislation. As my right hon. Friend requested, and as I will come to later, the Law Commission is reviewing this area, and officials in the Departments that I have mentioned will respond in due course.
Civil recovery is the legal means by which anyone who has suffered a financial loss due to the wrongful actions of someone else can seek appropriate compensation under civil law. Civil recovery schemes are used by many high-street retailers to deter shoplifting and recover from shoplifters the management, administration, security and surveillance costs incurred in dealing with the case, including the costs of the civil recovery action itself. That ambition is both understandable and justifiable. Shoplifting is not a victimless crime. Businesses employ civil recovery agents to recover through the civil courts often relatively low-value losses arising from, for example, shoplifting or employee theft. The alternative would be criminal proceedings rather than a suit, with the likelihood of a criminal record for the person being prosecuted.
Retailers have a clear legal right to recover the costs of goods that they lose as a result of crime. The Government recognise the appropriate and proportionate use of civil recovery as one option available to retailers for dealing with low-level criminal activity that also amounts to a civil wrong. We believe that civil recovery, when used proportionately, provides an effective response to low-value and often opportunistic crime that often involves teenagers and other vulnerable people.
The national retail crime steering group set up by the Home Office with the British Retail Consortium provides a forum for the Government, law enforcement agencies and retailers to discuss and devise strategies for tackling crimes of concern to retailers. At that national level, the Government are working with industry and business to broker solutions that cannot be solved by local action alone and to promote the sharing of effective practice. The group focuses on the significant crime issues affecting businesses, including tackling shop theft, violence against staff and the growing threat of e-crime, to adopt a task-focused, action-orientated approach.
We are encouraging businesses to do more to protect themselves from crime. Effective crime prevention advice is available for businesses to use, and we are making it a priority to share effective practice examples of businesses working together and in partnership with the police and other law enforcement agencies to tackle retail crime across their local areas.
As the right hon. Gentleman said, most retailers who adopt the civil recovery procedure normally employ specialist civil recovery companies to seek damages on their behalf, to meet the losses caused by individuals who steal from them. I understand that in addition to the actual cost of any goods stolen or damaged, retailers seek to recover the overall costs that they have incurred in dealing with the matter. The additional costs are usually claimed to cover the costs of general store security measures such as CCTV, security tagging and security staff, as well as any administrative costs incurred by the retailer.
In the great majority of cases, the value of the goods or cash allegedly stolen is relatively low, sometimes just a few pounds. However, the sum sought in damages can be substantially higher once additional costs are included. Such costs are often charged as a fixed sum of between £100 and £150, depending on the value of the goods or cash involved. I note that the right hon. Gentleman mentioned the amount of £137. The practice adopted by most companies involved in the sector is to write to individuals demanding payment. Failure to pay is followed by a threat of a court action for unpaid damages and the subsequent use of debt collection agencies. Such individuals are advised that their details will be entered on a national database, which can be accessed by retailers, prospective employers and credit providers.
Let me be clear that the Government are entirely satisfied that retailers have a legal right to recover the value of any goods lost or destroyed as a result of an individual’s actions. Defendants can go to their local CAB and receive advice about what to do with the claim. The Government accept that a retailer arguably has a legal right to recover any additional costs or losses directly caused as a result of dealing with a case. However, we appreciate that there is no statutory or other clear basis for setting the amounts of such costs or losses that can be recovered in an individual case. Therefore, the amount of money, if any, that a retailer can recover from an individual accused of low-level theft in respect of its wider costs is entirely a matter for the courts based on the circumstances and facts of the case.
I say “if any” because my officials have not yet been able to identify any cases in which the issue has been tested before the courts and a definitive judgment given. A specialist recovery company confirmed to Citizens Advice in 2010 that it had never issued a claim seeking recovery where an alleged shoplifter had failed to pay the sum requested. Therefore, that area of the law remains untested. CitA—the new name for Citizens Advice—has undertaken a lot of valuable work, for which we are grateful, to highlight what it believes are the relevant problems. I will refer to that valuable contribution later. However, given that some civil recovery is clearly entirely legitimate, we consider that the question deserving further examination involves the means used and the proportionality of losses recovered.
Simon Hughes
Has any work done by the Minister or his officials confirmed that the amounts sought in such cases have no relation to the costs incurred? People should be entitled to recover the £5 cost of a stolen item, but the £135 or £235 top-up fee does not appear to have any basis in reality.
Mr Djanogly
That would be a matter for the courts to decide, and as I have just tried to explain, there has not yet been a test case. A test case might be a good idea.
There is no clear basis for setting claims for additional costs at a specific level. Indeed, retailers can seek to recover such additional costs only to the extent that they can show that they have been incurred directly as a result of dealing with a case, so it is not at all clear how such costs could be set at standard levels. However, as I said, the point has yet to be tested fully in the courts.
As I said, Citizens Advice has raised a number of concerns about how civil recovery companies operate and has conducted valuable work on the matter, culminating in two reports. “Uncivil Recovery”, which was published in December 2010, set out detailed case studies drawn from 300 CitA-reported cases in which individuals had been accused of shoplifting or employee theft and were then pursued for substantial sums of money as compensation for what was described as
“loss and damage caused by your wrongful actions.”
I understand that in the vast majority of cases the police were not involved, nor were criminal charges brought. CitA suggested that it is unfair to use the civil courts in such circumstances, argued that the practice of civil recovery effectively relies on fear and ignorance of the law for its effectiveness and made a series of recommendations.
We believe that the recommendation that the law should be clarified to prevent any civil recovery unless there has been a criminal trial and conviction would result in undesirable additional pressure on the criminal justice system. As I have mentioned, the Government accept fully that some civil recovery is entirely legitimate. Accordingly, we consider that the question of the means used and the proportionality of losses recovered might deserve further examination. However, we accept that one important issue is what approach companies acting on behalf of retailers adopt when pursuing such cases.
In that context, I am pleased to be able to tell my right hon. Friend that the topic, and whether any guidance needs to be issued or other action taken, is being considered across a number of Departments, and good progress is being made. For instance, the Law Commission intends to seek views on the question in a paper soon to be issued on consumer redress for misleading or aggressive practices. The Law Commission project reviews the directive on unfair commercial practices implemented in the Consumer Protection from Unfair Trade Practices Regulations 2008 and asks whether consumers should have a right of redress of breaches of the regulations, and that includes the question whether civil recovery is a commercial practice within the meaning of the directive.
The issue is not beyond doubt, but on a broad interpretation of the meaning of a commercial practice, the directive could apply to civil recovery where it is used against shoplifters. That would not make civil recovery illegal, but specialist recovery companies would not be permitted to send misleading or aggressive letters. More generally, the Law Commission is also considering whether there should be a statutory right of redress for people to reclaim, along with moderate and appropriate damages for distress and inconvenience, any moneys that they might have paid as a result of a misleading or aggressive letter.
The Citizens Advice report implies that civil redress is sometimes uncalled for, but the Government do not support that position. The report is certainly useful in raising important issues, not least those that concern aspects of consumer protection, but I accept that some technical issues need to be resolved.
Simon Hughes
I see that the Minister is on his last page, so I will ask him one last question. A Law Commission report is imminent. Do the Government have a plan to bring together views across Departments and produce a coherent collective response later in this parliamentary Session? I am sure that it would be welcome in both Houses.
Mr Djanogly
I cannot guarantee the timing today, because it will need to be agreed among several Departments, but the issue will be considered on a cross-departmental basis, and we will come back with proposals.
Written Ministerial Statements
(13 years, 1 month ago)
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Sunset Clauses (New Regulations)
(13 years, 1 month ago)
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The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I am publishing today the guidance prepared by the Better Regulation Executive to assist Departments in implementing the Government’s commitment to introduce sunset clauses in new regulations.
The policy that is set out in the guidance will contribute to the Government’s goal of transforming the role of regulation in our society. Where regulation is no longer needed, or where it results in disproportionate burdens, the use of review and sunset clauses will help ensure that it is removed. It will strengthen the current process of post-implementation review, and also promote greater transparency and scrutiny of Departments’ regulatory activities.
The initial focus for the policy will be new domestic regulation introduced by Whitehall Departments that results in a net burden on business and civil society organisations, and domestic legislation implementing new EU obligations. The Government’s intention is that all measures that are in scope will be subject to a statutory review obligation, with those domestic measures implemented through secondary legislation also subject to a sunset provision. For secondary legislation, implementation in each case will be subject to the vires under which the relevant regulations are made.
Ministers will be under an obligation to carry out and publish a review of the regulation within five years of it coming into force. The review will look at whether the regulation is effective in meeting its original objectives, whether it is still required, and whether it can be improved. Where there is a sunset clause Ministers may also, depending on the outcome of the review, need to renew the legislation in order for the regulation to remain in force. The renewal, amendment, or revocation of regulations resulting from the new policy will be carried out through existing legislative processes.
The guidance is being published on the BIS website at: http://www.bis.gov.uk/policies/better-regulation/better-regulation-executive/reducing-regulation-made-simple /reviewing-existing-regulations/pirs-and-sunset-reviews. Copies will be placed in the Libraries of both Houses.
Defence Business Services
(13 years, 1 month ago)
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The Secretary of State for Defence (Dr Liam Fox)
As part of the process of departmental reform, today we are announcing the commencement of consultation on a significant organisational change within the Ministry of Defence, with the proposed establishment of a defence business services organisation.
Defence business services will deliver corporate services —human resources, finance, information, commercial and vetting—from a single structure to all areas of the Department. This new single organisation will allow us to provide high-quality professional services more efficiently and with fewer civil servants. We are exploring options to strengthen our ability to manage this change, including the possibility of bringing in outside professional management expertise to lead and direct the new organisation.
By making these changes we expect to reduce the overall civilian work force by about 2,000 corporate services posts with a net saving of £73 million per annum by 2014. This will make a significant contribution to the civilian staff reductions set out last October in the strategic defence and security review.
These proposals are a development of the recommendations made in Gerry Grimstone’s independent review into the use of civilians in defence in 2010. Along with the creation of a new defence infrastructure organisation, which I announced to Parliament on 16 February 2011, the corporate services reforms are the first changes arising out of the work of the defence reform unit chaired by Lord Levene on restructuring the Department. There will be more such changes as we receive and consider further proposals.
Consular Services (Fees)
(13 years, 1 month ago)
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The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)
In addition to its assistance to British nationals in distress, the Foreign and Commonwealth Office (FCO) provides a range of consular services to British nationals who live, work and conduct business overseas. On 16 March 2011 Her Majesty in Council approved the Consular Fees Order 2011. Part I of that order, which has been deposited in the Library of the House, sets what the FCO charges for these services (and for emergency passports, travel documents, and transferring money to those in distress overseas) from 6 April 2011. At the same time the FCO is also making broader changes to these services, most of which will affect very few British nationals.
From 6 April 2011 we will no longer provide as standard some niche administrative services. We will cease offering searches in foreign archives for personal documents, such as for foreign birth certificates. Modern communications allow customers to approach the relevant authority themselves, and where necessary we will offer guidance on how to do this. We will no longer automatically offer management of estates overseas for the deceased; instead, we will provide customers the details of local lawyers who are better placed to provide this service. And we will stop offering translation or interpretation on notarial services, instead putting customers in touch with expert local translators and interpreters.
These changes should contribute to reducing the time consular officers spend processing documents and increase the time they have to focus on the most vulnerable in most need of assistance. They will not diminish the FCO’s assistance to British nationals in distress nor its crisis response capability, including its ability to assist and evacuate British nationals from a country or region.
It is right that, as a general principle, those who benefit from consular services should meet the cost of them, rather than the general taxpayer. The increases to the fees in part I of the order will result in income from the fees increasing by 3.85%. Some fees are reduced, and some are increased by more than this amount. The new fees represent the full economic cost of what we do, and will ensure that British missions continue to provide a high standard of service to consular customers. They are also a sensible rationalisation of the structure of the fees charged.
Fees in part II for passport applications made in the United Kingdom and overseas remain at current levels.
Fees in part III for receiving applications for entry clearance to Commonwealth countries, British overseas territories and Crown dependencies continue to be charged in the order. These fees are “Home Office fees” and are approved by the Home Office Minister but are still contained within the Consular Fees Order.
Torture and Mistreatment Reporting Guidance
(13 years, 1 month ago)
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The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
I wish to make the House aware that I have updated and reissued guidance on reporting torture and mistreatment to all FCO staff, including contractors, secondees and temporary staff and staff from other Government Departments. I have made this guidance available to the public by publishing it on the FCO website.
The UK Government’s policy is clear. We do not participate in, solicit, encourage or condone the use of torture or cruel, inhuman or degrading treatment or punishment for any purpose. We have consistently made clear our absolute opposition to such behaviour and our determination to combat it wherever and whenever it occurs. We take all allegations and concerns about torture and cruel, inhuman or degrading treatment or punishment very seriously.
We are determined to strengthen the FCO’s institutional capability on human rights at home and overseas. The updated guidance reiterates existing advice, setting out the process for FCO staff and other staff working in Her Majesty’s diplomatic missions and offices for reporting information about torture and mistreatment.
Timely, accurate, specific and full reporting is crucial in strengthening the Government’s work to eradicate torture and CIDT around the world. The FCO is committed to this work and staff already report cases, raise concerns and take action.
A copy of the guidance will be placed in the Library of the House by 22 March 2011.
UK Influenza Pandemic Preparedness Strategy
(13 years, 1 month ago)
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The Secretary of State for Health (Mr Andrew Lansley)
I am publishing today, for consultation, a new “UK Influenza Pandemic Preparedness Strategy”. This cross-Government strategy updates the previous national framework, published in 2007, in the light of the experience from the H1N1 (2009) pandemic including the findings of the independent review chaired by Dame Deirdre Hine and the latest scientific evidence. The strategy has been developed jointly with the devolved Administrations.
It is vital that we remain prepared for a new pandemic, the threat of which remains undiminished. Given the uncertainty about the scale, severity and pattern of development of any future pandemic, three key principles underpin the new strategy. These are that the response to a new pandemic should be precautionary, proportionate and flexible. The draft strategy sets out our proposed strategic approach to apply these principles to pandemic preparedness.
The strategy is intended to inform the development of updated operational plans by local organisations and emergency planners. As a result of their experience in the H1N1 (2009) influenza pandemic, many other organisations and individuals have extensive experience of the challenges that can be posed by a pandemic and will have given these challenges much thought. The Government are keen to ensure that this experience is fully reflected. Therefore, we are inviting comments and views on the strategy set out in this document. The consultation runs until 17 June 2011. We intend to publish the finalised strategy later this year.
The strategy has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office. The document is also available at www.consultations.dh.gov.uk
A plan for improving the response to seasonal influenza will be published shortly.
EU Directive (Human Trafficking)
(13 years, 1 month ago)
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The Minister for Immigration (Damian Green)
I am writing today to the Parliamentary Scrutiny Committees in both Houses, seeking their views on the Government’s intention to apply to opt in to the EU directive to combat human trafficking upon its adoption. The Government’s view remains subject to parliamentary scrutiny.
In June, the Government took the decision not to opt in at the outset to the proposal for a directive to combat human trafficking but undertook to review the position when there was a finalised text. We have now carefully considered the finalised text. The main risk associated with the text has now been overcome: by waiting to apply to opt in, we have a text that has been finalised and we have avoided being bound by measures that are against the UK’s interests.
The new text still does not contain any measures that would significantly change the way the UK fights trafficking. However, the UK has always been a world leader in fighting trafficking and has a strong international reputation in this field. Applying to opt in to the directive would continue to send a powerful message to traffickers that the UK is not a soft touch, and that we are supportive of international efforts to tackle this crime.
Equality and Human Rights Commission
(13 years, 1 month ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
I am today launching a public consultation on the Government’s plans to reform the Equality and Human Rights Commission.
The coalition programme for government commits to “reduce the number and cost of quangos”. In order to deliver this, the Government carried out a major review of public bodies last year. Following that review, the decision was taken to retain the commission but substantially reform it to focus it on the areas where it alone can add value, and to increase its accountability to Government, Parliament and the public.
We want the Equality and Human Rights Commission to become a valued and respected national institution. To achieve this aim, we have today set out our proposals for legislative and non-legislative reform in three key areas:
Clarifying the EHRC’s remit—the Government will amend the legislation that established the EHRC, the Equality Act 2006, to clarify the commission’s core functions. This will allow the EHRC to focus on the work that really matters, where it alone can add value. At present, vagueness in the Equality Act, for example, the duty to “promote understanding of the importance of equality and diversity”, has led to the EHRC undertaking a wide range of activities that are not regulatory in nature, including running summer camps for young people.
Stopping non-core activities—one of the causes of the commission’s difficulties was the breadth of its remit, extending beyond its core role to, for example, operating a helpline and grants programme. The commission has struggled to do these things well in the past, so we have decided that we should not fund it to do them in the future. The evidence suggests that this work could be done better or more cost-effectively by others.
Improving transparency and value for money—problems with financial controls mean that each set of the EHRC’s accounts have been qualified since its creation, and it has struggled to deliver value for money. Today’s proposals include a legal requirement for the EHRC to publish an annual business plan in Parliament, and comply with the same rules as all other public bodies when spending money. Where the commission fails to show that it has spent taxpayers’ money wisely, financial penalties will apply.
Copies of the consultation document will be placed in the House Library and can also be found on the Government Equalities’ Office website at the following link www.equalities.gov.uk.
“Police (Northern Ireland) Act 2000 - Review of Temporary Recruitment Provisions”
(13 years, 1 month ago)
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The Secretary of State for Northern Ireland (Mr Owen Paterson)
I have today published the Government’s response to the public consultation on the “Police (Northern Ireland) Act 2000—Review of Temporary Recruitment Provisions”. The response document has been placed in the Library of this House. The temporary provisions came into force in 2001 and the previous Administration renewed them by order on 29 March 2010 for a period of one year.
A total of 162 responses were received to the consultation. Of these 152 were in favour of letting the provisions lapse on 28 March 2011, six were against this proposal and three did not express a definite view. One respondent was in favour of letting the provisions lapse for PSNI officer recruitment, but called for the provisions to be retained for support staff.
The Government have considered the responses to the consultation. They have noted the considerable progress made towards securing a police service that is more fully reflective of the community in Northern Ireland. This follows the recommendation in the Patten report that in order to make a police service representative, community leaders should take steps to remove all discouragement and make it a priority to encourage members of their communities to apply to join the police service.
At the time of the Patten report only 8.3% of Royal Ulster Constabulary officers were from a Catholic community background. Today 29.76% of officers are from a Catholic community background, the top end of the critical mass identified by Patten.
Against this background and given that policing in Northern Ireland is now, rightly, devolved and under local control, the Government consider that the continued use of the temporary provisions can no longer be justified and they will therefore lapse on 28 March 2011. Patten himself said the use of special measures should be revisited after 10 years.
The Government believe that maintaining a police service which is reflective of the society it polices is as important as ever. This view is shared by the Department of Justice and the PSNI themselves and they will continue to work to this end in the years ahead. We want to see this progress continue and for Catholic representation in the PSNI to grow further over time. Patten’s vision of a fair, impartial and effective police service does not end with the provisions.
PSNI recruitment issues are regularly monitored by the policing board which will continue to hold the PSNI to account. The PSNI shared future strategy agreed by the board demonstrates the PSNI’s continuing commitment to promoting equality and diversity, achieving good relations and building trust with the community.
House of Lords
Introduction: Lord Glendonbrook
Agriculture: Farming
(13 years, 1 month ago)
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Lord Harrison
To ask Her Majesty’s Government, in the light of the sales of tenancy farms by local authorities, what plans they have to assist individuals to enter the farming industry and to encourage innovation in farming.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)
My Lords, the farming industry needs to encourage people into farming by making it an attractive, rewarding and dynamic career prospect for new entrants. Defra is supporting this aim by working with industry on its agri-skills strategy to improve career structure, skills and professionalism; supporting innovation through the Rural Development Programme for England; funding research and development through the sustainable agriculture and food innovation platform; and encouraging entrepreneurship by reducing the regulatory burden on farmers.
Lord Harrison
My Lords, I thank the Minister for that Answer. Is he not alarmed at the number of sales by county councils of valuable land and farm tenancies, thereby depriving new entrants from coming into the farming industry? Many of those new entrants are brimming with new ideas and innovations for the industry. Is he not also alarmed that the sale of this valuable land deprives county councils of important income? The land provides land banks that enable them to pursue other county council policies that are of benefit to council tax payers?
Lord Henley
My Lords, I would not want to go as far as to say that I am alarmed, but I agree with the noble Lord that there have been considerable sales, particularly over the past 10 years, varying from around 3,500 hectares 10 years ago to about 600 last year. The figure varies from year to year. This is entirely a matter for local authorities as central government do not have any powers to intervene. It is for local authorities to make decisions themselves as to what is appropriate. Obviously, county farms can be a useful way of entering the farming profession, but a number of other ways are available, one of which is making sure that sufficient tenancies in the private sector come on to the market.
The Countess of Mar
My Lords, I declare my interest as a farmer on our small family farm. Is the noble Lord aware of the activities of Gloucester County Council? It has consulted many farming organisations and has come to the conclusion that bringing young farmers into the industry and food production is more important than selling off land to get the capital from it? Could he perhaps hold up that council as a good example of what should be done by local authorities, because without food, we have no cities?
Lord Henley
My Lords, all I would say is “good for Gloucestershire”, but it is for Gloucester County Council to make that decision itself, not for central government.
Lord Cameron of Dillington
My Lords, on the innovation side of this Question, it is encouraging to note that the agricultural colleges seem to be attracting more students than in recent years. Can the Minister say how the Government are going to attract scientists into this area, which is very important? How are the Government going to give them the confidence to choose a career that will help us to solve one of the great problems of today, which is how we are going to feed 9.4 billion people in 30 to 40 years time?
Lord Henley
My Lords, I am not sure that I can solve that problem in a 20-word answer. Obviously we will find it difficult to feed another 3 billion people within the next 40 years. Technological and scientific changes will all play their part, as will the Government and the industry. However, at this stage it would be rash of me to give the noble Lord too lengthy an answer.
Baroness Quin
My Lords, my noble friend has highlighted an important issue. Given that we want to increase food production and encourage new entrants into a profession which has a large number of older people in it, surely this is a matter for government as well as for local authorities. Local authorities may be tempted to sell because of their short-term financial constraints, but this may be against the long-term interests of the country. Does the noble Lord agree that Ministers should work with local authorities to ensure that this land remains as possible land for new entrants in the future?
Lord Henley
My Lords, it is not only for short-term reasons that the counties have been selling off land. As I made clear, counties have been selling off acreages for a number of years, particularly under the previous Government. We have no powers to stop them under the Agricultural Act 1970; it has to be a matter for local authorities. However, there are other ways of getting into farming. Merely because the land has been sold does not mean that it has disappeared from agriculture; it may still be available for use under other means. That is why it is right to ensure that it is easy for people to rent land. The noble Baroness may be old enough to remember that a previous Labour Government introduced the Agricultural (Miscellaneous Provisions) Act 1976, under which all tenancies were made inheritable. As a result, we saw tenancies dry up completely and utterly. It was only with reforms from the later Conservative Government that more agricultural holdings became available for letting, to the benefit of new tenants.
Baroness Parminter
My Lords, in order to increase the number of new entrants into farming, what steps are being taken to increase the very low take-up of government backed agricultural apprenticeships?
Lord Henley
My Lords, I was not aware that there was a very low take-up. I shall consider what my noble friend has said and write to her in due course.
Lord Taylor of Blackburn
My Lords, I realise that the Minister has little power over local government, but what about the Prison Service and the National Health Service, which have been selling off farming land, where he has got some control?
Lord Henley
My Lords, I realise that on this occasion I speak not only for Defra but for the entire Government. However, the noble Lord will appreciate that I have not been briefed on the problems of the National Health Service and the Prison Service. I shall make sure that I come to the House properly briefed in future and can deal with the question of agricultural land being sold off by those bodies should the question arise.
The Earl of Selborne
Does the Minister accept that after the First World War local authorities did an excellent job in providing a ladder for people to be introduced into the farming industry? Clearly, local authorities find it difficult now to assume this responsibility. What can the Government do to encourage the private sector to take up this challenge?
Lord Henley
My noble friend is right to point out the fact that it is a ladder. Unfortunately, it has been a ladder which has amounted to only one rung. People get on to the bottom rung but they do not seem to move off it. It is important that we should do what we can to encourage more land to be let, in whatever size is appropriate, by private landlords, of which there are a considerable number. That is why I referred to the changes made by the previous Conservative Government relating to the letting of agricultural land.
Arms Trade
(13 years, 1 month ago)
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The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, the United Kingdom continues to take a leading role in negotiations for an arms trade treaty and actively participated in the recent UN arms trade treaty preparatory committee meeting. It is important for us to learn lessons from recent events. On 16 March, my right honourable friend the Foreign and Commonwealth Secretary announced a review of the sale to Middle East countries of weapons that could be used for internal repression.
Lord Judd
My Lords, I thank the noble Lord for that reply and underline that the British delegation played a lead role in the discussions in New York last week. Does the noble Lord not agree that, while significant progress was made in the realm of conventional weapons, equipment and ammunition, there is still a glaring gap in the area of police equipment and internal security equipment? What arrangements are the Government making to address this key issue, which has obviously become very significant in the context of recent events?
Lord Howell of Guildford
My Lords, the noble Lord is absolutely right that we are making progress, but that there are still some gaps. The next preparatory meeting is in July, when we will address these issues closely. It is of course our broader aim to see smaller weapons more effectively included and embraced in the arms trade treaty, including the categories that the noble Lord mentioned. These are matters to which we are giving close attention.
Baroness Falkner of Margravine
My Lords, I pay tribute to those on the opposition Benches for the work they started in 2005 to bring about a comprehensive arms control treaty. We must be grateful to them for the lead that the United Kingdom has taken in this area. Would my noble friend explain to the House why the Government are resisting the very modest measure of the noble Lord, Lord Alton of Liverpool, in his attempts to bring through a re-export arms control treaty? That would surely be in the spirit of what we are trying to do at the UN level.
Lord Howell of Guildford
My Lords, my noble friend will remember that we had an exchange on precisely this matter the other day when my noble friend Lord Green, the Trade Minister, answered precisely this Question. He pointed out that we could bring in many laws in this country but, as we would have no control whatever over the actual movements of re-exported equipment, our laws would be in vain. It would not be the right approach. The much stronger approach is to continue to apply the very high standards, the very strict controls and the very rigorous criteria—some of the most rigorous in the world—which we apply to all exports of military equipment and items of concern.
The Lord Bishop of Exeter
My Lords, many of us on this Bench have warmly supported the leadership role of Her Majesty's Government in pressing for an arms trade treaty, which the noble Lord has just reiterated. However, we share the concern of others that that role has recently been put into question by recent trade visits to the Middle East. What steps are Her Majesty's Government taking or planning to take to ensure that their support of British arms exports does not undermine the moral and political leadership that the UK needs to show if the United Nations is to secure an arms trade treaty in 2012?
Lord Howell of Guildford
I appreciate the right reverend Prelate’s concern, but we do not see these matters as influencing each other in any undesirable way at all. On the contrary, we see as one task the application of our very strict controls for exports of armaments and the need for friendly and responsible countries to equip themselves in a responsible way rather than resorting to the much lower standards and greater dangers in participating in many of the other arms trades going on around the world, and we see promoting the commercial interests of this country in all responsible areas and ways as quite a separate issue. We do not really elide the two concepts as some people in the media and commentators have done.
Lord Harries of Pentregarth
The Minister mentions that we have one of the most rigorous control systems in the world for arms exports. Nevertheless, between 2008 and 2010, 198 export licences for arms were given to Indonesia, where there is a low-scale civil war in West Papua and the basic human rights of the indigenous people are being denied. Is he happy about those arms export licences?
Lord Howell of Guildford
One can never say, speaking in general terms, that one is happy. Perhaps a year or two ago, many people in this House would have been happy with the number of licences going to Libya, but it turns out that a great many of these—I think 118 of them—have been revoked, and rightly so. All licences for weapons of any kind of concern for Libya have been revoked. In the case of Indonesia, the process of rigorous control is there. We watch it all the time, and we will monitor it. These things are regularly revisited, and one hopes that any doubts about any weakness in the application of criteria will be strengthened. So I cannot say that one is happy or unhappy, but we are applying the best possible filter and controls, possibly by world standards, that are available to ensure that weapons are not misused, or used for repression in horrible ways.
Baroness Symons of Vernham Dean
My Lords, I refer to the question which the noble Baroness, Lady Falkner of Margravine, asked about re-exports. This has been a very vexed question, and I know that we have discussed it before in your Lordships' House, but the issue here is whether the use of end-user certificates would be of any real value. In my time as a Minister, we discussed end-user certificates and there was a good deal of international support to ensure that those buying arms from this country were prepared to say something about their eventual re-export. Can the Minister say whether that will be a subject for negotiations next year?
Lord Howell of Guildford
Yes, I believe it would. That is a sensible approach. It could be more effective, although there are always dangers and difficulties, than merely passing laws here that we hope others will observe. I think the noble Baroness’s suggestion is the right one.
Great War: Centenary Commemoration
(13 years, 1 month ago)
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Lord Faulkner of Worcester
To ask Her Majesty’s Government what plans they have to commemorate in 2014 the centenary of the outbreak of the Great War.
Lord Faulkner of Worcester
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as chairman of the Parliamentary All-Party War Heritage Group.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)
My Lords, traditionally, we mark the anniversary of the conclusion of a conflict rather than its beginning. However, given the importance of the centenary of the Great War, it is likely that a number of anniversaries of key events from 2014 to 2018, including the beginning of the war, will be marked in an appropriate way. Government consideration of how such events will be remembered is in its early stages and we in the Ministry of Defence are in discussion with colleagues in other departments on this. Further details will be announced in due course, but I do not expect that this will be in the near future.
Lord Faulkner of Worcester
I am grateful to the Minister for that relatively reassuring Answer. However, I think that he will be aware that there is some concern among military historians and others that our planning is not as far advanced as it could be—certainly, not as far advanced as it is in Flanders, which has already announced an imaginative programme of events in both Belgium and the United Kingdom. Would the Minister be willing to meet Mr Kris Peeters, the Minister-President of Flanders, to discuss the Flanders Government’s imaginative proposals for a permanent, commemorative garden by the Guards chapel, which would be made up of earth from the battlefield of Passchendaele and whose construction would be entirely paid for by the Belgian Government?
Lord Astor of Hever
My Lords, while we commend any initiative commemorating those who died in the service of their country, outside the official commemoration to mark an individual’s final resting place the MoD does not have responsibility for erecting or maintaining memorials. It has long been a standing policy of successive Governments that the cost is usually met not from public funds but from private donations or public subscription. However, wherever possible my officials try to provide advice on proposed memorials. I understand that they have only recently been informed of the proposals that the noble Lord mentions but I assure him that the Household Division, London District, the Guards museum and chapel and the Defence Estates are very supportive, while I would of course be delighted to meet the Belgian Minister. Finally, I wish the noble Lord a very happy birthday today.
Lord Lee of Trafford
My Lords, my understanding is that the Imperial War Museum, Imperial War Museum North and the National Portrait Gallery will be holding commemorative exhibitions. Will my noble friend take on board the possibility of the Government sponsoring a major national programme whereby schools adopt their local war memorials for both cleanliness and maintenance? That would also make our young people aware of our nation’s history.
Lord Astor of Hever
My Lords, I understand that the Imperial War Museum is prepared to lead the national commemoration of the centenary and has already appointed a programme manager. We are keen to work with it to develop a co-ordinated approach. It is hugely important that we continue to remember the sacrifices made in the Great War. I agree with my noble friend that our children, and their children, need to be taught how the freedoms they take for granted were won, and at such heavy cost. The Government commend any initiative to maintain a memorial that honoured those who made the ultimate sacrifice for this country.
Lord Bilimoria
My Lords, for six years I chaired the commemoration committee for the memorial gates on Constitution Hill that are in memory of the 5 million volunteers from the Indian sub-continent, Africa and the Caribbean who served in the First and Second World Wars. More than 130,000 gave their lives and 42 were awarded the Victoria Cross. In the First World War alone, more than 1 million of those volunteers were Indian. Will the Minister reassure us that the Government will ensure that the service of those individuals and their sacrifice will be acknowledged during the commemorations from 2014 onwards?
Lord Astor of Hever
My Lords, of course I can give the noble Lord that assurance. I was very honoured to lay a wreath at the gate about 10 days ago in memory of all those brave people who gave their lives in the First and Second World Wars.
Lord Selkirk of Douglas
Will my noble friend enter into discussions with other nations which have an interest in taking forward proposals for commemorations? Will our Government participate in any arrangements for commemorations carried out by other countries?
Lord Astor of Hever
My Lords, we are aware that other countries are also starting to think about this. We have already had some contact with the Governments of France, Belgium, New Zealand and Australia. Indeed, my right honourable friend the Minister for Defence Personnel, Welfare and Veterans discussed the issue with the Australian high commissioner last week. As for taking part in other nations’ commemorations, we will be keeping in close contact with them about their plans and we should, as far as possible and where appropriate, link with them in combined commemorations to mark the key anniversaries.
Lord West of Spithead
My Lords, I declare an interest as a trustee of the Imperial War Museum. I am pleased to hear that things are moving ahead, but the impression that one has gained, having looked at this in great detail, is that there is a danger of us being caught on the back foot. Who will be the person responsible for driving this forward? There is stuff going on across the Commonwealth, particularly in the Dominions, and across the EU and Russia. There is a whole raft of things that do not seem to be joined together. It would be dreadful for our nation to be on the back foot on this. Which department will lead to co-ordinate those who are doing this work?
Lord Astor of Hever
My Lords, the centenary of the beginning of the First World War is still three years away. As I said earlier, we are in discussions with other departments, the most likely of which is the DCMS. I assure the noble Lord that we in the Ministry of Defence take this matter very seriously.
Lord Campbell of Alloway
My Lords, having had to take part in that war, may I suggest that the last thing we should celebrate is its commencement? We should celebrate only those who in the end, with the help of the United States, got us out of it. Commencement is no great celebration—not for me.
Lord Astor of Hever
My Lords, I take my noble friend’s point. The main celebrations will be on the centenary of the end of the First World War, which was 1918.
Baroness Royall of Blaisdon
My Lords, does the Minister agree that it is particularly appropriate that my noble friend should have raised this Question on the day that we are debating the European Union? Does he also agree that we should recognise the part that the EU has played in ensuring peace and stability on our Continent since the end of the Second World War?
Lord Astor of Hever
My Lords, I do not want to be drawn on the European Union but I can confirm how grateful we are to all our European allies who helped us in the First and Second World Wars.
Transport: Penzance and Isles of Scilly Ferry Service
(13 years, 1 month ago)
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Lord Berkeley
To ask Her Majesty’s Government what steps they are taking to ensure the survival of the passenger and freight ferry service between Penzance and the Isles of Scilly.
Earl Attlee
My Lords, the Government are committed to the continuation of both passenger and freight ferry services between Penzance and the Isles of Scilly. Transport Ministers are considering a funding proposal from Cornwall Council and hope to make a decision shortly.
Lord Berkeley
I am grateful to the Minister for that response. Is he aware that the funding offers from the European Union and the tenders for the new ferry run out at the end of this month? Is he also aware that the Scillies have a very small population that relies on tourism? The ferry route goes across probably some of the roughest waters around our coast, and it is very challenging to find the right ship. Is he also aware that, unless a decision is made by the end of this month, the Scillies are likely to be severely disadvantaged this summer because the MCA says that the existing ship, if it is allowed to continue, will have to cut its maximum number of passengers from 600 to 300?
Earl Attlee
My Lords, we understand that a decision is sought by the end of March. While I can make no guarantees, we appreciate the timing constraints and are doing all that we can to avoid a further delay. The noble Lord talked about the population of the Isles of Scilly. There are about 2,000 people, and the investment will represent £28,500 per resident. The noble Lord’s points about the sea-keeping quality of the ships are well made.
Lord Bradshaw
Will the Minister consider two points? First, does he imagine that the Government in Scotland would consider cutting off the Scottish islands, many of which have smaller populations but are served by regular ships? Secondly, has he considered the employment implications both in the Scilly Isles and in Penzance that will arise from any failure to bring this matter to a conclusion?
Earl Attlee
My Lords, as I said in my initial Answer, we are committed to continuing the shipping link. One of the reasons for doing so is those employment opportunities on the Isles of Scilly that rely on that link.
Lord Davies of Oldham
My Lords, we very much welcome the Minister’s response and the positive attitude of the Government, but he must appreciate the urgency of the position. The danger is that this summer’s trade—both passenger and freight—will be severely affected. This degree of urgency requires the Government to be a little clearer about how they will support funding. As the noble Lord, Lord Bradshaw, mentioned a moment ago, if this affected Scottish islands we have not the slightest doubt that action would have been taken.
Earl Attlee
My Lords, the noble Lord will appreciate that the Scottish shipping operations are much more complicated than the service to the Isles of Scilly.
Lord Cameron of Dillington
The situation is even worse than the noble Lord thinks. The helicopter company that provides the link between Penzance and the Scilly Isles has just sold its Penzance airport to Sainsbury’s and has yet to find another site.
Earl Attlee
My Lords, the Question was about the shipping link but I have asked about the helicopter link. I understand the difficulties with it and its viability.
Lord Teverson
My Lords, the proposed vessel for the crossing will operate all the year round. This is a major improvement for the islands’ opportunities. Cornwall Council, of which I am a member, has now put its money where its mouth is by backing this scheme. Will the Minister now concentrate on the scheme that is being put forward, rather than the many others that are less well informed, so that this decision can go forward positively and rapidly?
Earl Attlee
My Lords, we are concentrating on Cornwall’s proposals. Noble Lords should understand that this issue is not just about the ship. There are also proposals for the improvement of the harbours at Penzance and St Mary’s. I understand that St Mary’s harbour has some health and safety issues because mechanical handling equipment gets too close to pedestrians. There is an obvious safety risk that genuinely needs to be addressed. The noble Lord makes very good points.
Lord Christopher
My Lords, I am concerned that the Minister can give no assurances about a date on which this might be concluded. It would be a tragedy if the money already offered were to disappear. Then, I suspect, it would not happen at all, with dire consequences for these islands, which now rely exclusively on tourism. I hope the Minister will let the House know as soon as he can what the Government propose if, as seems pretty certain, the helicopter service—which is not quite but nearly as important as the ship—disappears. Will there be some intervention over the possibility of an alternative site for the heliport at St Erth?
Earl Attlee
My Lords, I cannot comment any further on the heliport but the noble Lord makes extremely good points. I thank him for raising this issue with me orally some time ago. I immediately took it up with the appropriate Ministers.
Social Security (Contributions) (Amendment No. 2) Regulations 2011
(13 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Sassoon
That the draft order and regulations laid before the House on 3 February be approved.
Relevant documents: 16th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 16 March.
Greater Manchester Combined Authority Order 2011
Lord Taylor of Holbeach
That the draft order laid before the House on 7 February be approved.
Relevant documents: 16th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 16 March.
National Insurance Contributions Bill
European Union Bill
(13 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, I have it in command from Her Majesty the Queen to acquaint the House that she has been informed of the purport of the European Union Bill and has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament, for the purposes of the Bill.
In bringing this Bill before the House for Second Reading, I begin by outlining the Government’s approach to the European Union. When the coalition Government took office, we set out in our programme for government that we would pursue an “activist approach” to our engagement with the European Union. Since taking office, we can lay claim to a number of positive achievements in driving forward EU action. We led calls to set up free-trade arrangements in Pakistan, following the terrible floods there last year, and we have supported the free-trade agreement with South Korea. We have been at the forefront of the group of 25 member states that are keen to pursue enhanced co-operation in the field of intellectual property and, like the previous Government, we continue to be a prominent supporter of further enlargement.
My right honourable friend the Prime Minister has been vocal in calling for effective EU action in the neighbourhood. Recent attention, as we all know, has focused on the countries of north Africa, but we also want to ensure positive action with the eastern partnership countries—in both cases, supporting the EU’s work to foster security, democracy and good governance.
Looking ahead, there are clearly great challenges for the European Union—for example, in growth and global competitiveness. Action on better regulation and widening further markets in services, energy and the digital economy could do much to help to lift our own economic prospects at this time. The EU should also perform more efficiently—for example, in connection with its budget.
However, we also need to tackle the clear evidence, accepted on all sides of the political debate, of a growing disconnection between the people of this country and the European Union. This disconnection exists in our understanding of, and engagement with, the European Union and in popular consent for the decisions taken on behalf of the people of this country by successive Governments.
I see the Bill as strengthening our position, role and effectiveness as a member state of the European Union and as contributing to the wider aim of helping the European Union to modernise and to rest its authority more solidly on public and popular consent. With this legislation, we are plainly acting here in the spirit of the Laeken declaration in seeking to bring the EU closer to its peoples. That seems to be a timely and appropriate aim for the era in which we live. There is no doubt that British people feel shut out and isolated from the business of the European Union. Although they can vote to keep their favourite competitor in a reality TV show or on whether to have a directly elected mayor in their town or city, they have not been able to have a say on whether the Government should agree to confer on the EU further powers to act.
Therefore, in accordance with this Government’s wider agenda to shift power from Whitehall and Westminster to the people, and in accordance with the broader aspiration with our other EU partners to bring the EU closer to the people, we propose to shift power from the centre to the British people for decisions on whether powers should be transferred to the European Union. That is the primary objective of the legislation before us today.
Parliament’s ability to hold the Executive to account on EU decisions has also been limited and there have been many criticisms that there has not been enough examination of, or control over, significant decisions taken by the Government. Therefore, the Bill makes provision on the following issues. First, where a treaty change is deemed to transfer competence or power from the UK to the EU, it will in principle require the approval of the British people in a referendum, in addition to approval by Parliament. Secondly, parliamentary approval of treaty changes in all cases will mean by Act of Parliament, even those changes agreed under the so-called simplified revision procedure. Thirdly, any agreement to use certain of the so-called self-amending or passerelle clauses of the treaties will also require a referendum as well as an Act of Parliament in cases where there would be a transfer of power from the UK to the EU. Of course, that assumes that the Government of the day wish to support the use of a passerelle. Fourthly, any proposal to use other passerelle clauses that do not transfer power or competence from the UK to the EU will still require enhanced parliamentary approval, by an Act of Parliament or a positive resolution of both Houses of Parliament.
