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Oral Answers to Questions
(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Penny Mordaunt (Portsmouth North) (Con)
1. What recent discussions he has had with constitutional historians and experts on House of Lords reform; and if he will make a statement.
Laura Sandys (South Thanet) (Con)
4. What recent progress he has made on his plans for House of Lords reform; and if he will make a statement.
Nicky Morgan (Loughborough) (Con)
8. What recent representations he has received on House of Lords reform.
Andrew George (St Ives) (LD)
10. What assessment he has made of the recent debates in both Houses on his proposals for House of Lords reform.
The Deputy Prime Minister (Mr Nick Clegg)
The Government have received many representations on all aspects of House of Lords reform, including from constitutional experts. We recognise that a variety of views were expressed in recent debates in both Houses, and we are sure that the Joint Committee will take account of the debates when scrutinising the draft Bill and White Paper.
Penny Mordaunt
The elegance of our unwritten constitution allows it to adapt when necessary to meet a pressing need, but change for some other reason could be regarded as constitutional vandalism. Has the Deputy Prime Minister reflected on the fact that if a pressing need is not articulated, his plans for reform of the other place might fall into the latter category?
The Deputy Prime Minister
I do not think it is a new need, and in that sense it is not a pressing need, but there is an enduring need to make decisions in this place and the other House as accountable to the British people as possible. The simple principle that those who shape the laws of the land should be held to account by people who have to obey the laws of the land is a long-standing democratic principle.
Laura Sandys (South Thanet) (Con)
One matter of great concern in this Chamber is that the other place is most certainly secondary to it. Does my right hon. Friend see the opportunity to remove any ability for the other place to initiate legislation as a way to ensure the hierarchy between this place and the other place?
The Deputy Prime Minister
As we explained in our White Paper, we believe that the different mandates, electoral systems and terms of office, and of course the conventions enshrined in the Parliament Acts, will guarantee that although there will no doubt be an evolution in the relationship between the two Houses—that is bound to happen under any arrangement—the hierarchy between this place and the other place will remain intact.
Nicky Morgan (Loughborough) (Con)
The Deputy Prime Minister has just referred to the different mandates of Members of the other place, if it is reformed, and of this House. Does he not think, though, that the reforms would benefit from some clarification of those different mandates, so that the essential and long-standing relationship between MPs and constituents is not eroded?
The Deputy Prime Minister
We already have a system, of course, in which politicians are elected to different assemblies and Parliaments with different mandates, and as long as those mandates are clearly differentiated, as they would be under the proposed arrangements, there is no clash between them. Let us remember that what the Government suggest in the draft Bill is that elected Members of a reformed House of Lords would represent vastly larger areas than the smaller constituencies that we in this House represent.
Andrew George (St Ives) (LD)
Given that in our debates so far no one has rushed to the defence of the hereditary principle or patronage, does my right hon. Friend not agree that if we are to make haste in delivering the principles behind Lords reform, it would be best to get on with removing the hereditary principle and patronage now? No one disagrees with that.
The Deputy Prime Minister
I certainly agree that we aspire to create a reform that, although evolutionary in its implementation—it will take several years rather than happen overnight—will at least be comprehensive and create a reformed House of Lords with a far greater mandate and democratic legitimacy than is currently the case.
Mr David Hanson (Delyn) (Lab)
In the Deputy Prime Minister’s nirvana of 15-year terms, will he consider ruling out Members of the newly elected other place standing for this place, so that we do not have people roaming around one individual constituency trying to unseat the Member of Parliament by using their democratically elected 15-year position in the other place?
The Deputy Prime Minister
The right hon. Gentleman may have noticed that in the White Paper we suggest precisely that. We suggest that there should be a cooling-off period of at least one term, so that those who leave the other place cannot instantly stand for this place. That is precisely to avoid the clash that he rightly identifies.
Sheila Gilmore (Edinburgh East) (Lab)
Does the Deputy Prime Minister have a view on Lord Steel’s suggestion that a payment of £30,000 should be made to enable Lords to retire?
The Deputy Prime Minister
We are not in favour of that, but we are in favour of many provisions of Lord Steel’s private Member’s Bill and look forward to incorporating many of its transitional arrangements and so on into the Government Bill.
Steve Rotheram (Liverpool, Walton) (Lab)
Does the Deputy Prime Minister not understand that even those of us who support Lords reform cannot help wondering whether he has masochistic tendencies in trying to win this fight with one hand tied behind his back, and with the Prime Minister simply holding his coat and egging him on from the sidelines? Does he believe that he has the overwhelming support of his coalition partners to steer the Bill through both Houses? If not, is he not just wasting—
The Deputy Prime Minister
I remind the hon. Gentleman that all parties went to the country in last year’s general election with a clear manifesto commitment to reform the House of Lords. As I have said, it does not strike most people as a radical suggestion that the democratic principle that operates in Parliaments around the world should gently and incrementally be applied to the other place.
Ian Lucas (Wrexham) (Lab)
Do the Government’s proposals for the House of Lords include excluding peers not from England on voting on matters solely related to England?
The Deputy Prime Minister
We have not addressed that in the White Paper. If people want to discuss it in the Joint Committee, they are free to do so.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Has my right hon. Friend read the debates in which the argument was advanced that the House of Lords does its job, and therefore should not be changed in any way? If so, did he think he was reading the right issue of Hansard, or the one dated 1911, or perhaps the one dated 1832?
The Deputy Prime Minister
Whatever their views about the proposals for House of Lords reform that the Government made in the White Paper and the draft Bill, I believe that everybody accepts that the House of Lords is not immune to reform or improvement. My view is that political institutions are always susceptible to some improvement over time, and I believe that that package of carefully considered reforms, which I hope, over time, will enjoy cross-party support, will finally allow us to make progress on something that has been debated for more than a century.
Nic Dakin (Scunthorpe) (Lab)
2. What recent representations he has received on the Government’s policy on the proposed length of fixed-term parliaments.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
The Fixed-term Parliaments Bill has been debated almost fully in both Houses. We have received representations from the public, and I feel sure that, very shortly, another will emanate from the hon. Gentleman.
Nic Dakin
Leading constitutional expert Vernon Bogdanor said:
“If we are entering a world of hung parliaments, there is no reason for dissolutions to be made more difficult.”
Is the Fixed-term Parliaments Bill designed to serve short-term, coalition political interests rather than the long-term interests of the British people?
Mr Harper
Not at all. I know the opinions of Vernon Bogdanor very well, because he was my tutor. He and I disagreed while we were at university, and we continue to do so on many matters now. The Bill is very much in the interests of Parliament, and of having a stable situation in which the Prime Minister, for the first time, has given up the power to call an election to suit his political party. That is a huge constitutional improvement.
Simon Kirby (Brighton, Kemptown) (Con)
3. What steps he is taking to increase the completeness and accuracy of the electoral register.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
My hon. Friend will know that last Thursday the Government published their White Paper and draft legislation on individual electoral registration, to improve both the accuracy of the electoral register and its completeness.
Simon Kirby
Does the Minister agree with me and the many people in Brighton Kemptown who believe that accuracy and completeness are very important if fraud and malpractice are to be avoided?
Mr Harper
I very much agree with my hon. Friend. We made it very clear in our proposals that we are interested in reducing the vulnerability of our electoral register to fraud and in ensuring its accuracy. We are also interested in ensuring that it is as easy as possible for anyone who is eligible to vote to get on the register. To that end, we are taking part in some data-matching pilots to improve that situation.
Mr Graham Allen (Nottingham North) (Lab)
Does the Minister accept that not only registration but counting the votes properly is important? Is he aware that in most constituencies there are a handful of spoilt papers, whereas in mayoral elections there are sometimes more than 1,000? On two occasions at least, the number of spoilt papers has been larger than the majority of the election winner. Will he take that up with the Electoral Commission?
Mr Harper
I am grateful to the hon. Gentleman, who chairs the Select Committee on Political and Constitutional Reform, which will look at our individual elector registration proposals and carry out pre-legislative scrutiny. He has raised that question with me before, and I can confirm that I will ask officials to look into that matter. I will come back to him and the House in due course.
Priti Patel (Witham) (Con)
Specific to the electoral register, will the Minister provide precise details on the Government’s plans to extend the franchise to prisoners? Will proposed legislation on that come to the House, or will he defy Europe and uphold the will of the House?
Mr Harper
I am grateful to my hon. Friend for her question—this is a subject on which she is pursuing Ministers relentlessly both in the House and in written questions. The Prime Minister was asked a similar question at Prime Minister’s questions, and I can do no better than to say that the Government do not want to enfranchise prisoners, but there has been a clear decision by a court to which we have signed up. The Prime Minister said that the Government will ensure that any legislative proposals are as close as possible to the House’s decision earlier this year.
Chris Bryant (Rhondda) (Lab)
On 26 October last year, I asked the Deputy Prime Minister how he was going to ensure that everyone forced to move out of central London because of the changes to housing benefit would be enfranchised and end up on the register. He pooh-poohed that at the time, saying it was not going to happen. Now we know that the Department for Communities and Local Government believes that up to 40,000 people are going to have to move. How are Ministers going to ensure that those people are enfranchised?
Mr Harper
The hon. Gentleman will know that the Department does not say that at all—it is not what is stated in the impact assessment that Ministers have signed up to. I do not believe either that that is what the article in the newspaper said. On enfranchisement, we are very clear: our proposals will make it easier for people who are entitled to be registered to be registered. He will know that we are carrying out data-matching pilots across the country, and we will take forward and roll out any lessons from that to make it easier for people who are eligible to be registered.
Greg Mulholland (Leeds North West) (LD)
5. What recent progress he has made on the reform of party funding; and if he will make a statement.
Duncan Hames (Chippenham) (LD)
7. What recent assessment he has made of the timetable for the reform of party funding.
The Deputy Prime Minister (Mr Nick Clegg)
The Government are committed to work to reform party funding. The Committee on Standards in Public Life is conducting a review and the Government will consider its recommendations, alongside other relevant evidence before taking this forward.
Greg Mulholland
I thank my right hon. Friend for his answer. Does he agree that the unseemly spectacle last week of union leaders criticising the Labour leadership for not overtly supporting the strikes while the Labour leadership looked uncomfortably at the floor shows exactly why we need to get big money out of party funding and why we need real reform?
The Deputy Prime Minister
I agree that it cannot be healthy in a democracy if any political party is over-reliant on one source of funding to the exclusion of others. [Hon. Members: “Michael Brown!”] It is worth saying that the current situation is unsustainable and has done damage to all political parties, which is why it is something that we should look to reform on a cross-party basis.
Duncan Hames
If reforms to party funding are to have any meaningful effect they need to come into force at least 18 months before the next general election. Does the Deputy Prime Minister recognise that if his timetable cannot deliver, it might be overtaken by one that simply commands the support of a majority of the House?
The Deputy Prime Minister
We are first waiting to see the recommendations of the Committee on Standards in Public Life to consider whether they might kick-start a process of discussions between the parties, so that we can finally move beyond the shadow of the party funding scandals that have blighted all the political parties, and so that we can put the arrangements on a much more sustainable and transparent footing.
John Cryer (Leyton and Wanstead) (Lab)
Does the Deputy Prime Minister recognise the difference between 1 million trade union members donating £1 each to a political party and a wealthy individual writing out a cheque for a million quid?
The Deputy Prime Minister
As I said, I think that it is unhealthy if any political party is over-reliant on particular organisations, individuals or vested interests for their financial survival, and that is why I hope that all of us—given that all political parties have been affected by this in one way or another—can work together after the Committee on Standards in Public Life has produced its recommendations so that we can find a solution.
Sadiq Khan (Tooting) (Lab)
The Deputy Prime Minister is right that all three major political parties entered the election with a commitment to reform the way in which political parties are funded. Will he confirm that he will follow convention and seek cross-party agreement on the way forward? Will he also outline the timeline he has in mind? There has obviously been a delay in relation to the Committee on Standards in Public Life. When does he think we will be able to start the discussions to resolve this issue?
The Deputy Prime Minister
I agree that we should always seek to deal with this issue on a cross-party basis where possible. However, I cannot give the right hon. Gentleman a precise timetable because it is not within the gift of the Government to decide when Sir Christopher Kelly produces his committee’s report. As soon as he does, I hope that we can consider the recommendations together to see whether they provide a basis for cross-party discussions.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
6. What steps he is taking to increase voter registration.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
The hon. Gentleman will know that it is the individual responsibility of electoral registration officers to improve registration rates, but the Government are committed to helping them. He will know that the local council in his area is taking part in one of our data-matching pilots. I hope that that will have a positive effect on driving up registration rates, and then we can see whether it has lessons for rolling out such a system across the country.
Michael Connarty
Although it gave me great pleasure that Iain McKenzie was elected comfortably as the Labour candidate in the Inverclyde by-election—I was doubly joyous that the Liberal Democrats lost their deposit—I was concerned by the number of people I met who did not have an electoral registration card and were somewhat confused. Will the Minister assure me that the data-matching that he mentioned will be followed up by the Government, so that the responsibility, and the blame, is not left to electoral registration officers? It is a Government responsibility, if they want equal votes of equal value, to ensure that everyone is on the register.
Mr Harper
I very much agree with the last sentiment that the hon. Gentleman expressed. My officials are working closely with all local authorities that are looking at matching electoral registers with other existing government databases, to see whether we can identify people who are eligible to vote, but not on the register, and to follow them up. The evidence from the pilots will be looked at not just by the Government but by the Electoral Commission, and if the pilots prove successful we will look at rolling them out across the country. I welcome the hon. Gentleman’s support for that initiative.
Mr Gary Streeter (South West Devon) (Con)
Given that a key issue in increasing voter registration is the performance of electoral registration officers in every locality, which we know can vary enormously, is it not time that the Government gave the Electoral Commission the power to direct, and not just to issue advice?
Mr Harper
My hon. Friend, who answers very ably for the Electoral Commission in this House, will know that it has made that point strongly to the Government. We will look at the analysis of the referendum this year, when the head of the Electoral Commission, as the chief counting officer, had that power of direction. We will look at how that worked in practice and then take a view on whether it makes sense to consider it for elections more widely.
Penny Mordaunt (Portsmouth North) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Deputy Prime Minister (Mr Nick Clegg)
As Deputy Prime Minister, I support the Prime Minister on the full range of Government policy and initiatives, taking special responsibility for this Government’s programme of political and constitutional reform.
Penny Mordaunt
Which is the more pressing issue: the West Lothian question or House of Lords reform?
The Deputy Prime Minister
I do not think that it is an either/or choice. As the hon. Lady knows, there is a commitment in the coalition agreement to establish a commission to look into the West Lothian question, but I do not think that that precludes the Joint Committee looking at proposals for reform of the House of Lords at the same time.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
Will the Deputy Prime Minister join me in expressing heartfelt concern for the horrendous ordeal of Milly Dowler’s family? There are now allegations that even as the police searched for Milly Dowler and as her parents waited and hoped, the News of the World was hacking into her phone. Today the Leader of the Opposition has called for a full public inquiry into illegality in the newspaper industry. Will the Deputy Prime Minister say that the Government will back that call?
The Deputy Prime Minister
I entirely agree with the right hon. and learned Lady, and I am sure that we both speak on behalf of the whole House and the rest of the country in saying that if the allegations are true such behaviour is simply beneath contempt. To hack into the phone of a missing child is grotesque, and the suggestion that that might have given false hope to Milly’s parents that she might have been alive only makes it all the more heart-rending. The absolute priority now is to get to the bottom of what actually happened—what is the truth—and that requires, above and beyond everything else, a police investigation that pursues the evidence ruthlessly, wherever it leads.
Ms Harman
Of course, this time the police investigations must be thorough and rigorous, but there must also be a public inquiry. There has been widespread malpractice and criminality, and there is a stain on the whole system. We must protect people from this and clean up the British press. Is the Deputy Prime Minister going to act?
The Deputy Prime Minister
If there are wider issues that need to be looked at once the police investigation is complete, of course we can return to them. However, I am sure that the right hon. and learned Lady will agree that the key thing—this is what Milly Dowler’s family and families up and down the country want to know—is: who did what when, who knew what they were doing and who will be held to account? We will be able to get to the bottom of that only when the police ruthlessly pursue the evidence, wherever it leads.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
T3. A constituent of mine who wishes to remain nameless has contacted me because she believes that a “YES! To Fairer Votes” preaddressed postal vote form was fraudulently completed on her behalf. Can my right hon. Friend tell me what action my constituent can take to establish who might have signed the form on her behalf and what measures we can introduce to prevent this from happening again in future?
The Deputy Prime Minister
If my hon. Friend has evidence from his constituent of criminal or fraudulent behaviour, it should of course be referred to the police. I suggest that should be done as quickly as possible.
Ian Murray (Edinburgh South) (Lab)
T2. The NSPCC has announced the closure of ChildLine in Edinburgh, which will result in the loss of 14 staff and hundreds of volunteers. The thrust of the closure is to encourage children to use the internet, but there is concern that those who are most in need of ChildLine have the least access to the internet. Will the Deputy Prime Minister meet me, the NSPCC and the many hundreds of ChildLine volunteers in Edinburgh to see whether we can get this decision reversed?
The Deputy Prime Minister
I am sure that the hon. Gentleman is right to raise his concerns about the effect of that closure, given that ChildLine exists precisely to help the most vulnerable children. I am more than happy to establish meetings for him, and I would also suggest that meetings take place in Edinburgh with the Scottish Government, whose responsibilities have a bearing on this issue—[Interruption.] They might be able to help.
Esther McVey (Wirral West) (Con)
T4. Is it not about time that we introduced a British Bill of Rights to address ludicrous cases such as that of the convicted foreign killer Mohammed Ibrahim, who is avoiding deportation by claiming the right to family life, even though he killed Amy Houston, thereby denying all her relatives the right to family life?
The Deputy Prime Minister
I hear my hon. Friend’s concern about these matters, and she is quite right to raise them. The Government have established a commission to look into the case for a British Bill of Rights that will incorporate and build on the existing rights that we already enjoy and extend them further where we can.
Angela Smith (Penistone and Stocksbridge) (Lab)
T6. The right to form coalitions is very much part of our constitution. In Sheffield recently, Lib Dem councillors have co-opted a United Kingdom Independence party candidate on to one of our local town councils in order to maintain their grip on power. Does not this show that the Lib Dems will do anything, and do deals with any party, to maintain their grip on power?
The Deputy Prime Minister
I am not sure what case the hon. Lady is referring to—[Interruption.]
Mr Speaker
Order. First, the House must show some courtesy to the Deputy Prime Minister as he responds to questions. Secondly, I want to hear from Mr Gordon Henderson.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
T5. Does my right hon. Friend the Deputy Prime Minister understand the resentment felt by many taxpayers in my constituency when they see their taxes being used to help to provide a range of free services in Scotland that are not enjoyed by the English? When will the Government take action to bring that unfair subsidy to an end?
The Deputy Prime Minister
One of the reasons we are transferring a great deal of new fiscal freedom to the Scottish Administration through the Scotland Bill is to ensure not only that the Scottish Government enjoy greater freedom to raise and spend money but that they are held to account for it. That is exactly what we are seeking to achieve in the Scotland Bill.
Graham Stringer (Blackley and Broughton) (Lab)
T9. The Deputy Prime Minister has said on many occasions that if the House of Lords was reformed, this House would retain its primacy over the other place. In an article last week in The Times, his predecessor as leader of the Lib Dems, Lord Ashdown, said that if the House of Lords was reformed, it would have the right of veto over the decision to go to war. Who is right: the Deputy Prime Minister or his predecessor?
The Deputy Prime Minister
The House of Lords will clearly enjoy greater democratic legitimacy if it is wholly or largely elected, but that does not call into question the primacy of this House. Bicameral chambers all round the world manage this relationship perfectly adequately, with two directly elected chambers that have a relationship of subservience between the one and the other. That is precisely what will continue under the reforms that we have proposed.
Peter Aldous (Waveney) (Con)
T7. Later this week, I shall attend a meeting of Waveney youth council in my constituency. Given the declining proportion of young people voting at recent elections, I would welcome an update to pass on to the youth council on the steps that my right hon. Friend is taking to ensure the early registration of young people and their active engagement in the political process.
The Deputy Prime Minister
We hope that the process of individual electoral registration that we are pressing ahead with, and particularly the practice of comparing existing databases with the electoral register, will enable us to identify voters, old and young, who should be on the register but are not.
Chris Ruane (Vale of Clwyd) (Lab)
The finest databases in the country are run by Experian. I recently had a meeting with it to discuss the 3.5 million people who are not on the electoral register. It informed me that not 3.5 million but 6.5 million people are not on the electoral register. What steps is the Deputy Prime Minister taking to use the private sector—companies such as Experian and others—to increase the number of registered voters?
The Deputy Prime Minister
It is precisely to get to the bottom of exactly how many people who are not on the register but should be that we commissioned detailed research from the Electoral Commission to establish the facts. As I said earlier, we are running these projects so that we can have access to other publicly available databases to make sure that they are consistent with the electoral register.
Mark Menzies (Fylde) (Con)
T8. Does the Deputy Prime Minister agree that by delivering 103,000 more adult apprentices than were promised by the previous Government, this Government are delivering on their promise to rebuild the economy?
The Deputy Prime Minister
Yes, and I would add that those 103,000 apprenticeships are twice the target number that had originally been set for this year. In total, we will deliver 250,000 more apprenticeships during this Parliament than Labour would have delivered if they had been in power. We believe that apprenticeships are a tried, tested and successful way of getting people from full-time education into full-time work. That is what we are absolutely dedicated to deliver.
Kelvin Hopkins (Luton North) (Lab)
The recent referendum showed an enormous majority of the British people in favour of first past the post for British elections. May I suggest to the Deputy Prime Minister that a return to first past the post for European elections would be equally popular and that the Government should legislate accordingly?
The Deputy Prime Minister
We have probably had enough referendums on electoral systems for one Parliament. I, for one, will not be rushing to return to that issue any time soon.
Paul Uppal (Wolverhampton South West) (Con)
T10. Will the Deputy Prime Minister tell us what plans are in place to inform voters of the proposed changes to the House of Lords, particularly regarding an election in 2015—and how much will that cost?
The Deputy Prime Minister
The costs will, of course, be dependent on the final shape of the reforms—on exactly how large the House of Lords is and what proportion of its Members will be elected, and so forth. We have made suggestions on these issues, but we have been entirely open about wanting to listen to alternative suggestions with an open mind. That is why the Joint Committee process, which brings people together from both Houses to look at this in greater detail, is immensely important not only for improving the proposals but for giving the public a chance to scrutinise the proposals, as the hon. Gentleman suggests.
Mr David Winnick (Walsall North) (Lab)
As police investigations into phone hacking have been going on for some considerable time, is there not now a strong case for having a public inquiry, as requested from the Front Bench by my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), particularly in view of the latest information about the hacking of a murdered person’s phone. That is so disgraceful that a public inquiry is absolutely essential.
The Deputy Prime Minister
I totally understand the instinct for wanting something more to be done than the current police investigations. If we want the truth established, however, and if we want to turn allegations into facts and then to hold people to account and, where necessary and justified, to see prosecutions delivered, I strongly suggest to the hon. Gentleman that it is in his interest and that of all who want to see the truth properly exposed that we allow the police to get on with the investigation and ruthlessly pursue the facts and the evidence, wherever they might lead.
Mr David Amess (Southend West) (Con)
T11. With the whole country gripped by Southend mania, in the knowledge that it is the finest seaside resort with a pier in the world and entirely deserving of city status, will the Minister tell us when local residents in Southend can expect the crowning to take place?
The Deputy Prime Minister
I recognise the enthusiasm for the Southend bid, which I know is shared by many other Members who come from other places applying for city status. This will work its way through in the normal way, and I know that the hon. Gentleman will be waiting for the results with bated breath.
Dr William McCrea (South Antrim) (DUP)
What comparison has been made between the system of individual electoral registration operating in Northern Ireland and the one that operates in the rest of the United Kingdom?
The Deputy Prime Minister
We have learned all the lessons about the flaws in the electoral register here. That is exactly what we are seeking to address, not least by looking at the experience in Northern Ireland and elsewhere.
Miss Anne McIntosh (Thirsk and Malton) (Con)
T12. I wish to place on record my admiration for the ambition shown by the Deputy Prime Minister, but does he not agree that if he sticks to his present programme and allows the first elections to the House of Lords to be held in 2015, it is over-ambitious—even according to his own test—to hold them in the same month and year as the next rural district elections and the next general election?
The Deputy Prime Minister
“Ambition” was clearly intended as faint praise, and I will take it in that spirit. I think we have shown in past elections that the problems involved in the principle of combined elections can be overcome, as long as there is a clear distinction between the mandates for the bodies that are being elected on the same day.
Mr Ben Bradshaw (Exeter) (Lab)
As the Deputy Prime Minister’s right hon. Friend the Business Secretary felt that there were clear grounds for a full referral of the BSkyB takeover to the competition authorities on the basis of plurality, will he tell the Prime Minister, in the light of the latest shocking developments, that it would be totally unacceptable to wave through that takeover, and that he should put a stop to the dirty deal being hatched by the Culture Secretary with News Corp?
The Deputy Prime Minister
The right hon. Gentleman will know, as he has followed events very closely, that the competition aspect was determined by the European Commission. It cleared the transaction on competition grounds. The decision will be made by the Secretary of State for Culture, Olympics, Media and Sport, acting in a quasi-judicial manner. He will not consult me, the Prime Minister or any other member of the Government while reaching his decision, and he is meticulously following the advice supplied to him by Ofcom and other regulators.
Jo Swinson (East Dunbartonshire) (LD)
The coalition agreement committed the Government to setting up a fund to support people with disabilities who wish to stand for election—a move that was also recommended by the cross-party Speaker’s Conference. Following the conclusion of the Government’s consultation on the matter, will the Deputy Prime Minister update the House on the progress being made towards that goal?
The Deputy Prime Minister
I pay tribute to my hon. Friend, who has taken a great interest in this matter and has been remorseless in asking the Government when they will deliver on their commitments. We are determined to do so. As my hon. Friend said, the consultation ended recently, and we are keen to make progress as soon as we can.
Jack Dromey (Birmingham, Erdington) (Lab)
In a leaked letter, Nico Heslop wrote:
“we are worried about the impact…to build social housing for families”
to rent, and added:
“23,000 could be lost…disproportionately impacting on families and…children.”
Why was that information not shared with Parliament? What else is the Secretary of State for Communities and Local Government holding back, and why should anyone ever again believe anything that this Government say about housing and benefits?
The Deputy Prime Minister
I remind the hon. Gentleman that the manifesto on which he fought the election last year advocated a housing benefit cap. I assume that, like us, he advocated the cap because it is fair to those who do not receive benefits that those who do receive them cannot do so to the tune that would require someone in work to earn £35,000 or more. It is a fair proposal. Notwithstanding the contents of that leaked letter—which, in any case, was written six months ago; things have moved on since then—we have made it clear that when people, especially large families, need help they will be given that help, and that we will introduce transitional arrangements to provide it.
Harriett Baldwin (West Worcestershire) (Con)
On 5 April the Deputy Prime Minister said there was “a need to ensure” that reform of the other place did not “overlap” with the establishment of the West Lothian commission. Given that reform of the other place may take some time, can the Deputy Prime Minister reassure us that the West Lothian commission will be in place by the time of the Report stage and Third Reading of my private Member’s Bill on 9 September?
The Deputy Prime Minister
I can confirm that the commission that will look into the West Lothian question will be established this year.
Helen Goodman (Bishop Auckland) (Lab)
Does the Deputy Prime Minister agree with the Secretary of State for Culture, Olympics, Media and Sport that the “fit and proper persons” test is irrelevant in the case of the merger between BSkyB and News International?
The Deputy Prime Minister
As I said earlier, the Culture Secretary is acting in a quasi-judicial role, he is doing so in line with advice that he has received from Ofcom and the Office of Fair Trading, and he is reflecting the legal position as it currently is. The hon. Lady may shake her head and wish that the law were different; she may wish that competition provisions could somehow be applied here, although the European Commission cleared the transaction on in competition grounds—but that is the legal position as we currently find it.
Mr Alan Reid (Argyll and Bute) (LD)
Sex discrimination and religious discrimination should have no place in our society, so I am pleased that the Government are bringing forward measures to reform the succession to the Crown. However, the discussions with other Commonwealth Governments do seem to be dragging on for a long time. What is my right hon. Friend doing to ensure that those discussions come to a speedy and successful conclusion?
The Deputy Prime Minister
As my hon. Friend knows, both the Prime Minister and I have made it clear that we think there is a strong case for looking at the rules of the succession, as they clearly need updating in this day and age, but it is not quite as simple as that, because this is subject to consultation with all Commonwealth Governments. Discussions at official level are taking place between this Government and Commonwealth Governments. I acknowledge that that is not a very rapid process, but it is right that we should deal with this sensitive topic as collaboratively as possible with other Commonwealth Governments.
Paul Goggins (Wythenshawe and Sale East) (Lab)
At the recent British-Irish Council, which I understand the Deputy Prime Minister chaired, was there any discussion of the economic impact of different levels of aviation taxes, given that for a long-haul flight from the UK that is currently levied at £85 a head, whereas from Ireland the tax is just €3?
The Deputy Prime Minister
I am aware that the Treasury is undertaking a consultation on that subject, but it did not come up in discussions at the British-Irish Council.
Mrs Eleanor Laing (Epping Forest) (Con)
Pursuant to the answer that the Deputy Prime Minister has just given to the hon. Member for Argyll and Bute (Mr Reid), does the Deputy Prime Minister not understand that his constant answer that negotiations with Commonwealth countries about reforming the Act of Settlement are ongoing sounds rather like an excuse for inaction, given that no Commonwealth country has shown anything but respect, reverence and adoration for our female monarch for the past half century?
The Deputy Prime Minister
We cannot just do something about it. [Hon. Members: “He didn’t!”] No, the hon. Gentleman did not, for 13 years.
I totally accept—I have spoken publicly about this—that it seems a little anachronistic that we have rules of succession that appear to discriminate against women, and that clearly should be looked at, but as my hon. Friend the Member for Epping Forest (Mrs Laing) rightly pointed out, this affects many other Governments as well, and it would be wrong of us to act in haste when we need to act in a way that is open and following discussions—not negotiations, but discussions—between ourselves and other Commonwealth Governments.
Diana Johnson (Kingston upon Hull North) (Lab)
1. What recent discussions he has had with the Director of Public Prosecutions on prosecution rates for cases involving allegations of trafficking of children.
The Solicitor-General (Mr Edward Garnier)
None recently, but I can assure the hon. Lady that the DPP, the Law Officers, the Home Office—which I believe she shadows—and the Foreign and Commonwealth Office take the crime of human trafficking extremely seriously.
Diana Johnson
Can the Solicitor-General explain to me exactly how merging the Child Exploitation and Online Protection Centre into the national crime agency, against the advice of all the specialists in the field, will improve prosecution rates and the support given to victims of trafficking?
The Solicitor-General
If Parliament permits its creation, the national crime agency will not come into operation until at least 2012-13. Meanwhile, CEOP and the other necessary agencies are working together to ensure that the crime of human trafficking, which the hon. Lady takes as seriously as we do, is properly borne down upon, and I can assure her that nothing will be done to impede the efforts of the prosecuting authorities in that regard.
Tom Brake (Carshalton and Wallington) (LD)
Does the Solicitor-General agree that one way to improve prosecution rates would be to ensure that all resources are used to prosecute traffickers, rather than sometimes prosecuting the trafficked children?
The Solicitor-General
Of course I do, and it is imperative that trafficked children, who are the victims of this hideous crime, are not prosecuted but are treated as victims. Equally, it is imperative that adults under such duress, too, are not prosecuted but treated as victims. The Crown Prosecution Service recently published a public policy statement, which I am sure my hon. Friend has read, and the Home Office will shortly publish a human trafficking strategy that will deal very much with the points that he has made.
Miss Anne McIntosh (Thirsk and Malton) (Con)
2. What plans he has to review the prosecution of rape cases by the Crown Prosecution Service.
The Solicitor-General
We have no such plans at the moment, but I assure my hon. Friend that the CPS and I take the prosecution of rape very seriously indeed, and that it is constantly under review.
Miss McIntosh
Does the Solicitor-General have any idea about the level of prosecution of rape cases in Scotland compared with that in England? Will he undertake to remove all barriers to prosecution? In particular, will he facilitate the reporting of rape cases, which will speed up the prosecution rate in due course?
The Solicitor-General
I am sure that what is similar in Scotland and in this jurisdiction is not only that rape is taken extremely seriously by the prosecuting authorities and the police, but that prosecution requires evidence. It is essential that victims of rape and sexual assault are enabled to give their evidence and to withstand the hideous stress that necessarily follows from being a witness in a rape or sexual assault case. I can assure my hon. Friend that the Director of Public Prosecutions has personally overseen the drive to improve the approach of the CPS to rape prosecutions.
Fiona Mactaggart (Slough) (Lab)
At present the CPS has 840 specialist rape prosecutors. Will there be the same number or more next year?
The Solicitor-General
That is a decision not only for the DPP but for the chief Crown prosecutors in the various areas throughout the jurisdiction. This will depend on business need, but I assure the hon. Lady that rape prosecutions will be pursued with the same vigour both now and in the future.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
3. What steps the Crown Prosecution Service is taking to support victims of human trafficking to participate in criminal proceedings.
Susan Elan Jones (Clwyd South) (Lab)
4. What steps the Crown Prosecution Service is taking to support victims of human trafficking to participate in criminal proceedings.
The Solicitor-General
The CPS is taking a number of steps to encourage victims of human trafficking to support criminal proceedings, including the publication of a new public policy statement setting out its prosecution policy and how it will support victims. As I said to my hon. Friend the Member for Carshalton and Wallington (Tom Brake) a moment ago, the Home Secretary will shortly publish her Department’s human trafficking strategy. The CPS is also working with non-governmental organisations to develop further measures to assist and support victims.
Michael Connarty
I am very heartened by the general replies and that specific reply from the Solicitor-General on this question, but we are aware of reported cases of magistrates saying to a 14-year-old girl who had been trafficked and found in a cannabis factory that she had clearly made a lifestyle choice. Did the Attorney-General give any evidence, or a submission, to the Home Secretary in the upcoming review? If not, why not? If so, will he place a copy of his contribution in the Library for us all to read?
The Solicitor-General
It would not be sensible for me to comment on unattributable, or unattributed, remarks by unidentified magistrates. If what the hon. Gentleman suggests was said in that case was said, it was clearly unwise. The Law Officers’ Department did make a contribution to the thinking behind the Home Secretary’s human trafficking strategy. The hon. Gentleman will be able to read the strategy in full when it is published next week, and it will doubtless refer to all sorts of sources.
Susan Elan Jones
The US State Department’s 2011 “Trafficking in Persons Report” contains many things about the UK that hon. Members would find alarming, including the following quotation:
“Some potential and confirmed trafficking victims, including children, were prosecuted and imprisoned for committing offenses as a direct result of being trafficked.”
What does the Solicitor-General propose to do to stop that happening?
The Solicitor-General
As I said in answer to the hon. Member for Linlithgow and East Falkirk (Michael Connarty), and in connection with an earlier question, the Crown Prosecution Service public policy statement makes it clear that those who are trafficked—those who are victims of the trafficking—should not be prosecuted.
Mr Peter Bone (Wellingborough) (Con)
We are having rather lovely weather at the moment, and this spring seems to be going on for a very long time. Did the Solicitor-General let it slip that spring was going to end next week, and are we actually going to see the trafficking policy next week? If so, can he confirm that an oral statement will be given, rather than a written one?
The Solicitor-General
On the latter point I cannot give a confirmation, but on the earlier point I think I can.
Gavin Shuker (Luton South) (Lab/Co-op)
Paying for sex with a trafficked woman is a criminal offence under section 14 of the Policing and Crime Act 2009. What steps are the Government taking to ensure that section 14 is fully used by the police and Crown Prosecution Service? Will the Solicitor-General confirm that he is considering a pause in issuing CPS guidance, which could be a wasted opportunity at this stage?
The Solicitor-General
The Crown Prosecution Service assesses the evidence given to it by the police. If that evidence passes the evidential test and it is in the public interest to prosecute, those who commit such crimes will be prosecuted. Beyond that, I am not sure that I can usefully help the hon. Gentleman other than by repeating myself.
Mrs Siân C. James (Swansea East) (Lab)
5. What recent assessment he has made of the role of specialist domestic and sexual violence services in supporting prosecutions in cases involving allegations of such offences.
The Solicitor-General
The evaluations of specialist domestic violence courts conducted between 2005 and 2008 demonstrated that specialist domestic violence support services contributed to improving prosecution rates as well as to the safety of domestic violence victims. More recent analysis, conducted on behalf of the Crown Prosecution Service, has also shown a significant reduction in domestic violence against supported victims. There has been no formal assessment of sexual violence services.
Mrs Siân C. James
The Swansea sexual assault referral centre, or SARC, is one of four across Wales run by the New Pathways organisation. I have been informed that the centre receives no statutory funding for any work that it undertakes with children and young people, who often suffer the worst types of sexual abuse and violence. The majority of its referrals come from the statutory sector. Will the Solicitor-General promise me that he will look at the issue and at the gap in the funding that the centre receives?
The Solicitor-General
I can certainly promise to look into that. This Government, including my Department, value the work that such agencies perform. As the hon. Lady will know, in her part of Wales there are two SDVCs—or specialist domestic violence courts—one in Neath and one in Swansea, as well as other necessary advisory services. I appreciate that we are in a time of great economic constraint, but we will do our best with the resources that we can make available to them.
Mr Robert Buckland (South Swindon) (Con)
One of the main challenges facing vulnerable complainants and their families is the sometimes lengthy time gap between the making of their complaint and their appearance in court. Does my hon. and learned Friend agree that the work of women’s refuges, such as the one in my constituency, and of police family liaison officers is vital if we are to maintain the confidence we need in complainants in order for them to follow their complaints through the criminal justice process?
The Solicitor-General
I know that that is true not only in my hon. Friend’s constituency but throughout the rest of the country. It is important that the advisory services and family liaison staff are there to help those affected by such crimes of violence, whether they involve sexual or non-sexual assault, so that they can bring their evidence to court and the perpetrators can be convicted.
Ann Clwyd (Cynon Valley) (Lab)
6. Whether the Government plan to make additional resources available to the Director of Public Prosecutions to enable him to discharge the new responsibilities contained in the Police Reform and Social Responsibility Bill to consider arrest warrants in war crimes cases.
The Solicitor-General
The Crown Prosecution Service currently anticipates that any additional responsibilities will be absorbed within current resources.
Ann Clwyd
The Solicitor-General will have read the report of the Joint Committee on Human Rights on this issue, which finds that the Government have not made their case and that they should think again. I find it particularly ironic that we are prepared to change the law to protect one Israeli opposition leader when another opposition leader, the Palestinian Sheikh Salah, comes here and is put straight in jail. Where is the justice in that?
The Solicitor-General
I appreciate the right hon. Lady’s interest in this aspect of public policy, and I also appreciate that she has firm opinions on the matter. She is fully entitled to those opinions. In short, the law was changed not in order to solve the problems of one individual but to deal with a public policy problem. She knows that really.
Duncan Hames (Chippenham) (LD)
On 11 January, in this House, a Justice Minister assured me that allegations under universal jurisdiction offences would be accorded the highest priority. Does the Solicitor-General accept the need for an out-of-hours response so that we can be confident that those suspected of such serious crimes will not evade arrest?
The Solicitor-General
The criminal justice system, as the hon. Gentleman knows, never rests. If someone is arrested or brought into custody, he will have available to him, or should have, not only the benefit of the attention of the police and the Crown Prosecution Service but also of his own defence lawyers.
Kerry McCarthy (Bristol East) (Lab)
7. What steps the Crown Prosecution Service is taking to bring prosecutions under the provisions of the Female Genital Mutilation Act 2003; and if he will make a statement.
The Solicitor-General
The Crown Prosecution Service is due to publish new legal guidance on female genital mutilation—FGM—later this summer as part of its commitment to the cross-Government strategy on the prevention of violence against women and girls. I know that the hon. Lady has done a good deal to draw attention to the issue of FGM in Bristol, not least through her work with the Bristol safeguarding children board, which has raised awareness of FGM among midwives and other health professionals, the police and social workers.
Kerry McCarthy
I thank the Solicitor-General for that response. He made reference to the safeguarding children board, which estimates that up to 2,000 girls in Bristol are at risk. Obviously, the summer holidays are a particular problem period. May I urge the hon. and learned Gentleman to do all he can to work with teachers in schools and through his colleagues at the Department for Education to make sure that girls at risk are identified and steps are taken to prevent FGM, rather than just prosecuting people when the offence has been committed?
The Solicitor-General
Yes, and I can tell the hon. Lady that the Home Office, the Metropolitan police and the Foreign and Commonwealth Office launched a DVD on the subject on 4 July—yesterday. It was produced by young people for young people, and seeks to raise awareness of FGM among potential victims. It will be distributed to all schools by September 2011, so I hope the hon. Lady is reassured by that.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
8. Whether he plans to take steps to reduce the likelihood of any future prosecutions for contempt of court arising from the use of social media.
The Solicitor-General
As guardians of the public interest, the Law Officers bring contempt of court proceedings when it is appropriate to do so. I did so in the case of Fraill and Sewart in the divisional court, in which the Lord Chief Justice presided on 14 and 16 June. It is for the trial court judge to warn parties, and the public, not to publish prejudicial reports, and when appropriate to impose reporting restrictions. Juries in particular are warned repeatedly by the court not to use the internet to research cases in which they are involved.
Chi Onwurah
I do not know whether the Solicitor-General is on Twitter, but I am concerned that not only he, but UK law, appears to be on the back foot when facing what is not even new technology. Twitter is five years old next month. Is it not time we demonstrated that UK law is as at home online as on the streets?
The Solicitor-General
Let me confess: I do not tweet, nor do I have a Facebook account; perhaps the hon. Lady is not terribly surprised by that. In the relationship between social media and the law of contempt, the principle and the issues are exactly the same. The means of communicating may have evolved, but the principles we need to apply to ensure that the due administration of justice is not impeded or prejudiced remain the same for talking over the garden fence as for exchanging information through modern internet and social media.
Anna Soubry (Broxtowe) (Con)
Would the Solicitor-General confirm that judges always give strict directions to juries that they must not access any form of internet or other information sources when considering their deliberations in a criminal trial?
The Solicitor-General
Yes they do, and I have done it myself when sitting as a judge. What one cannot guarantee, of course, is that members of juries will obey those instructions and directions when they get home—but we have to rely on the good sense and public duty of citizens whose public duty it is to serve on juries.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Public concern about the misuse of modern communication technology, including social media, is growing, particularly about its impact on the pursuit of justice. That was most recently highlighted by the truly sickening allegations of phone hacking in the Milly Dowler case. The CPS announced a review of hacking evidence almost six months ago. When will the public and victims receive an update? Will further criminal prosecutions be brought, and will the Solicitor-General confirm whether any criminal investigations may have been jeopardised by the behaviour of the press and the rest of the media?
The Solicitor-General
With the greatest respect, I think that if the hon. Lady had thought about it a little more, she would understand that I am not going to give a running commentary either on the police investigations or on the likely consequences of any police investigations. She may rest assured that investigations will continue, and they will continue to follow the evidence wherever it may be—and if the evidence warrants prosecutions, they will be brought. That is work that we need to do in future; it is not something that I need to make announcements about here in the absence of any direct or relevant information immediately to hand.
Mr Graham Allen (Nottingham North) (Lab)
9. What steps he is taking to ensure transparency in the arrangements for the provision of legal advice to the Cabinet on a declaration of war.
The Solicitor-General
The hon. Gentleman’s Political and Constitutional Reform Committee reported in May on Parliament’s role in conflict decisions, and the Government will respond to his report shortly. The Foreign Secretary told the House on 21 March in the Libya debate that the Cabinet had the Attorney-General’s advice before it when the decision was made to take action in Libya. A Government note on the legal basis was placed in the Library that day, and was available to right hon. and hon. Members for that debate.
Mr Allen
The Solicitor-General knows better than most of us that there is a separation of powers, at least theoretically, in our constitution, and that the problems that we had over legal advice in relation to the Iraq war centred on the legal advice given to the Government by their own Attorney-General. Will he also take into account that Parliament has no right whatever to consult and get its own legal advice? Will he discuss with the House authorities putting that right, so that on future occasions when there is a conflict, Members can get their own advice rather than relying on trying to wheedle the Attorney-General’s advice out of Government?
The Solicitor-General
It is not for me to stop Members of Parliament getting whatever advice they think it appropriate to have, but the decision that has to be considered and accounted for to Parliament is that of the Prime Minister and the Government. That can be debated here, irrespective of one’s access to legal advice.
Dismissal of Ian Faletto, Lymington Stationmaster
Mr Desmond Swayne (New Forest West) (Con)
The excellent and award-winning stationmaster of Lymington was sacked for removing a shopping trolley from the line before a train could collide with it. The vicar of Pennington collected 8,400 signatures and sought to deliver them to South West Trains, but in an act of shocking discourtesy to the travelling public, the company refused to take them. It is therefore my privilege to present to this House the petition of the vicar of Pennington, which calls on this honourable House to enlist the support of the Department of Transport to intercede with South West Trains to reconsider this shocking injustice.
Following is the full text of the Petition:
[The Humble Petition of Revd Alex Russell, Vicar of Pennington,
Sheweth that a great injustice has been done by the dismissal of Ian Faletto Stationmaster at Lymington.
Wherefore your Petitioner prays that your Honourable House calls upon the Government to request that South West Trains reconsider their decision in the light of his many years of exemplary service to the public
And your Petitioner, as in duty bound, will ever pray, &c.]
[P000928]
Redevelopment of Rushden Hospital Site
Mr Peter Bone (Wellingborough) (Con)
To follow that is impossible, but my petition is of more importance to my constituents, because the hospital site, where there is of course no longer a hospital, has always been an area where it was planned that we should eventually have a hospital. Unfortunately, the NHS plans to sell it off and 270 local residents have signed a petition, led by Sheila Vickers. I shall read the petition where the point is well made:
The Humble Petition of residents of Rushden, Northamptonshire and the surrounding areas,
Sheweth,
that the proposed revised redevelopment of the Rushden Hospital site for housing is unpopular, ill-advised and detrimental to the residents of Rushden; that over 25% of the residents of Rushden petitioned the House of Commons for a new outpatient facility in the town, the majority wanting the new facility on the Rushden hospital site; that the proposal to build housing on the site instead of an NHS facility is unacceptable and the impact on the surrounding roads of a large housing development and the density of the development and the proposed cut-through to the Greenacre Drive Estate is wholly detrimental to local residents and notes that a similar proposal for housing development on this site was not approved by East Northamptonshire District Council.