The Constitution Committee of this House published its report on the Bill last Thursday. I thank the committee for its careful consideration of the Bill in advance of today’s debate. I welcome a number of the report’s conclusions, in particular those welcoming the provisions seeking to enhance parliamentary control over key decisions. That is very valuable. Another of the—
Lord Richard
It is very kind of the Minister to give way so early in his speech and in the debate. Perhaps he may be able to help us. When dealing with subjects for a referendum under Clause 4, he said that “in principle” certain subjects would attract a referendum. I do not know what those words mean. Do they mean that some discretion is left in relation to Clause 4 cases? Could the Government say, “We’re not going to have a referendum”? Or does it mean what it appears to mean—namely, that there is an automaticity in the process and that, if the issue falls within the terms of the clause, there must be a referendum?
Lord Howell of Guildford
Yes, I will be able to help the noble Lord on the meaning of “in principle”. He is quite right to spot that those words indicate that there are exceptions. I will explain exactly what those exceptions are. Briefly, they cover treaty changes that might not pass the significance test, which I shall explain later and help him on, and treaty changes that do not affect this country at all. I shall come to those in great detail and will be able to help him in a way that will satisfy him completely.
Another of the committee’s conclusions, consistent with its earlier inquiry, is that referendums in the United Kingdom should be reserved for matters of significant constitutional importance and that some of the matters subject to a referendum under the Bill could lead to numerous and costly referendums on small issues. I am not sure that I agree with that. First, the coalition Government have made a clear commitment that we will not agree to any treaty changes that transfer power or competence from the UK to the EU for the duration of this Parliament. Secondly, and more importantly, any treaty change is very unlikely to focus on single or individual transfers of power, for the simple reason that it must take into account the arduousness of ratifying treaty changes across all member states, of which we have vivid experience. The Lisbon treaty took 23 months to ratify in all 27 states and we expect a similarly lengthy process with the current treaty change on the eurozone’s stability mechanism and with future accession treaties. We do not believe that there is an appetite in the EU or in the member states for a further round of treaty changes that would transfer further powers, particularly on individual issues. That is our view on the matter.
Clauses 2 to 5 make provision for the process to be undertaken in the event of future treaty changes. I want to explain this and many other aspects in some detail and I hope that your Lordships will be patient with me. Clauses 2 and 3 are broadly similar but concern treaty changes agreed under the ordinary revision procedure and the simplified revision procedure respectively. Both clauses provide that all future treaty changes require parliamentary approval by Act of Parliament. At present, changes under the simplified procedure require only a positive resolution of both Houses of Parliament. Therefore, the first change that the Bill introduces straightaway is an enhancement of control in the case of so-called Article 48(6) decisions. Both clauses also provide that, where a treaty change of either type would also transfer power or competence from the United Kingdom to the EU, such a change should also be approved by the British people in a referendum. There is one exception to this—the so-called “significance condition” in Clause 3, which, as I indicated, I shall come to in detail in a moment.
Clause 4 sets out the detailed criteria that the Government of the day would have to apply to determine whether a transfer of competence or power would occur under a future treaty change. The Government make no apology for the complexity of the provisions. We want to make it clear for Parliament, the British people and, indeed, our EU partners and the EU as a whole where a referendum would be required under the Bill. We feel that a short, vague statement would leave any future decisions more open to challenge in Parliament and the courts. It would do little to increase the transparency of decision-making in the EU, which forms a fundamental part of the disconnection of the British people to these decisions—a matter about which the whole House is rightly concerned.
Whereas the principle of competence is fairly well defined in the EU treaties, the principle of power is not. Therefore, for the purposes of this legislation, I shall set out what we mean by a transfer of power. First, it means the giving up of a UK veto in a significant area of policy, because that would mean that the UK would lose the ability to block a future measure under that treaty article. Some of the vetoes in the treaties are in areas that all sides of the House consider important and sensitive—for example, foreign policy, tax, justice and home affairs. It is, and must be, right that any treaty change that would transfer from unanimity to qualified majority voting the way in which decisions were taken in those key areas of policy should require the consent of the British people before the Government could agree to such a change. These are set out in Schedule 1 to the Bill. We do not propose to hold a referendum over more minor or technical vetoes, such as any future agreement to change the number of representatives in the Committee of the Regions. The Government have therefore taken a balanced approach in deciding which vetoes should be subject to a referendum.
The second way in which power, which we are now talking about, would be transferred would be by granting an EU institution or body, through treaty change, a new ability to impose further obligations or sanctions on the UK or on individuals and organisations within the UK. It is this particular point on which, in the case of the simplified revision procedure, a Minister can determine that a future treaty may not be significant enough to require a referendum and instead rely on the requirement for parliamentary approval by Act. This is what is known in Clause 3 as the significance condition. We have provided for this test as we obviously recognise the need to be able to distinguish between important and minor changes. Therefore, we are providing a workable, sustainable solution to prevent referendums from being held on matters that we could not justify to the British public as having such significance as to merit a referendum—for instance, on giving an EU institution the power to require special statistics from a UK body or something of that nature.
Lord Higgins
I am sorry to interrupt my noble friend. We have recently had a great many debates on referendums and, for the first time ever, we have created a precedent whereby a referendum—that in relation to the AV Bill—will be mandatory. All previous referendums have been advisory, rather than mandatory. We also had a long debate on what the turnout needed to be, and so on. Could my noble friend tell us, in regard to this Bill, whether it is proposed that the referendum should be mandatory or advisory?
Lord Howell of Guildford
These referendums are mandatory. The Bill requires that these transfers of competence away from this nation to the European Union in these very important and fundamental areas cannot take place without the approval of a referendum. I hope that that clarifies the matter.
Lord Hannay of Chiswick
Will the noble Lord reflect on his use of the words “competence” and “power”? He seems to be talking about cases where there is already a competence and a power to the European Union but where the decisions have to be taken by unanimity, and that that might be changed to qualified majority. I readily understand that that is a significant change, but it is not the granting of a power or competence to the European Union; it is already there. I am sorry, but I think I am right in saying that he is misusing those words all the time, as he is with the word “veto”, which is not a word known to European legislation. One either takes decisions by unanimity, in which case all member states have to agree, or by qualified majority.
Lord Howell of Guildford
I do not think I agree with the noble Lord and I shall try to explain why in my remaining remarks. The word “competence” is of course very clearly defined in the treaties. There is no need to try to unravel that because it is defined in the treaties themselves. I agree that the word “power” is more difficult and I have been dealing with that. On removing the ability to veto, it may be that those precise words are not those to be found in the treaties but the action is clear enough. The removal of the ability of this country to veto certain proposals, so that they do not go to QMV, is a very clear adjustment or in some cases a surrender of power. I would not have thought that there was any difficulty about that.
Perhaps I may proceed with the explanation. I was saying that a prime example of a treaty change where we are not affected is the eurozone stability mechanism. The third is a treaty change which merely sought to codify EU practice in relation to the previous exercise of an existing competence.
In all cases, any future treaty change will need to be considered according to a set process, provided for by this legislation. In accordance with Clause 5, a Minister of the Crown would be required to make a statement within two months of a treaty change being agreed at EU level. That ministerial statement will have to give reasons why the treaty change does or does not require a referendum, by reference to the criteria set out in Clause 4 of the Bill. Like any ministerial decision, it will be open to any member of the public to challenge the Minister's judgment in that statement through judicial review. An Act of Parliament would then be required in all cases of future treaty change. So the possibility of judicial review by the courts does not displace the role of Parliament, but offers an additional safeguard for the people to hold the Executive to account.
The EU Bill would also give Parliament greater control over whether the Government can agree to use of the self-amending provisions of the Lisbon treaty, which those of us who were here a few years ago will recall very well. Those decisions, known as passerelles or ratchet clauses, allow for modifications to the EU treaties without recourse to formal treaty change. Because of the lack of a universal definition of what constitutes a passerelle, and because the Government's aim is to ensure that our proposals are as clear as possible to Parliament and the public, we have set out explicitly which treaty articles would require additional levels of control.
As I made clear earlier, Clause 6 provides that any proposal to use passerelles which would entail a transfer of power or competence from the UK to the EU would require a referendum as well as parliamentary approval by Act. There are two broad categories of provision in Clause 6. The first is the passerelles, which enable the European Council to decide to remove a veto in an area we consider to be significant and where we have made equivalent provision in Schedule 1: for example, social policy, the environment, common foreign and security policy and EU finance. Secondly, there are five specific decisions involving a transfer of power or competence, for example, a common European defence or participating in a European public prosecutor's office.
Clause 7 makes provision to require that any proposal to invoke one of the passerelles that would not involve the transfer of power or competence from the UK to the EU should nevertheless be subject to primary legislation. Clause 8 makes provision for specific parliamentary controls over any future use of the so-called broad enabling clause in Article 352 of the treaty, well known to many of us, on the functioning of the European Union.
Clause 9 makes specific provision for three passerelles in the field of justice and home affairs. The UK enjoys a protocol in respect of this field which allows the Government to decide on a case-by-case basis whether to opt in to a justice and home affairs measure. We have provided that a Motion would need to be approved in both Houses before the Government could opt in to one of those measures. Once the negotiation has then taken place on the proposal, if it is acceptable to the Government, an Act of Parliament would then be required before the Government could agree finally to the proposal in the Council. This provision does not apply to all justice and home affairs opt-ins, only to those passerelle clauses listed in the Bill which, if used, would allow EU powers to expand within the scope of the competence already conferred on the EU in the treaties.
There are some additional proposals which would require parliamentary approval by passing a Motion in both Houses rather than by an Act. These are provided by Clause 10. There are treaty articles which modify the composition or rules of existing institutions and, for the most part, are subject to QMV.
Lord Clinton-Davis
Which other members of the EU are prepared to go down the route which the noble Lord recommends?
Lord Howell of Guildford
Different member states have different patterns, including, as the noble Lord will know very well, elaborate referenda procedures, all of which take a very long time. The noble Lord will also be familiar with the German constitutional court and with other constitutional provisions in other member countries. This may be too general a comparison, but I think he will agree that most countries have somewhat more elaborate provisions and controls through constitutional courts and referenda requirements than we have had hitherto in this country.
As I was saying, there are some additional proposals which require parliamentary approval by passing a Motion in both Houses. These are provided by Clause 10. A vote in both Houses is therefore a practical solution to enable Parliament to have an appropriate level of control.
I hope not to detain your Lordships very much more, but there are one or two final matters which it is right to put before you.
Lord Richard
I am grateful to the Minister for giving way. He will realise that this is a rather complex Bill, and we need to hear the expert opinions of the Government on it. I want to come back to the point that I made a little earlier, which he has not answered. What did he mean by “in principle”? If he looks at Clauses 3(4) and 4, he will see that the exemption condition or the significance point—they are the same thing—can only apply where,
“the decision falls within section 4 only because of provision of the kind mentioned in subsection (1)(i) or (j)”.
Paragraphs (i) and (j) are perfectly clearly spelt out in Clause 4. What happens if it is not in paragraphs (i) or (j)? Presumably there is no question of significance or government discretion. There is no question of it being a decision for a referendum in principle. At that stage, if it is outside paragraphs (i) or (j) it is mandatory. It is compulsory in those circumstances to have a referendum.
Lord Howell of Guildford
Yes, except, of course, where the other exemptions apply, in particular, the one I mentioned that the treaty, such as the one we discussed in this very House last night, does not affect the United Kingdom and there is no competence transfer or power transfer. In those, there is no referendum, but where there is a clear transfer of competence or power and the treaty is being changed to that effect, there is indeed a mandatory requirement for a referendum. It is on the major issues that I have described, which everyone in this House is concerned with. We have mentioned them all many times, so I shall just take one very topical one: should we join the eurozone? We feel it is right that the people should be consulted through a referendum and so do, I think, the majority of people in this country.
We also feel that it is right that at the lower level, where we are talking about matters being handled by an Act of Parliament rather than just a resolution through the House, it is right, and the Constitution Committee agrees with us, that there should be more effective parliamentary control over what is happening and the passing of powers and competences. I think the position is as I described it in considerable detail to my noble friend. If I did not satisfy him, and I suspect I have not, there will, no doubt, be plenty of opportunity in Committee to go through these things in even more minute detail than I am going through them now.
I want to refer to Clause 18 because it will be recalled that the coalition set out in our programme for government that we, the coalition, would examine the case for a United Kingdom parliamentary sovereignty Bill. Following that examination, the Government resolved to include a declaratory provision in this Bill which makes it clear that EU law has effect in the UK legal order for one reason only; namely, that that authority has been conferred upon it by Acts of Parliament and that its authority lasts only for as long as Parliament so decides. This is a principle that to date has been upheld consistently by our courts.
Nevertheless, in recent years, legal and constitutional academics and others have suggested that the doctrine of parliamentary sovereignty has been eroded by, among other things, our membership of the European Union. Put another way, European law has now acquired an autonomous status within the UK legal order independent of the will of Parliament through its Acts. This argument was advanced most vigorously by the prosecution in the so-called metric martyr's case—Thoburn v Sunderland City Council—in 2002. On that occasion, the Divisional Court rejected the plea. In order to guard against the risk of any such argument gaining credence in the future, we have decided that it would be beneficial to place it beyond speculation that directly effective and directly applicable EU law owes its status within the UK legal order because statute has provided that this be so. The clause is declaratory, but lays down a firm marker about the sovereignty of this Parliament.
Finally, I reaffirm our firm belief that this legislation would have a positive impact for the people and the democratic governance of this country. We also believe it would help address the democratic deficit across the whole of the European Union today. The Government are clear that this legislation will not have any adverse impact on the influence or the engagement of the United Kingdom in the European Union. On the contrary, colleagues in the EU have agreed that it is for member states to determine how they consider and approve key decisions. The President of the European Council made precisely this point on a recent visit to London. Although they have other constitutional frameworks—this meets the point made by the noble Lord, Lord Clinton-Davis—other member states have similar provisions to those in this legislation. Several have referendum provisions in specific circumstances and, as I said earlier, the German Parliament has a series of provisions to approve a similar set of passerelles as those listed in this Bill.
There is no suggestion that those provisions in other member states pose a hindrance to their influence, in particular in the case of Germany, and we do not accept that this will be the case with the United Kingdom either; on the contrary, as I outlined, the Prime Minister continues to lead the Government’s close engagement with our European partners on those areas of policy where the EU can make a positive difference to the people of this country. Nor would this Bill hinder the day-to-day business of the EU. The provisions of this legislation do not extend to those items of legislation that are proposed under the existing competences conferred on the EU under existing treaties save for those proposals involving passerelles listed in the Bill. These decisions remain, of course, within the scope of our existing parliamentary scrutiny arrangements.
This legislation represents a significant step forward in ensuring sufficient parliamentary and public control over the key decisions taken by the Government in the EU.
Lord Kerr of Kinlochard
I am grateful to the Minister for giving way. He passed rather rapidly over Clause 14, so perhaps I may take him back to it for a second before he sits down. I find it very puzzling. If, as most of us believe, parliamentary sovereignty is absolute, Clause 18 is not necessary. If I am wrong and parliamentary sovereignty is not absolute but could be overruled by another legal order, then nothing that we say in this Bill or this Act could change that. So Clause 18, surely, is either superfluous or ineffective.
Lord Howell of Guildford
That is a good try, but it does not quite meet the point that what we are trying to do is put the principle into statute law rather than common law. It is a change in that degree; but, otherwise, I fully concede that it is declaratory and intended to reinforce the point, which is widely but not totally accepted. So it does make some difference. However, if the noble Lord is saying that it is not a decisive, world-shattering, course-altering piece of legislation, I would have to agree with him.
I was saying in conclusion that this legislation represents a significant step forward in ensuring sufficient parliamentary and public control over the key decisions taken by the Government. The Government’s clear aim is that this will become an enduring part of the United Kingdom's constitutional framework. It will serve to re-engage the people with the decisions taken in their name. It will give greater democratic legitimacy to the pursuit of the UK’s objectives as a leading member of the European Union and will play an important part in the necessary increase in the democratic legitimacy of the European Union as a whole, not just among the people of this country but among the people of all the member states of the European Union. This is all part of enabling us, the British, to play an active and activist role in the European Union, which is, we believe, clearly in this country's national interest.
This Bill has received considerable and considered scrutiny from another place. The House will note that during that scrutiny this legislation was unopposed both on Second Reading and on Third Reading and that no amendments were proposed in Committee or on Report which affected the fundamental provisions of the legislation. The EU Bill had the support of all sides of the other place. I am therefore hopeful that this legislation will receive similar support from all sides of your Lordships' House. I therefore commend the Bill to the House and beg to move.
Baroness Symons of Vernham Dean
My Lords, I thank the Minister very much for the way in which he introduced the Bill, particularly for the painstaking explanations and the courtesy that he showed to the House in the way in which he gave them. However, as an Opposition we want to make our view clear from the start: this is a poor Bill; it is an unnecessary Bill; it is a political Bill; it is a Bill which is primarily about the politics of the coalition Government, not a Bill about Britain or about Europe. We believe that this is a bad Bill, and we shall do everything we can to improve it.
Britain’s relationship with Europe is important. It is an issue which this House has repeatedly considered in various ways over the years and on which the Members of this House have focused many times. The quality and number of speakers on today’s list indicates that it is an issue on which the House wants to focus again today. On these Benches, the hope is that the Minister has come with an open mind and is prepared to listen to this House, and that the Government will be open to the improvements that we hope your Lordships will make to the Bill as it moves through the House. These are our hopes, but whether they will be realised is another matter.
The Bill is primarily a political Bill trying to solve a political problem. Our concern is that, despite the best efforts of the Minister, whom this House holds personally in great respect and affection, politics and in particular the politics of the coalition will get in the way. That this is primarily a political Bill is made particularly clear by the context in which the Bill was generated. The manifestos from the three major political parties in last year’s general election set out that context clearly. The Labour policy on Europe said:
“We are proud that Britain is once again a leading player in Europe. Our belief is that Britain is stronger in the world when the European Union is strong, and that Britain succeeds when it leads in Europe and sets the agenda for change”.
At the election, the Liberal Democrats largely agreed with us and promised to,
“put Britain at the heart of Europe, to ensure we use our influence to achieve prosperity, security and opportunity for Britain”.
The Conservatives took a different, largely Eurosceptic approach: they promised a series of referendum locks based on the central governing notion that,
“the steady and unaccountable intrusion of the European Union into almost every aspect of our lives has gone too far”.
As we all know, the election result was inconclusive. On Europe, neither party with pro-European views—that is ourselves and the Liberal Democrats—won the mandate of the people. We on these Benches lost the election—that is plain and incontrovertible—but so did the Liberal Democrats and, despite the propitious circumstances favouring their party, the Conservatives also lost. The result was a coalition Government formed between the losing Conservatives and the losing Liberal Democrats. Neither party had a mandate from the electorate in terms of the people’s approval of their manifestos. The coalition document that was published on 20 May 2010, The Coalition: our programme for government, has no mandate either from the British people. In some areas—AV, for instance, or nuclear power—trying to join the two parties has proved too much but the effort in other areas, such as Europe, has been almost as impossible.
From the start of the document’s proposals on Europe and the EU, the parties were trying to bridge the unbridgeable. They said:
“The Government believes that Britain should play a leading role in an enlarged European Union, but that no further powers should be transferred to Brussels without a referendum”.
This Dr Dolittle’s pushmi-pullyu act is at the heart of today’s Bill. Not surprisingly perhaps, given its genesis, the Bill is, I am afraid, not the most distinguished that this House has had before it. Many aspects of the Bill are overly complex; many simply repeat the status quo. For example, Clauses 2, 3, 6 and 7 state that a treaty or treaty amendment is not to be ratified unless, among other things, the treaty or amendment is approved by an Act of Parliament. That is already the case. Indeed, it is a clear principle of international law, and our involvement in the European Union in particular, that a treaty or treaty change cannot be ratified or have force in this country until it is first recognised by an Act of the UK Parliament.
There are two issues in the Bill on which we as an Opposition wish to concentrate: namely, sovereignty and the referendum mechanism proposed by the Government. For the Eurosceptic right in the Conservative Party and beyond, sovereignty in relation to Europe is indeed a talismanic issue. Accordingly, the coalition document tries to look specific on the issue of sovereignty by stating:
“We will examine the case for a United Kingdom Sovereignty Bill to make it clear that ultimate authority remains with Parliament”.
Clearly, the proposed UK sovereignty Bill did not pass that examination because the measures in front of your Lordships today are a long way from a stand-alone UK sovereignty Bill. The Government apparently believe that many people in Britain feel disconnected from how the EU has developed and from decisions being taken in their name. We know this, of course, from the helpful fact-sheet on the Bill that the Government have produced. The fact-sheet claims that, by rolling out control on these decisions to the people of Britain by means of a referendum, the Government will be reconnecting the people to the European Union.
The reality is that this Bill is not about disconnection from Europe but about politics—the internal politics of the coalition and the internal politics of the Conservative Party. Moreover, the reality is that the Liberal Democrats have an unblemished and impressive track record on Europe, which they have been required to undermine through their participation in the coalition. In contrast, the Conservative Party, when dealing with Europe, is and remains a party which has a fault-line between the pro-Europeans and the prominent Eurosceptics. That fault-line helped to bring down John Major’s Government and the party has tried again and again to paper over it. The resulting reality in the Bill before us is what the coalition leadership judges to be a necessary move to appease the right-wing Eurosceptics in the Conservative Party through the transparently unnecessary Clause 18 on sovereignty, which the Minister has been attempting to explain, while also attempting to keep the Europhiles in the Liberal Democrat Party at least moderately happy—who, I am bound to say, are very, very moderately happy.
The Government claim that there is confusion in this area, but such claims are not borne out by the facts. Let us take the celebrated court case of Thoburn v Sunderland City Council, from which the Minister quoted a few moments ago. That case made it clear that there was no threat to the doctrine of parliamentary sovereignty. Moreover, the European Scrutiny Committee concluded that the legislative supremacy of Parliament was not under threat from EU law. The Constitution Committee of your Lordships’ House has said:
“Clause 18 is self-evident: it restates, but does not change, the law”.
So the major reason we can see for restating these principles is to appease the few Eurosceptics on the Tory Benches who genuinely fear that the influence of the Liberal Democrats on the coalition will be decisive.
Lord Vinson
Does the noble Baroness accept that there are more than a few Eurosceptics? Does she realise that all the polls in this country now show that over 50 per cent of the population of the British Isles are highly Eurosceptic and want to see changes?
Baroness Symons of Vernham Dean
My Lords, what I am trying to do here is talk about what is going on in the House and in Parliament at the moment. There is widespread Euroscepticism. Different polls produce different results, but I fully acknowledge that there is Euroscepticism, and I thought that the Minister made those points clearly in his remarks. But I am addressing what is happening in Parliament.
Surely reciting the law on parliamentary sovereignty is a more appropriate activity for first-year law students than for Parliament itself. It is basic civics. It is already the law. It is just about the most basic constitutional point in British law. Parliament and the British legislative process should not be used as a piece of Conservative Party sticking plaster which the party opposite judges necessary to keep its own Eurosceptics at bay.
I turn now to the referendum issues. Part 1 proposes restrictions on amendments to the Treaty on European Union and to the Treaty on the Functioning of the European Union. It is envisaged that there will be a referendum restriction in the long list of cases in Clauses 4 and 6. These lengthy lists do not include the controversial issue of enlargement. For example, where a country wishes to join the EU, Clause 4(4) explicitly removes that subject from deliberation by the UK public unless the decision otherwise fulfils one of the listed criteria. Surely a decision which will bind our fate with the people of another sovereign country—where we will share borders, enforcement and, potentially, as the Irish experience demonstrated, even the financial fate of that country—needs greater consideration.
At the heart of this issue is what the Government call the “referendum lock”. This would ensure that when new competencies or powers pass from the UK to the EU there would be a requirement for a UK-wide referendum and primary legislation before a Minister can agree to the new powers going to the EU. It is a very powerful mechanism. Put succinctly, the Government have to hold a referendum only if they support the change. If they do not, they can block the change during negotiations with EU partners because, of course, all treaty changes of this nature can be agreed only by unanimity in the European Union. So by withholding UK agreement, the treaty changes are blocked—and blocked for everyone. This applies to treaty revisions, as we have discussed, to some bridging or passerelle clauses and other specific decisions under EU treaties.
Clause 4 specifies 13 different kinds of decisions which would trigger a referendum; otherwise, exemption from the referendum lock requires primary legislation to approve the decision that the issue under consideration is not covered by Clause 4—at least that is how I understand it. However, where a Minister decides the referendum lock is not appropriate under Clause 4, the fact-sheet states that,
“Parliament would have the opportunity to scrutinise the Minister’s assessment during the progress of the Act”,
and could add a referendum requirement at that stage. This is a very complicated procedure. There are many specifications and many treaty provisions and, as our own Constitution Committee has rightly said, the highly technical nature of the lock mechanism,
“hinders rather than helps transparency and accessibility in the law”.
This is indeed fertile ground for legal wrangling and judicial review and gives scope for many lengthy parliamentary battles between Europhiles and Eurosceptics about what amounts to competence. Is this really the way to rebuild the trust of the British people and to reconnect them with EU decisions? Will the British public really thank us for asking them to consider the extended application of a passerelle clause in a referendum, rather than doing our job in Parliament through scrutiny and decision?
The implications of the use of referendums in this Bill are unprecedented in terms of UK constitutional practices and the implications for Parliament. By means of the Bill, which is meant to enhance the relationship of the British public with the EU, the Government are in reality changing the terms of engagement between Parliament and the electorate. As the Constitution Committee made clear in its 2010 report on referendums, there are of course issues on which it must be right to hold a referendum—for example, leaving the EU, adopting a written constitution and abolishing the Monarchy or either House of Parliament—but there must be serious doubts about what the Government are proposing in the Bill. These are not fundamental constitutional issues which are appropriate for a nationwide referendum. Moreover, these provisions are contradictory to the Government’s own stated belief that referendums are most appropriate to issues of fundamental constitutional importance.
Many commentators—and, I suspect, some in this House—do not believe that there will be referendums and that a far more likely outcome is that the Government will recognise the problem early on and simply block more and more EU proposals at the negotiation stage. Some of your Lordships may welcome that, but others will see that there are real dangers involved in this country becoming increasingly isolated and pushed to the margins of the EU debate, pretty much as we were before the 1997 election. I have heard Ministers argue that the referendum lock will strengthen our negotiating position in Europe. It is possible that it may, initially, but after the negotiation point ploy has been used some three, four, five or six times, I doubt that it will be anything like as effective. Our partners will move on, leaving us shouting ineffectively from the touch-line. There is a real risk in all this of voter fatigue and low turnout which will detract from the important decisions such as the ones that this country is being asked to make on 5 May. For our part, we on these Benches will certainly seek improvements to the Bill, including a sunset provision and a limitation on the types of matter that would trigger a referendum. We shall also consider the nature of any referendums.
Lord Vinson
My Lords, could I remind the noble Baroness that her party promised a referendum on the Lisbon treaty and then failed to give it. Is that not a perfect example of how people lose confidence in the governance of their country?
Baroness Symons of Vernham Dean
We did not promise that. We promised that we would have a referendum if there were a written constitution. The noble Lord may not have sat through those debates, but I am afraid that the House agreed with me and not with him on that point.
Finding compromises and striking balances is at the heart of what this House does both as part of the British legislative process and in its role as one of the key checks and balances in the British constitution. The House knows a compromise and a balance when it sees them but this Bill is a confusion not a compromise, a botch not a balance. Britain deserves better than this Bill. Europe deserves better. Liberal Democrat Members of this House who have a proud record on Europe—including those who, 30 years ago this week, left the party on the Benches behind me largely on this issue—certainly deserve better. We shall try to give that to them.
Lord Phillips of Sudbury
My Lords, the noble Baroness made the comment earlier that she did not think that the Bill would help reconnect British public opinion with the EU. What does she suggest would?
Baroness Symons of Vernham Dean
During our debates on the European Union in the past, the noble Lord has himself put forward quite a few suggestions on how there could be better reconnection. There could be better reconnection through schools and in the sort of things that the noble Lord has suggested in the past, which I readily acknowledge were not taken up, of getting more information to people about the way in which the European Union can work to their advantage. The sheer complexity of what we are being asked to do and the potential proliferation of referendums under this Bill—if there are not referendums, that will be because of the use of the blocking mechanism—is not going to reconnect the people of this country with Europe at all. I hope that the noble Lord agrees with me.
Baroness Falkner of Margravine
My Lords, I rise with some clear indication of how interesting the passage of the Bill will be in this House, given that my party’s name has been mentioned so many times already before a word has been spoken from these Benches. It will be an amusing time.
For me, speaking on this EU Bill is somewhat daunting in the knowledge that the noble Lord, Lord Liddle, winds up for those on the Labour Benches and my noble friend Lord Wallace for the Government. By way of background, I took over as the Liberal Democrat’s EU policy officer in the early 1990s in the aftermath of the Maastricht treaty. It was in that capacity that I learnt from both the noble Lord and my noble friend how the EU actually worked in practice. I should say about the noble Lord, Lord Wallace, that I learnt even more by proxy from Dame Helen Wallace—the author, along with my noble friend—of several authoritative texts on the EU. Speaking alongside this cast of characters on the Bill gives one a sense of déjà vu, but I am sure that we will revert to some of the healthy arguments in the hours ahead about the extent to which the public in the UK have an appetite for the European Union.
If we on these Benches are known for anything it is for our internationalism and our support for our neighbours in Europe. On our Benches are several distinguished noble Lords who are not only expert in their knowledge but undiminished in their support, going back to the days of the EU accession referendum and before, and who will see the changes proposed in this Bill as matters of principle affecting our ability to be active members of the European Union. We would expect nothing less. We will also be joined by newer noble Lords on these Benches, who I suspect will bring a freshness and practical experience of selling Europe to the general public in elections. We look forward to working to improve this important piece of legislation from both aspects.
This is an important Bill. The coalition’s programme for government said that it,
“believes that Britain should play a leading role in an enlarged European Union, but that no further areas of power should be transferred to Brussels without a referendum. This approach strikes the right balance between constructive engagement with the EU to deal with the issues that affect us all, and protecting our national sovereignty”.
It is undoubtedly a compromise but, like many compromises, despite what the noble Baroness, Lady Symons of Vernham Dean, said, it is something that the British people, who are rather more pragmatic than driven by ideology, can live with. Perhaps that is why the election resulted in the way it did.
Lord Anderson of Swansea
In using the words,
“constructive engagement with the EU”,
the noble Baroness’s memory might go back to the fact that the Conservative Government of that time talked about constructive engagement with apartheid South Africa.
Baroness Falkner of Margravine
My memory goes back even further to when the Labour Party was itself completely riven on what approach it might take to the European Union, which was rather before the apartheid saga.
The coalition programme looks forward to forthcoming legislation with a view to increasing parliamentary scrutiny of new powers and competences, and looks outwards to ensure that the demands of democratic engagement are upheld. It goes further than before by enshrining in law that for significant changes sovereignty should be ceded by those who own it, the citizens or people of our country. It is therefore a far cry from the wording in the Conservative manifesto, which stated:
“We will work to bring back key powers over legal rights, criminal justice and social and employment legislation to the UK”.
The Bill takes the treaties, as amended most recently by Lisbon, as the starting point. While the coalition agreement gives a commitment to examine the EU's existing competences, and particularly to work to limit the application of the working time directive, this is not in my view a dramatic change. In fact, in an age of austerity, it might seem sensible to review the need for greater labour flexibility. However, it does raise the question of what other competences there will be and when. I wonder whether my noble friend could explain when winding up the debate the timeframe to which the Government are working in their examination of competences, and what role Parliament will play in scrutinising their conclusions.
Let me now turn to the substantive parts of the Bill. Clauses 2 to 5 will no doubt attract considerable scrutiny, as they deal with the procedure to be followed for treaty amendments and changes. They change the current situation in now requiring an Act of Parliament after the Government have signed up in principle to the change. This will no doubt add a considerable time lag to EU decision-making. We had an example of a draft European Council decision only last night on the European stability mechanism, and I wonder what useful purpose might have been achieved by a country that is not in the eurozone holding up those that are in it doing something that tidies up an existing situation and seeks to put it on a permanent footing. The way in which we dealt with that last night would no longer be possible if these changes go through.
I accept that every change of treaty requires an Act of Parliament, and I am in no way opposed to that level of parliamentary approval for significant and substantive treaty changes. Yet I wonder whether raising the test for an Article 48(6) decision—the simplified revision procedure—as set out in Clause 1(5) is necessarily the way to go. Clause 4 sets out a rather long list of criteria whereby a future treaty change will be judged and changes the situation whereby qualified majority voting ensues. I understand that the list is so comprehensive due to our lack of a written constitution in the United Kingdom and therefore to the relatively open-ended possibilities of judicial review. Can my noble friend explain whether that is the rationale behind this prescription and, if it is not, why we are spelling out our parameters in such detail? Does that not reduce the flexibility of the Government of the day to evaluate each decision on its merits and to go forward on that basis?
I turn to that other area of controversy, the so-called use of the referendum lock. The potential use of referendums will cover large numbers of procedures, including ordinary and simplified revisions and passerelles. The Constitution Committee, in its report on the Bill, lists some 50 treaty provisions that might attract a referendum. I accept the Government’s premise that a significant disconnect has developed between the British people and EU institutions. In fact, I wrote a thesis in the early 1990s on British attitudes to European federalist integration, and that disconnect had been there for some decades before. The challenge for succeeding Governments is to improve education about the EU and its institutions rather than just lamenting the lack of support for them, as put out by noble Lords on the opposition Benches a few minutes ago.
As we moved to a federal settlement in the UK in the 1990s with the establishment of a Parliament in Scotland and an Assembly in Wales, one would have expected that we would have also taken the opportunity to talk of our rightful place in Europe. Yet the Opposition became obsessed instead with impregnable tests on the euro and whether the ill-fated constitutional treaty would get through. In the mean time, another generation has grown up knowing the European countries better than ever before but not feeling the common solidarity that should unite us, other than in the most instrumentalist manner.
That distrust of EU institutions now leads us to the logic of the referendum lock. As noble Lords will know, the Constitution Committee defines a limited set of conditions in which, in its opinion, a referendum would be warranted. The committee goes on to say that this Bill is a radical step-change in the adoption of referendum provisions. As a Lib Dem who was privy to several animated discussions in our own party over whether to commit to a referendum before joining the euro, I know how difficult it is to agree what constitutes a fundamental shift in power. I was proud of moving to that promise and am overall a supporter of referendums for significant changes. Other European countries have their own scrutiny and control mechanisms in place. I come from a view that every generation should be able to have a voice on the direction of its country’s stance on sovereignty. At this stage, I am not inordinately concerned about these clauses. As the Constitution Committee reminds us, Parliament could repeal or amend any or all of the control mechanisms established by the Bill, including the referendum lock provisions.
On the significance condition, therein will lie the practical issues of how frequently referendums will be held. First, let us be clear that this condition in the Bill will enable Ministers to judge whether a simplified revision procedure change that gives an EU body the power to impose sanctions, requirements or obligations on the UK would not require a referendum. If this reading is correct, can the Minister give us examples of the sort of changes he has in mind that would then fall under ministerial judgment under this test? In other words, what would he consider insignificant?
On the subject of referendums, my recall is that if a treaty change would have triggered a referendum, we would have had about five in the past 25 years. Does the Minister expect a similar number in future? The other contentious area—
Lord Sewel
I am grateful to the noble Baroness for giving way. She has touched on the difficulty of significance —of what is significant and what is insignificant—and has asked the Minister to give examples. Does that not hint at the real possibility that the difference between significant and insignificant will be before the courts virtually every time this issue comes up?
Baroness Falkner of Margravine
The Constitution Committee made clear in its report that this would not necessarily be a matter for the courts but a matter of political judgment. We will probably hear from the Minister in his closing speech, and I will leave it at that.
The other contentious area in the Bill relates to parliamentary sovereignty and the status of EU law. I know that this has exercised the other place considerably and that its European Scrutiny Committee has commented on this at length. Given the number of speakers in this debate, I will comment on Clause 18 as we deliberate on it in Committee.
I conclude by stating the obvious. Ultimately, the Bill is about a political perspective on how to protect the UK’s interests in the EU. It is not a political Bill, as the noble Baroness, Lady Symons of Vernham Dean, suggests, but it goes to the heart of political judgments about what is right by our country.
There are elements of compromise on which in our coalition, as I suspect there are in parties themselves, there are opinions on all sides. What is essential for us in this House is that in scrutinising this legislation we end up with a product that achieves greater confidence among the public in what their Government will and will not do in their name. We look forward to the Bill in that spirit.
Lord Kakkar
My Lords, from the outset I declare an interest as a practising surgeon and professor of surgery at University College. The matters that I wish to deal with are not as grand as the overall principles of this important Bill—I am grateful to the Minister for having outlined its important purpose in establishing an opportunity to reconnect our people with the European Union—but on matters of unintended consequences of past European legislation and regulation and how this or future legislation might better protect against these problems. I shall do so by giving examples from my own discipline and area of practice, that of medicine and healthcare.
We have heard mention of the European working time regulation, for instance. It is an important piece of legislation, designed to improve the safety of workers in the workplace and their rights overall by restricting working time to 48 hours. However, its application to the practice of medicine has led—in an unintended way, I believe—to detrimental effects on the training of our junior doctors. We hear stories continuously about the way, and I have experience of this, that it has eroded the training of those particularly in craft specialities, such as those like myself in general surgery, to the extent now that the training offered within a 48-hour week is quite inadequate and we are producing generations of doctors who potentially might not feel sufficiently confident in the structure of the way that we deliver healthcare in our country, compared with the delivery of healthcare in other European systems, to practise independently and provide the standard of service and care to patients in the National Health Service in future. That is clearly an unintended consequence but it could have serious implications.
Another example is the application of employment law, driven by the principles in legislation derived from Europe. It is good in many ways to ensure that there is a free movement of labour across the European Union, and that has brought many advantages to our country. However, it has created a serious and important problem regarding the end of medical school undergraduate education. By tradition, the first year of employment after graduating from medical school—the so-called “house job”, now known as the foundation 1 year—is a year where junior doctors take up a post under the continued supervision of the dean of their medical school. They have to complete that post before they can be fully registered with the General Medical Council and be in a position to practise independently in our country. However, because that first year is a year of employment, it must now be open to competition throughout the EU for applicant doctors from anywhere in Europe. As a result, we now run an increasing risk of our successful graduates being unable to find posts in their first foundation year because they have been taken by others. They will therefore not be able effectively to complete their undergraduate education, and will never be able to register with the General Medical Council and serve the people of our country. Again, this is an unintended consequence of previous legislation and regulation from Europe that has had a detrimental effect.
I turn now to the primacy of our regulatory body for medical practice in the United Kingdom—the General Medical Council. There is a European medical directive and it is a requirement that the Medical Act passed by this Parliament be consistent with the requirements of that directive. The directive covers several areas, such as defining what specialties exist in the European Union with regard to medicine, surgery and so on. It deals with the number of hours that are required for a recognised undergraduate medical course. It deals with the question of the duration of postgraduate training for doctors, surgeons and others. However, it also ensures that an EU national—a qualified doctor registered anywhere in the European Union—has the right to practise here, in the United Kingdom, by seeking registration with the General Medical Council. That, in itself, is fine. However, it also therefore prevents the General Medical Council determining the quality and content of the training schemes that those doctors have been subjected to. It prevents something that we all well recognise the importance of now—the ability to test the English language skills of those doctors before they come to practise in our country. As a result of that, there have been some serious problems—unfortunate events where our own citizens have died as a result of poor medical practice that could have been avoided if these unintended consequences had been foreseen. It is interesting that the General Medical Council is able to deal—
Lord Teverson
Can I just clarify that? Surely it is the responsibility of the employer to make sure that the person is competent to speak English and carry out their duty. They have the right to do that. It is surely a primary responsibility of any employer to make sure that the people they employ meet the standards of that organisation or business.
Lord Kakkar
Indeed it is but it is not always done. I was coming to the point that the General Medical Council has the obligation to do this for doctors who come from outside the European Union. It must ensure that they have the language skills, that they have sufficient competence in skills, and that their training programmes and undergraduate medical education are of a sufficient standard and quality.
Baroness Nicholson of Winterbourne
Will the noble Lord reinforce his point by endorsing the FAB exam, which has resulted in more than 2,000 Iraqi medical professionals staffing the National Health Service very successfully? Could the FAB exam be transferred to European Union member state applicants who come to the General Medical Council?
Lord Kakkar
Indeed it could. There should be consistency in the standards that are required for doctors to practise in our country. There is another point: if a practitioner registered in another European Union country is struck off, suspended or undergoing investigation by that country’s regulator, those regulatory authorities have no obligation to inform our own—the General Medical Council—that it has happened. A doctor from elsewhere in Europe, having qualified there and been registered here, could continue to practise while not being able to do so in their original member country. This, again, is unacceptable.
I make these points just to reiterate that, in trying to achieve the objective of reconnecting the people of our country with the European Union, the proposals outlined in the Bill are very important. However, it is also important to ensure that we protect the standing of the European Union in areas such as the practice of medicine and healthcare by ensuring that the problems we have experienced so far are not repeated in the future; and that, as a country, we overcome these problems so that the purpose of the General Medical Council—to protect our patients and ensure the highest standards—is not inadvertently frustrated by European legislation.
The Lord Bishop of Guildford
My Lords, in the light of the confusion and controversy over the ratification of the Lisbon treaty, some clarification of procedure for agreeing to our ratification of important European Union decisions and treaty changes becomes obviously desirable. Indeed, as the cross-party agreement on the need for a referendum on entry into the euro indicates, there appears to be broad agreement that key decisions should entail a referendum lock-in. I also welcome the extended provision for parliamentary decisions in relation to the European Union.