Wherefore your Petitioners pray that your Honourable House urges the Secretary of State for Communities and Local Government to urge the Department of Health to withdraw the revised planning application and further urges him to request that the District Council of East Northamptonshire and the County Council and the Primary Care Trust work together to provide a suitable health facility on the site.
And your Petitioners, as in duty bound, will ever pray, &c.
[P000937]
New Member
Phone Hacking
Chris Bryant (Rhondda) (Lab)
I rise to propose that the House should debate a specific and important matter that should have urgent consideration: whether there should be a public inquiry into phone hacking at the News of the World and the related conduct of the Metropolitan Police Service between 2006 and 2011.
There cannot be a single person in the land who is not sickened by the news that a private investigator working for the News of the World hacked the phone of the missing teenager, Milly Dowler, and deleted some of her messages, thereby leading the family to believe that she might still be alive. That is not just a paper out of control; that is not just a paper believing it is above the law. It is a national newspaper playing God with a family’s emotions. Those involved, those whose negligence allowed it to happen, and those who covered it up should be truly ashamed, and the paper cannot pretend that this comes as a massive surprise to it. The News of the World ran a story directly referring to one of the messages. Even more cynically, only last weekend it wrote that people should be rightly disgusted at the “courtroom torture” of Milly Dowler’s family. What about the newspaper torture as well?
This is not just about one incident, as hideous as it is. It is about systematic criminality that has perverted police investigations and seriously damaged the reputation of British journalism and of the Metropolitan police. It is about a pattern of lies and half truths told to Parliament by the News of the World—that there was just one lone reporter; that no senior managers knew anything about all of this.
What makes it really important and urgent, however, is that this is about the behaviour of the Metropolitan police, in whom we put our trust. They had all this information in their hands in 2006, and yet they did nothing with it. Why have they lied time and time again to Parliament, saying that a full investigation had been done and that all the victims had been informed when self-evidently they have not been? In the end, the problem and the scandal is that the Metropolitan police, as the Deputy Prime Minister mentioned earlier, did not pursue the evidence and it is only because of the current campaign that a full investigation is now going on.
The only way we can get to the full truth and to the heart of the cover-up is by having a public inquiry, led by a judge, in addition to the police investigation. This is urgent. The inquiry should start now while memories are fresh and before people leave the scene or shred the evidence. We should not be spineless. Warm words will make no odds. We must have an inquiry.
Mr Speaker
The hon. Gentleman seeks leave to move a motion relating to a public inquiry into phone hacking at the News of the World and the conduct of the Metropolitan Police Service between 2006 and 2011. I have listened carefully and am satisfied that the matter is proper to be debated under Standing Order No. 24. Does he have the leave of the House?
Mr Speaker
The hon. Gentleman—[Interruption.] Order. The hon. Gentleman has the leave of the House. Members may resume their seats. He has the leave of the House to move his motion. As required by the Standing Order, I announce—[Interruption.] Order. As required by the Standing Order, I announce that the debate will be held tomorrow at the commencement of public business and that it will last for up to three hours. I think that that is clear.
Points of Order
Caroline Flint (Don Valley) (Lab)
On a point of order, Mr Speaker. The disclosure of a letter sent by the Secretary of State for Communities and Local Government’s private secretary to the Prime Minister’s Office has revealed that according to the Government’s own estimates the introduction of a benefits cap will lead to greater homelessness, higher costs for the taxpayer and fewer homes being built. The only answer the Deputy Prime Minister could muster this afternoon was that things have moved on. He had no answer on why this information was not made available to Parliament in the first place or why Ministers have denied that such an assessment has been made, and arrogantly dismissed out of hand questions about what else they might be hiding. I have raised the matter directly with the Secretary of State and asked him to come to the House to clarify how many families he believes will lose their homes and whether that information was shared with the Department for Work and Pensions. He has failed to reply. Will you advise me on whether you have received any indication from the Secretary of State that he intends to follow my suggestion by making a statement to the House?
Mr Speaker
I am grateful to the shadow Secretary of State for her point of order. As she will be aware, and as the House will appreciate, this matter was raised from the Opposition Front Bench yesterday. On that occasion I undertook to look into the matter, and I can assure her and the House that I am doing so. As and when there is anything further to report to the House—I recognise the premium on time—she may rest assured that I will do so without hesitation. I hope that that is clear.
Kerry McCarthy (Bristol East) (Lab)
On a point of order, Mr Speaker. Earlier this year the Prime Minister said to the House:
“I do not believe in making tax changes outside a Budget, which is the proper way we do things in this country.”—[Official Report, 26 January 2011; Vol. 522, c. 284.]
Yet today, the Chancellor has announced a decision on North sea oil and gas taxation which will cost the taxpayer £50 million a year. He did so not only outside a Budget, but outside this Chamber, despite the Government having an opportunity during yesterday’s Finance Bill debate, when the House discussed at some length an amendment on the North sea tax regime, to discuss the issue and to make the announcement then. Is it in order for the Chancellor to announce a tax decision in this way?
Mr Speaker
I am grateful to the hon. Lady for her point of order, of which on this occasion I did not have notice. She certainly raises a very serious concern that she and others feel. My initial response and advice is that she should look for other opportunities to debate the matter, possibly using the Order Paper. I do not know whether it would be in order to debate the matters within the context of consideration of the Finance Bill, because I have not looked at the groups of amendments. If that opportunity exists, I have a keen sense that the hon. Lady will be aware of it. If not, she will pursue it on other occasions. I hope that also is helpful.
Bill presented
Police (detention and bail) bill
Presentation and First Reading (Standing Order No. 57)
Mrs Secretary Theresa May, supported by the Prime Minister, the Deputy Prime Minister, Mr Chancellor of the Exchequer, Mr Secretary Kenneth Clarke, Mr Attorney-General and Nick Herbert, presented a Bill to make provision about the calculation of certain periods of time for the purposes of Part 4 of the Police and Criminal Evidence Act 1984, and for connected purposes.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 216) with explanatory notes (Bill 216-EN).
Electricity Transmission (Protection of Landscape)
(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Order. Just before the hon. Lady gets under way, may I appeal to Members who are unaccountably leaving the Chamber, and not remaining to hear her, to do so quickly and quietly, so that we can afford the same courtesy to her that we would want extended to ourselves in such circumstances?
Tessa Munt
I beg to move,
That leave be given to bring in a Bill to make provision to require factors other than cost to be considered for schemes for the transmission of high voltage electricity where infrastructure would impact on the visual and other amenity of a landscape; to provide that in certain cases such infrastructure be installed by visually unobtrusive works; to require that public consultation be undertaken and inform the selection of the method and technology for the transmission infrastructures used; and for connected purposes.
The purpose of the Bill is simple. It seeks to update the Electricity Act 1989, which recognises the transmission of high-voltage electricity only on cables strung between transmission towers, which we all know as pylons. Concerns have been raised by thousands of people throughout the country, many of whom live in rural areas and do not have the protection afforded to those in urban or suburban communities, where power lines are automatically put underground.
People who live in towns and cities, however, often enjoy their leisure time and holidays in the countryside, and I draw attention particularly to the 26,000 people whose livelihoods are dependent on tourism in my constituency, just one of many that would be damaged beyond belief if new lines on 152 ft pylons were introduced. The Somerset levels were in contention to become the 17th world heritage site until the proposal was made.
There are such problems for rural communities all over the country, as new pylons are planned to bring new supplies of energy from whatever source, be it turbines, gas, coal, wind, nuclear or tidal. What happens when we want to install cable TV? Automatically, we dig up high streets and roads all over the place. What happens when we host the Olympics? Around the whole Olympic village, power cables have been put underground. We do not suspend blue water pipes or yellow gas pipes from transmission towers, so why do we do so for electricity power cables?
National Grid has drawn to my attention the fact that it is holding a competition on pylon design, but that is purely a diversion and certainly not the answer to the country’s questions about transmission. The county council, district councils and parish councils are all against the proposals, but all that National Grid, our monopoly supplier, does is hear; it does not listen. There are alternatives, and they are underground and undersea.
The Bill recognises several factors, including the voice of the public and the value of consultation, which should not just be done on the nod; it should be about listening, not just hearing. Consultation responses should inform the method and technology for the infrastructure used. This is also about being green. Losses during transmission are about 7% once one gets the power to the cables. It is clear that undergrounding or putting cables undersea would reduce those losses significantly.
There are health reasons why we should put cables underground. The Government continue to be very poorly advised on the adverse health effects associated with high-voltage overhead power lines. Extensive studies have established a clear correlation between increased risk of childhood leukaemia, adult leukaemia, adult brain tumours, motor neurone disease, miscarriage and Alzheimer’s disease and the electromagnetic fields associated with such lines. The risk to children and adults easily satisfies a cost-benefit analysis in favour of burying high-voltage power lines.
The UK Health Protection Agency considers only a fraction—typically less than 10%—of the available scientific evidence. Included in major studies showing increased risk of childhood leukaemia are the 2005 study by Dr Gerald Draper of Oxford university, published in the British Medical Journal, and studies in Tasmania and, particularly, in Iran, where all power lines go overground. One of the many studies showing increased risks of Alzheimer’s disease is the 2008 whole-population study by Dr Anke Huss of the university of Berne, which revealed particular risks in populations living near overhead power lines in Switzerland.
National Grid is not the National Gallery, the National Trust or the national health service, but it is a massive, monopoly, multinational provider with a primary aim—to seek the maximum return for its shareholders. We have no choice but to use this super-sized company to get our power from its source to the places where it can be distributed to us in our homes and businesses. In June 2009, National Grid’s own chief executive officer, Steve Holliday, went on the record to say that undergrounding transmission lines was a “ no-brainer”. Cost is not everything.
In October 2010, Sir Michael Pitt, the chief executive of the Infrastructure Planning Commission, requested an independent and authoritative evaluation of undergrounding. The Department of Energy and Climate Change sought the assistance of the Institution of Engineering and Technology as an independent assessor of that study by a company called KEMA. The study was to be funded by none other than National Grid. None the less, it went ahead, and the results were meant to be produced on 25 January. However, nothing happened. On 3 June, the IET issued a press release stating that KEMA had not been able to issue a report with which it was satisfied owing to a lack of data from National Grid, and so the IET could not endorse its work.
It is surely time to open up this debate—to put it right into the light and demand that all these figures be provided. I am calling for openness in deciding whether power cables should be put underground or undersea instead of overground. The costs are not an issue—we all pay them through our bills. In November 2009, National Grid admitted that the cost of undersea or undergrounding would put just 1% on our electricity bills. Siemens has produced figures showing that using gas-insulated lines would reduce the whole-life costs of underground cables to under half the costs of pylons.
I pay tribute to the work of my many colleagues across the House who are interested in this subject, particularly my right hon. Friend the Member for North Somerset (Dr Fox) and my hon. Friends the Members for Weston-super-Mare (John Penrose), for South Suffolk (Mr Yeo) and for Suffolk Coastal (Dr Coffey), as well as many others. There have been objections to pylons in Wales, Scotland, the north-east, the south-west and throughout East Anglia. I understand that there is a statement on record from Carwyn Jones, the First Minister in the Welsh Assembly Government in Cardiff, who said no to pylons too.
I also recognise the work of the many pressure groups. I am grateful to some of them for information, in particular Pylon Moor Pressure, No Moor Pylons, Save Our Valley, REVOLT, Bury Not Blight, Highlands before Pylons, North East Pylon Pressure, Montgomeryshire Against Pylons and Stour Valley Underground.
It is time to consider the impact of what we are doing to our countryside, our tourism, our health and our environment. We know the cost of everything, but this matter indicates that we might not spot the value of what we have. Changing the law would at least give us the opportunity to get it right for everyone’s sake. I am delighted to introduce this measure to the House.
Question put and agreed to.
Ordered,
That Tessa Munt, Martin Horwood, Roger Williams, Sir Robert Smith, Tim Farron, Mr Tim Yeo, Dr Thérèse Coffey, Glyn Davies, Natascha Engel, Dr Alan Whitehead, Mrs Anne McGuire and Caroline Lucas present the Bill.
Tessa Munt accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 25 November, and to be printed (Bill 215).
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
On a point of order, Mr Speaker. Earlier, you heard a point of order from the hon. Member for Bristol East (Kerry McCarthy), which suggested that the Government had not made Parliament aware of fundamental changes in tax policy by a statement in the House. I believe that that was incorrect. I think that she was referring to the ring fence expenditure supplement for the North sea fiscal regime. I am sure you will recall, Mr Speaker, that that was presaged in the March Budget. Further to that, a very detailed written ministerial statement was issued by the Treasury this morning and was available in the House of Commons Library at 10 o’clock. Indeed, had the hon. Lady taken the trouble to look at the Order Paper, she would have found it at No. 3 on the list of today’s written ministerial statements. I just wanted to put the record straight.
Mr Speaker
We are grateful to the Deputy Leader of the House for doing so. The point is on the record and is very clear.
Mr Speaker
Very briefly. We are not having a general debate about taxation.
Mr Hanson
I am grateful, Mr Speaker. In defence of my hon. Friend the Member for Bristol East (Kerry McCarthy), she was referring to the fact that there was a debate on this very issue last night in the Commons and the Exchequer Secretary made no reference to the statement being due the following day.
Mr Speaker
That is noted, but procedural propriety has been observed. That is all that the Chair needs to observe.
Finance (No. 3) Bill
(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:36 - The House divided: - Ayes: 215 / Noes: 288 - Question accordingly negatived.
18:50 - The House divided: - Ayes: 25 / Noes: 279 - Question accordingly negatived.
20:54 - The House divided: - Ayes: 217 / Noes: 276 - Question accordingly negatived.
21:40 - The House having divided: - Ayes: 285 / Noes: 225 - Question accordingly agreed to.
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move amendment 13, page 42, line 30, at end insert—
‘(2) The Chancellor of the Exchequer shall review the possibility of incorporating a bank payroll tax within the bank levy and publish a report, within six months of the passing of this Act, on how the additional revenue raised would be invested to create new jobs and tackle unemployment.’.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 31, page 42, line 30, at end insert—
‘(2) The Chancellor of the Exchequer shall review the possibility of incorporating a bank financial transaction tax within the bank levy, levied on trading in financial products including stocks, bonds, currencies, commodities, futures and options and publish a report within six months of the passing of this Act, on how the additional revenue raised would be invested to tackle unemployment and reduce poverty in the United Kingdom and to assist in tackling deprivation in the developing world.’.
Government amendments 32 to 50.
Chris Leslie
We now come to our general debate on taxation in respect of the Finance Bill. Clearly, one of the major omissions from the Bill is a repeat of the bank payroll levy or bonus tax that the previous Labour Administration implemented in 2009. It is not only a matter of fairness that bankers should pay some of their substantial bonuses to support people far less fortunate than them and to rebuild public trust; it makes economic sense too. I hope that our amendment 13 will persuade the Government of the merits of a review of how the bank bonus arrangement could be incorporated into the bank levy. A fair tax on bank bonuses would help to get people off the dole and into work, and it is the best way to get the deficit down and stop Britain’s talent going to waste.
Youth unemployment rose sharply in the recession, as we know, but a year ago it was starting to fall steadily thanks in part to the youth jobs programme and the future jobs fund advocated by the previous Administration. One of the first things that the current Chancellor of the Exchequer did was to scrap that successful programme. Before the election the leader of the Liberal Democrats, now the Deputy Prime Minister, said:
“Parents used to worry about whether their children could get onto the housing ladder, now the concern has spread to whether they can even get a job…We must provide a lifeboat to this lost generation.”
Well, he and the Prime Minister have sunk that lifeboat.
In the 1980s, youth unemployment continued to rise for four years after the recession was over, and whole communities were scarred as a result. Many of the effects can still be seen and felt in places across the country. That is why we believe we need to act urgently to prevent disastrous mistakes from being repeated. There are now 31,000 more young people unemployed than there were last summer, and one in five 16 to 24-year-olds is now out of work. Although there has been a welcome fall in unemployment in the past two months, the claimant count is still rising, vacancies are down and job creation has slowed in the six months since the spending review. Unemployment is set to be 200,000 higher over the coming years than was expected just a few months ago, and the Office for Budget Responsibility keeps revising the figure upwards, just as it keeps revising the growth figures downwards.
We believe that a repeat of the bank bonus tax could be used to create more than 100,000 jobs, build 25,000 affordable homes, rescue construction apprenticeships and of course boost investment in businesses. Putting young people on the dole is not just a waste of talent but a waste of money, and failing to get Britain back to work fast enough is helping to push the benefits bill and welfare costs up by more than £12 billion, or more than £500 a household. It is not rocket science—more young people out of work means more money spent on benefits and less money coming in through tax receipts to pay down the deficit.
Considering how the future jobs fund and the bank bonus levy worked, we believe that sufficient revenue could be raised to invest the money in creating 90,000 good jobs to get young people into work and ensure that we do not make the mistakes of the past. It could also be used to build 25,000 homes to support people as they get back to work. Our plan could generate more than 20,000 jobs in that sector and save several times more jobs in the supply chain and as many as 1,500 construction apprenticeships. That would leave sufficient resources to boost the regional growth fund by £200 million, to support companies that want to start projects that will create more jobs, meaning more help for small businesses in regions up and down our country.
Our amendment is pretty straightforward and, I hope, fairly unobjectionable. It asks the Chancellor of the Exchequer to review the possibility of incorporating a bank payroll tax within the bank levy, and to publish within six months of the passing of the Finance Bill a report on how the additional revenue would be used.
Mr Chuka Umunna (Streatham) (Lab)
One of the objections that has been raised to reintroducing the bank bonus tax is that it would lead to a flight of talent abroad. We have often been told that a number of people would go from the City to Switzerland, for example. Has my hon. Friend noticed that in 2011, just under 400 of the 330,000 people working in banking and financial services in the City went to Switzerland, and that the year before the number going there fell by 7%?
Chris Leslie
An excellent statistic from my hon. Friend. We are often told that the reason we cannot take any action is that complex descriptor “regulatory arbitrage”. It is a term that belies what it actually means—people fleeing the country, usually because they want to pay lower taxes. Actually, there are good reasons for the financial services sector to stay and thrive in this country, and they are not just about tax and regulation. They are not always financial reasons. We have Greenwich mean time, and we have a great rule of law that can ensure that businesses succeed and thrive. I believe that that is ample for our financial services sector to be rejuvenated and sustainable. The talk of “regulatory arbitrage” is in many cases the last refuge of the scoundrel.
The Government are letting the banks off the hook. They are taking a light-touch approach on taxing the banks by failing to repeat the banker bonus tax that the previous Labour Government levied, which brought in £3.5 billion.
David Rutley (Macclesfield) (Con)
Is the hon. Gentleman not aware that this Government’s banking levy raises £2.5 billion, compared with the £2.3 billion one-off net yield of the bonus tax that the previous Government levied? The bank levy is a proactive statement by this Government—action that will lead to the raising of more than £10 billion over the course of this Parliament.
Chris Leslie
The problem is that we should have not either/or, but both. The bank levy and the banker bonus tax would be a fair contribution from the banking sector—[Interruption.] The Minister disagrees, but that is his opinion. The OBR says that the yield of a bonus tax could be £3.5 billion, but even a conservative estimate of, say, £2 billion would mean significant money that could eat into youth unemployment.
Chris Leslie
Will the Minister say why he disagrees with the bank bonus tax?
Mr Hoban
I will make my remarks in my own time, but I remind the hon. Gentleman that he and his colleagues stood on a manifesto that rejected the bank levy. It is a bit rich for him now to talk of having both a bank levy and a bonus tax, because at the last election he and his colleagues rejected both ideas.
Chris Leslie
Let us assume that the Minister is mistaken in his understanding of the Labour manifesto; I certainly would not accuse him of twisting our hope of an international agreement on a bank levy. Many countries are adopting the bank levy idea, and it is often much higher than the one we are pursuing. The Opposition believe that the bank levy is important, and we support it as it is, but—
Chris Leslie
The question the Minister must answer is this: why is he taking no action at all on banker bonuses, and specifically on repeating the previous Government’s banker bonus? Why does he refuse to do that?
Mr Hoban
May I just remind the hon. Gentleman what the Labour party said on the bank levy when it was in government? It said that it should be
“coordinated internationally to avoid jeopardizing the UK’s competitiveness”.
The previous Government were not even thinking about a bank levy—they ruled it out. They said that we should not set the tone of the international debate. This Government have had the courage to do so. It is about time that the hon. Gentleman recognised our willingness to take that tough decision to raise more money from the banks than the previous Government raised from their bank payroll tax.
Chris Leslie
I am sorry that the Minister repeats the point he made earlier. Of course, if the previous Government could have got international agreement writ large on a bank levy, so much the better, but this Government have introduced their bank levy at a puny level. It is a shame that the Minister refuses to repeat the bonus tax on senior executive bankers who take home obscene amounts of money, when that revenue could be used to help to get young people off benefit and into work. It is a shame that he turns his face against that idea. He thinks that the revenue raised by the levy is adequate, but the Opposition do not. We believe that it is necessary for the banks to do more to pay their fair share.
Bill Esterson (Sefton Central) (Lab)
My hon. Friend is right. Does he agree that the Government’s arguments on the levy would be more credible if their corporation tax cuts did not substantially benefit the banks? It would be better if they supported amendment 13.
Chris Leslie
Indeed. Sometimes Government Members protest too much. The Opposition simply want a review of what the bank levy combined with the bonus tax could yield. My hon. Friend is right about the corporation tax cuts from which the financial sector will benefit. The sector will have a tax cut of £100 million in 2011-12, £200 million in 2012-13, £300 million in 2013-14, and £400 million in 2014-15. That is a £1 billion corporation tax cut over this Parliament. The Treasury ought to supplement its very modest bank levy plan with the bank bonus tax because it is only fair that those who played such a central role in the global economic downturn make a greater contribution to help to secure the economic recovery by supporting jobs and growth.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I agree with the thrust of the hon. Gentleman’s argument—the bankers are getting off far too lightly—but rather than introducing a payroll tax, as he suggests in the amendment, would it not be better to increase the corporate levy? Would that not deal with the bonuses issue?
Chris Leslie
We discussed in Committee how the bank levy might be altered, and I will come in a moment to my own criticisms of how the Government have framed the bank levy. Their original plans would have brought in far more revenue, but the banks started complaining so the levy was shrunk back to a level that the banks felt was acceptable, not to a level the taxpayer felt was acceptable.
Frank Dobson (Holborn and St Pancras) (Lab)
Will my hon. Friend confirm that in order to pay for the corporation tax reduction, which has greatly benefited the banks, the Government withdrew quite a bit of the special funding that had previously been provided for investment in industrial activity? So much for their claim to be promoting British manufacturing! In fact, their taxation policies continue to over-promote the banks.
Chris Leslie
Indeed, they have imposed stealth tax after stealth tax on ordinary working people and small—and larger—businesses in this country. For some reason—we know not why—they have sought to give help and support to the banks at a time when they ought to be paying their fair share.
Stephen Williams (Bristol West) (LD)
I thank the hon. Gentleman for giving way three times on the same point. My recollection of the Committee stage upstairs was that he and his colleagues did not oppose the Government’s reduction in corporation tax and actually thought it a good thing. Perhaps he will recall that the reason the bank levy was increased was to take account of the fact that some banks might benefit from that reduction.
Chris Leslie
I agree with my right hon. Friend—they definitely will benefit from the reduction. I am not sure that the counteracting change—the tweak to the bank levy—goes far enough to counteract that corporation tax change. There are ways in which the bank levy could be amended further, but in general we support the principle; it is the design and the level at which it is set that we object to.
Amendment 31, tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell), relates to a financial transaction tax, for which a strong and impressive case can be made. Many of us, on both sides of the House, will have received letters and e-mails from constituents through the Robin Hood Tax campaign, which many charities have advocated. I pay tribute to the technical work that they have done on that issue. What may well be very minor changes to transaction levies could, according to many of these designs, generate significant and useful resources. Clearly, though, we need a design that does not jeopardise the rejuvenation of a stable and well-balanced financial services sector, so we would need an honest assessment of the impact of such a tax.
I am appalled that the Government have for now ruled out a financial transaction tax. It should not only stay on the table, but be actively examined and reviewed. Government Members might say that they are pursuing a financial activities tax—a slight variant in this policy area—instead, but the Chancellor, having talked about that last June, has made absolutely no progress with international jurisdictions in advocating or gaining support for it. We see no action by Ministers on what were ultimately G20 discussions about a financial transaction tax. We have not seen them explore either that possibility or a financial activities tax. The only qualm I have with my hon. Friend’s amendment is whether it stresses sufficiently the need for international agreement and discussion. Nevertheless, it is certainly something that, in broad terms, we think needs to stay on the table to be examined further.
Alison McGovern (Wirral South) (Lab)
That is a crucial point, because moving ahead on this suggestion will take leadership from the very top of all Governments around the world, yet that is the very thing that seems to be lacking in Britain at the moment.
Chris Leslie
It is a shame that the leadership we need—not just at the G20, but at the European level and elsewhere—on the financial transaction tax and in a number of other areas is lacking. The Chancellor of the Exchequer has not reported any progress on the financial activities tax, for example. Perhaps the Minister would care to tell us today what progress he has made with other Heads of Government and Finance Ministers on the financial activities tax.
David Rutley
Might not the Government’s position have something to do with the fact that the International Monetary Fund does not endorse a financial transaction tax and that there is a stronger case for an activities tax? Should the hon. Gentleman not consider that more fully?
Chris Leslie
I know that the Government have such a close relationship with the IMF that they take their policy lead from it on almost every issue, but I am sure that they can think for themselves on this issue. Given that there was discussion at the G20 about exploring many of those things, I would have thought that the Government ought to keep the issue on the table and under review because it has potential, as most hon. Members seem to recognise.
Chris Leslie
Indeed, and there are ways the bank levy could be improved. It might be appropriate at this point to refer to the Government amendments 32 to 50, which are technical amendments. It would be useful if the Minister said whether the bank levy’s yield will be affected by those technical changes. Generally speaking, although the bank levy is a fine idea in theory, the way the Government are implementing it in practice is inadequate. It has been designed around a fixed yield of £2.5 billion to £2.6 billion, but when the Treasury originally published its design for the bank levy last June the banks complained that it would cost them £3.9 billion. The Chancellor listened to their complaints and, as a result, watered down his original plans. Indeed, he gave the banks a £20 billion tax-free allowance before they start paying the bank levy, thus bringing the yield back down to £2.5 billion to £2.6 billion.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Does my hon. Friend agree that the Government’s bank levy was watered down as part of an agreement in their Project Merlin to secure a wider arrangement for lending by the banks into the economy, which we desperately need? Merlin has turned out to be an absolute flop: the first quarter figures for private sector lending to small and medium-sized businesses show that they are £2 billion short already. What a deal!
Chris Leslie
It is difficult to see how the Government thought that that would be the moment of catharsis—the moment when everybody said, “Yes, aren’t the banks doing their just bit? They’re now completely free from their obligations to the taxpayer.” Project Merlin clearly did not achieve that. The Chancellor made some tweaks to the negotiations on the Project Merlin arrangements—he did so in February, on the day of Treasury questions—and he then tweaked the rate again in the March Budget, after criticisms of the big corporation tax cut that the banks will enjoy. However, the bank levy is set at a relatively low rate, especially when we look at what is happening in France, Hungary, Portugal or Austria. Indeed, we even read in today’s Financial Times about the quasi-bank levy arrangements pursued by the Dutch Government.
In future years, the Government should increase the bank levy to ensure that the banks continue to pay their fair share of tax and so that taxpayers are not left picking up the bill for the crisis caused by the irresponsible actions that the banks pursued. That is why in May we called for the Government to review the bank levy and to publish a report of the analysis behind the rates that they had set and the thresholds that they had chosen. They refused to do that; however, as we have seen, they are now refusing even to review the possibility of repeating the bank bonus tax.
Why has the Chancellor failed to take action on excessive executive banker bonuses? At first, the coalition agreement suggested that the Government might well do something about this. It promised to
“bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector; in developing these proposals, we will ensure they are effective in reducing risk.”
That is on page 9; it is one of the first things that the coalition put into its agreement. The Business Secretary recently described the bankers’ bonuses paid for this year as “offensive”, yet the Government could not even promote proper transparency on bonuses and remuneration, never mind taking action to ensure that they were fair and reasonable. The most that the Government could extract voluntarily from the banks was an agreement in Project Merlin to report anonymously on the total remuneration of the five highest-paid bank senior executives outside the board. The Government are not even forcing the banks to disclose all the bonuses over £1 million, which was a key recommendation of the Walker review. That would have been easy to implement, given that it was part of Labour’s own legislation. The provision is on the statute book, ready to be triggered.
Bill Esterson
Does my hon. Friend remember hon. Members talking in Committee about the large-scale donations that bankers had made to the Conservative party? Has he had cause to reflect on whether that might be the reason for the Government being so reluctant to act on this matter?
Chris Leslie
I cannot answer for the motivations of Ministers. It is difficult to know what motivates them. Is this a question of omissions? Is it incompetence? Is there some other devious motivation, or malice for those who might benefit from the proceeds of these revenues? We do not know, but we look forward to hearing the Minister’s justification for failing to get transparency and failing to repeat the bonus levy.
Recent figures suggest that some of the largest investment banks are actually increasing the slice of their revenues that they pay to their staff. The ratio between remuneration and revenues is known as the compensation ratio, and it is interesting to note from the detailed figures that even the Royal Bank of Scotland’s global banking and markets division paid 34% of its net revenues in remuneration in the first nine months of 2010, compared with just 27% of net revenues in the full year of 2009. The amount of compensation, in the form of salaries and bonuses, is therefore going up as a proportion of revenues. That was also the case for J. P. Morgan, which paid 39% of its net revenues in the first nine months of 2010, compared with 33% in the full year of 2009. Barclays paid 43% of its net revenues compared with 38% over the same periods. Compensations are strong and still growing.
Frank Dobson
Does my hon. Friend agree that the Orwellian use of the term “compensation” in relation to working for a bank suggests an effort to increase public sympathy for some of the greediest and most stupid business people this country has ever seen?
Chris Leslie
It is very easy to find oneself tied into the lexicon used by the financial services sector. My right hon. Friend calls a spade a spade, and it is sometimes important to do just that.
The bonuses that I have described are really excessive. For example, we know from the limited disclosures that we have seen that John Varley, the former chief executive of Barclays, received a £2.2 million bonus in 2010 and that, between them, the top five earners at Barclays, excluding executive directors, received more than £38 million in salary and bonuses in 2010 alone. That amount was shared between five individuals. Bob Diamond, the chief executive of Barclays, has received £6.5 million in bonuses for 2010 since January. As many will know, Mr Diamond lost out in the bonanza compared to his two senior managers at Barclays, with Tom Kalaris receiving a cool £10.9 million in salary and bonuses, and the other top manager, Rich Ricci—my hon. Friends might remember his name—receiving a cool £10.6 million. Those two individuals earned enough money—£17 million—in 2010 to pay the wages of more than 500 qualified nurses.
Alison McGovern
My hon. Friend is pointing out some of the excesses at the top of the financial services sector, but does he agree that it is also a matter of concern to those at the bottom end of the pay scales in the financial services sector to see such inequality in the organisations they work in, just as it is to workers in other sectors?
Chris Leslie
Indeed. That is precisely why the bonus payroll levy arrangements that we advocated excluded bonuses of up to £25,000 going to those working on the front line in the banks. We thought that those working at that level should not be affected by that particular payroll tax. What we are talking about now are senior executives. Stuart Gulliver, chief executive of HSBC, gained a £5.2 million bonus while Eric Daniels, the former chief executive of Lloyds, secured £1.45 million.
Mr Robinson
Does it occur to my hon. Friend, as it does to me from time to time, to ask what sort of activity these bankers engage in that can generate such enormous profits? Anybody who has worked in any competitive commercial sector in the UK, let alone the manufacturing sector, operating in the international economy, knows that those sorts of margins and returns cannot be generated in the real world. Are we heading back to the same sort of distortions that led to the previous crash?
Chris Leslie
There are serious issues about the balance of power between management and ownership. Many shareholders are also very exercised about excessive remuneration, compensation pay or call it what we will, and I believe that the balance of power needs addressing in the longer term. It is interesting to note how banks have tried to shift their remuneration approaches according to the political and tax arrangements of the day. While the Minister will no doubt tell us that bonus payouts for the City in 2010-11 were predicted to come down by 8% in comparison with 2009-10, what he will not tell us is that that apparent fall in bonuses was largely offset by a 7% increase in salaries for senior banking executives. The roundabout continues, but some people never lose out when it comes to this particular game.
Analysis of official earning figures by pay research specialists Income Data Services showed that large payouts in the financial sector during February and March this year helped to maintain payments during the 2011 bonus season at a similarly high level to that recorded in 2010. Not enough has changed; Ministers are not exercised or angry enough about this particular scandal, and action is necessary.
The fact is that banks are now more likely to pay discretionary bonuses, which would be captured by our proposed bonus tax, instead of paying the guaranteed bonuses that they used to get away with—the multi-year contractual bonuses that looked to the rest of us like salaries but that they called bonuses, which would not be caught. If the guaranteed bonuses become the exception and not the rule, as the Chancellor says, it might provide us with an opportunity to capture more of the discretionary bonuses through our bank bonus tax. As I said, we estimate the yield to be £2 billion.
We have to resolve the sense of anger felt by UK taxpayers towards the banking institutions that they had to bail out. The public are still rightly angry about the greed and irresponsibility of some of the senior executives at our largest banks and about the size of the bonuses. There is simmering anger out there still about the bonuses that continue to be paid when austerity is biting very hard for many of our constituents. Real and visible action is needed on bonuses, not secret voluntary arrangements behind closed doors between the big banks—as with Project Merlin, which the Chancellor pursued before. As my hon. Friend the Member for Coventry North West (Mr Robinson) described it, it was little more than a damp squib.
The banks provide an important utility in our society. They are a key part of our economy, and a strong banking sector is in all our interests. However, by talking tough and acting weak the Government are fuelling public anger while doing little to address the issues. They should stop treating people like fools, and do far more to ensure that the banks and senor banking executives are paying back their fair share—a fair share that could generate money to repair some of the damage to jobs and the economy, and help tens of thousands of young people to secure a decent start in employment.
We are not asking very much. We just want a review of whether the bank levy could be augmented with a repeat of the bonus tax. We want the taxpayer to be given a fair deal in return for rescuing the banks, and we want the Government to take seriously the threat of a lost generation of young people struggling to find work. A fair tax on banker bonuses to help people off the dole and into work is the best way to get the deficit down and stop Britain’s talent going to waste.
John McDonnell (Hayes and Harlington) (Lab)
Amendment 31, which stands in my name, proposes a report reviewing the possibility of incorporating a financial transaction tax within the Government’s proposed bank levy, which would also examine ways in which any funds raised through such a tax could be invested in tackling not just unemployment and poverty in this country, but deprivation in the developing world. Many will remember the financial transaction tax in its former life as the Tobin tax; last year it was relaunched as the Robin Hood tax, focusing largely on the campaign to tackle poverty in the developing world.
I can think of no better day on which to debate this issue, having seen the pictures shown on our television screens last night and today of the tragedy that is taking place in the horn of Africa. This morning, Radio 4 broadcast the story of a family—parents with one child—who had walked for miles to the aid station, only to find that the one-year-old child had died as a result of suffering the drought and famine. I also commend last night’s “Dispatches” programme, presented by Jon Snow, which identified the activities of Rachmanite landlords in west London. Some of those landlords operate in my constituency, and the matter has been raised in the Chamber in the past. It demonstrates the poverty that still exists in this country.
On a personal note, let me say that this morning I received letters from children at Cherry Lane primary school in my constituency as part of their campaign to encourage politicians to think about how we can fund education in the developing world so that children there can go to school. That is what my proposal is all about.
When the transaction tax was relaunched last year as the Robin Hood tax, it was supported by a wide range of churches and religious organisations. I will not name them all, but let me give Members a flavour of them. They included the Trades Union Congress, Crisis, Action Aid, Article 12 in Scotland, Barnardo’s, the Catholic Fund for Overseas Development, Christian Aid, Church Action on Poverty, Comic Relief, the Church of Scotland’s Church and Society Council, the Christian Socialist Movement, the Disability Alliance, the Ecumenical Council for Corporate Responsibility, EveryChild, Family Action, Faith2Share, Friends of the Earth, the General Assembly of Unitarian and Free Christian Churches, Greenpeace, Oxfam, Quaker Peace and Social Witness, Save the Children, Tearfund and the Salvation Army.
That was the largest alliance of civil society organisations that we have seen in generations campaigning on a single issue, and, as you know, Mr Speaker, they came here last month. Twelve hundred people came to Parliament, and met us in Central Hall over a cup of tea. The event was organised in particular by Oxfam, Action Aid, Save the Children, Tearfund, CAFOD and Christian Aid, and their message was simple: 1 billion people have no access to clean water and 2.5 billion lack basic sanitation, and it is time for change and action.
Those organisations pointed out that—as we have seen in the horn of Africa—the situation is dramatically worsening as a result of drought and famine. They raised three issues with us: the need to ensure that all Governments commit themselves to devoting 0.7% of gross national income to aid, the need to tackle tax evasion and avoidance, and—this was their key demand—the need for a Robin Hood transaction tax on banks. The amendment does not ask the Government to make an instant decision; it simply asks them to help us move the debate on. It is an attempt at a bipartisan—or whatever the correct term is as so many parties are represented in the Chamber—or consensual approach to enable us to move forward. I am not asking for its immediate adoption, although I would like that; rather, it specifically asks for a report to be prepared so that we can be convinced about the way forward both in principle and in respect of the practical arrangements, to ensure that whatever Government introduce this tax, it proves to be successful. It simply asks the Government to review and report.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is setting out his case very well. In recent years, there has been an ever-speedier move towards the globalisation of our economies, and he is absolutely right that this assessment and review is needed in respect of our obligations to global society. My hon. Friend has set out that case perfectly. Does he agree that it is crucial that we do not overlook some of the global challenges in tackling poverty and climate change?
John McDonnell
Yes, and when the various groups lobbied us last month it was interesting to note how the debate had progressed since the original discussions about the Tobin tax. The debate had become much more refined and concretely related to the global needs that my hon. Friend mentioned. There has been a debate about how we allocate these resources and what the greatest priorities are, and so far it has been about poverty in this country so that we do not in any way undermine support for such taxation among people in the UK, but we must balance that with support for efforts in the developing world. The climate change issue has also come on to the agenda since the Tobin tax was first proposed.
One question that arose in the discussions in Central Hall was what the effect would be if we did raise, for example, £20 billion in this country. It was said that if we spent £4 billion, we could halve child poverty in this country overnight, and if we spent £5 billion, we could insulate every home and therefore take people out of fuel poverty. Such examples bring home the reality of what could be done through such a tax.
It is not a tax on normal retail banking or on savings or mortgages. It does not hit the ordinary saver. It is a micro-tax, and in some ways a tax on short-term speculation banking. It does not fall on UK banks alone either, as foreign banks operate in the City. I would take particular delight in taxing Goldman Sachs in this way—that is a personal grudge—but there are also other hedge funds operating in the City of London. A strong argument, which we have heard today, has been made for seeking international agreement. Negotiations are taking place and there is consensus, even within the European Parliament, on introducing a European-wide financial transaction tax. My concern about that is that the European discussions were about using that tax to fund the European Commission—I might have more than reservations about that proposal.
Nigel Adams (Selby and Ainsty) (Con)
The idea of a Robin Hood tax is noble, but does the hon. Gentleman not agree that without international agreement across all countries, it is very unlikely to get off the ground?
John McDonnell
No. If that was the case, we would not have introduced a stamp tax on transactions. It brings in £5 billion and has been an incredibly successful tax. The concern has been expressed that this country would be disadvantaged if it acted unilaterally, but the International Monetary Fund’s study does not say that. It cites the stamp duty as an example of a transaction tax that has not affected UK business and states that financial transaction taxes
“do not automatically drive out financial activity to an unacceptable extent”.
Banks do not leave, because they know that they are secure in this country—in fact, they know that if they get into trouble we bail them out.
The argument that London’s advantages would evaporate overnight as a result of this sort of tax are just not accurate. The reason this country has these advantages, apart from the experience in dealing with financial transactions that we have built up over generations and centuries, is that it is time zone-critical—it is located between the Asian and New York markets—so it is ideally placed to ensure that financial operations are carried out in London. If companies were to move elsewhere in Europe, where would they go? Germany, our main competitor in the European time zone, is already committed, under Chancellor Merkel, to implementing a financial transaction tax.
The argument that is made now about needing some form of global international agreement is exactly the same one that was used to say that we should not introduce any form of taxation on bank bonuses. When we introduced the one-off tax on bonuses in 2010 we were told of fears that there would be a mass exodus of bankers leaving the country. In fact, the recruitment of bankers has increased—perhaps that is a debate for another day.
Alison McGovern
On the argument that my hon. Friend has just made about whether or not people would leave as a result of such a tax, does he agree that we should support what J. K. Rowling said in 2010 about people who might leave this country because of taxation? She said:
“I cannot help feeling…that it would have been contemptible to scarper…at the first sniff of a seven-figure…cheque.”
Ought we not to support her on this?
John McDonnell
There is a spell, is there not—[Interruption.] The new sequel film is coming out soon, so we will see what spell there is to retain bankers in this country, if we need them.
I do not take this issue about international agreement lightly. That is why I am calling for a report, as any report would examine that issue. We are going back to the point that my hon. Friend the Member for Wirral South (Alison McGovern) made earlier, because this country is best placed to take the lead in trying to secure some of these agreements and such a report could address how we could do that. However, it certainly should not hold us back from taking unilateral action.
The other matter that has been raised in this debate previously is the concern about avoidance, but we can design out any avoidance measures. We can design this tax to make it difficult to avoid, just as we did with stamp duty.
Andrew Gwynne
My hon. Friend rightly talks about taking the lead. Are we not hearing exactly the same arguments as the ones used against my private Member’s Bill to tackle vulture funds in the previous Parliament? Thankfully, the Bill was pushed through by the previous Government using the wash-up procedure and it has been made permanent by this Government. Were not exactly the same arguments employed during the debate on that Bill? Is it not sometimes right that we do take the lead?
John McDonnell
Yes, I had forgotten that example. It is a good example of how unilateral action can raise the standard overall across Europe and globally.
Another issue raised in our debate on the Tobin tax a number of years ago concerned whether it would be practical. Things have moved on since then and the system for undertaking financial transactions is highly automated and centralised. New systems have been put in place, and I refer Members to the study by the Institute of Development Studies that identified how the system now operates:
“The Continuous Linked Settlement Bank, launched in 2002, now settles more than half of all foreign exchange transactions, with the remainder processed through national real-time gross settlements systems.”
Now we have the systems in place, through advances in new technology, to monitor the process and thereby ensure that tax is collected easily and that avoidance can be prevented.
Bill Esterson
My hon. Friend just mentioned avoidance and the problems that it causes. Does he agree that if avoidance was the reason for not doing what he proposes, the Government would give up on collecting any taxes? Avoidance of tax is a far greater problem than any to do with claiming benefits, yet the Government focus their energy on benefits and not on tax.
John McDonnell
The main argument on the Tobin tax involved the inability mechanically to identify the transactions and therefore levy the tax. I think that that has been overcome with the new systems.
The avoidance issues will concern migration to tax havens and elsewhere and the report on this tax would have to address them, but we must also attack them more generally. That is why I was so disappointed that my amendment on that subject was not called for debate. That is another issue, however, that I shall raise at another time.
Financial transaction taxes have been introduced elsewhere in the world. In fact, they have been identified in about 40 countries—including ours, with stamp duty. Another question that was raised concerned whether, if we introduced this tax, it would be passed on to the customers. That is a concern, but the report we receive from the Government can consider how to design the tax so that it is targeted at the casino banking that has resulted in this crisis and so that we can protect ordinary people and businesses.
The key point about this tax is that, as the IMF study said, it is “highly progressive”. It falls on the richest institutions and individuals in a very similar manner to capital gains tax. As for the competition element and whether the cost will be passed on to customers, thereby hitting individuals harder, the finance sector is competitive and institutions that try to pass on the cost of the tax to customers will find themselves attacked through a shortage of business.
Another argument that has been made more recently is that this tax could help to assist in addressing high-frequency trading, where transactions happen every few seconds. There has been a huge increase in the number of transactions to do with derivatives. The volume of such financial transactions is now 70 times the size of the world economy and commentators have argued that that is dangerously large and destabilising. Lord Turner, the chair of the Financial Services Authority, said that many such speculative transactions are socially useless. Many of them are based on extremely small profit margins, so even a low rate financial transaction tax of 0.05% would reduce the size of the market by reducing the profitability of these risky transactions. In that way, it would contribute to stabilising the economy overall.
I do not want to delay the House. Many Members have considered the issue in some depth as a result of the lobbying, but for all the reasons I have given I agree with the 1,000 economists who wrote to the G20 summit. This is an idea whose time has come. Issues still need to be addressed, which were set out by Neil McCulloch in the IDS study, but the principal issue is political will. I hope that we can display political will across the parties and across the House to move on this matter.
I finish by quoting from the letter from the 1,000 economists to the G20:
“The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.”
The letter says that a Robin Hood tax is not only “technically feasible”, but “morally right.” That is why I invite the House to support my amendment.
Stephen Williams
I want to make some brief remarks on the amendments. The hon. Member for Nottingham East (Chris Leslie), who leads for the Labour party, mentioned that youth unemployment has grown to roughly a fifth of 16 to 24-year-olds. Of course we all deeply regret the wasted talent that that represents, whether of young people who have qualified at school or college or have left university with a degree and cannot find jobs or those who have not acquired any training or education—the so-called NEETs, those not in education, employment or training. Over the years, I have worked with many charities, such as Fairbridge and the Prince’s Trust, which try to help such people in my constituency. I must gently tell the hon. Gentleman that many of his points were made in the previous Parliament when I used to sit where his hon. Friend the Member for Leyton and Wanstead (John Cryer) is sitting now and I spoke for the Liberal Democrats on skills and higher education. The number of NEETs and the rate of youth unemployment increased year on year throughout the previous Parliament; the number just about touched 1 million before the general election.
I am sure the hon. Member for Nottingham East was not trying to give the impression that youth unemployment had reached 1 million purely because of the actions of the Government. It has been a problem in some cohorts of young people for a long time and has seemed intractable for Administrations of many parties, but the Government are trying to do some good things to tackle it, such as investment in apprenticeships and in the Work programme that will come in shortly.
Bill Esterson
I am glad the hon. Gentleman has given way, because I cannot believe he has the nerve to say what he has just said. One of the first actions of the incoming Government was to scrap the successful future jobs fund, which was bringing down youth unemployment. If he reads Professor Wolf’s report, he will see that her worry is about what is happening to 16 to 18-year-olds. We are in danger of repeating the mistakes of the ’80s when youth unemployment peaked four years after the middle of the recession.
Stephen Williams
I have spoken on platforms with Alison Wolf, and indeed launched a book with her during the previous Parliament. I think she would be surprised to hear the Labour Opposition citing her in support. Yes, the Government are phasing out some of the previous Government’s programmes, but they are being replaced by the Work programme, which brings together many people who can work with the long-term unemployed or unemployed young people. They have a holistic approach and are bringing social enterprises into the programme, which may be more successful than the many initiatives that took place under the previous Government. I repeat: youth unemployment just about reached 1 million just before the previous Government left office. It is not a new problem created by the present Government.
Chris Williamson (Derby North) (Lab)
But does the hon. Gentleman at least acknowledge that as a result of the measures brought in by the previous Government, through the future jobs fund, youth unemployment was falling? Surely, that is something we should celebrate, so was it not a mistake for Government Members to support the move that got rid of the future jobs fund, which was having such a positive impact on youth unemployment?
Stephen Williams
As I understand it, the future jobs fund was a temporary measure and it has now stopped. It is being replaced first by the Work programme, which will come in shortly, and by the Government’s investment to create hundreds of thousands of new youth apprenticeships. I hope that the hon. Gentleman has visited in his constituency, as I have in mine, the many employers—including, in my constituency, the city council—who are taking on apprentices for the first time to give those young people a chance. Indeed, the Government have increased the minimum wage some of those people receive; they have also increased the apprentice wage, which the previous Government did not do.
Chris Williamson
Of course we all celebrate the fact that some young people are getting apprenticeships. We obviously support anything that helps young people get into employment, because it is a waste of talent for people to languish on the dole, but as my hon. Friend the Member for Sefton Central (Bill Esterson) pointed out, the Government’s Wolf review said that those apprenticeships are not going to the youngest school leavers; they are going to an older cohort, so clearly the Government need to take additional measures to ensure that we do not have a whole generation of 16 and 17-year-olds who are simply thrown on the scrap heap.
Stephen Williams
I thank the hon. Gentleman for his rather long intervention. As well as the Work programme and investment in apprenticeships, the Government have a growth strategy to develop the new jobs of the future—into which, incidentally, the future jobs fund was not necessarily placing people. For instance, there are many initiatives in the green economy, with the green deal that has come along as well, that will help the young unemployed. I mentioned the situation to emphasise that the problem is not new. The previous Government struggled hard with it as well, as I pointed out in the previous Parliament. I have been consistent in what I have said across both Administrations.
The purpose of amendment 13 is to reintroduce, or at least to examine the case for reintroducing, the bonus tax that the Labour Chancellor introduced in 2009. As I recall, the purpose of that bonus tax was not to raise revenue, but to change behaviour. It was an attempt to persuade the banks that they should not be introducing bonuses at that time, when many of them were dependent on state funds to continue in existence. I also recall that the anticipated proceeds of that bonus tax were about £500 million. In fact, as we have heard on many occasions, it raised in gross terms more than six times that amount, so it did not change behaviour at all. It seems that the Labour party in opposition has switched the underlying purpose of a bonus tax.
I share the moral outrage that many people feel about the level of bonuses being paid by some institutions. I am a free market liberal, so I believe it is up to a company to decide its own remuneration package and justify it to its shareholders, but in the current climate, when many families around the country are facing difficulty, some of the decisions taken by remuneration committees in the City cross the threshold at which it is right that some of us in this place express moral outrage at what they have been doing.
The culture of people paying huge amounts of money to themselves is not a new phenomenon in this Parliament. I remember Lord Mandelson, before he became the Trade Secretary in the previous Parliament, saying that new Labour was “intensely relaxed” about people becoming filthy rich. The hon. Member for Nottingham East looks faintly embarrassed at my reminding him of that phrase, but when the Labour party was in government it encouraged that culture. We should not let Opposition Members forget that.
Frank Dobson
I cannot help myself, in these very unusual circumstances, leaping to the defence of Lord Mandelson. If the hon. Gentleman had continued quoting from the sentence, Lord Mandelson went on to say “provided they pay their fair share of tax.”
Stephen Williams
I was not aware of the continuation of that quote. However—[Hon. Members: “Withdraw!”] Rather than withdraw, I shall expand on my point and make it more strongly. The previous Government engendered the culture of get rich quick by slashing the rates of capital gains tax and making a virtue of cutting income tax and holding down higher rate taxation. Ironically, it is under the Conservative-Liberal Democrat coalition that capital gains tax has gone up and the 50p top tax rate has been levied in this Parliament.
Bill Esterson
The hon. Gentleman called himself a free market liberal. Another Member of the House who described himself as a free market liberal is the right hon. Member for Haltemprice and Howden (Mr Davis), who describes the current arrangements in this country and the way in which capitalism operates as wealth extraction, rather than wealth creation. Does the hon. Gentleman agree with that assessment when it comes to bankers’ bonuses, and will he support the amendment on the reasonable grounds that my hon. Friend the Member for Nottingham East (Chris Leslie) set out?
Stephen Williams
I thank the hon. Gentleman for his intervention, but I have already stated clearly for the record that I share the moral and ethical outrage at the level of bonuses being paid by certain firms in the City and elsewhere. The question is whether reintroducing the bonus tax designed by the Labour Government would make any difference, because the evidence suggests that it made absolutely no difference to the bonus culture. It was a handy device for raising rather more than the expected revenue, but it certainly did not change behaviour.
As a free market liberal, I think that companies should be free to decide their remuneration policies, but they must justify them to their shareholders. One way that behaviour might change would be if shareholders took a more active interest in the bonuses that the remuneration committees award within their companies, whether they are banks or not. As was mentioned in yesterday’s debate, the people on those committees are often executive directors of other companies and so have a vested interest in the magic circle of super bonuses being justified in other companies. If the shareholders of the banks that we own, Lloyds Banking Group and Royal Bank of Scotland, were able to express a view, that would introduce a new dynamic into capitalism.
I hope that the Government will seriously consider giving each citizen a share in RBS and Lloyds Banking Group when the time comes for both banks to be divested from the state—this is another plug for the pamphlet I published in March, “Getting your share of the banks: giving the banks back to the people”. I had an interesting meeting with officials from UK Financial Investments last Wednesday in the Treasury in order to discuss that.
Amendment 31, tabled by the hon. Member for Hayes and Harlington (John McDonnell), proposes a Robin Hood tax. I fully support such a tax, as I have mentioned in many debates in the House. I have spoken with many non-governmental organisations in my constituency and at lobbying events, such as the one that took place last week and has already been mentioned. A Robin Hood tax has three elements. The first is a levy on banks’ balance sheets, and the Government introduced that in the form of a bank levy. We might disagree about the level of the levy, but the important fact is that the coalition Government have legislated for it to exist and said that it will be permanent, in the sense that it will last for the lifetime of this Parliament. The rate has been changed once, as I mentioned in an intervention, and I hope that it might be increased again.
The second element of a Robin Hood tax is a financial activities tax—FAT, as opposed to VAT, which the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) might have phonetic difficulty with when speaking in Welsh, in distinguishing between an F and a V. I hope that the Minister can update us on what discussions are taking place on that between Finance Ministers across the European Union and what progress has been made on the introduction of such a tax, which is a tax on certain profits of the banks.
The third element of a Robin Hood tax is a financial transactions tax, which is the subject of the amendment. As the hon. Member for Hayes and Harlington said, that has traditionally been called a Tobin tax. It would be the most problematic component of a Robin Hood tax to introduce. It might impede liquidity, which is not necessarily a good thing, and the other barriers he mentioned would be difficult to surmount without international agreement between the major trading nations.
Another problem with a Robin Hood tax is the question of how much it would raise, as I have heard a wide variety of figures for that which are in the billions. The hon. Gentleman referred to the great coalition of NGOs that support such a tax, and many of us support them, but I wish that they would agree a figure for what the different components of the tax could reasonably be expected to raise.
Mark Durkan (Foyle) (SDLP)
Does amendment 31 not afford the Government the possibility of coming up with such a figure? They could do the very scoping work that the hon. Gentleman says is needed, and surely that is the Government’s job, not the job of all those NGOs.
Stephen Williams
The hon. Gentleman makes a reasonable point, and I am sure that the Minister will tell us what work has been done in the Treasury and his estimate of what the proposal from the hon. Member for Hayes and Harlington might raise.
My point is that it is not helpful to present MPs or our constituents with such a range of sums—from the low billions to in excess of £100 billion—that the Robin Hood tax could raise, because they raise false expectations of what it might actually achieve.
John McDonnell
I was encouraged by the hon. Gentleman’s earlier statements, but I was waiting for the “but” and it has come. Amendment 31 simply asks for a report to be prepared exploring all the issues that he has quite rightly and properly set out, so I see no reason why he cannot support it in order, as I said earlier, to move the debate on.
Stephen Williams
I have not said, and I hope that the hon. Gentleman does not think, that I do not support what he is trying to achieve. We will have to hear from the Minister what work the Treasury is doing, or may have already done, to produce the facts and figures that we all want.
My final point on the amount that a Robin Hood tax could raise is about what it should be spent on. I have heard about a range of problems at home and abroad that could be solved by such a tax, but I entirely agree with the way in which the hon. Gentleman has refined those objectives down to dealing with poverty at home and abroad. I think we can agree at least on that.
Mr Robinson
It is interesting—if not more than that—to follow the hon. Member for Bristol West (Stephen Williams), who calls himself a free-trade liberal, or words to that effect. He is a “good doer”, in other words, and he means that he is in favour of every good sentiment expressed in this House but believes that neither he nor any Government can do anything at all about this issue, other than consult the shareholders. If the shareholders—the electorate—were consulted at the moment, his party might not be as pleased with the idea as it seems to be.
Nothing can be done, it is said, and the hon. Gentleman, while agreeing with every sentiment, will not even vote for amendment 31, spoken to by my hon. Friend the Member for Hayes and Harlington (John McDonnell), who I think is going to press it to a vote if he can catch your eye, Mr Deputy Speaker. It calls for exactly what the hon. Member for Bristol West wants, and he would not have to listen to his new masters in the Treasury, because we would be able to have an independent inquiry.
I had the luck to study with Tobin at Yale university when he first advanced these ideas, and they generated a lot more attention and interest in those days, but if the hon. Gentleman is serious about his wishes, and about the good will that he bears towards every serious intent to put things right, including bankers’ bonuses—which we are discussing in relation to amendment 13, of which I am speaking in support—he should vote with us, and also for amendment 31, in the name of my hon. Friend the Member for Hayes and Harlington.
The strange thing about this debate is that before the election, and even during it, the current Financial Secretary to the Treasury and the current Chancellor spoke with great vehemence and passion about how offensive the whole banking culture was and how, once they were in office, they were going to get tough with the bankers.
As in other matters, however, the Chancellor talks a good talk but does not walk a good walk: one puff of wind from the Governor of the Bank of England and the Chancellor gives in on regulation. One meeting with the bankers and he says, “Okay, we’ll do Merlin, but meanwhile we’ll agree with you on the level of bonuses: I won’t tax your bonuses; we’ll go for a corporate bonus tax instead.”
Of course, we wholly endorse the effect of that tax and fully support the bank levy, but it has an impact on banks’ balance sheets, because as we are asking them to build themselves up, we are taxing them, quite rightly. We can achieve both, however, given the unusual and inexplicable profitability in the banking sector. The joy of what we would do, through amendment 13, is that we would tax the bankers—and so we should—but not impact on the business per se.
My hon. Friend the Member for Nottingham East (Chris Leslie), who introduced amendment 13, said that under this Government about £40 million had been paid in net remuneration—or it may be even gross, I am not sure—to the top five employees of Barclays bank. Some £40 million has been paid in bonuses alone. If anything is offensive, that is, and yet the Government refuse to do anything about it. What they should do is staring them in the face. We are not, in the amendment, asking them to agree with every single purpose to which we would dedicate the use of the funds. They may disagree with us on regional development or on the growth fund for new jobs; they can disagree on any number of items. However, surely no one in this House who is serious about tackling the bonus culture that has become so poisonous in the banking industry, and is spreading increasingly to the rest of the commercial and private sector, can disagree with the need to tackle those bonuses.
We heard the hon. Member for Bristol West speak for the Liberals, but it is interesting to note that there is not another Government Back Bencher anywhere in the House. When my hon. Friend the Member for Nottingham East spoke to the amendment, not a single Government Member, Liberal or Conservative, rose to oppose it. Not only have the Chancellor and his Financial Secretary caved in to the banks, but the whole coalition has fled the Chamber in fear and trembling of saying something that will offend the bankers. There is not one Member there—where have they all gone? What has happened? Are they, like the Chancellor and his Financial Secretary, afraid of offending the banks? I do not know; all I can see is that the serried ranks have fled and the Financial Secretary is left on his own to defend the indefensible—of which he is no doubt perfectly capable.
Mr Robinson
They are hoping to collect them, I imagine, when they lose the next election.
What I do not understand about this whole debate is how the banks can make so much money. The retail sector is usually profitable. It is like a utility: there is a regular amount of income, those involved have a fairly nice oligopoly between them, and it works quite well. I do not think anybody is complaining about that, apart from the fact that every time the investment sector does badly, the poor retail customer gets it in the neck—the small companies and others—when the banks immediately try to recoup their losses by increasing fees and charges. While all is going well, we have one rule for the investment banks and one rule for the rest of the world. The investment banks continue to coin it in and take every penny they can in bonuses, and the rest are left with the remaining share of profitability, which is diminished by the excess amounts that the investment side is taking.
The first thing that I would recommend the Government to do is look at the spread of profitability throughout the economy. If we are serious about rebalancing the economy, the first thing that has to be rebalanced is the power differential between the banking sector and manufacturing—and, equally, the share of profitability as between the banking sector and the rest of the economy. It cannot be possible for those in the banking sector—RBS, Barclays and others—to go from a position of massive losses one year to huge profits on their investment trade in the next. In six months RBS made £5 billion profit. We are pleased to receive our share of that, but how can it be making such disproportionate profits compared with the rest of the economy? That does not quite stand up. Either they are real profits, in which case there is clearly a dysfunction in the economy as regards competitiveness that needs to be investigated and addressed, or the bank is creating fictitious profits, taking the bonuses while it can, and leaving the taxpayer to bail it out later. I do not know the answer to that question, but I put it to the Financial Secretary that it needs to be looked into. The profits are unreasonably high. He should forget about whether they are offensive or poisonous and address this as a purely economic phenomenon. How can the banking sector make those profits without sucking profitability out of the rest of the economy, particularly the manufacturing sector?
That brings me to the Government’s policy on rebalancing the economy. We all agree with that, but why do they not address the problem by taxing bonuses through the levy—and, for that matter, through the bonus tax that we propose? Unless we do something about that, the banking sector’s preponderance in being the master and not the servant of industry will continue, and for as long as it does, any talk about rebalancing the economy and the rebirth of manufacturing is make-believe. Nowhere can we see that better than in Derby, with yet another death of one of the few remaining conventional manufacturing industries in the UK. We are all in favour of advanced manufacturing and high-tech industries, but the German success has been based on superb engineering in the traditional conventional industries, which we—particularly those on the Treasury Bench, under both the Conservative and Labour parties—have tended to look down on.
If the Government are serious about rebalancing the economy in favour of manufacturing—we must all be serious about that—they will have to do better than saying that the market and the banks are the master. I am pleased that the Transport Secretary announced an investigation this morning—on the “Today” programme, as usual. The next instalment of the growth plan must consider how the Government can use their purchasing power to the benefit of this country, as is done superbly well in Germany and France.
We should look back. I have not made a study in advance of this speech and it would take us too long to go through everything. The death of the telecoms industry was down to a Government purchasing decision that ditched GPT. Ericsson came in with a great fanfare, then closed the whole of its works in Coventry and pulled its horns back to Sweden. We also pulled our support from the motor car industry. Years ago, people thought it was great because we would move into high-tech manufacturing. What happened? One industry after another closed in the wake of the car industry, including the machine tools industry and the capital goods industry in general. Throughout the history of post-war British manufacturing there has been a progressive loss of self-confidence and self-belief in British manufacturing throughout the country. That has to be addressed, and I put it to the Financial Secretary that it needs to be done now.
Alison McGovern
Does my hon. Friend agree that one moment in history when the British Government did not act in that way, which I raise because it was important to my constituents, was when the Labour Government stood behind General Motors at Ellesmere Port to maintain that industry in my area at a time of deep economic troubles in this country?
Mr Robinson
That is right, and I supported that entirely. I support any large manufacturing company with a base in the UK that we are seeking not to protect, but to develop and expand. I have stressed the progressive loss of self-confidence in British manufacturing across the nation. That example involves a large American company. Although it had got into a much worse mess than the old British motor industry ever got into, because it was American it had a naive faith that it would be able to pull itself, and us, out of that situation.
There has been a loss of confidence in our industries. I will not delay the House by giving example after example, but the view of the Treasury, the old Board of Trade and the old Department for Industry—unbelievably misnamed—has always prevailed: that the Government can do nothing, and market forces must prevail. That is despite the fact that every country that was a real competitor of ours took exactly the opposite view, and ensured that their industries thrived and prospered. They were not protected, but they were supported. We have so many latent advantages that we simply ignored, to the advantage of others and to our own continuing and cumulative disadvantage. That is the point that I am trying to make.
This is by no means a digression from the debate, Mr Deputy Speaker. This is why the tax on the banks should be increased. The banking sector’s preponderance in the economy has to be reduced if we are to survive as a manufacturing and balanced economy in the future. In one way or another, that has to be done. What we have seen from the Government is a pathetic capitulation to the banks. It was difficult enough for us when we were trying to save the banking industry in the crisis, when it was in a bad state. When the banking industry is clearly on the way to recovery, there is absolutely no reason not to proceed with the bonus tax.
The only reason—with which I disagree—is that if we dare tax the banks, they will go abroad because they are being taxed too highly in the UK. This is another area where I would like a study to be done. To what extent is that really a risk? If it were a risk that major bankers would leave the UK in droves and we would have a denuded financial sector over night, it would have some benefits and a lot of disadvantages, but to what extent is it a risk? That could be studied. There are some hard-headed people in the Treasury who would certainly not agree with the banking point of view.
What is so special about the bankers that they can generate these huge profits and bonuses? I do not think that anybody knows. Anybody who thinks about it objectively thinks, “How can that be done?” The manufacturing industries in Germany and France, such as the telecoms sector and the car and lorry manufacturers, are sweating it out in their export markets. They are rebuilding the east of Germany and eastern Europe, and are now helping to industrialise China with massive exports of huge engineering resources. How can it be that they struggle to make 10% on turnover, but bankers can come in and generate huge profits—unrelated, as far as one can see, to any meaningful or socially useful activity, as Lord Turner said in another place?
Stephen Timms (East Ham) (Lab)
I very much welcome the telling case made by my hon. Friend the Member for Hayes and Harlington (John McDonnell) for a bank financial transaction tax, but I wish to focus my remarks on how the proceeds from the bank payroll tax suggested in amendment 13 should be used to create new jobs and tackle unemployment.
We have argued that £600 million of the proceeds should be used to establish a fund to create 90,000 good jobs for young people. That would not be identical to the future jobs fund, but it would certainly have striking similarities to it, so it is important to consider the lessons from the future jobs fund.
As my hon. Friends have pointed out, the scrapping of the future jobs fund was announced in the emergency Budget just after the general election. In opposition, the then shadow Secretary of State for Work and Pensions, the current Home Secretary, whose assurances ought to carry some weight, promised that it would not be scrapped. She wrote to the chief executive of the Association of Chief Executives of Voluntary Organisations on 28 April, just a few days before the general election, to say that the future jobs fund would be reviewed to ensure that it delivered long-term, sustainable work. She stated:
“I welcome this opportunity to clarify the Conservative position on the Future Jobs Fund, which I feel has been misrepresented by certain groups in the media.”
Unfortunately, far from misrepresenting the position, those certain groups in the media were right. The fund was scrapped, without even the pretence of a review, which was a terrible mistake.
The future jobs fund was a £1 billion fund, set up to get 100,000 18 to 24-year-olds into work. It was set up quickly—certainly—to minimise the scarring of long-term worklessness on young people in the wake of the global crisis. We saw serious scarring during the recession of the 1980s, and we are still paying the price for that in today’s labour market, almost 30 years later. Rightly, the previous Government wanted to ensure that there was no repeat.
It is worth reflecting on anecdotal evidence on the future jobs fund. A strikingly large number of people, with a lot of experience in such matters, have made the point that in their view the future jobs fund was the most successful welfare-to-work programme in which they had ever been involved. I noticed the remarks made about the programme to the Select Committee on Work and Pensions by Jackie Mould of Birmingham city council. She said:
“The benefits that they have identified are about the fact that they’ve had a job. I can’t say that enough; it’s come out in every interview that we’ve done, with every single person. Some of them didn’t even know they were on a programme; they just thought they’d got a job. The other benefits have been the confidence and self-esteem that people get from having a job, from feeling valued—that they’ve got something to offer and that they can do it.”
We can all understand how big a breakthrough it is for a young person who has been out of work for some time to get a job. The price of keeping that young person out of work for a long period is huge. It is in that context that the costs of the fund proposed in amendment 13 need to be assessed.
The future jobs fund provided proper jobs when they would otherwise not have been available. My right hon. Friend the Member for Birkenhead (Mr Field), who is currently the Government’s adviser on child poverty, said that the future jobs fund was
“one of the most precious things the last government was involved in, a lifeline”.
Ministers in the present Government have criticised the future jobs fund essentially on two grounds. In considering amendment 13, their criticisms need to be addressed. The first ground is value for money, and the second is that the jobs created were largely in the public sector.
First, on value for money, the maximum price per job offered to bidders to the future jobs fund was £6,500. That is a higher cost per job than most welfare-to-work schemes, but—this crucial difference is often overlooked—unlike other schemes, participants in the future jobs fund came off benefits and were paid a wage. We therefore no longer incurred the cost of benefits to support them. That is not always reflected in cost comparisons, but once it is taken into account, the difference between the Work programme approach and the future jobs fund is much less than is frequently stated.
The Department for Work and Pensions produced statistics showing that of the people starting the future jobs fund between October and November 2009, just over 50% were not claiming benefits one year later—well after their placement on the future jobs fund had finished. The Prime Minister used that figure to criticise the future jobs fund, saying that 50% is not a large proportion, but that comparison is not a valid one, because the young people whom the future jobs fund helped were precisely those who were furthest from the labour market, and therefore most in need of support to get back into work.
In evidence to the Work and Pensions Committee, Tracy Fishwick of the Centre for Economic and Social Inclusion described participants in the future jobs in this way:
“the vast majority of people who are coming forward for Future Jobs Fund are the young people who have less than an NVQ level 2, and sometimes no formal qualification at all.”
In that context, having more than half of such people still in work a year after their placement with the future jobs fund ended is no mean feat. I think that the assessment we are expecting of the fund will show that it provided good value for money by avoiding unemployment.
The second criticism is that none of the jobs created were in the private sector. In fact, that was not the case. It is true that only a small proportion of the jobs were in the private sector. There was an issue about the state aid rules making it harder for private firms to benefit, but with a little more time to plan next time and with the benefit of the report proposed by my right hon. Friend the Member for Morley and Outwood (Ed Balls) in amendment 13, we could increase that proportion. I noticed that Neil Carberry from the CBI told the Work and Pensions Committee:
“I suspect that the speed of the timetable greatly restricted the number of private sector companies that could get involved”.
I think that he was probably right. This was an emergency response to avoid what otherwise would have been a rapid escalation in youth unemployment.
Having said that, there were examples of private firms benefiting from the fund. In Oxfordshire, 33% of the jobs under the county council’s future jobs fund programme were in the private sector, and the council pointed out in its evidence to the Select Committee that it had been disadvantaged by the loss of the future jobs fund—that is the county council for the Prime Minister’s constituency. Other councils reported a smaller but nevertheless still significant proportion of jobs in the private sector. The Select Committee is right that this issue needs to be tackled in the report. Amendment 13 proposes that care should be taken next time to ensure that private firms can benefit from the new programme when it is introduced.
It is not the case, as Ministers have sometimes carelessly asserted, that all the jobs were in the public sector—many were in the voluntary sector—so when the Secretary of State for Work and Pensions appeared on the “Today” programme on 12 May to claim that the
“Future Jobs Scheme created only jobs in the public sector and once the money ended those poor young people crashed out of work straight away”,
it was clearly untrue. Indeed, Dr Peter Kyle, the acting chief executive of the Association of Chief Executives of Voluntary Organisations, which represents more than 2,000 third sector organisations, wrote to the Secretary of State that day to reply:
“I feel obliged to point out that within the voluntary sector it has been widely perceived as a success in delivering vital vocational skills to potentially vulnerable people whilst unlocking potential within non-governmental organisations.”
Later that same day, the Secretary of State claimed:
“The Future Jobs Fund was six times more expensive than anything else that they were doing and actually created jobs only in the public sector”.
That was simply untrue, as Martin Sime, the chief executive of the Scottish Council for Voluntary Organisations, pointed out. There are lessons to be learned from the future jobs fund about how to ensure maximum private sector participation from this approach to creating jobs for young people at a time when those jobs are desperately needed, which they most certainly are at the moment. The value of voluntary sector participation—the contribution and enthusiastic support of those whom Ministers want to be their partners in the big society—must not be overlooked.
The Opposition’s amendment would put back in place the support that the future jobs fund provided with lessons learned through the proposed report to improve the programme further. It is important that Ministers, when evaluating the proposal in amendment 13, reflect on what people have widely said about the future jobs fund and on the enthusiastic response from local authorities, businesses and participants. A young woman from Rochdale told the Select Committee how her time with the future jobs fund opened up many avenues for her, boosting her confidence in the workplace, providing her with training and supporting her with her interviews. She said that being in employment with the future jobs fund helped to get her full-time employment subsequently.
As the hon. Member for Bristol West (Stephen Williams) acknowledged, youth unemployment remains unacceptably high. The Government cannot simply point to the Work programme. We wish it every success of course, but the future jobs fund created jobs where none would otherwise have existed. Given the long-term damage of extended youth unemployment, for both young jobseekers and the economy more widely, it was undoubtedly an investment worth making. Indeed, it is an investment that we should make again. I hope that the House will agree to amendment 13, as moved by my hon. Friend the Member for Nottingham East (Chris Leslie).
Alison McGovern
I want to say a few words in addition to those made so far about amendment 13. The amendment is crucial, and it matters because at its heart it concerns inequality. I want to say something that I take to be uncontroversial across the House: inequality is a problem for us all, no matter what our place in society—it is even a problem for the bankers receiving the bonuses that we have heard about so far. We know that more equal societies do better. I take that statement to be uncontroversial, because we have had many recent discussions both inside and outside this House about why equality matters and why it is important to deal with wide income gaps between the top and bottom in our society.
On that basis, amendment 13 is highly relevant to one of the biggest problems that we have been trying to grapple with. As I said in an earlier intervention, this is not merely about inequality across society, from the very top earners to those receiving the minimum wage; it is about an imbalance in the financial services sector. Many people in my constituency, across Merseyside and in the rest of the UK work in the financial services sector, and not all of them are well paid. Inequality matters not just within those companies, but for those working for companies that service banks—I am thinking about those in occupations such as cleaning or looking after the children of those working in the financial services sector. They face steep income inequality; therefore, it matters that we address this issue. Income inequality has a huge impact on our society—I take that fact to be uncontroversial—and therefore the amendment is important.
The hon. Member for Bristol West (Stephen Williams) described himself as a free-market liberal; I would not go that far, but I would describe myself as somebody who has tried to think about how the economy works.
Stephen Williams
I am quite proud to call myself a free-market liberal, but just to make it clear and to differentiate myself from the right hon. Member for Haltemprice and Howden (Mr Davis), who was mentioned earlier, I am also a social liberal. I wonder what label the hon. Lady would apply to herself. Is she a socialist, a democratic socialist or perhaps a social democrat?
Alison McGovern
That is probably the easiest intervention that I will ever get. In so far as I believe in the needs of society above the needs of capital, I am a socialist. However, as a socialist, I think that it is important to consider how the economy actually works, because unless we understand the functioning of the economy and what makes our society work well, we will not be able to live up to the needs of society or the demands of our fellow people. As my hon. Friend the Member for Coventry North West (Mr Robinson) mentioned earlier, something has gone wrong when we see such large bonuses and when a small group of people in the City of London can arrange extremely high salaries for themselves.
However, this is not just a market imbalance; it is a power imbalance too. Something is going on that enables a small group of people to argue for a much higher salary than anyone else in society. As someone who cares about how the economy works, I call that market failure. Something is going on, and the situation needs to be questioned, thought through and rebalanced. That needs Government intervention. There could be an insider-outsider problem, in which some people are outside the small group who are able to arrange bonuses for themselves in this way and use their position as insiders to argue powerfully for the maintenance of their position, while others remain unable to enter the market. That is what makes me think that Government action is important in this regard.
My hon. Friend the Member for Nottingham East (Chris Leslie) said that there was also a failure of transparency. Markets work well only in conditions of perfect information, but we do not have perfect information, and we have seen the lengths to which some people have gone in order to prevent transparency over pay and bonuses. The case for Government action on bonuses has been well made today by other hon. Members. I would argue that that, too, is politically uncontroversial. In fact, the Secretary of State for Business, Innovation and Skills told the BBC earlier this year that the coalition Government were “fully signed up” to “robust action” on curbing bonuses. Well, that is great. Our amendment should therefore be pretty uncontroversial, and I hope that hon. Members on both sides of the House will support the principle of what we are trying to do.
My worry is that the Government have just not done enough. They have straightforwardly not lived up to the public’s expectations on bankers’ bonuses. I am also worried that the corporation tax cut that they have introduced will effectively hand money back to the profitable banks, and that not enough action is being taken to rebalance our economy. I could talk for many hours about manufacturing and the fact that the financial service sector should serve the productive economy, rather than the other way round, but my hon. Friends have already done that subject justice, so I will not detain the House further on that.
David Mowat (Warrington South) (Con)
The hon. Lady is making a case for the higher taxation of banking bonuses and salaries. Does she think that high salaries in other professions such as the oil industry, financial services, insurance—
David Mowat
Indeed. Does she think that higher salaries in all those professions should be taxed more? If that is the case, the most logical option would be to have higher income tax.
Alison McGovern
As I said earlier, I think we all agree that inequality is a problem. We have tabled an amendment that deals with a specific problem. Do not we all agree that inequality in this country is a problem that needs to be tackled? I thought that that was politically pretty uncontroversial these days.
Alison McGovern
Many people wish to speak, so perhaps it would be better if I did not take any more interventions. I am assuming that the hon. Gentleman was not about to tell me that inequality is not a problem.
I want to outline what we could do with the extra income that could be generated if our amendment were accepted. I also want to build on the remarks made by my right hon. Friend the Member for East Ham (Stephen Timms). His analysis of the future jobs fund was thorough and it accords with my research on that subject. I pay tribute to him as one of the House’s experts on youth unemployment. His constituency is in the London borough of Newham, which has done extensive research into that issue and probably knows more than many places in this country about what can best be done to tackle it.
I want to make a further point. In January, I asked the Minister for Employment whether he could provide business planning projections of how much the Department for Work and Pensions expected to have to pay for 16 to 24-year-olds on jobseeker’s allowance for each year of this Parliament’s life. I was told that by the end of this Parliament the Department expected to pay jobseeker’s allowance to 279,000 16 to 24-year-olds. It thought that just under 280,000 young people would be on the dole. To check what had happened as a result of the Government’s economic policies coming into force, I asked that self same question in June, when the Minister for Employment was forced to tell me that his Department projected having to pay 303,000 such young people on the dole. The DWP has had to up by 24,000 its own forecast of the number of young people on the dole by the end of this Parliament. Nobody can say that this problem does not need to be dealt with. The Government know from their own DWP projections that this problem has to be dealt with—and it has got worse, not better, over the last six months.
I applaud the Government’s approach to apprenticeships and many other things, but the fact is that we had a programme and a set of policies that were working well for young people. The future jobs fund will be much debated and there is more research to come on the subject, yet the DWP’s own research provides evidence of how that particular scheme worked. The best way to get a job is to have a job; we demonstrated that basic fact through the future jobs fund.
Kate Green (Stretford and Urmston) (Lab)
I agree with every word that my hon. Friend says. Does she agree that one crucial value of the future jobs fund intervention was that it broke the trend into long-term youth unemployment—a trend about which we should be particularly concerned? The lesson of the 1980s recession was that if young people did not get a start in the labour market at the very beginning of their working lives, they never really got themselves established. That is what the future jobs fund successfully intervened to disrupt.
Alison McGovern
I thank my hon. Friend for her intervention. Having grown up on Merseyside in the 1980s, I know it was only when I studied economics later in my life that I found out that there was a word for the thing I always knew happened—that people got punished throughout their lives for being unemployed when they were young. The economic word for that is hysteresis. The labour market has memory: if someone fails to get a job early in life, it stays with them, scarring not only the person’s career prospects, but the economic prospects of the locality. We know all about that and the previous Government worked to stop it happening when the economic crisis hit. I would like to see this Government take that problem seriously, introduce measures that will bring real work to young people and deal with some of the problems we face, which are getting worse.
Bill Esterson
Let me draw Members’ attention to the proposals of the Opposition Front-Bench team. Amendment 13 states:
“The Chancellor…shall review the possibility of incorporating a bank payroll tax within the bank levy and publish a report”—
not an unreasonable request, but a very sensible and measured one. Yet we have heard from Conservative Members and from the Minister in an intervention that they are reluctant to take that action. I guess that the Minister will take the same attitude towards the amendment proposed by my hon. Friend the Member for Hayes and Harlington (John McDonnell), which similarly calls for a review. Neither of these measures calls for the City of London to be disbanded or for bankers to be put in the stocks and pilloried by the public—much as many members of the public might wish to do just that! However, given that many members of the public may have recently wished to do the same to Members of Parliament, perhaps we should not pursue that line too far.
Alison Seabeck (Plymouth, Moor View) (Lab)
One of the benefits of this tax is that a considerable sum would be put into building 25,000 new homes for affordable social renting. Does my hon. Friend agree that through investing in housing we invest in apprenticeships and jobs and we get a higher tax take because people are working?
Bill Esterson
My hon. Friend is right: a virtuous circle is created by investment, and especially investment in construction. It is one of the most efficient ways of putting money into the economy, and there is clear evidence that in periods of recession and downturn the role of the public sector should be to put money into the economy until such time as the private sector is strong enough to take up the slack and create jobs and continue to grow the economy. I fear that stage of the economic cycle has not yet been reached, which is why we need measures such as a bankers’ bonus tax to enable money to come into the economy.
Those 25,000 affordable homes would only be a start, but it would be a very important start. We have a housing crisis in this country, and it will be made worse by the benefits cap the Government are introducing, as revealed by the evidence from the private secretary of the Secretary of State for Communities and Local Government that the cap could result in 40,000 families losing their homes. We certainly need activities such as those mentioned by my hon. Friend to make up for Government problems being caused by activities elsewhere.
I hope the Government will read carefully the two Labour amendments, and acknowledge that, as they merely call for a review and are very reasoned, they are worthy of support. I therefore hope that we will hear later that they accept both amendments.
Frank Dobson
I should begin by saying that I support the Robin Hood tax, and it therefore follows that I am opposed to the Sheriff of Nottingham, who in this context is the British banking industry. The sheriff was known for robbing the people and feathering his own nest, which is a characteristic of our banking industry. When the bankers start squealing and the City journalists start repeating their squeals and appearing on radio and television saying how terrible it would be to impose further taxation on the bankers, it is worth remembering the scale of the banking industry, and the scale of the damage the banking crisis did to this country.
It is estimated—I think this estimate is generally accepted—that the effect of the banking crisis on Britain has been to reduce our output of goods and services by more than £300 billion. In other words, had that recession caused by the bankers not taken place the country would be £300 billion better off than we are now, and, with a normal tax take, the Treasury would have been about £120 billion better off than now. In other words, a large slice of the famous deficit would have been wiped out, and a large slice of that deficit has been caused by the incompetence, stupidity and greed of the bankers.
When the bankers say they cannot afford to pay any more, it is worth looking at the sums Britain’s leading banks lost in the crisis while still managing to survive—and most of them survived only by being either taken over or backed up by the taxpayer. HSBC lost $27 billion in the crisis; Morgan Stanley lost $15.7 billion in the crisis; Royal Bank of Scotland lost $14 billion in the crisis; Barclays lost $7.6 billion in the crisis; HBOS lost $6.8 billion in the crisis; and Lloyds TSB lost $4.7 billion in the crisis. Yet all of them have paid bonuses to management who presided over those losses. In the case of Barclays, as I understand it even the shareholders have been doing rather badly and have been treated unfairly, because the Barclays leadership has been paying bonuses while the bank’s share value has been halved in the last 10 years. These are therefore undeserved bonuses not only from the point of view of the rest of us, but even from the point of view of the banks’ shareholders. There is a lot of scope for getting some money out of these banks because they are rolling in money, and we should spend it in ways such as those mentioned in amendment 13, tabled by my party’s Front-Bench team, and amendment 31, tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell).
To put matters in perspective, this year—a frugal, austere year in the City, we understand—City bonuses amounted to more than £6 billion, yet we are told that the Government may not be able to accept the Dilnot report recommendations because they would cost the taxpayer £2 billion. That means that the Dilnot recommendations, which would help all the people who look with fear to the future and to getting older, could be implemented at an annual cost of one third of the bonuses being paid in the City of London. If that does not demonstrate how ridiculous the remuneration in the City of London is, I cannot imagine what does.
As I said in an intervention on my Front-Bench colleague, my hon. Friend the Member for Nottingham East (Chris Leslie), these people in the City have now started to refer to their pay as “compensation”. They apparently need to be compensated to turn up at work, and apparently their normal compensation is not sufficiently high, so they have to get a bonus on top of that to compensate them for going to work and turning up at their office—and then, as we know from the crisis, losing money. It is about time these bankers started compensating the rest of us and doing what my hon. Friend the Member for Coventry North West (Mr Robinson) discussed: making more of the undeserved wealth splashing around in the banking industry available to those who are providing useful goods and services to people in this country and the rest of the world, and getting us to a fairer and better situation.
Chris Williamson
May I begin by entirely agreeing with what my hon. Friend the Member for Sefton Central (Bill Esterson) said about the amendment being wholly reasonable? It ought to command the support of Members on both sides of this Chamber. I hope that at least some Government Members will find it within themselves to support an amendment that will make a significant contribution to addressing the real challenges facing this country. My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) just referred to the eye-wateringly high bonuses that the City of London has enjoyed in what he described as an “austere” year. It is incredible to think that the City of London bankers’ bonuses amounted to £6 billion.
Alison Seabeck
May I, first, draw the House’s attention to my entry in the Register of Members’ Financial Interests in relation to an indirect interest of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), as I should have done that earlier? My hon. Friend the Member for Derby North (Chris Williamson) mentions some enormous sums. Does he share my concern, and that of enough people around the country, about the huge contrast between those figures and the people who are desperate to find a home? The homelessness figures are rising, as we have learned from the Secretary of State for Communities and Local Government.
Chris Williamson
My hon. Friend makes an apposite point and she has done some excellent work to highlight the plight of people in our country who are struggling as a result of homelessness and having inadequate access to decent housing. It is a stain on our national character that in the 21st century, in one of the richest nations on earth, there can be the huge disparity to which she referred.
My first point relates to apprenticeships, the waste of talent in our country and the level of youth unemployment, which is still unacceptably high. I wish to discuss some personal experience and my concern that Bombardier, the last train-building company in our country, has today announced 1,429 redundancies at its Derby plant. It also made the point that its ability to provide apprenticeships for young people in the city of Derby has been considerably diminished. My real fear is that before the end of this year, unless the Government are persuaded to review things and to revise their decision in favour of the British train-building industry, the last remaining company that manufactures trains in our country will pull out of Great Britain altogether. The company will certainly be a shadow of its former self and its ability to provide apprenticeships will be almost completely eliminated.
It is, therefore, absolutely essential that hon. Members support the amendment proposing a tax on bankers’ bonuses, because it would enable the Government to earmark a proportion of that money to create job opportunities. My Front-Bench colleagues suggest that if £600 million of that £2 billion bonus money were used, almost 100,000 opportunities for getting young people into work could be created. Surely that ought to unite all of us. One would hope that even the bankers might consider that to be a reasonable use of the eye-wateringly high bonuses that they have enjoyed in this austere year.
The Government are under a moral obligation to support the amendment. I look directly at the Minister when I make that point, because he is under a moral obligation. I say that because one of the first decisions taken by those on the Government Benches was to scrap the future jobs fund. I can see him mouthing things because he knows what I am about to say. That fund did provide opportunities for our young people and it was making genuine inroads into youth unemployment in our country. The Government’s ability to tackle that is stuttering as a consequence of removing the future jobs fund.
This tax would make a mere pinprick on the standard of living of the bankers affected by it. The Government keep saying that we are all in it together, but if they genuinely believed that, surely those with the greatest resources should be giving a bigger contribution to those with almost no resources. As my hon. Friend the Member for Wirral South (Alison McGovern) said, if young people are unable to get a job at the start of their career, this follows them throughout their life. The Government have it within their gift to support the amendment, which would go some way to addressing that real concern, and I hope that they will take on board their moral obligation to support it.
My hon. Friend the Member for Sefton Central also mentioned that the Wolf review pointed out that some of the youngest of the unemployed in our country—the 16 to 18-year-olds—are struggling to find alternative employment. Although I applaud the Government’s attempts to deal with youth unemployment and their efforts on apprenticeships, their actions are clearly missing out a significant cohort and they should do more to address that situation. One of the other ways in which they could make a significant contribution would be by earmarking a proportion of this bonus tax for the building of 25,000 affordable homes. That would be a modest contribution, but we know that there is a huge demand for affordable housing in our country. Far too many people are living in inadequate accommodation, and there was an excellent exposé on Channel 4 last night about the growth in the number of Rachman-style landlords, who are afflicting parts of our country again.
In my view, we certainly need to do more to tackle that problem and one of the best ways to do that would be to build more decent affordable homes for people to live in. That would have not only the social benefit of providing good-quality homes for people who desperately need them but the added benefit of creating job opportunities and, dare I say, more apprenticeships for younger people, stimulating the economy. If young people are living in better, decent accommodation, their educational and health outcomes are beneficially affected. Whichever way one looks at such investment in affordable housing, through a modest tax on bankers’ bonuses, one can see that it would bring huge benefits to society. I hope that Members will find it within themselves to consider that and to support the amendment.
There is a great need to stimulate and support manufacturing industry and businesses across the piece. They are struggling: we know that the economy is flatlining, that the Government’s attempts at growing the economy are failing and that there is a need for a plan B.
Mr Ben Wallace (Wyre and Preston North) (Con)
I have listened carefully to the hon. Gentleman’s points about apprenticeships and youth unemployment. In my constituency, youth unemployment has fallen by 14%. For a similar reason, the aerospace industry and associated apprenticeships in his constituency are doing rather well under this Government. That is especially the case as regards foreign orders, such as those from China for Rolls-Royce engines and, in a case that affects my constituency, the expansion of British Aerospace abroad. That is the best way to create futures for young people. We should give them proper jobs through long-term investment in intellectual property and research and development tax credit, which the Government have expanded in the recent Budget. Does the hon. Gentleman not think that that is the best way to do it and should he not therefore support the Budget tonight?
Chris Williamson
I certainly do not support the Budget. Although I acknowledge that Rolls-Royce does some excellent work—we are fortunate, in that it is the largest employer in my constituency and provides huge opportunities for young people—the hon. Gentleman would do well to remember the support given by the previous Government to the aerospace industry. He would also do well to remember that one of this Government’s first decisions was to scrap the loan to Sheffield Forgemasters. I can see that he is screwing up his face and rolling his eyes—
Madam Deputy Speaker (Dawn Primarolo)
Order. I know that the hon. Gentleman was tempted down this line of argument by the intervention, but we are discussing the bank levy.
Chris Williamson
Thank you for your guidance, Madam Deputy Speaker. The point I am trying to make is that the resources realised as a consequence of supporting the amendment and introducing such a tax within the bank levy—or at least exploring the possibility and reporting back on how it might be used—could be used to support opportunities to create new employment for people in Sheffield through Sheffield Forgemasters and to generate more apprenticeships and opportunities for young people. I hope that the hon. Member for Wyre and Preston North (Mr Wallace) will reflect on those comments and join us in supporting the proposal made by my hon. Friends on the Front Bench about considering a tax on bankers’ bonuses.
I was going to talk about the fact that we know that the Government’s economic policies are failing and that the economy is flatlining. Opportunities are not being realised because of the Government’s blinkered approach, if I may put it that way. I ask Ministers to consider this proposal as an additional opportunity to support business and young people and to create opportunities in our country. Realising such aims has been made very difficult for Ministers because of the policies they have pursued.
We hear all the time from Government Members, particularly the Chancellor of the Exchequer, that we are living in austere times, that we all must tighten our belts and that we are all in it together. As I have said, the amendment provides an ideal opportunity for the Minister and for Government Members to demonstrate that they mean what they say when they make comments about all being in it together.