However, as the noble Baroness, Lady Jay, has said, commenting on her own Constitution Committee report, the rather extensive provisions for referenda could pose a significant challenge to our constitutional settlement in the long term. The sovereignty clause states what is already the case, as has been reiterated in your Lordships’ House this afternoon. EU law takes effect in the UK primarily by virtue of the European Communities Act 1972. Nevertheless, would not a large extension of the principle of decisions by plebiscite risk evacuating the principle of parliamentary sovereignty of real meaning?
Moreover, I would argue that referenda can work well for big things about which people feel passionately, but rather less, I suspect, for detailed, technical and complicated issues. We shall see shortly, for example, whether the public have a real grasp of the technical differences between the present electoral system and the proposed alternative voting system, and whether the latter will also be hopelessly confused with the proportional representation that others favour, as I fear. We shall see.
Granted the lamentable endemic low view of Europe in the United Kingdom, is there not a serious risk that extensive referenda on necessarily complex European issues matters could lead, as the noble Baroness, Lady Symons, indicated, through low turnout and referenda fatigue, to a multispeed Europe in which the UK is confined to the hard shoulder? In the context of debate on the Lisbon treaty, the Bill looks appropriate; but could it have unintended negative long-term effects?
I have another question of a rather different character. At the time of the Lisbon treaty, application was made to the courts on the then decision not to seek a referendum. The cases were dismissed on the proper grounds that they were,
“an attempt to pursue a political agenda through the court”.
Yet the Bill at Clause 5, as interpreted by the Explanatory Notes, makes it clear that a ministerial determination on whether a treaty or amendment is “significant” would be open to judicial review. I would value the legal wisdom of your Lordships’ House in this apparent invitation to the Appeal Court or the Supreme Court to determine what the courts have only recently stated to be political questions.
To conclude, I reiterate that the Bill appears to be a necessary post-Lisbon debate clarification. However, I ask whether the apparently very extensive provision for referenda on complex issues may, if applied, put us on a slow train in Europe, while diluting parliamentary sovereignty in the longer term.
As the Government and the Minister have said that they do not intend to use the referenda provisions during this Parliament or, one understands, to use them widely, I am partly reassured. I would welcome further reassurance, but I still wonder whether the provisions for referenda are drawn too widely in the Bill as it stands.
Lord Howe of Aberavon
My Lords, it is ironic that I am speaking in this debate, which was opened by my noble friend Lord Howell. Many years have passed since we first addressed this question, at a time when he was handing over to me, or rather vice versa, the editorship of Crossbow in 1968. That distinguished journal is still with us. It published a 20-page supplement on the Rome treaty and the law, written by Dennis Thompson, which set out clearly the direct impact on the law of this country of accession to the treaty. There is no mystery; it has been there all the time. I congratulate my noble friend and the noble Baroness, Lady Symons, on their speeches, in which they addressed the problem with lucidity and balance, although without agreement.
I find myself dismayed by the persistent degree of schizophrenia implicit in the Bill, which is foreshadowed in the coalition agreement. Perhaps the coalition is by definition likely to suffer from schizophrenia. There are two themes running through this. First, there is the oft-repeated proposition that we want Britain to play, in the words of the coalition agreement,
“a strong and positive role with our partners, with the goal of ensuring that all the nations of Europe are equipped to face the challenges of … global competitiveness, global warming and global poverty”.
The text echoes the comparable but much more dramatic phraseology of Winston Churchill in 1950, when he called on Europe to unite.
Alongside that encouraging part of the agreement is the negativity of two commitments. The first is that no further powers shall be transferred to Brussels without a referendum. That is an absolute, comprehensive proposition. The second commitment is to examine the balance of existing competences and limit the application in some respects, and so on. What emerges from that has been commended by some people on the basis that we will live in an atmosphere with a host of referendum locks. The phrase “referendum locks” distresses me in the approach towards referenda.
The noble Baroness, who has now returned to her seat, referred to the difficulty of understanding the purpose of referenda. All of us who are sincere about this would be anxious to see an enhancement of the understanding of the British people of what the Community is about and how it works. We have failed to deliver as much of that as we should over the years, although great statesmen have endeavoured to do so. It could be the case that referenda by the score would be instructive and educative, but I am doubtful about that in the technical context in which we live.
Referenda are not being commended in this legislation because of their constructive effect. I am afraid that they are there, in one way or another, as effective locks that illustrate the belief that the extension of European jurisdiction is more likely to be unwelcome than welcome. That is my anxiety, and that is why I am apprehensive about the concentration on them in the Bill. There is no reason, as several noble Lords pointed out, for concern or dismay about the nature of Community law as it applies to us and as it has applied since the 1972 Act. It was under Section 2 of that Act that the impact of Community law was established and has been sustained ever since. It has a direct application to this country to the extent specified. That is important for a very positive reason. It is not something imposed just on us. The heart of the treaty is that the body of Community law should apply throughout the Community. If it imposes obligations and rights on our country, so be it, because for the most part those rights and obligations are advantageous. However, likewise it imposes obligations and rights on our fellow member states and enhances the opportunity for the states to work together. That is the very concept of the single market.
Had it not been for that core provision for the direct application of Community law and our ability to handle that and negotiate on it through successive European Councils, it would not have been possible, for example, for my noble friend Lady Thatcher and me to go through various summit meetings and achieve by agreement and negotiation not just the easy—he said laughingly—propositions about recovering part of the “bloody British budget” but, more importantly, those in the Single European Act. We were not able to foresee every detail or pre-emptively to get the propositions reviewed domestically either in Parliament or in referenda; we were working forward, as has to happen in negotiations of that kind in that organisation.
Referenda can be used as a means of informing the British people or encouraging them to understand the way in which the European Union is working as Churchill hoped it would—enlarging and expanding our resources and our ability to work together, although that need not be seen as the dominant impression of the European Union. However, there might be adverse impacts in certain areas and in certain cases, which is why I am apprehensive about frequent and, in many cases, unnecessary referenda.
We had one referendum in 1975, which resulted from the fact that a succession of Heads of Government —starting with Churchill and going through to Macmillan, Heath and Wilson—all came to accept the need for Section 2 of the 1972 Act, which is reaffirmed in Clause 18 of this Bill. Until the 1975 referendum, Harold Wilson, who had challenged the concept of the 1972 Act—I made the winding-up speech at the end of that debate—had been trying to expound the proposition that it was quite unnecessary to embrace Community law into our own law, as we did with Section 2 of the Act. He had been advised to the contrary by distinguished lawyers such as Lord Gardiner and Lord Elwyn-Jones. It has always been necessary for that to be part of our agreement and that is where we are today.
I can see the importance of considering the possibility of referenda if one wants matters to be acceptable to the country when we are making negotiations, but I do not think that they play a really valuable part. I do not think that they can be justified on their educational role alone, but it is of course important, as my noble friend has pointed out, that, a fortiori in those circumstances, Parliament should understand what is being sought and agreed and what is going to happen. I suspect that sometimes in the past we may have gone to European Council meetings having been a little less than candid about what we were seeking to achieve in our pre-Council presentations to Parliament, largely because we did not know quite what we would be able to achieve.
It is certainly right that Parliament should be consulted and be allowed to intervene and there may be provisions in the earlier clauses of the Bill in which a parliamentary survey of what is going to be agreed and what has been agreed should be strengthened. I do not accept that with great enthusiasm. My fear is that the shower or flurry of clauses that require referenda mean that the referenda are going to be obstructive rather than instructive. That is why it is important for Parliament to be given a larger role as we move forward, building up the effectiveness of Community law and working together in the kind of Community that we would like to see.
However, I do not like the emphasis in the Bill—an emphasis not made, I hasten to add, by my noble friend —on having referenda locks. We do not need referenda locks. We may need some referenda considerations, but I suspect very few. We certainly need to ensure that Parliament is consulted and plays an effective role in the negotiations that take place. We need to exploit the existing conditions whereby Community law applies throughout the Community, to our advantage in many areas, in this country and in others, and the extent to which the Community can work as a collective organisation on behalf of the whole of Europe. If only it had been able to do so on the Iraq crisis, for example, how much happier we would have been.
Let us favour that and ensure that the Bill adds a positive component to what is necessary, but please let us not clutter ourselves with undue and unnecessary referenda in too many cases and too many places. I hope that that is not too simplified a summation of the way in which I think we should handle this important legislation.
Lord Clinton-Davis
My Lords, I am very happy to follow the noble and learned Lord because, when I was a Commissioner, he was enormously helpful when we met. The reason was that he cared about the European Community and still does.
Reference has been made to the debate in the House of Commons. Unfortunately, I do not think that the other place gave this Bill the consideration that it deserves. I do not share the view of the Bill taken by the noble Lord, Lord Howell of Guildford. I think that it is an abomination. It reflects a suspicion on the part of the Government about most of the things that the European Union does. In the other place, we had the usual suspects: John Redwood, Bill Cash and the somewhat ambiguous Foreign Secretary William Hague, aided and abetted by a minority of Labour Eurosceptics. They characterised the Bill as a “show Bill” and a “mouse of a Bill”, and the Foreign Secretary was depicted as being “all over the place”. Those criticisms are not entirely without foundation.
Of course, in the Commons, maybe a majority of the Conservative Party desire to come out of the European Union altogether or to render it insignificant. This Bill is not exactly a disappointment; it is exactly what many of us thought it would be: a smokescreen for those in government hoping to camouflage their true intent regarding the European Union.
In this House we have heard the noble Lord open the debate in a very calm and dignified way; it is exactly what we would expect. But does he really believe in this Bill? I remember when he unreservedly supported the situation of the EU and he wanted us to go in. Now he wants the reverse. Of course, I think Britain should adopt a decisive role in Europe, helping to mould it, particularly at this time when the EU could play a significant part in global affairs. In Europe, the Conservative Party has chosen to align itself with some extremely dubious people. That is not irrelevant; that shows how it really thinks. I am sure that the noble Lord, Lord Howell, cannot possibly approve of that alliance.
Where does the Liberal party stand in that regard? The Conservative Party in the European Parliament has left the European People's Party altogether, favouring instead what Chris Huhne once said were the “wackos and weirdos” in the Parliament. There the Conservative Party remains. Was that the pursuit of an “enlightened self-interest” which is writ large across its so-called European policy? That is what William Hague said. I do not believe it.
The Bill is short, but it has the capacity to be complicated, confusing and contradictory. Even from the Government's point of view, the ambition to initiate a referendum should be clear and decisive. Instead it is the very opposite. That has been reflected in our debate, particularly by my noble friend Lady Symons. That is no accident. It stems from the Government's attitude and confused stance towards the EU. The Government endeavour to satisfy both the antipathetic attitude of the majority of their supporters and the obvious requirement to be a worthwhile member of the EU. It is impossible to reconcile those objectives.
The Government are quite unable in the Bill to indicate when a referendum will be required. A mass of contradictions and difficulties have been raised in the debate today. We do not know whether Parliament or the courts will be able to determine that important issue. That is not an academic point; it goes to the very heart of what we ought to be debating today.
We should also be directing our concern to other vital issues, such as jobs, cross-border crime, trade and climate change—all essential matters in which the EU can play an increasingly salient role. In a world of blocs of power and influence, the EU must be heard on all those issues. The Government prefer it to be ineffective. The EU speaks for about 500 million people and therefore occupies a significant role in Europe and the world. We should be part of that process, but this puny Bill fails to promote that ambition.
Where, in all this, stand the Liberal Democrats? I was, frankly, very confused by the speech of the noble Baroness, for whom I normally have a lot of time. Are they in favour of the Bill? Are they against it? I emerged at the end of her speech without any guidance whatsoever. Are they prepared to fight for the EU, a cause about which they once cared enormously deeply; or do they now propose to take the ignoble course, alongside their Tory allies, of administering a potential death blow to the EU?
Before the general election, David Cameron described himself as the son of Thatcher. Well, Margaret Thatcher said that referendums sacrifice parliamentary sovereignty. They represent, she said, political expediency. So where stands the Liberal party as far as that is concerned? It is important that the Liberal Democrats should be able to respond to that criticism.
The Bill should not have been submitted to Parliament. It is fatally flawed. It is introduced primarily to placate the Tory anti-EU campaigners, but even this miserable Bill will not achieve its misconceived objectives.
Baroness Williams of Crosby
My Lords, I was about to thank the noble Lord, Lord Clinton-Davis, for what he said about the very disappointing performance of the other place in the discussion of this Bill. We have to say that in many ways the other place passed up its deep obligation to the people of this country to discuss with real seriousness and in detail a Bill of this kind which has such very far-reaching consequences. It was, and I think the noble Lord would agree with me, disappointing that so few Members of Parliament rose to their feet to question the extraordinary claims and statements being made in the House by some of those who are particularly sceptical about the European Union. It would be better in many ways if we ask the other place in future to consider more carefully the repercussions on a Bill of this kind. I also want to say that I shall be more than happy to try to add to what has already been said by my noble friend Lady Falkner of Margravine to respond to the questions that the noble Lord asked us.
In order to do so, let me go back just a little while. Several noble Lords have already referred to what they describe as the deep division between the British public and the British attitude towards the European Union. It is about time that we said very clearly that this country has laboured under two major difficulties in even beginning to understand what the European Union is all about. We are virtually unique in Europe in having a print press that is overwhelmingly antipathetic to the European Union and does not even attempt to describe in objective terms what it tries to do. We know without naming names that there are very large press barons in this country—incidentally, most of them do not come from this country—whose great aim is to try to sour the relationship between this country and the European Union.
The second major handicap we labour under is the fact that our education system does very little to recognise that we are citizens of Europe as well as citizens of the United Kingdom. I am not going to take responsibility for that because I recall trying to introduce a foreign language in every primary school when I was Secretary of State—mostly the likelihood was that the language would be French—and a second language in secondary schools. I am afraid to say that over the past 30 years, we have almost completely abandoned the study of European languages, with great damage to the relationship that we are able to establish with our neighbours and colleagues on the continent of Europe. It is all very well to visit frequently and fun to go for holidays, but if one cannot speak at all in the language of the country which one is visiting to those who inhabit it, there is always going to be a very great weakness in the relationships of friendship, colleagueship and understanding that can be established.
I hope that when the new Secretary of State for Education, Mr Gove, looks, as he is looking now, at the syllabus for our schools, he will take very seriously into account the need to teach something about citizenship of Europe as well as citizenship of the United Kingdom and will also look very closely at the need for this country to begin to grasp some foreign languages. Many noble Lords will, like me, feel that it is positively embarrassing when one goes to Holland, Belgium or even Germany and discovers that they can all speak excellent English when we can say, at best, “Good morning”, “Good day” and “How much will a room cost?” when we assail them in their language.
One of the things that I find quite astonishing is the inability of this country and, particularly, of its media to recognise the staggering achievements of the European Union. Perhaps I may very briefly, for reasons of time, in not more than a sentence each, mention those attainments.
The first and perhaps greatest achievement is that now, on the anniversary of the First World War, we cannot imagine another war in western Europe. It is simply beyond the understanding of our children and grandchildren to think of another war between Britain, Germany, France and Italy. It is, quite straightforwardly, no longer part of their practical understanding of what life is all about.
The second great achievement was to help bring the whole of central and much of eastern Europe back to democracy after the collapse of the Soviet Union. No one should underestimate the magnetic power of the European Union in that scene. For the first time, outside of the United States, the central and east Europeans could see the possibility of real security and an end to their long period of suffering under dictatorship. Today, in most of those countries—not all, but most—democracy thrives. One reason it thrives is British support for the concept of an association agreement which has made possible the transition of those countries from communist domination to membership of a democratic European community.
The third achievement is much more recent and of great importance. The European Union—to an extraordinary extent which is hardly recognised at all in our country—has undertaken the burden of being a very good neighbour indeed to countries much poorer than itself. The EU is the greatest giver of aid in the world, and by a substantial margin. The EU has gone out of its way to help bring democracy, and training in democracy, not just to central and eastern Europe but far beyond it as well. The EU has given massive support, incidentally, to a scheme in the Mediterranean which has assisted those countries that are now in turmoil in northern Africa. No other country in the world has gone out of its way to try to create that kind of relationship
I do not know why we fail to recognise these staggering achievements of which we are a part, though a diminishing part. I should therefore like to say, loud and clear, that anything that makes the development of our relationship with the continent of Europe more difficult will not be helpful in meeting some of the most crucial problems in the world.
What are those problems? Let me mention some of them very quickly: climate change; the attempt to develop renewable energy; the decision to repatriate the energy market so that it is not dominated almost entirely at present by Russia; the attempt to deal with organised crime, and no one in this House should underestimate the scale of the organised crime that we are up against, although perhaps last week’s debate on corruption, money-laundering and the like will give us some insight into the gravity of the problem. I could cite many more examples, such as the drugs trade, and issues concerning our relationship with China and with India, both of which have massively improved as a result of their desire to have good relations with the European Union. All of these things are problems that we should confront—problems, incidentally, which have often been described by my noble friend the Minister when he has spoken about the rise of emerging countries; and problems where these countries have increasingly been looking to a relationship with the European Union which could not conceivably exist in the same way with each of the individual European states, including even the three large ones of Britain, Germany and France.
I shall move on very quickly. The noble Lord, Lord Kakkar, made a very interesting speech about the medical training and education of young doctors. I feel that this issue should be taken up between him and the Government and pressed within the Council of Europe and, in particular, within some of the sub-committees of the Council of Europe. He also spoke about the law of unintended consequences, and I should like to say a few words about that. What are those unintended consequences? If we suppose that attaching conditions to almost every significant change that might be made—but only where the Government are not in favour, to oppose the change; only as a lock and never as a key—we will introduce into our relationship a negative aspect that I believe will be seriously damaging. What will happen?
My noble and learned friend Lord Howe, in his thoughtful and typically reasonable speech, touched on one of those possibilities. Our neighbours in Europe will find every possible way to get around the difficulties presented by trying to carry the United Kingdom with them. How will they do that? People should not forget that under the Treaty on European Union and the TFEU there is a provision for enhanced co-operation. It says that if one-third of the member states agree to work together within the spirit of the treaties, they may go ahead and do so. That is an open invitation to our neighbours in Europe to bypass us, although it was never intended that way, but how useful it will be for that purpose.
In addition, there is not only the law of enhanced co-operation but also the invitation and encouragement to countries to work together where they cannot get full agreement across the board. Noble Lords will recall that when the previous Prime Minister, Gordon Brown, attempted to enter a discussion between the eurozone countries on crucial financial matters, he was politely told that he could not do so because we were not a member of the eurozone. I am not suggesting that we should be now a member of the eurozone, although the day may come. I am saying seriously that we will be cut out of the most significant decisions on financial matters within the whole of the European region because of the attitude that we have taken towards not accepting a wider relationship.
As regards the real dangers of referendums, the first has already been mentioned by a number of noble Lords; that is, the possibility of an endless series of obstacles to moving on within the European Union. But there are two additional dangers. It would be terrible for us to be in a situation whereby we have to have a mandatory referendum and perhaps a quarter or less of our country votes. That would be a real problem, which would lead to endless legal arguments as to whether that could be a valid and proper statement of public opinion.
The other danger, which perhaps is even more dangerous, is the strong possibility, which is growing all the time, that the different parts of the United Kingdom would vote differently by large margins. All of us in this House know that Scotland and Wales are more inclined to vote in a pro-European development direction than England and certainly more so than Northern Ireland. One would be bringing about a fissure in the United Kingdom if one has referendum after referendum, some of them being to no great purpose.
In conclusion, I find it very depressing that the European Union, to which the United Kingdom has made such a huge contribution, instead of being seen as a real model for the future—a model of dealing with issues that go beyond the nation state in a way that is politically acceptable to all nation states but also capable of going beyond that—should now be under great threat from this country, which under Winston Churchill was one of the major initiators of the whole European Union process. We owe more to the world than that. Our potential and capacity is greater than that. I am certainly speaking very clearly to the question asked by the noble Lord. I am proud to say that my party continues to be, and consistently has been for many years through election after election, the most pro-European party in this House and in this country, and I see no reason at all why that should change.
Lord Pearson of Rannoch
My Lords, as this is our first major debate on EU matters since we finished with the Lisbon treaty three years ago, I must start by making an apology. At the end of those proceedings, on 18 June 2008, I regretted that, with one honourable exception in the shape of the noble Lord, Lord Williamson, noble Lords in receipt of an EU pension had not declared that interest. Many of us, including your Lordships’ Sub-Committee on Lords’ Interests, chaired by the noble and learned Lord, Lord Woolf, felt that such pensions should have been declared because they can be taken away if a holder breaches certain obligations arising from their time in office. This applies to former members and officials of the European Commission, but I made the mistake of saying that it also applies to former MEPs, which it does not. I therefore apologise now to those I named, particularly to the noble Baroness, Lady Quin, with whom I subsequently corresponded.
It is regrettable that the nomenklatura in your Lordships’ House has since confirmed that even former EU Commissioners do not need to declare their forfeitable pensions in our debates. They tend to be some of the most blinkered and enthusiastic advocates of our EU membership. It is not helpful to the public if they do not know where those noble Lords are coming from, so I hope that they will do so anyway, although I have to say that the noble Lord, Lord Clinton-Davis, has already failed the test. I would have thought, too, that former MEPs might also want to mention this experience because it suggests that they might have—
Lord Clinton-Davis
I do not have to declare it every time, but it is well known that former Commissioners get some sort of allowance by way of pension. It is not as vast a sum of money as the noble Lord suggests.
Lord Pearson of Rannoch
My Lords, the test of whether it should be declared is what a reasonable member of the public might think, and I am very glad that the noble Lord, Lord Clinton-Davis, has now passed the test.
Lord Tomlinson
My Lords, can I invite the noble Lord, Lord Pearson of Rannoch, to pass his own test? I once asked him whether he was prepared to declare the interest that he got for forestry land that he owned from the FEOGA—the European Agricultural Guidance and Guarantee Fund. All I got from him was an abusive letter and no declaration of interest. I wonder whether he wants to catch up with us now.
Lord Pearson of Rannoch
My Lords, the noble Lord is coming close to misleading the House. I put the matter straight in a letter to the Guardian newspaper, which had suggested that I had taken this grant. It is not a grant. The noble Lord might like to know that when something goes wrong with a plantation, for instance if it burns down, you have to repay the money or replant the thing at your own expense. He will be delighted to hear that the plantation in question has burnt down and I have had to replace it.
I was suggesting that even noble Lords who have been MEPs might want to mention that experience because it suggests that they may have a better understanding than most of the complicated world of Brussels, but of course it is up to them.
Baroness Quin
I am interested in what the noble Lord says. I spent a much longer time being a Member of the other place. Do I need to declare that every time I get up to speak?
Lord Pearson of Rannoch
I think I said that the noble Baroness does not need to declare her pension as a former MEP. The difference is that pensions from the other place are not removable, whereas pensions for former EU Commissioners are removable. It is removable from former Commissioners but not from MEPs. That is what I thought I had said and that is why I went out of my way to apologise to the noble Baroness for putting her in the wrong category before.
Lord Hannay of Chiswick
My Lords, the noble Lord has for years been worrying at a very old bone, and it does him no credit that he returns to it. Could he perhaps tell us how many members of the Commission have had their pensions withdrawn for having expressed political opinions in a place like your Lordships’ House? He continually rests the whole of his case on the fact that they are at risk every time they speak in debates such as this if they do not take the line that, presumably, has been dictated to them in e-mails from Brussels. That, frankly, is completely absurd, and he is just wasting the time of your Lordships’ House.
Lord Pearson of Rannoch
My Lords, I do not think that I am the one who is wasting the time of your Lordships’ House. I suggest that the noble Lord reads the opinion of the noble and learned Lord, Lord Woolf, and of our Sub-Committee on Lords’ Interests, and any other noble Lords who are interested in the subject should do that. I think it lowers the tone and skews the quality of your Lordships’ debates if people who are exposed, however remotely, to losing a very substantial pension do not continue to fulfil the obligations they had when they were Commissioners. In that, I think the EU pension is unique. It is a great shame.
Lord Kerr of Kinlochard
It was extremely handsome of the noble Lord to start his remarks with such a fulsome apology, but I hope that he might now address the Bill.
Lord Pearson of Rannoch
Given the chance, that is exactly what I was going to do. We have now wasted five minutes on this.
Lord Pearson of Rannoch
The interventions have not added anything to what I have to say.
The Government are holding up the Bill as a “thus far and no further” Bill, which it probably is, and to that extent I welcome it. However, I cannot help seeing it more as a “shutting the stable door” Bill. Your Lordships’ House remains a very Europhile place; only perhaps a dozen noble Lords are prepared publicly to advocate withdrawal from the European Union out of a membership of some 800. This makes the subject of Europe unique in your Lordships’ House. In every other area of our national life, your Lordships have your fingers very much on the national pulse—often far more than the House of Commons—but when it comes to Brussels, most of your Lordships are solidly out of touch with popular feeling. This has grown steadily more Eurosceptic since our Lisbon proceedings, to the extent that now around 75 per cent of our people want not only the improbable referendums proposed in the Bill but a referendum on our EU membership, and around 50 per cent say that they want to leave anyway.
I hope that noble and Europhile Lords will not be tempted to suggest that this is because the gullible public have been conned by the wicked Murdoch press, to which I would reply that our national press is more than balanced by the entrenched Europhoria of the BBC. For instance, the BBC has yet to fulfil the promise it gave in 2005 after the Wilson inquiry to explain to the British people how the institutions of the EU interact and their effect on our British way of life. The inquiry had been into whether the BBC was biased in favour of our EU membership and it found that it was—so in view of their opening remarks I hope that the noble Baronesses, Lady Symons and Lady Williams, will agree that it is a great shame that the BBC has not fulfilled that commitment. Perhaps we can work together to encourage that.
Anyone who doubts the BBC’s continuing bias should consult the globalbritain.org website or listen to the BBC’s director-general, who admitted before Christmas that the BBC had been what he called “weak” on Europe. He also said that views that start off as extreme can become the prevailing view inside five years.
Lord Lea of Crondall
Does the noble Lord have anything to say about the role of Mr Rupert Murdoch, who is undoubtedly biased? The BBC’s bias is in the mind of the noble Lord, Lord Pearson. Is it not obvious that a great part of the media—now further reinforced by Mr Hunt—is under the control of an American-Australian, who is enormously biased and would influence any referendum?
Lord Richard
Does the noble Lord, Lord Pearson, agree that this is a debate about the Bill and not the British press?
Lord Pearson of Rannoch
My Lords, in that case I shall not reply to the noble Lord, Lord Lea. I do not know about it anyway.
This is also a debate about British public opinion—what the British public want, what the Bill supplies and what the Bill which the British public have been promised could supply. Who would have thought five years ago that a major national newspaper, the Daily Express, not owned by Mr Murdoch, I think—
Lord Pearson of Rannoch
—would run a campaign to get us out of the EU? Who would have thought then that 373,000 of its readers would have signed a petition to leave? Most of those people took the trouble to fill in a small form, cut it out and post it to the Express. Does that not reveal quite a bit of energy? Now there is a new campaign, the people’s pledge, launched last week. It is an all-party national campaign, led from the left, which asks people to sign a pledge online that at the next general election they will vote only for a candidate who promises to support an in/out referendum on our EU membership. It includes people who believe we should—
Lord Sewel
Could I renew to the noble Lord the invitation of the noble Lord, Lord Kerr, to get on with the Bill?
Lord Pearson of Rannoch
At this rate I will be at more than 20 minutes. I suggest that noble Lords do not interrupt, but it is of course up to them. As I was just saying, this new campaign has people on it who believe that we should stay in the EU but who still want a referendum. So far, some 50,000 people have signed it and thousands more have volunteered to campaign as activists. I suggest that noble Lords have a look at it at peoplespledge.org.
Then there is UKIP and its performance at the recent Barnsley by-election, where it beat the Conservatives and Liberal Democrats into second place. In fact, we got nearly as many votes as those two parties combined. I am sure that much of the success was due to the fact that it now has a decent leader again, and it was of course only a by-election, but something is moving out there in the country. That something is the country’s growing wish to have a referendum on our EU membership. That wish will not be met by the Bill. The Bill is an irrelevance to that wish.
Why do Her Majesty’s Government refuse the people the referendum that they want and which they were promised, and instead offer them the pale imitation that is the Bill before us? The answer is clear; they think that they would lose the referendum which the people want and we would then have to leave the EU. In the Government’s defence, they seem to really believe, as do most of our political class, that leaving the EU would somehow be bad for trade and cost British jobs. I think they believe that because so few of them have ever run an international business. They just do not know how it works.
I guess that this would be the central debate in any referendum campaign about our membership. I give the Government and your Europhile Lordships four brief reasons why leaving the EU would have the opposite effect to the one that they might genuinely fear. First, we indeed have 3 million jobs exporting to clients in the EU, but it has 4.5 million jobs exporting to us, so it would want to continue its free trade with us. We are in fact its largest client. Would the French stop selling us their wine or the Germans their cars just because we are no longer bossed around by Brussels? Our trade and jobs would continue. There is no fear on that score.
Secondly, the EU has free-trade agreements with 63 countries worldwide, with more in the making, so why not with us—their largest client? Thirdly, the World Trade Organisation would also prevent any retaliation, and anyway the EU’s average external tariff is now down below 1 per cent so there is not much point to retaliation. Fourthly, Switzerland and Norway, which are not in the EU, also enjoy free movement with the EU and every other facility that we have. They control their own immigration and export much more per capita to the EU than we do—Norway by five times and Switzerland three times.
Lord Teverson
I thank the noble Lord for letting me intervene. Although Norway and Switzerland are not within the European Union and have full relations with it, the result is that they have very little control over their legislation. The way it works is that the European Union faxes instructions to the Governments of Norway and Switzerland in those areas and they have to comply or withdraw from the European Economic Area. That is the problem. You have the single market but far less control and no input into the legislative process.
Lord Pearson of Rannoch
That point is often made. Of course, if we were not in the European Union, we would have to obey the EU rules for the exports that we sent to them, but not in our own internal market and not to the rest of the world. Most countries in the world export to the European Union without that problem. It is really not a real one.
Lord Hannay of Chiswick
The noble Lord is propagating nonsense, if I may say so. Norway and other countries are obliged under the European Economic Area treaties to apply the single market legislation to their own market. They do not apply them only to the goods that they export to the European Union. The noble Lord would do well to recognise that he would be bossed about by Brussels even if he had his referendum and got us out of the European Union, with all the other damage that that would do to us.
Lord Pearson of Rannoch
My Lords, the noble Lord is making the usual mistake of thinking that we would stay in the European Economic Area. Why would we? Why would we not have a relationship like Switzerland and like all the other countries in the world that export to the European Union and are not bossed around by the Brussels rules?
I am not suggesting that the British people are fully up to speed with the four points that I have just made—nor, indeed, is the noble Lord, Lord Hannay—but they are getting the point that the EU is ruinously expensive, that we cannot afford it, and that it has taken away their sovereignty, and their right to elect and dismiss those who make their laws. Most of our national laws are now made secretly in Brussels, where our Government have some 9 per cent of the votes, and our MPs, for whom the people vote, are irrelevant in that process. The people are also right when they fear that they can no longer afford EU membership, which is untouched by this Bill. I give your Lordships six points to prove that.
Lord Pearson of Rannoch
Well, my Lords, they are quite important. Some £8.3 billion per annum is sent in cash to Brussels, which is £23 million a day or 750 nurses, teachers or policemen thrown away every day at £30,000 a year each. Yet we are struggling to cut the same amount from our own public expenditure.
Secondly, there is really no such thing as EU aid or subsidies to us. For every £1 they send us, we have given them £2.10. Then we are borrowing millions more to bail out the euro, which we might not get back. Every family in the UK spends £1,000 more on food than it would if we were not in the EU.
Then the Treasury has estimated that overregulation from the EU costs up to 6 per cent of our GDP, or £84 billion a year—the equivalent of £1,400 per person. There is no doubt that this handicaps our exporters worldwide and would hit the City and its tax revenues hard. As I mentioned to the noble Lord, Lord Teverson, all this is against the background that only 9 per cent of our GDP goes in trade with clients in the EU, while 11 per cent goes to the rest of the world and 80 per cent stays in the domestic economy. Yet the whole 100 per cent of our economy is hit by the diktats from Brussels. No wonder the Government refuse a cost-benefit analysis on our membership.
The Daily Express campaign and other campaigns have made the British people see that Brussels interferes in every aspect of their lives—immigration, rubbish collection, post offices, light bulbs, car premiums, working time, as mentioned by the noble Lord, Lord Kakkar, our fishing industry, financial supervision and so on. Governments of all persuasions have for years dismissed how much of our law is imposed by Brussels, with the House of Commons and your Lordships' House irrelevant. However, the people are now beginning to understand it and they do not like it.
To cap it all, none of what I have just mentioned can be changed without the unanimous agreement of all 27 member states. That is why so many of us say that the only way out is by the door.
Could I conclude by saying—
Lord Pearson of Rannoch
I am glad to be so popular. I conclude by asking the Minister one question. The noble Lords, Lord Tebbit and Lord Stoddart, and I asked a long series of Written Questions going back to 18 October last year and ending on 16 February. We asked what areas of our national life are now not subject to interference or control from Brussels, and what areas of our national life we are left with entirely to ourselves that are not subject even to unanimity. Which areas of our national life could become the subject of referendums under this Bill? In his Written Answer of 27 January, the noble Lord said:
“There are many areas of our national life where the UK remains the final authority, such as the functioning of Parliament … and the deployment of British Armed Forces”.—[Official Report, 27/1/11; col. WA 191.]
On 16 February, I asked him with what else we are left. He merely referred me to earlier Answers that set out treaty clauses that give our powers away, but he did not point to any more that we still have. Can he answer that question now? I fear that there might not be any. That would be another reason why this Bill is something of an irrelevance, because the horse has already bolted.
We have nothing left to have a referendum about, apart perhaps from joining the euro, but in view of the disaster which that initiative has become, that is really not a starter. It would be another reason why the British people do not need this Bill so much as the Bill that they were promised by all three parties and which they very much want—a Bill to give them a referendum on our EU membership itself.
Student Visas
(13 years, 1 month ago)
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Earl Attlee
My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Home Secretary in another place. The Statement is as follows.
“Mr Speaker, the UK has a worldwide reputation for providing quality education to overseas students. Britain is, rightly, the destination of choice for many people wishing to study abroad but under the last Government the student visa system became the symbol of a broken and abused immigration system. Labour claimed it had capped unskilled immigration at zero but was happy just to sit back and watch as unskilled migrants abused the student route to come here.
We had too many people coming here to work and not to study. We had too many foreign graduates staying on in the UK to work in unskilled jobs and too many institutions selling immigration, not education. We want to attract only the best and the brightest to Britain. We want high-quality international students to come here. We want them to study at genuine institutions, whose primary purpose is providing a first-class education, and we want the best of them—but only the best—to stay on and work here after their studies are complete.
That is exactly what we are doing across all the immigration routes. We are tightening up the system, tackling the abuse and supporting only the most economically beneficial migrants. I have already announced and begun to implement our plans to limit economic migration, cutting the numbers by over a fifth compared with last year. I will be returning to the House later this year with a consultation that will set out proposals that break the link between temporary migration and permanent settlement. I also intend to consult on changes to the family migration route. I will be bringing forward proposals to tackle sham marriages and other abuse, to promote integration and reduce the burdens on the British taxpayer.
We aim to reduce net migration from the hundreds of thousands back down to the tens of thousands. The most significant migrant route to Britain is the student route, so we must take action here too. Immigration by students has more than trebled in the last 10 years and is now far larger than through work or family routes. It is unsurprising that more and more overseas students are attracted by our world-renowned higher education institutions but there has also been an increase in abuse in the private further education sector. Students now make up the majority of non-EU migrants: including their dependants, they accounted for around two-thirds of the visas issued last year under the points-based system.
When Labour introduced the current system in 2009, almost a third more student visas were issued that year than in the year before, with an increase from 230,000 to 300,000. Numbers were so high that the UK Border Agency had to suspend student applications in some parts of the world because it could not cope with the demand. Much of that demand was simply not genuine. We have so-called students turning up at Heathrow Airport who cannot answer basic questions in English or even describe what their course is about. One institution has an intake of whom 90 per cent are international students and only asks for GCSE-level qualifications to do a supposedly degree-level course. Another college’s own sales agent actually helped a student to cheat in their entry exam. Legitimate colleges should still be able to recruit legitimate overseas students but we need to stop the abuse and return some common sense to our student visa system.
The current system is based on a sponsorship regime which trusts educational institutions to assess the quality and ability of students, and puts the responsibility on the institution to ensure the student is actually studying and obeying the Immigration Rules. That trust has been well placed in some sectors: universities, independent schools and publicly funded further education colleges mostly take their sponsorship duties seriously and act responsibly. Yet some, particularly in the private FE sector and parts of the English language college sector, are not exercising the due diligence that we would expect. These institutions make up the largest single group on the sponsor register. The sector is essentially unregulated: they are not subject to a statutory system of education inspection and can offer any type of course they like. Although some of these institutions are legitimate, for many their product is not an education but immigration, together with the ability to work here.
It is absolutely clear that the current regime has failed to control immigration or to protect real students from poor-quality colleges. That is why the proposals I am announcing today are unashamedly targeted at the least trustworthy institutions. Our proposals protect the interests of our world-class universities, they protect our leading independent schools and public FE colleges and, ultimately, they are in the best interests of legitimate students.
In future, all sponsors will need to have been vetted by one of the approved inspectorates—either Ofsted and its devolved equivalents, the Quality Assurance Agency or the relevant Independent Schools Inspectorate —and all must become highly trusted sponsors. Once they achieve that status, private colleges offering quality, bona fide training programmes of genuine educational value will be able to continue to recruit legitimate international students.
All current sponsors who do not meet the requirements will be allowed to stay on the register for a short period from April 2011. During that time, they will be limited in the number of students they may sponsor. They will first have to apply for highly trusted sponsor status and accreditation. They will then be required to achieve highly trusted sponsor status by no later than April 2012 and accreditation by the relevant agency by the end of 2012. As well as cracking down on bogus colleges, we will also crack down on bogus students. Students who want to come here should be able to speak English, to support themselves financially without taking paid employment and to show that they are coming for study and not for work, so we will toughen up the entry requirements.
First, we will strengthen the evidence that students need to demonstrate that they have the financial means to fend for themselves. Secondly, we will streamline the requirements for students from low-risk countries and prioritise resources on high-risk students. Thirdly, we will toughen up the rules on English language competence. Those coming to study at degree level will have to speak English at an upper intermediate level. Others will have to speak English at an intermediate level.
UKBA officers will be given the discretion to refuse entry to students who cannot speak English without an interpreter and who do not meet the required minimum standards. Let me be clear: you need to speak English to learn at our education establishments. If you cannot, we will not give you a visa.
If someone is coming to the UK as a student, study should be their main purpose, not work. So we will end permission to work during term time for all students other than those at university and publicly funded education colleges. Students at public sector FE colleges will be allowed to work for 10 hours per week, and students at university for 20 hours per week. We will reduce the amount of work that can be done on work placement courses for non-university students from 50:50, as now, to two-thirds study, one-third work.
At present, students on courses of six months or more can bring their dependants with them. In 2010 over 31,000 student dependants came here. We will remove this right for all but postgraduate students at universities and Government-sponsored students.
Coming to the UK to study a course should by definition be a temporary step, so we will limit the amount of time that students can spend in the UK. Too many students who originally come on short courses have been staying here for years and years by changing courses, often without showing any tangible academic progress. We will limit the overall time that can be spent on a student visa to three years at lower levels, as now, and five years at higher levels. There will be exceptions for longer courses, such as medicine and veterinary science and PhD study, but no longer will students be able to stay here and switch from course to course to course.
We want the very best international graduates to stay on and contribute to the UK economy, but the arrangements that we have been left with for students who graduate in the UK are far too generous. They are able to stay for two years, whether or not they find a job and regardless of the skill level of that job. In 2010, at a time when one in 10 UK graduates was unemployed, 39,000 non-EU students with 8,000 dependants took advantage of this generosity. So we will close the current post-study work route from April next year. In future, only those graduates who have an offer of a skilled graduate-level job from an employer that is licensed by the UK Border Agency will be allowed to stay.
Post-study migrants must be paid at least £20,000 or the appropriate rate for the occupation, as set out in the relevant code of practice, whichever is higher. This will prevent employers recruiting migrants into skilled occupations but paying them less than the going rate. We estimate that had that been applied last year, it would have halved the numbers staying in the UK through this route. We will not impose a limit on this group next year, but we will keep this position under review.
If the number of foreign students entering the labour market as post-study workers increases significantly and unexpectedly, we will ask the Migration Advisory Committee to look at how any abuses can best be addressed. That could potentially include the introduction of a separate temporary limit on post-study workers. As we restrict the post-study work route, we will ensure that innovative student entrepreneurs who are creating wealth are able to stay in the UK to pursue their ideas. The message to the brightest and the best students around the globe is clear: Britain’s world-class universities remain open for business.
We recognise the need to implement these changes in a staged manner that minimises disruption to education providers and students. We will therefore implement the measures in three stages, starting with new rules that will be laid by the end of this month. I will publish full details shortly.
The package of measures that I have outlined today is expected to reduce the number of student visas by 70,000 to 80,000, a reduction of over 25 per cent, and it will increase the outflow of foreign students after they have concluded their studies. It will mean a proper system of accreditation to root out bogus colleges; tough new rules on the English language, financial guarantees, working rights and dependants to root out bogus students; and new restrictions on post-study work to make sure that all but the very best return home after study. This package will stop bogus students studying meaningless courses at fake colleges. It will protect our world-class institutions, it will stop the abuse that became all too common under Labour and it will restore some sanity to our student visa system. I commend it to the House”.
My Lords, that concludes the Statement.
Lord Hunt of Kings Heath
My Lords, I am grateful to the Minister for repeating the Statement. I say at once that I am glad that the Government have had second thoughts on this matter.
The Minister will be aware of the concerns expressed in your Lordships’ House on 15 and 16 February about the impact of the original Home Office proposals on universities in the UK and the seeming conflict between his department and BIS. On the one hand we had the noble Lord, Lord Green, the Trade Minister, speaking warmly of the role of British educational institutions as export earners. On the other hand, we had the Home Office putting forward proposals that would have had a devastating impact on the finances and reputation of our universities. I remind your Lordships that Universities UK called the original proposals “damaging and dangerous”, the UK Council for International Student Affairs called them,
“potentially the most damaging for a decade if not a generation”,
and the Association of MBAs, writing in The House magazine, was equally concerned about the impact on recruitment, business and growth.