Mr Hoban
The Finance Bill introduces the bank levy, a permanent tax on banks’ balance sheets that will raise more than £2.5 billion each year. Amendment 13 seeks to reintroduce the one-off bank payroll tax introduced in the previous Parliament, but that would be unnecessary and counterproductive. Amendment 31 seeks to introduce a financial transaction tax, but such a tax would need to be applied globally to prevent the relocation of financial services.
The Government have already set out far-reaching plans for banking reform on regulation, lending, remuneration and tax. That includes the introduction of the bank levy. Both amendments would also place an obligation on the Government to produce a report on how any additional revenues from each tax could be spent and we have already heard many ideas during the debate.
Before I talk about the amendments in detail, we should remind ourselves of the significant contribution to the economy and public finances made by banks operating in the UK. Many hundreds of thousands of jobs across the whole United Kingdom—not just here in London—depend on Britain being a competitive place for financial services. It has been said:
“While the success of the financial sectors in New York and Tokyo has been built largely on supplying large domestic economies, with a smaller domestic economy the success of London has increasingly depended on its global role…The Government recognises that it must ensure that the UK’s tax regime remains competitive”.
The hon. Member for Nottingham East (Chris Leslie) described such an approach as the last refuge of the scoundrel, but the “scoundrel” who made that statement was not me, my right hon. Friend the Chancellor, or the Prime Minister; it was the right hon. Member for Morley and Outwood (Ed Balls), when he was the Treasury Minister responsible for financial services. It is clear that in a short space of time, the Labour party has decided it is no longer important to be globally competitive. That is yet another nail in the coffin of the economic credibility of that party, which voted this morning to scrap the deal obtained by the previous Prime Minister at the G20 summit to increase resources for the IMF.
The financial crisis demonstrated that fundamental reform was needed and that is what the Government are delivering. The Government firmly believe that banks should make a fair contribution to the public finances. In particular, banks should make an additional contribution in respect of the potential risks they pose to the UK financial system and wider economy. Last year, we announced a permanent levy on bank balance sheets, which was implemented from the beginning of this year.
Mr Hoban
Let me make my point and then perhaps the hon. Gentleman can explain the position of his party when it was in government.
In opposition, we made it clear that the UK should introduce, unilaterally if necessary, such a levy, but just weeks before the general election, the previous Government told us that a bank levy would have to be
“coordinated internationally to avoid jeopardising the UK’s competitiveness.”
Where we and our coalition partners have sought to lead international debate, Labour would hang back and let others make up their mind for them.
Mr Umunna
The Minister is extremely fond of harking back to what the previous Government did, but he is in government now and has failed so far to give a single convincing reason to support his position of not adding a bank bonus tax to the levy. Reuters is predicting profits this year of about £51 billion in the sector and there is still an implicit taxpayer subsidy of the sector, so in that context why is it so unreasonable to support the amendment? It simply asks for a review, which is a very reasonable suggestion.
Mr Hoban
The hon. Gentleman should be patient. I am just warming to my topic. I have much more to say about the bank levy and about amendment 31 on the Robin Hood tax. There is an issue about the need to reform the banking sector and the coalition Government decided to look at the structure of banking, which the previous Government failed to do. We want to tackle issues around the resolvability of banks and to look at how we can make the banking system much more stable. The measures we are taking forward will tackle some of the issues.
Chris Leslie
It is very gracious of the Minister to give way.
On the so-called progress the Minister is making on banking reform, can he tell us what progress he has made on the transparency of banker bonuses? That is a critical point. How many other Finance Ministers, worldwide or in Europe, has he spoken to and when will the transparency element of the legislation be triggered?
Mr Hoban
We have one of the most transparent disclosure regimes for banking salaries anywhere in the world. The measures we introduced as part of Project Merlin were more transparent and provide more information than in any comparable regime across the world. The Government have made real progress on tackling that issue.
We decided that we would lead the international debate and act unilaterally if necessary on the bank levy. Since we made our announcement, France and Germany have joined us in announcing such levies, and others have followed, including Hungary, Austria and Portugal. The hon. Gentleman made reference to the fact that the Dutch had announced a similar thing. Apparently, they believe that our design for a levy should be followed.
The hon. Gentleman talked about international comparisons. Even allowing for the larger size of the UK banking sector, the UK levy is larger than that of France or Germany. Different levies cannot be compared by looking just at headline rates; for example, the UK levy is focused on balance sheet liabilities, while the French levy is on risk-weighted assets. Furthermore, unlike the UK levy, the French levy does not apply to branches of foreign banks. Consequently, the French levy is expected to raise between €500 million to €1 billion a year, much less than the £2.5 billion we shall raise in the UK, a difference that cannot simply be explained away by the different sizes of our banking sectors. Moreover, unlike the UK, the French levy is deductable from their corporation tax liability. The hon. Gentleman said that the Government will not review the banking levy. If he looks carefully at the documentation, he will see that we are committed to reviewing it in 2013.
The levy is not the only tough action we have taken to ensure that banks pay their fair share of tax. The right hon. Member for East Ham (Stephen Timms) was a member of the Treasury team when the previous Government introduced the code of practice on taxation for banks, but they utterly failed to get all the banks to sign up to it; only four of the big 15 banks had signed up to it by the time they left office.
While the previous Government talked a good story about tackling tax evasion and avoidance, we acted. By the end of November, all the top banks had adopted the code and by the time of the March Budget this year, 200 banks had adopted it. We have taken tough action to tackle tax planning issues and to ensure that banks pay a fair share in taxes to recognise the contribution they should make, given the risk they pose to the UK economy.
With amendment 13, tabled by the shadow Chancellor, the Opposition seek to reintroduce the bank payroll tax, which was introduced in the previous Parliament as a one-off interim measure ahead of changes in remuneration practices from corporate governance and regulatory reforms, and the previous Chancellor conceded that it could not be repeated. The net yield for the tax, accounting for the impact it would have had on income tax and national insurance contribution receipts, was £2.3 billion, which is less than we will raise from the bank levy this year, and less than we will raise from it next year, the year after and the year after that.
Andrea Leadsom (South Northamptonshire) (Con)
Does my hon. Friend agree that the unintended consequence of the payroll tax was to push up salaries versus bonuses in the City, which is something that no Member wants to see?
Mr Hoban
My hon. Friend points out some of the behavioural impacts of the tax. A Labour Member pointed out earlier the reduction in the proportion of remuneration from bonuses and the increased amount from salaries. That is the kind of behavioural change that happens. Those responses are important. Banks and bankers respond to such changes, but the world has moved on. Unlike when the payroll tax applied, the top rate of income tax is now 50p in the pound. The previous Government told us that they would apply the bonus tax only until changes in remuneration practices were in place, and this Government have taken firm action in that regard.
The Financial Services Authority revised remuneration code of practice sets out detailed rules for pay for firms in the financial services sector. The code ensures that bonuses paid to significant risk-takers are deferred over a number of years and are linked to the performance of the employee and the firm. In addition, significant portions of any bonus will be paid in shares or securities. Those revised rules came into force on 1 January 2011. Let us not forget that under the previous Government, bankers could walk away with the cash in their pocket as soon as the bonus was declared. The rules on bonuses have been toughened up: bonuses are deferred and are paid in shares. The previous Government let the bonus culture rip and taxpayers paid the consequences.
Mr Hoban
At times, I wonder what Opposition Members read; we were clear from the outset that we wanted to toughen up the rules on remuneration. [Interruption.] We were very clear about what we wanted to do. The Opposition should hang their heads in shame about the bonus culture they allowed to perpetuate when they were in government. I remind them that Labour gave Fred Goodwin a knighthood for his services to banking.
We do not need a bank payroll tax. We have demonstrated that the bank levy we have introduced will ensure that banks pay a fair share in relation to the risk they pose to the wider economy. The right actions have been taken.
Amendment 31 was tabled by the hon. Member for Hayes and Harlington (John McDonnell). He is right to highlight the importance of funding international development, on which there is cross-party consensus. The Government agree that we should move to ensure that 0.7% of gross national income should be for aid. The hon. Gentleman is also right to highlight the importance of achieving the millennium development goals. He mentioned talking about education in a school in his constituency. On Friday, I met a group of pupils from Portchester community school who were very much behind the “Send my sister to school” campaign. These are important issues, but we need some discussion about whether the financial transaction tax model offers a stable and efficient mechanism to raise revenue. Such taxes remain the subject of ongoing debate at international level, and the UK continues to take an active role in the discussions.
Frank Dobson
The Minister recently told me that the Government had made no assessment whatever of the money that might be raised by a transactions tax, as proposed by my hon. Friend the Member for Hayes and Harlington (John McDonnell)—a Robin Hood tax. If the Government have made no assessment of the money likely to be raised, how can they have meaningful discussions with international bodies about what the impact of the tax would be?
Mr Hoban
Significant studies have been done by both the EU and the IMF on such a tax, how it would work and the pitfalls in the proposals. We will see an impact assessment on that emerging shortly. We have not ruled out a financial activities tax. We are engaged in discussion with our international partners and we have pressed for the Commission to consider such a tax. It is working on that. We are making progress. Another review is not needed; there is sufficient work going on to explore the issue in significant detail. The amendment would impose more burdens on the Treasury and it would be better to allow that work to take its course.
Mr Hoban
I would like to give way to the hon. Gentleman, but I want to try to wind up the debate because there are other important matters to be discussed this evening.
On Government amendments 32 to 50, since our proceedings in Committee, it has been brought to our attention that in one area the Bill as drafted may not fully achieve the intended policy ambition. These are the rules relating to netting and in particular the rules concerning multi-lateral netting agreements in groups. These are essentially agreements that allow different members of the same banking group to enter into a net settlement agreement with the same counterparties.
We have sought as a public policy objective to ensure that banks should be able to net off certain liabilities against assets, and that the levy is charged only on the remaining balance of liabilities. The amendments clarify the purpose of the Bill and ensure that the netting rules apply so that some banks are not adversely affected. We want to make sure that we keep the provisions under review. That is why we have put into the amendments a power to allow the Treasury to amend the rules applying to netting arrangements.
The hon. Member for Nottingham East asked whether there would be an impact on yield as a consequence of the amendments. There is no impact on yield, as the amendments reflect the policy objective that we have pursued.
In conclusion, we think it is right that banks should make a contribution reflecting the risks they pose to the UK financial system and the wider economy. That is why we introduced the bank levy. We expect the levy to raise more each and every year than the bank payroll tax did under the previous Government. All the Opposition have to offer in the debate is a tax that did not work the first time round. We have put in place a clear strategy to reform the banking sector. I believe that the actions we are taking are right, and I ask my right hon. and hon. Friends to oppose the Opposition amendments.
Chris Leslie
I repeat my congratulations to my hon. Friend the Member for Hayes and Harlington (John McDonnell) on at least getting the debate on the financial transaction tax on the table. We on the Front Bench also want to keep it on the table. It is appalling that the Government have ruled it out. My hon. Friend and I have already spoken about how we should revisit the issue in future legislative opportunities. The Front-Bench team has a qualm about the fact that the amendment does not mention sufficiently the need for international agreement on the subject, but broadly we agree that the matter needs to be taken forward. Unfortunately, we will not be supporting his amendment on this occasion, but it is an important topic which we must keep under review and keep a close eye on as it develops.
My hon. Friends the Members for Coventry North West (Mr Robinson), for Sefton Central (Bill Esterson) and for Derby North (Chris Williamson) and my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) highlighted the fact that there is no good reason for the Government’s inaction on bonuses. My right hon. Friend the Member for East Ham (Stephen Timms) and my hon. Friend the Member for Wirral South (Alison McGovern) spoke about the massive blow to the self-esteem that young people in particular feel, and the sense of their role in society and of their value that they lose, if they do not have the opportunity of jobs and employment.
The Minister says that our amendment 13, which would repeat a bank bonus levy, is unnecessary and counterproductive. The Government seem content with the lack of transparency on bonuses. They are happy with high and growing remuneration for executive bankers. They think the banks are paying a fair share, and they scoff at the £2 billion that could be raised by a tax on bank bonuses. We feel that the public disagree with the Government. The amendment would be a fair approach and it would help to create employment. That is why I urge the House to support amendment 13.
Question put, That the amendment be made.
Kerry McCarthy (Bristol East) (Lab)
I beg to move amendment 12, page 45, line 5, at end insert—
‘(2) The Schedule shall not come into force except as specified in subsection (3) below.
(3) The Chancellor of the Exchequer shall bring the Schedule into force by order within six months of the passing of this Act.
(4) A statutory instrument containing an order under subsection (3) shall be accompanied by a report which details—
(a) any effective subsidy provided to, or additional profits accruing to, operators of existing and new nuclear power stations as a result of the provisions in the Schedule;
(b) the immediate impact of the provisions in the Schedule on consumers and on fuel poverty;
(c) the immediate impact of the provisions in the Schedule on energy-using manufacturing industries and on employment in those industries;
(d) the expected effect of the provisions in the Schedule on investment in new renewable power generation and on investment in new nuclear power generation;
(e) the measures that the Chancellor intends to adopt in a future Finance Bill in order to recoup any effective subsidy to or additional profits accruing to the nuclear industry as a result of the Schedule; and
(f) how the monies raised by those measures will be used to mitigate the immediate impact of the Schedule on consumers and on manufacturing industries and to encourage green investment.’.
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss amendment 21, page 45, line 5, at end insert—
‘The Schedule shall come into force on a date specified by the Treasury by an order made by Statutory Instrument, which may not be made until an agreed packaged of mitigation measures for energy-intensive industries has been laid before the House of Commons and approved by a resolution of the House of Commons. The dates specified in paragraphs 8(3) and 9(5) of the Schedule shall be replaced by the date specified in the order under this section if it is later.’.
Kerry McCarthy
Let me start by confirming that Labour Members support the principle of a carbon floor price. We believe that carbon price support could be an excellent opportunity for the UK in providing a high and stable price for carbon. It could encourage investment in low-carbon power and green technologies, create a new generation of green high-skilled jobs which the UK sorely needs, enable the UK to make radical reductions in its carbon emissions, and contribute to meeting our carbon budgets. Unfortunately, however, we cannot support the way in which the Government have implemented this measure. It will hit those who can least afford it, damage the prospects of developing a UK green industry, and fail to reduce carbon emissions. We have to question whether we can call the carbon price support rate a green tax at all.
First, I shall deal with the impact on consumers. We know that people are struggling to pay their fuel bills. The OECD estimates that, on May’s figures, energy prices are nearly 10% higher than they were a year ago. Scottish Power recently announced electricity bill rises of 10% and gas bill rises of 10%, and other companies are expected to follow suit. The Government are not helping. Rising energy bills and fuel bills are coming on top of higher taxes, cuts to tax credits and cuts to public services. This year the Government have cut the winter fuel payment by £50 for people over 60 and £100 for people over 80, with no mention of that in the Budget statement or the pre-Budget report. That comes after their promise in last year’s Budget to protect key benefits, including winter fuel payments, for older people. They may claim that they inherited this from the previous Government, but we could and would have looked again at that decision in the light of rising energy prices, and so could they; that is the point of having an annual Budget statement.
These are the circumstances in which the Government have proposed a carbon floor price designed in such a way that it will cost working families by raising their energy bills. We understand that in the long term, if the policy is designed in a way that encourages a switch to low-carbon energy production, there should be no significant effect on consumer bills—that is why we support the principle of the carbon floor price—but right now, in the short term, there will be price rises for consumers at a time when they are already finding their fuel bills unmanageable. The Government have not included any counterbalancing measures to help working families to deal with those price rises. If the measure goes ahead in the form that the Government propose, between 30,000 and 60,000 more households will fall into fuel poverty in 2013, rising to between 50,000 and 90,000 more households by 2020. Those are the Government’s own estimates. Earlier this year, Consumer Focus said:
“In its current form there is a real risk that this policy may simply displace detriment.”
In other words, even if it did have a positive impact on green investment, that would be at the cost of more people falling into fuel poverty.
There have recently been somewhat hysterical reports about green taxes, alleging that they are the biggest factor in causing consumer bills to rise. That is not true. Ofgem figures from March show that environmental and social costs make up just 8% of the typical dual fuel consumer bill, and that has risen by just one percentage point since 2008. Climate change deniers cite figures suggesting that hidden green taxes add some £200 to energy bills, but those figures do not stack up. That does not mean, however, that now is the time to add to those costs. The Government have got it wrong. Ordinary working families were clearly the last thing on their mind when they designed this policy. That is why the amendment calls for them to look again at the effect that it will have on people in fuel poverty.
I turn to manufacturing, which several of my colleagues will wish to discuss too. Rising energy prices will affect not only consumers but firms that employ thousands of people across the country. In particular, they will hit energy-intensive industries such as steel, aluminium and chemicals. There is a danger, particularly in the absence of a credible Government plan for growth, that growth and jobs will be exported to other countries. According to a report by Thomson Reuters Carbon Point earlier this year, the carbon floor price will impose additional costs on businesses amounting to £9.3 billion. We understand that that effect might be mitigated in the long term if there is a switch to greener sources of energy, although that is not certain given the problems that I will come to in a moment. In the medium term, however, UK industry will be at a disadvantage, and jobs and growth will be put at risk. That is why the director general of the CBI and industry bodies such as the Chemical Industries Association have called for an exemption from these extra costs for high energy-using industries.
Concerns have been expressed by firms such as Tata Steel, which employs 1,000 people in Teesside. Its chief executive officer said:
“The introduction of the carbon floor price represents a potentially severe blow to the sustainability of UK steelmaking.”
Rio Tinto Alcan, an aluminium producer in the north-east, may close, shedding 600 jobs, and 1,800 jobs are at risk at INEOS ChlorVinyls in Runcorn. Some of the industries threatened by this measure are not only major employers but among the UK’s biggest export sectors. For example, the chemical industry, which accounts for 12% of total UK manufacturing, exports the bulk of its production, with a trade balance in 2008 of nearly £6 billion.
There is also the danger that we will harm our own prospects of building a UK green industry. This sector represents huge opportunities for the UK. For example, the wind energy sector provides over 10,000 jobs, and it expanded by 91% in just two years from 2007 to 2009. The solar energy industry in the UK provides over 10,000 jobs. There is a danger that we may not be able to sustain these sectors in the UK, despite any efforts from the Government, if the necessary materials are not available here. This would be yet another own goal for the “greenest Government ever” after their ill-thought-out change of policy earlier this year on feed-in tariffs, which has put thousands of green jobs at risk. The solar sector is a vital, nascent green industry in the UK. Until the Government’s announcement, the 10,000 jobs that it currently supports was expected to rise to 17,000 this year. The Government’s promised green investment bank was supposed to boost investment in new green industries, but it has been watered down: it will be a fund, and not a real bank, until 2015. That makes a mockery of the Government’s green credentials. Our amendment calls on the Government to look again at the carbon floor price and its effect on high energy-using industries. This is the wrong time to put jobs and green investment at risk without a plan to protect them.
I now move on to the impact on green investment. We accept that a well-designed carbon floor price can deliver reduced emissions and higher green investment, which is why we support the idea in principle. However, we doubt whether the Government’s proposal will deliver those goals. The UK is part of the EU emissions trading scheme, so any carbon permits that are not sold in the UK will simply be sold elsewhere in Europe. The Department of Energy and Climate Change commissioned Redpoint Energy, a consultancy, to examine the options for a carbon floor price. It said in a footnote to its report:
“Under the EU ETS, it would be expected that lower emissions from the GB electricity sector in a given year would be offset by higher emissions elsewhere within the trading scheme.”
A recent report by the Institute for Public Policy Research agreed that
“this policy would have no direct effect on emissions reaching the atmosphere.”
It went on to say that
“it is important to be clear that the UK would be meeting climate change targets in a way that has zero direct effect on emissions.”
The Treasury’s own consultation document admitted that for power stations covered by the ETS, the carbon price floor will not directly impact on the Government’s ability to meet their carbon budgets.
Consumers and companies facing higher energy bills because of this policy would be right to question whether this is a worthwhile use of their money. Will the Government’s policy encourage more investment in renewable power? The Energy and Climate Change Committee expressed doubt:
“when it comes to low-carbon investment, the effect of the Carbon Price Support will depend on the confidence of investors in the long-term reliability of the Carbon Price Support.”
The Economic Secretary to the Treasury (Justine Greening)
Perhaps I can just tell the hon. Lady that the Institution of Civil Engineers said that the policy will create a “more conducive environment” for investment. Does that allay her fears? If she has concerns about the structure of the policy, it would be helpful for Members to hear the Opposition’s alternatives.
Kerry McCarthy
As I will go on to explain, there are concerns about future stability, as we have seen with the North sea oil tax, which we discussed yesterday. Investors need stability to plan for the long term, particularly in solar and wind power, which need long-term investment. People need to know what to expect and what impact proposals will have.
As for what the Opposition are saying, I refer the Minister to our amendment, which calls for a review of three main points, which I am discussing in my speech. Those are the impact on fuel poverty, the impact on energy-intensive industries and the fact that this is, in effect, a subsidy for nuclear power, which I will discuss later. It is important for us to look at the consequences of this policy because, as with so many things, the Government have introduced it in haste and without thinking through the consequences. It is not until we look at the impact on these sectors that we will see what the ideal solution might be. It is premature of the hon. Lady to ask us to come up with an alternative before we have done that analysis and reached a consensus with the industry on what the impact will be. As I have said, we agree in principle with the carbon price support, but because of the way it is being implemented, it will not achieve any of the objectives that she presumably wants it to achieve.
Justine Greening
As we will no doubt debate later, we carried out an extensive impact assessment on this policy. Indeed, the hon. Lady has quoted a couple of figures from it. I reiterate what I said earlier. If she agrees in principle with the policy, which I very much welcome, it would be helpful to hear how she thinks the delivery of it ought to differ from what the Government are doing.
Kerry McCarthy
As I said, we are calling for a full-scale review. I am not convinced that the Government’s impact assessment examined in sufficient detail the impact on fuel bills, for example. As the Economic Secretary is intervening on me, it is obviously not the time for me to pose questions to her. When she speaks later, perhaps she can enlighten us as to what it was judged that the impact would be on consumers in meeting their fuel bills, on fuel poverty and on energy-intensive industries. What impact does she think that will have on jobs and growth in the areas where energy-intensive industries are based? Perhaps she could also respond to the questions that I will soon pose about whether it is wise to, in effect, create a subsidy for the nuclear industry when there are other competing priorities, on which some people would argue the money would be better spent.
David Mowat
I have listened carefully to the hon. Lady’s remarks on behalf of the Labour party. Can she make it clear for the House whether the Labour party supports a carbon floor? I thought that that was settled policy. If it does support a carbon floor, what is the particular aspect of the announcement that is causing such concern?
Kerry McCarthy
I am not sure where to start in responding to the hon. Gentleman. My opening line was that we support the idea of a carbon floor price in principle. Everything that I have said since has outlined why we have reservations about the way in which it is being implemented. I simply refer him to the speech that I am making.
I appreciate that there are difficulties in getting this policy implemented at an EU level. It would be easier if we could look at the EU emissions trading scheme in the round. Experts have said that measures on carbon pricing should first be considered at EU level, and that a UK-only solution is a second best option. Lord Turner, the Chair of the Committee on Climate Change, has said that, and it was echoed in the Institute for Public Policy Research report. The Government appear to have done nothing to explore the EU option. The coalition agreement says that the Government will
“make efforts to persuade the EU to move towards full auctioning of ETS permits.”
However, it does not mention any intention to talk to our EU partners about a carbon price floor. Perhaps that is unsurprising, given the Government’s record on dealing with the EU. For example, the Government’s MEPs tabled no proposals to reduce the EU budget, whereas Labour MEPs tabled amendments that could have cut more than €1 billion of waste from EU spending.
Justine Greening
Is the hon. Lady aware that one of the main reasons why the UK’s contribution to the EU budget is going up is that the former Labour Prime Minister, Tony Blair, gave away part of the rebate?
Kerry McCarthy
The Whip is telling me that we do not have time to reply to that point. It is a bit rich of the Economic Secretary to say that, when she made great play of going to Europe and saying that we would not accept any rise in the EU budget—there was a lot of grandstanding and playing to the crowd on that issue—and then her party’s MEPs tabled no proposals at all to tackle the issue. That is far more relevant to what we are discussing than something that happened many years ago.
Andrew Percy (Brigg and Goole) (Con)
I am encouraged by what I think I am hearing about the European Union. My policy would be simply to leave it. Is it now the policy of the Labour party to cut the EU budget? If so, why did it not seek to negotiate a reduction in the EU budget when it was in power?
Madam Deputy Speaker
Order. Perhaps we can stick to this debate. If the hon. Gentleman wants to know the answer to his question he can discuss it privately with the hon. Lady outside the Chamber. We should return to the important issue of climate change.
Kerry McCarthy
I have touched on the fact that there needs to be greater Government engagement in Europe to try to deal with the matter at a pan-European level.
I turn to the nuclear subsidy. As I have said, the carbon price support rate will hurt families and industry in the immediate future, yet it seems likely to fail to reduce carbon emissions. We have to wonder why the Government decided to implement it. The obvious explanation is that they got it wrong, again. It would not be the only tax that they have bungled in this Finance Bill. I have already mentioned the difficulties over the fuel duty stabiliser and the North sea oil tax, which was—[Interruption.] Sorry, I have been thrown off slightly by a sedentary heckle from the Economic Secretary. As I was saying, the Government introduced a last-minute supplementary charge on North sea oil in response to growing public protest about prices at the petrol pump. We have subsequently seen how ill thought out that was, and it has led to the Government having to perform U-turns at a fairly rapid pace.
One explanation of why the Government want to introduce the carbon price support rate is the money that it will raise. Is it perhaps a revenue-raising measure in disguise? The 2011 Budget report reveals that it will raise £740 million in 2013-14, more than £1 billion in 2014-15 and £1.4 billion in 2015-16. If it fails to encourage faster green investment, as some predict, the tax could go on to raise much more as the carbon price approaches £70 a tonne. In fact, the Budget report states explicitly:
“The decisions the Government is taking to strengthen the tax system—including…the introduction of the carbon price floor announced at this Budget—will also help to support the long-term sustainability of the public finances.”
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend agree that the problem with having a unilateral carbon price in the UK is not just that it will make international investors such as Tata Steel near Swansea think of moving their investment to Europe, and therefore helping Europe rather than Britain? She may be interested to know that in Port Talbot, near Swansea, a specialist steel is being developed. When wrapped around buildings, it produces its own heat and reduces the carbon footprint. Does she agree that the Government’s measures are undermining global market-changing technology to reduce carbon footprints, as well as destroying jobs in Britain?
Kerry McCarthy
That is an important point. Although there is concern about the carbon emissions of energy-intensive industries, in cases such as my hon. Friend has outlined they are actively working on measures to reduce carbon emissions. It is important that we do not throw the baby out with the bathwater and prevent that type of green investment.
The carbon price support rate will actually provide an effective subsidy to the nuclear industry, as the Economic Secretary has confirmed in a written answer. In fact, it will benefit nuclear power twice as much as the renewables sector, with an average value of £50 million a year for nuclear between 2013 and 2030, compared with just £25 million a year for renewables.
We support building new nuclear power stations as part of the UK’s energy mix, but the problem is that the Government explicitly promised voters that they would not grant nuclear power stations a public subsidy. In fact, there is meant to be cross-party agreement that we are against nuclear subsidies. The Conservative party said in its manifesto that it intended
“clearing the way for new nuclear power stations—provided they receive no public subsidy”.
The coalition agreement stated that the Conservative party was
“committed to allowing the replacement of existing nuclear power stations…provided that they receive no public subsidy.”
The Prime Minister himself said in the House in March:
“What we should not be doing is having unfair subsidies.”—[Official Report, 23 March 2011; Vol. 525, c. 950.]
Then there are Liberal Democrat Members, who were elected on a manifesto that opposed nuclear power entirely. At their party conference last year, a resolution was passed stating that
“any changes in the carbon price”
should not
“result in windfall benefits to the operators of existing nuclear power stations”.
When we delve deeper, it turns out that this is not the only nuclear subsidy by stealth that the Government are trying to sneak past the House. When I say “subsidy by stealth”, I am of course borrowing a phrase from the hon. Member for South Suffolk (Mr Yeo), the Chair of the Select Committee on Energy and Climate Change. Writing about the Government’s wider package of electricity market reforms, he has warned that they
“must not impose a one-size-fits-all reform on all low-carbon generation in order to avoid singling out nuclear for support.”
He said that the Government’s proposed design for feed-in tariffs
“seems to be more about concealing the fact that it is providing financial support for nuclear power than it is about coming up with the best approach.”
Even if the Government do support public subsidy for new nuclear build, they need to explain why they want to subsidise existing nuclear stations—and, for that matter, existing renewable power stations. Calling the carbon price support rate a green tax surely implies that it is intended to provide an incentive for future green behaviour. However, the Economic Secretary said to the Public Bill Committee:
“We are clear that ensuring that a tax is structured to drive positive environmental behaviour is one thing; ensuring that that can happen on the ground, and that people can change their decisions of the future is another.”––[Official Report, Finance (No. 3) Public Bill Committee, 19 May 2011; c. 242.]
A public subsidy for existing power stations, whether renewable or nuclear, is not behaviour-changing.
We should remind ourselves exactly where the subsidy comes from. The Economic Secretary may argue that it is not a public subsidy per se, because it does not involve taxing and spending. In fact it has a much more direct impact on every electricity bill payer, whether they are working families or manufacturing firms, and it is still a public subsidy in every sense. The hon. Member for South Suffolk says that the Government
“needs to be upfront about its financial support for nuclear energy”,
and I agree with him. That is why we have tabled the amendment.
The Government are using money taken from people and from energy-intensive industries to subsidise nuclear power stations, which they explicitly promised voters they would not do. They are also using that money to subsidise existing power stations, which makes no sense. We have tabled the amendment to give them an opportunity to explain why they have done that. If they are still sticking to their policy that there should not be a subsidy, I want to know how they will put that right.
Kerry McCarthy
No, because I am just reaching the end of my speech. The hon. Gentleman will have an opportunity to intervene when other Members are speaking.
The hon. Members for Redcar (Ian Swales) and for Westmorland and Lonsdale (Tim Farron) have tabled amendment 21, which calls for mitigation measures for energy-intensive industries. I hope that they and other Liberal Democrat Members will feel able to support amendment 12. It has 11 signatories, not all from the Labour party, and like them we call for support for energy-intensive industries. In addition, we have called for help for consumers and support for green investment. Our amendment also calls for the nuclear subsidy to be recouped, as did the hon. Member for Cheltenham (Martin Horwood) this weekend, according to the Daily Mail.
The Government have confirmed that there will in fact be a windfall for the existing nuclear industry, despite the Liberal Democrats’ party conference decision last year. Fortunately, the coalition agreement allows Liberal Democrat Members to vote against that without its being seen as an issue of confidence in the Government. I hope that they will make use of that ability today.
The Government’s carbon floor price will not do what they said it would do. It is a missed opportunity for the country. We could have seen a new generation of green investment and jobs, but instead we see ordinary people being hit at the time when they can least afford it. We see UK manufacturing being hit when the Government say they want to promote growth, yet we will not see carbon emissions into the atmosphere reduced by a single tonne, and we might not see green investment. The Government have got the policy wrong, and our amendment asks them to go back and think again.
Ian Swales (Redcar) (LD)
I wish to speak to amendment 21, in my name and that of my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron).
I, too, support the carbon price support mechanism and its objectives, but without mitigation measures its introduction will have the surely unintended consequence of seriously damaging energy-intensive industries through higher electricity prices. Cumulative electricity prices in the region of 20% will make production costs higher in the UK than in European and international competitors. Analysis shows that the profitability of UK-based energy-intensive businesses could fall by up to 150%, or disappear altogether. They are mostly international businesses, and the competition cannot believe their luck that the UK seems determined to make itself much less competitive.
Geraint Davies
I agree with that point. Is the hon. Gentleman aware that Airbus, whose wing production is based in north Wales and which commands 55% of the total global plane market, is producing its latest generation of planes with a carbon composite that requires 30% less fuel consumption? It is therefore contributing to lower carbon footprints. By discouraging it through this ridiculous pricing technique, we are inadvertently harming the planet rather than helping it, and harming jobs as well.
Ian Swales
I am not aware of Airbus’s activity in detail, but I will support the hon. Gentleman’s point later by saying that such industries have a role to play in our future, and that they are not just of the past.
The hon. Member for Bristol East (Kerry McCarthy) has mentioned the comments of the head of Tata Steel. He also said:
“European steelmakers already face the prospect of deteriorating international competitiveness because of”
EU emissions costs. On the provision in the Bill, he added:
“This is an exceptionally unhelpful and potentially damaging measure.”
As well as steel, other large sectors are at risk—including chemicals; oil and gas; cement; aluminium; glass, bricks and ceramics; tyres; and paper. There could be more. Those are broadly the sectors that are most affected, but the EU has gone further and drawn up a list of 164 industrial sectors and sub-sectors that are deemed to be exposed to what it calls carbon leakage. That means that the EU recognises that the EU emissions trading scheme and other measures could disadvantage European companies that compete internationally. The sectors and sub-sectors that are judged to be at risk of carbon leakage are estimated to account for around a quarter of the total emissions covered by the EU emissions trading scheme, but for around 77% of the total emissions from EU manufacturing industry.
The UK Government's proposing to add a further tax to those already in place is bound to have an effect. We have just witnessed fresh closures and 1,500 job losses from Tata in Scunthorpe and Teesside. I see a number of hon. Members in their places who are directly affected by that. Tata again mentioned UK energy prices as a factor in its recent decision, but in the fourth carbon budget statement, the Secretary of State for Energy and Climate Change said that
“we need to ensure that energy-intensive industries remain competitive and that we send a clear message that the UK is open for business.”—[Official Report, 17 May 2011; Vol. 528, c. 177.]
The announcement has been welcomed, but there is concern that, to date, there has been insufficient detailed consultation on, and impact assessment of, the proposals with respect to energy-intensive industries. Consequently, the fear is that the Government might underestimate the risk to those sectors.
David T. C. Davies (Monmouth) (Con)
I am grateful to my hon. Friend—I suppose I should call him that—for giving way on that point. Does he find it slightly ironic that Members of all parties in this House have for years called for all sorts of extra costs on any industry that generates carbon in any form, but that now, all of a sudden, when the consequences of that become clear, they begin to express their reservations?
Ian Swales
I thank my—yes—hon. Friend for his intervention. It seems that the issue is becoming more prominent. That is due partly to industry lobbying. Earlier this year we set up an all-party parliamentary group on energy-intensive industries. I have major concerns for my constituency and the Tees valley, and I am an officer of that group—at least one other officer is in the Chamber. The very high level of interest shown in the group by companies from all sectors indicates the potential gravity of the problem.
Those industries are looking not for special favours, but simply for a level playing field on which to compete internationally. Despite what some commentators claim, there is already a price issue. Even before the Bill, the increase in bulk electricity prices in the UK over the past 10 years was 22% more than in Germany, 29% more than in France and 64% more than in Spain.
The inconvenient truth about UK carbon reduction performance is that it is partly due to the rapid decline in manufacturing. As we have heard in this Chamber many times, under the previous Government manufacturing reduced from 22% to 11% of the economy. Our goal should not simply be to reduce our energy usage at the expense of those industries which, by their nature, are energy intensive. A tonne of steel cannot be melted, and chlorine cannot be made from brine, without using a huge amount of energy—it is simply not possible. Our goal should be to improve our energy efficiency for the same level of activity, not to reduce activity. Otherwise, the trend of the UK exporting jobs and importing carbon will continue.
To ensure that the UK makes a real contribution to climate change, we cannot look just at carbon production; we must also measure carbon consumption. I say that mainly to ensure that the effect of imports is recognised, but we must also acknowledge the contribution of export businesses to our economy. There is no better example than the restarted Redcar steelworks, which will contribute almost 1% to the UK’s carbon emissions, but whose output will go almost wholly to Thailand. Whose carbon is that?
The Government’s policy has far wider economic consequences. Energy-intensive industries play a vital economic role. For example, as the hon. Member for Bristol East said, the chemical industry is a vital exporter—in fact, I believe that it is our biggest exporter. That illustrates how important such industries are to our national economy as well as our local economies. Those sectors feed many other industries, such as automotive, aerospace and green technology, which needs materials for wind, wave and solar power.
We should also remember that the service economy does not exist in isolation—it partly depends on manufacturing, all the way from office cleaners to corporate lawyers and merchant bankers. Pricing those industries out of the UK would mean that tax revenues fell because of closures, and a lack of further investment. That will have the knock-on effect of higher unemployment and an increased burden in welfare costs. I therefore hope that the Minister considers the wider economic consequences of the effects of the Government’s policy on energy-intensive industry.
Energy-intensive industries are often capital intensive, which means that companies cannot just pick up their kit and move. The key thing for the UK is whether executives in boardrooms across the world are writing off the UK as a place to invest and reinvest. International businesses have options on where to put their money. I know from experience in the chemical industry that a business can take up to 20 years to die after an exit decision is effectively made by ceasing to reinvest.
Energy-intensive industry does and will continue to play its part in improving energy efficiently. It also produces a range of environmentally beneficial products, such as catalysts, insulation, lightweight plastics, and, as we have heard, energy-saving aerospace products. The all-party group recently heard how developments in tyre technology reduce fuel use in vehicles, how new types of glass reduce heat loss from buildings, and which industries are needed to make photovoltaic cells. To give another example, I am aware of a research project in my constituency between Tata, the steel producer, and the Centre for Process Innovation, to make construction-grade photovoltaic panels. Such developments are vital in moving the UK towards a low-carbon economy. We do not want that expertise to be lost to the UK. Energy-intensive industries are not sunset industries that stand in the way of our low-carbon goals, but crucial allies in delivering the necessary technology to make them a reality.
There is therefore an urgent need for simplicity in carbon taxes and for long-term certainty for the industry. Energy-intensive industries need such clarity before the carbon price support mechanism is introduced. Will the Minister assure me that she supports the Energy and Climate Change Secretary, who said—and I repeat—that
“we need to ensure that energy-intensive industries remain competitive and that we send a clear message that the UK is open for business”?—[Official Report, 17 May 2011; Vol. 528, c. 177.]
Will she ensure that the Government engage in comprehensive consultation, and take steps to ensure that a full package of mitigation measures is agreed and legislated for, ahead of the introduction of carbon price support?
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to follow my north-east neighbour, the hon. Member for Redcar (Ian Swales), and if I may, I shall reiterate some of what he said.
I agree with both amendments, particularly amendment 12 tabled by my right hon. and hon. Friends. If this country was portrayed as a heat map, with particular emphasis on different components of industry, such as nuclear energy, energy-intensive industries and renewable energies, my constituency would burn the brightest. We on Teesside provide a large part of this country’s energy needs. I have a nuclear power station in my constituency, and just outside there is a gas turbine station and a combined heat and power facility. Petroplus, Europe’s biggest independent refiner and wholesaler of petroleum products, has significant oil and gas refining capabilities in my constituency.
Although we generate a lot of the country’s energy requirements, we use a lot of it too. As the hon. Member for Redcar said, we have significant energy-intensive industries—not just refining but petrochemicals, speciality and fine chemicals, plastics, biotechnology and pharmaceuticals. I also have a world-class steel pipe mill in Hartlepool supplying essential components in the supply chain for the oil, gas and chemical industries, although unfortunately the pipe mill has just laid off 90 people. Some 60% of the UK petrochemical industry is based on Teesside, as well as more than one third of our country’s pharmaceutical and chemical industry. The Tees valley has the largest concentration of petrochemical industry anywhere in western Europe, and we have the largest hydrogen network on the continent.
A single venture in Teesside, GrowHow UK, which makes nitrogen fertilizer in my area, uses 1% of the UK’s entire natural gas capacity. About 40,000 people are employed directly in the process industries on Teesside, with a further 250,000 employed indirectly through the supply chain. Energy-intensive industries generate one quarter of my region’s gross domestic product, with about £10 billion of sales. As the hon. Member for Redcar said, the importance of Teesside and these industries to the national economy, let alone the regional economy, cannot be overstated.
Like my hon. Friend the Member for Bristol East (Kerry McCarthy), who sits on the Front Bench, I agree with the principle of a carbon floor price. However, given the importance of energy-intensive industries to my area, I remain very concerned that the proposals in the Bill for carbon floor pricing represent a serious threat to UK competitiveness.
Geraint Davies
Does my hon. Friend agree that this carbon floor pricing will, first, run contrary to the strategy of shifting from reliance on banking to manufacturing and a broader base and, secondly, move the production of things such as steel, which is environmentally controlled and relatively clean, from Britain to somewhere such as south America, where the same amount of steel will be produced much less cleanly? The impact will be to harm the environment and the economy, which is ridiculous.
Mr Wright
I absolutely agree with my hon. Friend on both points. We are exporting not just jobs but carbon emissions to elsewhere in the world where there might not be the same high level of regulation on carbon emissions.
The point that I want to emphasise as much as possible is that my area is doing exactly what the Government want it to do—we are rebalancing the economy and have an emphasis on manufacturing and, in particular, export-based industries that can provide wealth and job creation. It seems that we are doing everything right according to the Government, but we are being penalised and not provided with a level playing field.
My hon. Friend the Member for Bristol East and the hon. Member for Redcar quoted the managing director and chief executive officer of Tata Steel’s European operations. I want to be as balanced as I can. He praised the Government’s enterprise zones and stated:
“It is good news that the Tees Valley is to be among the first of the government’s newly created Enterprise Zones, as Tata Steel will remain a major employer in that region”.
To expand on the quotes already given, however, I should add that he went on to state:
“The extension of the Climate Change Agreements and the return of the discount on the Climate Change Levy to 80% will come as modest but welcome relief to Britain’s hard-pressed energy-intensive industries. However, these benefits are likely to be dwarfed by the introduction of the Carbon Floor Price (CFP), which represents a potentially severe blow to the sustainability of UK steelmaking. European steelmakers already face the prospect of deteriorating international competitiveness because of the proposed unilateral imposition by the European Commission of very significantly higher emission costs under Phase 3 of the EU Emissions Trading System. The CFP proposal will impose additional unilateral emission costs specifically on the UK steel industry by seeking to artificially ensure that these costs cannot fall below government-set targets which no other European country will enforce. This is an exceptionally unhelpful and potentially damaging measure.”
Andrew Percy
I will try to avoid further outbursts over the EU, Madam Deputy Speaker—I can never resist the opportunity to get my views on the EU written into Hansard.
I agree with much that has been said. I am not going to get into an argument with the hon. Member for Hartlepool (Mr Wright) over whose constituency glows redder, but in my constituency a significant amount of power is generated locally—by the Drax power station, which is just outside, by Eggborough power station and by Keadby gas power station. Furthermore, I share the Scunthorpe steel works in my constituency with the hon. Member for Scunthorpe (Nic Dakin)—unsurprisingly —and I will say something about that in a moment.
I echo some of the concerns expressed by colleagues on both sides of the House. In the Humber, the petrochemical industry is a huge employer, and we are hoping for further growth. Indeed, the whole renewables sector in the Humber is incredibly important, and it would be perverse were we to bring Siemens and other tower and turbine producers to the Humber only for them to be unable to use steel from Scunthorpe because it has been rendered uncompetitive.
I am not going to rehearse all the arguments on climate change. I am not a scientist—I do not understand a lot of these things—but I understand that it is probably a good thing to do something about the amount of carbon we are putting into the atmosphere. Of course, however, jobs must always come first. We need no greater reminder of that than what is happening in Scunthorpe at the moment with Tata Steel—1,200 jobs are going already because of losses going back a few years. In fairness to Tata, it has not blamed this policy, but it has said that it has considerable concerns about its impact on future growth at Scunthorpe. I would like to hear from the Minister—she and I have had conversations about this on several occasions, as she will remember—what the Government plan to do to support the high-energy users. The Humber economy is very much based around high-energy use, so this policy could impact on us disproportionately. I know that the Government are considering that point, but the sooner we can get some certainty the better.
As I mentioned, much has already been said, and in the interests of brevity I do not propose to go over it all. [Interruption] But I have not quite finished. Something needs to be said about general support for manufacturing. What has happened to manufacturing in this country not only over the past decade but over the past couple of decades is a scandal. I welcome the fact—I believe in being as positive as possible—that the Government are committed to a resurgence in manufacturing, which, as I said, is very important in the region represented by me and neighbouring colleagues. That is why we welcome the enterprise zones, which the hon. Member for Hartlepool mentioned, and we are hopeful of getting another one approved for the Humber shortly. I welcome the emphasis on skills and sending young people the clear message that working in manufacturing is just as valuable as trotting off to university to get a degree and become a doctor.
We are hearing all the right things from the Government, and I support that entirely. However, I have concerns about where we are heading with this policy, which is why I think that both the amendments have some merit. Before deciding how to vote, I will listen to the response from the Minister, who I know is very much alive to the issue. Clearly the Government will not want to do anything that puts manufacturing jobs at risk, so I look forward to her response. On that note, I will end this brief, four-minute speech, and look forward to hearing from other hon. Members.
Nic Dakin (Scunthorpe) (Lab)
I am pleased to follow my neighbour, the hon. Member for Brigg and Goole (Andrew Percy), and I support many of his comments.
For the Government to unite the representatives of manufacturing industries with Greenpeace, Friends of the Earth and the World Wildlife Fund in opposition to their proposals is a masterstroke. I do not accept the ingenious argument that the Economic Secretary to the Treasury gave in Committee, which was that such a range of opposition to the tax was proof positive that the right balance had been achieved. That is patently not the case: as we have already heard, the arguments of the high-energy manufacturers and the environmentalists are complementary, not contradictory. The key challenge that we face as a nation is how to balance greening the economy with growing the economy. The Government’s proposals fail to meet that challenge. The UK is competing internationally for investment. The Humber is competing with Bremerhaven and Esbjerg for green investment. As we have already heard, those making investment decisions too often sit outside these shores. In the real world, the carbon floor price represents a serious threat to our competitiveness. We are in danger of seeing multinational companies choose to invest not in the UK but elsewhere.
Martin Vickers (Cleethorpes) (Con)
The hon. Gentleman is making a persuasive case. He and I know the seriousness of the situation from our regular visits to Tata Steel in Scunthorpe, and he will be familiar with the Able UK site in my constituency. One of the arguments for the company coming to our area was the proximity of the steel works, which, ironically, Able UK wants to use for production in the renewables sector. I am sure the hon. Gentleman agrees that it would be tragic if that steel were produced elsewhere, thereby creating greater emissions.
Nic Dakin
The hon. Gentleman makes a cogent and sensible point. [Interruption.] Indeed, I note that the Economic Secretary is writing it down, so I hope that she will respond to it later.
We are in danger of exporting UK jobs to places such Ukraine and Russia, thereby boosting global warming rather than reducing it. As we have heard, my community in Scunthorpe faces serious challenges after Tata announced that 1,200 jobs were at risk. We have also heard the chief executive of Tata Steel, Karl-Ulrich Köhler, quoting the carbon floor price as part of the context of the decision. However, other, local companies are equally concerned. Richard Morley of Caparo Merchant Bar in Scunthorpe said to me:
“As well as supporting growth and jobs, companies like mine are well-placed to provide many of the technical and material solutions necessary to address climate change”—
the point that the hon. Member for Cleethorpes (Martin Vickers) made a moment ago—
“but we can only do so if we are able to remain competitive. The unilateral introduction of the”
carbon floor price
“at too high a level could threaten this.”
Richard Stansfield of Singleton-Birch has examined in more detail what the carbon floor price means:
“The CFP does not actually set a…price of £16 in 2013 as has been implied. The figure of £16 has been arrived at by using a 2009…carbon price of £11.06 and adding a £4.94 tax, called the carbon price support, to reach the £16. The current forward price of carbon in 2013 is already around £16, so adding this £4.94 will make the price of carbon £20.94. This will be £4.94 more than our European competition will be paying and £20.94 more than the rest of the world.”
Only last month we heard the new director general of the CBI, John Cridland, expressing concerns about the impact of the carbon floor price on high-energy manufacturing.
In a written answer to a parliamentary question, the Economic Secretary confirmed that the carbon price support provisions would put up consumer energy bills and deliver windfall profits of £50 million a year from 2013 to existing nuclear reactor operators. Greenpeace has calculated that the figure exceeds £1.3 billion up to 2020. The Government’s proposal is therefore a bad deal for bill payers. Almost £1 billion will be given to the nuclear industry for doing absolutely nothing new. The proposal will add nothing to energy output or Britain’s energy security, and there will be no requirement for the companies to invest the windfall in national priorities such as energy efficiency programmes or meeting our renewable energy targets.
I am afraid, therefore, that in its present form the carbon floor price is a badly designed tax. It will not drive the significant investment needed to develop clean, safe alternatives to fossil fuels or the technological improvements needed in energy-intensive industries. As research by Waters Wye Associates concluded:
“The outcome of implementing policies as they are currently conceived will…be poor both economically and environmentally. Global greenhouse gas emissions may well increase as well as hitting both investment and jobs.”
The current approach risks penalising British industry and endangering British jobs. It will hurt the consumer and fail to deliver our green ambitions. I urge the Government to think again.
Angela Smith (Penistone and Stocksbridge) (Lab)
I want to speak in support of amendment 12 for three reasons. First, the Government’s statements on subsidies for nuclear power have been absolutely clear. The amendment calls for a report, so that the Government can at least be transparent about how they will use the subsidies raised through the carbon floor price. Secondly, the impact on fuel poverty has to be measured and so, again, has to be transparent. Finally, like the hon. Member for Redcar (Ian Swales) and my hon. Friends the Members for Hartlepool (Mr Wright) and for Scunthorpe (Nic Dakin), I particularly support proposed new subsections (4)(c) and (f) of clause 78, which relate to the impact on energy-intensive industries.
The report should detail the impact on energy-intensive industries and make clear how the revenues will be used. The Government should commit this evening to using some of the revenues raised from the carbon floor price to mitigate its impact on the competitiveness of our industries. If we look at the numbers employed in energy-intensive industries across the UK, we see that at least 225,000 people are directly dependent on such industries, with around three times as many indirectly dependent on them through the supply chain.
The impact of the proposed measures would absolutely be felt in my constituency of Penistone and Stocksbridge. Tata Steel in Stocksbridge is a major employer, currently providing more than 800 jobs, and has recovered from its hiatus in 2008, when it was on the brink of going bankrupt and out of business. Tata Steel is now back in profit, employing as many people as it did in 2008, if not more. That is a success story for UK manufacturing and a vote of confidence by Tata Steel in the capacity of UK manufacturing and its ability to compete globally. In my constituency we also have Fox Wire, which makes world-class cabling for drilling and welling operations globally, and Naylor Industries and Hepworth, which manufacture clay pipes for all sorts of applications across the world. We also have Pilkington glass and Georgia-Pacific, which produces paper. That makes well over 1,500 jobs that are directly dependent on energy-intensive industries.
As my hon. Friend the Member for Scunthorpe set out in detail earlier, the impact of the carbon floor price is clear: the cost of carbon will increase from £16 a tonne, rising from 2013 to £30 a tonne by 2020. As he pointed out, that will create a significant risk that the industries that we are talking about this evening will be placed in an uncompetitive position globally, not just in relation to Europe, but in relation to the US, China, Ukraine and Russia. We share the view of the head of Tata Steel’s European operations that this will threaten the future of those industries in the UK.
What is it about those industries that makes them so special, and why should a special case be made for them? The argument is crystal clear: it would be very short-sighted to damage those industries in relation to the rest of UK manufacturing because their products are increasingly being geared towards improving fuel efficiency, and they are reducing their carbon emissions in their manufacturing processes.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I should like to speak to amendment 12. It is a great pleasure to talk about places that I know well, such as the Teesside Cast Products plant in Redcar, Stocksbridge, Hartlepool and Scunthorpe, as well as Skinningrove in my own constituency.
The chemical industry is no longer the dirty industry depicted in Ron Angel’s “Chemical Worker’s Song”. On Teesside, between 35,000 and 45,000 workers are directly or indirectly employed in the industry, and over the past 18 years, it has reduced its emissions by some 75%. That has been matched by the steel sector’s reduction in energy per tonne of steel produced from 31.7 GJ in 1973 to 19.4 GJ in 2010.
Ian Swales
Does the hon. Gentleman agree that those industries need no further encouragement to reduce their energy use, because, by definition, they already spend a large proportion of their money on energy? They all have a good record in reducing their energy use.
Tom Blenkinsop
I thank the hon. Gentleman for his comment, and I entirely agree with him. The industries are in it to make money, and it is obvious to anyone who knows them that they need to reduce the amount of energy that they expend to make their products.
British manufacturing output as a whole has been growing for decades, according to figures from the Office for National Statistics. Why is that? Output in the chemicals industry has increased, unlike in other sectors. During the 2008-09 downturn, the industry suffered the second smallest decline in production. The development of the chemical industry over the last decade under Labour has been largely unreported. Only now is it being seen as a sexy subject. However, in places such as Middlesbrough, Redcar and Billingham, we have always referred to ourselves as proud smoggies, in the knowledge that our manufacturing endeavours have far more worth than the machinations of the City.
According to DECC statistics on greenhouse gas reduction, the disappearance of the chemicals sector would directly save an average 10.79 million metric tonnes of CO2 equivalent, out of the total UK generation of 627.85 million metric tonnes of CO2 equivalent. Across industry, the chemicals sector is responsible for only 3.9% of energy-related emissions. The growth reviews in November and December last year gave good signals to manufacturing. However, the rhetoric contained in those reviews assumed that a low-carbon economy could emerge only by pricing energy-intensive users out of the market. The flaw in that logic is the assumption that the full substitution of fossil fuels will miraculously come about if intensive energy users are strangled. A further flaw is that the technology that will develop green industries actually flows from the existing energy-intensive industries, their research and development, and their skilled work forces, but they will obviously no longer exist in the UK if we force them abroad.
The December growth review stated that high energy prices were a barrier to advanced manufacturing growth, yet the Secretary of State for Environment and Climate Change said at the same time that recovery does not come from old industries “bouncing back”, and that the low-carbon industries would be an important part of our growth story over the next 10 years. That was in his speech to the Institute for Public Policy Research on 1 December last year.
For every tonne of CO2 emitted in producing insulation, 233 tonnes of CO2 are saved, and, as my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) said, for every tonne of CO2 emitted in producing a wind turbine blade, 123 tonnes of CO2 are saved. For every tonne of CO2 emitted in the production of energy-saving tyres, 51 tonnes of CO2 are saved—and so on, and so on. In the case of insulation, one year’s CO2 emissions created producing insulation saves 2.4 billion tonnes of CO2.
At the heart of the issue is the lack of understanding in the Treasury and DECC that these chemical companies cluster, as they always have done, and as they previously did within the large-scale set-ups of ICI. As NEPIC—the North East of England Process Industry Cluster—has proven in my region, locally produced products often feed on-site sister businesses or other company-owned plants. That integration produces better economies of scale, efficiency, profitability and technological development. It is regional clustering, as exemplified by NEPIC in north-east England, which was set up by One North East, that exemplifies industrially-led industrial activism. The Government’s carbon floor pricing policy, on the other hand, fragments industrial integrative clustering.
Unfortunately, the Government assume that secondary industries will not leave the UK, even if the primary chemical industries do. Indeed, the Secretary of State for Energy and Climate Change has said that
“quite a few of the high energy users have forms of natural protection like high transport costs so the impact is rather less than you might expect.”
Unfortunately, empirical evidence wholly contradicts the Government’s stance. As Jeremy Nicholson, director of the energy intensive users group has said:
“The idea that downstream industries are likely to remain here indefinitely if primary production goes might have a theoretical case but I’d say just look at the empirical evidence: downstream manufacturing thrives on co-location with primary industry and why would you expect that to cease in the future?”
Real life examples clearly show just how fragile downstream companies are. Let us consider Wilton, the former ICI site in the constituency of the hon. Member for Redcar (Ian Swales). The plants were balanced with the ICI ethylene cracker at the top of the production pyramid; as foreign ethylene became cheaper and producers produced offshore, the requirement for the cracker was reduced, leading to other plants downstream such as the Dow plant also being affected.
When Dow closed, 55 direct jobs were lost. That is not as big a media story as the events that unfolded at the mothballing of the Redcar blast furnace at the then Teesside Cast Products Corus plant, but the repercussions of Dow were just as profound. An estimated 2,500 jobs were lost downstream as a result of the closure of Dow’s ethylene oxide production plant—the only ethylene oxide plant in the UK. NEPIC has bounced back, bringing in other investments to Teesside, but it is acutely aware of the loss of primary chemical production and of lost opportunities for technological developments that could be made on Teesside, securing new green markets in turn.
More than this, however, the Secretary of State’s comments condone the loss of primary chemical production as a result of the carbon floor pricing while actually actively pursuing it. The question I must ask is: if industry flees within two years, as feared, how on earth will this carbon floor pricing levy taxation apply when the energy-intensive industry is no longer here? An industry cannot be taxed if it will not hang around to be taxed, which leaves Britain with neither the tax nor the industry.
As many primary raw chemicals are very expensive to transport and in some cases are banned from transportation, the Secretary of State’s relaxed approach appears uninformed. Many secondary production companies are small and medium-sized enterprises, often with fewer than 10 employees, and economies of scale for the transportation of such vast quantities of chemicals are just not viable, making the whole operation futile and highly costly for such small operations.
Amendment 12 would ensure that the Government look at the immediate impact of the provisions in the schedule on energy-using manufacturing industries and on employment in those industries; and at how the moneys raised by those measures will be used to mitigate the immediate impact of the schedule on consumers and on manufacturing industries and to encourage green investment. At the very least the Government must monitor and review their own policy and its consequences, which I fear will be devastating for energy-intensive industry and for my area of Teesside. A review will allow the Government to take stock.
Ian Lavery (Wansbeck) (Lab)
Is my hon. Friend aware of the double whammy of the European trading scheme and the carbon floor price, which will have a devastating effect not just on Scunthorpe and Teesside but on Lynemouth in my constituency? Rio Tinto Alcan is the company there and it makes a current profit of £50 million a year, which will be totally wiped out as a consequence of this double whammy, putting 600 quality jobs at risk. Does my hon. Friend agree that special measures must be put in place to overcome these unjust taxes?
Tom Blenkinsop
I thank my hon. Friend for his intervention. Yes, I certainly do. To finish, let me say that a review will allow the Government to take stock of the policy and to make quick changes to it, as I fear they might have to before it is too late.
Nia Griffith (Llanelli) (Lab)
There have been many excellent contributions, so I shall keep my comments short.
As secretary of the all-party steel group, I want to speak to amendment 12, in particular to subsection 4(c) and (f). We are asking for the Finance Bill to be amended because of the very significant negative impact that the carbon floor price, at the level set, is likely to have on heavy industry, such as the Trostre steelworks in my constituency and similar steelworks and energy-intensive industries throughout the UK.
Caroline Lucas (Brighton, Pavilion) (Green)
I am pleased to speak in support of amendment 12, because the House needs much more detail from the Government on the impact of a carbon floor price, including possible unintended consequences.
First, however, let me say a few words about amendment 21. Although I have a great deal of sympathy with some of the comments made about the amendment, we need to be reasonable when looking at the impacts of the sort of floor price we are talking about on energy-intensive industries. I am quite sure that some parts within those industries will face real problems, and it is right to look at measures such as border tax adjustment so that they are not put at a competitive disadvantage.
Let us not forget, however, that the EU has already exempted large numbers of energy-intensive industries from paying for the EU permits under the emissions trading scheme. Let us not forget that not all energy-intensive industries are subject to carbon leakage. Some undoubtedly are, and we certainly need elements of mitigation for them, but some can quite easily raise their prices and pass them on. Let us not forget that what we are trying to do is to put a price on carbon. That is the purpose of the whole exercise. Yes, we need to look at mitigating measures, where necessary, but let us not throw the baby out with the bathwater and lose the purpose of the exercise, which is to shift to a greener economy. Let us not forget that research by the university of Cambridge and others has found no empirical evidence to show that more ambitious climate policies will result in mass relocation of industries out of the EU.
Ian Swales
I respect the hon. Lady’s expertise on these issues. Can she give examples of energy-intensive industries that she feels are at no risk of carbon leakage?
Caroline Lucas
What I can say is that I have been in the European Parliament, that representatives of industries have told us time and again that the latest EU environmental law will lead to mass relocation from Europe, and that plenty of studies have shown that that has not happened. I accept that many energy-intensive companies will face problems that will need to be mitigated, but, according to those studies, the risk of relocation is far lower than has been suggested.
Caroline Lucas
I will not give way again, because I want to talk about amendment 12, which I have tabled.
I agree that an effective carbon price mechanism has the potential to reduce greenhouse gas emissions from electricity power, mainly by increasing the carbon liability attached to energy use and thereby making energy efficiency measures and renewables more attractive. It also embodies the “polluter pays” principle, which, of course, I also support. I fear, however, that the proposed carbon floor price will not ensure that investment in energy generation is directed towards low-carbon technologies.
I hold that view for a number of reasons, including the fact that market-based solutions to direct investment in low-carbon generation have proved pretty weak in the past. For example, the EU emissions trading regime has so far failed to maintain the cost of pollution allowances at high enough levels to make any significant difference in reducing emissions. It is also true that, because the floor price will be subject to annual votes in Finance Bill debates such as this, it will fail to provide the price stability that is needed to boost certainty and security for investors in low-carbon energy sources. Furthermore, it can be difficult to judge the level at which a carbon floor price should be set to give appropriate incentives to the various technologies that the Government wish to support.
It is clear from those inherent weaknesses that a carbon floor price will maximise its potential to support a low-carbon economy only if any additional revenues that it raises are ring-fenced for use in support of that transition. That must include, in particular, energy efficiency measures for the fuel-poor. Many Members have raised that subject this evening. The Institute for Public Policy Research estimates that an additional 30,000 to 60,000 households could be pushed into fuel poverty in 2013 as a result of the carbon floor price because it will push up the cost of electricity.
It is therefore crucial for flanking measures to be introduced alongside a carbon floor price, including measures that will properly support and protect those in fuel poverty. They should include proper capitalisation of the green investment bank, support for the implementation of the green deal—for instance, ensuring that the “eco” element is increased considerably, given that it is the part directed at the fuel-poor—and, indeed, assisting in the development of innovative renewable energy technologies. Failure to ring-fence the revenue of the carbon floor price would mean missing a real opportunity to focus efforts on the technologies that will most quickly cut emissions from power generation.
Many other Members have reinforced the idea that the carbon floor price must not deliver windfall profits to the well-established nuclear industry, which has already been heavily publicly supported for many years. The Government’s own figures show that existing nuclear generators stand to gain £50 million a year from it until 2030. It is vital for the Government to clarify whether such a windfall constitutes the kind of subsidy for nuclear power that they have repeatedly said they will not provide. It looks very much like a subsidy to me, and it looks very much like a subsidy to the Chair of the Energy and Climate Change Committee, the hon. Member for South Suffolk (Mr Yeo), who has said that the Government should be upfront about the fact that it is a subsidy. He has also said that
“it would be deeply irresponsible to skew the whole process of electricity market reform simply to save face.”
I hope that Ministers will benefit from his expertise, and will recognise that rigging the electricity markets simply to try to provide more support for nuclear generation is entirely wrong.
David Mowat
The hon. Lady is making a powerful case against the nuclear industry, but a few moments ago she made a case against high electricity prices and their impact on the poorest in our society. Electricity costs in France are between a third and a quarter less than those in this country owing to decades of cheap nuclear power, which has a beneficial impact on both heavy industry and consumers.
Caroline Lucas
The hon. Gentleman will not be surprised to learn that I do not agree with the tenor of his intervention. The truth is that the price people pay for nuclear power does not represent its true cost in terms of liabilities, decommissioning and clearing up after an accident. People in Japan are not paying the true cost of clearing up after Fukushima. That £250 billion was not included in people’s energy costs. Nuclear subsidies are incredibly untransparent, but, essentially, people are paying a great deal more for nuclear power. I agree with the hon. Gentleman that we need electricity prices that people can afford, but the answer is to invest in renewable energy and energy efficiency, which will become far more competitive and far cheaper than nuclear power very soon if we give them the support they require.
If the Government recognise that this is a subsidy, they should claw it back through a windfall tax. I tabled a new clause that would have allowed them to do exactly that, but, sadly, it was not selected for debate.
David Mowat
It may be true that renewables will become more cost-effective over time, but there is an long way to go: a factor of about four in the case of solar power.
Caroline Lucas
I entirely disagree. I wish that the hon. Gentleman had been at a meeting with representatives of the solar industry that took place a few days ago in Portcullis House. We were shown presentations by Ernst and Young and others which demonstrated that if a small amount is invested now, solar energy will be able to compete with all fossil fuels and with nuclear power in four or five years.
Although an improved carbon floor price mechanism could help to deliver a less carbon-intensive energy sector, it is important for the Government not to see it as a “silver bullet” solution. Other stronger levers, such as a well managed—I underline “well managed”—feed-in tariff regime and a strong emissions performance standard must also be part of the overall picture. Sadly, however, the Government are falling short in those respects as well. I should like them to devote at least as much effort to stepping up their work at EU level to ensure that the next phase of the EU emissions trading scheme is much more effective than the current phase. The recent collapse in the cost of EU carbon allowances under the scheme is clear evidence of their over-allocation, and the shortcomings of the scheme are becoming increasingly obvious.
I should also like the Government to work with European partners to ensure that, as a minimum, allowances are in line with the policy of cutting EU emissions by between 80% and 95% by 2050, as agreed by member states; that allowances cannot be banked from the second phase of the EU ETS into the third phase; and that a reserve price is set on the auction of permits into the market. Any permits that the market does not want to buy at the reserve price or more should be retired from the scheme.
I urge the Government to undertake to produce the report for which the amendment calls, and to take the opportunity to show how the benefits of a carbon floor price can be maximised and any unintended consequences eliminated. If the carbon floor price is to be effective, we need a tax on the windfall profits of the nuclear industry, along with flanking measures to ensure that those in fuel poverty do not suffer as a result of this policy.
Dr Alan Whitehead (Southampton, Test) (Lab)
The Economic Secretary to the Treasury has already suggested that those in favour of a carbon floor price should explain how it could be introduced in a different way from that proposed by the Government. I imagine that she will return to that subject at the end of the debate, but I suggest that she need only look at her own consultation document, which led to the amount that has been established and the mechanism by which the floor price works.
The consultation document posited a £1 difference between a Europe emissions trading scheme and a carbon floor price, certainly in respect of the starting period. It also warned about how far away from that £1 difference a floor price might go and what might happen to energy prices in the rest of Europe. As people who contributed to that consultation document suggested, because our energy supply is highly interconnected with that of Europe, a substantial difference could lead to investment going to where the sale price is cheaper, with, perhaps, new gas-fired power stations being developed on the other end of an interconnector rather than lower-carbon power stations being developed at our end of an interconnector.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
I wish to speak to amendment 12, and I shall do so both as chair of the all-party group on energy-intensive industries, which the hon. Member for Redcar (Ian Swales) so kindly mentioned, and as the Member of Parliament for Stoke-on-Trent Central—the potteries. I wish to draw the Minister’s attention to the impact of the carbon price on the ceramics industry, because that poses a real danger to the future of the industry which really began the industrial revolution, at Etruria, under the great influence of Josiah Wedgwood.
You will know, Mr Deputy Speaker, that the potteries came to north Staffordshire not because of the north Staffordshire clay, although that helped, but because of the coal—because of the energy—as Edwin Clayhanger told young George in the great “Clayhanger” novel by Arnold Bennett. The firing of the kilns and the making of the pottery demand intensive energy use, as temperatures of up to 1,200° C are involved, although we are hoping to bring that down with new technology. The cumulative impact of some of the carbon price legislation is therefore dangerously undermining the ability of these industries to survive.
The point about the effect of this legislation is that these industries will provide a classic example of carbon leakage. Over the past 20 years we have seen jobs disappear to Indonesia, Vietnam and China, and we face the threat of jobs leaving for Poland and Bulgaria. We do not cut global carbon emissions through this process. Instead, we export jobs and reimport the carbon. Britain loses economic competitiveness and the world gains nothing in terms of cutting carbon emissions. Ministers need to understand that many of the companies involved are international conglomerates, as many of my hon. Friends have pointed out. Such companies have the ability to move their businesses offshore, and they will do so if we become more and more uncompetitive.
Many in the ceramics industry are in favour of energy-saving measures, and I am not averse to those. We have seen, in different industries across the sector, the ability of energy-saving measures to improve performance. Let us consider what happened to the German car industry in the 1980s. When the Greens began to turn their attention towards the inefficiencies of that industry and its overuse of energy, that industry began to be transformed. Today the German car industry is among the most successful and competitive in the world.
The problem that we face in Stoke-on-Trent is that many of our industries and many of our pottery firms have already cut their energy usage by 80% or 90%, yet they still face new hikes and new measures. It will be very difficult for them to make further cuts. We need a more sophisticated way of measuring carbon, which is what our amendment suggests. We need a more sophisticated way of understanding carbon usage, and we need to understand its use over a lifetime.
We have already heard references to the chemical industry. In my constituency I am blessed with the Michelin tyre production company, and when the energy used in production is set against the lifetime use of those tyres, energy is actually saved. My hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) mentioned using clay pipes rather than plastic pipes, and again, over the lifetime of the products, energy is saved. In Newcastle-under-Lyme, next door to my constituency, one can also see some very good clay pipe production.
The point is that high-quality products made with high energy intensity often, in the long run, save carbon. The Government need to get their thinking straight. When considering the competitiveness of such industries, Ministers often point to cuts in corporation tax as saving businesses. If no profits can be made—if they are wiped out by the carbon costs—the cuts to corporation tax will make no difference. There is a failure to appreciate the cumulative impact and the international market.
I hope that we have begun to see the beginnings of a shift in thinking. We look forward to the outcome of the DECC-BIS-Treasury working party, which will reach its conclusions towards the end of the year. Ministers should regard our amendment as an attempt to help them and to encourage a degree of clarity in the dealings between their civil servants over the coming months. What is frustrating about this process is the fact that the ceramics sector in Stoke-on-Trent is enjoying a resurgence. Jobs are coming back from China because of rising energy and labour costs in both porcelain and bone china. We are seeing a resurgence in the kingdom of Spode, Wedgwood, Churchill and Dudson, and of new companies, such as Emma Bridgewater. It would be typical of British legalistic short-sightedness and the myopia of the Treasury world view if, faced with a rising and successful industry, we were to undermine it. If we are interested in rebalancing the British economy we should support the ceramics, chemical, steel, glass, aluminium and other energy-intensive sectors on their journey towards a green economy. The amendment seeks to do just that.
Justine Greening
Clause 78 and schedule 20 amend the climate change levy to introduce a carbon price floor for electricity generation. We have had a helpful and interesting debate on the two amendments and I shall do my best in the time available to try to address as many of the points that were raised as possible. Before I do that, it is probably worth returning to the question of why this measure is necessary in the first place. Indeed, the hon. Member for Brighton, Pavilion (Caroline Lucas) spent some time setting that out in her speech.
We all recognise that the UK needs significant new investment in low-carbon electricity generation over the coming decades. As the debate has shown, we do not want that to be the only thing that we encourage over the coming years. We also want to encourage a broader transition to a low-carbon economy. As the hon. Member for Penistone and Stocksbridge (Angela Smith) pointed out, many industries that have been mentioned today in the context of the challenges they face have the chance to benefit from their role in the low-carbon economy of the future.
We need significant new investment in low-carbon electricity generation. As well as preparing for an increase in demand for electricity over the following decades, the UK must meet its legally binding CO2 emissions reduction targets, which require an 80% reduction from 1990 levels by 2050. That is why in the Budget, following consultation, we announced that the UK would introduce a minimum carbon price. As the hon. Member for Southampton, Test (Dr Whitehead) pointed out, we included a number of different scenarios in that consultation so that we could understand and get feedback from stakeholders on the impact of the different scenarios. In fact the carbon price floor will provide a strong incentive for billions of pounds of new low-carbon investment.
Dr Whitehead
Does the hon. Lady agree that none of the scenarios in the consultation document included the idea that there should be a £5 premium on the emissions trading scheme as a result of the introduction of a carbon floor price?
Justine Greening
The scenarios we looked at as part of the consultation asked stakeholders what carbon price they felt we should start at, and where they felt it should finish—the trajectory from the first to the last point. As suggested by respondents, we used the market price of carbon, which is low, although we used DECC’s central carbon price as an illustration in the consultation. The hon. Gentleman referred both in his intervention and in his contribution to the balance we have to strike in setting a carbon price floor that will actually make a difference while putting in place one that does not in the meantime make the energy-intensive industries in our country uncompetitive, as we heard in powerful contributions from my hon. Friends the Members for Redcar (Ian Swales) and for Brigg and Goole (Andrew Percy) and, in an intervention, from the hon. Member for Scunthorpe (Nic Dakin). I want to provide the House with some reassurance about the steps we are taking to ensure that we manage to strike that balance. Despite the various contributions we have heard today, when we take the time to read Hansard tomorrow we shall probably see that there was more agreement in the approaches than may have come across from the tone of the debate. The challenge for us on both sides of the House is to strike the right balance, and I want to talk a little more about how we intend to try to do that.
We know that ultimately we have to make the transition to low-carbon electricity generation cost-effectively, and that will happen only if investors have greater long-term certainty about the cost of carbon emissions. The shadow Minister, the hon. Member for Bristol East (Kerry McCarthy) talked about uncertainty, but the measure is about introducing more certainty so that the extra investment we need can take place. The impact assessment that was part of the consultation showed that although the carbon price floor will increase electricity bills in the short to medium term, bills will be lower in the longer term than would have otherwise been the case, as more low-carbon capacity leads to cheaper electricity. I shall talk about how we want to see fuel poverty tackled over coming years, because that is obviously important.
Andrew Percy
I particularly welcome my hon. Friend’s comments about supporting industry as we move forward. I had to pop out of the Chamber after my speech to meet people from Drax. One of the things they told me was that at the moment the system is so structured that it discourages them from buying UK coal in favour of foreign coal. Will she take that into account when looking at the extra support that can be provided? If not, could she meet us to discuss this important issue in a bit more detail?
Justine Greening
My hon. Friend makes a helpful contribution. I am always happy to meet hon. Members. In fact, only last week I wrote back to the hon. Member for Stoke-on-Trent Central (Tristram Hunt) to say that I would be happy to meet representatives of his local industry. One of the reasons we are working across Government—not just the Treasury, but BIS and DECC—is to make sure that we consider all the different aspects of the support we want for the energy-intensive industries, and get it right.
I am conscious of the time, and the fact that Members want to debate the remaining amendments, so I now want to make progress. In Committee we discussed at length the issues raised in the amendments. Not all Members present in the Chamber today will have heard those debates, so I shall go through my response to both amendments, taking amendment 21 first, as it raises some important points. It would require the Government to lay, and Parliament to approve, an agreed package of mitigation measures for energy-intensive industries.
A number of Members from across the House made powerful cases on behalf of their local industry about why the issues are so important. The Government recognise the issues and want to take steps to address them. There is, as I said, clearly a balance to be struck: we need to meet our carbon reduction requirements, but to do so in a way that still enables the UK to continue to have competitive energy-intensive industries. That is why the Budget helped to offset the impacts of the price floor on energy-intensive industry and to show, as we have heard, that the UK is open for business, as it must be.
In March we announced an extension of climate change agreements to 2023, with an increase in the discount on electricity from 65% to 80% for participants in the scheme from April 2013. We plan to consult on how to simplify climate change agreements for the companies participating in them. Overall we intend to reduce tax levels to among the lowest in the EU.
We announced that we would not introduce the previous Government’s planned complex and costly carbon capture and storage levy, which would have increased electricity bills by 2% from 2015. In addition, we set out plans that will see a cap on the cost of policies funded through energy bills. To support industry more broadly, we introduced policies that will reduce corporation tax by a further 1%, which is part of an overall year-on-year set of reductions in corporation tax.
As I said, BIS, DECC and the Treasury are already in discussion with energy-intensive industries to identify those most affected by the carbon price floor and to pull together the best set of options to address some of those concerns. The package that we plan to announce by the end of the year will build on the measures, some of which I have set out, that we announced in the Budget. The Bill could also be a means of implementing part of the package. I should be clear that the options that we are considering do not relate only to tax. They look across the board at what we can do to support energy-intensive industries.
On Opposition amendment 12, the carbon price floor is designed to give UK electricity generators certainty about the carbon price. That will encourage more investment in low carbon. Although some Members expressed concerns about how the policy will work, it has been supported by a number of members of the investment community. A range of policy assessments have been carried out not just as part of the consultation document, but as part of the extensive impact assessment that was done alongside that, including the tax impact and information note that was published at the time of the Budget.
Caroline Lucas
Does the Minister agree that the carbon price floor effectively constitutes a subsidy for nuclear power? Does she therefore agree that unless it is clawed back through a windfall tax, it would contravene the terms of the coalition agreement on no subsidies for new nuclear?
Justine Greening
I am pleased that the hon. Lady has raised that point, because it gives me the opportunity to be crystal clear again—alongside the statements that I made in Committee, and those that she knows I have made to the Select Committee of which she is a member—that this policy is not a subsidy for the nuclear industry. As was pointed out in the previous debate by my hon. Friend the Member for Bristol West (Stephen Williams), who I am pleased to see in his place following his contribution to the Committee stage, this is a tax on carbon, not on nuclear fuel rods, as happened in Germany.
The reason nuclear is outside the scope of the tax is that uranium and wind, for example, are not in the carbon price floor because, of course, they do not contain carbon. I understand the arguments that have been made, but they are a little like saying that because we have a tax on alcohol, that is a subsidy for the soft drinks industry. There is also a contradiction between what Opposition Members have been saying. They complain that this is a tax-raising measure, yet they also say that it is a subsidy. Those arguments are contradictory.
Amendments 21 and 12 are unnecessary, and I hope that they will both be withdrawn.
Question put, That the amendment be made.
The Exchequer Secretary to the Treasury (Mr David Gauke)
I beg to move amendment 1, page 48, line 16, leave out subsection (4).
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss Government amendments 2 to 8.
Mr Gauke
Clause 87 and schedule 25 give effect to the new mutual assistance recovery directive, which comes into effect on 1 January 2012. The directive will improve the current mutual assistance provisions, which permit member states to recover and enforce tax debts and to exchange information across the European Union. This will improve tax compliance and make the tax system fairer. The directive extends mutual assistance to all national and local taxes. Local taxes are devolved, so consent is required from the Scottish Parliament and the Northern Ireland Assembly to legislate on their behalf. These consents could not be secured before those Administrations dissolved ahead of the May elections, so a number of exclusions were included in the Bill published on 31 March 2011. Agreement has now been received from Scotland and Northern Ireland that Westminster can legislate for these matters.
The amendments remove the exclusions included in the Bill in relation to Scotland and Northern Ireland. They also make an addition to the explanation of “relevant UK authority” in order to include a claim from another member state to recover an agricultural levy in Scotland.
Gavin Williamson (South Staffordshire) (Con)
I understand that my hon. Friend recently received the very prestigious award of tax personality of the year. I am somewhat concerned that this glorious award may be influencing his conduct as a Minister in carrying on his business in relation to tax policy. Is that a fact?
Mr Gauke
I am grateful to my hon. Friend for that intervention. I am trying hard not to let the award go to my head. I will endeavour to do my best, but it is of course a great honour. I take it as praise for what the Government are doing more generally on tax policy. Before I break into tears—I find it quite emotional to talk about the award—I shall return to the issue of mutual assistance.
HMRC’s data-gathering powers are modernised by clause 86 and schedules 23 and 24. It is important that the powers satisfy the international standards determined by the OECD and the global forum on transparency and exchange of information for tax purposes. The provisions in the Bill, which have been discussed in Committee, will ensure that HMRC can use its full range of existing powers to meet requests from overseas.
The global forum is currently conducting a peer review of the UK and a specific issue has been identified that we have to address. Schedule 36 to the Finance Act 2008 does not allow HMRC to require information from a third party when it does not know the full identity of the taxpayer but has some information from which their full identity can be ascertained, such as a branch code and a bank account number or a credit card number. At present, unless a serious loss of tax is suspected, HMRC is unable to issue a notice to a third party that can be reasonably expected to know the name and address of the person concerned. In the examples I have given, that would be a bank or credit card issuer. To meet our international commitments, we need to amend schedule 36 to allow a formal notice to be issued in those circumstances. However, we have made a clear commitment to consult on tax changes, so I have asked HMRC to consult over the summer on how best to achieve the changes, with a view to publishing draft provisions in the autumn and legislating next year. I envisage the changes taking effect from Royal Assent in 2012.
In conclusion, the amendments to clause 87 and schedule 25 will help to ensure that the new mutual assistance recovery directive is fully transposed into UK law by 31 December 2011. We fully support the aims of the directive and this implementing legislation. I therefore commend the amendments to the House.
Chris Leslie
The amendments look reasonably uncontentious. It is sensible to find ways to support mutual assistance between nation states in the recovery of tax debts and duties. I am glad that the consents have come from the devolved Administrations. Those justify the amendments, so we do not wish to oppose them.
May I, too, take this opportunity to congratulate the hon. Gentleman on the prestigious award of tax personality of the year. I am sure that there is more to his personality than tax. Perhaps in his speech, as well as thanking his parents and his agent, he could also thank his accountant.
Amendment 1 agreed to.
Schedule 7
Investment companies
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss Government amendments 23 to 29.
Mr Gauke
The amendments will ensure that clauses 34 and 48 operate as intended when companies make retrospective changes to the dates to which their accounts are drawn up.
Schedule 7 allows companies to elect prospectively to change the currency in which they prepare their accounts for tax purposes. That is often referred to as their functional currency. That change must be prospective to prevent companies from changing their functional currency with the benefit of hindsight to realise a foreign exchange loss for tax purposes. Following the Public Bill Committee debate on clause 34, a major accountancy firm disclosed an avoidance scheme that retrospectively creates a short accounting period to circumvent the new rules. The amendments will ensure that clause 34 operates as intended when a company retrospectively changes the date to which its accounts are drawn up.
Clause 48 and schedule 13 implement an optional branch exemption regime. Companies must elect into branch exemption in advance of an accounting period to prevent them from leaving known losses outside of exemption in order to retain loss relief. Retrospective accounting period changes create problems similar to those that arise in connection with clause 34, whereby decisions on election into branch exemption may be made with the benefit of hindsight. The amendments will ensure that clause 48 operates as intended when a company changes its accounting periods. In each case, the date on which an election comes into force will be fixed in advance at the time when the election is made.
The amendments that relate to clause 34 will protect the £60 million yield in the original measure, and together the amendments will protect an estimated £200 million that would otherwise be likely to be lost due to avoidance schemes. They will ensure that clauses 34 and 48 operate as intended when a company uses hindsight to alter its accounting periods. I therefore urge the House to accept them.
Chris Leslie
Again, these Government amendments are sensible. It is important that we tighten loopholes for investment companies that might chop and change the election of their functional currencies to generate tax deductible foreign exchange losses and avoid a tax obligation. They seem important minor amendments to improve election arrangements, so we are happy to support them.
Amendment 22 agreed to.
Amendments made: 23, page 166, line 21, leave out subsection (3) and insert—
‘(2A) An election under section 9A(2)(a) may be revoked by notice of the revocation being given to an officer of Revenue and Customs before the election takes effect.
(3) Subject to that, an election has effect until immediately before—
(a) the day on which another election by X takes effect, or
(b) the day on which a revocation event occurs,
(whichever first occurs).’.
Amendment 24, page 166, line 41, at end insert—
‘(5A) Subsections (5B) and (5C) apply if a period of account of X (“the straddling period of account”) begins before, and ends on or after, the day on which—
(a) an election under section 9A(2)(a) takes effect, or
(b) a revocation event occurs.
(5B) It is to be assumed, for the purposes of this Chapter, that the straddling period of account consists of two separate periods of account—
(a) the first beginning with the straddling period of account and ending immediately before that day, and
(b) the second beginning with that day and ending with the straddling period of account,
and X’s profits and losses are to be computed accordingly for the purposes of corporation tax.
(5C) For those purposes, it is to be assumed—
(a) that X prepares its accounts for each of the two periods in the same currency, and otherwise on the same basis, as it prepares its accounts for the straddling period of account, and
(b) that if the accounts for the straddling period of account, in accordance with generally accepted accounting practice, identify a currency as X’s functional currency, the accounts for each of the two periods do likewise.’.
Amendment 25, page 167, line 28, leave out from ‘but’ to end of line 37 and insert ‘for a change in the company’s functional currency (within the meaning of section 17(4) of that Act) as between—
(a) the period of account of the company in which the gain or loss arises, and
(b) a period of account of the company ending in the 12 months immediately preceding that period.”’.
Amendment 26, page 167, line 44, leave out from ‘but’ to end of line 9 on page 168 and insert ‘for a change in the company’s functional currency (within the meaning of section 17(4) of that Act) as between—
(a) the period of account of the company in which the gain or loss arises, and
(b) a period of account of the company ending in the 12 months immediately preceding that period.”’.
Amendment 27, page 168, line 14, at end insert—
‘( ) Where an election made by a company before 27 June 2011 does not specify the day on which it takes effect, the election is to be treated as if it specified the first day of the first period of account of the company beginning after the election was made.’.—(Mr Gauke.)
Schedule 13
Profits of foreign permanent establishments etc
Amendments made: 28, page 209, line 39, leave out from ‘company’ to end of line 40 and insert ‘beginning on or after the relevant day.
(1A) “The relevant day” is the day on which, at the time of the election, the accounting period following that in which the election is made is expected to begin.
(1B) Subsection (1C) applies if an accounting period of the company (“the straddling period”) begins before, and ends on or after, the relevant day.
(1C) It is to be assumed, for the purposes of the Corporation Tax Acts, that the straddling period consists of two separate accounting periods—
(a) the first beginning with the straddling period and ending immediately before the relevant day, and
(b) the second beginning with that day and ending with the straddling period.
(1D) Where for those purposes it is necessary to apportion the profits and losses for the straddling period to different parts of the period, that apportionment is to be made on a just and reasonable basis.’.
Amendment 29, page 209, line 41, leave out from ‘before’ to end of line 42 and insert ‘the relevant day.’.—(Mr Gauke.)
Schedule 19
The bank levy
Amendments made: 32, page 315, line 34, leave out paragraph (b) and insert—
(b) M, or another member of the relevant group, has assets which correspond to liabilities which N, or another entity which is not a member of the group, has to M or (as the case may be) that other member (“N’s liabilities”),’.
Amendment 33, page 315, line 36, leave out ‘between M and N’.
Amendment 34, page 315, line 37, at end insert ‘, and liabilities of other members of the group to N or another entity which is not a member of the group,’.
Amendment 35, page 316, line 1, leave out paragraph (d) and insert—
(d) “the netting event occurs” if the insolvency or bankruptcy of—
(i) M, or another member of the relevant group which has assets which correspond to a liability covered by the provision mentioned in sub-paragraph (1)(c), or
(ii) N, or another entity which is not a member of the group and which has such a liability,
gives rise to the termination of any arrangements under which such a liability arises.’.
Amendment 36, page 316, line 23, leave out ‘M’s assets’ and insert ‘the assets of M, or of another member of the relevant group,’.
Amendment 37, page 316, line 24, at end insert—
‘( ) But if this paragraph applies in relation to more than one member of the relevant group, no part of an asset may be included in the net settlement assets of more than one such member.’.
Amendment 38, page 320, line 11, leave out paragraph (b) and insert—
(b) M, or another entity within sub-paragraph (9), has assets which correspond to liabilities which N, or another entity not within that sub-paragraph, has to M or (as the case may be) to that other entity within that sub-paragraph (“N’s liabilities”),’.
Amendment 39, page 320, line 13, leave out ‘between M and N’.
Amendment 40, page 320, line 14, at end insert ‘, and liabilities of other entities within sub-paragraph (9) to N or another entity which is not within that sub-paragraph,’.
Amendment 41, page 320, line 35, leave out paragraph (e) and insert—
(e) “the netting event occurs” if the insolvency or bankruptcy of—
(i) M, or another entity within sub-paragraph (9) which has assets which correspond to a liability covered by the provision mentioned in sub-paragraph (8)(c), or
(ii) N, or another entity not within sub-paragraph (9) which has such a liability,
gives rise to the termination of any arrangements under which such a liability arises.’.
Amendment 42, page 321, line 6, leave out ‘M’s assets’ and insert ‘the assets of M, or of another entity within sub-paragraph (9),’.
Amendment 43, page 321, line 7, at end insert—
‘( ) But—
(a) if N’s net settlement liabilities include liabilities of a relevant foreign bank covered by paragraph 17(17), X% (as determined at Step 2 in paragraph 24(1)) of the assets corresponding to the liabilities of the relevant foreign bank are to be disregarded for the purposes of sub-paragraph (14), and
(b) if sub-paragraph (12) applies in relation to more than one entity within sub-paragraph (9), no part of an asset may be included in the net settlement assets of more than one such entity.’.
Amendment 44, page 324, line 38, leave out paragraph (b) and insert—
(b) M, or another entity within sub-paragraph (9), has assets which correspond to liabilities which N, or another entity not within that sub-paragraph, has to M or, as the case may be, to that other entity within that sub-paragraph (“N’s liabilities”),’.
Amendment 45, page 324, line 40, leave out ‘between M and N’.
Amendment 46, page 324, line 41, at end insert ‘, and liabilities of other entities within sub-paragraph (9) to N or another entity which is not within that sub-paragraph,’.
Amendment 47, page 325, line 15, leave out paragraph (e) and insert—
(e) “the netting event occurs” if the insolvency or bankruptcy of—
(i) M, or another entity within sub-paragraph (9) which has assets which correspond to a liability covered by the provision mentioned in sub-paragraph (8)(c), or
(ii) N, or another entity not within sub-paragraph (9) which has such a liability,
gives rise to the termination of any arrangements under which such a liability arises.’.
Amendment 48, page 325, line 36, leave out ‘M’s assets’ and insert ‘the assets of M, or of another entity within sub-paragraph (9),’.
Amendment 49, page 325, line 37, at end insert—
‘( ) But—
(a) if N’s net settlement liabilities include liabilities of a relevant foreign bank covered by paragraph 19(17), X% (as determined at Step 2 in paragraph 24(1)) of the assets corresponding to the liabilities of the relevant foreign bank are to be disregarded for the purposes of sub-paragraph (14), and
(b) if sub-paragraph (12) applies in relation to more than one entity within sub-paragraph (9), no part of an asset may be included in the net settlement assets of more than one such entity.’.
Amendment 50, page 336, line 33, at end insert—
‘Netting agreements
(1) The Treasury may by order add to, repeal or otherwise amend any of paragraphs 16, 18(8) to (16), 20(8) to (16), 22 and 25.
(2) An order under this paragraph may make consequential amendments of this Schedule.
(3) An order under this paragraph may have retrospective effect in relation to—
(a) any chargeable period in which the order is made, or
(b) in the case of an order made on or before 31 December 2011, any chargeable period ending on or after 1 January 2011.
(4) Orders under this paragraph are to be made by statutory instrument.
(5) A statutory instrument containing an order under this paragraph may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.’.—(Mr Gauke.)
Schedule 25
Mutual assistance for recovery of taxes etc
Amendments made: 2, page 390, line 29, leave out ‘other than excluded matters’.
Amendment 3, page 390, line 31, leave out ‘other than excluded matters’.
Amendment 4, page 390, line 32, leave out sub-paragraphs (3) and (4).
Amendment 5, page 391, line 18, leave out sub-paragraph (4).
Amendment 6, page 393, line 15, at end insert—
(ca) if the foreign claim relates to an agricultural levy and the steps are ones to be taken in or in relation to Scotland, the Commissioners concurrently with the Scottish Ministers;’.
Amendment 7, page 393, line 42, leave out sub-paragraph (2).
Amendment 8, page 395, line 26, leave out sub-paragraph (3).—(Mr Gauke.)
Third Reading
Mr Gauke
I beg to move, That the Bill be now read the Third time.
During the course of the debates on this Finance Bill we have spent some time combing through the details of our plans to put the economy back on course. It is a Bill that will help ensure the stability of our financial sector, protect the most vulnerable in society from the worst effects of the downturn, make Britain a better place to do business and stimulate private sector growth. We are clearly the Government who are setting the agenda on the need for a tax system that encourages growth, by cutting corporation tax, improving research and development tax credits, extending enterprise investment schemes and increasing the entrepreneurs’ relief.