Our universities are one of our crown jewels and we should cherish the esteem in which they are held internationally. No wonder other countries were lining up to take advantage of the threatened changes here and attract many thousands of bright students away from their preferred destination, the United Kingdom.
In the Statement, the Minister said that the message to the brightest and best students around the globe is that Britain’s world-class universities remain open for business. Amen to that, but can the Minister assure me that the final decision of the Home Secretary has been communicated to and discussed with our universities? What has their response been?
What impact does the Minister think that the proposals will have on the income to be earned from international students? I remind him that Universities UK estimates that, in a market that is growing at about 7 per cent per year, international students offer the UK considerable growth potential and bring huge benefits to regional and national economies. Its estimate is that international students contribute more than £5 billion to the UK economy through tuition fees and off-campus expenditure as well as bringing extensive cultural and political benefits to the UK and, as a result, creating local jobs as well. Is the Minister confident that the Government’s proposals will not have an impact on those benefits?
I turn to the post-study work mechanism. Although this is to be closed, the Government have decided to retain the right of international students to work for a period of time in the UK after graduation in graduate-level jobs. Again, Universities UK has said that this is critical in attracting international students to the UK. Without it we would be at a severe competitive disadvantage to countries such as Canada, the US and Australia. It is reported frequently that international students feel that it is very important when they come here to be able to deploy their skills in the workplace for a limited time before going home. This also boosts employers in the UK who are looking for trained graduates in strategically valuable disciplines. As the noble Earl described in the Statement, the rules around this mechanism are to be tightened. Can he guarantee that the overall package that will now be on offer to prospective international students, including the post-study work mechanism, will none the less be at least comparable to those of other countries, and that we will not be put at a competitive disadvantage?
I note the actions that the Government intend to take in relation to bogus colleges and bogus students. We welcome such actions and will study them with a great deal of interest. However, as the Statement made some rather pejorative points about the previous Government, I ask the noble Earl to confirm that the previous Government took action to close down many bogus colleges. Will he confirm that, as a result of that action, more than 140 colleges were closed?
I also ask the noble Earl about the capacity of the UKBA, which will have an important role to play in policing these new arrangements. The noble Earl will be aware that, as a result of cuts in his department, the UKBA is expected to lose a total of about 5,000 staff from its employ. Can he confirm—and reassure me—that the UKBA is in a position to manage its affairs effectively in relation to international students, alongside the many other responsibilities that the Government have given the UKBA in the past few months on the one hand, and to reduce its staff by 5,000 on the other?
Finally, the Statement said that we want high-quality international students to come here. I applaud that. Can the Minister assure me that his department will work closely with universities and Universities UK to monitor the position on a regular basis, so that the impact of these changes will be measured and adjustments made if it is apparent that there is an adverse effect on our universities?
Earl Attlee
My Lords, I thank the noble Lord, Lord Hunt of Kings Heath, for his comments and the tone of his response. The UK has a worldwide reputation for providing quality education to overseas students. We want to attract only the best and the brightest, but there has been too much abuse. We need to stop such abuse and return some common sense to our student visa system. The policies I have outlined today will achieve this. A proper system of accreditation will help to root out the bogus colleges. Tougher entry requirements will ensure that only genuine students who can speak English and support themselves financially can come here. The package of measures will protect our world-class universities and stop the abuse.
The noble Lord referred to the Government’s second thoughts and talked about conflict within the Government. He must understand that a balance must be struck between all the needs of different government departments and different parts of the economy. We have listened: the position of universities has been protected in many ways and we have adjusted our proposals. The noble Lord said that other countries were lining up to take our place. They will be disappointed. Our target, as I said in the Statement, is the private sector further education colleges. It is too early to report on the response from the universities sector but I strongly agree with what the noble Lord said about the economic importance of that sector.
The noble Lord talked about post-study work opportunities. I agreed with much of what he said. Yes, I am confident that we will have a good post-study work regime. An employer with a competent human resources department will be able to manage the changes and new procedures. The noble Lord referred to certain aspects of the drafting of the Statement. He will have been in exactly the same position as me; perhaps he could make a suggestion to the Procedure Committee about how drafting might best be addressed. We will certainly be monitoring implementation of this policy very carefully for the reasons that the noble Lord described.
Lord Cormack
My Lords, I declare my interest as a senior associate member of St Antony’s College, Oxford, and as the organiser of a scheme that brings American students to work in Parliament for a period each year. I greatly welcome the sensitivity of the Statement, but I urge my noble friend to ensure that the monitoring to which he referred is indeed careful, continuous and very sensitive. Does he agree with me that it is better that a few bogus students come into this country than that a single potential Nobel Prize winner is kept out?
Earl Attlee
My Lords, I agree with most of what my noble friend said—nearly everything, in fact. He touched on the parliamentary interns. I have used them in the past. I asked my officials about parliamentary interns this morning. I hope we maintain an effective system and I am sure we will monitor that very carefully.
Lord Tomlinson
Can I ask the Minister to make a number of points about the Statement quite clear? He referred in the Statement—which I am grateful to him for repeating—to private sector further education colleges. Can he make it clear that his strictures do not apply to private sector higher education colleges? In saying that, I declare my interest as the chairman of the Association of Independent Higher Education Providers and chairman of the board of the London School of Commerce, a private sector higher education college with 7,000 students. Those 7,000 students are all also registered with a state university that awards their degrees. It would do major damage to state universities—at a time when they are already being deprived of government funds and the teaching of overseas students is an income stream for them—if that sort of provision, particularly that which links the private and the public sectors, was in any way damaged.
Finally, will the noble Earl confirm that what the whole of the education sector now needs is no more consultations or big new deliberations? We have had them almost continuously now for five years. We need to let the education sector, which is going through a time of major financial crisis, get on and deliver its role. In doing that, I hope the Government will take equal note of the report of the Home Affairs Select Committee of the House of Commons, which was published last week.
Earl Attlee
My Lords, the noble Lord makes an important point about the difference between higher and further education. I would make the point that there are private sector further education colleges that are perfectly respectable. Not every single one is bogus. However, that is where most of the problems lie. The noble Lord pleaded for no more consultations. Unfortunately, that is outside my gift and that of the Home Office, on behalf of which I am speaking.
Baroness O'Neill of Bengarve
My Lords, the noble Earl described how the present situation arose through, in effect, displacement. There have been people who sought to work here but found that the only way to get a visa was to register for an FE course—preferably a bogus one that left them lots of time. I hope that the Government are considering the possibility of another displacement effect that could arise from the present regime. I suspect that once it is known that UK students can potentially borrow a substantial amount for their student loan, overseas higher education providers will set up franchise operations in the UK. I am sorry to say that quite a lot of these franchise operations will not have the same standards as those of the parent organisation in the home country, which may be a very respectable university. However, those operations will be here to cherry pick and provide things more cheaply. They will also make such offerings available to overseas students coming to the UK. This may seem to be merely more business, but unfortunately it may be a route by which, once again, we find that there is one way that you can head if you are looking to get a student visa without having to do any hard studying. The difference in this case is that the higher education institutions are not subject to regulation—given that they are autonomous institutions, as Ministers have frequently said—but franchised, overseas-based HE institutions might be a problem under the regime that the noble Earl described.
Earl Attlee
My Lords, the noble Baroness’s first point on the problem of displacement is extremely important: you solve one problem but it reappears in another guise somewhere else. We will obviously monitor the effects of the new policy. The linked matter that the noble Baroness mentioned is also important, and I will write to her to give her any reassurance I can.
Baroness Hamwee
My Lords, does the Minister agree that we need to be confident about the numbers? At the moment, the number of incoming students is based on the number of visas applied for. Naturally, that is an overestimate; but regarding evaluation of the exit figures, unless the students say, “I have finished my studies”, they are not counted as students going out. If they say, “I am going back to work”, they are counted as economic migrants.
Are the restrictions on off-campus work done during the week, mentioned in the consultation paper, being relaxed? Many of us are concerned about the degree-related work that would be affected, as well as the casual work that many students undertake to keep them going. Post-study work has been referred to. What criteria for licences will the UKBA apply? Restrictions are unlikely to attract the “brightest and the best”—I use the Government’s phraseology. While we are considering language, can we stop regarding student visas as immigration? Their value in a much wider context has been made clear by many Members of the House.
Earl Attlee
The noble Baroness makes a couple of important points. The first was about measuring the numbers. The international passenger survey is run by the Office for National Statistics for a number of purposes. One of the main aims is to provide information on the number of migrants entering and leaving the UK. The IPS is the foundation for the ONS figures on long-term international migration, and the survey includes adjustments to take account of migration to and from Northern Ireland from 2008 onwards as well as for asylum seekers and people whose length of stay changes from their original intentions. The ONS figures on net migration are the best available measure, have been on a consistent definition since 1991, are produced in accordance with ONS codes of practice, and are used widely across government. The ONS uses a long-standing UN standard definition of a migrant as someone who enters or leaves the UK for more than a year—and that obviously includes students.
The noble Baroness also asked me about post-study work. We listened to what we were told during the consultation and have changed the policy relating to work requirements. There will be no change for students studying at universities: they can work a limit of 20 hours per week during term time, but they can work full time in the vacation and will not have an on-campus restriction. Students at FE colleges will be allowed to work 10 hours a week in term time, and full time in vacation. All other students will have no permission to work. Regarding employers and post-study work, the most important issue is that they should offer graduate-calibre work—most universities in their glossy prospectuses do not state that post-study work will involve work in a burger bar.
Baroness Kennedy of The Shaws
My Lords, I also thank the noble Earl for his Statement. I endorse what has been said by others. Visiting students add so much to the life of Britain, and students who are born here benefit from the enrichment of being with students from other cultures and other parts of the world. We also make long-term friendships. When I was chair of the British Council and I travelled abroad, it was most wonderful to meet government Ministers and business partners among people who had had such a good experience here that they remained warm in their feelings about Britain. You cannot put a price on that. I hope that we do not in any way discourage many people from coming here to study.
I am president of SOAS, the School of Oriental and African Studies at London University. This issue is a source of concern to us because we are an arts and humanities university. We train people in very unusual languages, and many of those students go into the Diplomatic Service. The languages include Japanese, Chinese, and those of Africa, Asia and the Middle East. I remind this House of the impact in terms of income that the shift in policy on higher education will mean for an institution such as ours, and of the impact of that loss of income if the changes are made.
Perhaps I may highlight a number of problems. The visa system already creates problems for us—a feeling that is probably shared by many of the university chancellors who sit in this House. Students often cannot get here for the start of a term because the visa process takes such a long time, and that is because the process has become so convoluted. My first question for the noble Earl is: will there be a fast-track system for visa applications for those who are coming to the well established universities in this country? Will there be a method that somehow does not involve the current delays and investigations? Sometimes students cannot start their degree courses at the appropriate time, and they lose out.
Secondly—and I know that this is true of other universities—students who do not speak English come to us at SOAS from places such as Japan and China. They are incredibly bright and they learn the language very quickly. Not allowing anyone to come without having our language is a problem. We also run pre-entry courses for people to learn English and to acclimatise before going to other universities. Will we be prevented from offering those kinds of courses under this new regime?
Earl Attlee
The noble Baroness said that visiting students add so much. In effect, she talked about soft power and said that you cannot put a price on that. In your Lordships’ House, I have for a long time been interested in, and have spoken about, defence. The noble Baroness could not be more right. She could not overemphasise the importance of visiting students. She also mentioned the important issue of loss of income for institutions. However, if students are genuine, there should not be a loss of income. She talked about entry clearance for students at universities. We have made some simplifications for students coming here to study at university. It will be easier for them, for instance, to show that they have the resources to support themselves. However, it will be much more difficult for those students to go to a private FE college. Visas for university courses are often prioritised at posts overseas, but we advise applicants to apply in good time.
Lord Phillips of Sudbury
My Lords, we have in this House more than 50 chancellors of universities and their equivalents. As my noble friend may know, we had a meeting not long ago at which there was a universal sense that the old proposals, if I may call them that, were an own goal of the most stupendous proportions. I seek some reassurance from the Minister. I accept that what he said today—although we will need to look at it carefully—appears to represent a major shift away from the previous proposals. However, are the Government fully aware of how much stronger the competition is in the world outside these islands for the students whom we are successful in attracting? Are they therefore aware that the assumptions about a growth of roughly 7 per cent per annum in the number of students coming to our higher education institutions may have to be reduced, not because we want that but because everybody is trying to get these students? Thirdly, are the Government aware that the universities, for perfectly understandable reasons, will be under the cosh financially in the next few years?
Finally, the Minister spoke reassuringly about treating the highly trusted higher education institutions separately from private colleges. The noble Lord, Lord Tomlinson, made a perfectly proper point, but am I right in assuming that the overwhelming concentration of the Government's anti-avoidance measures will be directed now at those private institutions? As a result, will he assure us that the estimates made by the Migration Advisory Committee, which he mentioned, that we would lose 50 per cent of our higher education intake from outside the EU over the next five years, are a statistic that we may consign to history?
Earl Attlee
My Lords, the noble Lord talked about the number of university chancellors in your Lordships' House—don't I know it—and he described our consultation proposals as an own goal. They were consultation proposals. We have fine-tuned them to meet the concerns of those who will be affected. We are aware that there is strong competition. It is difficult to compare the opportunities that different countries offer. Some are more generous in one respect but take it away in another. We are well aware of the financial situation of the university sector.
The noble Lord talked about highly trusted sponsor status. When he looks at the detail he will find that many institutions will have to have highly trusted sponsor status. He mentioned some alarming statistics. They are alarming, but they are not related to reality.
Baroness Warwick of Undercliffe
My Lords, I am very pleased with the way in which the Government have responded to the consultation. Although we will have to look at these proposals very carefully, it seems that they have recognised the importance of attracting international students to our higher education institutions. I was particularly taken with the point that the suspicion of immigration abuse will be linked to the type of institution rather than to the level of study.
Perhaps the Minister will say something about the impact of these proposals on pre-university pathway programmes. It is worth remembering that nearly half the students engaged in such pathways go on to higher education. This forms part of the attractiveness of our immigration system for international students. Will the Minister now ensure that the changes in the scheme and the impact on students are very widely publicised? A great deal of damage has already been done to Britain’s attractiveness because it looks as though we are not open and welcoming to international students. Much work was put in over many years to ensure that Britain became and remained an attractive destination, and we have been enormously successful in attracting those students.
Finally, I am anxious about postgraduate working opportunities. They have been part of a package to keep our best students in the UK and to enhance in particular many of our science and technology industries. It would be an enormous shame if we were not able to retain those students and did not remain at least competitive with the features of other countries in their attractiveness to international students in this regard.
Earl Attlee
My Lords, first, the noble Baroness talked about pathway programmes. I fully understand their importance, but in future most of them will have to be sponsored by a university; there will have to be much more of a linkage. She talked about promulgating the changes. They will be promulgated in a wide variety of suitable media. She also talked about post-study work. We absolutely understand the need to retain that—I made a comment about the university prospectus and burger bars—and we want people to carry on doing post-study work, but at the appropriate graduate level. We definitely appreciate the importance of this.
Lord Brooke of Sutton Mandeville
My Lords, I understand about the time, but I wish to make a complaint. More noble Lords would be able to contribute if others asked only two questions and did not make long statements. At least three noble Lords have been shut out.
European Union Bill
(13 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Richard
My Lords, I will say nothing about the comments that have just been made, except to indicate that the experience this afternoon, not only in relation to the Statement but also in relation to the debate, has strengthened the argument that we should have a Speaker with greater powers than the Lord Speaker.
I am delighted to take part in this debate. I see that the noble Lord, Lord Pearson, has come back. With him sitting immediately behind me, my shoulder blades tend to itch a little; I am never certain what is going to happen.
This is a bad Bill. When I read it and thought about it, what came to my mind was Churchill’s pudding: it has no theme. The Bill has two main thoughts, which unfortunately are mutually contradictory. There is no overarching theme into which we can slot the argument. The first half of the Bill is designed specifically to curb Parliament’s ability to act on its own via the so-called referendum lock. The second part seeks to emphasise the doctrine of parliamentary sovereignty, which by definition means that Parliament should be entitled to do what it wishes. It is difficult to see the euphony between those two principles.
In order to understand the Bill, perhaps it is worth recalling the origin of this piece of legislation. It began with the Foreign Secretary making a somewhat overblown speech to the Conservative Party conference in 2009. He said, ringingly and passionately:
“If you believe in an independent Britain, then come with me, and I will give you back your country”.
This apparently is what he is giving back. It is not often that I quote Mr Bernard Jenkin, but he said at Second Reading in the House of Commons the other day:
“I am bound to ask, as should we all, whether the scene that we observe in the Chamber today was really what my right hon. Friend the Foreign Secretary envisaged when he came up with the brilliant idea of a referendum lock at the Conservative conference in 2009. At that time, I think what he saw looming was the imminence of the ratification of the Lisbon treaty, and the difficulty of holding a referendum on a treaty that had already been ratified. He was looking for something to throw to the crowd, and his idea got a wonderful round of applause at the conference. Little can he have imagined, however, that that simple promise would give rise to a Bill of such byzantine complexity … No one, with the exception of a few aficionados, can have imagined what a mess the future Government were getting themselves into by making such an apparently simple pledge”.—[Official Report, Commons, 7/12/10; col. 252.]
The Bill provides for the possibility of referendums in a large number of disparate situations. The provisions of Clause 4 are comprehensive to the point of absurdity. If one then adds to it the provisions of Schedule 1, implementation of the Bill will produce a constitution in which the electorate are consulted by way of referendum to an extent as yet undreamt of even by the Swiss. Does anyone really believe that a referendum blizzard of this sort on some of the most technical issues in relation to the development of the European Union could conceivably attract public interest to the extent that the result of the referendum could be understood and expressed to be a national view? I do not think so.
The Select Committee on the Constitution, in its 13th report, set out its view on the circumstances in which referendums could be used. It believes—and I agree—that referendums should be used to determine issues of constitutional importance. It concluded that,
“if referendums are to be used, they are most appropriately used in relation to fundamental constitutional issues. We do not believe that it is possible to provide a precise definition of what constitutes a ‘fundamental constitutional issue’. Nonetheless, we would consider to fall within this definition any proposals: To abolish the Monarchy; To leave the European Union; For any of the nations of the UK to secede from the Union; To abolish either House of Parliament; To change the electoral system for the House of Commons; To adopt a written constitution; and To change the UK’s system of currency”.
That would seem to be a sensible and well ordered approach to the difficult and complex issues of holding referendums in a country where Parliament is meant to be sovereign.
One inevitably has to ask what the object of this exercise is. Who are the Government trying to legislate for? The answer is quite clearly the Eurosceptics inside the Conservative Party. If that is so, I can only say that the Government have been spectacularly unsuccessful. In the Second Reading debate on the Bill in another place, some extraordinarily strong—almost venomous—speeches were made against these proposals, and we have heard one here this afternoon. One said that it was,
“a mouse of a Bill … what we need is genuine reform of the European Union so that it delivers what it should be concentrating on … and not be passed across to shyster lawyers arguing the case in the Supreme Court”.—[Official Report, Commons, 7/12/10; col. 225.]
Moderate language, my Lords! It is perfectly clear that the people whom the Government are attempting to placate with the Bill have no intention whatever of being placated by it. They do not like the concept of a referendum lock. What they want is a Bill presaging withdrawal from the EU.
It is worth noting, too, that in that Second Reading debate of 30 speakers, only one was a Liberal Democrat, and, if I may say so with respect to him, his speech was tentative, quiet and questioning. It was hardly a model of a speech strongly supportive of this legislation. I have to ask the Liberal Democrats—and I do so, I hope, in not too attacking a manner—how they can support this Bill. I know the views of a large number of people on those Benches and I have known them for years. I know their views on Europe. At one stage, they were so far in advance of me on European issues that I felt that I had to run in order to catch up with them to prove my European zeal. However, for them now to have their spokesman supporting a Bill in which referendums are proposed to be used not as they should be but as a weapon in order to weaken the functioning of the European Union, I find totally inexplicable.
We are now in a position with Part 1 of the Bill where the mechanisms designed to placate the sceptics are being rejected by them on the grounds that they do not go far enough, whereas most objective observers seem to take the view that the profusion of referendum issues in the Bill would, if implemented, produce a constitutional monstrosity.
The other part of the Bill is in almost direct contradiction to the first. The provisions of Clause 4, re-emphasising the doctrine of parliamentary sovereignty, seem totally unnecessary. Everyone seems to agree that the clause makes no difference at all to the legal position that Parliament is sovereign. The Thoburn case of 2002 has been referred to and I should like to quote what Lord Justice Laws said in his judgment. He said that,
“there is nothing in the”,
European Communities Act,
“which allows the Court of Justice, or any other institutions of the EU, to touch or qualify the conditions of Parliament’s legislative supremacy in the United Kingdom. Not because the legislature chose not to allow it; because by our law it could not allow it. That being so, the legislative and judicial institutions of the EU cannot intrude upon those conditions. The British Parliament has not the authority to authorise any such thing. Being sovereign, it cannot abandon its sovereignty”.
Lord Justice Laws was absolutely right. The law is clear and pretty well unchallengeable. Parliament is sovereign and remains so, despite our membership of the European Union.
I am bound to say that I dislike declaratory clauses. The danger is that, while they attempt to clarify the law, they complicate it. If the clause is not necessary, it should not be in the Bill. I cannot put the argument better than the way in which Vernon Bogdanor put it in his evidence to the European Scrutiny Committee. I have now reached an age at which, when I find a quotation that expresses the argument better than I can, I am prepared to read it. He said:
“Although there is therefore a basic rationale for the European Union bill, it seems to me that its provisions are inconsistent with the declaratory clause insisting that Parliament is sovereign. Indeed, the purpose of the bill is unclear to me. A government will not provide for a referendum unless it wishes to support a proposal for treaty amendment or transfer of powers. If it is opposed to such a proposal, it can use its veto, since all matters to be made subject to the referendum require unanimity. The present government has indicated that it will not support any amendment or transfer of powers in this parliament. Therefore, the purpose of the bill must be to prevent a future government from supporting such an amendment or transfer without a referendum. The bill seeks, in other words, to bind a future government. That seems to me inconsistent with the declaratory proposition that Parliament is sovereign”.
This, of course, is the fundamental problem with the Bill. Its purpose is not to legislate in accordance with the normal doctrine of parliamentary sovereignty but to do what it can to bind successor Governments. Not only is that excessive; in some ways, the Bill is positively frivolous in its demand for referendums and unnecessary in its declaratory provisions relating to parliamentary sovereignty.
I suppose that the Bill has to be given a Second Reading, but in its present form it hardly deserves to go very much further.
Lord Williamson of Horton
My Lords, I declare an interest, as I spent a good part of my career in the United Kingdom public service dealing with European affairs and some part of it as an official of the European Commission.
This Bill is quite unlike the EU legislation with which we have been dealing over many years, principally that relating to the treaties of Maastricht, Amsterdam, Nice and Lisbon. Under those treaties, we were undertaking commitments that involved the development of policies within the European Union. In this Bill, we are doing rather the reverse, because such commitments would in future be subject to a very strict condition—the so-called referendum lock—by which the agreement of the British public in a referendum would be required if the decisions transferred power or competence from the UK to the European Union.
I shall deal, first, with the main features of the Bill and then say something about the context in which the Bill has been brought forward. The Bill, like almost all UK national legislation, is quite complicated and detailed. First, on the referendum lock, I suppose that it would have been possible to have a much shorter text, which simply stated that proposals within the EU that would transfer power or competence from the UK to the EU would require a national referendum for approval. However, the Bill does not do that. Instead, it lists the cases that could or would trigger a referendum if the Government wished to go ahead. Some of those, where a transfer of power or competence is proposed, are quite evident, notably any amendment of the Treaty on European Union or the Treaty on the Functioning of the European Union.
Secondly, there are those cases under the simplified revision procedure that would currently allow the European Council to decide unanimously in specific areas to switch from unanimity to qualified majority voting. That is covered by the referendum lock and clearly there is a case for that. I think that that will be examined in Committee, but it is an important part of the Bill.
Finally, in Clause 6 there are other evidently important proposals, such as membership of the euro or the Schengen area. However, there are also some areas, such as in relation to the European public prosecutor’s office, that may need examination in Committee.
The key element of the Bill is the referendum lock. It indicates more widely which potential actions would require an Act of Parliament as well as a referendum and those that might require parliamentary approval by resolution. For me, several points must be underlined in relation to the substance of the Bill. The first is that all the possible transfers of power or competence to be covered by the referendum lock are today subject to unanimity, which means that the UK Government can refuse them all without a referendum. That is very simple. It is only those cases where the UK would consider the proposed action so advantageous to the United Kingdom that it would not wish to use its veto that the referendum lock would come into play. That is an important point in understanding the substance of the Bill.
Secondly, the exceptions to the referendum lock are very limited—notably, those cases where the Government conclude that the effect of a provision in relation to the UK is “not significant”, as the noble Lord pointed out. That is in Clause 3(4). In all important matters, the lock is unbreakable. When I read this Bill for the first time, I thought that people would be dancing on Rannoch Moor, but I do not believe that that is the case—I got that wrong. I thought that it must be the case because the effect of the referendum lock is extremely strict.
I have heard many comments from those who are opposed to our membership of the European Union that this is only a minor measure or a cosmetic measure or that something else is wrong with it. They are entitled to their view on membership—although they are wrong—but they are not entitled, in my view, to say that this is a minor measure. It is a watershed for our policy within the EU, because the consequence of the Bill is that normally, perhaps almost invariably, United Kingdom Governments would not agree to proposals covered by the referendum lock. That is why I have described this as the “no referendum Bill”; the actions that might trigger a referendum would simply not be taken. The sole significant exception to the application of the referendum lock is accession treaties. Thus, in relation to the potential major accession of Turkey, there will almost certainly be a referendum in France, but this Bill does not trigger one here, although the Government could decide to have one on their own initiative.
Thirdly, although it is clear why, in the light of press and public opinion, the referendum lock has been put forward, it is worth noting that this Bill involves an important constitutional change. It deprives Parliament of the decision in these cases and shifts it back to the people. If it were invoked, it would be a form of referendum government, not parliamentary government.
In addition to the referendum lock, the Bill contains Clause 18, which is sometimes referred to as the parliamentary sovereignty clause and is perhaps more accurately described, as in the Bill, as the clause on the status of EU law. The Explanatory Notes correctly describe this clause—of course, it would now be in statute—as a restatement of the UK’s position over many years, which was most succinctly put by Lord Justice Denning, but was also well put by Lord Justice Laws, who has been quoted. Lord Justice Denning said:
“Community law is part of our law by our own statute”.
That is the basic principle of it. Some people may think that that should not be in the Bill—many noble Lords may take that view—but in the current state of public opinion it is understandable why the Government have proposed it.
That brings me finally to the context of the Bill, which I mentioned at the beginning of my speech. In this country, we have an amazing capacity to play down our achievements and to shoot ourselves in the foot. I am sorry that many of us have now tended to transfer that regrettable habit to our judgment of the European Union. We are bringing in a Bill that will affect our relationship substantially with the European Union. In reality, what does the European Union stand for? It exists to improve the quality and standard of life of its citizens, to which it has made a major contribution over its long existence and, as far as the UK is concerned, over a period of more than half a lifetime, during which we have benefited from and contributed to it. Its objectives, to which the Bill makes specific reference in Clause 4(1)(a), include the promotion of peace and well-being, the establishment of the single market, the principle of free movement of persons and the upholding and promoting of the values of the European Union in the wider world. Given the turmoil elsewhere in the world, the European Union has made a very good shot at attaining its objectives, as demonstrated by the very great attraction of the Union for its neighbours.
I understand why the Bill is needed now, but we have to ensure that we can still play our role in the European Union. Contrary to the malaise that hangs over much public opinion here, I consider the European Union to have been a great liberalising force over many years. Memories are very short, but the introduction of the single market throughout this huge economic area involved, in one day, the abolition of millions—I repeat, millions—of forms and of oppressive customs controls. When I first lived in Belgium, there were 21 counters in the customs hall and an English cheese, which was sent to me as a present, took so long to get through customs that it was uneatable. Frontier controls have largely been eliminated. Remember those phrase books for English travellers abroad that had pages and pages about passing through customs. How antique they seem now.
Of course we have regulations in the European Union, but the impact of many of them on the ordinary citizen is much exaggerated. However, we have a mountain of UK national—not EU—secondary legislation. In a recent period in this House, we had 2,364 national statutory instruments, of which 94—about 4 per cent—directly implemented EU law. Whatever people may say, the UK maintains national control of all the most important aspects of public life that concern citizens: public finances, taxation, education, transport and the environment, to quote but a few. This Bill is important in maintaining that position unless the British public decide otherwise, but it needs fairly thorough examination in Committee.
Lord Brittan of Spennithorne
My Lords, I view the Bill with an undisguised lack of enthusiasm. I fully understand the political imperatives that have led the coalition Government to putting forward legislation of this kind, but those political imperatives do not make the Bill either objectively necessary or desirable. I suggest that it is neither. I suggest that parts of it are unnecessary, other parts objectionable, and others ineffective. Above all, it is legislation that provides the illusion of certainty when in fact it is giving massive governmental discretion.
There are three relevant commitments in the coalition agreement, which we have to take seriously. The first states:
“We will ensure that there is no further transfer of sovereignty or areas of power”—
from the UK to the EU—
“over the course of the next Parliament”.
That commitment is easy to fulfil without any legislation. Moreover, if we think about the difficulties that existed not just in this country but all over Europe in getting the Lisbon treaty enacted, the fear that there is a realistic possibility of something like that happening again and further EU legislation being enacted that transfers powers is completely illusory. There is no appetite for further change in that direction in the overwhelming majority of EU countries.
Even if there were an appetite for such further change, there is absolutely no need for the Government to agree to it. As has been pointed out several times in this debate, such changes would require unanimity. If the Government do not want it, they do not have to have it. No legislation is needed to fulfil that commitment. Legislation should not be introduced just to make people believe that the Government will actually do what they have very clearly said that they will do and have power to do.
Moreover, the idea that the Bill would be truly constraining is illusory. It is extremely complex, but it still leaves a high degree of discretion for Ministers to decide whether a transfer of power or competence is involved. At paragraph 21 of the Explanatory Notes, provided very helpfully by the FCO, we are told:
“As the majority of treaties and Article 48(6) decisions will require the exercise of judgement as to whether a transfer of power or competence is involved, in those cases the Bill requires that a Minister must make a statement giving an opinion as to whether or not the Treaty or Article 48(6) decision meets the criteria for a referendum, and must give reasons. As with all Ministerial decisions, it would be possible for a member of the public to challenge the decisions of the Minister in such a statement”.
So no certainty whatever is provided. It would seem, therefore, that nothing is gained by legislation when the Government could simply exercise their judgment in deciding whether a transfer of power is being proposed and not agree to it if they think that that is the case.
The second commitment made in the coalition document states that,
“any proposed future treaty that transferred areas of power, or competences, would be subject to a referendum on that treaty—a ‘referendum lock’ … the use of any passerelle would require primary legislation”.
That commitment cannot be described as unnecessary, in the sense of adding nothing new to our present arrangements; it adds a very substantial requirement, but I do not think that it is desirable. My main reason for saying that is that I am fundamentally opposed to referenda. They are inconsistent with representative parliamentary democracy. Every time one is proposed, we are told that it is quite exceptional and put forward only because of the fundamental importance of what is proposed and the need for the people to have the last word. So far from being exceptional, under the Bill we risk referenda proliferating and displacing the primacy of Parliament, which should be the real guardian not just of the popular will but of the rights and liberties of the individual citizen. The call for a referendum has become routine, and the more that referenda are agreed to, the harder they will be to resist.
The Government clearly see that risk. In order to prevent unnecessary proliferation, elaborate provisions in Clause 5 enable the Minister to specify that proposed changes are not significant and therefore do not require a referendum. That sounds very sensible, but it means that once again the apparent certainty provided by a statutory enactment melts away in the face of the inevitable exercise of judgment as to what is and is not significant and what does and does not evoke a referendum. Why go through that charade of purported but not real legislative certainty when, in any given case, it is open to the Government of the day to call a referendum if they are genuinely nervous about the popular acceptability of what they are minded to agree with their EU partners?
The provision in the Bill is, in my view, undesirable not only because of its illusory creation of certainty but, even more importantly, because its existence will actually weaken the hand of our Ministers when they negotiate in Brussels. They will have to look at any new proposal not just on the basis of whether it is in the national interest but also whether they dare to agree to it in case it triggers a referendum—without being sure whether it would or not.
The third commitment in the coalition agreement states:
“We will examine the case for a United Kingdom Sovereignty Bill to make it clear that ultimate authority remains with Parliament”.
The Government have clearly concluded that such a legislative enactment is required, and it now appears in the very curiously worded Clause 18, which we will no doubt want to consider carefully in due course. I find its inclusion puzzling to say the least. It has been clear since the European Communities Act was passed in 1972 that the supremacy of European law, in the area in which it operates, applies in this country only because Parliament has enacted that that should be the case. That is what the courts have said.
Attempts have been made to argue to the contrary and to suggest that some new, higher, autonomous legal order has been created that has a life of its own, independent of its creation by UK statute. Those arguments have been knocked down comprehensively in our courts. The Bill is pointless. Either Parliament is sovereign, in which case it is unnecessary to say so, or it is not sovereign, in which case, as the noble Lord, Lord Kerr, cogently pointed out, nothing in the Bill can make it so.
In these circumstances, it is difficult to see the benefit of restating the clear constitutional position. Paragraph 11 of the FCO's paper tells us very clearly that that is all that the provision is supposed to be doing. If it were done in a more felicitously phrased form than in Clause 18, it would at least be innocuous, but the fact that it could be innocuous is an inadequate reason for introducing legislation of this kind.
I am afraid, therefore, that that leaves nothing in the Bill that I can truly commend to your Lordships.
Lord Anderson of Swansea
My Lords, what a wealth of experience of Brussels we have had from the previous three distinguished speakers. I cannot claim to have the same intimate experience of Brussels, but I share the lack of enthusiasm of my former pair in the other place, the noble Lord, Lord Brittan, and agree substantially with what he said. Everyone respects the Minister. He is highly respected, and he is an excellent salesman, but alas on this occasion he has a very bad product to sell. It is a bad Bill—bad in its gestation, bad in its principles and bad in its effects. It does not arise from a cool appraisal of our national interests but of the increasing Euroscepticism of the Conservative Party and of the dynamics of the coalition.
In the 1980s, we had this odd reversal of position on the European Union between my party and the Conservative Party. We then had the awful debates in the years of Mr Major that did so much damage to our position in Brussels. The noble Lord will know the position in which we were the asterisk country in terms of progress, and this Bill will, as he said, put not a lock but a ball and chain on developments and on British influence in Brussels.
From the debate in the 1990s, we had Mr Cameron’s decision to withdraw from the European People’s Party, which clearly was not in our national interest. It was the result of a failure to understand that the European Parliament works through political families and that if you withdraw from that family, which is your natural centre-right family, you lose influence in committee placements, and that can hardly be in our interest.
The pledge on the European People’s Party gave the signal to the Eurosceptics that the Prime Minister understood them. They were perhaps taken in, as I suspect he travels very lightly on Europe, but it is a false view to imagine that the Government are rather like a penguin-house keeper in the zoo feeding the Eurosceptic penguins and throwing fish to the penguins in the hope that they will swallow them. Yes, they will, but they will ask for more. Therefore, the Government will not satisfy the Eurosceptics by this stratagem.
As for the coalition, we had the true and traditional voice of the Liberal Democrats in the remarkable speech by the noble Baroness, Lady Williams. In terms of coalition bargaining, I have come to the conclusion that I would not ask my many Liberal Democrat friends to negotiate on my behalf because they have sold their principles for a mess of potage. Here is the most European of parties prepared to make very serious compromises just for its obsession with constitutions and the alternative vote.
The only respectable argument that has been put forward is that there is clearly a disconnect between politics as a whole and public opinion, and on this I agree with the noble Lord, Lord Pearson. However, that disconnect comes from a whole series of reasons. As someone who has been a Member of this Parliament—a great honour—for almost 40 years, I did not have many constituents coming along to complain to me about the European Union. Who can doubt that much of the Euroscepticism has been manufactured by the press lords who live outside this country and who tell us what to do and what is in our national interest?
We saw the same thing when we had the debate on votes for prisoners. The Government weakly and tamely listened to those views in total ignorance and failed to understand that the European Court of Human Rights has nothing to do with the European Union and the fact that by being willing to defy the European court on this one issue of votes for prisoners, we lose the moral high ground against the serial defaulters: Russia, Turkey and others. They will simply say, “You have done it, so why can’t we?”. I defer to the moral high ground.
Lord Pearson of Rannoch
I would never seek to claim that over the noble Lord. When he says that votes for prisoners had nothing to do with the Luxembourg court but came from the Strasbourg court, does he agree that under Article 6 of the Lisbon treaty the European Union has signed up to the jurisdiction and generality of the Strasbourg court? They are connected.
Lord Anderson of Swansea
There is a very slight nexus because of that recent linkage. The noble Lord will surely know that the European convention, the European court and the Council of Europe as a whole come from an earlier stage of European integration in the late 1940s and early 1950s that was very different from the treaty of Rome and the more integrationist stage that came at that point. I hope he will look through the debate in the other place on votes for prisoners and, alas, see the enormous ignorance of those who failed to see that distinction.
So what do we have? We essentially see a failure of leadership. If there is a disconnect, it is surely in part because of the Government’s failure of leadership in trying to put over the case for Europe, as the noble Baroness, Lady Williams, did so eloquently. If only there would be something positive about Europe from this Government. The only thing I have seen was from Mr David Lidington, who is a very able Minister, tucked away in a Written Answer on 10 January.
I come to the specific proposals, and I shall be brief because I can adopt everything that the noble Lord, Lord Williamson, said about the referendums. If it were in the judgment of the Government of the day against our interests, we would veto it in any event. If the Government seriously thought that it was in our interest, they would come out against this great cloud of ignorance that has, in fact, been created partially by the Government. In fact, there are unlikely to be many examples.
As for the referendums, excluded from them are the accession treaties, and who can doubt that one of the largest influences on our country would be, for example, the accession of Turkey? Yet there would be no referendum in respect of Turkey. A number of the transfers would benefit us—one thinks of the foot and mouth matter and QMV in the past—and the definition of “significant”. The sovereignty clause has been mentioned by many colleagues. It is essentially symbolic. It is gesture politics. No Parliament can bind its successor. It is superfluous, meaningless and a waste of parliamentary time, and is to be seen only in the context of the Government’s problems with their own Back-Benchers.
The key principle of this Bill appears not to be to be at the heart of Europe but rather them and us, as if we are engaged in a constant struggle against those who wish to conspire against us and our interests, and our need to confound their knavish tricks. In fact, it is a very false picture. It is a gesture to the populist press and step by step, as was the danger during the 1990s, we will be led inexorably along a road to distancing ourselves, or at least to a semi-detached status.
Finally, I am reminded of a distinguished observer of France on the eve of the French Revolution who looked at French aristocrats who were flirting with revolutionary ideas and said very sagely that those who were blowing upon the flames would one day be consumed by them. The Conservative Party is indeed blowing on those flames, and there is a real danger that the public might go for the real thing. There is UKIP, and one day it might find it is indeed consumed by it.
Lord Maclennan of Rogart
My Lords, I find it ironic that the First Reading of this Bill in another place occurred on 11 November, Armistice Day, when we celebrate and remember the consequences of European civil war, not just between 1914 and 1918 but for centuries. It seems strange that the purposes of the European Union have been so inadequately spelt out by those who believe, or say they believe, that the public are not connected with the European Union. We have had some speeches today—many speeches—which have reminded the participants in this debate, and those who will listen, of what some of those beneficent purposes are. But it seems to me that this Bill does nothing to strengthen the process of integration which has brought such potential strength to this country and our neighbours over the long period since the Second World War, more than could be recalled for centuries before it.
The Bill, at its heart, is confused and confusing. It is attempting to suggest that decisions will be taken by popular acclamation about some of the more detailed decision-making that might be undertaken by the institutions of the European Union to enhance the effectiveness of their decisions, not only domestically within Europe but also internationally when, for example, we negotiate with other powerful nations—growingly powerful nations, such as India and China—about our trading; when we seek to combat global threats, such as threats to the environment from the use of unsuitable fuels; or, indeed, when we seek to rationalise and protect those who for reasons of poverty are driven to seek new homes, and to rationalise the system that enables us to absorb multicultural people.
I find it astonishing that we can have such a retreat from the recognition of the virtues of the pooling of sovereignty which lay behind the impulse to reach agreement, as we did back in the 1970s. The British Government's recent decision to pool sovereignty in defence matters with the French in the Anglo-French defence treaty, which presumably will provide for joint decision-making about the use of joint weaponry, has not been subjected to a referendum proposal. That was bounced through, and many of us welcomed it. However, it seems a more immediate diminution of Britain’s decision-making capability in respect of defence than anything that has come from the European Union.
Questions have been raised about the Liberal Democrats' participation in the preparation of the Bill, and very properly so, for there is language in the coalition agreement that appears to be a part of the explanation for why this Bill has been brought forward:
“We will ensure that there is no further transfer of sovereignty or powers”—
from the UK to the EU—
“over the course of the next Parliament”.
That seems to be a gesture made to pacify the more extreme isolationists in the Conservative Party. However, it does not require a Bill to give it force. The Government can simply refuse by using their power of veto or—to take the point made by the noble Lord, Lord Hannay—by not engaging in a unanimous decision.
It is going way beyond the coalition agreement to suggest that a Bill is necessary. However, even if it was explicit in the coalition agreement, I see no reason why members of the coalition should take that as though it, like the law of the Medes and Persians, were unchangeable. A document of such profound significance as this Bill is not something to be traded or to be based upon an agreement that was put together in a few days—as though it could go on in its impact for a few years in which the circumstances are completely changing. When that agreement was signed, who anticipated what would happen in north Africa within less than a year? It is foolish to believe that that document is something that we cannot readdress and judge in relation to the appropriateness of the coalition Government’s policies.
We heard from my noble friend in opening this debate that the public are disenchanted with the European Union, and there is some opinion poll evidence to suggest a movement in the direction of disenchantment. However, I argue very strongly that the reason for that is the absolutely notable failure of our political leaders to explain what they are trying to do, and to explain and make clear what the European Union is achieving. In fact what happens is that, after Heads of Government meetings or Council meetings, Ministers—and this is not a party point—come back and say, “We triumphed. The British have succeeded. We led the way”. That is not the nature of the European Union. The nature of the European Union is to arrive at consensual agreements that are for the benefit of all the members, to offset the disadvantages to those who have something at stake and might lose by a particular decision.
This Bill has been very well exposed and expounded by a number of noble Lords. I do not need to repeat what the noble Lord, Lord Williamson, and my noble friend Lord Brittan said. They have made those points strongly. I am making a much more general point which I believe all political parties ought to address now. Do they want the gradual disintegration of the decision-making process in the European Union? Do they want to see people lining up and a new balance of power within Europe? That was what the Congress of Berlin talked about in the 19th century, but it led to nothing but disaster.
The actuality is that we have a framework which will be made very much worse if member Governments go around calling for referenda on detailed decisions which are designed to smooth the process of decision-making and to ease and to expedite the process of speaking with one voice so that Europe has some influence over its own future. My fear is that this Bill would delay European Union decision-making. It would jeopardise the Union’s steady constitutional development, which I believe needs to be in a more democratic direction, and it is moving in a more democratic direction.
The immediate outcome will be to marginalise this country because if the other 26 countries cannot achieve their outcomes by agreement with us, they will use the arrangements within the European Union for enhanced co-operation to achieve their purposes without us. This Bill is not just a piece of public relations from the coalition. It is a dangerous Bill, which has to be substantially changed during its progress through this House so that the House of Commons can give renewed, more detailed and considered attention to the impact of its provisions.
Lord Stevens of Ludgate
My Lords, I congratulate the Government on the Bill. Some of us—indeed, the majority of the population of the United Kingdom—have eagerly awaited a Government who would finally stand up against further European integration. But do they achieve this? As the noble Lord, Lord Howell, has said in this House,
“the use of ratchet clauses or passerelles, provisions in the existing EU treaties, which allow the rules of the EU to be modified or expanded without the need for a formal treaty change, would require an Act of Parliament before the Government could agree to its use”.—[Official Report, 27/9/10; col. WS 199.]
As we know, a referendum is required only if the Government support a proposed change that transfers power or competence from the UK to the EU. However, even on the previous Government’s own figures, more than 60 per cent of our laws are now made in Brussels. In Germany, the figure cited by the Government recently was 80 per cent. We have already lost control, with no power of veto, of—among other areas—trade, fishing and farming. We are rapidly losing control over foreign policy and health, to name but two areas. How many regulations has the hard working European committee in this House amended or rejected? I believe that it is none.
The fathers of the European project made it clear at the start that the objective was a European federation or the creation of a united states of Europe and we have gone along with it. We are now subject to rule by Brussels, which for 16 years has not had its accounts signed. The auditors commented:
“Payments from the budget continue to be … affected by error”,
The UK does not need an EU single market. Customs unions are largely redundant. More than 90 per cent of UK imports are tariff free and those that remain are very low.
The UK has a large trade deficit with the EU, amounting to nearly 90 per cent of our total trade deficit. Our exports to the EU are less than 10 per cent of our economic output, yet EU legislation and bureaucracy is imposed on 100 per cent of our economic output. UK exports and imports from countries outside the EU are growing more rapidly than those to and from the EU. Both the USA and China, without any EU regulation, export more goods to the EU than does the UK. No doubt, in the Budget Statement later this week, we will be told that the march of bureaucracy and regulation in this country will be turned back, but it cannot be reduced in any significant way because most of it comes from Brussels.
The EU has its own supreme court—the European Court of Justice—which has the ultimate power of decision over the content and scope of Community law. As many Members will know, in 1992, the Court said:
“An international treaty is to be interpreted not only on the basis of its wording, but in the light of its objectives ... The Rome Treaty aims to achieve economic integration leading to the establishment of an internal market and economic and monetary union. Article 1 of the Single European Act makes it clear that the objective of all the Community treaties is to contribute together to making concrete progress towards European unity. It follows from the foregoing that the provisions of the Rome Treaty on free movement and competition, far from being an end in themselves, are only means for attaining those objectives”.
If we look at our earlier so-called social chapter opt-out at Maastricht, we see how quickly this was undermined by the use of health and safety powers. The Bill does not address these issues. Brussels now interferes in nearly every aspect of our daily lives—from immigration to financial regulation and even to playing golf in the fog. It continues along its sublime way, increasing its budget and putting up pay and allowances when all around it are cutting expenditure.
The Government have, I am sure, brought forward the Bill to quieten the pressure for a real Bill on a referendum—in or out, part of Europe but not in Europe, or a free trade area, EFTA. So insecure are the bureaucrats in Brussels that they are proposing that European political parties use public money to publicise their referendum campaigns in any member country. We are told that we will have no liability to bail out the economies of failing member countries. But we have already agreed to help Ireland on some spurious argument about our trade with that country being more than that of several other countries combined.
The previous Government gave away a large amount of our rebate for no return. Will the Minister assure the House that the UK will not waive the UK’s right to opt out of new EU justice and home affairs laws in 2014? In yesterday’s debate, we agreed to European Council decision 33/10. Indeed, one can see how biased the whole system is when a government Minister, Mr Lidington, says that there was great concern to word the bail-out change so that no member country needed a referendum.
There have been several comments about press barons, of which I suppose I was one. I think that the comment about overseas ownership was a little unfair. The Daily Express, the Daily Star, the Daily Telegraph probably, the Financial Times, the Guardian, the Independent, the Daily Mail, the Sunday Express and the Mail on Sunday are all owned, as I understand it, by UK-resident taxpayers. The only papers that are not are the Sun, the Times and the News of the World. The Telegraph could be debated but it is managed in the UK.
Lord Stevens of Ludgate
I apologise if I did not say the Sunday Times. The point is that Mr Murdoch’s press accounts for 32 per cent of the total turnover. I am not necessarily a supporter of everything but it is somewhat unfair to say that overseas press barons determine newspaper content.
On a side issue, when I was chairman of the Daily Express, the editor of the Daily Star was a somewhat misguided individual who supported the European Union. I tried to persuade him of the error of his ways. It was not until he became editor of the Daily Express under Mr Desmond that he decided that it might be wise to change his views. It shows what a weak person I am. Let the Government show the courage of their convictions and have a referendum on continuing membership of the European Union instead of fudging the issue with this Bill. Any prevarication will cost them dear at the next general election.
Lord Davies of Stamford
My Lords, before I get on to the points I wanted to make this evening, I must deal with the speech we have just heard from the noble Lord, Lord Stevens, because it was such a good example of the classic Eurosceptic speech. It had an absolute maximum of sloganising and an absolute minimum of thought, reflection or familiarity with the facts. I shall take three points on which the noble Lord seemed to be making an egregious error.
First of all, the noble Lord said that the European Court of Auditors has qualified the accounts of the European Union. The Court of Auditors has not qualified the accounts of the institutions of the European Union, the Commission, the Parliament or the Court of Justice. The court has qualified, because it has been unable to certify, the accounts of certain member states in the administration of European Union programmes. If he is consistent, perhaps the noble Lord would be in favour of the Commission taking over the administration of all EU programmes, for example, the structure and agricultural funds within the member states concerned. That is an enormously federalist proposal and I do not think the noble Lord really meant that. He should think about this a little more and perhaps look at the actual statements of the auditors in question.
The noble Lord then started referring to tariffs, saying that 90 per cent of tariffs have been abolished anyway. He has clearly not understood the distinction between tariff barriers being reduced and the creation of an internal market. The whole point of an internal market is that it deals with the non-tariff barriers, the really difficult obstacles to trade. Those problems have been dealt with very successfully by the creation of the single market. That seems to me to be a significant point.
Thirdly, he said that we have been forced to bail out Ireland because of our membership of the EU. Obviously he does not listen to his own Government. Ministers made it absolutely clear the other day that the reason we are contributing to Ireland has nothing to do with our membership of the EU, but is simply because it is in the national interest to help a neighbouring country with which we have a close economic relationship and a lot of ties, and indeed we hold a number of Ireland’s assets that we do not want to write off. The noble Lord needs to think about all these things and perhaps take some advice on some aspects before he addresses the House again on EU-related matters.
The Bill before us has already been described several times as a “bad Bill”. It is worse than that: it is a disreputable Bill and the most cynical Bill that I have ever read—and I say that coolly, reflectively and seriously. I shall explain exactly what I mean in saying that. As has already been pointed out, of course, the Bill was born in cynicism. It has nothing to do with trying to increase democratic accountability in this country or with advancing the interests of this nation. As we all know, it was a decision by the Prime Minister to give a sop to the extreme Eurosceptics in the Tory party to get them off his back, and no doubt to make an attempt at getting some UKIP voters back into the Tory fold. The Lib Dems went along with this and thus have swallowed a lot of their own principles—just as they are swallowing their principles in supporting the Government on their excessively rapid spending cuts, on a Bill to restructure and privatise large tracts of the National Health Service and on the abandonment of their electoral promises on tuition fees and so forth. It is not a very edifying spectacle.
I pay tribute to the brave dissenting voices of a number of distinguished Lib Dems that we have heard in the course of the debate, and I hope that we hear more from them in the course of the Committee stage. But the fact is that the Liberal Democrat Front Bench has completely sold out. That is particularly sad because—
Baroness Falkner of Margravine
The noble Lord waxes on about principles, but perhaps I may respectfully suggest to him that he would know a thing or two about them, and indeed the Conservative Party, given where he is today and where he was for many years.
Lord Davies of Stamford
The noble Baroness may have better things to do with her time, but if she feels like going over my track record in public life and indeed before, I have to tell the noble Baroness that it is a matter of fact that my first political campaign was conducted on the 1975 referendum. That shows how old I am. I have been absolutely consistent on the matter, as indeed I have on other matters. When I joined the Tory party in 1974, it was actually the pro-European party. The noble Baroness would not have been born or thought of then, so perhaps she has forgotten that fact. I have been extraordinarily consistent.
Neither the Tory party nor, I have to say in all honesty, the Labour Party has been consistent on this matter, but until this moment, the Liberal Party was. We can go back to the 1950s when the treaty of Rome was first conceived and signed. The Liberal Party was the one political force in this country that was in favour of our joining the European Community as it then was, and has been committed to its principles and spirit ever since. Those were the days of Jo Grimond and Lady Violet Bonham Carter. There is thus a personal as well as an intellectual tradition that goes straight back to the internationalism of Sir John Simon to Asquith and Gladstone. What would all those figures be thinking today if they saw the Liberal Front Bench subscribing to a measure like this? It is a very sad day for all of us. I have been happy to pay tribute to the consistency of the Liberal Party and its successor the Liberal Democrat Party until this moment, and precisely because that history has been so honourable up to the present time, today’s picture is a squalid and sad one for the country as a whole.
I said that this Bill was born in cynicism, but unfortunately the cynicism does not end there. The very fabric of this Bill is hypocrisy. The Government state that what they want to do is bring about a situation where there is direct public involvement through referenda and accountability to the electorate as a whole. All I can say, using reasonably parliamentary language, is tell that to the marines. There is no intention to have a referendum on anything at all; there could not possibly be. We know already that this Government are not going to have a referendum in this Parliament while they are still the Government because they have committed themselves not to on any grounds. Horrible thought that it is, let us suppose that the Tory party wins the next election and this Bill remains on the statute book—I take it as axiomatic that a future Labour or indeed a future Labour/Lib Dem coalition Government would immediately rescind this nasty piece of work—so can the House imagine for one second that there would be a referendum on any of this?
Let me remind noble Lords of the sort of subjects that would call for a referendum listed in Schedule 1. They include:
“Article 17(5) (number of, and system for appointing, Commissioners)”.
Are we going to go to the public, spending tens of millions or even hundreds of millions of pounds—I have no idea what it costs to run a referendum—with a referendum on the number of and system for appointing Commissioners? The list goes on:
“Article 19(2) (appointment of Judges and Advocates-General of European Court of Justice)”.
Are we going to have a referendum on that? Possibly we might do so on,
“(specific provisions on the common foreign and security policy)”,
but what about,
“(decision of European Council extending time during which treaties apply to state withdrawing from EU)”?
The scenario there is that a country wants to withdraw from the EU. It is a complicated negotiation, so the suggestion is that we should agree timetables and negotiate with that state on a qualified majority voting basis so that we do not take a month of Sundays agreeing everything or failing to agree anything at all. Are we going to have a referendum on that? Does anyone in the House seriously think that the Government are going to go to the public and say, “Can we please have consent to have qualified majority voting to resolve this particular issue?”.
The list in the schedule goes on and on and includes:
“Article 192(2) (adoption of certain environmental measures)”.
Is the idea of introducing QMV on environmental protection really so shocking that we are going to go to the public with a referendum on it? There is also:
“Article 127(6) (conferral on European Central Bank of specific tasks relating to prudential supervision)”.
Unless the Government have gone completely mad, Members on both sides of the House are in favour of good banking supervision, which probably does not involve 27 people all having to agree unanimously and then going back to their Governments to pass referenda and so forth. Is that a sensible thing to have a referendum on?
Again, I could go on and on. The list includes:
“Article 115 (approximation of national laws affecting internal market)”—
that is hardly shocking, because we have had that for many years—and,
“Article 89 (cross-border operation by competent authorities)”.
What is wrong with that? The most extraordinarily minor things are covered, such as anything to do with the “European Public Prosecutor’s Office”. All of these might be resolved by QMV, but they have to have a referendum. Are we going to the wonderful electors of the Grantham and Stamford constituency and say, “We want you to take the time to look at all these documents about the Public Prosecutor’s Office and then we want you to go to the polls”? I thought that we were all worried about excessive public cynicism about politics and low participation rates in elections. If we start having referenda on this kind of stuff, how can we expect those participation rates to be at all respectable? We cannot, of course.
Anyone who reads this thing will see more of the same. I shall draw attention to something which is the absolute killer argument. It arises in Clause 3(2):
“The referendum condition is that—
“(a) the Act providing for the approval of the decision”—
it is a decision, not a treaty change—
“provides that the provision approving the decision is not to come into force until a referendum about whether the decision should be approved has been held throughout the United Kingdom or, where the decision affects Gibraltar, throughout the United Kingdom and Gibraltar”.
Are we going to ask the British public to go to the polls to determine something that does not affect us but merely affects Gibraltar? Who in this country has ever heard of such lunacy? Cynicism understates the matter. I am looking for a stronger word than cynicism or hypocrisy to describe a situation in which the Government seriously suggest that we will have referendums on these kinds of subjects taking up the time of the British people. Are we going to have dozens of referendums on this kind of nonsense? Of course we are not. This is absolutely through and through false; there is not the slightest intention to have a referendum on any of this.
There is, however, an intention to initiate a freeze—and, if possible, create a crisis—in relations between the United Kingdom and the rest of the European Union which would make it absolutely impossible for us to give even the sensible, pragmatic and reasonable responses required by the evolution of events, which we all know to be necessary. The British Minister there will be completely paralysed and he will become Monsieur Non or Mr Niet, whatever it may be; that will be his role.
That can lead to only two things. Eurosceptics dream that what will happen is that the whole of the European Union, which they hate so much—the speech of the noble Lord, Lord Stevens, is a good example of that—will come to a juddering halt or pack up and go home and that this nasty European Union will dissolve itself or throw in the sponge and give up trying to do a serious day’s work in making sure that the interests and the futures of the peoples of Europe are properly looked after and defended. They may dream that that is going to happen, but of course it is not. The alternative will happen. The EU will proceed under the enhanced co-operation programme, the framework for which has already been created in the Treaty of Lisbon, and we shall be left behind. So that is the real agenda. It is so far from the declared agenda that I stand by my words—cynical and hypocritical.
Lord Hannay of Chiswick
My Lords, the troubled history of Britain’s relations with the rest of Europe has been marked by numerous incidents of bad luck and bad judgment. It was bad judgment by both of the two main parties that we did not join the Coal and Steel Community and the European Economic Community at the outset of their existence in the 1950s; it was bad luck that we were vetoed twice by General de Gaulle in the 1960s; it was bad judgment that we tried unsuccessfully to renegotiate the terms of accession in 1974; it was bad judgment, too, that we did not join the exchange rate mechanism in the mid-1980s, when the then Chancellor of the Exchequer and the then Foreign Secretary, both now Members of this House, pressed that we should do so; and it was bad luck that when we did join in 1990, the whole system was beginning to suffer from the aftershocks of German reunification. The Bill we are debating today falls fair and square in the bad judgment category.
I shall not weary the House with a full-blown rehearsal of the arguments against the use of referendums as a regular part of our constitutional practice. We debated that extensively last October on the basis of an excellent report by the House’s Constitution Committee, which saw many negative aspects in referendums—many more than any positive ones—and I set out my views then. Suffice it to say that the problems of low turnout, of the impossibility of ensuring that voters address the question being asked and are not swayed by extraneous considerations or by their attitude to the Government of the day who are posing the question, are serious—perhaps fatal—defects which undermine any assertion that referendums represent a superior form of democracy to the working of representative parliamentary institutions.
It surely cannot be denied that their frequent use will seriously damage the legitimacy of the institution of Parliament, which has been built up so laboriously in this country over many centuries. Some of these defects can be palliated by devices such as adding a sunset clause to the present legislation, or by making the result of a referendum purely advisory, or by setting a voting threshold below which the matter would return to Parliament for decision—this last device, of course, being an amendment which the House supported in the context of the recent alternative vote referendum Bill. All these palliatives will, I trust, be given full and careful consideration as we scrutinise the Bill, but the fundamental negative consequences for our parliamentary system of the proposed extensive use of referendums contained in the Bill cannot simply be wished away.
The hard fact is that the Government faced a choice when they set out to give legislative effect to the coalition agreement of last May: that any significant change to the EU treaties should be subjected to approval by referendum. They could have brought forward a quite simple Bill ensuring that any future treaty amendments that transferred significant powers to Brussels would be so treated and would be the object of a referendum. Or they could, as the present Bill does, seek to invent new procedures, including referendums, to handle decisions taken by the European institutions under the powers conferred in the Lisbon treaty, which we, like every other member state, have ratified. I believe the Government made the wrong choice.
That, too, seems to be the thrust of this House’s Constitution Committee in its excellent recent report on the Bill, published on 17 March, when it stated:
“In our judgement, the resort to referendums contemplated in the European Union Bill is not confined to the category of fundamental constitutional issues on which a UK-wide referendum may be judged to be appropriate. Furthermore, many of the Bill’s provisions are inconsistent with the Government’s statement that referendums are most appropriately used in relation to fundamental constitutional issues”.
That is a damning judgment indeed.
In making their choice to go for a complex Bill, the Government have constructed a cat’s cradle of incredible complexity which, as cats’ cradles tend to do, is only too likely to catch and entangle the cat that created it in the first place. The main effect of the Bill if passed in its present form will be, I would guess—others have said this, too—to blight British decision-making in Brussels, even when the decision in question might be one which is strongly in Britain’s interests to see go ahead. After all, no Government are going to willingly risk defeat in a referendum as a result of mid-term unpopularity or in the approach to a general election. It is far more likely that we will find the Government of the day blocking a decision in Brussels, even when it would be in our national interests to pursue it.
There is also what I call the chicken and egg problem about this legislation. All the EU decisions which are designated to be caught by the Bill are only the ones that require unanimity in the Council. So unless and until Britain signifies its agreement to the measure in question, it does not exist in a legal form which can be put to the electorate for confirmation or rejection. Among other things, this implies that the Government as a whole will have to campaign for a yes vote in a referendum—I would be grateful if the Minister can confirm this—because they will already have backed the decision in Brussels. If they had not, there would not have been a decision and there would not be a referendum. Is that a correct reading of the situation?
If the referendum were to have a negative result, or if, for that matter, we were to block a decision simply in order to avoid the need for a referendum, we should of course have set up a simple position in Brussels under which the other 26 member states—which, by definition, would have agreed to it—could go ahead without us under the enhanced co-operation procedures of the Lisbon treaty. We would be left out of a measure which the Government and Parliament would have decided it was in our national interests to participate in. This would be an absurd situation. Is that what the Government have in mind?
In any case, the Bill is shot through with constitutional contradictions. None is more flagrant than the clear and deliberate attempt to go against one of the main precepts of our unwritten constitution, namely that no Parliament can tie the hands of its successor. That is exactly what the Bill sets out to do. This is made all the more blatant by the statement from the Government in the coalition agreement that they do not intend to agree to any significant transfer of powers to Brussels during the lifetime of this Parliament. The referendum provisions of the Bill will only be triggered in subsequent Parliaments, not this one. That really is making constitutional innovation on the wing. It is another powerful argument for a sunset clause.
As a number of noble Lords said, there is another of those contradictions in Clause 18, on the,
“Status of EU law dependent on continuing statutory basis”.
It is hard to understand what that provision is meant to signify or what, if any, effect its enactment would have. It is harder still if you read that in combination with Explanatory Notes 118 and 119, which state:
“This clause does not alter the existing relationship between EU law and UK domestic law; in particular, the principle of the primacy of EU law … The rights and obligations assumed by the UK on becoming a member of the EU remain intact”.
To use another feline metaphor, this clause really resembles the smile of the Cheshire Cat. The longer you look at it, the more it tends to disappear. Surely either the clause should be dropped or we should include in the Bill the Explanatory Note that I have cited.
I have no doubt—we have to some extent already been told this by the protagonists of the Bill—that it is designed to enable Britain to feel comfortable in its EU membership and the mere existence of this so-called referendum lock is meant to achieve that. Yet it certainly does not appear to be having that effect on the Government’s Eurosceptic supporters in another place nor on the prominently Eurosceptic press. Nor is it easy to see how a succession of referendums on relatively abstruse aspects of European law and practice could have that effect either, whether they were voted down or confirmed. If it is not going to appease Eurosceptics and will work against our interests in Brussels, what on earth useful purpose does it serve?
It is regrettable that, after a lengthy period of EU preoccupation with institutional issues, we British should now be heading back down that long, dark tunnel. I had hoped that with the Lisbon treaty in force we could focus on the substance of European policy-making, completing the single market, achieving economic and financial stability and growth, freer and fairer world trade, further enlargement and making a reality out of the common foreign and security policy. Instead, we appear to be seeking to deny the EU the flexibility built into the Lisbon treaty and the capacity to adapt to changing circumstances. Without that, no institution, either at the national or international level, can hope to prosper and flourish. The Government’s policy seems to be to lock the door and throw the key out of the window.
Lord Plumb
My Lords, we are half way now and in danger of getting a bit repetitive on some of the points being made. That is inevitable in a debate on a Bill such as this. I must declare my interest, having spent 20 years as a Member of the European Parliament. I have been involved in many changes in the European integration project.
We have been well reminded today, particularly by my noble friend Lady Williams, of the relevance and importance of a project that began in the aftermath of the Second World War and progressed step by step over more than 60 years. It now stands at a critical juncture, as it has on many occasions in the past. It is discouraging to hear so many negative comments today when we need to concentrate on developing that project and determining the way forward, working on many of the successes that we have had over the years. It is also inevitable that, among 27 countries, many of which are now economically weak, crises will occur needing a strong political will to overcome their many fiscal and economic problems. I regret that the Bill, from what I see in it, does not necessarily offer the sort of political will that we need to move forward on some of those more positive projects.
Your Lordships are well aware of and justifiably concerned by the need for budget discipline and long-term sustainability in the marketplace. I can be as critical as anyone else of the unnecessary and complicated controls through directives and regulations, surrounded by red tape and bureaucracy and causing unnecessary waste and expenditure. However, these are often exaggerated in this country. I often wonder whether people really ask themselves what directives or regulations we might have had in this country had we not been a member. Things would not have stood still where they were before we joined.
I can use plenty of examples, but the one that was obviously nearest to us as I spent my time in Brussels, Strasbourg and elsewhere was the inconvenience of moving the European Parliament from Brussels to Strasbourg each month. That is of course nonsense but the Parliament itself has no power to determine where it sits. In another way, the European Parliament’s power has grown as its responsibilities have increased through the co-decision procedure on future development. That has given the Parliament some responsibilities. If you take power, you have to be more responsible. I believe that that is what is happening. I would be interested to go with my chairman on Thursday to Brussels to discuss these things with Members in the European Parliament.
I am sure that my noble friend the Minister would agree that the Government’s role in influencing a clear strategy for a single market is considerable, given the Commission’s claim that it is suffering from “integration fatigue” and “market fatigue”. We must remember that the single market—something very much in Britain’s interests—celebrates its 20th birthday in 2012. That birthday will take place with a new strategy that could help to open untapped potential in order to achieve a growth, as has been estimated, of 4 per cent GDP over the next 10 years. I hope that the report produced by a European sub-committee on relaunching the single market will be before your Lordships for debate shortly.
I have no quarrel with much of the Bill, which may clear up some misunderstandings, particularly those regarding some major issues. I am concerned with the possible restrictions on treaties relating to the EU. We have been there, we have done it and we have settled those problems. Do not let us start undoing and unpicking issues that are particularly in our interest. Because of the time, I will name only one major concern.
As many have said, the Bill provides that a referendum has to be held before there can be any amendments to the Treaty on European Union or changes that may appear to give significant transfer of power from sovereign Parliament to the European Union. As the noble Baroness, Lady Symons, said, 13 cases are listed where the treaty or Article 48 could attract a referendum. I am not a supporter of referendums for such purposes, even with a 40 per cent threshold. Many of the voters to whom I speak—and I have spoken to many recently, knowing that this was coming forward—have said that they would certainly accept Members of Parliament as agents with legislative powers but would not be in favour of transferring these powers to make radical alterations by any referendum to laws that are already made and determined. It is the responsibility of those who are elected to do a job in the interests of the people. Would it not be more appropriate to have a sunset clause, as the noble Lord, Lord Hannay, has just said? Without one, there would be a loss of authority to Parliament.
Would my noble friend the Minister not agree that a referendum should be needed only for significant changes? Would this not lead to considerable confusion, triggering a tendency among other member states to engage in enhanced co-operation among themselves and leading towards the United Kingdom being excluded from intergovernmental agreements outside the framework of the European Union? Surely the co-existence of the sovereignty of Parliament and the principle of EU law is assured as long as the 1972 Act—an Act that has been amended from time to time to take account of the new treaties—remains on the statue book. Would my noble friend the Minister agree that, if we judge that we should have a referendum and it is written into the Bill, that referendum should be explicitly made only advisory? If it were to be mandatory, do I understand correctly that the Government may be bound by results but that Parliament may not, leaving Members the freedom to choose the way forward? Would that not cause a few problems if that were to happen?
The main effect of the Bill as drafted will be to encourage Governments to avoid any decision that might trigger a referendum, even decisions in Britain’s interest, such as opting for the Single European Act. It is surely not in Britain’s interest to be marginalised, allowing other European countries to take advantage.
As we have heard from many noble Lords, many negative publicity points are made generally about the European Union. However good the intentions may be to satisfy public opinion that our membership is important, the media have already started to campaign, knowing that there is a possibility of a referendum coming, advising voters to vote no to Europe in order to withdraw—deliberately, therefore, misinterpreting the many references made in the Bill. This would surely be a retrograde step.
Lord Dubs
My Lords, when Labour won the 1997 election, it very much looked as if the many years during which this country would agonise about its relationship to the European Union had come to an end and that we were beginning as a country to take our full place in Europe with our European partners. Now I fear that this Bill is setting the clock back and that we will return to those agonising years in British politics, unable to settle on what basis, if any, we are members of the EU. It is a very retrograde step for that reason, if for no other.
I wonder what our European partners must be thinking of us if they are listening to this debate or, above all, to the debate that took place in the Commons, seeing legislation going through that casts doubt on the very European Union that east European countries have struggled for so many years to join. There is such a contrast between the Euroscepticism and downright hostility to Europe that we hear sometimes in this country and the passion on the part of countries that threw off communism, wanting to be members of the European Union, not just because there might be in the short term financial benefits for them but because they believe ideologically that they have turned their back on communism and want to become part of a western democracy that believes in human rights and the rule of law and all that sort of thing. Then they see us, as one of the founders of democracy, saying that we are not sure about this European Union that they have aspired to join. That is a slap in the face for them and does not send out a very good signal about the sort of country that we are likely to become if we go on down this path.
The test of any Bill is clearly the difference that it will make. At its very best, this Bill will not make too much difference. After all, if the Government do not intend to bring about any changes in the lifetime of this Parliament in transferring powers, they do not need the referendum option anyway. At worst, the Bill is harmful, partly for the reasons that I have mentioned—it sends the wrong signal to the countries that have just joined or wish to join the EU. It also sends the wrong signal about what sort of country we are and what our relationship is to be with the European Union, whether we are going to be good partners or not. I fear that our partners will see that we have turned the clock back.
Why are the Government doing this? Clearly, these measures might bind a successor Government, but a sunset clause will put a stop to that. In any case, the next Government in this country will surely say that they are not going to have this provision and reverse it. So it does not seem to have much point. As for placating the Eurosceptic wing of the Tory party, the Bill may have missed the mark as well. Certainly, to judge by some of the comments made by Tory MPs in the Commons, it has not succeeded in placating them. In a way, I feel for the Lib Dems, who are sitting there looking incredibly glum.
Lord Dubs
As my noble friend Lord Tomlinson says, they are the goodies. For example, the speeches by the noble Baroness, Lady Williams, and the noble Lord, Lord Maclennan, were excellent. Clearly, they represent what the Lib Dems feel more than the official policy of their party.
As a supporter of the EU, of course I believe that the EU needs to be reformed and of course I believe that there should be changes in the EU, but these are not the changes. This Bill and the discussion that it is creating will stand in the way of our being able to consider the EU and the more positive contribution that we in the EU can play to change the EU and make it better. We could all go through a long list of reforms that we would like to see in the EU, but of course they will not be discussed at the moment.
I do not want to talk about the media except to say one thing. Reference was made to the BBC. I do not believe that the BBC is pro or anti the EU; I believe that it has failed to cover it at all. One reason why public opinion is susceptible to the Murdoch press and the Daily Express is that nobody in our media is saying positive things about the EU—they are saying nothing. The Guardian and Independent might, but I wish that the BBC would cover the EU properly, warts and all, in such a way that we had a better understanding of it.
I read with interest, as did many Members of this House, the conclusions of the House of Lords Select Committee on the Constitution, which said that the Bill is “complex and highly technical” as regards the referendum lock provisions, which,
“hinders rather than helps transparency”.
Certainly there is a lack of transparency about this Bill.
I fear that the Bill will have sent the wrong signal to our European partners and told them that we no longer wish to be in the mainstream of the EU, which will lead to a two-tier Europe with less British influence. The Government have said that they will, though not in this Parliament, support an amendment to the treaty over transfer of powers. However, even with the best will in the world—and I shall give the Government the credit of saying that they have the best will in the world—things can change and there might be a need in future, even in the lifetime of this Parliament, to transfer some powers in the interests of this country. You cannot always predict the future in terms of the environment, nuclear energy, terrorism and so on. There are all sorts of measures for which we might wish for more powers, because they would protect this country better. If we got in that position, we might find it hard to get a referendum passed, particularly as we know that referenda in Europe are often decided on the basis of issues other than the subject matter of the referendum. We have seen that all too often in referenda. The popularity of the Government influences the referendum rather than the subject matter.
Like other Members, I am also concerned that if we were to get referenda we might have them on relatively minor matters, which to the British public would seem trivial. They are a costly business, as we heard time and again during the passage of the recent legislation on the alternative vote referendum. Therefore, I do not think that that is a sensible way forward.
Fundamentally, we have to decide whether we believe in parliamentary democracy or whether we want to go down the path of too many referenda. After all, they are alien to our parliamentary traditions except where there are major constitutional matters to be decided. If the Bill were only about major constitutional matters, I would say, “Okay, fine”, but to have referenda on minor or apparently trivial matters is simply not convincing. In their response to the Political and Constitutional Reform Committee’s report on the Parliamentary Voting System and Constituencies Bill, the Government said:
“The Government also agrees with the Committee’s view that referendums are most appropriately used in relation to fundamental constitutional issues, but that it is not possible to provide a precise definition of this term”.
It may not be, but we would know one when we saw it. A lot of those liable to come forward are not in that category.
I am also concerned that under the Bill there will be a need for more primary legislation to replace the quicker procedure that Parliament has now. I do not know how many Bills that will involve or how much time, as the noble Lord, Lord Williamson, mentioned. Can the Minister tell us what sort of legislative burden there will be in additional primary legislation that we will have to go through in the course of the Parliament?
I wonder whether, if we are to have a referendum, it would not be preferable to have a non-binding outcome or, alternatively, one that might be binding only if the turnout exceeded a threshold. I feel that we have been here before on the long days and nights on the AV Bill, but I hope that we can amend this Bill so that it will work slightly better than it would at the moment.
Finally, I wish that we could reject this Bill. We understand why we in this House cannot, although all the arguments suggest that it would be defeated pretty handsomely if we all voted on our beliefs. All we can do is make it less bad by putting forward some amendments to improve it.
Lord Oakeshott of Seagrove Bay
My Lords, I wonder whether I could just correct one thing. We on these Benches are not at all glum. We are greatly enjoying all the pro-European speeches from all around the House, including the noble Lord’s.
Lord Taverne
My Lords, as this debate goes on my speech, as the House will be glad to hear, is getting shorter and shorter. It is almost inevitable that there be some repetition but I will try to keep it to the minimum. I oppose this Bill in principle for three reasons: philosophical, political and constitutional. The referendum argument should be put in some context because the Enlightenment —that glorious episode in the history of civilisation—saw the birth of democracy, but the recognition that the will of the majority should generally prevail led to two strands of development. One of them was the approach of John Locke; the other was the approach of Rousseau.
Locke’s approach was to emphasise the rule of law and the rights of minorities as well as the right of the majority. The Rousseau approach was to say that the will of the people must prevail at all costs and should not brook any opposition whatsoever. Locke’s philosophy was expressed in our parliamentary system and its gradual evolution from the Bill of Rights of 1688, while Rousseau’s approach found its expression in the French Revolution and in the Committee of Public Safety. In fact, in the house where he was staying, Robespierre the incorruptible used to read to the daughters of his host the works of Rousseau rather like a religious preacher who was reading it for the benefit and moral edification of his pupils.
I want to challenge the idea that a referendum somehow leads to a connection between the people and government. The followers of the referendum are also the people who feel that it is the ultimate expression of democracy. As a result, they regard MPs as delegates and not representatives—because if they were representatives, they might be flouting the will of the majority. Perhaps I may draw on my own experience to challenge this idea.
I once fought a by-election as an independent in 1973 on the issue of whether a Member of Parliament should be a delegate or a representative. My local Labour party in Lincoln told me that if I voted in favour of joining the European Community, against their instructions—indeed, against a three-line Whip—they would withdraw support. Well, I did and they did. I resigned, called a by-election and the result was an overwhelming victory for the principles enunciated by Edmund Burke. It is interesting that an opinion poll taken in Lincoln showed that the people there were against the idea of our joining the European Community by a majority of three to two.
I therefore believe that it is a mistake to think that, somehow or other, a referendum is the ideal instrument of democracy. If you ask people, “Do you want a vote?” they of course say yes. If you ask, “Do you think it is important that you should have a vote?”, it is, “Yes, of course it is important that we have a vote”. But do they vote? On the whole, the turnout in a referendum is very low and they often vote on an issue that is not the issue of the referendum. How many people are likely to turn up to vote in a referendum on whether we should partake in the office of a public prosecutor in Europe?
The political objections have been so well stated by so many previous speakers that I shall not repeat them. Yet why do we have this Bill? The fact is that a virus has infected the Conservative Party—a virus of hostility to and even hatred of the European Union, whatever the effect on our long-term national interests. It is odd how, in the past 50 years, a virus has infected both main political parties. I saw it happen in the Labour Party during the 1970s and 1980s when a virus of latter-day Marxism affected nearly all younger members of the party, including some of the brightest. Many of the champions of new Labour were at one time Trots, members of the Socialist Workers Party or the Militant tendency. All of them supported unilateral nuclear disarmament and leaving the European Union, including Tony Blair, but eventually the party recovered its senses. Now, it seems that no Conservative under 40—certainly, no Conservative MP that I am aware of— recognises the need to work closely with Europe as the natural forum for exercising our influence in the world at large. No doubt they will recover in time; I hope they do so soon.
My third objection is a constitutional one and a point that has been made very effectively by several speakers. The referendum will be triggered if there is any transfer of powers to Brussels, but the Government have no intention of transferring them. So have we got it wrong in thinking that they have no such intention? Are they perhaps thinking of joining the eurozone? It seems a bit unlikely. Are they going to support majority voting on foreign policy or a common defence policy, take part in a European public prosecutor’s office or extend the scope of majority voting? Will the Minister—I feel slightly sorry for my noble friend who is going to reply—explain under what circumstances the referendum would be triggered in the present Parliament?
The answer regarding the purpose of the Bill is quite plain: it cannot and will not apply to the present Parliament—its purpose is to bind the next Parliament. That is a wholly unconstitutional proposal. It contradicts the principle that Parliament is sovereign and cannot bind its successors, a principle that is now restated in Clause 18. It is a most unconstitutional principle and there is a simple way of thwarting it: to have a sunset clause saying that Clause 1 and Schedule 1 shall cease to have effect when this Parliament is dissolved. I hope that all Liberal Democrats will support such a clause because I see nothing in the coalition agreement that forces us to accept a wholly unconstitutional principle. I hope that Members of all parties, irrespective of their views on the merits of Europe, would also support such a clause to stop a constitutional monstrosity being enacted.
Lord Stoddart of Swindon
My Lords, I remember the noble Lord’s by-election very well because I went along to it and canvassed against him. It was not a very good experience because most of the people who had previously voted Labour, or a good many of them, were going to vote for him. They voted him back into office and here he is, still making speeches in Parliament, which of course are very welcome.
Today there seems to have been a coalition Bill but also a coalition against the Bill. This has been an interesting experience; I do not think that I have heard one speaker for the Bill. I have to say that I was going to welcome it, and to some degree I still do. However, it is 40 years too late. We should have had a referendum before we joined the European Economic Community, as it was then, but Mr Heath fought the 1970 election—in which I was elected the Member for Swindon—on the basis that he wanted a mandate to negotiate, no more and no less. Instead of holding to that mandate, he decided that he would push the legislation through Parliament without a referendum, and it was passed.
In 1975 we had a referendum, which was brought on by pressure from Tony Benn, and the people decided that they wanted to remain in the EEC. The opportunity was then missed, and it would have been a proper opportunity, to test the opinion of the people to see whether they wanted to join the Common Market, or the EEC or whatever it was, and discover exactly what road they had embarked upon. It was not simply a common market but a road towards much larger European integration than they expected. So any referendum now would be 40 years too late.
Opportunities to have referendums on other important matters, like important treaties, have been missed. We should, for example, have had a referendum on the Single European Act because it was a huge step towards further European integration. We should have had another referendum on the Maastricht treaty; unfortunately, that was refused by a mere eight votes in the House of Commons. We should have had a referendum on the Lisbon treaty. We did not, and because we have refused to grant referendums on these huge changes people have begun to distrust government altogether. The result is that the Bill, which will not solve the problems that we face, will give some reassurance. However, the building blocks for a single European state are already in place. Apart from having a single currency and a single defence policy, it is difficult to see how much further we can go without creating a country called Europe.
There are, as we have heard, many defects in the Bill. It is devoid of anything to repatriate powers that should not have been ceded in the first place. There is nothing there that gives hope for the repatriation of powers to this country. Indeed, the Government can avoid having referendums by various devices. Parliament does not seem to have any redress in such cases, unless it is to take action through the courts. That, in itself, would undermine parliamentary sovereignty. As we have already heard, the Bill cannot commit future Governments or Parliaments. There is no way in which the Bill can do that. That has been pointed out forcefully by many speakers today and they are absolutely right.
My other very important point is that there are apparently to be no referendums on new entrants to the European Union. That is the most essential thing for the people to have a say in. The extension of the influence and geography of the European Union is very important, particularly in the case of Turkey, which has a population of 80 million, all of whom would have access to this country in due course. Turkey would be an enormous influence on the leadership of the European Union. Once you have attracted a country from Asia, it would cease to be a European community; it would be a Eurasian community. Furthermore, the French want to incorporate the north of Africa as well. Would we have a referendum on that? I am sure that we would expect one.
Incidentally, there are no safeguards in the Bill against referendums being run time and again, as they have been in Denmark and the Republic of Ireland. If the Bill is to pass, we need an amendment to ensure that if a referendum is held it cannot be held again within, say, five years, so that Governments cannot say, “You must keep voting until you give us the right answer”. As I say, it has happened elsewhere.
Finally, we need a cost-benefit analysis of our membership of the European Union. Time and again, the Government have been asked to do this and, time and again, they have refused. Hence, they cannot really make their case. Unless the Government can tell the people of this country that there are real benefits, which they can see and understand, they will not believe that being in the European Union is good for them and good for the country. We need a cost-benefit analysis, and we should then have one referendum, asking “In or out?”. That would settle the matter and I could go home and have a nice, comfortable retirement.
Lord Judd
My Lords, I hope my old friend the noble Lord, Lord Stoddart, will forgive my observing that, in the last part of his remarks, he seemed to reveal the old fault of looking at the price of everything but failing totally to see its value. Of course we want effectiveness and do not want waste—we would all agree on that. However, we all know that building a spirit of European co-operation is about something more than just cost-benefit analysis.
If there has been one refreshing aspect to this debate, I found it in hearing the authentic voice of the principles of the Liberal Party at its best—on international realities and the relevance of the European Union to those realities. I found it altogether reassuring to hear the honest comments of Members such as the noble Baroness, Lady Williams, and the noble Lord, Lord Maclennan. Both spoke about the European project originating in the aftermath of the Second World War and the vision of how we were going to prevent another nightmare of that kind. Incidentally, I say to the Conservative Party opposite that it was a vision very much shared and expressed by Winston Churchill himself.