To be fair, after three months of debate we have not seen much policy from the Opposition. Of course, the right hon. Member for Morley and Outwood (Ed Balls) proposed a temporary cut in VAT in the middle of our proceedings, although I cannot but draw the House’s attention to the fact that he then failed to table an amendment to that effect until it was too late. It fell to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who I am delighted to see here this evening, to table such an amendment. However, at that point the official Opposition abstained and failed to support the very policy for which they had been campaigning the week before. I would like to think that they were persuaded by the arguments made from the Dispatch Box that it was the wrong policy. Perhaps there is some cachet in being tax personality of the year after all, although on that evening not all Government Back Benchers were so easily persuaded by arguments from the Treasury Bench.
Hon. Members will be aware that this is the first full Bill in which we have demonstrated our commitment to the principles of tax policy making that were set out in last year’s Budget. To paraphrase Bananarama, it ain’t just what you do, it’s the way that you do it. I am sure hon. Members are aware that the Treasury Committee published its report on our new approach to tax policy making on 15 March, and that they will have noted the principles of good taxation set out by my right hon. Friend the Chancellor in his Budget speech. Like the Committee, he gave his views on what the key elements of our tax system should be. It should support growth and encourage competition; be certain and predictable; be simple to understand and easy to comply with; and be fair, reward work, support aspiration and ask the most from those who can most afford it. Those principles are central to the policy making process that is reflected in the measures that we see in the Bill.
The Bill supports growth in our economy, and will help to provide businesses with the most competitive tax system in the G20. We set out our plans for achieving that in “The Corporate Tax Road Map”, which was published last November. We are providing business with a clear understanding of our overall direction of travel; setting out the timetable for major areas of reform; and enabling businesses to have the confidence they need to invest, create new jobs and drive the recovery. John Cridland, director-general of CBI said, quite simply:
“This Budget will help businesses grow and create jobs. The Chancellor has made clear the UK is open for business.”
The Bill delivers some of the major changes: a cut in corporation tax to 26% this year and 25% next year, towards a rate of 23% in 2014, which will be the lowest corporation tax rate in the G7; cuts in the small-profits rates of tax; interim reforms of the controlled foreign corporation rules, before a full reform next year; and simplification of the rules relating to corporate capital gains. Those will help to deliver on making Britain competitive internationally, although that is not the only driver of growth: we are supporting British businesses through changes to the enterprise investment R and D tax credit schemes, making them more generous; we have doubled the rate of entrepreneurs relief; and we are increasing the disposal time for short-life assets to eight years.
We set out most of the measures in the Bill last year, just as we set out most of the measures for next year in Budget 2011. We will consult on draft legislation in the autumn to allow time to hear from interested parties and, as I have said, we have set out future changes in a number of areas, including for corporate taxes. Certainty is what British businesses need most, and that is what this Government are giving them.
On simplification, we recognised the spaghetti bowl of complexity in the tax system, so last summer we set up the Office of Tax Simplification to advise us on how to untangle matters. It has made substantial progress and has already examined the reliefs within the tax system. Following its recommendations, we have identified more than 40 reliefs for abolition, of which seven are repealed by the Bill. We recently launched a consultation on the remainder to ensure that taxpayers have sufficient notice of the changes, with a view to legislating next year. Furthermore, the OTS has made recommendations on the operational integration of income tax and national insurance contributions, and we announced in the Budget that we will take forward work on that. A simpler tax system is an easier tax system, and it reduces costs for business and the Government, although it may leave me with less to read on my quiet evenings in.
The final principle outlined by the Chancellor and echoed by the Treasury Committee is that of fairness. We have increased the personal allowance by £1,000, and will increase it to £10,000. We are making real steps in every year in this Parliament. We have cut fuel duty by only 1p, as opposed to the 6p increase that the previous Government would have imposed. We are freezing vehicle excise duty for hauliers, and there will be an inflation-only increase in vehicle excise duty for all other motorists.
We are supporting pensioners through the triple guarantee on state pensions and by removing the requirement to annuitise, and we are helping charities through changes to the substantial donors rules. We are taking action on tax avoidance to address issues that have spiralled out of control. In particular, we have introduced legislation to tackle disguised remuneration—the practice whereby well paid individuals disguise their remuneration as loans that are never repaid, which results in a loss to the Exchequer. That measure will raise more than £700 million a year, and I am genuinely surprised and disappointed that it did not receive Opposition support in Committee. We have also introduced the bank levy to encourage banks to behave in a less risky manner, while ensuring that they pay their fair share. The tax system must be fair, and this Government are ensuring that that is so.
When I thought that I would be making this speech on 4 July, I found it easy to weave in references to American independence, in which taxation played such a large part. The date of 5 July is a little less well known for historical events, although of course it was the date in 1948 on which the NHS was launched. My research on this day uncovered a further event of note, although I shall refrain from calling it historical—were the right hon. Member for Delyn (Mr Hanson) here, I would wish him a very happy birthday. I thank him for his constructive engagement during the passage of the Bill in Committee and on Report, as I do the hon. Members for Bristol East (Kerry McCarthy) and for Nottingham East (Chris Leslie). I hope that the right hon. Gentleman has found the time to celebrate. I would like to thank him for his good humour during the Bill. I would also like to take this opportunity to pass on my congratulations to an official who has been supporting me throughout the Bill and who is celebrating her 30th birthday today and showing her dedication to the cause. It may be her 30th birthday but she is still with us in the Chamber today.
We have a plan for deficit reduction that has been internationally endorsed, and we are sticking to it. We have a plan for growth—growth that will be driven by investment and exports, growth that is sustainable and growth that supports entrepreneurs throughout the country. The Bill puts in place the right conditions to allow British business to flourish, and I commend it to the House.
Chris Leslie
May I join the Minister in congratulating the Bill team on their hard work and unstinting efforts, especially in Committee, where unfortunately I was unable to join them? However, it has been a delight to revisit these issues on Report over the past couple of days. I would like to pay tribute to my right hon. Friend the Member for Delyn (Mr Hanson), whose birthday it is today—I do not know where he is at the moment, but I am sure that he is watching proceedings avidly.
I should also say happy birthday to the NHS and to the official who has been helping the Minister. I am told that 30 is the new 20. I thank my hon. Friend the Member for Bristol East (Kerry McCarthy), and also my hon. Friend the Member for West Ham (Lyn Brown). The Whips are often unsung in these matters, but we would not be here without their support and assistance—and tugging of jackets at various moments! I am not familiar with Bananarama’s greatest hits but the Minister, given his new personality award, might like to tell me a little more about them. I gather that “True Confessions” in 1986 was one of their greatest hits, but “Please Yourself” came in 1993—I think that somewhere between the two defines his approach to the Finance Bill.
Coming in at just under 400 pages, the third Finance Bill of the year, with a huge number of amendments, is a complex measure, but for all its detail and complexity, I am afraid that it represents a missed opportunity to tax the banks fairly and to support job creation across the UK. Those omissions make this a sub-standard and ill-judged Bill. Of course, like every country we need to get the deficit down, but the Government are creating a vicious cycle in our economy because they are cutting too far and too fast—hitting families and costing jobs. More people out of work and on benefits will make it harder to get the deficit down. In fact, the Government are now set to borrow £46 billion more than they had planned.
The Government said they would cut the deficit by cutting spending, but putting people on the dole and suppressing growth is a waste of money and a waste of their potential. Instead, the Government need a plan B. They ought to follow our balanced deficit plan, which puts jobs first. Of course, although we need tough decisions, getting people off the dole and back into work is the best way to reduce the deficit. As we have made clear today, rather than giving the banks a tax cut, the Government should adopt Labour’s plan for a tax on bankers’ bonuses and use the money to fund apprenticeships, getting young people into work and supporting small business.
I am afraid that the Bill jeopardises job creation and fails to support existing jobs. The rushed decision to make a tax raid on North sea oil means that companies are reconsidering their future in Britain, and puts investment and jobs in jeopardy. Of course the Government should seek windfall profits at a time of high fuel prices, but they have rushed that decision without consultation or proper consideration of the longer-term economic consequences. By slashing the investment allowances by £2.6 billion, the Government are penalising those companies that invest, particularly small businesses and businesses in the manufacturing sector. Again, that is putting jobs at risk and holding back growth.
The Bill leaves a number of unresolved and unanswered questions. In Committee, the Government said the child trust fund replacement for looked-after children was still being considered by the Department for Education, but that there was no fixed time frame for implementation. The Minister has been unable to put on record whether any progress has been made on that issue, which is a pity.
Clause 26, which deals with disguised remuneration employment income provided through third parties, has stood out as being particularly badly drafted. It is long and complex, and has been subject to no fewer than 88 last-minute amendments. Businesses are still raising concerns about its scope and interpretation. However, although the drafting of clause 26 was unclear, we did not oppose the principle, and it would be wrong if our position on it were further misrepresented. All we wanted to know was whether the provisions would catch some genuine transactions and whether Ministers were working properly with businesses and professionals to clarify those issues.
The amendments made on Report to clauses 34 and 48 were about closing avoidance loopholes that HMRC have detected. We support those amendments of course, but we have raised concerns about avoidance in respect of the foreign profits clauses. We also had concerns about the loss of tax revenue to developing countries—something on which the Government claim to have conducted only an “initial analysis”. It is a shame that the Government have passed legislation when they cannot give a figure for the impact on developing countries’ tax bases—an assessment that we called for before implementation. We can therefore only hope that the poorest countries in the world are not unintentionally harmed by that measure.
To conclude, as well as leaving a number of questions unanswered and creating uncertainty, the Bill represents a missed opportunity to get banks to pay a fairer share of tax to society, through a stronger bank levy and a repeat of the bank bonus tax. Tragically, it is also a missed opportunity to tackle unemployment and get people into work—further evidence that this Government fail to understand that the best way to secure growth and get the deficit down is to get people off the dole.
Stephen Williams
I shall make some brief remarks in this Third Reading debate on yet another Finance Bill. Unlike the hon. Member for Nottingham East (Chris Leslie), who is lucky not to have sat through every stage of the Bill, I have endured all of it, from the Budget and Second Reading right the way through to the upstairs and downstairs stages. I too congratulate my hon. Friend the Minister on being named tax personality of the year, which is indeed an exalted position. The tax personality of the year should, of course, know that 5 July is the end of a tax month; in fact, it is also the end of the first quarter of the traditional tax year, so he could have mentioned that too. I can only assume that the judges made their decision before they heard his Bananarama joke. Unfortunately you were absent at that point, Mr Speaker, so you will have to look in Hansard to see what I am talking about.
In the spirit of cross-Chamber harmony, I too briefly congratulate the right hon. Member for Delyn (Mr Hanson) on his birthday. He has also been with us for all stages of the Finance Bill, apart from this one. I can only assume that he has thought of somewhere better than the Chamber of the House of Commons from which to watch the final stage of the Bill.
This is a good opportunity to weigh up the credibility of both the official Opposition and the coalition Government, after all the various stages of the Bill. We have heard many times that the Labour Opposition believe that fiscal tightening and a reduction in the budget deficit are needed. However, although we have heard from many Opposition Members about the cuts that they oppose, we have not heard from any of them about the cuts that they favour. We have also heard about their difficulties with the various tax changes that the coalition Government are making. As my hon. Friend the Minister pointed out, the Opposition pulled a rabbit out of the hat in the middle of our proceedings when the shadow Chancellor announced a great new policy with a flourish. His policy was that the Opposition would, after all, oppose the VAT increase to 20%. However, first the Scottish National party gave the Opposition an opportunity to vote against the increase and they abstained, and then Plaid Cymru gave them another opportunity and they abstained again. Indeed, the Opposition could have given themselves an opportunity to vote against the increase, but they failed to get their amendment in on time. That is two official abstentions and one botched attempt to oppose the Government’s policy, so the next time any Labour MP says that they oppose the rise in VAT, they will not have much credibility.
The Opposition also even opposed tightening a tax avoidance measure in Committee, and this morning the last vestige of Labour credibility—if Labour had any—in dealing with the economy was stripped away by the hon. Member for Nottingham East, when Labour refused to support the extension of special drawing rights arising from Britain’s contribution to the IMF. Of course, that was part of the initiative launched by the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), when he supposedly saved the world—I think that was the phrase—at the London G20 summit in 2009. And today, his successor spokespersons for the Labour party refuse to support the spirit of internationalism in dealing with bail-outs around the world.
Chris Leslie
I hope the hon. Gentleman will allow me to put on record something that he admits has been conspicuous by its absence—namely, the fact that the UK’s subscription to the IMF is rising from, I think, £10.7 billion to more than £20 billion. I hope he will explain that figure to his constituents and tell them, at a time when we are also on the hook for the other European bail-out arrangements, why we should be paying twice in that regard. I would be interested to hear his point of view.
Stephen Williams
I would be happy to invite the hon. Gentleman, as well as any other hon. Members and my own constituents, to read my blog, where I explained exactly that point straight after this morning’s debate. The explanation is of course a movement between the Government’s reserves and the reserves that we denominate in special drawing rights at the IMF. That does not involve additional Government borrowing or additional cuts, as the hon. Gentleman very well knows. What we saw this morning was the Labour party making a cheap, opportunistic point on a very serious issue.
Chris Leslie
I am grateful to the hon. Gentleman for being so nice about me just a moment ago. The Minister refused to tell us this morning, but does the hon. Gentleman know how much British taxpayers’ money is on the hook, via our IMF support for Greece? How many pounds sterling are on the hook? Does he know what our liability is?
Stephen Williams
The hon. Gentleman will have heard exactly what I heard this morning from the Financial Secretary to the Treasury, which was that, in its whole history since 1945, the IMF has never lost its money because it is always the first creditor to be paid. Our money is therefore not at risk, but our providing it is essential in order to ensure that the international economy stabilises. That is also in our own national interest.
I have dealt with the Labour party’s credibility, but what about that of the coalition Government? The points that the hon. Gentleman has just made lead me neatly to compare this country with Greece. During the passage of the Bill, we have seen the sad events in Athens, with the Greek Government having to make difficult and unpopular decisions. Greece’s bond rating, which reflects people’s willingness to lend to it, is CCC, while ours is AAA, even though our budget deficit is much higher than that of Greece. The difference is that our Government have a credible plan for repairing our public finances, and that is what gives us credibility in world markets and at home.
The Finance Bill and the Budget have also confirmed one of the most important measures that the coalition Government will introduce—namely, making the income tax system fairer. That was the No. 1 commitment that my Liberal Democrat colleagues and I stood on in the general election. We believe that work should pay, and that the lowest-paid employees in this country should be shielded from income tax. I am therefore pleased that the Bill takes another step towards making our pledge of £10,000 of tax-free income come true during the lifetime of this Parliament.
The Bill also puts in place a bank levy, so that the bankers will pay something back towards the problems that they helped to create during the last Government’s period in office. The budget is now under control. That is why the coalition Government were formed in the first place. Many of us might have thought at the time that it was a somewhat unlikely coalition, but it was put together to take these difficult decisions, to repair our public finances, to bring back international confidence and to give confidence to our own constituents that our country could get back on track. The difficult decisions have now been made, and we will see the job through.
Jonathan Edwards
I will not take up much of hon. Members’ time this evening. I regret to inform the Treasury that we will vote against the Government. Leaving aside our concerns about the speed and depth of the cuts, our main concern as a party is obviously the effect of the Budget on Wales. Given the economic headwinds that Wales faces, the Treasury might be interested to know that all four parties in the National Assembly, including the Conservative party and the Liberal Democrats, have today signed a joint declaration calling for an immediate reform of the Barnett formula, borrowing powers for the Welsh Government, including the ability to raise capital funds via bonds, and fiscal responsibility in respect of taxation powers. Although 5 July is not usually a historic day, I would say it is today because all the Unionist parties have adopted Plaid Cymru’s economic policies. I understand that the Treasury Minister will meet the First Minister on Monday and I hope he will embrace this fresh mandate from the people of Wales.
Question put, That the Bill be now read the Third time.
The House proceeded to a Division.
Mr Speaker
I ask the Serjeant at Arms to investigate the delay in the No Lobby.
Business without Debate
Business of the House (Police (Detention and Bail) Bill)
Business of the House (Sovereign Grant Bill)
COMMITTEE ON MEMBERS’ ALLOWANCES
PAY FOR CHAIRS OF SELECT COMMITTEES
REVIEW OF PARLIAMENTARY STANDARDS ACT 2009
Delegated Legislation
European Union Documents
Petitions
Mr Desmond Swayne (New Forest West) (Con)
The excellent and award-winning stationmaster of Lymington was sacked for removing a shopping trolley from the line before a train could collide with it. The vicar of Pennington collected 8,400 signatures and sought to deliver them to South West Trains, but in an act of shocking discourtesy to the travelling public, the company refused to take them. It is therefore my privilege to present to this House the petition of the vicar of Pennington, which calls on this honourable House to enlist the support of the Department of Transport to intercede with South West Trains to reconsider this shocking injustice.
Following is the full text of the Petition:
[The Humble Petition of Revd Alex Russell, Vicar of Pennington,
Sheweth that a great injustice has been done by the dismissal of Ian Faletto Stationmaster at Lymington.
Wherefore your Petitioner prays that your Honourable House calls upon the Government to request that South West Trains reconsider their decision in the light of his many years of exemplary service to the public
And your Petitioner, as in duty bound, will ever pray, &c.]
[P000928]
Redevelopment of Rushden Hospital Site
Mr Peter Bone (Wellingborough) (Con)
To follow that is impossible, but my petition is of more importance to my constituents, because the hospital site, where there is of course no longer a hospital, has always been an area where it was planned that we should eventually have a hospital. Unfortunately, the NHS plans to sell it off and 270 local residents have signed a petition, led by Sheila Vickers. I shall read the petition where the point is well made:
The Humble Petition of residents of Rushden, Northamptonshire and the surrounding areas,
Sheweth,
that the proposed revised redevelopment of the Rushden Hospital site for housing is unpopular, ill-advised and detrimental to the residents of Rushden; that over 25% of the residents of Rushden petitioned the House of Commons for a new outpatient facility in the town, the majority wanting the new facility on the Rushden hospital site; that the proposal to build housing on the site instead of an NHS facility is unacceptable and the impact on the surrounding roads of a large housing development and the density of the development and the proposed cut-through to the Greenacre Drive Estate is wholly detrimental to local residents and notes that a similar proposal for housing development on this site was not approved by East Northamptonshire District Council.
Wherefore your Petitioners pray that your Honourable House urges the Secretary of State for Communities and Local Government to urge the Department of Health to withdraw the revised planning application and further urges him to request that the District Council of East Northamptonshire and the County Council and the Primary Care Trust work together to provide a suitable health facility on the site.
And your Petitioners, as in duty bound, will ever pray, &c.
[P000937]
Food Security Strategy
(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Laura Sandys (South Thanet) (Con)
The vast majority of Members in the House have a lot of respect for the Minister of State, Department for Environment, Food and Rural Affairs, my right hon. Friend the Member for South East Cambridgeshire (Mr Paice) and his colleagues for the knowledge and strategic vision that they bring to their roles. The last year has shown a marked difference from previous years, with agriculture policy being based on fact and experience. My right hon. Friend has also been clearly focused on the issue that I intend to raise in this debate—UK food security.
I do not come from a farming background; to be frank I know little about agriculture per se, but I know about rising food prices. This year we have seen a 4.9% rise in food prices, and that impacts on my constituents as much as on those of my right hon. Friend. I believe that food inflation could seriously undermine our growth targets and have an impact on consumer spending in the wider economy. Although I doubt whether there is anyone up at this time of night in the Treasury, there might be one insomniac who is taking food inflation as seriously as we are.
I recognise that food security has risen up the Government’s agenda. It was given prominence in the defence and security review. In the Department for Environment, Food and Rural Affairs White Paper, the Minister announced that a group would be established to look at food security, and the Government Office for Science published an exceptionally insightful Foresight report on food security globally. I was also pleased to see DEFRA’s announcement, following the G20, which pledged to give greater transparency to commodity markets through the establishment of an agriculture market information system.
However, I propose to the Minister that we can and still need to do more to ensure long-term food security, to provide greater resilience of supply and greater ability to hedge this country against shocks and price volatility. I would like to highlight to the Minister the fact that some policy measures that are being used to build greater energy security might be a useful guide to ensuring greater food security.
Mr Mark Spencer (Sherwood) (Con)
I congratulate my hon. Friend on securing this important debate. She has identified the importance of energy, but does she agree that modern technology has a role to play? I hope she will join me in encouraging the UK Government to embrace new technology and allow UK farmers to produce more food so that we are all well fed.
Laura Sandys
Indeed. There are four key planks in energy policy that we should be looking to adopt in food policy, one of which, is innovation and new technologies. From an energy perspective, security of supply, price and affordability, tackling demand and, as my hon. Friend said, the introduction of new technologies are fundamental. We should examine the same suite of policies when we look at food security.
Security of supply is critical to this country. We import more than 50% of our food, and we are extremely dependent on international markets working. Fair trade, transparent markets and secure shipping lanes are all important, but in the past five years these norms have been severely challenged by international developments, climatic changes and population increase, as well as changing food expectations globally. As in the case of energy, we are facing the increased politicisation of the trade and greater uncertainties globally.
Jim Shannon (Strangford) (DUP)
Does the hon. Lady share my concern and that of many others in the House about regulations in Europe and other parts of the world? Here at home we provide a top quality product that can sell anywhere, whereas in other parts of Europe and of the world, similar legislation does not exist. That puts producers there at an advantage over us, as we try to do the best we can in every case.
Laura Sandys
I welcome the intervention. That is particularly key in animal welfare matters. Yes, there are issues in relation to international standards and we need to ensure consideration of food safety and market equity. Perhaps I will come to that later in the debate.
In 2008 the food crisis that occurred started a trend towards something very worrying for a country that imports 50% of its food—protectionism. Indonesia, India, Egypt, Russia and the Ukraine all curbed their rice and wheat exports in response to domestic food inflation. What was most concerning was that those countries were able to mitigate domestically the price hikes that others faced around the globe. This has become an incentive for exporting countries to adopt further restrictions in the future. Although we might want to trust in global food markets, we must recognise that exporter countries will find it almost impossible to export food if their domestic populations are starving. I do not believe that our food supply is secure, and it is becoming more and more unstable.
With our level of import dependency, has there been any assessment of what impact an increase in protectionism would have on domestic costs, and is that seen as a strategic threat? The National Security Council has incorporated food security in its key priorities. Can the Minister give me an update and outline the work that is going on through that channel? Most importantly for both his Department and my interest, are there as many officials in the Treasury examining the impact of food insecurity and food inflation as there are looking at the global energy sector?
In order to mitigate some of the impacts of global insecurity in the energy sector, we have decided that increasing domestic resilience and domestic production is important. Do we have a similar strategy for food? Although I am most certainly not suggesting that we look to become self-sufficient, are we happy to be so dependent on international and more volatile imports?
The second point relates to price and affordability, which is extremely pertinent to all Members as it impacts on each and every one of our constituents. We all recognise that food prices will rise, but we must also be clear that that will have significant social implications, including impacts on nutrition, health and education. Are we thinking strategically enough about the impact of food price increases on young people and the elderly, for instance? In the energy sector we look at capacity mechanisms that help us hedge price volatility, such as increased storage to secure supply at times of global price rises and shocks. Such mechanisms could help us to manage the price volatility that has such an impact on our constituents and cushion us from protectionism and the politicisation of food exporting countries.
I urge the Minister to look again at issues relating to the food poor in the same way as we look at fuel poverty. An individual is classed as fuel poor if more than 10% of their income is spent on fuel. Does DEFRA have a similar measure to indicate food poverty? Those on low incomes will be worst affected by food price rises. I had a constituent come to one of my surgeries a couple of weeks ago. He is on jobseeker’s allowance and had a heart attack about a year ago. He has been told specifically by his doctor that he must eat fresh fruit and vegetables every day, but there is no way that he can afford to do so. Just as our constituents have campaigned for the Treasury to help shoulder the burden of rising fuel costs, we will see a similar response to food price rises if we do not take action to reduce volatility and control price.
The third point is that we also have the power to use food better and ensure that we get better value for the food we produce. We currently waste 30% of the food we produce, so much more can be done to get better value from the food we grow. This will take a cross-Government effort to tackle supermarket procurement, supermarket products and food labelling, such as the sell-by dates that make customers feel anxious and throw food away far too early. On of my bugbears, which I know the Department shares, is fish discards, which we must also tackle. I urge the Department to have constructive conversations with the Food Protection Agency, which many feel is too risk averse.
We also need to focus on other Departments and look, for instance, at education in schools on how to use food more effectively, explaining that we can use all meat products, including offal. The Department of Health should use its procurement power to demand better use of food. We cannot go on ploughing food into the soil because it does not look pretty enough, or discarding large parts of carcases because we have forgotten how to cook certain meat cuts. We as consumers must learn again how to keep food fresh and stop chucking good food in the bin.
Will the Minister give a commitment that we will address food waste and look at a cross-Government programme to ensure that the 30% we currently waste is reduced? I would also be delighted to set up with the Minister a little company that I have thought up, called Ugly Foods Ltd. I think that we could do rather well, and perhaps even create a profit centre for the Government, by selling all the food and produce that the supermarkets reject.
My fourth point is about innovation, which my hon. Friend the Member for Sherwood (Mr Spencer) referred to earlier. We should be looking at food production and technology as one of the most exciting growth areas for this country. I know that the Minister shares this belief, so why is agriculture, agronomy and food production not included as a growth sector in the Department for Business, Innovation and Skills? Why do we consider careers in the food sector to be careers of the past? I believe that they are the careers of the future. I would also like him to examine what food technology assets we have that can be exported, because that seems to be an important trigger for getting the Treasury and BIS interested.
Food insecurity is almost never raised in this House. We have delegated to global markets and domestic supermarkets the responsibility to deliver cheap food to our constituents, but I am not sure that that will be enough in the future, because inflation targets are at risk and food poverty will increase. I urge the Government to look again at an holistic approach to food security in which we start to see that in the food production sector we have real opportunities that could contribute to a more secure and profitable food sector in the United Kingdom.
The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) on securing this debate. In many ways, it deserves a longer time span than she has achieved, because this subject is hugely important, and I congratulate her on choosing it. I hope that in the next few minutes I can reassure her on a number of her points, and in passing I also thank her for her kind personal remarks to me.
The Government believe that food security is a vital strategic issue for this country, so the opportunity to spend a few minutes discussing it is very welcome. My hon. Friend will be aware that a few weeks ago the Government’s chief scientific adviser published the final report of the Foresight future of food and farming project, and it identified the scale of the challenge that food security poses—the very points that my hon. Friend made. The food system in this country is consuming the world’s natural resources at an unsustainable rate, and the report also highlighted the most important challenges that we face if we are to balance the competing pressures and demands on the global food system in order to ensure that we can feed ourselves.
My hon. Friend also referred quite rightly to our domestic food industry, and I want to reassure her that we believe that farming and food are very important to the UK economy. The whole food chain contributes some £88 billion per annum, or 7% of GDP, and 3.7 million jobs—no small contribution on anybody’s measurement. As a sector, it contributes to the delivery of the Government’s long-term economic objectives on trade, green jobs, and growth and development, and, slightly contrary to my hon. Friend’s remarks, the UK food and drink industry was highlighted in phase one of the Government’s growth review as an important area for growth. I passionately believe that that is the right place for it to be.
Jim Shannon
I understand that in the United Kingdom 20% of agricultural land is not in agricultural use today. Does the Minister have any intention of using that land for agriculture and food production?
Mr Paice
I am afraid that I have no idea where the hon. Gentleman has got his statistics from; they are completely strange to me. I will certainly look into them after this debate, but I have no knowledge of a significant area of land having been taken out of agricultural production in the United Kingdom.
The Department for Environment, Food and Rural Affairs worked very closely, and continues to work, with the industry to ensure that our views are captured by the Department for Business, Innovation and Skills, and I assure my hon. Friend the Member that we certainly intend that to continue.
We will concentrate—particularly within the growth review—on the rural economy, and one of our main themes will be realising the value of natural capital. That includes a strand concentrating on the potential to increase competitiveness in the agri-food sector. We will ensure also that food and drink is included in other areas of the review, such as logistics, skills and mid-sized businesses.
The Government are also taking action to support British farming and to encourage sustainable food production by helping to enhance the competitiveness and, as my hon. Friend said, the resilience of the whole food chain while minimising our impact on natural capital. The Government have been keen to lead, and on the sustainable procurement of food, for example, our recently announced Government buying standards will help to ensure that food procured by central Government meets sustainable standards of production equivalent to the UK’s requirements, when that does not lead to an overall increase in costs. Full details were provided in the recent announcement.
Steps have also been taken to improve market information and transparency by establishing an agriculture market information system to promote greater shared understanding of food price developments. My hon. Friend rightly said that UK food security cannot be delivered merely by a narrow, self-interested national protectionist stance or by recommending self-sufficiency. She rightly reminded us that that is not unique to the UK but should apply to every country. Several countries around the world have adopted protectionist measures. Argentina did so a few years ago with the beef sector, as did the Russians, more recently, with grain, although they have recently relaxed their measures, and there are several other examples. I firmly believe that they are doing their own consumers down by taking that approach, which, in the long term, does not help the global market.
International trade has an important role to play in providing food security not only in the UK but elsewhere. We are a trading nation in a global market. The UK is a significant exporter of wheat, lamb, dairy products, breakfast cereals and beef. Our food security depends on access to the world market, and it is important to emphasise that our domestic food industry needs to be able to compete on the world stage. In 2010, 25 countries together accounted for 90% of our food supply, and 49% of it was supplied from within the UK; we could not produce some products because they are not suitable for our climate. Currently the UK produces the equivalent of 72% of our indigenous foods and 59% of our food overall; we then export 10% of it, hence the 49% I mentioned. Supporting exports of UK food and food products will contribute to rebalancing our trade position. Reform, not subsidy, will achieve these goals.
In the recently published natural environment White Paper to which my hon. Friend referred, the Government made a commitment to bring together Government, industry and the environmental partners to reconcile how we will achieve our goals of improving the environment and increasing food production. I assure her that I believe passionately that that is possible. I do not believe—some farmers challenge me about this—that it is an either/or situation; we can do both.
My hon. Friend referred to food waste, and she was right to do so. We recognise that addressing that across the entire food chain will be critical in building a sustainable food supply. As part of our commitment to a “zero waste” agenda, three weeks ago DEFRA published a review of waste policy that highlighted various actions to be taken to reduce food waste, including developing a responsibility to deal with the hospitality and food service sector, with a strong focus on preventing food waste; tackling food waste across the public sector; and exploring further the role of incentives in reducing food waste and ensuring that it is managed in the most sustainable way possible.
We will also continue to work with the food industry and others in areas such as improved supply chain management; improved product design, including simple things such as resealable packaging; and providing the right advice and information to help consumers, including clear information on matters such as portion sizes, freezing food and using leftovers. We believe that through these actions, we will help industry and consumers to waste less food and save money—but I must emphasise that this is not something that Government can do on their own.
Mr Spencer
Does the Minister agree that it is also important to encourage local authorities to provide areas for allotments so that members of the public can not only grow their own food there but use them to understand food production and add to their own education?
Mr Paice
My hon. Friend is entirely right. We want not only to encourage local authorities to provide allotments—and there are massive waiting lists across the country for them—but to encourage other organisations, such as charities and those in the private sector, to provide land for them, whether as part of permanent or temporary arrangements. There are plenty of pieces of disused land in our inner cities. Although the land itself might not be appropriate, it could be used for mini-allotments based on containerised soil, so that people can start to grow some of their own food. Such food is more wholesome and fresh and, as we all know, contributes to people’s health and their environment.
Tessa Munt (Wells) (LD)
I am concerned about the number of people, particularly young people, who are going into farming. We must do something to stem the tide of people who are leaving farming, particularly dairy farming in my area. Does the Minister have any ideas about how we could encourage more people to come into farming, particularly given the sale of the county farms?
Mr Paice
I am grateful for my hon. Friend’s intervention. I do not have much time to answer it, but I am happy to do so privately. I believe that the most important way to encourage young people into farming and food production is to ensure that the industry is respected and recognised as a vital part of our economy. No Government can turn the economics of agriculture around in the ways that my predecessors could. We do not fix prices or intervene in those ways, and quite rightly. However, we can ensure that the industry is recognised as a vital part of the British economy, and that it is a worthwhile career choice. I am happy to discuss that matter further with my hon. Friend.
My hon. Friend the Member for Sherwood (Mr Spencer) referred to allotments. I was just coming on to the issue of growing food in our schools, which is equally as important. We need to ensure that our schools are part of this project. The Secretary of State recently launched the food growing in schools task force. The task force, which is led by Garden Organic, will make recommendations on the need for a food growing area to be integrated into every school in the UK. I have had many dealings with schools that are twinned with individual farms. Pupils not only go on physical visits but, through DVD technology, the farm can go to the school. Such twinning arrangements allow for children to be frequently updated on how the crops or livestock are progressing, so that they can learn more about how food is produced.
My hon. Friend the Member for South Thanet was right to refer to food prices. Of course we acknowledge that some people struggle to afford a healthy diet. The Government provide a means-tested nutritional safety net for extremely low-income families through the Healthy Start initiative, which offers vouchers that can be spent on milk and plain fresh and frozen fruit and vegetables at participating retailers. It supports more than half a million nutritionally vulnerable pregnant women, babies and young children. We are trying to help.
We also routinely monitor trends in the affordability of food through domestic retail food price inflation and movements in the drivers of domestic retail food prices. It is important to recognise an issue that this House often does not understand. Since the removal of production-linked support in 2005, after decades of politicians across the political spectrum demanding an end to the common agricultural policy propping up prices, farm crops and livestock have been traded in a global marketplace. It is those markets that dictate our food prices, along with exchange rates, oil prices and wider commodity issues.
My hon. Friend also referred obliquely to the meeting of G20 Agriculture Ministers. The issue of international trade and price volatility was central to that meeting. I assure the House that the UK will take global leadership on this issue. We are committed to promoting better functioning of agriculture markets to help mitigate future price spikes, and that commitment is demonstrated through the important steps taken towards the development of better-functioning markets at the first ever meeting of G20 Agriculture Ministers.
My hon. Friend referred to the link between food and energy. We, too, recognise the strong dependency of our food supply on energy supply and transport infrastructure. As she suggested, the Government have a co-ordinated approach to the supply and resilience elements of food security. I will not go into great detail about it tonight, but I can assure her that my officials work closely with colleagues in all relevant Departments in response to the risks to our food security and other parts of our national infrastructure. The Department for Environment, Food and Rural Affairs also continues to build an evidence base on all aspects of the food supply chain.
The Government have made a sustainable and profitable food and farming sector the No. 1 business objective of DEFRA. We believe passionately in the industry, which, as I have said, is a vital part of the British economy and British life, particularly in rural communities. I congratulate my hon. Friend on securing the debate and on her contribution to it, and I hope I can reassure her that the Government are totally committed not just to British food and farming but to British food security, which is of interest to us all.
Question put and agreed to.
Ministerial Correction
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Civil List
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Mr George Osborne
Let me now turn to some of the detail, recognising that in a fortnight’s time or so people will have had a chance to study the legislation and we will have a longer debate on Second Reading. First, we need a funding mechanism that prevents the sovereign coming to Parliament each year for resources, and that provides funding broadly in line with the growth of the economy. There is such a mechanism at hand, through the historical connection with the Crown Estate, so I propose that from 2013-14 the royal household receives 15% of the profits made by the Crown Estate in the two years prior. That is an average.
[Official Report, 30 June 2011, Vol. 530, c. 1146.]
Letter of correction from Mr George Osborne:
An error has been identified in the opening statement given on 30 June 2011. The correct answer should have been:
Mr George Osborne
Let me now turn to some of the detail, recognising that in a fortnight's time or so people will have had a chance to study the legislation and we will have a longer debate on Second Reading. First, we need a funding mechanism that prevents the sovereign coming to Parliament each year for resources, and that provides funding broadly in line with the growth of the economy. There is such a mechanism at hand, through the historical connection with the Crown Estate, so I propose that from 2013-14 the royal household receives the equivalent of 15% of the profits made by the Crown Estate in the year two years earlier.
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Police Forces
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Teresa Pearce (Erith and Thamesmead) (Lab)
It is a privilege to hold this debate under your chairmanship, Sir Alan. I requested it because, in one of my surgeries recently, I met a young police officer who told me in great detail about his concerns for his career and those of his colleagues and for the general morale of the police in the light of recent Government policies. We talk a lot about the effect on the public of the Government’s 20% cut in police funding. Although that is important and I will mention it, it is equally important that we focus on its effect on the police force and police officers.
Police officers up and down the country feel angry about budget cuts and attacks on terms and conditions and pension provision, following the Winsor and Hutton reviews. Police officers cannot strike, and many feel that they have no voice and no way to fight the changes. I hope that this debate will make them feel that they have had an opportunity to state their case to Ministers through their elected representatives. I also understand that the Police Federation is to lobby Parliament next week, and I look forward to attending.
The Government intend to cut the overall policing budget by 20% in real terms by 2014-15. It is estimated that that will result in the loss of 12,000 officer jobs and 16,000 other police staff jobs. Research drawing on information from police forces and police authorities suggests that in the Metropolitan police area, which covers my constituency, 1,291 police officers and 1,046 police staff will lose their jobs over the next three years.
Jessica Morden (Newport East) (Lab)
Tomorrow, I will show around the House four police officers nominated this week for the national police bravery awards. Does my hon. Friend agree that in a week when we are rightly focusing on the special job that the police do, it is equally important that the Government listen to police concerns about the impact of cuts on morale in the service?
Teresa Pearce
I certainly agree. It is a job unlike almost any other, except the armed services or ambulance drivers. It is a special job with special needs, and we must listen to what the police are telling us.
Keith Vaz (Leicester East) (Lab)
I congratulate my hon. Friend on securing this debate, as I congratulate you, Sir Alan, on your recent elevation as a knight of the realm. My hon. Friend the Member for Newport East (Jessica Morden) mentioned listening. Did my hon. Friends have the opportunity to hear the speech of Sir Hugh Orde to the Association of Chief Police Officers conference yesterday? He said that what was happening to the police force was the most profound reform in 180 years and that what was required, as my hon. Friend the Member for Newport East suggests, was a period of listening during which people could be consulted, as with NHS reforms, to give the Government the opportunity to see what will happen as a result of their reforms. Does my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) agree that a period of listening is desirable at this stage?
Teresa Pearce
I agree. I am pleased that there are so many Members here today. Through us, police officers’ voices will be heard, but a period of consultation is needed, owing to the unusual nature of their job and the daily importance of teamwork and morale.
In my constituency, 1,291 police officers and 1,046 police staff will lose their jobs over the next three years. Senior police chiefs also plan to cut 150 sergeants from local policing teams next year. The figure could rise to 300 in the next two or three years. It is worth bearing in mind that the cuts will affect London police forces and that it is estimated that more than 9,000 police officers will be required each day at the peak of the London Olympics, in an operation that Scotland Yard describes as the biggest ever policing challenge facing Britain. Deputy Assistant Commissioner Richard Bryan said that the games would put unprecedented demands on the Metropolitan police, yet the Met faces 20% cuts.
The Home Office says that the savings can be found solely in back-office functions and efficiency savings, with no impact on front-line policing.
Rosie Cooper (West Lancashire) (Lab)
I congratulate my hon. Friend on securing this debate and thank her for allowing my intervention. Does she know that Lancashire police are dealing with cuts of more than £40 million and are consulting on proposals to cut front-desk services in Ormskirk and sell police stations and houses across West Lancashire? That will leave my constituents with a 25-mile round trip to the nearest police station. It comes on the back of a reduction in the number of officers on our streets, and the future of police community support officers is still under threat. Does she agree that the Conservative-led Government have broken their promise that front-line services would not be affected by cuts, that the impact across the country and in my constituency will lead to an erosion in people’s feeling of safety on their streets and in their homes, and that crime—and, more importantly, the fear of crime—will increase?
Teresa Pearce
I agree. That brings me to the question of what front-line policing is. The police representatives to whom I have spoken say that the Government’s view of what front-line policing entails is misguided. It involves not only uniformed officers on the beat, but staff in front-line departments such as neighbourhood policing, counter-terrorism, domestic abuse and child abuse units. Those are not back-office functions, yet they will undoubtedly be affected by severe budget cuts. It is feared that that will increase crime and public fear of crime and create a less resilient public service. Which back-office jobs would Members here consider unnecessary to our work: researchers, case workers, the Table Office, the Vote Office or the Library? Those might be seen as back-office functions, but they are integral to our work, and it would be impossible to do our job without them.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Lady on obtaining this debate. Hugh Orde was mentioned. He has vast experience of policing, especially in Northern Ireland as Chief Constable. Does she agree that police officers in Northern Ireland—like those here on the mainland, I am sure—say that one of the biggest hindrances to police officers in doing their job is the red tape, bureaucracy and form-filling involved in an arrest? That makes it difficult for them to do their job.
Teresa Pearce
That is another case of our need to listen to what police forces tell us. Rather than making a 20% cut and telling them that they must make cuts in turn, we must listen to what they tell us needs to change. No one is saying that police forces should not change and develop, but they are the experts, and we must listen to them.
Her Majesty’s inspectorate of constabulary says that the maximum saving that the police service could achieve without an impact on quality of service is 12%. There is a big gap between that and a 20% cut. It is difficult to see how front-line policing could not be affected. The situation is made more difficult by the fact that the Home Office has no formally agreed definition of front-line policing. The chairman of the Police Federation, Paul McKeever, said that it is reckless for Ministers to base policies on a term with no legal definition.
Her Majesty’s inspectorate of constabulary has tried to define front-line policing. Its recent study said that 67% of police officers and civilian staff are involved either in visible contact with the public or in specialist roles that involve intervening to keep people safe and enforce the law, meaning that they should be considered as front-line. I understand that the Home Office has consulted Her Majesty’s inspectorate of constabulary to establish a definition. Will the Minister update Members on what progress has been made? It is important to have a definition so that the effects of policies on the police can be measured properly.
Morale is low in the police force. Officers are worried not only about their ability to protect the public in the face of drastic funding cuts, but about threats to their own financial situation and future.
Joan Walley (Stoke-on-Trent North) (Lab)
I congratulate my hon. Friend on securing this debate, which is important to people throughout the country who, like her, are concerned about front-line policing. Does she agree that that concern is shared by members of the coalition Government as well? All-party meetings are taking place to discuss concerns about front-line service. One big issue with the cuts to front-line services is the introduction of single crewing, which means that police officers are attending crimes alone. That is causing real concern about the standard and quality of front-line policing, as are the linked issues of pensions and future conditions of service, and I hope that the Minister will address that.
Teresa Pearce
My hon. Friend makes an important point. The issue affects morale. The police have told me that one of the good things about working in the police force is the teamwork. How they work together helps them to build relationships with one another and develop mutual trust and understanding. Working alone makes the job virtually impossible and very dangerous.
A recent survey by the Police Federation found that the budget cuts have led 98% of officers to claim that morale has fallen in the ranks. Moreover, 86% believe that the fight against crime will be damaged. Police numbers are already dropping and have fallen by 5,000 since January. The same period has seen a 16% rise in civilian volunteers or special constables, and there is concern that volunteers will be used to replace the work that should be undertaken by police officers, all in the name of deficit reduction.
At about the same time as the 20% overall budget cut was announced, Lord Hutton’s review of public sector pensions and the Winsor report on police pay and conditions delivered their recommendations. If implemented, the Winsor report recommendations will see the vast majority of police officers take a real-terms pay cut on top of increased work loads. Some officers could be up to £4,000 worse off, which does not include the additional hit of inflation. Police officers face the prospect of their basic salaries being frozen for two years from September 2011 and of inflation running at 5%. Over two years, the average salary of a police officer could fall by more than 10% in real terms.
Winsor’s recommendations will also reduce pensionable pay. If officers have not reached the top of their pay scale, they will be at the same pay point for the next two years—an average loss over two years of £2,345. Officers are at the top of their pay scale can receive the competency related threshold payment, but Winsor recommends that it be scrapped, so they will lose £1,212 a year. On top of that, the competency related threshold payment makes up officers’ pensionable pay. If it is removed, their annual pensions on retirement will be £800 a year lower.
On top of those proposals, officers who fall into certain groups may see their pay cut by even more. If they regularly work ordinary overtime, given the change to plain time, they will lose an average of £430 a year. If the force requires officers to work overtime on rest days, with less than five days’ notice, they will lose an average of £300 a year. If the receive a special priority payment, they will lose between £500 and £3,000, although some officers could lose more. Those are average figures—some officers will receive more, but others will get less and some nothing at all. With cuts of that size, some police officers might be compelled to leave the service because of financial difficulties.
Pat Glass (North West Durham) (Lab)
I congratulate my hon. Friend on securing this important debate. I have never worked in the police force, but I have been married to it for 26 years. I hear of the first-hand experiences of police officers in my constituency, and they tell me that the combination of the cuts in funding, the attacks on their pensions and the way the Government are seeking to drive a wedge between what they see as front-line services and others is having an impact on morale. That, in due course, will have an impact on outcomes, which will affect us all.
Teresa Pearce
I thank my hon. Friend for sharing with us her personal circumstances. Officers have written to me with testimonies saying that the financial hit means that they will be looking to leave the job at the earliest opportunity. That is backed up by the fact that nine out of 10 of the police officers who responded to the Police Federation survey said that they fear their colleagues will quit because they will be unable to make ends meet. In a job in which teamwork and trust are essential, that could be disastrous. I find it difficult to understand how there could not be a knock-on effect on police recruitment and retention.
Being a police officer is not an easy job. The hours are long, unsociable and often not conducive to family life. For instance, rest days can often be cancelled at the last minute. Police officers can also suffer violent assaults, mental stress and injuries that have a lasting effect on their lives and those of their families. I have heard from officers who feel that they do a 24-hour-a-day job in their community. It is not unusual for a police officer to have family, friends and neighbours calling at all hours asking for advice and help. It is not a job where they can clock off at 5 o’clock. Policing is not like other jobs. They do not leave it behind when they finish their shift; it is a 24/7 job. On or off duty, day in, day out, uniform on, uniform off, they are always police officers.