It is always good on a Bill of this kind to break free of intricate detail and to look at the context in which the legislation is being put forward—there has been a good deal of consideration of context in the debate—and the driving reality. There has been a good deal of examination of what really is the driving reality: coalition politics and the rest.
There has been much mention of sovereignty. I take second place to none in my views on the sovereignty of Parliament in a constitutional sense, but when we start to talk about sovereignty emotionally, we may be conveying other messages about which I am far less happy. We seem to talk about sovereignty as a sacrosanct end and principle in itself. The sovereignty of Parliament is of course part of how we achieve effective democracy, but we have to look at the world in which that democracy is being taken forward. We live in a totally interdependent global community. This is true of the environment, the problems of which are accentuated by the finite nature of many essential resources. It is true in an economic sense. It is true increasingly as regards the movement of people. It is true of health and the advance of information technology. It is true of culture. Most importantly, it is certainly true of security of defence in an age of cyberspace and potentially highly disruptive terrorism.
The first responsibility of a Government is of course to protect the people within their jurisdiction, but not one of the issues that I have mentioned, and many others, can be resolved in the context of the nation state alone. Every one of those issues requires effective international co-operation. The test of political leadership and government is to secure the well-being of the people who live in the British Isles by contributing to effective international collaboration, and finding and applying the necessary solutions. European co-operation is a vital step towards this.
There is of course a paradox. Certainly, as globalisation has come about, there has been a growing sense of helplessness among increasing numbers of people—a helplessness in their ability to affect events. There has been a loss of confidence and identity, and political apathy has resulted. This has led to the appeal of power-hungry xenophobic opportunists who seize the opportunity of alienation to peddle their message. However, as has been stressed in the debate, this is above all a challenge to political leadership. It is a complex task—of course it is. However, these issues are not separate or moving in opposite directions. The challenge to political leadership is surely to strengthen that sense of identity at the same time as leading on a public understanding of the imperative of international co-operation. These two things should be two sides of the same coin.
European institutions are remote—but why? Again, I side completely with noble Lords who argued that perhaps the biggest culprit is a total failure of political leadership to argue the case for their relevance. Instead, the reverse has happened. I did a stint as Minister for Europe way back in the 1970s. I remember being confronted with the culture and not being happy about it. It is always easy to say these things later in life, but it is true that I was not happy. When a meeting had taken place, the nature of the job was to rush out to a press conference and demonstrate how strong one had been for Britain in the negotiations and what one had gained for Britain. I used to think, “Surely, for God's sake, we should be going out of meetings saying, ‘Look at what we have achieved for Britain and the people of Europe by the agreements that we have reached, and this is why they are so important’”. We all know that this has been the name of the game. The populism has been there: we have faced in two directions.
We must also face up—and those of us in the political community should never miss an opportunity to ram this home—to the absolute, crude, opportunist sensationalism of the media at their worst, as they look constantly to win circulation battles and the rest, instead of understanding the historic and crucial role in a democracy of providing the quality of analysis on which that democracy can operate.
Some might argue, in the context of the social and political realities and of the public attitudes that exist, that we need to move to a more confederal approach. However, if we do that, the test must be how far it strengthens international action. At the moment, we have too many of the characteristics of neurotic ostriches. The Bill depresses me because of its lack of vision, lack of strategy, lack of purpose and total lack of political honesty. As my noble friend Lord Dubs has just said, how on earth will it enhance our influence in Europe and in international institutions to be seen constantly as the elderly neurotic on the edge, afraid to throw ourselves in?
Back in the 1970s, funnily enough before Jim Callaghan invited me to be the Minister to Europe under David Owen—now the noble Lord, Lord Owen—I had been a critic of the European Community. I felt that it had more of the characteristics of the nation state than of the kind of international co-operation for which I was looking. I was very interested by the outward-looking nature of EFTA and the rest. However, with all sincerity I share with the House my total conviction, which I had at the time of the referendum during the Labour Government and have had ever since, that if the nation decided that it was going along the European road—and we did decide to do that—there was only one way to play it, namely to be second to nobody in our commitment both to building a strong, effective Europe and to ensuring that the project met the needs of our people and the people of Europe. I am afraid that time and time again we have undermined our potential to make that contribution because of our neurosis, because we are looking two ways and because of our political leadership's failure to spell out to the British people as clearly as it should be spelt out that their destiny lies in effective international co-operation, starting with Europe.
The Bill does nothing to meet that challenge. We ought to be ashamed of it.
Baroness Nicholson of Winterbourne
It is a very great honour to follow such eminent speakers in this debate. This is a topic of very high value. The noble Lord, Lord Judd, commented on the great emotion that it raises. I am afraid that in comparison with his speech and that of the noble Lord, Lord Stoddart, for example, mine will be very dry, and I hope that your Lordships will forgive me.
The Government are right to believe that United Kingdom membership of the European Union is in our national interests, and the promise vigorously to champion those interests while playing an important role in the European Union is to be welcomed. Of course, Britain has always played a powerfully important part in all affairs of the European Union, and we have been wonderfully well represented by successive generations of our diplomats. The Foreign and Commonwealth Office is generally considered to be primus inter pares and is spoken of as such by other delegations in the EU. With the inspiring presidency of the noble Lord, Lord Plumb, who has spoken today, the tremendous Commission competences exercised by the noble Lord, Lord Brittan—another powerful and important British figure—and the Commissioner today, the noble Baroness, Lady Ashton, we have been wonderfully well served. Many speakers in this debate have not touched on the eminent contributions that the United Kingdom has made so effectively in Brussels and Strasbourg over such a long period. Indeed, I cannot move on without commenting most positively on the wonderful way in which the different Ministers here in the United Kingdom have briefed Ministers in the EU, enabling them, too, to play their part in successive Councils of Ministers in different sectors of our involvement.
The coalition agreement states that in the context of a leading role in an enlarged European Union,
“no further powers should be transferred to Brussels without a referendum”,
on the basis that this would strike the correct balance between constructive engagement with the European Union and protecting our national sovereignty. This Bill seeks to enshrine that principle in statute. However, I suggest that much of the debate in the United Kingdom that has been sceptical or hostile towards Europe has gained disproportionate traction through a perceived remoteness and democratic deficit. There should be nothing to fear in seeking to improve the democratic accountability of the European Union, thereby ensuring that the British public are engaged and active participants in the future of Europe. This remoteness was not addressed by the Treaty of Nice, nor by the Lisbon treaty, which increased the relative powers of the European Parliament. However, the intractable problem of lobbyists—6,400 of them—operating in Brussels, and within the European Parliament in particular, makes it even more important today that national Parliaments deliver the necessary accountability and public scrutiny. Your Lordships’ House and the other place should not be reticent in providing the necessary counterbalance to, and additional scrutiny of, European matters.
Part 1 of the Bill, which deals with the so-called “referendum lock”, specifies the circumstances in which parliamentary scrutiny is to be undertaken. The effect is likely to be at least an enhanced involvement of Parliament with EU matters, which have often been more or less left to Ministers. However, I believe that in our debates on the European Union we should be mindful that we are discussing our intergovernmental structure. The European Parliament, where I had the privilege of serving in the Comité d’affaires étrangères, was conceived to provide only occasional scrutiny of Council of Ministers decisions—once or twice a year perhaps—giving the flavour of democracy and not the real thing. Why was this so, or perhaps more importantly, why did we not raise this point at the time of our entry?
In the decade or so running up to UK membership, we took the view, or our Government of the day perceived, that Brussels would create laws only very occasionally and that this feather-light European legislative touch would not imperil nor even infringe our national sovereignty, as those few Brussels laws would be inferior in status to our national legislation. How wrong we were. That view held good even 20 years ago when the picture was changing fast in consequence, at least in part, of the European Parliament’s transformation from a nominated body of national parliamentarians to today’s directly elected European Parliament with significantly enhanced authority, which often seems, from the perception of the electorate, to overrule Westminster and locally elected councillors time after time.
Today the picture is very different. Together the five EU institutions create, modify or influence a larger part of member states' legislation over an ever increasing range of competences. As the noble Lord, Lord Howell, has already confirmed, European Union legislation has acquired autonomous status. Unless a member state Parliament takes an exceptionally active and determined position in scrutinising, debating and voting in a timely manner, European Union legislation rolls through, apparently unheeding of national parliamentary rights and obligations. However, parliamentary involvement in the essentially intergovernmental system on which the EU was built and still remains, relies in large part on Governments’ willingness to allow that to happen. I suggest that history shows that successive UK Governments have been unwilling to involve Parliament in a timely and appropriate manner.
For a decade, I served in the other place on European Union Standing Committees A and B. We should have had papers; we should have had debates; and we should have been able to put statements to the House before the Council of Ministers made its decisions. Too often, that was not the case. Not only was it not the case, but sometimes we got the papers after the Minister had made the decision in Brussels and had reported back to Parliament. It was the most extraordinary democratic deficit in the United Kingdom, within the powers of successive Governments, that I could ever have imagined experiencing. That was not the fault of the European Union, the Commission, the Parliament or the Council of Ministers, or even the Court of Justice or the Court of Auditors; no, it was the responsibility of the United Kingdom. The heart of the democratic deficit of the European Union lies in the United Kingdom national Parliament.
Even today, Council of Ministers debates and reports are rare and post hoc. That is not necessarily the case in other member state Parliaments or in other Governments. When I reached Brussels, I was astonished to discover that other Parliaments did not have information withheld or their authority undermined by their own Governments. The Danish situation is particularly interesting. Before a Danish Minister goes to the Council of Ministers with a proposal from his ministry or before he or she embarks on a debate or a decision-making process, he goes to the relevant committee of the Danish Parliament and tells that committee what the topic is all about and what will happen. Then the committee instructs the Minister or debates with the Minister. When the Minister has been to Brussels and attended the Council of Ministers at any level, he or she reports back to the relevant committee and then to the Floor of the House. That is the case not just in Denmark but also in other member state Parliaments.
Where is the democratic deficit? I suggest that it has been here in Westminster. Hence, I suggest, the coalition is right in its determination to take some action to bring the British Parliament and the British public closer to the heart of the EU decision-making process. To involve Parliament, Ministers must decide to do so, not once, not twice but consistently and for the long haul. That is why the Bill is of such high value to the UK. Despite its perhaps necessary complexity, it commits the Government to what I and many others perceive as the right course of action. Even if it is late, it is never too late in democratic terms.
However, I must admit that the House of Lords Select Committee on the Constitution’s report on the Bill finds:
“The multiple specification of individual Treaty provisions hinders rather than helps transparency and accessibility in the law”.
It is therefore wholly legitimate to debate in your Lordships' House the use of referenda as a mechanism in our constitutional practice, as the Bill represents a change. That alone may warrant wider detailed consideration.
We have not had referenda in the United Kingdom with the great frequency that the noble Lord, Lord Stoddart, for example, suggested in his speech. He talked, for example, of the Single European Act. I was in the other place during the passage of the Single European Act—I beg your Lordships’ pardon, I mean the Treaty of Maastricht. With the noble Lord, Lord Hurd of Westwell, who was UK Foreign Secretary, I recall spending a full year debating the Maastricht treaty. Was that not democratic? Would it have been any better if we had had referenda every moment with the British public? We are not California, I suggest; referenda should be scarce and carefully thought through, and then they will bring the British public into greater familiarity with European Union legislation and competences. Regular referenda would not be welcome. Your Lordships’ House will want to debate the use of referenda in considerable detail.
I therefore particularly welcome Part 3, even though it does little more than reassert what is already the common law position: that European law has currency through legislation and a mechanism agreed by Parliament. Case law has upheld that common law position, but there is nothing to be lost and much to be gained in placing that principle on a statutory footing. Similar provisions exist through a sovereign act in other member states, such as Germany.
The Government’s undertaking to use the Bill to reconnect European Union citizens with European Union decisions is appropriate. To be most effective, as I have already stated, that will require the Government to be proactive in making the case for our continued membership and demonstrating the benefits which our active participation brings. Those are significant, serious, long-lasting—permanent—benefits. The general public does not understand that because the Government have made no effort at any time in the past 30 years to explain that point. By leaving out Parliament to the degree that I have identified, we do not give our Members of Parliament in the other place or us in this place the opportunity to speak more clearly, as we should do, on European Union matters. The Government should be significantly more ambitious in establishing a true and lasting connection between the European Union and the people of this country.
The Bill is therefore to be welcomed as the first step towards establishing a robust connection between the public and the European Union, but many unanswered questions remain. I hope that in responding to the debate, the Minister will be forthright in responding to the issues that the Government have yet to address. The Bill is so technical and complex—a point that has been accepted by Ministers—that it risks creating greater uncertainty than it resolves. The principle underpinning the Bill is sound, but the Government have yet to explain how it will be applied in practice. Its breadth is considerable, and how it is to be applied will be important. Can the Minister clarify precisely how the Government envisage this concern being addressed?
Ministers have argued that this Bill will strengthen our democracy, but mostly powers will continue to rest with the Government. Ministerial determination will remain pivotal. It will be the Government who determine whether there has been a transfer of power. What mechanisms does the Minister propose to address that deficit and overcome those concerns? What action will the Government be taking within their own programme and communications to facilitate greater engagement between the electorate and European Union business? Their approach to European scrutiny, even within your Lordships' House, has not always been as open and timely as would be desirable and it has been historically lamentable in the other place. How long does the Minister anticipate before the results of this will feed through to the public consciousness? What action do the Government envisage taking to make more widely available the workings and considerations of the European Commission, the European Parliament and the Council of Ministers?
This Bill is profoundly useful, insofar as it restates the common law position and provides a mechanism to establish a new and proper connectivity between the electorate and the European Union. The measure of success will be the extent to which the Government’s intentions are truly reflected in their application of these mechanisms for advancing our national interest through serious parliamentary involvement here in Westminster in EU matters and through the active incorporation of our electorate in major decisions such as transferring UK powers and competences to the European Union. I support the Bill.
Lord Kerr of Kinlochard
My Lords, is it an ineluctable law of coalition government that the Wallaces get all the ghastly jobs? I think we all greatly admired the tact and skill of the noble and learned Lord, Lord Wallace of Tankerness, in extremely difficult circumstances on another Bill, but as I listen to this debate—the score so far is one supporter, two convinced that it does not go far enough and 22 critics, some of them very fundamental, of the Bill—I begin to think that the noble Lord, Lord Wallace of Saltaire, has a more difficult task on his hands. I have the greatest respect for the noble Lord, Lord Wallace. I have learnt a great deal from him down the years. I know what he thinks about the European Union, and I know how difficult is the situation he finds himself in now. He has my sympathy.
Let me say straightaway that I have absolutely no quarrel with Part 2 or Schedule 2. Part 1 is a little more complicated. I find the referendum requirements absurd in conception and damaging in effect. As for Part 3, or rather Clause 18, I think it is certainly spurious and possibly sinister. The Bill is, of course, also very badly drafted. What has happened to Foreign Office drafting? Who could have drafted Clause 18? Nobody in the Foreign Office, I am quite sure. It must have come down from a great political height. The Bill is incoherent. You cannot assert parliamentary sovereignty in Part 3 and demolish it in Part 1, condemning it to a death by a thousand cuts. It does not make sense. Clause 18, which appears to be declaratory, asserts the sovereignty of Parliament. Directly applicable EU laws apply directly to us because Parliament passed the 1972 Act. I agree. If Parliament repeals the 1972 Act, they would no longer apply to us because we would leave the EU using the new procedure set out in Article 50 TEU and the noble Lord, Lord Stoddart of Swindon, could go home a happy man. I agree with that too. Parliament decides, because Parliament is sovereign. However, in Part 1 there is this enormous list of provisions where Parliament does not decide where a referendum requirement is introduced.
The noble Lord, Lord Davies of Stamford, entertained us with some parts of Schedule 1. The one that most puzzles me is:
“Article 346(2) (changes to list of military products exempt from internal market provisions)”.
It is not the substance of the list that we would go to the nation about, it is whether the procedures for deciding the list should be changed. I know what that is about. The internal market competition rules do not apply to certain categories of defence goods, because some countries with inefficient defence industries wish to preserve them, and we wish therefore to have a protectionist situation applying to the goods on the list. The list is decided by unanimity, so it is quite a long list, because everybody who has a tinpot little defence industry that makes something which it would like to buy for its own forces makes sure that the goods in question are there on the list.
We happen to have the most efficient defence industry in Europe. It would be strongly in the UK’s interest to have the procedure for deciding on that list moved to qualified majority. The Government say that they will make sure that that does not happen in this Parliament; and in the next Parliament, the Government say, it could happen, but only if there was a referendum vote in favour of it happening. I do not understand this.
Let us remember that these are mandatory referenda, not advisory referenda. However obscure the issue, however low the turnout, however keen the Government are on the measure, however strong the support for it in Parliament—because, by definition, Parliament will have approved it and the Government will have approved it; they will have signed up to it and the whole European Union will want to do it—but however much it is in our interest, if on a turnout of 20 per cent it is 11 noes and nine yeses, that is it, it does not happen. I do not understand this. It may be, as a minimum, that we need to think about the provision that this House voted for by a large majority proposed by the noble Lord, Lord Rooker, in another context, when we were dealing with another Wallace, almost as distinguished as the one we face tonight.
I am not in favour of mandatory referenda. Actually, I am not in favour of referenda—I will be honest—but I think that mandatory referenda are particularly alarming. The 1975 referendum was not a mandatory referendum, it was an advisory referendum. The then Leader of the House of Commons told the House that it would be,
“wholly consistent with parliamentary sovereignty. The Government will be bound by its result, but Parliament, of course, cannot be bound”.—[Official Report, Commons, 11/3/1975; col. 292.]
That was a Labour Government. From the opposition Front Bench, Mrs Thatcher, in my view totally correctly, said that, “If it was binding, parliamentary sovereignty would be infringed”. Exactly. So what are we doing now?
A second argument about how this Bill would reduce parliamentary sovereignty, has already been powerfully put by the noble Lords, Lord Richard and Lord Taverne. The idea of trying to bind future Parliaments—this whole exercise is irrelevant to this Parliament because the Government have said that they will not agree to anything in Brussels and, therefore, the referendums will not happen during the term of this Government—seems to me to be clean contrary to a fundamental principle of parliamentary sovereignty. So I do not much like Part 1 and Schedule 1.
I should explain why I find Part 3 and Clause 18 spurious and possibly sinister. At the beginning, I did not know why Clause 18 was there. Cui bono? Who wants it? I still do not know. Having read the debates in the House of Commons, it is clear that no one there liked it. Mr William Cash hated it. The House of Commons Scrutiny Committee shares our puzzlement. It concluded that the clause is a,
“reaffirmation of the role of a sovereign Parliament in a dualist state (that is, a state in which external agreements are not self-enacting in domestic law). This principle is neither controversial nor in danger of erosion by the courts; and ‘did not need declaring in statute’”.
I raised that point with the Minister.
So why is it in the Bill? At paragraph 115, the Explanatory Notes assert:
“This clause has been included … to address concerns that the doctrine of Parliamentary sovereignty may in the future be eroded by the courts”.
I have followed EU matters reasonably closely for 25 years. I sit on the Law and Institution Sub-Committee, which was chaired by the noble and learned Lord, Lord Mance, and is now chaired by the noble Lord, Lord Bowness, who I see in his place. They are both powerful, legal experts. Never in 25 years have I come across these concerns. On the streets of Blackburn and Burnley, are they really worrying much about the 2002 argument in the metric martyrs case—which failed in the High Court? Would putting what we all know to be the case on a statutory basis deal with the problem of the disconnect between Europe and British public opinion, about which the Minister spoke eloquently at the start of our debate? I do not honestly think so.
We know that these arguments are spurious. We know that Clause 18 is a tombstone on the grave of the sovereignty Bill, a casualty of the coalition negotiations and agreement. Presumably, Ministers told officials to go off and find something about sovereignty that they could stick somewhere else. Here we have something about sovereignty. I can see that we are required to legislate on matters on which the coalition reached agreement, but I do not see why we have to fill the statute book with tombstones over matters on which the coalition did not agree, particularly when they are nonsense.
If the courts were to find that Parliament is not sovereign, no Act of Parliament could reverse that. If Clause 18 is intended to provide reassurance to the concerned people in the country, that seems to me to be unnecessary because there is no visible concern and because the concern would be absurd. And anyone with concerns about the 2002 case would be seriously misled if he thought that this Bill could set them to rest.
The admirable report from the Constitution Committee, which has been referred to by others, reminds us at paragraph 54 that,
“the idea of such a declaratory sovereignty clause is not new. A similar proposal was in fact made during the passage of the European Communities Act 1972. The then Government opposed the idea and the proposed clause was rejected”.
The then Solicitor-General, now the noble and learned Lord, Lord Howe of Aberavon, who spoke so eloquently earlier in the debate,
“characterised such a declaration as ‘futile … and really a hollow sham ... The position is that the ultimate supremacy of Parliament will not be affected, and it will not be affected because it cannot be affected’”.
I am extremely sorry for the noble Lord, Lord Wallace of Saltaire. I support all Wallaces because I am a Scotsman. I like William Wallace the First who came to a sticky end. I hope the same fate does not await the noble Lord.
That is my argument about spuriousness, but I also think Clause 18 is potentially sinister. I am not a lawyer and perhaps I am being naive, but what other purpose could this clause have? Three elements create a suspicion in my mind. The first is the language of the clause, to which I have already referred. It is curiously convoluted and tautological. Why does it say that it is,
“only by virtue of an Act of Parliament that directly applicable or directly effective EU law”,
has force in this country? Is that “an” specific, or is it generic? It appears to refer to the 1972 Act, which is not controversial, but could it be construed as also referring to other past or possibly future Acts? Is it a dog whistle, a message saying “We want to be able to pick and choose. We want to dine a la carte”? Hoping for reassurance, I looked to the Explanatory Notes for guidance. At paragraph 113 we find the following:
“The words ‘by virtue of an Act of Parliament’ covers UK subordinate legislation made under Acts”.
I hope that the noble Lord, Lord Wallace, will be able to explain that because I cannot understand what it means. What subordinate legislation, and why “Acts” in the plural? That is the second cause of my suspicions.
Let me say why I find all this really worrying. For as long as we remain members of the European Union, we cannot pick and choose which EU laws apply to us and which do not. Nor, as the High Court found in the Factortame case, can this Parliament pass laws inconsistent with EU law. If the suggestion or the subliminal dog whistle implication of the curious language of Clause 18 is that by passing, amending or repealing subordinate legislation or passing or not passing some new Act deemed relevant, we can disapply laws we do not like, that is seriously misleading and dangerous nonsense. Where we have conferred powers on the European Union, directly applicable EU laws apply in this country, overriding any conflicting national laws. I believe that that is because of the 1972 Act and that it could not be reversed by any other Act or subordinate legislation unless that Act repealed the 1972 Act and, using the Article 50 procedure, we left the European Union. So I oppose Clause 18 very strongly. I think it is unnecessary, muddled, misleading and spurious.
The third suspicious feature is easy to describe. The Explanatory Notes say, perfectly correctly, that the clause,
“does not alter the existing relationship between EU law and UK domestic law; in particular, the principle of the primacy of EU law”.
It is declaratory of the existing legal position, but, in a point made by the noble Lord, Lord Hannay, if we agree that that is what it is, why does it not say that? Why do we have these curious, backwards-drafted four lines? We believe in transparency and in the need to reconnect with people, so we give them this curious formula which I find very hard to construe. I am not sure what the public outside would think about it. If it is really only declaratory, alters nothing and has no sinister intent, why do we not drop it? I think we should.
I wish to make one more general point about the Bill. As the noble Baroness, Lady Symons, pointed out at the outset, the referenda requirements here are not about big issues—for example, joining the euro—or major treaty changes such as the Single European Act or the Maastricht treaty. Big changes deserve heavy ratification procedures and, although I do not like referenda, we now seem to be stuck with them on the big stuff. However, as the noble Lord, Lord Davies, spelt out, the lists in the Bill are mainly about Brussels decisions on points of detail and process.
If the Bill passes unamended we shall have signalled to our friends in the other 26 member states that we are highly unlikely ever to agree to any reform, however minor, of EU procedures and processes, institutional arrangements and decision-taking procedures. This point was made by the noble Lord, Lord Williamson, and his analysis is completely correct. Our friends will spot that no British Government, even if they supported some minor proposed reform, would want to have a referendum on it, and therefore would block it. As the noble Lord, Lord Williamson, said, this is not a Bill about having referenda but about not having referenda and, in order not to have referenda, bringing about a paralysis of the institutional structures of the European Union. At least that would be the perception of our partners.
I would greatly regret that. I worked in Brussels for two British Prime Ministers and neither took that view. Mrs Thatcher deserves great credit for the Single European Act, which opened the way to the single market programme. She was extremely tough in negotiations but she was clear that the British should always be in them. As Prime Minister, Mr Major was sceptical about the euro but deserves great credit for ensuring that we were fully involved in its preparation and, although not required to join, had a ticket to do so should we ever so choose.
Being at the heart of Europe is in the British interest. The single market has been good for UK jobs and London has dominated the Euromarket. Conversely, as the noble Baroness, Lady Williams of Crosby, pointed out, the perception of a relentlessly negative approach, entrenched by a referendum requirement on any new issue or proposed reform, could lead our friends and partners to cut us out of discussions on future reform and development. It is perfectly possible for them to do that by engaging in what is called “enhanced co-operation”, for which there are provisions in the treaty, or by concluding intergovernmental agreements outside the treaty framework.
When I raised that risk last week with a Minister, he replied—with a smile—that he thought that the EU was indeed likely to go for more variable geometry in future. He may be right but surely we should at least try to be in the room where the rules get written—as, thanks to Mr Major, we were for the euro. Let us at least give ourselves the option of going on being centrally involved. If the Bill passes, that will be harder to achieve. We shall have excluded ourselves.
I oppose the Bill on grounds of international policy as well as on constitutional grounds. If it is enacted, we will have damaged the national interest as well as parliamentary sovereignty.
Baroness Verma
My Lords, forgive me for reminding noble Lords but, if they could, it would be helpful to the House were they to keep their contributions to about 15 minutes. Thank you.
Baroness Quin
My Lords, it is a great pleasure to follow the entertaining and knowledgeable contribution of the noble Lord, Lord Kerr. In response to the exhortation by the noble Baroness a minute ago for brevity, I was tempted to say that I agree strongly with my noble friends Lord Dubs and Lord Anderson, the noble Lords, Lord Taverne and Lord Kerr, and others, and then just sit down. I hoped that I would receive some popularity points as a result. However, I would briefly like to add one or two thoughts.
My first objection to the Bill is on constitutional grounds. The Constitution Committee talks about the Bill breaking new ground in the UK constitution by its imposition of referendum requirements on such a large scale. Reading that, I was reminded of the earlier inquiry, in which I participated, by the Constitution Committee into referendums generally. The report published in April last year said, significantly:
“The balance of the evidence that we have heard leads us to the conclusion that there are significant drawbacks to the use of referendums. In particular, we regret the ad hoc manner in which referendums have been used, often as a tactical device, by the government of the day”.
I strongly agree with that statement in the Constitution Committee’s report.
In introducing the debate, the noble Lord, Lord Howell, said that voting had almost got into our weekly habits in the present day, particularly in relation to television programmes. With respect, a light-hearted vote on whether to keep the redoubtable Ann Widdecombe in “Strictly Come Dancing” is not really the same as referendums about Britain’s future, which should be better thought out than seems to be the case in the Bill. Nor am I simply making a party-political point in opposing this part of the Bill. I spoke against the idea of the European referendum that my party had decided to hold on the so-called European constitution and I did not like the referendum in the 1970s, which essentially seemed to have been called to get my party off the political hook at the time.
The Government are proposing referendums not just in the Bill but also via their localism agenda and in many other ways. We need to confront a choice here in whether we want to be essentially a representative democracy or a plebiscitary democracy. I would much prefer that we did not treat this subject lightly but tried to establish some common and cross-party rules about when and where referendums are an appropriate part of our political system. It may be that there would be cross-party agreement that they should be used in cases of fundamental constitutional reform, although that is not always easy to define. It is unwise to jettison our precious representative democracy and move down the plebiscitary road. The Bill makes a great mistake in the way that it tackles that issue. I also very much agreed with the noble and learned Lord, Lord Howe, when he decried the expression “referendum lock”. It is such a negative starting point for our relationship with the European Union and it seems to pander to the view that this is always a threat and never an opportunity, as I believe it can be.
My second objection to the Bill is on political grounds. It tries to pander to Euroscepticism, although, ironically, it does so significantly unsuccessfully, as we saw in the debates in the other place and, indeed, in the debate here today. Indeed, the Conservatives in particular have repeatedly made that mistake at European elections and by-elections, where they have not been the beneficiaries of pandering to Euroscepticism. That benefit has tended to go to UKIP and other political forces.
The Minister talked a lot about public opinion. Indeed, the noble Lord, Lord Pearson, was barracked in a lordly way when he referred to the media and the BBC. However, he was right; it is relevant to this debate. How the public get the message about Europe, if we are talking about reconnecting them to Europe, is an important aspect. The noble Lord was right to raise the issue, although I would raise it from a very different standpoint.
It is also very much the responsibility of Ministers to be positive about Europe. The noble Lord, Lord Maclennan, spoke about this when he said that very often Ministers after Council meetings declared that they had won famous battles—things were seen in terms of a battle rather than co-operation. When I was Europe Minister, I would often try to point out to people that in the three Councils that I attended—on home affairs, foreign and general affairs and agriculture—very often the meetings were harmonious. Decisions by voting were the exception rather than the rule and people worked very much towards a consensus. However, it was hard to get that positive message across in the media; a battle is much more newsworthy than good news about a harmonious European Council. While I accept to a certain extent that Ministers could have been more robust, it is difficult sometimes to get that positive message across, because of the old adage that the good news is not news, whereas bad news is intrinsically newsworthy.
I echo the point made by my noble friend Lord Anderson, who said that during his time as a constituency Member of Parliament he was struck by how little the issue of Europe was raised. That was certainly my experience, too, even when I was Europe Minister; indeed, as I had previously been an MEP, I had some profile among my constituents on European issues. Even now, knocking on the doors, as I and others in this Chamber do, I know that it is seldom raised as an issue in terms of the frantic Euroscepticism that seems to dominate so many parts of the media.
Slight reference was made to this earlier. While I have no objection to newspapers crusading if they want to on particular issues—although sometimes I wish that they would simply report the news rather than crusade about it—I must say that the screaming headline of the Daily Express on 11 February, “Britain in the EU: This must be the end”, had me completely mystified, particularly when I found out that it referred to prisoners’ votes and the European Court of Human Rights. The noble Lord, Lord Pearson, made an attempt at defending this by saying that in the recent treaty the EU as a whole had acceded to the European system of human rights, but we all know both that that system predates the EU and that the EU has absolutely no responsibility whatever for the decisions of the European Court of Human Rights. Presumably the Daily Express is knowledgeable enough to know that it does not have anything to do with the EU at all.
Lord Dykes
Further to that, does the noble Baroness acknowledge that, when an independent survey was commissioned for the last calendar year to check thoroughly and independently 125 banner headlines in the Daily Telegraph, the Daily Mail and the Daily Express about wicked things happening in Europe, it was found that not a single one was correct?
Baroness Quin
I am grateful to the noble Lord for making that point so effectively.
This Bill ends up by pleasing no one. It does not please the Opposition, as was clear from the elegant speech of my noble friend Lady Symons; it does not please most Conservatives who have spoken in this debate, I am pleased to say, or most Liberal Democrats. I look forward with some incredulity to the closing speech by the noble Lord, Lord Wallace, who was teased somewhat, but quite rightly, by the noble Lord, Lord Kerr. I have certainly heard those who are now Liberal Democrat Ministers in this House take a rather different view from that of their colleagues in the other place on the subject of referendums and be staunchly pro-European in a way that does not square with the contents of this Bill.
I hope that we manage some changes such as the sunset clause, which my noble friend mentioned, or some kind of limitations on the scope of using referendums. Fundamentally, however, I wish that we could go back to the drawing board to have a proper think about the role of referendums in our political system and a much more informed debate across the country about our European future.
Lord Bowness
My Lords, my noble friend Lord Howell of Guildford introduced this Bill in such a reasonable manner that I feel churlish in being somewhat less than enthusiastic in my welcome for it. In looking for something to which I could give a small cheer, I suppose that, if the Government want to make any of the changes envisaged in the Bill, Parliament will indeed have a greater engagement in European matters than before and, perhaps, a greater awareness. Having said that, just as many other noble Lords are unhappy about the Bill, I am not enthusiastic about its plethora of provisions about referenda.
Like the noble Baroness, Lady Quin, I did not believe in a referendum on the proposed constitution. When that ill fated proposal did not proceed and the Lisbon treaty came along in its place, it was entirely right that it was dealt with by Parliament as all other treaties have been in the past. I had hoped that the coalition was committed to enhancing the role of Parliament. It is strange to me that we are seeing a number of issues where it is apparently content to abdicate responsibility to the people not at a general election, when voters in a representative parliamentary democracy may take a view about the Government’s performance as a whole, but issue by issue when the motives for casting a vote one way or another may not be directly related to the matter in hand.
The Bill presents numerous possibilities for the holding of referenda if the Government of the day are minded to agree any of the matters proclaimed to be the subject of referenda in it. As other noble Lords have observed, it is strange that in every case the Government would in any event be able to veto the proposals in the Council. Thus, if a proposal reaches the stage of requiring a referendum after ministerial Statements and Acts of Parliament, those are matters on which the Government would want a positive answer. It is even stranger that the Government should want to be in the position of seeking a positive answer and risking a rejection. That would probably be because of unpopularity for reasons that had little or nothing to do with the referendum issue. If it was an important issue, perhaps defeat should have been contemplated as one of the circumstances under the Fixed-term Parliaments Bill when Dissolution ought to be sought.
My noble friend Lord Howell of Guildford referred to tackling the disconnect with the public. I echo what other Members have said this evening: to do that, it would be much better if this Government were prepared to do what recent Governments have, by and large, failed to do and to lead in matters relating to Europe. Why do people feel isolated and shut out? Perhaps they would feel that less if the lead was given in positive terms and not by references to the threats, red lines and double and triple locks.
I do not propose to delay the House with my thoughts on the sovereignty clause. At this time of the evening, I wish neither to take up the House’s time nor to destroy the somewhat unjustified reputation of my legal expertise given by the noble Lord, Lord Kerr of Kinlochard. Suffice it to say that I will adopt his arguments and observations on the sovereignty clause. I add merely that nothing in the clause removes our obligations under the treaties to give effect to EU legislation properly enacted under the treaties. If we fail to do so, we will be in breach of those treaties and, as long as we are parties thereto, we are bound by them. In some quarters, that principle seems to be overlooked, which culminates in the unfortunate criticism of judges both across the Channel in Luxembourg and Strasbourg and just across Parliament Square.
The clause has infuriated the Eurosceptics, whom nothing but the repeal of the European Communities Act 1972 will satisfy. Nevertheless, the Bill actively contemplates litigation that will follow the Minister’s decision about whether or not something is significant or transfers powers. I find this somewhat strange, given the apparent unwillingness of the coalition Government to concede the rights of the court to make interpretations of Acts of Parliament and treaties.
Future Governments are going to have to face the fact that, if they want any of the changes to be made the subject of referenda by the Bill, they will have to face the possibility of defeat. I say “future Governments” because, although the Bill could be repealed, as could the European Communities Act 1972, that would in fact be difficult to do. I am not a scientist, but one of the things that I remember being told is that some chemical reactions are irreversible; I suspect that, in terms of real politics, some Acts of Parliament are the same. For example, I do not think that anyone here, whatever their feelings might have been at the time, would suggest that the House of Lords Act 1999 could now be reversed. I agree with other Members that a Bill that seeks to confirm the sovereignty of Parliament but which goes some way towards binding its successors is contradictory.
As has been said, the passage of the Bill will send our partners in Europe a very strange message. Having frequently criticised the lengthy decision-making process in Europe and having said that we want to get away from sterile arguments about process, we are burdening ourselves with further complications and processes, the consequences of which we cannot know because we do not know the issues or circumstances when we may well want to implement changes to treaty provisions that are in the Bill.
I am concerned specifically about the provisions in the Bill regarding the possible setting up of the European prosecutor’s office, or extensions to the power of that office, and making both the subject of a referendum. We do not have a current proposal. We know that a previous proposal from the Commission concerned cross-border fraud, which remains a concern. Professor John Spencer of Cambridge University, one of the contributors to the original proposal, wrote in an article for Parliamentary Brief that what was suggested was,
“a uniform code of criminal offences of fraud against the EC budget … a uniform set of procedural rules applicable to their investigation, and … to enforce them, a European Public Prosecutor, authorised to bring proceedings in the criminal courts of any member state. In practical terms, this EPP would consist of a chief prosecutor based in Brussels, with deputies in each Member State, these being national prosecutors on secondment”.
It is, however, something that is portrayed as a threat to our justice system—nothing to do with combating fraud and instead something to do with the advancing of a federal state. These provisions seem to have more to do with satisfying that suspicion and hostility among certain elements of the press than to be a proportionate response by responsible Ministers to what one hopes would be responsible proposals. If the proposals were not responsible, presumably we would not vote for them in the European Council. That problem will be even more emphasised if we have already become involved in the European prosecutor’s office when we seek to make amendments.
The noble Lord, Lord Davies of Stamford, and others, including the noble Lord, Lord Kerr of Kinlochard, referred to Schedule 1 to the Bill. I am sorry that this, again, seems to highlight any steps that might be necessary in the fields of justice and home affairs, particularly justice. We just do not know and cannot tell how these matters will develop and whether in the future, in a global world—never mind a European world—we might want to see changes to how these things are processed. They may be better processed by a move to QMV; I do not know. While we do not know, we still have the veto. I find it difficult to understand why the coalition envisages a referendum in these areas, many of which have been referred to by other speakers. Do we not even concede that there may be a situation in which, far from being in the minority and being outvoted, we are part of a thwarted majority, unable to make the changes that we want?
Other Members have made it clear that, if we adopt these provisions, we run the risk of being pushed to the margins of influence in the European Union. I hope that I may be forgiven for suspecting that the Bill is more about our suspicions about Europe and less about the powers of Parliament and power to the people. I find it odd that these matters, which are the subject of relations with our neighbours, partners and allies in a voluntary union, will be the subject of ministerial Statements, Acts of Parliament and referendums, yet we are still able to engage in significant military operations without any of these things. If only the same leadership could be displayed to Parliament and people in matters of the European Union, how different our position in the European Union would be.
Lord Lea of Crondall
My Lords, this Bill is of course a charade. Nevertheless, it must be taken seriously. It is a self-imposed straitjacket and could prevent HMG making agreements that are in the long-term interests of the country. To adjust a well known phrase, referendums are the last refuge of the scoundrel, with one exception. In the case of Harold Wilson, it was the last refuge of a statesman. They undermine parliamentary democracy and deprive Parliament of its judgment, which—if I may say so to the noble Lord, Lord Pearson of Rannoch—UKIP claims to hold dear. That is not the way that parliamentary democracy works.
On the methodology of referendums, there are serious problems in getting any message across. The campaigners in referendums would be hard pressed on many issues—the noble Lord, Lord Kerr, gave us many examples—to explain the basis on which the referendum has been called. More than that, referendums deal with matters that often depend on the rapidly changing world being understood. Parliamentarians have to try to understand these things, but to say that they are all simple to understand in Burton-upon-Trent is not the classic view of parliamentary democracy.
It is very easy for people to misunderstand what we are talking about. Noble Lords on the government Front Bench often refer to the importance of China and ask why we concentrate on Europe when China is so important. I do not think that anyone wants us to be the 51st state of China, but the world is in large blocs of one sort or another. We cannot say, “Stop the world, I want to get off”. That message is not getting across to the British people. It is not just a question of stopping the world; it is a world that is getting faster, and we have done nothing to disabuse people of not understanding that.
I echo all those who have commented on referendums, and the noble Lord, Lord Hannay, put it most bluntly. Presumably the Minister—the noble Lord, Lord Wallace —will be able to disabuse us of any misunderstanding on this. The Government have agreed to something in Brussels that, under this rubric, needs a referendum. They then will presumably—can I be assured on this?—be honour-bound to recommend a yes vote and then to campaign for it. I honestly do not know why they wish for such a process. Presumably, that is the process the Government have signed up for.
Another difficulty I have with referendums in any socioeconomic field is regarding the trade-offs involved in economic, social and industrial policy. People cannot always be presented with things that they find particularly palatable. There are trade-offs in real life that make things unpalatable, but you cannot vote just for the nice bit—for example, “Would you like to have a subsidy for wind farms?”—without voting for the carbon tax or whatever.
I take the carbon tax as an example. There will probably be an EU carbon tax; in fact, we have agreed to go along with a carbon price floor and it must be compatible with our huge commitments to help the developing world. On adjustment, this may add up to hundreds of billions of pounds and, therefore, at the previous ministerial council—I think that it was the summit on energy policy that took place only a couple of months ago—it was agreed that there should be no competition on subsidies. Therefore, we are moving increasingly towards what you might call an EU energy tax regime.
The list on the now famous page 14 of the Bill, referred to by a number of speakers, including my noble friend Lord Davies of Stamford and the noble Lord, Lord Kerr, is confusing and we are trying to get our brains around it. The article referred to on line 9, on the harmonisation of indirect taxes, relates to a change that presumably involves moving from unanimous to majority voting. I suppose that that is what this could be about. I think that that must happen and having a carbon tax will not be very popular, because it would affect aviation and lots of other aspects of energy policy, including transport and so on. People should be very careful what they wish for in making these gestures to keep the dogs at bay, as it were, politically.
I return to the point about how the media is, as the word suggests, the intermediator of information. Information is intermediated by, for example, Rupert Murdoch. He is quite unlike the BBC, which is why so many of us are very disturbed by the deal announced recently by Mr Hunt, the Secretary of State for Culture, Olympics, Media and Sport, which will allow Rupert Murdoch to have such a big influence. The relationship between Rupert Murdoch and the BBC is as follows. If one looks at one's BlackBerry every morning, one sees that the BBC always reports what the papers say. It does not have its own opinions, but it reports what the Daily Mail, the Daily Express, the Sun and the Times say. That is the relationship.