Police officers make those sacrifices in their personal lives because they want to serve their community, but also in the understanding that they will be financially compensated for taking on a dangerous and demanding job. When asked to sum up their current mood, one police officer told me:
“The rug has been pulled out from underneath me. I joined the service because I felt I had the skills and capabilities to use for the good and in the protection of vulnerable sections of society and victims of crime. However, I did this in the understanding that I would be fairly compensated for taking the risks that the job entails, and for the negative impact that it would invariably have on my own quality of life through stress and shift work.
I feel I am being penalised for making the sacrifices inherent in doing this job, and that the Government are gunning for the Police Service as the easiest Public Sector target. Without the right to strike I feel we can do nothing. This is not about fairness, it is about saving the largest amount of money in the shortest amount of time and hang the consequences for those involved, Police and public.”
I have heard from another officer whose role has an on-call requirement that is voluntary. He has been urged not to continue to fulfil that requirement if special priority payments are scrapped for on-call work, because his family life will be restricted without any financial compensation. However, police officers do not do their job just for their salary. If money was their primary motivation, they would all be in different jobs. We cannot expect them, however, to take on the huge sacrifices required by the job without fair financial reward for doing so. To pay them properly is a sign of the due respect that we should show them.
If we value what the police do, we should show that by making sure that they are able to have a family life and a decent home. Most young officers in my area have no chance of buying a place to live. A young man who came to my surgery explained that he is 25 years old, studied for three years and brings a wealth of experience to his role, but after paying his tax, national insurance, student loan and rent, and his bills for the phone, petrol and food, there is little left. He spends his time off work sitting in his rented flat, because he has no money with which to socialise with friends or to take part in any of the leisure activities that one would expect as a professional. He already earns below the national average wage and a two-year freeze will make it worse. He is seriously thinking of leaving the force. I doubt whether he is alone in that view.
The cuts to police pay may also have an impact on pension provision. Many officers say that if the cuts are made, their only option will be to quit the police pension scheme. It is not hard to see why they are considering doing so—less pay, greater pension contribution rates and higher inflation will push people to take such drastic action. The impact on society in later years will be significant. The proposed increase in employee contribution rates needs to be highlighted, because police officers already contribute at the highest rate of any public sector workers. Police contribution rates to pension schemes are between 9.5% and 11%.
Many police officers in my constituency have also contacted me about the switch in the indexing of their pensions from retail prices to consumer prices. I have opposed that switch in speeches on the Floor of the House and voted against the annual up-rating order. I also signed early-day motion 1625, which calls for the annulment of the statutory instrument that made the switch. I am not convinced by the Government’s argument that CPI, which does not take into account housing costs, is the better measure of inflation for pensioners because most pensioners own their own homes. Even if pensioners no longer have mortgages, they still have to pay costs associated with housing, such as council tax and heating. Such costs can be a heavy burden. Although I oppose the switch to CPI on behalf of all public sector workers, people in fields such as law enforcement, the emergency services and the military stand to lose the most because of the switch. They often need to access their pensions earlier in life, because of the physically demanding nature of their job or serious injury suffered at work.
Everyone deserves a decent pension, especially police officers, given the risks and sacrifices inherent in the job. In a parliamentary answer to my hon. Friend the Member for Wallasey (Angela Eagle) on 14 February, the Minister for Policing and Criminal Justice said that no assessment had been made of the number of members of the police pension scheme who may opt out of it as a result of the change in indexation. Does the Department intend to conduct such an assessment in the future?
The expectation of a reasonable retirement income has also been an important recruitment and retention tool for the police. That was highlighted by the submission of the staff side of the Police Negotiating Board to the Independent Public Service Pensions Commission. It said:
“In order to recruit and retain officers of appropriate calibre who are willing to accept these hazards, members of a police pension scheme should be allowed to work towards, and benefit from, a reasonable retirement benefit. They must also be secure in the knowledge that should their career be cut short by illness or injury, they will be appropriately supported.”
Without such an incentive, we may find it hard to recruit and retain officers in the future.
Many police officers in my constituency have written to me about the need for a royal commission on policing, because the Winsor and Hutton reviews demonstrate a fragmentary and disconnected approach to reform of the police service. Early-day motion 1604, tabled by the hon. Member for Birmingham, Yardley (John Hemming), calls for such a commission to establish precisely what is required by the British police to ensure that they continue to deliver a public service that is fit for purpose. I support such a commission, but agree with the amendment tabled by my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe): it must deal with the urgent problems of excessive Government cuts and the impact on police forces. I should be grateful to the Minister if he answered the concerns that I have raised and said whether he supports such a commission.
Tom Brake (Carshalton and Wallington) (LD)
I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing this very important debate. I am pleased that so many hon. Members are present to discuss the subject. I shall make a limited number of points about what Sir Hugh Orde said yesterday, but before I do, I would like to show support for and congratulate officers on the work that they do in my constituency. I am sure that other hon. Members will do likewise for their constituencies.
Last week, I had the pleasure of attending a police academy event at Camden junior school, where the local safer neighbourhoods team and some police cadets were training a number of pupils in the arts of marching, fingerprinting and working with police dogs and horses. A great time was had by all. At the end of that event, as we were handing out certificates, I asked the children how many of them wanted to join the police force. It may be that they have not heard about some of the changes being made, but I am pleased to say that half of the children put their hands up and said that they wanted to join the police force as a result of attending the police academy. I thank my safer neighbourhoods team for arranging that.
Toby Perkins (Chesterfield) (Lab)
Is the hon. Gentleman not worried—as I am—that if we cut down on staff who are not seen as front line and pare down the police’s responsibilities, that kind of activity will disappear?
Tom Brake
I am very pleased to reassure the hon. Gentleman that the scheme is continuing—or starting up again—in September. The police cadets involved are, in fact, pupils at one of the local secondary schools, and will therefore continue to play a key role in delivering that scheme.
I shall move on to what Sir Hugh Orde said yesterday. Among other things, he highlighted concerns about changes to accountability, central structures and, of course, pay and conditions. I shall just make a few points about those matters. On changes to accountability, the Police Reform and Social Responsibility Bill is going through the Lords and some of the amendments that are being considered will add substantially to the accountability of police and crime commissioners.
For example, confirmation hearings for key PCC staff posts will be introduced and police and crime panels will be able to hold confirmation hearings for key staff. Importantly, co-operation between PCCs and community safety partnerships will be strengthened, because accountability for delivering improvements in safety will be enhanced if there is a clear requirement for those two groups to work together co-operatively. The required majority for the police and crime panel to veto chief constable appointments will be amended, and the precept will be changed from three quarters to two thirds. We have pushed for that very hard through amendments 103 and 192. The composition of the police and crime panels will be extended to allow additional members. That will ensure all authorities within an area covered by a police and crime commissioner are represented. In terms of accountability, those are substantial improvements to the current arrangements.
Another area where accountability needs to be enhanced is in relation to the draft protocol that is being drawn up. That sets out how the relationship between the police and crime commissioner and the chief constable will operate within England and Wales. There is scope for improvement there, particularly on how the protocol might operate in relation to Wales. I have taken soundings from a recently retired senior police officer on other areas within the protocol, and he was clearly very keen for the majority to be changed. That is being taken up through Lords amendments. He also thought that further clarity was required regarding the fact that the police and crime commissioner will be the recipient of all funding, including the Government grant and the precept related to policing and crime reduction. How that money is allocated is a matter for the police and crime commissioner. That requires further clarification, because if the police and crime commissioner, for example, decided that no money at all was going to be spent on Tasers, thereby stopping the police using them, some might argue that that was interfering with operational matters. It would be helpful to have further clarity on the circumstances surrounding the protocol, and on whether the police and crime commissioner will be able to allocate funds without reference to any other parties.
The protocol is a good starting point. As I said, I am pleased that it will be amended to reflect the fact that the majority needed for a power of veto will be cut from three quarters to two thirds. I hope that when the protocol is published, more clarity will be provided about the relationship between the Home Secretary and the police and crime commissioners. One of the essential proposals in the Government’s plans that I support is about ensuring that policing is delivered locally without the interference of the Home Secretary. It would be helpful to have more detail in the protocol to ensure that that is the case, because whoever is Home Secretary—or, indeed, Prime Minister—clearly there will always be an inclination to get involved in day-to-day policing matters. If any further strength can be given to the powers of police and crime commissioners in the protocol to ensure that they have responsibility for policing at a local level, that would be helpful.
The other concern that Sir Hugh Orde raised was about the central structures. Elected police and crime commissioners are clearly part of that, but the national crime agency also falls into that category. As hon. Members will know, four commands will cover organised crime, border policing, economic crime and the Child Exploitation and Online Protection Centre. That structure could work more effectively nationally by drawing those different bodies together, and I certainly welcome the emphasis put on the border policing aspect.
Hon. Members have previously raised concerns about CEOP, and may do so today. I have visited CEOP and had detailed discussions with people there, including the new chief executive, Peter Davies. My impression is that he is completely confident that he can ensure that CEOP will continue to work effectively, whether it comes under the Serious Organised Crime Agency, as of course it did, or the NCA. All the private funders of aspects of CEOP’s work have indicated that they will continue to fund the organisation once it is included within the NCA. When the Home Secretary made a statement about that, she said:
“An individual at chief constable level will be appointed fairly soon”,
and that that individual
“will…work within the Home Office over the period before the NCA is set up.”—[Official Report, 8 June 2011; Vol. 529, c. 237.]
It is essential to have an effective person in place, and to have a sufficient transitional period to allow for an effective transition. I would be interested to hear what particular lessons were learned from setting up SOCA, and how those lessons will be applied to the establishment of the NCA.
My last point concerns changes to pay and conditions. Sir Hugh Orde and others have highlighted concerns about morale. We have to accept that, certainly according to surveys, morale in the police is not good, although I talked to officers on Friday and they did not express concerns about morale. They seemed to be fully committed and were enjoying their jobs. However, surveys show clearly a very high level of concern and unhappiness in the police force. One thing that the Government can do is explain—or re-explain, or explain in more detail—exactly what the impact of the proposals will be. Yes, it is true that some officers will suffer a reduction in pay. It is also true, however, that some officers will see their pay increase by up to £2,000 as a result of the changes, and that needs to be explained.
Another reason for low morale may relate to other things that the Government are having to do to tackle the deficit. I am confident that once those changes start to take effect and we start to see the economy moving in the right direction and a big impact is made in reducing the deficit, morale, not only in the police service but beyond, will improve.
Mr David Hanson (Delyn) (Lab)
When I was Minister with responsibility for the police, I published proposals for the grant for this year and next year. Will the hon. Gentleman remind me why he opposed those proposals and called for more money? Why does he, a Liberal Democrat, now support a 20% cut in the money going to policing, despite the fact that the Labour Government were going to make savings in the budget for this year and next year? That 20% cut has an impact on some of the major concerns that he has mentioned.
Tom Brake
The right hon. Gentleman will perhaps know that what appeared to be the case regarding his Government’s finances was not necessarily the case once one looked at the detail. For example, the structural deficit was much higher than the previous Government had led us to believe. The changes that we are making are, to a large extent, changes that his party would have had to make if they were in power. I hope—I am always hopeful—that we will hear some solutions from Opposition Members and an articulation of their alternative. I am sure that Opposition Members feel that the themes they hear from those on the Government Benches are always the same. I would say in return that the themes raised by those on the Opposition Benches are always the same—a catalogue of genuine concerns are raised, but a solution is never provided.
Mr Hanson
When I proposed a police budget containing reductions of £1.3 billion, with savings on procurement, overtime and mergers of back-office staff, the hon. Gentleman opposed it. He now supports a £2.5 billion cut. The extra cuts of £1.2 billion will cause concern about morale, numbers, rising crime and the impact in our communities, as outlined by Sir Hugh Orde yesterday. Why has the hon. Gentleman changed his view in the past 12 months?
Tom Brake
I have already explained why I have changed my view. The Government have to take those decisions. I suspect that if the right hon. Gentleman was still the Minister with responsibility for the police, he would be saying some unpalatable things about pay and conditions, pensions and so on, too. Maybe he will say that when he makes his speech.
In conclusion, there are improvements that the Government can make and are making in relation to accountability and central structures to ensure that the transition to the NCA is seamless. The Government are doing what they can on pay and conditions in a very difficult financial climate.
Jack Dromey (Birmingham, Erdington) (Lab)
It is a pleasure to serve under your chairmanship, Sir Alan.
Who are they, the human face of police cuts—the casualties of Government policy? The Home Secretary was good enough to meet recently with six officers from the west midlands. Inspector Mark Stokes, a police officer for 33 years and a specialist in crime reduction—the longest serving in the country. An expert at designing out crime; for example, the Four Towers estate scheme in Birmingham saw a 98.7% cut in crime. There is no better example worldwide, and that is why he has a deserved international reputation—forced out.
Sergeant Dave Hewitt is 48 years old, with 32 years of service, and a neighbourhood sergeant. An expert in early intervention—stopping antisocial behaviour becoming serious crime. He tackled problems ranging from dangerous dogs to cannabis factories. He is a man who engaged successfully with his community, which led to a significant reduction in crime—forced out.
Police Constable Ian Rees is 55-years-old with 34 years of service. A motorway police officer—the first on the scene after serious accidents, coping with death and distraught families. For example, a serious accident on the M42, involving a minibus on its way to a wedding, caused serious injuries and one death. He not only coped with that, but was then the police liaison officer with that family afterwards, giving them comfort—forced out.
Detective Constable Tony Fisher, aged 50, has 33 years of service. On the one hand, he tracked down the gang who were robbing pensioners at cash machines and put away the leader for 13 years. On the other, he tracked down a gang led by a man who wielded a machete when robbing shops and put him away for 17 years—forced out.
Detective Constable Tim Kennedy, 31 years a police officer, is one of the best in Britain at tackling serious acquisitive crime, ranging from burglaries to cars. He has one of the highest detection rates in Britain and is described by fellow officers as an outstanding detective— forced out.
Finally, PC Martin Heard—32 years a front-line police officer, in the past nine years in an area of multiple deprivation in Wolverhampton, coping with vice crime, drugs, burglaries, engaging with the community, closing down drug dens, slashing crime in that community—forced out. To add insult to injury, within weeks of being forced out, he received a letter asking whether he would like to come back as an unpaid special constable.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I thank my hon. Friend for raising the case of ex-constable Martin Heard. He served the All Saints community in Wolverhampton in my constituency in exactly the way that my hon. Friend describes. I should like my hon. Friend to respond to an e-mail that I received yesterday from another Wolverhampton officer in the same force. He wrote:
“Older in service officers, like myself are very worried about having their CRTP taken away. For me it is £100 per month less… our pay has already been frozen and with SPP also in line to be taken away”.
He went on:
“At the current time, all the officers who have spoken to me all state they love serving the local community and work to make the streets of Wolverhampton even more safer. It would be awful if colleagues leave our fine occupation due to financial issues.”
What is my hon. Friend’s response to that?
Jack Dromey
My right hon. Friend is absolutely right. Little wonder that there is a collapse in police morale. They are being asked to do more at a time of rising crime and are now threatened with being paid less. They deserve better.
The latest casualties of Government policy in the west midlands are 16 senior officers—nine superintendants and seven chief inspectors, including the heads of counter-terrorism and of crime—why? Her Majesty’s inspectorate of constabulary stated that we could experience a 12% reduction in expenditure over a period of years; instead, the Government have gone for a front-loaded reduction of 20%, with an inevitable serious impact on the police service. The consequences for the west midlands are that 2,200 will go from our police service, including 1,100 police officers.
Mr Aidan Burley (Cannock Chase) (Con)
The hon. Gentleman is sailing close to the wind, and I would not want him to mislead anyone in the Chamber. He mentioned Government policy in the west midlands and repeatedly used the phrase, “forced out” in his opening remarks. To be clear, will he confirm that no Government policy whatever forces chief constables to retire officers with experience of 30 years or more and that the use of regulation A19, to which he alludes, under which such officers are being “forced out”—his words—is purely a matter for the chief constable of the police force and has absolutely no direction from the Government? The best chief constables can manage their work force without losing officers with the most experience.
Jack Dromey
That is the Home Secretary’s Pontius Pilate defence. At the worst possible time—2,500 more burglaries, 2,200 more vehicle crimes, robbery up by 25%—the Government are cutting the police, but they are then blaming the police for the cuts. The Government have put good chief constables, such as Chris Sims of the West Midlands police, an outstanding leader of his service, in an impossible situation. It is about time that the Government accepted responsibility for the consequences of their actions and did not blame our chief constables.
Gavin Barwell (Croydon Central) (Con)
The hon. Gentleman is right to put a human face on the decisions taken and is right to ask why. Can he tell me why the reductions cited are being made in the west midlands, whereas in my constituency the Metropolitan police force is recruiting additional officers this year?
Jack Dromey
Because, in how the Government have proceeded, we have seen time and again a disproportionate impact on areas of high need and high unemployment, such as Birmingham and the west midlands—not only in the police service, but in local government and the health service.
In conclusion, this Government have reversed the welcome progress of the previous 13 years. Our Government had put 17,000 more police officers and 16,000 police community support officers on the beat, leading to a 43% reduction in crime. It is little wonder that there will be thousands of police officers descending on London next week. They will be here to defend the service that they love. They are Birmingham and Britain’s best, and they deserve better than to be told, “Thanks for your loyalty; here’s your redundancy notice.”
Nigel Mills (Amber Valley) (Con)
I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing this important debate. She was right about many things, in particular that the police struggle to speak for themselves—they are one of those services that cannot strike—so it is right for Members to have police debates, when we can speak up for them.
I have the pleasure of being on the police parliamentary programme, spending about 15 days with the police this year. I am always cautious speaking in a police debate, because if I say anything that they do not like, the chances are that I will find that out the hard way on the next day that I spend with them. My next day with them involves going up in a helicopter, so they will have scope to show me whether they like the things I say.
The police are facing a variety of what they probably regard as attacks from all angles, such as the funding cuts and the changes to the pay and conditions of police officers, although we should draw a distinction between those for uniformed police constables and those for police staff, who, I suspect, are often in an even worse position. The Government are also making structural changes to the accountability of the police force, which the hon. Member for Carshalton and Wallington (Tom Brake) discussed.
This is the fourth or fifth policing debate that I have spoken in over the past year, and I always start by urging the Government to review how they allocate funding to various police forces around the country. If we look at the impact on forces, we need either to implement the existing funding formula, so that forces actually have the funding that the formula calculates for their needs, or to find a better formula and implement that. We cannot, however, remain with a formula that calculates for Derbyshire police £5 million more than they actually get, and yet each year say, “That’s difficult, we will leave that for another year.” I am sure that the Nottinghamshire police force of the hon. Member for Gedling (Vernon Coaker) is in a similar situation and that we will get the same pleas from his force. If we need to be more efficient, can we start with fair funding in the first place? Derbyshire police force thinks of itself as extremely efficient—it has had to be for years, because in its view it has been underfunded. The concern of Derbyshire police is that, while it accepts the scope for more efficiency and further savings, it is hard to keep getting more blood out of the stone when it sees other forces not being forced to make the same level of efficiency savings. I have made that plea almost half a dozen times now. I hope that a different Minister will give a more encouraging answer to my police force, but I fear that that might be beyond his role today.
In common with all Members present, I have been lobbied by various serving and retired members of the police force about the impact of the proposed changes to their pay and conditions. All of us who have been in employment, and who have experienced threats to the business in which we are working or announcements of change and redundancy reviews, know that such times are horribly unsettling and uncertain. One lesson that I have learned is that the time of uncertainty should be as short as possible for it to be as fair as possible on the people affected, so I am concerned that many weeks have gone by since the Hutton and the Winsor announcements. Serving police officers do not yet have any idea which of the proposals will be implemented by the Government, which will not and how the proposals will impact on individuals. If we want to get police morale trending back upwards, we need to resolve what the Government proposals actually are, although I understand that they are under negotiation and that it is hard to come up with any public statement. Human nature, however, is to flick through the reports, find all the worst possible scenarios, add them all together and envisage a situation that, I suspect, is far worse than the reality will be.
Toby Perkins
I am glad that the hon. Gentleman has highlighted the situation in Derbyshire, which we both represent. At the Police Federation conference, Derbyshire representative Sarah Adams reminded everyone of what the Home Secretary said at an earlier conference:
“If you come with me, I will make this promise: I will always back you, I will always support you, I will always fight for you.”
Sarah Adams finished by asking the Home Secretary
“how can you expect police officers or the communities we serve to trust you or your Government?”
Our representative from Derbyshire said that to the Home Secretary. Does that make the hon. Gentleman feel neither that the police have misunderstood nor that the Government have failed to explain, but that the policy is wrong?
Nigel Mills
I have had some great times with the police going around the hon. Gentleman’s constituency, because we are advised on the police parliamentary scheme not to go around our own seats in case we attract more attention than the police do themselves. I would not go as far as he did in his intervention. Without doubt, we have a huge deficit, which has to be tackled, and there is no way that police forces can be shielded from that—they will have to pay their share, and I think that they accept that. I am sure that we will disagree about how large the share should be, but, when pay accounts for three quarters of police budgets, there is no way around the fact that that is what must take a fair chunk of the strain.
My point is that it is only fair on people to tell them what the changes will be as quickly as possible, rather than dragging out the uncertainty for months. Some things in the Winsor review and, in particular, the Hutton review are welcome. Hutton singles out the police force for a better deal on pensions than other public sector workers can expect, because they will be allowed their pension at 60, rather than the age rising to 66 or 67.
Mr Burley
Does my hon. Friend accept that some police officers may receive their pension as early as the age of 48? Police officers have unique job security. It the only job in the public sector that I can think of which people may start at 18, and have a job for 30 years, and a guaranteed pension of around two thirds of salary with no chance of being made redundant. Police officers cannot be made redundant, unlike people in every other job in the public and private sector. That unique job security should be reflected in the overall pay and conditions and, indeed, pension.
Nigel Mills
I am grateful for my hon. Friend’s intervention, but I think he is leading me down a line that would cause some difficulty. There is merit in considering whether police officers should sign up for 30 years, or whether they should join on a shorter contract. There is logic in signing up for 10 years, and if that works out for the force and someone wants to stay longer, they can do so. If it is not working out after 10 years, they may want to do something else. I was encouraged that Police Federation representatives from Derbyshire whom I met a few months ago were keen on that idea, and could see some advantages.
My hon. Friend tried to tempt me down the line of police redundancy, and my hon. Friend the Member for Rochester and Strood (Mark Reckless) has introduced a ten-minute rule Bill on that topic. I think that that would probably add more uncertainty to police officers’ views on their future. Some to whom I have spoken have colleagues who are unfit for work or have lost their enthusiasm for it, and a mechanism allowing them to leave would probably be a positive step, but I suspect that that is not the general view of the police force.
I want to plead for police staff whose terms and conditions are not as generous as those of serving police officers, but who have borne the brunt of some previous savings rounds. They do not have redundancy protection, and they fear that they are being even more unfairly squeezed when police forces are looking to make savings. I have certainly had representations from them saying that they do not have the same generous pension to look forward to and cannot retire at the same time. We must ensure that the balance of savings is spread fairly.
When we talk about front-line and back-office functions, it is easy to blur the fact that some of those functions that are key to the front line, but are not strictly uniform, are being squeezed. I have had representations from scene-of-crime officers saying that compared with years ago when a team would sent to almost every burglary, there is now a squeeze on and it is hard to get an operative to go to a crime scene. Certainly that service is not available for many burglaries. That is not the way to improve the rate of crime detection.
There are many challenges, and at a time of funding constraint, it is important that the Government give the police all the necessary powers to tackle crime as efficiently as possible. I will cite one example from the burglary division of Derbyshire police. I am sure that the hon. Member for Chesterfield (Toby Perkins) agrees that Derbyshire police has made great improvements in recent years in tackling burglaries and in providing a service to victims of such crimes. It has told me that many burglaries are carried out by people who want to steal jewellery to fund their drug habit. They rob a house, nick the jewellery and take it straight down to the local jeweller, who sometimes has a melting pot. The jewellery is sold for cash, and even if the police receive a tip-off about where the jewellery has gone, there is no trace of it or whom it was bought from. Previously law-abiding jewellers are being snared by the high price of gold into that route of crime. There are no regulations that the police can use to tackle jewellers or to force them to keep details of jewellery that they buy or whom they bought it from.
Regulations apply to scrap metal dealers, and even to pawnbrokers, but not to jewellers. If we are to help the police tackle crime, we must tackle the demand side and give them the powers that they need. I hope that the Minister will encourage his colleague, Baroness Browning, to look at the matter a little more closely than she suggested a couple of weeks ago.
I want to touch on accountability, because it is important that the police are brought back closer to the communities that they serve. There have been many welcome developments on neighbourhood consultation, but the introduction of elected police commissioners will do that, and I hope that the Government will proceed with that and not bow down to Lords wrecking amendments. It will be an important development, and even serving police officers have told me that they are looking forward to it, because it will make the force seem more accountable. Perhaps even at chief constable level it will encourage focusing priority on the area and not on the national, high-profile matters that chiefs sometimes focus on. That reform is essential to bring the police back to their trusted status with the public. I urge the Government to progress with that.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship, Sir Alan. I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing this important debate, which affects every community we represent in this House. In the time available, I want to make three brief and interrelated points: first, I want to discuss crime and antisocial behaviour in my constituency; secondly, I want to talk about how, as the long title of this debate hints, Government policies will place enormous strain on police forces at a time of drastic cuts; and thirdly, I want to point out that morale in the police force is at an all-time low, which has been alluded to in the debate.
Before doing so, however, like other hon. Members, I pay tribute to police officers throughout the country, and particularly in my constituency, who do so much on our behalf. I have been out on night shifts with officers, and I have seen at first hand the danger, anger and violence that they face. Some of the things that drunken thugs say about officers and their families are truly horrific. I admire the restraint and professionalism that they show in the face of such pressure and danger.
Mr Wright
I do not have much time, and I know that other hon. Members are waiting patiently to speak, so I hope that the hon. Gentleman will forgive me if I do not give way.
Hartlepool has experienced a pronounced drop in crime and antisocial behaviour over the past few years. Crime has dropped by 4% in the past year alone and by an astonishing half in the past seven years, and there are 6,000 fewer victims of crime in my constituency, with a reduction in the distress, ruin and low quality of life that crime produces. That is wonderful. In the past 24 hours, officers carried out a dawn raid in the village of Elwick in my constituency, where they uncovered a cannabis farm containing more than 1,000 plants with a street value of about £400,000. Officers from Hartlepool district drugs unit, the district support unit, the town’s dog section and Cleveland police helicopter all assisted in the raid. Cleveland police stated:
“These plants could have been destined for the streets of Cleveland, the co-ordinated and robust effort of officers has once again stopped the vicious cycle of these illegal substances from affecting our local communities.”
That great success in the past few years is a result of investment, co-ordination and that intangible sense that the police matter and are valuable—they should be seen as such. This is no time to be complacent, and much more needs to be done. Although criminal damage has fallen spectacularly in Hartlepool in the past five years, violence against the person has been on the increase in the past year after falling substantially since 2008. Despite the successes of the past year or so, and in the past couple of days, drug offences have risen sharply in the past two or three years.
Where there is economic deprivation, there is often crime, and we should all be mindful of the risk of crime when there is rising unemployment. Despite what Ministers say, there is a link between economic inactivity and crime, and it flies in the face of common sense to suggest otherwise. There are disproportionate cuts to public services in the north-east, and a particular and worrying emphasis on cutting early intervention schemes, which often nip problems in the bud. Youth unemployment is a particular concern in my constituency, with the risk of a generation of young people being lost to meaningful employment. With the cancellation of the education maintenance allowance, the abolition of the future jobs fund and so on, we are seeing the end of all possible help and support.
I am not suggesting for one moment that people who have lost their jobs or who are on benefits are more inclined to commit crime, but Government policies on matters such as welfare and housing benefit are socially divisive, making the lives of families who are already struggling even more difficult, with a threat to social cohesion. That is a risk, and we must have an effective policing system to address that risk.
My third and final point has already been mentioned. It concerns the appallingly low morale in the police service at the moment. Police officers have e-mailed me and come to see me at my constituency surgery. Many of them, often with decades of experience, have said that morale is on the floor. They have expressed concern that at a time of added risk and strain in terms of crime and antisocial behaviour, excessive cuts will mean the loss of police provision. In my area, a particular strength has been the number of police community support officers, which went from 37 in 2003 to almost 200 last year. They have made a real difference by providing a visible presence on the streets, and working closely with neighbourhoods and residents to provide reassurance, gain intelligence about an area and head off potential trouble and criminal activity. Because of the Government’s financial settlement, however, PCSOs in Cleveland police force cannot be guaranteed in their current form beyond 2012-13. The loss of those PCSOs would have a huge and negative impact on safety and reassurance in my community.
As we have heard, police terms and conditions are being attacked on all sides, including in the Winsor review and in the Hutton review of pensions. Officers have told me that the cuts seem to be ad hoc and piecemeal, and that the Government lack a vision for policing in the 21st century. That is why a royal commission on policing would be a sensible way forward. That possibility has already been mentioned in the debate, and I hope that the Minister will say something positive about such a commission.
Despite the pressures and cuts, police in my patch will do their job professionally, as they always do, and they will do their best. There is, however, an understandable feeling and growing resentment that the Government are making the police go out to do their duty with one hand tied behind their backs. As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) has said, at a time of growing pressure, and given the huge risks that they run when they go out on shifts, the police, and the communities that they serve, deserve better.
Mr Aidan Burley (Cannock Chase) (Con)
I was not going to speak this morning, but before the winding-up speeches, I want to respond to a few points that have been raised. The hon. Member for Erith and Thamesmead (Teresa Pearce) mentioned the 12% savings suggested by Her Majesty’s inspectorate of constabulary. We can have a political argument about whether cuts should be 12% or 20%, but as many people have asked—certainly in my constituency—if savings of more than £1 billion a year can be so easily identified, why have they not already been made over the past 10 or 15 years? Clearly, there is a lot of fat in the system and savings can be made. An analogy was made between that system and MPs and their researchers, and it was asked how we could do our jobs without back-office staff. Is it suggested that no savings whatever can be made? Her Majesty’s inspectorate of constabulary has identified savings of 12%.
Barbara Keeley (Worsley and Eccles South) (Lab)
Will the hon. Gentleman give way?
Mr Burley
I will give way in a moment. Do people think that police forces cannot work more efficiently and be less bureaucratic, that we cannot get rid of some form filling and red tape, and that there cannot be greater efficiencies in procurement and when buying IT systems? I suggest to hon. Members that a lot of efficiencies can be made.
Barbara Keeley
The cuts announced in Greater Manchester last week will affect 900 jobs, including crime scene investigators, forensic scientists and call handlers. Does the hon. Gentleman think that the second largest police force in the country can support the loss of hundreds of such jobs?
Mr Burley
As I said, it is up to individual police forces to manage their work forces and budgets. For example, my constituency is in Staffordshire, where numbers of police officers are not being cut. Instead, the police estate has been reduced—quite controversially, given some of the comments about police buildings—and the number of police stations has been rationalised from nine to six. Locally, there has been an outcry over the closure of three stations, but the chief constable suggested that instead of having nine stations that are half used, under-utilised, dilapidated and made of old Victorian bricks, and which cost £1 million a year to maintain, it would be better to close three stations and put the money into front-line services, PCSOs and the police officers mentioned by the hon. Lady. It is easy to jump on the bandwagon on closing police stations, but the most forward-thinking forces manage their budgets and staff in an innovative way that protects the front line and reduces costs in other areas.
Police numbers have been mentioned several times. Let us be clear: the Labour party refused to guarantee police numbers at the last election. As hon. Members know, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) was famously asked by Andrew Neil whether he could guarantee police numbers, and his response was no. When the hon. Member for Gedling (Vernon Coaker) begins the winding-up speeches, perhaps he will tell us how many police officers would be cut under the Labour party’s proposals to cut by 12% rather than 20%.
There has been some debate about the front line, but an agreed definition of what constitutes the front line does exist. HMIC has stated that about 68% of police staff are involved in every day, visible contact with the public or specialist roles to keep people safe and within the law. That is the definition of the front line. It is important because some of the toughest front-line roles that I have seen in the police force are carried out not on the streets but on computers in police stations by those who watch hard-core pornography involving children being tortured and murdered. To me, that is the hardest front-line job within the police force.
I wanted to intervene on the hon. Member for Hartlepool (Mr Wright) to point out that there is a difference in the roles done by police officers. I often hear comments such as, “If I am on the front line, there is a fight in a pub, it is pouring with rain and I am running towards that fight, I know that I will possibly get a kicking and be spat at.” That is a front-line, hard role in a big fight between drunk men in a pub on a Saturday night, and there is a difference between that and people sitting in a station working a nine-to-five shift. Front-line officers say that it is unfair that those in the stations are often paid more than those who run to the fight in a pub on a Saturday night, because they have done 10 years in the police service with an automatic pay increase every year. There are different roles within the police force, and I do not see a problem with people being paid according to the difficulty of their role. If people disagree with me about that, I would be interested to hear from them.
I will make just two final points to allow the Minister and the shadow Minister time to respond. First, on pay and conditions, it is not true that most police officers will face a £4,000 cut; a lot of officers will actually have a pay increase under Winsor’s proposals because they will be doing front-line duties. At the time of the last police review—such reviews seem to happen every 20 or 25 years—a special payment for front-line duties was given to about 89% of officers and rolled into the general salary. It could be argued therefore that the police already receive an extra 9% pay on top of their basic salary. Winsor could have removed that compounded extra payment, but instead he left it in the basic salary and proposed an extra increase in pay for some officers, based on the difficulty of their job and whether they are on the front line. The police get a fairly good deal, and some will get an even better deal under the proposals. Some, of course, will lose out because they are not undertaking difficult roles on the front line.
As I pointed out, there is amazing job security in the police service, and that should be reflected in the pay and conditions. I challenge any hon. Member to intervene on me and tell me another public sector job that someone can join aged 18, from which they cannot be made redundant—other than for gross negligence—and from which they can retire after 30 years, often as early as age 48, on two-thirds of their salary for the rest of their life. There is no single comparable job in the public sector.
Teresa Pearce
My example is that, as we have said previously, policing is different. Does the hon. Gentleman think that it should not be different and that the retirement conditions are the only perk that the police have and that they should not even have that?
Mr Burley
I think the police have a lot of perks; I pointed out that the retirement conditions are a unique condition. Does the hon. Lady say that being in the Army, Air Force or the Navy is somehow less dangerous? Surely, fighting in Afghanistan is more dangerous than a lot of police jobs. The job security in the police service is unique in the public sector, as is the fact that police officers cannot be made redundant.
In answer to the hon. Lady, yes, I think that the police should change their terms and conditions. The hon. Member for Birmingham, Erdington (Jack Dromey) made a fair point when he alluded to the fact that if, as we are now seeing, chief constables have to manage their work force and make reductions in the head count, the only people whom they can make redundant are police staff and PCSOs. Those people have different terms and conditions from police officers, who are warranted officers of the Crown, and that is unfair. All hon. Members would agree that we need a mixed work force in the police; we need police staff, PCSOs and police officers. It is unfair on staff and PCSOs that their terms and conditions mean that, in times of cuts, they are inevitably the only people who can be made redundant. Chief constables are not able to get rid of some of the dead wood, as they may wish. If we believe in a mixed work force in the police, we should believe in the same terms and conditions for all parts of that work force.
Barbara Keeley
We are talking about regulation A19 of the Police Pensions Regulations 1987 and the retiring of experienced police officers. I wonder whether the hon. Gentleman agrees with the constituent who came to see me, who finds himself, after four years, as the most experienced police officer in his unit and who was forced, as many police officers now are, to contact officers who had been retired through the A19 process to pick their brains about cases with which he was dealing. Does the hon. Gentleman think that that contributes to effective policing?
Mr Burley
No, I do not. A good chief constable should not be retiring officers who have such experience and who they think can make a huge contribution to their force. The point, as I said earlier, is that they do not have to do that. The Government are not forcing any police force to retire officers with loads of experience, and the best forces are not doing that. However, the point remains that they have to deal with the cuts.
We are not blaming police forces. We are not blaming Chris Sims for getting rid of his officers with 30 years’ experience. Police forces have to deal with the massive budget deficit that the Labour Government left us, so it is the previous Government whom we are blaming for the cuts having to be imposed on police forces, which are doing their best to deal with them. We blame not the police forces or the chief constables, but the previous Labour Government.
Sir Alan Meale (in the Chair)
I am well aware that only one more Back Bencher wishes to speak. My difficulty is that we need to bring the Front-Bench spokesman in, so that he can get answers and responses to the questions that have been posed. However, as the hon. Member for Lewisham East (Heidi Alexander) is the only one and has quietly waited all through the debate, I shall call her to speak. I ask her to be very brief.
Heidi Alexander (Lewisham East) (Lab)
Thank you, Sir Alan. I will take one or two minutes. I came to the debate today to put on the record my concerns about the cuts to the safer neighbourhood teams in London. In my constituency, we are experiencing a halving of the number of safer neighbourhood team sergeants. My concern is that those individuals are very visible and very effective and will be sorely missed in the communities that they serve. A big row has broken out about police numbers, but safer neighbourhood team sergeants play an important role in reassuring the community and making the public feel safer, and a number of wards in my constituency will be left without sergeants dedicated to them. That is of huge concern to me, and I should like the Minister to respond to it.
Vernon Coaker (Gedling) (Lab)
I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing the debate and on the excellent points that she has made. All the Labour Members who spoke described the real dangers and difficulties facing the police forces of this country. The debate should resonate up and down the country, because I fear that the Minister will do exactly the same as every Minister has done since the Government were elected, which is to ignore the voice of the police telling them that the budget cuts being introduced go too far and are happening too fast, and that the reforms and changes that the Government are making are causing real difficulties. I fear that the Government will plough on regardless. We saw that yesterday in the speech that the Home Secretary made to the ACPO conference straight after the president of ACPO, one of the most senior police officers in the country, had said that there is a real danger with what the Government are doing with respect to the police—risking community safety in this country.
Irrespective of what the hon. Member for Carshalton and Wallington (Tom Brake) says, I am sure that when he goes out and meets police officers in his constituency, as all hon. Members do, he will recognise the work that they do. However, he and all other Government Members in the Chamber have to recognise that the policies that they are supporting and voting for in the House of Commons day in, day out are causing the problems that officers have. That is the reality. Government Members can sympathise and say to them, “Yes, this is difficult. I understand the problems you have,” but the only way to make a real difference is to vote differently. The alternative is to stand up to those officers and say, “I don’t care what you’re telling me about the reductions in the numbers of officers and police staff, the changes to your pay and conditions and all the other changes being made. I know better than you do and I’m going to carry on supporting the Government to deliver it.” That is the reality.
When the Minister responds to all the points made by my hon. Friend the Member for Erith and Thamesmead and all the other hon. Members who have contributed, he will lay out the Government line, Mr Meale—Sir Alan. I should explain that I have known Sir Alan for so many years as a Labour MP that it is difficult to get used to his new title.
In the time available, let me quickly run through some aspects of the Government’s line. Obviously, I will give the Minister a few minutes to respond.
First, let us deal with the budget cuts. My right hon. Friend the Member for Delyn (Mr Hanson), who was the last Police Minister in the previous Government, set out what we had said on budget cuts. At no time did the previous Government say that they did not propose to make any cuts, and at no time have the current Opposition said that we do not propose to make any cuts. What we did say was that we would listen to what the inspectorate said and conform to its professional opinion. Why? Because the inspectorate told us that what was proposed could be done without impacting on the front line. Through changes in collaboration, IT and procurement, the savings could be made without impacting—to deal with the point made by the hon. Member for Cannock Chase (Mr Burley)—on police officer numbers, although of course the chief constable would have discretion within that. That was the point that my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), the Home Secretary in the previous Government, was making.
Cuts of 12,000 and 16,000 in the numbers of officers and police staff will have a huge impact on our communities. People sometimes say that this point is a bit trivial, but I do not believe that any Government Member who voted for the budget cuts stood at the last election saying that we have too many police officers. I can guarantee that. It would be nonsensical. We say that we will listen to the public. I have yet to meet anyone outside the House who says that we have too many police officers. They may say that officers are not doing what they should be or that they should be doing this or that, but they do not say that there are too many of them. That is why the hon. Member for Carshalton and Wallington voted against our Budget last time and stood on a manifesto promising thousands more police officers. People want to see more police officers—whether uniformed officers, specialist officers dealing with sexual violence or domestic violence, detectives or specialist officers dealing with economic crime—in stations working 9 till 5, I might point out; it is not only officers out on the beat who make a significant difference.
We see all these budget cuts before us. In addition, the defence police face significant cuts. The issue that my hon. Friend the Member for Erith and Thamesmead has raised for debate is the impact of Government policies on policing. Let us run through a couple of the other policies. The Minister will not be able to respond to this.
The National Policing Improvement Agency is being abolished. What is happening to all its functions? The Government do not have a clue. That is the answer. They are clueless. They have no idea. They are making it up as they go along: “We’re going to put a bit here and a bit there, but we’re not sure.” They said that they would abolish the NPIA in April 2012 and create the national crime agency later, in April 2013, with the NPIA functions probably going to the NCA. Then someone said, “You’re abolishing the NPIA a year before the NCA is created,” and the Government said, “Oh dear.” No one could make it up. The Government are abolishing the NPIA—where are all its functions going?
The national crime agency is to be established. There is no legislation for it at all. We have no idea about it. The hon. Member for Carshalton and Wallington says, “We’re going to have a co-ordinating function here and a co-ordinating function there.” The previous Government’s manifesto proposed a border police force. Now we have a co-ordinating police border command. The Minister needs to explain to the Chamber and to the police the direction and control arrangements of the national crime agency. The national crime agency document says that the chief constable of that organisation—who is now a secondee, not an appointment, because the Government messed that up as well—will have direction and control. Does that mean that the Metropolitan Police Commissioner will not be able to determine what happens at Heathrow airport and that the national crime agency will, because it is co-ordinating border command? What about the chief constable of West Yorkshire dealing with Leeds airport? Who has direction and control there? Is it West Yorkshire police or the national crime agency? The Government do not have a clue about that.
We have the Winsor review, the Hutton review and the Neyroud review—we have not even mentioned Neyroud. All those things are going on at the same time. What is important about the Winsor review is that it is before the Police Negotiating Board, but such things are not meant to be negotiated. Will the Minister confirm that this is a job lot? We either take it or leave it. We cannot negotiate individual bits; the whole thing must be agreed. The “N” in PNB stands for negotiating; this is not about the Government dictating to the police what they should do. These things are supposed to be negotiated, but, again, the Government have not done that.
No wonder police morale is at rock bottom, as my hon. Friends have said. Of course, we should not worry; the Government will carry on regardless and they will not listen. It is all right the hon. Member for Amber Valley (Nigel Mills) saying that he is a member of the parliamentary police scheme—that is very laudable—but the police actually want a Government who take into account, and respond to, what they say. I challenge the Minister to say what significant change the Government have made as a result of what the police have said. There is not one. No wonder the police feel disrespected, undervalued and demoralised—so would I if the Government did not take the slightest interest in what I said.
Finally, there is accountability. The Government will not even publish the responses that they received to the White Paper proposals on police and crime commissioners. They had 800 or 900 responses, but they will not publish them. Instead, they published a summary. Why? Because, by and large, those who responded were not in favour of the proposals. Will the Minister tell us who supports police and crime commissioners, apart from Government and right-wing think-tanks, the hon. Member for Cannock Chase (Mr Burley), a few other Tory Back Benchers, the Prime Minister and Lord Wasserman? He cannot. The Government should not just praise the police—we all do that, and it is obviously important—but it is about time they listened to them and acted on what they are saying.
The Minister for Immigration (Damian Green)
Congratulations on your elevation, Sir Alan. I join others in congratulating the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing this important and timely debate. Everyone on both sides of the House recognises and applauds the vital work done by police officers, from chief constables such as Chris Sims to the most newly recruited PC on the streets. In the short time available to me, I want to address many of the issues that have been raised.
Damian Green
I must apologise to the hon. Lady; I will not. I have eight minutes in which to respond to a very dense debate.
Our vision for policing can be expressed quite simply: the police have a clear mission to cut crime. Our entire approach is designed to support that mission through a comprehensive and clear programme of reform. There are four key elements to our programme: improving democratic accountability; ensuring greater transparency and engaged communities; increasing efficiency and value for money, and returning discretion to the professionals; and getting a stronger grip on serious, complex and organised crime.
Of course, reducing the budget deficit remains a priority, and the police service will have to play its part. A 12% cash reduction in central Government funding over four years, which is equivalent to 20% in real terms, is a challenging but manageable settlement for the police. In real terms, the average reduction in central Government funding to the police will be about 5.5% per year.
However, Government funding is not the only source of funding to the police. About a quarter of their funding comes from the police precept component of council tax. If the precept is increased in line with forecasts from the Office for Budget Responsibility, the spending review settlement will represent only a 6% cash reduction in total funding by 2014-15, which is equivalent to 14% in real terms. Those figures show that although the reductions are challenging, they also are achievable. By introducing the reforms I have mentioned, we will create a police service that is more efficient and responsive to local demands, despite the inevitable funding reductions that it will face in the coming years.
That touches on the central incoherence in the points made by the hon. Member for Gedling (Vernon Coaker), who speaks for the Labour party. The former Police Minister, the right hon. Member for Delyn (Mr Hanson), who performed that function admirably, admitted in public that the previous Government were going to cut police budgets. Subsequently, in one of the Opposition’s flirtations with honesty, the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), announced that he would have had to introduce much more serious cuts across the board had he remained Chancellor after the election.
Although the former Chancellor was perfectly honest about the fact that he would have announced some cuts, and although former colleagues of his in the previous Government have admitted that the cuts they would have introduced would have been much bigger, the tone adopted by Opposition Members throughout the debate has been that any change or reform would be disastrous for the police service. Their approach is simply incoherent. Had the Labour party remained in government, they would not have taken that line.
Damian Green
The right hon. Gentleman knows as well as I do that the figure under the previous Government would not have been £1.3 billion. That is what they told us before the election, but we now know that they would have told us something completely different after the election had they been re-elected.