That would be true with knobs on for any referendum. We have a potential crisis if we do not treat people as responsible citizens. The way in which we changed TUC and Labour Party policy in 1988, in which I had a hand, was to present concrete arguments and considerations that masses of people could understand, with the eloquence of Jacques Delors behind us, about why we should have collective bargaining at a higher level in Europe, and trade-offs to do with workers’ rights across Europe, so that employers could not say, “We cannot do that in our country because we would lose competitiveness”. This was a serious message that people could understand. Recently, we have not treated our citizens as serious people at all. It has been like Julius Caesar treating people as if all they wanted was a few funfairs. That has been our democracy.
At the end of all this we will be confronted, as with the AV Bill, with referendums that will probably have pathetic turnouts, so we will be saying: “Forget parliamentary democracy, this is how we govern the country—by a decision of 19 per cent against 13 per cent of the electorate”. Britain's stock in the world will go down and down despite—or because of—the fact that other people, on enhanced co-operation, will be moving forward. It is a sad day when we see short-term politics bringing before us a Bill such as this. I hope that a sunset clause will not be needed in practice, but I am sure that an incoming Labour or Lib-Lab Government will immediately take this ludicrous piece of legislation off the statute book.
Lord Shutt of Greetland
My Lords, I hope that the House will permit me to explain that it is now necessary for Royal Assent to be notified to two Acts. This will involve adjourning the debate for no more than a few moments. I beg to move that the debate on the Motion for a Second Reading of the Bill be now adjourned for the notifications of Royal Assent.
Royal Assent
European Union Bill
Lord Dykes
My Lords, resuming the debate rapidly after that procedural change, first I express my gratitude to the noble Lord, Lord Lea of Crondall, for reminding us of Labour Party history concerning the fundamental change of attitude towards the European Union and for his remarks on the Bill. For those of us who have been fighting the European cause for many years, it has been a great pleasure to see the change in attitude in the Labour Party, and not merely because there were some good suggestions from Michel Rocard and Jacques Delors, as well as, to a lesser extent, Helmut Schmidt. Eventually, before the election that produced the coalition Government, we saw that the Labour Government of Gordon Brown, too, had become fully European so far as we could tell. There are some, although not many, Labour Members of Parliament in the other place who are still sceptical about European matters, but to varying degrees, and I think that one can now officially say that the Labour Party is a pro-European party and that the previous Government were a pro-European Government. In those days, the Liberal Democrats in opposition—I was proud to be involved myself—proposed no amendments to the Lisbon treaty legislation in the upper House. We followed what the Government presented in the legislation and enthusiastically endorsed it. That perhaps is a good example to consider and quote compared with the present sad situation.
This has been a great debate. Inevitably, by this stage, the points that one makes are bound to be a little repetitive but at least I can refer to the House of Commons. Being fairly masochistic, I decided to sit in on quite a few sessions of its deliberations on the European Union Bill. I attended not only the Second Reading but some of the Committee stage of what I regard as a very peculiar Bill, as has been brought out in the comments of other noble Lords in this debate. Even more masochistically, I sat in a little on some of the remaining stages of the Bill in the Commons, and it was not at all edifying. After all, it is not often that we get the chance to listen repeatedly and monotonously to the hyperbolic words of people such as Bill Cash, John Redwood and Jacob Rees-Mogg—a new Member of the other place—and others. I thought that I would briefly convey to the House some of the erudite offerings that I heard during those proceedings. Those who spoke did not prevail with any of their amendments but they put forward these extremely educated thoughts.
I shall quote without giving any names in order to save time:
“We want our country back”.—[Official Report, Commons, 7/12/10; col. 234.]
I think that that is what Sarah Palin says when she is speaking on behalf of the extreme end of the Republican Party in America. Another comment was that the Tory party is now “the old Referendum party”. Another said:
“I am no friend of the EU”.—[Official Report, Commons, 7/12/10; col. 254.]
Another comment was:
“The European Union is a state in decay. It is rotten at its very core. It is corrupt. It is dishonest. It is bullying” .—[Official Report, Commons, 7/12/10; col. 256.]
Another said that the accession treaties give up control of our borders and that means that other EU citizens can circulate freely here too. Another said that the question we should all face is,
“whether we should be part of the European Union at all”.—[Official Report, Commons, 11/1/11; col. 188.]
Yet another said:
“many Conservative Members want withdrawal from Europe”.—[Official Report, Commons, 11/1/11; col. 206.]
I shall not mention any more, although there were plenty of others, in case noble Lords think that those extremely learned utterances give the total picture.
Many such sentiments were expressed throughout the difficult proceedings in the other place, although I am glad to say that the characters who repeatedly expressed those views numbered a maximum of 30, including one or two rather strange Labour MPs who do not seem to be so enthusiastic about Europe. One of them is a lady Member from the Birmingham area who has changed her mind fundamentally in recent years. They were defeated so heavily on amendments that eventually the Tory antis gave up pressing any votes at all.
Although the Tory leadership in opposition had made what I would describe as a disgracefully reckless point of stirring up all those atavistic emotions before the May 2010 election to get their Members excited and to bring about withdrawal from the European People’s Party in Strasbourg and Brussels, together with the rest of the absurd and provocative behaviour, it has backed off since then. I am told that even William Hague, the Foreign Secretary, is developing an interest in the EU and its benefits and workings. Of course, that happens in government. People like going to the grand meetings and gathering with the officials and other politicians. It is a club of like-minded sovereign countries working together for the good of Europe.
However, this Bill remains to be dealt with. Foolishly, following the preamble on Europe, the coalition agreement says:
“We will ensure that the British Government is a positive participant in the European Union”.
How ironic that the following paragraphs came after that promise. To be benevolent, I assume that many Tory MPs have accepted the fact that this is a pretend Bill, and I presume that they are genuinely horrified by the absurd xenophobia of their colleagues, some of whom I have quoted this evening, who merely parrot the non-UK-taxpaying, foreign-based owners of our extreme right-wing comics—called newspapers—whose views on Europe are taken as their subject matter.
I am not sure that this House, now the sole revising and improving Chamber in our Parliament, will take such a benevolent view of the need for this peculiar Bill. We are where we are with the sad story of Britain’s antics in recent years as the increasingly bad member of the club. Despite what I said about the recent Labour Government, that has been the case over many years. Britain is always the one with the exceptions, the opt-outs, the exclusions, the derogations, and the one saying, “I don’t want to do that”. It is the bad member of the club who goes on a coach outing to Eastbourne and shouts from the back seat, “No, I want to go to Hastings”. That kind of attitude has annoyed all our fellow member states.
If government spokesmen tonight, or on other occasions, as this dodgy Bill proceeds to Committee stage, suggest that others do not mind this legislation, an increasing number of our foreign friends and colleagues in the institutions in Brussels and in the European Parliament will begin to see what is happening with this legislation. Despite the arrival of a very distinguished member of the Government from the other place, who is beyond the Bar of the House and whom I must not mention, I add that that will be increasingly so as they discover this daft suggestion coming from the coalition Government.
Unlike other member states, for years politicians from Thatcher to Blair, and Brown to start with—although not in more recent times, to which I pay tribute—cast unnecessary aspersions, had unnecessary rows, needlessly betrayed commitments in the treaties and generally behaved like the Artful Dodger. Contrast that with Spain, which also has a thousand years of glorious history, where the two main parties bitterly fought their domestic battles in the last general election, but no one, including in the Partido Popular, the right-wing party, sought to invoke Europe as a domestic issue to try to get cheap votes.
As the noble Lord, Lord Lea of Crondall, said, I am so glad that the Labour Party has changed. It is the duty of the Liberal Democrats to restore their own enthusiasm for Europe in the processes that we shall follow in the coming months. This wretched Bill is a step back and this House has to deal with it in a way that the other House failed to do. Therefore, I am sure that your Lordships will wish to propose a large number of amendments. Fortunately, the power to determine decisions about what is referendable remains with Ministers, but they will still need Commons approvals via Motions and primary legislation, as has been discussed tonight. There is no need for this Bill at all and in this House we have to deal with the problem through amendments.
Harold Wilson brought in the only national referendum in 1975, solely because of internal divisions in his own party. That is the only reason why it was done. Surely, we must not repeat that exercise this time. The public wisely remain supremely indifferent to the comings and goings of the antis. The ridiculous Daily Express struggled to get just over the population of a single London borough in its recent petition, in comparison with millions of our enlightened citizens who regard membership of the European Union as a natural item, like being in NATO or the UN or the World Trade Organisation. This daft referendumitis disease is now undermining the renewed authority of Parliament after the struggle of the financial expenses scandal and the need for Parliament to become psychologically stronger again.
Lord Empey
Even though there are many people in this country who are for the ideals of the European Union, does the noble Lord accept that public opinion is in a different place from that which he says? That is because of stupid things like straight bananas, Cornish pasties and such nonsense, instead of looking at the strategic overview. I believe that many people in this country support the concept of Europe, particularly its ability to prevent war, which was the starting point, but they are put off by some of the nonsense because behind it there are people with a political objective who do not accept the concept of the nation state.
Lord Dykes
That is entirely true. Politicians leave a vacuum by not explaining the proper arguments about our European Union membership because they become pusillanimous when the mass media and the right-wing papers, owned almost exclusively by non-UK-taxpaying, foreign-based owners, put forward poisonous arguments. I believe that that even applies to Mr Desmond, the Daily Express owner; if I am incorrect, I will apologise to him personally. They put forward these poisonous arguments—pretend, nonsensical arguments—such as the headline about straight bananas. As I mentioned earlier when the noble Lord was not in the Chamber, an independent survey was commissioned which showed there have been 125 banner headlines in the Daily Express, Daily Mail and Daily Telegraph in the past calendar year about wicked things being done in the European Union. Literally all of them were incorrect, and I have the evidence if the noble Lord wants to see it.
Lord Teverson
I am sorry to interrupt my noble friend, but I want to make it absolutely clear on the Cornish pasty issue that Cornwall fought for 10 years to get that definition. It has been welcomed by the Cornish pasty industry in Cornwall. Under British legislation, it was never possible to keep the name Cornwall for pasties produced in Cornwall only; the same was true for clotted cream. It was a great victory to us, which became possible only through European legislation.
Lord Dykes
I am movingly grateful to my noble friend for his enlightenment.
Lord Pearson of Rannoch
Before the noble Lord continues with his exceptional peroration, will he undertake to put in the Library of your Lordships' House or to circulate to those of us who have taken part in the debate this fascinating survey, to which he has now referred twice, which rubbishes every headline about Europe that has appeared in any of our more sensible national press?
Lord Dykes
Sensibly, I expected at least one or two of the 125 to be correct, but they were all incorrect. I am very happy to show it to him—
Lord Dykes
I do not think that it would be fair to the House to give way again. I know that one should do if someone wishes to insist, but I would prefer not to. The noble Lord made quite a lengthy speech.
Lord Pearson of Rannoch
I can put it in a sentence. Did the noble Lord say that he was happy to share this with all of us?
Lord Dykes
Absolutely, at any time; I am very happy to do so.
It is mischievous tomfoolery of the worst kind to waste Parliament’s time with an unnecessary, foolish Bill, except that it is trying to do just what we cannot accept: bind a successor Parliament, as other noble Lords have said. Suppose that a nervous and weak future Government accepted a referendum on a small change in treaty powers because of a press campaign. As Professor Bogdanor suggested in his evidence to the Commons European Scrutiny Committee, there might be a turnout of, say, 26 per cent, with 13.5 per cent voting against and 12.5 per cent voting for. What should the Government do? That is what would happen with this nonsense.
Of course, the whole pantomime could be made advisory only, as in 1975, at least for the Parliament, if not for the then Government. It is worth remembering that the “referendum lock” proposal enables a Government to reject a new so-called transfer of power treaty change, or presumably major passerelles, but it does not automatically give the public or Parliament the right to vote on it. Then we have judicial review to complicate and delay the whole process. Hence, the lock could even stop other Governments from adopting a treaty change, which is an amazing thought.
We therefore have to look searchingly and meticulously at this very strange Bill. If we can use the phrase “the upper House” in the modern era, this House is ideally suited to this process; the other place is not. I submit that a passerelle is a gangway or a footbridge; it is neutral and level, most the time. It is not a ratchet, which is the wrong word that the Government foolishly chose. The British Government wholeheartedly supported QMV procedures for the single market. That was a very good example to build on. The other member states thought that we would follow it in other fields, as they intended to. We need to look very searchingly, particularly at Clauses 3 to 7 and the rest of the paraphernalia in this difficult and complicated Bill.
I am sure that the whole House is grateful for the timely and extremely critical report of the Constitution Committee, which is damning in its criticisms, although couched in its characteristically polite language. As the Bill attacks existing EU legislation anyway, it may well be repealed as it is incompatible with our existing treaty duties, including under the Lisbon treaty itself. This is also why Liberal Democrats above all have a duty of care in this grave matter tonight and in the later stages of the Bill.
I amplify what the noble Lord, Lord Kerr, said about the noble Lord, Lord Wallace. Not being Scottish, I cannot share the same emotion, but I, too, am a great admirer of my noble friend Lord Wallace of Saltaire. He is armed with another high moral purpose, duty and tradition as a resident of the very houses of Sir Titus Salt in Saltaire. I think his house is in George Street, which was named after Sir Titus’s son. That great creator of the model village, the mill, the workers and the welfare system had a high moral purpose and my noble friend too has a duty to try to deal with this Bill sensibly, bearing in mind the damage that has been done, unwittingly and accidentally, I submit, in the coalition agreement. The Guardian leader of 7 December stated:
“so many ministers know their bill is nonsense. Coalitions involve compromises, but it is a shameful moment to see Britain's most pro-European party”—
the Liberal Democrats—
“and pro-European Tories such as Kenneth Clarke, trooping into the lobbies tonight in support of such a foolish, feckless and futile Bill.”
Lord Willoughby de Broke
My Lords, like the noble Lord, Lord Stoddart, I give this Bill a qualified welcome, if only because it has brought out a rash of our Europhile friends to complain about it. Any Bill opposed by the noble Lords, Lord Brittan, Lord Hannay, Lord Kerr, Lord Davies and Lord Dykes, must by definition be on the right track. I hope the Minister will not object if I remind him that all these very distinguished Europhile noble Lords were hard-line supporters of our membership of the euro. They were very wrong then, so I hope he will take their no doubt very well meant advice with bucketloads of salt now. Their predictions that the euro would be a rock of stability—I think that is what they used to call it—and that Britain would be left behind by the euro-banger have been almost comically incorrect. I do not know what it is with the europhiles, but they always have this image of motion and transport—“We must not miss the train; we must not miss the euro-bus; we must not be left behind by the euro-tricycle”. Even today, the right reverend Prelate the Bishop of Guildford was up there with them saying that we are going to be left behind in a lay-by. Given the slow motion car crash that is the eurozone, I think that a lay-by is probably quite a safe place to be at this stage.
I sometimes lie awake at night wondering whether it is not the eurozone that is being left behind. Let us look at the eurozone. Greece and Ireland are now wholly owned subsidiaries of the European Commission. The only thing their Governments can say when the Commission says, “Jump” is, “How high?”. Portugal is next in line. It has already checked in by denying that it needs a bailout, which is always the first prelude to accepting or being forced to accept the bailout. There is no need for it to rewrite history. The script has already been written for it by the Greek and Irish Prime Ministers.
Apart from flushing out the euro enthusiasts, my very cautious welcome for the Bill is based on the fact that for the first time a UK Government may, just may, have armed themselves with a weapon to slow down the relentless pressure from the eurocracy for ever closer integration. The Bill lists very precisely the particular articles under which decisions will be required for a referendum, so when the Minister goes around the table in Europe and there is a particularly unpalatable piece of legislation, he would be able say, “Don’t go there. The EU Act”—as it will be, I expect—“passed by our Parliament will require a referendum on that. You know how you hate referendums because you always lose them”. I think that is a useful weapon to have, even allowing for the many qualifications that have been expressed this evening about that.
Rather churlishly, that is as far as I can go in welcoming the Bill, because it does not even go close to what is required now by this country. Although it is called a sovereignty Bill, it ignores the plain fact that successive Governments have signed a number of treaties since 1992 which make it quite clear that the ultimate authority does not lie any longer with Parliament—it lies with the EU. Why else would Governments now have to talk about non-EU immigration? Why do we have an energy policy that commits us to expensive and useless wind power? Why are women’s insurance premiums going up and men’s life premiums going down? These laws and regulations are not introduced in Westminster, debated and voted on here; they are handed down by decree from Brussels. So claims that this Bill is an assertion of parliamentary sovereignty ring hollow. To that extent I agree with the noble Lord, Lord Kerr, who would probably be horrified that I agree with him on anything. This is not about sovereignty. If you are sovereign you do not need a Bill to tell you that you are sovereign; it would be self-evident if Parliament were sovereign. I think that this Bill is, in fact, an admission of weakness.
The noble Lord, Lord Stoddart, was again absolutely right—nowhere does this Bill seek to regain any of the powers that have been given away to the EU by successive Governments. As we heard earlier from the noble Lord, Lord Kakkar, the NHS is labouring under the requirements of the working time directive. This Government are promising, I keep reading in the newspapers every day, to cut red tape on business. But how can they do so when a large percentage—I will not quote the exact percentage, but 60 to 70 per cent; it does not really matter—now comes straight into law from Europe? If these regulations are damaging to British businesses, are they untouchable? Can Parliament do absolutely nothing about it? Will the Government, for example, resist and oppose the new part-time workers directive, or will they roll over and accept it?
The Commons European Scrutiny Committee is interesting on sovereignty, leaving aside the abstruse legal arguments over the primacy of parliamentary sovereignty versus the primacy of EU law. At paragraph 76—I am sorry that the noble Lord, Lord Kerr, is not here, because this takes issue with what he was saying—the committee says:
“We think it right that, should an Act of Parliament instruct the courts to disapply an aspect of EU law, the courts should do so: this is not only consistent with the case law of the courts, but also with the doctrine of the legislative supremacy of Parliament; and also with the rule of law”.
Encouragingly, the committee also goes on to conclude that it is entirely within bounds for Parliament to ask judges to disapply any aspect of EU law if that is the will of a democratically elected Parliament, even if—this is important—that were to lead to infringement proceedings in the EU Court of Justice. That runs exactly contrary to what the noble Lord, Lord Kerr, was telling us in his speech.
A good working example of that—this is not my example but the example given by the Commons committee—is France's recent deportation of Roma immigrants. This is almost certainly against EU law but has not—certainly not as far as I know, and I stand corrected if this is not the case—led to infringement proceedings being taken against France. So it seems that there is some room for Parliament to disapply EU law if it so wishes.
Even more encouraging, and perhaps more challenging for the Government, is that we should very soon have a practical, watertight test of whether this Government really believe in parliamentary sovereignty. On 10 February there was an overwhelming vote, with a 212 majority, against the judgment of the European Court of Human Rights that prisoners should be given the vote. I accept that that was not to do with the EU, but it is about parliamentary sovereignty. This will be a test of whether the Government accept that Parliament is sovereign in this area. Who is going to be sovereign? Will it be Parliament’s will, as expressed in this very large vote, or will it be the will of a gaggle of 47 semi-qualified European lawyers? I hope that the Minister may be able answer that at the end of this debate.
There are serious gaps in the Bill. The noble Lord, Lord Stevens, mentioned justice and home affairs, which I think will have to be pursued in Committee. The Government must decide by 2014 whether a whole raft of EU police and justice laws, which were agreed before the Lisbon treaty, should come into force, including whether the iniquitous European arrest warrant will continue to apply in the UK after 2014. The Government have the choice of opting in or opting out. If they choose to opt in, the full jurisdiction over all these laws will for the first time be removed from UK courts to the European Court of Justice in Luxembourg. That is an inescapable question: should there be more Europe or less Europe? Perhaps the noble Lord, Lord Wallace, will be able to say something about that, although I appreciate that it does not have to be decided until 2014.
The Conservative manifesto pledged both to repatriate powers from Brussels and to have a sovereignty Bill. So far, neither of those pledges has been met. No powers have been repatriated and this is not a sovereignty Bill. I do not know why some of the Euro-enthusiasts are getting so hot under the collar about this Government and about this Bill. The fact is that the coalition has signed up to the European investigation order without any parliamentary vote or control over the decision. It has given away powers to regulate the City to EU bodies and seems quite happy to give even more power to the EU external service of the noble Baroness, Lady Ashton.
I am sorry to say that the Government’s actions to date belie what seems to be the intention behind the sovereignty Bill. It is by actions that Governments are judged and not by words. This Bill is smoke and mirrors, moving the furniture around. I was grateful to the noble Lord, Lord Howell, who reminded us that it is 36 years since anyone in this country has had a chance to vote on the European Union. That is what is needed now, not the plethora of referendums that have been mentioned in this Bill. We need a Bill to enable people to have a vote on our future in the EU in a referendum. That would be a proper sovereignty Bill.
Lord Radice
My Lords, we have had a terrific debate. We have certainly had some brilliant speeches from a lot of distinguished people. I think that the general mood was summed up by the noble Lord, Lord Brittan: the Bill has been received by an undisguised lack of enthusiasm. I have to admit that this Bill, which we have been examining today, is one of the most curious, complicated and confused pieces of legislation that I have encountered in all my 38 years in Parliament. It is also extraordinary that in a country which has previously been much renowned for its parliamentary democracy the coalition Government are introducing a Bill which would, or might, require a national referendum in a wide area of policy questions, a constitutional innovation which is unprecedented in our practice.
As my noble friend has said, and as many noble Lords have quoted, we are all indebted to the House of Lords Select Committee report on the constitution, which examined the case for and against the referendums, and which concluded that referendums are most appropriate where they are concerned with fundamental, constitutional questions. We can probably all agree on the kind of list that would make: the abolition of the monarchy; leaving the EU—as the gentlemen behind me want to do, and that would certainly require a referendum; changing the electoral system and changing the UK system of currency. Most of us would agree that these are the kind of questions that would naturally give rise to a referendum.
When the Constitution Committee examined the European Union Bill, one of the main questions it had to answer was whether it provided for referendums solely on fundamental constitutional grounds. The committee concluded that that was not the case and that many of the matters set out in the Bill are not fundamental constitutional issues. Indeed, relative to the big questions I have just referred to, they are quite small and technical. However, specifying over 50 policy issues where a referendum might be required really does amount to a radical step change in the adoption of referendum procedures. These are small questions, but we are talking about a major constitutional change which the Government are introducing under the guise of this Bill. I do not think that the noble Lord who introduced the Bill, who we all much admire, suggested that this is a major constitutional change, but that is in fact what it is.
How come we have got to this place? How come the Conservative Party, when it was led by the noble Baroness, Lady Thatcher, would say that referendums were the device of demagogues and dictators? How come this party is now posing such a radical step change? How come my friends in the Liberal Democrat Party—many of them are my friends—who are strong pro-Europeans, are going along with it? The Tories blame the Labour Party for their position, and we have heard one or two noble Lords suggesting that in the debate. We ought to have had a referendum on the Lisbon treaty, even though the Government of the day never said that we would have one. The Tories say that we broke the trust and therefore they have to reintroduce that trust by having a whole raft of referendums. But the real motive is quite different—it is to appease the Eurosceptics in the Conservative Party, but there is a fat chance that that will actually occur. You have only to read the debates in the other House to understand that they totally failed on that front.
When I asked my Liberal Democrat friends why they are supporting this, they say that it is part of the coalition agreement and they have to go along with it. They also argue that as part of the coalition agreement, the Tories have had to drop their extremely unrealistic plans to repatriate certain powers from the European Union, which is perhaps correct. They go on to say that, on the whole, the coalition has been adopting a more positive European approach in its day-to-day affairs than was originally expected. This is the Liberal Democrat argument to justify the position it is taking.
When those who are very concerned about this Bill raise the issue that it may unleash a series of referendums on relatively minor issues, the coalition Government say, “Actually, we have no plans or any intention of agreeing to any treaty changes during the lifetime of the Parliament and therefore the issue of referendums is highly unlikely to arise”. I must say that to pass a referendum Bill in order not to use a referendum Bill is a pretty odd argument, but that is what people, in justifying their position, have been saying to me.
The reality, of course, is that if the Bill goes through, a system of referendum locks will have been erected. I agree with the noble and learned Lord, Lord Howe, that there will be a system of locks on the statute books, a change which could not only alter our constitutional practice in a major way but act as a block and handicap to our membership of the European Union. In the long term, that will be a genuine problem for us. It will not, in the end, be a problem for the European Union because it will use enhanced co-operation to get round our blockage. However, it will certainly set back the way in which we can act inside the European Union, which will be bad for us and bad for our people.
I do not want to say anything about the sovereignty of Parliament because I could not possibly add to what the noble Lord, Lord Kerr, has said. I think we are all very surprised that it is in the Bill. It does not add anything to the Bill—it is a kind of fig leaf—and I do not see why we have to have it. We would be doing the country a service if we kicked it out during the passage of the Bill. Certainly it is ironic that, on the one hand, the Government are putting forward a system of referendum while, on the other hand, they are saying, “We are strongly in favour of Parliament and believe in its sovereignty”. There is a conflict there, as a number of constitutional experts have pointed out. The idea is to somehow kid the Eurosceptics that the Government are concerned about parliamentary sovereignty. The noble Lord, Lord Kerr, suggested that they are kidding them along so that at some later stage there might be a kind of breakout and a repatriation of powers. I hope that he is wrong.
The real fundamental point about the Bill is that it is based on entirely the wrong premise about the way our membership ought to be in Europe. It is designed to act as a long-term brake on UK participation in European integration. It approaches the pooling of sovereignty by the UK at EU level exclusively as though it amounts to a transfer of power to an alien body. It ignores the fact that the sharing of responsibilities with partners in an organisation, of which the UK is a very influential member, is good for this country. As the noble Baroness, Lady Williams, said in a notably moving speech, we have greatly benefited from our membership of the European Union.
I am sorry that the Minister for Europe, who was at the Bar of the House, has gone because I am about to quote him. It may be that he does not want to be quoted because I understand that Ministers do not wish to say anything nice about the European Union in case they are rumbled as being pro-Europeans. However, I should like to read into the record—it is the first time I have seen it from a Minister—what Mr Lidington had to say about the European Union. He stated that,
“membership of the EU gives UK business full access to the world’s most important trading zone, comprising 500 million consumers without the barriers of customs or tariffs. This is of great importance to the UK’s prosperity. 10% … of UK jobs are reliant on exports to EU member states, the beneficial effect of EU trade on UK households is estimated at between £1,100 and £3,300 per year, UK exports to member states are worth more than £200 billion, and EU Foreign Direct Investment … comprises 49% of overall FDI to the UK. Under the present terms of membership the UK plays a strong and active role in influencing and shaping developments within the EU, allowing us to further goals essential to the national interest, such as strengthening and expanding the single market, delivering growth, and promoting a resource efficient, low carbon EU economy … In addition, EU membership gives the UK better leverage and negotiating power on the global stage, allowing us to better achieve our international objectives on issues such as freer international trade, conflict prevention, stabilisation, climate change, human rights and development. There are also wide-ranging benefits for UK individuals, such as the right to study and work within the EU, and to receive free or reduced cost health care on temporary visits within EU member states”.—[Official Report, Commons, 10/1/11; col. 232W.]
That is good stuff. Let us have a lot more of it. I would like to hear more of that from the Minister, who we all much admire, and a little less about how we are falling behind China, India and all that sort of stuff, which I have heard from him for the past 10 or 15 years. I want to hear him say, as the noble Baroness, Lady Williams, said, the good things that have been done in the European Union. We want to hear Ministers say that because it is part of the coalition agreement, too. Let us have more of that and a little less of the kind of stuff that is in the European Union Bill, which is at best unnecessary and at worst could weaken our position in the European Union and strengthen anti-European feeling in this country. We in this House have a duty over the next few weeks to improve the Bill. I hope we will be able to do that.
Lord Teverson
My Lords, I start by congratulating the Government on their European policy because, since the Government formed, we have not had an attempt to unpick the Lisbon treaty, we have signed two defence treaties with France—not part of the EU framework but an important move towards joint co-operation and some pooling of sovereignty and resources—and we have committed to helping the Republic of Ireland in its work to get out of its economic and fiscal problems. That is probably greatly in our own interests because of the problem of indebted UK banks in the Irish Republic, but these are far more positive moves towards Europe than I may have expected from my coalition partners.
I also welcome part of the Bill. As my noble friend Lord Bowness said, the fact that the Bill requires primary legislation in certain areas is probably not a bad thing for parliamentary scrutiny and the accountability of the Executive. Yet to say that the Bill is about healing the gap and distance between European and British public opinion and the institutions of the European Union has to be classified as total humbug, as far as I can see. The problem is not going to be solved by additional referenda or by the Bill. It will be solved only by greater leadership by British Governments. I am thinking about the current one, but even the previous Government were a huge improvement on the Government who preceded them. I was in Europe a lot in 1997, in Brussels and Strasbourg. The Labour Government coming in were an absolute breath of fresh air—not necessarily because of their domestic policies or whatever but because, at last, there was the possibility of co-operation at European level among all member states and even the possibility that we might actually remain a member of the European Union.
Unfortunately, the momentum of the Labour Government was lost. I am sad to say that, but it is something that happened almost by default and from the top-down leadership rather than the Labour Party itself. A lot more could have been achieved; I say that in sorrow rather than anger. One thing that became clear in 1996 and 1997 was that, during the Major Government, who had such problems in European policy, we had an empty chair policy. We associate empty chair policies with Gaullism in the 1960s in France, but the UK started to practise this at the end of the Major Government. It was a complete and utter failure, which moved us back in terms of influence rather than forward. To me, that is a fundamental lesson in understanding how getting things done and getting your case over in Europe really works. It is not done by threatening not to be there; it is done by threatening to participate and being in every meeting, working up coalitions and discussing your cause. That is the only way in which it works.
What does this Bill do? In terms of the referenda, it says to Europe, as many noble Lords have said, that Britain will not participate any further in the institutional development of the European Union. The problem with that is, first, that it is not just the declaration of this Government; by being in primary legislation, the measure is very difficult to undo even for other, future Governments. The provision takes us out of the conversation and away from many of the important areas of power and decision-making.
The provision also has a fundamental contradiction. Back in the 1990s, I remember it being argued, when we were so concerned about giving up our veto in so many areas, that one big issue in the UK—and quite rightly—was reform of the common agricultural policy. Why could we not get it reformed at that time? Because to reform it required unanimity. However hard we tried, it was impossible to get those reforms. If everybody went down this route and this type of referendum was mirrored among all 27 member states—and in the near future, it may be 29 or even 30 member states—that would give Malta, with a population of 400,000, and Luxembourg, with a population of 500,000, a veto over what other member states wanted to do to move the European Union forward and what we wanted to achieve. It would be to give a veto—not, I agree, through this Bill, but through this philosophy—to an equivalent of Cornwall, where I live. I am sure that Cornwall would love to have that power on the international stage with regard to vetoes of European strategic policy. By this philosophy we would give that to important but small member states such as Malta and Luxembourg.
One thing that is not understood sufficiently by the philosophy of this Bill is that we do not lose power just by giving away sovereignty. That is an argument that you can use, and in certain circumstances it can be valid. But we give power and our sovereignty away by not participating. When we opt out, that is not keeping our sovereignty but giving it away, because we have less influence on the decisions that are made within the most important political grouping that we are part of. That is why this philosophy is wrong.
Having said that, we should not deny that we have a huge problem. As we have heard from the Benches opposite, Europe is not that popular, and we must recognise that as a House. We should remember that in the last European elections—although I notice that the two UKIP Members of this House are not in their place—UKIP achieved 17 per cent of the vote. It beat not just the Liberal Democrats into fourth place but the Labour Party into third place and it came second to the Conservative Party. In national elections, it did not figure strongly at all because Europe does not tend to come high up in national election issues. Yet there is a huge need for us, whether as a political class or as leaders in society, to make sure that this message is far stronger. I, too, hope that my noble friend Lord Wallace will reinforce that message of a positive Europe with Britain playing its full part in it.
I put down a challenge to the Government to be radical. As the noble Lord, Lord Howell, said, this is about connecting not just Britain’s population but Europe’s population to the European Union. I am not completely against referenda on absolutely fundamental constitutional issues but, if you really want to make that connection through referenda, you do it by a referenda of those half a billion people as a whole. If that had been done on the Lisbon treaty, the treaty would almost certainly have been rejected. While I would not have liked that result, it would have meant that, perhaps for the first time, Europe’s whole population could start to take control of Europe in some way. Where we would go from there, I do not know, but that democratic deficit exists. That needs to be changed but this Bill is not a part of it.
Lord Sheikh
My Lords, at the outset I apologise for my late arrival at the beginning of the debate. This is an important Bill and it is timely that your Lordships should have the opportunity to debate it. As a tail-ender, I have listened carefully to the arguments put forward by various noble Lords but I am going to remain firm and support this Bill. The Government’s proposals are in concert with many other member states that give their electorates a voice if treaty changes propose a transfer of power to Brussels.
The European Union has delivered strong benefits for the United Kingdom since we joined and we should all be confident in the possibilities offered through free and open markets. Yet there has been a gradual erosion in public support for some other dimensions of what is sometimes referred to as the European project. We have witnessed a huge transfer of powers to Brussels in many policy areas. For example, although we are not part of the eurozone it has been estimated that approximately 65 per cent of financial regulations affecting the City of London comes from Brussels. As an insurance broker and underwriting agent, I have a long-standing connection with the City of London.
The European Union has changed a great deal since we joined the then European Economic Community in 1973. We all recall the treaties that have come about since then including Maastricht, Amsterdam, Nice and Lisbon. These treaties have altered the nature of the institution profoundly, yet the British people have not had the opportunity to have their say since 1975. Arguably, some of those treaties have featured strongly in general election campaigns and have been grounded in party manifestos. However, we need to recognise that people feel increasingly detached from European-level decision-making. As the European Union has undergone enlargement, so the distance between the ordinary voter and the European institutions has got that bit bigger.
I am of the opinion that greater efforts should be placed on making the public more knowledgeable about European Union affairs. Apathy is a big problem in local and general elections but is even worse when it comes to European elections. Significant numbers of the population cannot name even one of their three MEPs, yet these politicians are now colegislators in many important areas of policy as a result of the Lisbon treaty. Do the Government have any plans to broaden awareness about the European Union among the British electorate?
I believe that the Bill is a carefully considered measure to seek to reconnect the British people with the decisions made in their name in Brussels, and that is a good thing. Never again should we allow the transfer of powers without adequate consultation and scrutiny.
Our membership of the European Union is important for our economic prosperity, and we should be at the heart of those countries driving the agenda for the future. We need to have an ambition to place Britain at the heart of Europe, steering the agenda firmly. To achieve that, we need to be absolutely clear about our future role, which is the basis on which we will engage and rebuild the public trust and confidence that has been eroded in recent times.
The principle underpinning the Bill is simple, even if the technical aspects require rather more careful consideration. Any action that might affect our lives, as stated in the Bill, should be subject to the consent of the British public, and it is proper that that should be defined in statute. Extending economic opportunities is crucial to our improved well-being, but there has been a growing disconnect with what we signed up to and a lack of clarity about where the European Union is going.
In opposition, the Prime Minister was very clear about ensuring that the principle of sovereignty was enshrined in law. I welcomed that then, and I am pleased to see the Government bringing that forward in the Bill. As a sovereign parliamentary democracy, it is proper that we should be clear that European Union powers are exercised through the consent of the United Kingdom Parliament and, where appropriate, with a referendum of the wider British public. I agree wholeheartedly with my right honourable friend the Secretary of State who, at Third Reading in another place, said that the Bill,
“is an overhaul that is as profoundly needed as it is overdue. It marks a real shift in power from Ministers to Parliament and from both Ministers and Parliament to voters themselves”.—[Official Report, Commons, 8/3/11; col. 847.]
Clause 4 lists the criteria that the Government should take into account when deciding whether a transfer of power would occur and thus trigger a referendum. Clause 4(1)(f) specifically covers extended competences of the EU relating to matters involving economic and employment policies. I particularly welcome this clause as it shows a willingness on the part of this Government to stem the flow of regulation affecting businesses and the City of London.
I will confine the bulk of my remarks to Part 1 of the Bill, which deals with the “referendum lock” concept and places the Prime Minister’s commitments into law. However, that needs to be clearly spelt out and be unambiguous. We know that the basic principle needs to be enshrined in law. There was no referendum on the Lisbon treaty, and the ratification involved no consultation with the British public. That could not happen in the case of this Bill; for any future treaties, a referendum would be mandatory. We need to be clear that the responsibility for our laws rests with the British people and our Parliament.
I accept that changes to the existing treaty framework through the ordinary revision procedure are likely to be limited in number. They depend upon the satisfactory conclusion of an inter-governmental conference. I do not envisage that we will see many of these, but it is proper to ensure that the public are given the opportunity to express their views on each future occasion that this might arise.
The simplified revision procedures in the Bill provide greater scope for changes to be made and changes that might alter the balance in future considerations. Those may appear technical but the consequences could be profound. For example, where the voting procedures in the Council are changed from unanimity to qualified majority voting, this could alter the balance and change a large number of future outcomes. While these procedures are designed to make changes simpler, I welcome the fact that the Government are committed to providing a safety valve for additional scrutiny where these instances occur. I also welcome the requirement for Ministers to explain the basis of their decision, which will be open to legal challenge. The Government should not have anything to hide in making these decisions. It is a bold and welcome step that Ministers have taken.
This law may be repealed by a future Parliament, giving rise to the view among some critics that the Bill is unnecessary—that it cannot bind a future Parliament. I do not accept this analysis. I recall how aggrieved many people felt at not having their say in a referendum on the Lisbon treaty. However, I would not like any future Government to repeal the solid commitment that is provided in the Bill and I do not believe that they would do so.
Parliaments must be sovereign in the United Kingdom. Our laws are a matter for our Parliament. We have benefited, and will continue to do so, from harmonisation across our trading networks. The European Union offers great potential to champion the free market robustly. However, we are the custodians of our democracy. It is not ours to give away; it belongs to the British public. We have a duty to ensure that adequate scrutiny is applied where powers and competences are transferred. Where appropriate, the British public must be given the chance to have the last word. The Bill does not solve all the problems of the European Union, but it affords us a valuable protection for the future. It enshrines the clear principle that power rests with the electorate.
Since coming to power, the Government have gone to great lengths to give the British public a chance to determine their own destinies through initiatives such as the big society and the localism agenda. The Bill demonstrates an extension of this concept to the European strata. Above all, the Bill strengthens our democracy and provides the British people with statutory reassurance. That is why I support the Bill and commend it to the House.
Baroness Brinton
My Lords, as a new Member of this House, I have been impressed by the expert contributions on all sides of the debate. With my L-plates on, I am learning fast and am certainly in some awe of the previous seven hours.
It is all too evident that the 21st century offers us phenomenal challenges, including global competitiveness, global warming and global poverty, which we could never deal with effectively as one nation state. Therefore, it is absolutely vital that the UK should play a strong and positive role in the EU, so that all the nations of Europe are equipped to face these and many other challenges. Not to do so would not only diminish us as a nation but seriously impact on our commitments to tackle these major issues. As a Liberal Democrat I am, not surprisingly, pro-Europe. In my life before I joined this House, I saw its absolute strength for business and trading zones; for our universities and research councils, with knowledge exchange and innovation; and for our people and local communities, many of whom have benefited from working together, developing and strengthening our common interests.
We should make sure that there is greater public debate about these practicalities, not about the myths. There was much debate about the press coverage earlier this evening. On the doorstep, when you hear the straight bananas argument, it is a bit like the “What have the Romans ever done for us?” scene in the Monty Python film “Life of Brian”. When you say that recently there has been the EU arrest warrant, which has managed not just to arrest but to convict several paedophiles across Europe and large numbers in this country, they say, “That’s a good point”. Then you mention the EHIC—the health insurance card—and people come up with stories of how it has helped them when they have hit problems on holiday or working overseas. If you start to talk about the contribution of the ESF—perhaps the adult language course around the corner or the IT course at the community centre have been funded by the ESF—the EU suddenly becomes real. Then there is the ERDF. There are many other funds that on their own sound dreadful, but the key point is that they affect our lives, day to day, in our communities.
The Bill is a route map for enacting legislation, but does not reduce our commitment to Europe. On a personal note, some of the detail in the Bill is a tad overprescriptive, and I look forward to the Committee stage. However, life in the coalition is a compromise and I accept that the Bill will deliver the promises made in the coalition agreement. The Bill will give the British public a new sense of ownership, carefully set out and enshrined in law, over how the UK can work with the EU.
We are not alone in the Union in recognising that the pace of EU integration has resulted in a worrying lack of understanding between the EU institutions, national parliaments and citizens. It is therefore worth noting that—following changes that provided similar legislative safeguards in Denmark and Ireland, where referendums have stimulated public debate—there has been significantly more involvement and interest from the general public in matters relating to the EU. For those of us passionate about democracy, this will give the people a real say in important matters relating to our country and the EU. While I accept that the public will not be interested in the detail, it is somewhat patronising to suggest that they are incapable of recognising the UK’s national interest. In Ireland, in particular, the safeguard of the referendum has built confidence and made the people much more pro-Europe than previously.
There has been reference to the detail of the Bill acting as a block to working effectively in the EU. In Germany, regarding the issues around the Lisbon treaty, 80 pages of explanation were produced. However, this was not seen in Germany, or elsewhere, as anti-European. For those who have expressed concern about the so-called increasing power of the EU, the Bill provides real reassurance. It places our Parliament at the heart of the decision-making process; it places a duty on the people to express their views on matters that require a transfer of power from the UK to the EU; and it places a duty to enshrine passerelles in law, rather than by subsidiary legislation. If, as a nation state, we want to clarify and strengthen the democratic processes between us and the European Union, it is incumbent upon us to make specific the process by which we will do it. I therefore understand why the Bill is so detailed, but I hope that we will look carefully at amendments during Committee to consider how we might improve some of these areas.
Clause 4 sets out exactly which powers of competence and transfers of power are affected, for the avoidance of doubt about where the bar is, and what matters must be put to the people. That seems to be right and proper. For those who are worried about the length of Schedule 1 and its high level of particular references, I say as a newcomer that I find it helpful, as it is about the voting mechanisms on those explicit articles and clauses, not about the substance of the clauses themselves. It has explained to me exactly how this new legislative framework would operate, which has to be welcome. The less chance there is for misunderstanding and confusion the better, and there is a possibility of judicial review later.
The Bill makes it clear that our Parliament should take a stronger and more visible role in EU legislation, and that is why, where any transfers of power are proposed, the question should be put to the people. Does the Minister agree that one of the welcome outcomes of the Bill could be that the very low level of public knowledge and debate over the EU in much of British politics and the media will be improved as a result? I suspect that that would shatter much of the Eurosceptic mythology that has fogged our national view and replace it with a pragmatic and more truly accountable legislative process.
I started by saying that the Bill is a product of coalition politics—two parties with differing start points working together to find a level of common agreement, defining the European constitutional question, with the public and Parliament having a final say over the key matters that will determine how the UK and the EU will work together in the future.
Lord Sewel
My Lords, at last we are moving towards the end of the debate, and the main lines on both sides of the argument have been laid down. That is accurate, but we must recognise that the weight of the argument has been solidly in one direction. It is a bit like the Barnsley by-election. Who will lose their deposit: the supporters of the Bill or those who say that it does not go far enough? The only thing we have to look forward to now, apart from the significant contributions of my noble friends Lord Tomlinson and Lord Liddle, is the winding up from the noble Lord, Lord Wallace. I am afraid that we do so with some mischievous glee, because he has form on this issue. He is not the only member of the Wallace household who has such form, but perhaps we should not pry into what is said over the breakfast cereal: snap, crackle and pop.
At the beginning of the debate, the noble Lord, Lord Howell of Guildford, prayed in aid the fact that in the other place the Second and Third Readings were passed without division, and there were no Divisions on amendments. This Chamber is at its best when it does not rerun the partisan jousts of the other place, but sets itself aside, across the Benches, and says to the other place, “We think that you have got it wrong”. On this Bill, the overwhelming weight of argument is that the other place so far has got it wrong and we should ask it to think again.
I could save some time for the House by indicating the noble Lords with whom I agree and whom I follow. The trouble is that that would probably take up as much time as saying what I want to say in any case. We all recognise the contributions of the noble Baroness, Lady Williams of Crosby, and of the noble Lords, Lord Richard, Lord Brittan of Spennithorne, Lord Davies of Stamford, Lord Hannay, Lord Taverne and Lord Kerr of Kinlochard, to name but a few.
As the noble Lord, Lord Richard, said, this is a bad Bill. It is bad in its construction and bad in its underlying methodology. As a legislature, the least that we should expect of the Executive is that they should bring forward Bills, especially on constitutional issues, that are underpinned by an organising principle. That principle should inform and give coherence to the entire Bill. That is singularly lacking in this case. Not only does the Bill lack any such unifying principle, it is schizophrenic. It is built on the conflicting principles of popular sovereignty on the one hand and parliamentary sovereignty on the other.
The guts of the Bill put in place detailed mechanisms establishing what are in effect binding referendums. The Bill makes it clear that the process of agreeing a transfer of powers and competences to the EU will be an act of Parliament followed by a confirmatory, binding referendum, all followed by a unanimous decision of the Council. I said that it makes it clear, but it does not quite do this because of the significance test. When I read the details of the test, I was tempted to think that it is only there in order to provide outdoor relief to the legal profession, because I am sure that many members of that profession will make a great deal of money by arguing about what is significant and what is insignificant.
I have two points to make. Is it sensible to create a situation where Parliament’s decision is set aside on the basis of a referendum with the possibility—indeed, probability, I am afraid to say—of a derisorily low turnout? I know that that may be difficult for some noble Lords to accept, because I know that some Members of your Lordships’ House and the other place are moved almost to paroxysms of agony and ecstasy when it comes to matters European. However, I doubt whether that is the position of most electors. I think that they will take a slightly more proportional and measured approach and stay at home. Therefore, a very low turnout is a real possibility, setting aside the position of the Government in the Council and the measured consideration of Parliament. I just ask whether that is a sensible way to proceed.
Secondly, on referendums, let us remember the de Gaulle problem, which basically boils down to the fact that a Government can determine the question that is asked but they cannot determine the question that the electors answer. The French people cared little about de Gaulle’s very sensible proposals on reform of the French Senate and regional government in France, but they did know that they had had enough of the general and they voted against him in the referendum in order to get rid of him. That had nothing to do with the content of the referendum, and that situation is likely to be rerun if we go down the route that the Bill invites us to go down.
The main part of the Bill establishing mandatory, confirmatory referendums is couched in terms of popular sovereignty. Then we suddenly come to Clause 18, and with that clause everything changes. Popular sovereignty disappears and is replaced by a rather curious assertion of parliamentary sovereignty. In terms of a principled argument, Clause 18 turns everything on its head and stands in flat contradiction to everything that has come before in the Bill. A legislature deserves something better—at least an attempt at internal consistency and coherence. I believe that it is just possible for parliamentary sovereignty to coexist with a diluted form of popular sovereignty, with advisory referendums on clearly significant and important issues. However, it is difficult to see how parliamentary sovereignty can, over the longer term, survive a sustained onslaught of mandatory, binding referendums, particularly when we introduce them on a whole series of detailed propositions with which, I am afraid, the electorate may have very little direct interest.
Finally, it is clear that the primary political purpose of the Bill is to perpetrate a constitutional outrage, which, as has been mentioned before, is to bind successor Parliaments. I think we all recognise that, and in that case the Government’s acceptance of a sunset clause is a minimum requirement.
Lord Tomlinson
My Lords, some time ago I was given a copy of a speech made by a former Comptroller and Auditor-General of the United Kingdom, Sir John Bourn. I put it in a plastic folder and kept it on my desk so that I could produce it the next time someone was so foolish as to raise the question of the qualification of European Union accounts. The noble Lord, Lord Stevens, has hit the jackpot today. He is the recipient of the message from Sir John Bourn, who confirmed in June 2006 that,
“if the UK had the same system as the EU, he would have to qualify all 500 UK expenditure accounts rather than just those where he thought there was a problem (13 in 2005)”.
He went on to say:
“It is worth noting that the accounts of Britain’s Department for Work and Pensions, which is responsible for distributing pension and other social security benefits, have been qualified by the National Audit Office for each of the last 18 years”.
Nothing has changed since 2005.
“Fraud and error in the payment of UK benefits amounts to an estimated £2.5 billion a year—that is substantially more than the £224 million that is thought to be fraudulently taken from the EU”.
I thought that that was worth reading into the record, so that it is absolutely clear. Every time we debate Europe, the canard is produced about a Europe riddled with fraud, as if our example is somehow the perfect one that the rest of Europe should adopt and follow.
The European Union Bill arises from the section in the coalition programme on Europe, in which the Government said that they would,
“examine the case for a United Kingdom Sovereignty Bill to make it clear that ultimate authority remains with Parliament”.
Yet the Government in their response to the House of Commons European Scrutiny Committee said at paragraph 6:
“The Government has never claimed that Parliamentary sovereignty is currently under threat in relation to EU matters. We would agree that, to date, the UK Courts … have rebutted arguments that EU law has an autonomous entrenched status in UK law and have recognised that EU law takes effect in the UK through Acts of Parliament”.
The Government continued, having already demolished the argument about UK sovereignty, to proceed to a Bill that includes Clause 18. In a further report to the House of Commons Select Committee, when they had quoted three main sources for their concern, the Government said:
“Although none of these sources has in any way undermined the operation of Parliamentary sovereignty in relation to EU matters to date, we do think that there is a need to put the matter beyond speculation for the future”.
So this was not a real problem for today; it was an imaginary problem for tomorrow. Yet, when they were pursued further—this is my last quotation—they went on to say in a rather paranoid state of mind that Clause 18 had been included in the Bill to,
“address concerns that the doctrine of Parliamentary sovereignty may in the future be eroded by decisions of the courts”.
Here we have yet another example of the paranoia that is developing in the coalition about the courts. First, it was about the European Court of Justice; then it was about the decisions of the European Court of Human Rights; and now there is this fear that courts in this country may, at some time in the future, exercise an unreasonable power over what they consider to be parliamentary sovereignty. I view Clause 18 as unnecessary in its totality and I hope that the Minister can find persuasive, cogent reasoning to convince us why your Lordships’ House should not seek to delete it at a later stage.
During discussion of the Bill today, we have witnessed a rather sad scene: a rather unhappy and lonely duo on the Front Bench. They are usually such a happy couple, but we have had the noble Lord, Lord Howell, looking fairly miserable and the noble Lord, Lord Wallace, doing his best to raise a smile once in a while. It is not surprising that they are looking discomfited, however much they are wedded and welded together by coalition politics, because today they have by and large been abandoned by the Conservatives—apart from the noble Lord, Lord Sheikh. I always listen to the noble Lord, Lord Sheikh, with interest, but, with respect, he gave a rather eccentric constitutional interpretation about binding your successors. Apart from that, they were abandoned by the Conservatives, rather disowned by the Liberals—with the exception of the noble Baroness, Lady Nicholson, who, I thought, tried to play both sides against the middle—and found no support on either the Labour or the Cross Benches. That is a unique achievement even for a dynamic duo such as the coalition’s Robin and Batman on foreign affairs. They have managed to find precious little support anywhere in this House. Even if they were reasonably confident of getting support from the usual suspects on Euroscepticism in this House, they have found that, as we already knew, they were not going far enough to placate any of them.
We have an EU Bill under which there are only two real issues. There is the so-called referendum lock, on which I shall not have the impertinence to say anything, because the noble and learned Lord, Lord Howe of Aberavon, demolished it in his remarkable speech earlier. The other part of it is sovereignty, which has not found a friend in the House, as far as I can see. We have Parts 1 and 3. If I followed my instincts, I would possibly get into trouble, but my instincts are that the Bill needs two main amendments: “delete Part 1” and “delete Part 3”. Then we could have a vote on Part 2. That would make it a Bill that would get unanimous support not only in the coalition but in the whole of the House. That is one possibility. The case for the hierarchy of referendum locks has been destroyed and Clause 18 has been shown to be a sham.
Today’s debate has shown that everyone in this House is out of step with the government Front Bench. From the Liberal Democrats, we have had remarkable speeches from the noble Baroness, Lady Williams, and the noble Lords, Lord Taverne, Lord Maclennan and Lord Dykes, among others. From the Conservative Benches, we have had remarkable speeches from the noble Lord, Lord Brittan, and the noble and learned Lord, Lord Howe, and very interesting contributions from the noble Lords, Lord Plumb and Lord Bowness. From the Cross Benches, we have heard from the European trio of the two Davids—the noble Lords, Lord Williamson and Lord Hannay—together with the noble Lord, Lord Kerr. From the Labour Benches, each of my colleagues who has spoken has made an impressive contribution.
Lord Pearson of Rannoch
I would not have presumed to such an honour, my Lords. Does the noble Lord agree that he has just read out a litany of the more Europhile Lords in your Lordships’ House, who have come together on this issue with unanimity and, I must say, incredible repetition in all their speeches?
Lord Tomlinson
All of them are proud to be associated with each other. All of them spoke about the Bill and none of them took 21 minutes to do so.
The Bill is a sham, a fraud, an illusion. It is a piece of cynical deceit. Where it purports to offer referendum locks, it does it in circumstances where unanimity already applies. It is the political equivalent of the three-card trick “Find the lady”: it has always moved by the time you take the cup off the top.
The big questions after today’s debate are whether this Bill can be fundamentally amended and whether it can be meaningfully amended. There is near unanimity that it is pretty near worthless as it stands. If there are to be amendments, minimum standards for turnout and majority in any referenda, were the Bill to apply, should be considered for inclusion. There should certainly be a sunset clause, as many noble Lords have said, in order to prevent the constitutional outrage of trying to bind successors with legislation that, if you mean what you say in your programme, will not apply to the current Government. I do not want referenda on anything other than issues of major constitutional significance. If the Bill is to proceed, it should have a sunset clause; otherwise, it would be an outrageous attempt by this Government to bind their successors.
This Bill is a mess and it has distracted us from serious debate on the serious issues facing Europe. It is pandering to Eurosceptics, but will we never learn? They will never be adequately fed; you feed them a little bit and they will want more. The Bill will not deliver referenda on the issues that Eurosceptics want because we all know that those issues are the ones not covered in this debate, such as the Lisbon treaty and the European investigation order.
We who believe in Europe should be finding every opportunity to talk about the benefits that the European Union is bringing to the people of Europe. When I first started in politics, we used to argue enormously about how much the fascist dictatorships in southern Europe and the colonels in Greece would cost this country in terms of the contribution that it would make to the southern flank of NATO. Nobody knew what the price was. They did not care because it was a price worth paying. Today, we do not even have to think about it, because those countries are now all fully integrated in the European community of democratic nations. We can go on and find example after example of positive issues about Europe that this coalition Government ought to be leading on in making sure that they are popularly understood in this country. That is the way to enthuse people about a destiny in the European Union. They are the sort of things that the noble Lord, Lord Wallace of Saltaire, used to talk about. I hope that he will get back to talking about them some time, because they are the things that are inspirational about what the European Union is, what it can be and what it can do, not just for our people but for our people in a secure Europe playing a part in securing Europe within a securer world.
My position is one of major disappointment that we have managed to spend a full parliamentary day, almost running into tomorrow, without debating the essential issues of Europe: how to make the 2020 strategy create more jobs; pushing for the single market reform that started in 1992 but that we are still not near completing; and how we get the changes to the common agricultural policy so that it can be fair in relation to the budget and play a real role in feeding the world over the next century. None of those things has been present, but those are the things that are partly the opportunity cost for having wasted so much time on a futile debate that is really about a programme that we all know is meaningless. The two parts of it, whether the referendum lock on the one hand or the sovereignty clause on the other, are totally irrelevant to the needs of our people and our country and to the role that we should be playing in building a stronger Europe.
Lord Liddle
My Lords, I should open with a rare act of deference to the noble Lord, Lord Pearson of Rannoch: I worked for three years in the European Commission, and for good measure I have a wife who works for the BBC, and I am immensely proud of both. It is humbling and a bit daunting to make your debut from the opposition Front Bench on an issue and in a Chamber where so many noble Lords from all sides of the House have made such a distinguished contribution to the cause of Britain in Europe. Regrettably, the same cannot be said of the Bill before us.
We have had, as many noble Lords have said, some wonderful contributions in this debate, including that from the noble and learned Lord, Lord Howe of Aberavon—one of my pro-European heroes—who in a memorable speech destroyed the logic of the referendum locks which are central to the Bill. The noble Baroness, Lady Williams of Crosby—who probably sacrificed her chances of becoming Labour’s first woman leader and Prime Minister because of her commitment to Europe—wondered whether it would ever be possible to find the key to any of those locks. That was a wonderful speech as well, as was the speech by the noble Lord, Lord Brittan of Spennithorne, who in his 10 years as a European Commissioner built on the achievement of the Single European Act by the noble and learned Lord, Lord Howe, and drove through the single market and negotiated the Uruguay round. I thought that the end of his speech, where he said that he could find nothing in the Bill to commend to your Lordships, was a very clear and devastating statement for the Government.
There have also been excellent speeches from the noble Lords, Lord Kerr and Lord Hannay, who served as our permanent representatives in Brussels. I think that the noble Lord, Lord Kerr, used to be described in the Foreign Office as the man with the golden pen. Tonight, in a really wonderful speech, he proved that he also has a golden tongue. We have also had the benefit of a tremendously logical and crystal clear exposure of the Bill from the noble Lord, Lord Williamson of Horton, who, as a former secretary-general of the European Commission, served first and foremost the cause of Europe and, in doing so, the cause of Britain. Whatever the noble Lord, Lord Pearson of Rannoch, may think, I think, and we think, that it is possible to do both.
We have had many good speeches but I cannot mention them all. I would, however, like to mention some of the speeches from my own side—from our former Commissioners, the noble Lords, Lord Clinton-Davis and Lord Richard. The speech of the noble Lord, Lord Richard, was particularly excellent and brilliant.
I did a count as we were going through the debate. We will have 37 speakers in all, 33 of them from the Back Benches. There has been one loyal Conservative supporter, the noble Lord, Lord Sheikh, from the Conservative Back Benches. There were also four anti-European speeches which basically criticised the Bill because it is too little, too late. The noble Lord, Lord Kakkar, made a speech which I think was as much about how the European processes of legislation are inadequate as it was about the content of the Bill.
There were traces of support in three of the Liberal Democrat speeches—that is how I would assess the position. The noble Baroness, Lady Brinton, was perhaps the most enthusiastic in her support, whereas the support of the noble Baroness, Lady Nicholson, was perhaps somewhat qualified. I think that the noble Baroness, Lady Falkner, was hedging her bets as to which way the Liberal Democrats will eventually go. However, a total of 24 of the speeches, from all sides of the House, were critical of the Bill in some way. So I think that Ministers will have to go away from the debate today and think, “Never before can a government Bill on Europe have been so comprehensively rubbished by those with the most claim to understand its purpose and content”.
I do not want to be unfair to the noble Lord, Lord Howell, for whom I have genuine respect. On Europe, I see him as the epitome of the cautious pragmatist. I am always conscious of the need not to get too carried away by my own Euro-enthusiasm, so I rather warm to his pragmatism. The noble Lord is a Eurosceptic in the proper sense of the word. He is not someone for whom the misleading label of Eurosceptic is a cover for rabid anti-Europeanism, which this bad Bill was designed to propitiate, but a sceptic who is open to rational argument and persuasion. As this House’s scrutiny of this Bill proceeds, I trust that those qualities of the Minister will be allowed every opportunity to shine through by his political masters in the coalition because he will have some persuading to do. On this side of the House, we will do our best to help him.
The Government have one good point on which they attempt to build their whole case for this Bill. The EU has a serious legitimacy problem and not just in Britain. But so do our national politics, which the anti-Europeans never refer to. They have a serious legitimacy problem as well. Even accepting that the EU’s legitimacy problem is graver, it is by no means clear that the Bill’s remedies provide credible answers to the question or even that it has identified the right set of questions.
There are two schools of thought about how to address the problem of legitimacy. One is “output legitimacy”—that is, making the EU more effective so that citizens will better comprehend its purpose and its benefits. The other is “input legitimacy”—that is, improving the process of transparency and democratic accountability of European decision-making. Output legitimacy—a Europe of results, as the Commission President, Jose Manuel Barroso, once described it—has been a long-standing British goal. But to get a Europe of results requires a pragmatic attitude to the powers that the EU may need in a rapidly changing world to be effective and to achieve results. By no stretch of the imagination can that spirit of pragmatic flexibility which is necessary be on display in this Bill.
As my noble friend Lord Anderson of Swansea put it, Clause 4 puts a ball and chain around the British Government’s agreement to virtually every flexibility to improve procedures that the Lisbon treaty contains, particularly the passerelles and the simplified revision procedure. Its “significance clause” throws the whole process open to judicial review, which, in an extraordinary way, is something that the Government appear to welcome.
I thought that the key point was made by the noble Lord, Lord Williamson. There are already strict safeguards in place on the use of these flexibilities. Under the Lisbon treaty, passerelles and treaty amendments can be agreed only by the unanimous agreement of all member states, including Britain. Under our own law, which was passed in 2008, they have to be endorsed by positive resolution of both Houses of Parliament and, in the case of treaty change, by an Act of Parliament.
Given that these safeguards already exist, what is so fundamentally at fault in the status quo? Surely, in order to give the Ministers the flexibility they wish to make use of, we can amend this Bill to exclude some of the passerelles from its coverage to widen the test of significance, which would allow Ministers more room for manoeuvre when they seek the pragmatic need to improve decision-making.
Instead of widening flexibility, Clause 6 and Schedule 1 list a whole series of decisions that would automatically be the subject of many other referendums. As many noble Lords have pointed out, these go way beyond the fundamental constitutional issues, which in the judgment of your Lordships’ Select Committee on the Constitution should be where referendums are most appropriately used. Does it really make sense, for example, under Clause 6(5)(c) for the,
“participation by the United Kingdom in a European Public Prosecutor’s Office”,
to be subject to a referendum? Let us return to the real world because that is where we should be: a world of “Events, dear boy, events”, as Harold Macmillan famously put it.
Let me illustrate that with one example. In the negotiations on the Maastricht treaty in the early 1990s, the 15 member states of the European Union decided that justice and home affairs should become an EU competence, but set them apart in a separate pillar where the Commission would have a reduced role and unanimity in decision-making would apply. Within 15 years, in a Union which had then grown to 25 member states, there was unanimous agreement that in order to safeguard citizens against greatly increased threats of terrorism, cross-border crime, drugs and human trafficking, these decisions should be made subject to the normal Community method. The nation states of Europe decided this not because they are mad federalists who want a united states of Europe, but because they felt that in our porous world, this was absolutely essential for the protection and security of their citizens. We have to have the pragmatism to adjust in line with events. Yet this Bill restricts, hampers and cramps the pragmatic flexibility the European Union needs for the future.
What the Bill does offer is wonderful provisions enabling the British people to vote in a referendum on matters of supreme clarity and importance to them, such as the suspension of the emergency brake procedure and the substitution of the ordinary legislative procedure for the special legislative procedure. What the coalition does not seem to recognise—I am surprised about the Liberal Democrats here—is that qualified majority voting can be and often is in the British national interest. We had an example of that in the past few weeks when we accepted qualified majority voting on enhanced co-operation on patents to make it work. That was in our interests, but under this Bill, it could not have occurred.
I agree that the flexibility I am talking about has to be complemented by strengthening democracy and accountability in the way European decisions are taken. That is the input legitimacy side. For decades, because of its origins, Europe has suffered on this score because it was the child of diplomacy between what were very suspicious and sovereign member states. But thank God for that diplomacy, which has given us 60 years of unparalleled peace, prosperity, social justice and democracy, in contrast to the previous 60 years of great power rivalry, two world wars and unimaginable horrors. So we need to strengthen both the role of the European Parliament and the processes of accountability within member states.
The noble Baroness, Lady Nicholson, was right to say that Westminster politicians consistently underestimate the European Parliament. They tend to think of it as a talking shop, but now it has real power through the extension of co-decision. There is a point about this that is relevant to the Bill. British Eurosceptics dismiss the European Parliament, saying that its legitimacy is low, the turnout for its elections is low, few people understand the complexities of what they are voting for and media coverage is at best patchy. But these are all arguments that could equally be made about local government, and even more so about the possibility of multiple referenda on obscure EU issues with the likelihood, as my noble friend Lord Lea said, of 10 per cent to 15 per cent turnouts or less, which is the central feature of this Bill.
Lord Pearson of Rannoch
My Lords, we Eurosceptics do not say that the European Parliament lacks legitimacy just because it is a talking shop; we say it lacks democratic legitimacy because it cannot even propose legislation. All European legislation—now the majority of legislation in this country—is proposed in secret by the unelected Commission; it is negotiated in secret by the unelected COREPER; and it is decided in secret by the Council, now sometimes, as the noble Lord said, with the participation of that fraud of democracy, the European Parliament.
Lord Liddle
I am afraid the noble Lord is describing a situation which might, at a stretch, have described European decision-making 30 or 40 years ago but certainly does not describe the way in which co-decision works today.
In addition to the European Parliament, there is also a need for a stronger role for national Parliaments in European decision-making. The previous Government did a great deal to push this: the treaty of Lisbon introduced the yellow card procedure on subsidiarity; and the Act of 2008 strengthened the accountability of Ministers to Parliament for their conduct of European business. We should have a serious debate about how we can strengthen parliamentary accountability. The Commons could learn a lot from the excellent work of the European committee of your Lordships’ House under the chairmanship of the noble Lord, Lord Roper, the reports of which are listened to across the European Union.
What you get instead in this Bill is not a serious debate about these issues but an attempt to insert a sovereignty clause which has been described in the debate as irrelevant, dangerous, spurious, futile and as a grubby political compromise. What is the point of it? We look forward to the explanation of the noble Lord, Lord Wallace.
The Bill has failed to decide what it is all about; it is a fundamentally confused Bill. Is it about increasing parliamentary accountability, with the added possibility of occasional referenda on issues of fundamental constitutional importance; or is it about a powerless Parliament, with weak leadership, where the most trivial subjects are decided in multiple referenda? Is the latter really the coalition’s vision of the future direction of our democracy? It is reality TV democracy, as the noble Lord, Lord Howell, described it, as against representative democracy. If we can justify the approach to multiple referenda on Europe, why not referenda on everything from hanging to dangerous dogs? It is a fundamental constitutional point.
On the question of whether these referenda matter, the present Government clearly think that they do not because there is no likelihood, they say, that they will ever call a referendum in Parliament under their own legislation—they say that there will be no transfers of powers to Brussels in the present Parliament—so what we have here is not relevant to the present Parliament; rather, it is a crude attempt to bind future Parliaments. This is contrary to our normal constitutional practice, and that is why the Opposition will support a sunset clause in the Bill. We look forward to the unanimous support of the Liberal Democrats on this issue, which the noble Lord, Lord Taverne, promised us. I hope that that promise will be fulfilled.
The noble Lord, Lord Wallace, must know that if the Bill is accepted as permanent it would have a disastrous impact on Britain’s position in Europe. We would have no room for manoeuvre as the EU develops. We would see the gradual emergence of a two-tier Europe, a situation that the Foreign Office has fought for 30 years to prevent. This is in an age when a stronger European Union is needed.
Last week I was in Brazil, speaking at a conference on globalisation. A distinguished Brazilian ambassador told me something that is relevant to our whole thinking about the European Union. Until 1928, Britain was Brazil’s largest trading partner. From 1928 to 2009, it was the United States. In 2010, it became China. After the devastation of the Second World War, Europe, in Alan Milward’s famous phrase, came to the rescue of the European nation state but because Britain had never been occupied or defeated, it never saw quite the same need to be rescued. Now, the huge challenge for Europe is globalisation. For all the nation states of Europe, including Britain, globalisation poses the need for another European rescue of the nation state. Yet instead of thinking big about the issues and how these questions are to be addressed, the Government come forward with this miserable, pathetic little Bill. This is a coalition not of leaders but of panderers. The House has shown today why the Bill is simply not good enough.
Lord Wallace of Saltaire
My Lords, this has been a vigorous debate—sometimes passionate and often lengthy. On one or two occasions I remembered the time when the noble Lord, Lord Shaw, was just beginning to get to the heart of an argument as he entered the 25th minute of a speech in the Committee stage of an EU Bill. We look forward to an equally vigorous Committee with, I hope, slightly shorter speeches, as we examine the Bill in detail.
As we have discussed the Bill, I have on various occasions said to people, “Please understand that unless I can explain to the noble Lords, Lord Kerr and Lord Hannay, what exactly this particular clause means, life may be difficult for us”. I hesitate to remind the noble Lord, Lord Kerr, that he has benefited over the years from a great many cigarettes that my wife has given him. I trust that this is no longer a trade that is necessary. At this time of night I need to leave many of the detailed issues until we reach Committee and will deal here with the underlying themes of the debate, which are the political contexts for the Bill, developments in the European Union, the constitutional implications of the Bill and the implications for the UK’s position within the EU.
I expected that my noble friend Lord Howell and I would be fired at from both sides and forced to stand back-to-back like the Gloucester regiment at the Battle of the Nile. I have been surprised to discover in this debate that the concentrated fire has only come from one side. From the other, it has been scattered and rather inaccurate. I wondered if the noble Lord, Lord Pearson, had forgotten he was involved in a battle against the EU Bill and gone off to shoot ducks—or, perhaps, EU pensioners. There were some wonderful flights of fancy. If I understood the noble Lord, Lord Davies of Stamford, correctly, there is a danger that Conservatives will fan the flames until they roast the Euro-sceptic penguins. Was that correct?
Lord Wallace of Saltaire
You did. I am glad to see that the Labour Front Bench is beginning to enjoy the freedom of opposition. Some weeks ago, a former Labour Minister said to me, “William, opposition is so much more fun than being in government. You get to ask lots of questions and you do not have to give any answers”. We then went on to discuss how mischievous one can be in opposition. The noble Lord, Lord Sewel, agreed that mischief is great fun and that that is what he wants to be engaged in on the Bill, as he was on the AV Bill.
The Bill addresses a problem of public distrust that the coalition Government inherited from their predecessors. The noble Lord, Lord Tomlinson, said that we are missing the real issues but popular consent is a real and central issue and cannot be ignored. The noble Lord, Lord Liddle talked about the real world. This Chamber is part of the real world but is not entirely the real world. I remember someone once saying to me, “William, you are much too much of an academic. You do not go to enough football matches”. I have to say that in the past few weeks my wife and I have been to rather too many dinners and other occasions in Yorkshire where the conversation from everyone from businessmen to teachers about what they assumed to be the state of the European Union was horrifying, and made the noble Lord, Lord Pearson, occasionally sound like a moderate.
Popular suspicion of the European Union has risen. In 1997, 35 per cent of the British public thought that British membership of the EU was a good thing; in 2009, that had dropped to 30 per cent. However, on the subject of polls, I should perhaps remind the noble Lords, Lord Pearson, Lord Stoddart and Lord Willoughby de Broke, that in the Daily Mail online poll—perhaps noble Lords have failed to vote so far—on whether there should be an in-out referendum, 71 per cent have said that they were against such a referendum. So there is either some very good lobbying going on or public opinion is not as strong as noble Lords thought.
Under the last Labour Government there was no concerted effort to carry the British public with the Government into a positive engagement with the European Union. I remember the St Malo Franco-British treaty on European defence co-operation. There was still then a degree of co-operation between the Liberal Democrats and the Government on foreign policy and defence, so I was involved in many of the meetings. But as soon as the Daily Mail labelled European defence co-operation as leading to a European army, the Prime Minister went silent.
The British case in Brussels depends, as we know, on steady recruitment of British officials, but the last Labour Government closed down the European fast stream and it is up to the coalition Government now to reopen it. The noble Lord, Lord Clinton-Davis, asked whether the Liberal Democrats were prepared to fight for the European Union. Well, I would say yes—far more than the Labour Government ever did, and I regret that. It is one thing that I deeply regretted about that Government.
Of course, there is a longer history of governmental failure. When John Major became Prime Minister, he said that he wanted to take Britain to the heart of Europe, and he was driven back, and in many ways James Callaghan produced the greatest failure after the success of the 1975 referendum when he said that it was more important to let the wounds within the party heal than to build on that to argue a positive case for long-term European engagement.
The noble Lord, Lord Radice, said that they would like to hear more about what the EU has achieved over the past 20 to 30 years, and he seemed to think that this Government had failed to tell us about that. We would like to have heard that from the Labour Government, too, especially from Gordon Brown and his advisers, who included the young Ed Miliband.
Lord Radice
The noble Lord is being a bit unfair to me. I actually quoted one member of his Government, the Europe Minister, and said that I wanted people like the noble Lord and his colleague on the Front Bench to follow his very good example. That was the point that I was making.
Lord Wallace of Saltaire
We shall continue to do so.
I am grateful for the depth of concern for the purity of the Liberal Democrats. It is most touching to hear so much from the Labour Benches. Indeed, it reminded me of the years in which I used to worry about the purity of the commitment of the noble Lord, Lord Richard, to the Labour Party as it became Eurosceptic, and how on earth he could manage to stay in the Labour Party through all of its twists and turns on Europe. But we worry about each other.
Lord Richard
Is the noble Lord saying that I became a Eurosceptic? If he is, he knows nothing about me.
Lord Wallace of Saltaire
I know very well that the noble Lord did not, but I also understand that he made various compromises to stay in his own party.
Lord Tomlinson
Can I just invite the noble Lord, seven minutes into his speech, to get back to the EU Bill? This wander through memory lane might avoid him having to face up to his responsibilities to answer the debate, but the time has come when he ought to do that.
Lord Wallace of Saltaire
I am talking about the underlying issue that the Bill addresses, which is that of popular consent and distrust and how we rebuild popular consent.
This Bill is the product of the coalition agreement and a compromise between initially very different positions. It is intended to draw the line underneath popular accusations that power is slipping silently and conspiratorially from London to Brussels. To demonstrate to the public that there will be a transparent process of scrutiny, the competences will not creep away but the complex and opaque processes of EU decision-making —sufficiently complex that my wife and I used to make a good living out of trying to explain them—will have to engage with public acceptability and public persuasion.
The European policy of this Government is a product of coalition. It necessarily differs from what a Conservative -only Government would have pursued, under pressures from their own Back-Benchers, and from what a Liberal Democrat-only Government would have achieved. That is democratic politics and constructive compromise. A certain amount has been said about coalition. Indeed, I felt that the noble Baroness, Lady Symons, was suggesting that this coalition is somehow not entirely legitimate because it has not got an appropriate mandate. Because it is relevant to this, I would remind her again a little about where we were with the previous Government. That was an informal coalition between Brownites and Blairites in which, at one stage, according to Jonathan Powell, the Prime Minister’s party kidnapped a Treasury official from Brussels to Luxembourg in order to try to discover what the Treasury was negotiating on financial concerns.
In the Lords, we now have a Labour alternative team of moderates proposing strong pro-European approaches. I note that it is a very different team to the one we had on AV, rather as one has an attacking and a defending team in American football. We look forward to detailed discussions on this but we start from where we are with the British public. We have their deep mistrust of the European Union. As we talk about the role of Parliament, we also need to remember that we have a mistrust of Parliament and the complex issue of parliamentary sovereignty. The Government, in their programme and policy, are moving to address the causes of that mistrust. The Bill sets out to address the anxieties of the British public.
Several noble Lords have mentioned the position of the press, which is part of the problem. I say to the noble Lord, Lord Stevens of Ludgate, that my understanding is that those sections of the press which are the most vigorous defenders of British sovereignty are indeed those which are most preferentially owned by people domiciled outside the United Kingdom. That is one of the many paradoxes of the situation we are now in. Yet the United Kingdom is no longer an exception. If one looks at public opinion in most other EU states, that has also become more sceptical, as have the press there. Part of that—here I address the noble Lord, Lord Liddle—is that the EU itself has changed a great deal. It has become a great deal more complicated and it is therefore much more difficult to explain, particularly to the younger generation, why the EU is a public good which we should expect our public to accept.
The Brussels bubble itself is one in which policy pursues an easy and seductive competence creep. I read a recent Policy Network document which was talking about how to revive social Europe. Indeed, I think that the noble Lord, Lord Liddle, was its author.
Lord Sewel
Will the Minister give an assurance at this stage in his winding up that he will address the key issue, which is reconciling the concept of popular sovereignty with parliamentary sovereignty?
Lord Wallace of Saltaire
I will move to that very briefly.
However, there is a problem of competence creep and that is part of what we need to address in improving the quality of parliamentary scrutiny on the full range of EU legislation. My noble friend Lady Falkner asked about work on the balance of competences, and the noble Lord, Lord Kakkar, talked about the problem of competences and the working time directive. I can confirm that, in line with the coalition agreement, work is now being undertaken to look at the issue of competences and at the way in which EU legislation is implemented in the UK, with concerns about overimplementation, and, extending from that, to look at issues of subsidiarity. We take the issue of parliamentary scrutiny of justice and home affairs particularly seriously. As noble Lords will be aware, my noble friend Lord Howell made a Statement last month setting out the Government’s intention to introduce new and strengthened arrangements for parliamentary scrutiny.
On the constitutional implications of the Bill, I am more and more struck as I listen to this debate, just as I was when I listened to the Parliamentary Voting System and Constituencies Bill debate, by the fuzzy nature both of the British constitution and of the understanding of it in this House. The Bill proposes a triple lock: resolutions in both Houses, Acts of Parliament and referendums. Much of the discussion that we have had today has been on one of these locks, the referendums, but I stress that parliamentary scrutiny and the improvement of it in both Houses is an important part of the Bill.
Lord Dykes
In view of the fact that three-quarters of the Members present in this long debate today spoke strongly and passionately against the Bill’s contents, particularly in Part 1, will my noble friend undertake that, if serious amendments are presented on the main clauses in Part 1, the Government will give them ample consideration and be sympathetic to changes?
Lord Wallace of Saltaire
My Lords, we shall move into an extensive Committee stage. Of course the Government will give full consideration to the various amendments that are tabled.
I was simply going to conclude by saying that much of the determination to improve the time and effort given to parliamentary scrutiny is indeed addressed to the other place more than to this House. The intention is to focus the attention of MPs on the flow of EU business and on UK involvement in that business.
I turn to referendums. Some are against them in principle; some think it likely that the Bill will lead to too many, while others fear that it will not lead to any. I say simply that we think it unlikely that many of the single issues that are listed in Clauses 4 and 6 and in Schedule 1 are likely to come up on their own. We recognise that the EU often moves through package deals and major treaty changes, and that at the next major treaty changes it will be appropriate to have a referendum on the entire package. However, we do not expect there to be any matters for treaty change in this Parliament. When major changes are negotiated and passed, the British Government, having agreed to those changes, will of course recommend a yes and will campaign for it. They will have to persuade, to win over public opinion and to carry the country with them to gain public trust. That is one of the underlying purposes of the Bill.
I move on to Clause 18, about which we have heard a large number of critical comments—
Lord Hannay of Chiswick
My Lords, I ask the Minister not to pursue the road that he is about to go down. I think that it is common ground on all sides of the House that no one wants to see a major reform of the European institutional arrangements in the near future. However, in order to get out of the mess that he has got into with this mass of trivia that can be subjected to individual referendums, he now tells us that we can all relax because we can have a big package that will deal with them as one. Please—please—do not.
Lord Wallace of Saltaire
The noble Lord is well aware that we have had major and minor amendments of the treaty, but in each case and on each occasion they have covered a range of issues.
Clause 18 is a declaratory clause. There is nothing wrong with having a declaratory clause; Magna Carta was intended to be a declaration of existing rights of the members of the public in Britain who mattered in those days—the Peers—but it reasserted what they understood to be the existing situation.
Lord Lea of Crondall
Would the Minister respond to the point that, in so far as Clause 18 has any logic, it is a dog whistle to those who want to believe that we will be not at the heart of Europe but in the second tier of a Europe of enhanced co-operation, which could be a disaster for British foreign policy?
Lord Wallace of Saltaire
My Lords, I do not accept that but we will come back to it when we discuss the issue in detail. Several noble Lords, including the noble Baroness, Lady Symons, insisted that the doctrine of parliamentary sovereignty was simple. I think she said that it was a matter of basic civics. The noble Lord, Lord Richard, said that it was a clear and simple doctrine. I recommend that noble Lords read the debates of the European Scrutiny Committee of the House of Commons between the chair of the committee and a succession of law professors. These became increasingly a matter of anxiety over whether the doctrine of parliamentary sovereignty was one of absolute sovereignty, a legal doctrine or one in which the courts play a part. That is why we had the argument over the change in the exact phrasing of the Explanatory Notes.
The doctrine of parliamentary sovereignty, as we have been in the process of discovering, is not entirely easy to understand. In its declaratory nature, Clause 18 restates an understanding. It draws a line for all to take. It does not introduce any new legislation. We will have to work from that and the courts will work from that. As various noble Lords have said, there are those from various sides who currently question the role of the courts. From my own perspective and that of my party, parliamentary sovereignty in a liberal democracy is part of the balance between the rule of law and popular democracy. That is another issue to which we will need to return on future occasions.
Baroness Symons of Vernham Dean
My Lords, I am now very confused about the noble Lord’s position on Clause 18. The noble Lord has said that it is declaratory. He went so far as to compare it to Magna Carta, which was stretching a point beyond most people’s imaginations. However, his main point was that it was declaratory. He has now gone on to say that it is something more than declaratory; it is something that needed an expression—an explanation—and that clarification is given in the Bill. Which is it? Is it declaratory—something that was clear to everybody already—or is it a further explanation of something that was so unclear that it needs an explanation and clarification, rather than a declaratory principle? The Minister has explained that that was the case in the conversations that took place in another place.
Lord Wallace of Saltaire
My Lords, noble Lords will understand that we do not have a written constitution in this country. We have a number of conventions and common understandings. I will not go further into the recent Policy Exchange pamphlet and a number of papers that attempt, in different ways, to reinterpret where we are. The debates in the Commons scrutiny committee and in the House of Commons have shown that there are a range of different views on the exact definition of parliamentary sovereignty. However, for our purposes in this respect, Clause 18 restates that no Parliament can bind its successor; that EU law is part of the law of the United Kingdom because Parliament has said that that is to be the case; and that, in principle, what one Parliament has introduced another Parliament can undo. That is what it restates; it is quite clear. We will return to that in Committee and no doubt have lengthy arguments.
A number of noble Lords talked about the implications for the UK’s position within the EU and have suggested that we will be pushed by the Bill towards a marginal position. The noble Baroness, Lady Nicholson, kindly reminded us that other member states also have their own constitutional arrangements. The Germans in particular have detailed arrangements for parliamentary scrutiny that are sharply overseen by the Federal Constitutional Court. The Danes and the Irish have other arrangements. We can and will manage with this Bill to rebuild popular consent. It will, however, require active engagement by the Government.
I end by reminding noble Lords that the coalition Government are already actively engaged in pursuing a positive European agenda. We placed in the Library today the letter on an EU growth strategy that the Prime Minister, with another eight Heads of Government, has just sent round to the 27 Heads of Government. The letter puts forward a number of positive proposals. We are actively engaged on the climate change agenda—an area where the EU is moving forward faster than most other states or federations across the world. We signed another treaty with the French—this time a bilateral treaty. Britain and France between them account for nearly half the EU’s defence spending. We are opting in to a number of justice and home affairs matters. Today, the Government have announced that we are opting in to the human trafficking directive. We have therefore opted in to nine directives since last May. We are engaged actively on the neighbourhood policy.
I say in particular to the noble Lord, Lord Teverson, that we are therefore pursuing a positive European agenda, but we have to persuade our sceptical public. Previous Governments have failed to persuade our sceptical public, and the Bill is a step in rebuilding that trust.