Let me move on to some of the points that have been raised. On improving democratic accountability, the hon. Member for Gedling asked me who had approved the proposals for police and crime commissioners, and the answer is the House of Commons, which voted for the legislation.
Damian Green
We are in the process of swapping bureaucratic control for democratic accountability by replacing police authorities with directly elected police and crime commissioners. Despite the recent vote in the House of Lords, which the hon. Gentleman refers to, the Government anticipate that police and crime commissioners will be introduced across the whole of England and Wales, with the first elections taking place in May next year. The coalition agreement made that clear. We fully intend to go ahead with the proposals, and we expect the Commons to reinstate the policy.
As I said, the second element in our reform programme is increasing transparency and creating engaged and active communities. That will help communities, which is important, but it will also help police engagement with communities.
The third element of our reform programme is introducing local professional discretion to help to increase efficiency and value for money. That is directly relevant to the many points made about morale. As we all know, there has been too much unnecessary paperwork over recent years.
Damian Green
I am sorry, but I really have not got time.
That has happened as a result of central Government adding layers of bureaucracy to make up for the lack of local accountability. The Government have taken the lead in cutting interference from the centre in police business. We want to respect the police’s operational independence and to give them the space they need to deal with any problems. That is why we published a draft protocol setting out the roles and responsibilities of police and crime commissioners, chief constables, police and crime panels and the Home Secretary. The protocol was drawn up in discussion with, and has the full agreement of, ACPO, including Sir Huge Orde, the Association of Police Authorities and the Association of Police Authority Chief Executives. It builds on recommendations from the Home Affairs Committee.
On top of that, we have axed many of the unnecessary bits of paperwork that had built up over the years. The policing pledge, public service agreement targets, performance indicators and local area agreements have all been scrapped. In their place has been put the one simple objective of cutting crime. The hon. Member for Gedling asked what we had done, and those measures are a significant answer.
We will continue to make decisions that improve the performance of the police and their relationship with the general public. Let me deal with that in detail. Mention was made of funding in Metropolitan police areas. The Metropolitan Police Service receives specific funding for its role of policing the capital. That funding comes in the form of national, international and capital city grant and totals £200 million this year. As with any force, we will consider requests for additional support where the costs involved in any single operation are significant and place an unmanageable burden on the Metropolitan police.
Inevitably, we have discussed the Winsor review extensively. The Government have been clear that action is needed to tackle the deficit, and the police service has its part to play. In an organisation such as the police, where pay is 80% of revenue expenditure, there is no question but that pay restraint and pay reform must form part of the package. Police officers should be rewarded fairly and reasonably for what they do. That is why the Home Secretary asked Tom Winsor to undertake his review. The review is not only about savings, but about making reforms to enable the introduction of modern management practices and to maximise officer and staff deployment to front-line roles, maintaining and improving the service to the public. The principles Tom Winsor sets out in his report provide the right framework, and we have referred his recommendations for short-term change to the relevant bodies for consideration.
Damian Green
I am sorry, I really cannot.
We have talked a lot about whether the cuts can be achieved without damaging the front line. Denis O’Connor of Her Majesty’s inspectorate of constabulary estimated that £1.15 billion could be saved if the least efficient forces brought themselves up to the average level of efficiency. We want forces to reach the standards of the most efficient, not just the average.
There are also areas outside the remit of HMIC’s report, including Government and IT collaboration, where further savings can be made. Indeed, my right hon. Friend the Home Secretary made an announcement about that yesterday, which will be significant. In terms of officers opting out of the pension scheme—
Packaging Industry
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Mark Pawsey (Rugby) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. I am pleased to see the Minister and so many other hon. Members in the Chamber.
I want to consider the difficulties faced by an important industry in the UK: producers and distributors of packaging products. The matters I want to raise fall broadly into three categories: issues affecting industry generally; the cost inputs by which the packaging industry is affected, particularly energy and international competition; and the impact of packaging on the environment. I realise that of those three items only the first is specifically the responsibility of the Minister and his Department, whereas the second is broadly that of the Department of Energy and Climate Change, and the third of the Department for Environment, Food and Rural Affairs, but I am pleased that the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), is to answer, because I want to dwell on the broader issues affecting an important business sector.
We all recognise packaging when we see it. It performs an important role in our lives. The container that food is sold in protects the product and reduces spoilage, keeping it fresher for longer. Packaging exists only because other products exist. First and foremost it is a delivery system for other products. As to its impact on the economy, the UK packaging manufacturing industry has a turnover exceeding £11 billion, with 85,000 employees, representing approximately 3% of UK manufacturing output. It is recognised by the Minister’s Department as an important part of the green economy; it has a role as a major recycler and as a reuser of recycled material. The sector has contributed to raising the UK’s packaging waste recycling record over 10 years from just 28% in 1998 to 65% in 2008.
I believe that I have some authority to speak on packaging because of my career background before entering Parliament. In 1979, as a 22-year-old fresh from university, I joined a company called Autobar Vending Supplies as a graduate trainee. The business’s product range originally consisted of beverages for the drink vending sector, but also, importantly, included disposable plastic cups. The range of cups led the business into supplying a broader range of catering, disposable and food packaging items. As an aside, I draw attention to the fact that the model of that business is, regrettably, seen less frequently today; it was owned by an entrepreneur, who had a strategy of building up sales of a range of products to a level where it made sense to acquire a manufacturer or to start up manufacturing from scratch, so as to control quality and delivery, and retain the manufacturing profit. It is a shame that today the perceived complexities of running and managing manufacturing businesses mean that the strategy would probably involve sourcing the products in volume from an overseas manufacturer.
In my early years with the business I was involved in sales of goods manufactured in the UK by businesses such as Mono Containers, Autobar Vendabeka and Fibracan. At that time, in 1979, the catering disposable sector was growing fast. In 1974 McDonald’s opened its first restaurant in the UK, in Woolwich, serving in-store customers and those who wanted takeaways with products in the same disposable type of packaging. That started to change people’s attitudes towards the use of packaging more broadly.
Susan Elan Jones (Clwyd South) (Lab)
It is rather heart-warming to hear the hon. Gentleman talk about home-grown British packaging businesses. He may know that north-east Wales has been badly let down by Tetra Pak, a company that had net sales of €9.98 billion in 2010, but which closed down an entire operation with a loyal work force. Will he, with me, implore the Minister to speak to the company again, especially as the Rausing family is an extremely large donor to the Conservative party?
Mark Pawsey
I shall come on to the pressures that the industry has faced, and some of the actions that we may ask our Business Minister to take on behalf of that business and others.
Kate Green (Stretford and Urmston) (Lab)
I am very pleased that the hon. Gentleman has secured the debate. Nampak Plastics in my constituency would welcome his comments about the need to support UK industry, and the need for home-grown businesses to thrive. However, it would point out that those things also have to do with the raw materials being home-grown. It is concerned that the waste products that can be turned into recycled packaging material cannot be processed in the UK because of an insufficiency of suitable waste recycling plants. Does the hon. Gentleman share my wish for the whole product chain to become, as far as possible, a home-grown industry, with British industries supported throughout?
Mark Pawsey
The hon. Lady makes a good point: we need the industry to go from start to finish, recycling a product and bringing it back. There have been difficulties about planning consents, and the Minister may be able to comment on changes in the planning system that will enable some of the new processes and facilities to come online.
Neil Carmichael (Stroud) (Con)
I welcome the debate; it is excellent that my hon. Friend has secured it. There is another issue that we need to explore in relation to the supply chain, which is the enforcement of regulations. In my constituency, silage from farms is covered with black cellophane. That is, effectively, being exported to China, where it might be dealt with inappropriately, when it is needed here for plastic recycling, to be turned into bin bags. We would be greatly aided in tackling that by the enforcement of existing DEFRA regulations. I know that Lord Henley is busy working on that, but we would welcome consistency and long-term planning on that front.
Mark Pawsey
My hon. Friend makes a good point: recycled material should be seen as a resource. It should be used and valued, whereas historically we have put it into landfill. He is right to say that, increasingly, large proportions of recyclable materials are being sent overseas to be manufactured into products.
I was talking about the growth in the use of packaging, particularly in the food service sector, because of the advantages of disposable packaging over reusable products, and the role of packaging more generally. In my business, our challenge was to enable a customer to get hot food products home still hot, and in one piece.
In 1982, I formed my own business supplying catering disposables and food packaging to businesses throughout the midlands. In the 30 years that I have been involved in the industry, it has seen substantial developments in food-service packaging. The greater use of disposables arrived at the same time as changing lifestyles, with people eating more regularly on the move or grazing, and there has been a substantial growth in the hospitality industry, and the development of mass-catering at far more venues. That has led to a variety of innovations. Sandwiches represent an interesting development; at the outset they were packed in paper bags, or possibly wrapped in cling film, but then there were containers made of moulded plastic and, more recently, of moulded coated board with a heat-seal to preserve the life of the product.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Gentleman on securing this important debate. I declare an interest: I have a company in the agri-food sector. The hon. Gentleman will be aware that there have been scares in the food sector in the United Kingdom, whether justified or not. Concerns have been raised about the use of recycled cardboard in the food sector because it may contain mineral oil. Although there is no firm evidence that it could be a health risk, does he agree that the packaging industry, whether it deals with cereals or whatever, needs to address the matter to prevent such health risks developing?
Mark Pawsey
The hon. Gentleman makes a good point about the use of recycled materials. We need to be careful about products that come into contact with food. I shall speak later about a recycling project with which I am familiar, but the recycled products are not for food use.
I referred to recent developments in food packaging. The speciality coffee sector is another case; the producers of better-quality coffee are able to distinguish their products by presenting them in board, rather than the less expensive plastic or expanded polystyrene foam. Throughout my time in business, I saw catering disposables and packaging being used as a marketing medium—a device on which to print a name, logo or marketing message to convey the nature of the business. My experience of the catering disposable sector has given me such a knowledge of its products that I often joke with friends that I could speak for more than an hour on the various methods of packing a hamburger, but I shall not inflict that on the House. However, like sandwiches, hamburger packaging represents a good example of development. We moved from the paper bag to wrapping in foil, and then went from expanded polystyrene to the folded and glued board carton with which we are familiar today.
One thing that encouraged me, as a new Member, to apply for this debate was the fact that I have joined the all-party group on the packaging manufacturing industry, and I am pleased to see a number of its members here today. I was encouraged to join the group not only because of my experience in the packaging sector, but because a substantial manufacturer is based in my constituency of Rugby. Ball Packaging manufactures one-piece aluminium drink cans, and I was pleased to visit its highly automated high-tech plant only last summer.
Rory Stewart (Penrith and The Border) (Con)
I congratulate my hon. Friend on securing this debate. Following his observations on the company in his constituency, does he recognise that the packaging industry is not just important as an industry, but provides a lot of model companies for Britain? For example, Innovia in Wigton is investing a great deal in the local secondary school, the Nelson Thomlinson school; it provides good apprenticeships, spends more than £8 million a year on research and development, and has achieved 92% exports from the far west of Cumbria. Could we please include in this masterful discussion an account of the good company practices of the packaging industry?
Mark Pawsey
My hon. Friend makes a good point. I shall speak later about concerns that have been raised about the effect of packaging on the environment. However, that pressure has caused industries in the sector to become good neighbours, and to work with their communities and undertake exactly the kind of work to which my hon. Friend refers.
At a meeting—probably my second—of the all-party group, I was concerned to hear what the manufacturing companies had to say. One comment stuck with me for some time. One or two people said that the pressures on the packaging industry were such that people present believed that the industry might not exist in its current form 15 years from now. Given the number of people employed in it and its importance to our economy, that struck me as a significant statement, and one that deserves further attention.
Neil Carmichael
The industry will continue to exist, because we will still need packaging, but we should celebrate the fact that the industry is capable of huge technical advances. Nampak in my constituency, which makes bottles for Dairy Crest, has made some great strides in reducing the weight of its bottles, stopping leakage and so forth; the product is almost perfect now, and much less wasteful. Critically, that manufacturer is using high technology and will continue to develop—for example, by moving to products that are less dependent on oil. Those are things to celebrate.
Mark Pawsey
I shall speak later about some of the industry’s innovations in response to the pressures, and my hon. Friend gives a great example.
Given those concerns, I turn to matters to do with the environment and energy costs. I understand that many of them are not the direct responsibility of the Minister’s Department, but I am sure that he will appreciate the concerns of this important manufacturing sector. Given the challenges faced by industry more generally, manufacturing has been and continues to be an important part of the UK economy, adding £140 billion per annum to the economy and providing 2.5 million jobs, but it has been badly affected over the past 10 or 15 years and particularly by the recent recession. He will be aware that industry generally considers it vital to provide the right conditions to ensure that manufacturing can succeed in a globally competitive environment. It is important that the Government deal with the barriers that businesses face, such as finance, regulation, tax and skills.
Despite the recent slow-down in global growth, the world economy is predicted to double in size over the next two decades, with massive growth in emerging markets such as China and India. It is important that the UK’s manufacturing sector is able to take advantage of such opportunities. The good news is that manufacturing output rose by 1.3% in April and that, in 2010, manufacturing output grew by 3.6%—the fastest since 1994. The Government place a high priority on helping manufacturing firms to invest, and they have cut the main rate of corporation tax to 26% and the small profits rate to 20%.
In addition to encouraging investment, industry needs new recruits. We need to encourage school leavers to consider a career manufacturing. In many ways, that will require a change in culture, as we must give an incentive to school leavers to consider manufacturing. The UK skills shortage is recognised by Proskills UK’s chief executive, Terry Watts. He said that the skills shortage in the manufacturing sector is costing the UK £118 million in lost productivity. He also said that the Government should
“do more to espouse the whole of manufacturing, and not just the high profile industries.”
We should also consider the process industries that are not as high-profile as manufacturing, recognising that industries such as packaging are fundamental to the development of the whole economy.
The Government take the skills shortage seriously. Addressing the shortage means increasing the number of apprenticeships and technical training opportunities. In a positive move, the Government have said that they will fund an additional 80,000 work experience places for young people and expand the programme of universities and technical colleges.
Lorely Burt (Solihull) (LD)
I agree with what my hon. Friend says about the need to increase young people’s awareness of the opportunities that exist in manufacturing. Does he agree that we need to shake up the image that the careers service has of manufacturing? I am talking about the idea that engineering is an oily rag type profession. The service should lay before our young people all the potential that manufacturing offers as a career.
Mark Pawsey
My hon. Friend makes a good point about the image of engineering. As west midlands MPs, we both know the importance of engineering. As a father of children who have recently gone through school, I recognise that the case for going into industry and getting involved in manufacturing has not been put sufficiently strongly by the careers service. We want to change that attitude in the hope that some of those bright young people who are coming from the technical colleges will find their way into the packaging industry, whether through design and innovation or through their input to the manufacturing process.
Let me turn now to the challenge of competing in world markets and energy costs. The production of packaging—the process by which paper, board, glass and metals are manufactured—is energy intensive, and the energy agenda affects the packaging industry and packaging manufacturers disproportionately. The packaging industry produces large volumes of low-value items. The cost of a box, can or bottle is measured in pence per item and the cost of a bag measured in points of a penny per item. A significant increase in energy costs will have an impact on those items.
The Government aim to reduce carbon dioxide emissions to 50% of the 1990 level by 2027. The packaging industry fears that that objective, together with other plans, will put UK manufacturers at a greater disadvantage than those located elsewhere in the world. It feels that the UK expects too large a carbon reduction in too short a time.
The think-tank, Civitas, recently prepared a report on the effect of energy prices on the chemical industry; the effect on packaging would be pretty much the same. Civitas states:
“Britain is making the deepest emission reductions of any industrialised nation. The 2020 34% target is 14% higher than that of any other EU nation. The latest carbon budget now commits the UK to emission targets beyond 2020, the first country in the world to do so. To meet these over-ambitious targets, high unilateral costs are being imposed, such as the new carbon price floor. Taking all green levies into account, the average energy-intensive company’s energy bill is set to rise to £17.5 million by 2020 from the current £3 million.”
Lorely Burt
My hon. Friend is being very patient with me this morning. Is he aware of the National Industrial Symbiosis Programme, which works across industry, thinks outside the box and uses other firms’ waste and by-products? Since April 2006, its 12,500 members have reduced by 7 million tonnes the waste that would have gone to landfill, and they have reduced carbon emissions by 6 million tonnes. Would he like to see that extended to all industries throughout the country?
Mark Pawsey
My hon. Friend makes a good point about the industry’s activity. None the less, I want to focus on the concerns that a cost input of the industry is significantly out of line with that of similar manufacturing companies based elsewhere. I shall add to the Civitas quote. The think-tank said:
“The response to the price hike”—
in energy costs—
“will be industrial emigration. Companies, especially multinationals, will leave the UK to settle in countries with lower energy prices and fewer punitive costs. Those who cannot afford to relocate will likely fold. In the long-term, foreign investment will also dry up, leaving the UK an industrial backwater.”
That is a real concern for companies involved in manufacturing, especially in this sector.
Mike Crockart (Edinburgh West) (LD)
I thank my hon. Friend for giving way so many times. Although it is undeniable that we need to deal with climate change, is he not worried that we might not only lose industry abroad, but offshore our CO2 emissions, which effectively means that we do not deal with the problem at all?
Mark Pawsey
I want to address that point a bit later. My hon. Friend is right. All we end up doing is moving more product around rather than manufacturing it in the place where it would be most sensible to do so. In that movement, we generate additional carbon dioxide.
On business investment plans, one of the key things that business needs to do is estimate future costs of raw materials and energy, of which energy is often the most significant. There is already an account of the Business Secretary having had his ears burned by industry leaders about energy costs. If other countries do not follow our lead, the concern is that packaging manufacturers might move away from their UK bases. A number of people involved in the industry have said that a large proportion of UK plants producing packaging are now owned by companies that are based overseas and that if energy prices or regulation in the UK become excessive, there is no reason why those overseas-based multinationals would continue to keep those businesses in the UK.
Let me touch now on the standards under which imported products are manufactured. Manufacturers based in the UK, particularly those involved in producing packaging for food, incur costs by ensuring that they are compliant with all relevant food safety and hygiene legislation, but that is not the case for competitors based outside the EU, which puts UK-based manufacturers at an economic disadvantage. If such packaging is supplied without the recognised accreditation concerning EU food safety and hygiene, the concern is that there could be health risks to consumers.
Another strand of my argument relates to packaging products being seen as an obstacle to a greener environment and a greener economy. The Prime Minster has pledged to make this the greenest Government ever. One of the ways in which the Government aim to achieve that is by reducing the amount of packaging used and encouraging even more recycling. The industry accepts that its product is highly visible; we see it around us all the time. None the less, its environmental impact is much less than many would presume. Less than 3% of land-filled waste is packaging waste, despite the fact that 18% of household waste comes from packaging. It is accepted that packaging is visible because of litter. By definition litter is waste that happens to be in the wrong place. It is created by individuals through thoughtless or antisocial behaviour. The industry has a responsibility regarding litter, but it argues that litter should be addressed by education, investment in street cleaning and law enforcement.
The problem is that packaging attracts media attention. I would present Jeremy Paxman as a witness. Only the other day, he spoke on Radio 5 Live as chair of the Clean Up Britain campaign and railed against manufacturers of packaging. The industry argues that the attention that it receives is disproportionate and that packaging should be seen not as a problem but rather as a resource-efficiency solution. Given all the media attention, the packaging industry feels that it has become an easy target for those who wish to present their green credentials.
The emphasis on packaging and the environment has been recognised in the waste policy review, which was recently published by the Government. That review outlines the Government’s determination to move towards a zero-waste economy by relying more on voluntary approaches to cutting waste, increasing recycling and resource productivity, and improving the overall quality of recyclates.
Broadly, the industry is pleased that the review acknowledged the valuable role that packaging plays and that, in most cases, the carbon footprint of packaging is absolutely dwarfed by that of the products that it protects. However, there is a view within the industry that the review continues to pander to public misperceptions about packaging, as it draws attention to surveys that show that consumers believe packaging remains a big environmental question. The industry is disappointed that the review does not attempt to challenge some of those misconceptions.
The industry believes that, to challenge such misconceptions about waste, customers need to understand that good food packaging reduces food waste, which in turn saves people money through lower grocery bills and reduces the amount of unused food that is sent to landfill or composting. The review refers at some length to the need for packaging to be improved further, but it focuses on toy packaging. Unfortunately, toy packaging makes up only 0.36% of packaging in the UK and it is mostly used for imported goods, over which we have no control in the UK. In addition, the review pays a lot of attention to waste prevention, with the announcement of new initiatives and funding, and it also has a stated aim of reducing food waste. Some organisations have praised the review for making commitments to work with businesses to help them to reduce wastage, rather than carrying on the old practice of handing out penalties to companies that fail to comply with legislation.
Broadly, the industry believes that it can work with the Government on the waste policy review. Dick Searle, chief executive of the Packaging Federation, has said:
“It looks like there’s nothing unexpected in here and it’s all reasonably logical. I’m sure the industry will appreciate the light touch approach. I’m very pleased to see the reference to packaging being ‘dwarfed’ by product in terms of carbon footprint. Overall, it looks like government has been listening.”
Perhaps we might consider that response from an industry to Government plans as a refreshing one.
Kate Green
I am listening with care to the hon. Gentleman and agree with much of his analysis. Does he agree that the Government have an opportunity to galvanise a cross-sectoral approach to the issue—for example, by looking at a product from beginning to end and considering packaging within that context? In the milk industry, the packaging used is responsible for only 7% of the industry’s carbon footprint and joint work by the industry and the Department for Environment, Food and Rural Affairs has enabled the entire product chain to be analysed. Does he endorse that approach to looking at environmental concerns?
Mark Pawsey
Absolutely. Cross-cutting and working together through voluntary agreement is entirely the way forward. That is the main thrust of the waste policy review, and I am delighted that the Minister has said with regard to the review:
“This Responsibility Deal with the waste management industry is most welcome. It is a good example of the way alternatives to regulation can work to achieve better waste management and recycling services for SMEs”—
small and medium-sized enterprises—
“and encourage better sorting of recyclable material to help the recycling industry.”
Voluntary arrangements are certainly the way forward and they are arrangements that industry that will respond to. Perhaps the carrot will always work better than the stick.
It is not possible to talk about the regulation of business without making some reference to Europe. European legislation and regulation are already in place under the European packaging directive, which requires the packaging industry to meet strict requirements to prevent the use of excessive packaging. Since that directive came into place, the amount of packaging waste recovered and recycled in the UK increased from 3.3 million tonnes in 1998 to more than 7.1 million tonnes by 2009.
On recycling, my experience as local councillor before coming to Parliament led me to conclude, first, that most people are pretty sympathetic to recycling and see activity by their local authority to improve recycling rates as a good thing and, secondly, that individuals are prepared to put time and effort into sorting out waste streams, so it is important for the industry to make it as easy as possible for people to identify the materials used in the manufacture of each product. For example, most Members present will know that plastic is not just plastic; there are many varieties, some of which are recyclable and some of which are not.
How local authorities go about waste collection and recycling leads to a concern that the industry has about localism, which of course is a key objective of the Government. Localism is appropriate in many sectors, but occasionally it has a downside. The packaging industry takes very seriously what happens to its products at the end of their life and, consequently, regularly engages with the authorities that are responsible for the collection and disposal of waste. Of course, for consumer goods, those authorities are local authorities.
The Food and Drink Federation has referred to the difficulty for the packaging industry of responding to the localist agenda given that there are 398 local authorities, each with a different approach and different priorities with respect to waste planning and disposal, including whether it is right to recycle or incinerate. The industry believes that the lack of uniformity across local councils makes life difficult for it in establishing contact and liaising with local councils. It also believes that it might be helpful if the Government suggested some form of unifying strategy and that, in addition, such a strategy might be of benefit with regard to dealing with litter. I recognise the conflict between that objective of the packaging industry and the broader objective of the Government to enable local people to have the right to decide, through their elected representatives, the best way forward in their area.
Given the problems that I have referred to—problems that fall into three categories—how is the packaging industry responding to the challenges that I have outlined? First, regarding its image, the industry recognises the need to convey the benefits of the products that it produces and to put forward examples of positive development and innovation. It is very clear that modern packaging solutions have enabled a huge change in the way that we shop and go about purchasing our goods, but the industry recognises that it needs to do more work to convey its message more effectively and to get across the benefits of packaging. For example, eliminating packaging from fresh produce would lead to massive food waste. The Cucumber Growers Association has conducted tests that show that unwrapped cucumbers are unsalable after three days, whereas just 1.5 grams of plastic packaging can keep the same product fresh for as long as 14 days. The industry recognises that it needs to get that type of message across.
The second response of the industry to the challenges that it is facing is innovation. The industry has been designing products with waste prevention in mind for years. Improvements in packaging design and production techniques have resulted in huge reductions in material use, which have been referred to by hon. Friends. For example, a pint glass bottle is 65% lighter today than it was in 1940; a 330 ml steel drinks tin has been reduced in weight by 63% since 1950; a 1 litre plastic detergent bottle is 58% lighter than it was in 1970; and cardboard outer packs are typically 14% lighter than they were in 1970. Given all that improvement in efficiency and despite growth in the quantity of consumer products over the years, the quantity of packaging material has increased at a slower rate. Between 2006 and 2008, when the economy was growing, there was zero growth in grocery packaging.
Innovation has been about not just reducing the quantities used, but making greater use of recycled material. In March, The Mail on Sunday reported that Coca-Cola, one of Britain’s biggest users of plastic packaging, had agreed a 10-year £200 million deal with Britain’s biggest plastics recycling firm, ECO Plastics, to turn old bottles into new. It is hoped that the Lincoln plant will produce enough recycled plastic to achieve the company’s target of 25% of its packaging being made of such material. That will help the Government to achieve their objectives of reducing the volume of plastics sent to landfill sites and of stopping tonnes of material having to be sent to China, as happens at present. Such development and innovation not only benefit the environment, but go some way towards making the industry competitive. The challenge for the industry, however, is that innovation is often recognised and copied, making any competitive advantage short-lived.
I have spoken about the industry’s support for recycling. The Save a Cup scheme to collect used plastic and paper vending cups was established some years ago, and its range has now been extended to include cans and pods. In connection with the point made by the hon. Member for Upper Bann (David Simpson) about food safety, the scheme has an online shop where people can buy trays, bins and stationery items such as pencils and rulers that have been made from the recycled material.
Although development costs are high, the packaging industry—in particular, the food service packaging industry—has looked to embrace new materials such as polylactide—PLA—and recycled polyethylene terephthalate—rPET—along with coating developments, and encourages UK companies to participate in efforts to increase local manufacturing.
We have spoken about how litter is created by individuals rather than by companies, but most companies take part enthusiastically in litter-reduction schemes. Many industry participants attended the recent parliamentary launch of the “Love Where You Live” campaign, at which Keep Britain Tidy’s ambassador, Kirstie Allsopp, acknowledged the responsibility of end users of packaging:
“Being part of Love Where You Live is a chance for the big brands to become the heroes instead of the villains in the fight against litter. Those who mindlessly chuck their fast food or cigarette packet on the floor cost our country millions and destroy the places we call home.”
Individuals create the problem but industry can help, and is doing so. In its simplest form such help can include, as part of its design, reminders to dispose of packaging responsibly, and the new “Love Where You Live” logo will start to appear on large amounts of packaging. The industry already includes information on materials used in manufacture and on how and where to recycle.
I shall draw my remarks to a close with a shopping list for the Minister of things that the industry would like the Government to consider. The first is action to stop further erosion of the UK’s manufacturing base and to ensure that packaging manufacture is not exported outside of Europe to economies that can live with a more carbon-intensive environment. The industry is keen to see greater recognition of its contribution to the UK economy, as a major UK manufacturer with £11 billion of sales and 85,000 employees, and it is keen to see support for action on ensuring a level playing field with overseas competitors, particular regarding the cost, supply and taxation of energy. It also wants there to be an understanding that carbon impact is created only by responding to consumer demand for products and that pursuing a low-carbon economy by squeezing manufacturing without addressing that consumer demand might lead to substantial UK manufacturing job losses.
The industry would like to see an acknowledgement that unilateral action by the UK Government on carbon floor pricing might end up putting the UK packaging industry and its customers at a disadvantage compared with international competitors. It also wants recognition of the progress that it has made in supporting recycling and in decoupling packaging growth from growth in gross domestic product, and it wants greater recognition of packaging’s pivotal role in protecting products and providing safe and secure supply chains for a variety of products. The industry would like acceptance that the measurement of environmental impacts must be based on sound research and scientific fact rather than on the emotive language that we occasionally hear. Finally, there is the benefit that would accrue from a little national guidance on local waste and resource management strategies.
The industry recognises that there is a need for greater dialogue between itself and the Government, and I hope that this debate will form part of that. The industry argues that it is vibrant, successful and economically important, and that it makes products that safeguard the environment, conserve resources and enable modern living. It has worked hard to address many challenges and has developed into one of the most innovative industries of its type in the world. It believes that the fears about viability that we heard expressed in the all-party group for the packaging manufacturing industry might not be as serious as presented at the outset, but that it is important for the Government to recognise the challenges.
To sum up the importance of the sector, I can do no better than to quote Steve Kelsey, the founder of PI Global, a company that developed a lightweight bottle for Stella Artois and saved carbon dioxide production in manufacture and distribution:
“Packaging is the forgotten infrastructure that is as important as clean water, electricity and highways.”
Nigel Mills (Amber Valley) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan, for the second time this morning. I pay great tribute to my hon. Friend the Member for Rugby (Mark Pawsey) for that 47-minute summary of the packaging industry, which demonstrates his knowledge of and enthusiasm for it. He has made almost all the points that I would have cared to make, but I shall reinforce a few of them.
First, we should stress how important the industry is to the UK economy. The data suggest that the UK packaging manufacturing industry has annual sales of £10 billion, employs about 85,000 people and represents about 3% of UK manufacturing. This key industry constitutes a sizeable part of the economy in many of our constituencies, and it is one that we want to protect and encourage.
I have talked to the packaging manufacturing businesses in my constituency. The largest of them is, I think, BPI Consumer Promopack, which made supermarket carrier bags for many years until the business became uneconomic in the UK—the bags are now made in China. The company subsequently changed, and it now makes the heavy-duty garden waste bags that we all buy from the supermarket and spend our weekends filling. One of its product lines is a bag made by recycling the complex agricultural wrap that my hon. Friend the Member for Stroud (Neil Carmichael) referred to. The business chose to invest in recycling those complex agricultural films. The films, which can become dirty from lying around in farmers’ fields for several months, are washed in Dumfries, converted into pellets and made back into garden waste bags. Some people are trying to undercut the cost of the process by exporting those incredibly dirty films as clean waste to China, Burma or other places in the far east. It is illegal to export waste that dirty, but they are managing to export it as clean waste, because the regulations are not enforced adequately.
There is a lesson there. If we want businesses to invest in recycling, which we need in the sector, we must be sure that they have a stable regulatory base and that those regulations are enforced, otherwise their investment decisions will not be viable. As my hon. Friend the Member for Rugby has said, many of our businesses are multinationals, which consider their investments closely at board level. If investing in one territory is substantially less economical than investing in another, the investment will go where the best returns are.
That leads me to concerns about our energy policy. The industry requires substantial amounts of energy to create packaging. It does not count as an energy-intensive industry eligible for the special treatment proposed by the Government, but there is no gain to us in accidentally exporting packaging manufacturing to other countries that probably use less demanding environmental standards and then shipping it back to ourselves. I suspect that that will result in a far higher carbon footprint than manufacturing in the UK, where the industry is fully committed to becoming more environmentally friendly and using less material.
The industry tells me that its customers are adamant in wanting less packaging, because less packaging means less weight, less cost and less expense shipping products around the country. There is huge pressure in the market to make packaging as efficient and effective as possible. We do not need to get out the big stick and force the industry into it, because it has been doing so for years and wants to keep doing so. It is absolutely in its interests for the future of the business that the industry gets it right. It is important that the Government recognise that we do not want to move too fast and make ourselves uncompetitive.
My hon. Friend has discussed how we all go to the supermarket to buy a pack of potatoes and wonder, “Why do I need the plastic tray and plastic film? Why can’t I just buy loose potatoes?” What we do not understand is that from the time food is grown and shipped to when it is sold through the supermarkets and ends up in our fridges, very little is wasted—I think that it is less than 3%. Compare that with the amount of food that we waste once it is in our fridges, when we forget to eat it until it has gone off and end up throwing it away. Around the world, we are having problems feeding the population. Packaging that makes food last longer and ensures that we buy it in a safe, edible condition and do not waste it is vital to an adequate food supply. The last thing that we want to do is damage the industry. It does not have the resources or incentive to invest in the continual improvement of packaging.
I urge the Minister to recognise how important the industry is, both as a UK industry and to various other Government objectives, and ensure that we do not accidentally damage it as we chase laudable goals elsewhere. The industry clearly needs to keep investing in new machinery, new equipment and research and development. It is important that we get the R and D rules right to encourage that research to be done here and that we get the tax rules right to encourage business to invest in new machinery. We had a long debate on that during consideration of the Finance Bill yesterday. I struggled to convince the Government that reducing capital allowances to 18% in a hugely complex way is perhaps not the best way to encourage investment. I will have another go at the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), to see whether I can get an encouraging reply from that angle, but perhaps I should not hold my breath that he will contradict the Treasury.
Creating a business environment that encourages innovation and investment is the best way to reach our environmentally friendly goals. A big stick and a blunt instrument will, I suspect, lead the trend the wrong way, and we will end up importing from far-flung places things that have travelled huge distances and been made in a less environmentally friendly way than they will be if we can protect the industry in the UK and encourage it to invest.
Ian Lucas (Wrexham) (Lab)
It is a pleasure to serve under your chairmanship, Sir Alan, and to hear the hon. Member for Rugby (Mark Pawsey) tell us about his background and expertise in the subject. I was interested to hear about it. It shows the value of having Members who have experienced other worlds before coming to this place.
I should say at the beginning that I am a long-standing member of the all-party group on the packaging manufacturing industry, and I have several packaging companies in my constituency, including Ball Packaging, to which the hon. Gentleman referred, and Amcor. I confess that when I was elected—I came from another background than manufacturing—I knew little about the packaging industry, but it fast became clear to me that it was an important industry in the area, in terms of inward investment, jobs and profile in the local community. At the time, in addition to those two companies, another company, Tetra Pak, was located just outside my constituency in Clwyd South and employed many people, although regrettably that company has ceased manufacturing in the UK. Its reasons for doing so are relevant to this debate.
Early in my political career, I visited Tetra Pak and got to know the managing director of the plant well. I also visited Ball Packaging, and I was pleasantly surprised when I visited both companies. When I approached the packaging industry for the first time, my default position, like that of most of the general public, was a bit sceptical. We all have visions of toothpaste being packaged in cardboard boxes and wonder why that is, as we know that our society needs to create less waste. I therefore wondered what the purpose of packaging was. Would not an ideal world be one without packaging? Of course, I was entirely wrong in that approach, as I learned quickly. It fast became apparent to me how efficient the packaging industry is. It is efficient because it depends on two crucial drivers: energy prices and regulation. Over the 10 years that I have been in Parliament, the all-party group has always returned to those two things. They are crucial to the future of the industry in the UK.
When I first visited the packaging plants in my constituency, it became clear early on that they were very efficient in their energy use. At the time, they were much more efficient than individual consumers, because they saw energy costs as a crucial part of their bottom line. Whenever they produced items, they were keen to reduce costs as far as possible, and they worked extremely hard to do so, because energy costs are such an important part of their total costs. Energy costs have always been a major driver for the business.
The second important area is regulation. The drivers of the massive changes that have taken place in recycling and elsewhere have been defined largely by elements of regulation, often from Europe. Those drivers have had an enormous effect on progress in recycling during the time that I have been in Parliament. The hon. Gentleman referred to the improvement in recycling rates in the industry from 28% in 1998 to 67% nowadays. The reason why that is so important is that it reduces costs and is being done in response to regulation originating at a European level. We still need to pursue that regulatory goal.
[Sandra Osborne in the Chair]
We all agree with, and all three main parties supported, the Climate Change Act 2008, which will be the fundamental driver of industrial policy, and packaging policy specifically, in the UK for years to come. The Act has compulsory targets that we must achieve, because we all believe that it is important to deal with climate change. It is important that we convey the importance of that to the general public. I still do not think that most individuals—it was interesting to read about this in the papers that I received from the all-party group on the packaging manufacturing industry—recognise that climate change should be a driver in the decisions that they make when they purchase items. The fundamental driver, particularly in these difficult times, is cost. If we are serious about dealing with the profound challenges that climate change poses, we have to get across to everyone how important it is as a driver.
We need to get the regulation right, including at a European level, which means that whenever draft regulations are proposed, or regulations are introduced, Members of Parliament should engage as early as possible with business and industry in their communities. It is important that business draws to the attention of elected representatives, whether in the UK Parliament or the European Parliament, the impact that regulation can have on their businesses. It is also important that we ensure that regulation extends as far as possible across the world.
The issue of carbon leakage has been referred to on a number of occasions. Unless we reduce the carbon emissions of the planet as a whole, there is no point in reducing carbon emissions in one country alone. It is important that we reduce carbon emissions on a European level, but it is also important that we do it on a worldwide basis. We need to co-operate across the piece on reducing carbon emissions and put in place the right regulations to do so.
Business is very capable of responding to frameworks, provided that they are set early and are clear, and that they enable business to make the right choices as far as investment is concerned. Even the most challenging goals in regulations can often be achieved by industry, provided there is clarity. That clarity depends, crucially, on the relationship between Government, business and industry, the early interchange of ideas, and a close working relationship. In the past, we have not had as close a relationship as we need with the packaging industry. By contrast, we received very good news recently of substantial inward investment in the automotive sector, and of £72.2 billion-worth of orders from the aerospace sector. We have to ask ourselves why we have massive inward investment in some sectors, and the opposite in others. Last year, Tetra Pak decided, after 30 years in the Wrexham area, to cease manufacturing in the UK and to move the company’s manufacturing responsibilities to mainland Europe. It has decided to move in the opposite direction when other areas of industry are inwardly investing in the UK.
One of the reasons for the success of the UK aerospace and automotive industries is that there has been a close working relationship between Government and industry. There has been early engagement with the important issues we face, such as low carbon, so that we have excellent innovations, such as the National Composites Centre, and the automotive sector has a constructive and positive approach to the low-carbon economy in the automotive sector.
There will be long-term challenges in relation to low carbon, and the packaging industry and the demands placed on it are one of the areas that will be affected. There has to be a closer relationship, and consumers, industry and Government need to have a better understanding of the issues facing the packaging industry. There is a real threat to a large number of jobs; some 85,000 people are employed in such manufacturing in the UK. We all want more, not fewer, people to be employed in the packaging industry, so we need to make the UK the place of choice for investment in packaging companies. I am afraid that, at the moment, it is clear from the representations we all receive from the industry that that is simply not the case. We need to take a long, hard look at what is different about packaging companies and our successful companies in the UK. We need more successful companies and more successful sectors.
I talked about regulation earlier, and would like to pick up on an area mentioned by the hon. Member for Rugby: consistency of regulation as far as local authorities are concerned. Localism is a little like motherhood and apple pie; everyone is in favour of it, and would like to have a hospital on their street corner and everything sorted out between them and their next-door neighbour. In the real world, however, that is not practical. Localism, with each local authority determining different policies on waste, causes great difficulty, or difficulties that need not be there, for many businesses.
The packaging sector is efficient. I challenge everyone, including Jeremy Paxman, to visit a packaging company. I suspect that he has not visited many during his career, but if he did, he would see that packaging companies are, without exception in my experience, very efficient. If they were not efficient, they would not be in business. Their focus on cost-reduction and energy use is second to none. They work extremely hard at it. We need to ensure that they are enabled by Government to do the right thing. They need to be able to work closely with local authorities, to develop more efficient supply chains through the industry, and to ensure that waste is not made too complicated for business. That is a real problem and is part of the inevitable tension between centralised practices, which in some respects make things much easier for business, and the pool of localism, whereby there are very different approaches in local authorities. I am still unsure about why recycling practices have to be different in every local authority, and I am sure that that makes things difficult for businesses in general.
The Energy Intensive Users Group and the TUC have produced an impressive report on energy. It has some good recommendations, and I urge the Government to look at them. The sector is under pressure. It needs to be listened to more than it has been, and not just by this Government; this has been an issue throughout my time in Parliament, and when I was a Minister in the Department for Business, Innovation and Skills. This has been a difficult time for the industry, but we still have very good and strong companies in the sector in the UK. We need to ensure that those companies have a future in the UK, and that they work to provide the jobs that we all want to see in the UK economy.
First, we need to educate consumers. The cucumber packaging example that the hon. Member for Rugby gave is a good one—packaging can be a good thing. Secondly, we need a closer working relationship between the industry and Government, and perhaps the Government need to listen a little more to the industry. Thirdly, we need to work hard to get the right regulations in place, and we need to engage with all the institutions that create the regulations to ensure that they are clear and fair. That means having very early engagement.
This is a very important industry for the UK that can have a future, if we make the right choices. I urge the Government to engage as much as possible with not just the industry, but the all-party group on the packaging manufacturing industry. I am celebrating my 10th anniversary of membership of that group this year. Thank you, Ms Osborne—I note that you have magically appeared in the Chair—for allowing me to speak.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate my hon. Friend the Member for Rugby (Mark Pawsey) on securing the debate and, indeed, on the comprehensive range of his remarks, which demonstrate his knowledge of the industry. I do not think you were fortunate enough to have the opportunity to hear his contribution, Ms Osborne, but I know that Sir Alan and the rest of us were fascinated by the range of issues raised. I will do my best to deal with all of the 10 action points raised in my hon. Friend’s remarks and with some of the excellent points made by my hon. Friend the Member for Amber Valley (Nigel Mills) and the previous speaker, the hon. Member for Wrexham (Ian Lucas). Everyone has highlighted a different aspect of the subject.
I want to make a small plea. This subject relates to substantial areas that are far beyond my remit and come under the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs. We work closely together, and I will do my best to answer hon. Members without creating new policies for my ministerial colleagues.
As has been pointed out, packaging is part of our everyday lives and, in a sense, is commonplace. At the same time, the different elements and materials—the metals, plastics, glass and paper—feed across the whole of manufacturing as they are very broad and are part of a wide range of supply chains. That is why it is right to say that there is a genuinely competitive role for UK industry in the sector. There have been some encouraging signs of innovation both as a discrete sector and as a process that is part of manufacturing as a whole. My hon. Friends the Members for Amber Valley and for Stroud (Neil Carmichael) have set out a couple of good examples of the kind of innovation that hon. Members across the House want to be encouraged.
As has been accurately pointed out, the packaging industry employs 85,000 people and has a value of £10 billion. In terms of the share of the manufacturing industry, it represents about 3% of the work force. It is worth noting—I am keen to put this on the record to demonstrate that we are mindful of this as a Government—that the productivity of the sector is double that of industry’s average performance. We are not talking about an industry that is sitting back and waiting for things to happen; it is very responsive. I will come to that point in a moment.
I shall thematically pull together the 10 actions mentioned by my hon. Friend the Member for Rugby and the other points made. He mentioned the industry’s role within manufacturing and what the Government can do to help, energy costs—which were raised by several hon. Members—and the broader issue of waste regulation and how that impinges both on the customers of the packaging industry, who are very often industry and business themselves, and the sector.
On the industry’s place within manufacturing, my hon. Friend is absolutely right to say that we need to make sure that we rebalance that economy. We want to ensure that an over-reliance on a too-narrow group of sectors is replaced with a broader base, so that manufacturing has a key role to play. As the Minister with responsibility for manufacturing, I include in that not only what we might think of as high-tech, but industry as a whole.
On perceptions, which were rightly raised by the hon. Member for Wrexham, in the past 12 months, there have been good signs in terms of output, investment, exports and, in some parts of manufacturing, jobs, which is encouraging. He mentioned the automotive industry. There have been some encouraging signs in the investment that Jaguar Land Rover, BMW and Nissan all want to make. There are reasons to be encouraged, and we have had a good opening year, but we need to do a lot more. That is why the Government are determined not only to take corporation tax down from 28% to 26%, but to take it on down to 23%. At the end of that process, we will be putting £1 billion back into the coffers of industry, including packaging. That money can be reinvested. As we have heard, one of the key ways in which industrial sectors keep ahead is not simply by trying to reduce costs all the time, although that is important, but by innovating to keep ahead of competitors. That reinvestment capability—the £1 billion extra a year—is a very important part of that equation.
In addition, the Chancellor set out our plans in the Budget to improve short-term capital asset release and to extend it to eight years instead of just four. From talking to a number of people in industry, I know that that is a real boon, because when people invest in an industrial project, more so than perhaps in services, the payback time is often more than four years—it is often five, six, seven or eight years, and in some cases it is beyond that. My hon. Friend the Member for Rugby knows that, because he has worked in the industry. That is another important incentive to enable the packaging industry to progress.
It is also important to bear in mind—several hon. Members made this point—that it is not only the hard capital issues that matter, because soft capital issues and skills matter, too. That is why we have made a determined change in the investment in and development of apprenticeships. During this Parliament, 250,000 additional apprenticeship places will be created. That is particularly important in an industry such as packaging, because it has to adapt and to be able to cope with conventional packaging issues and the growing issues around climate change and the environment. It is a crucial part of the equation for the packaging industry to be able to reskill its work force.
On that note, the hon. Member for Solihull (Lorely Burt), who sadly is not in the Chamber at the moment, raised a point in response to my hon. Friend the Member for Rugby on the perception of industry. Indeed, the hon. Member for Wrexham also highlighted that important matter. There is an outdated perception of industry that is often blown away when someone gets the chance to go and see an industrial facility. We note the generous invitation issued by the hon. Gentleman to Mr Paxman to visit a packaging company, and he is right: we need people to visit centres and see what an industrial facility is all about in the modern era. That is why, last week, we started a pilot project called “See Inside Manufacturing.” I went to the north-west to encourage and talk to careers advisers and teachers. In the autumn, we want to roll out the programme, so that it works not only with the automotive industry—as it does at the moment—but with the whole of industry.
I extend to the packaging industry an invitation to consider joining that programme in the coming few months, so that we can consider how we can show young people and the public as a whole the broader opportunities in that field. It is also important to change people’s perception of what is involved in the range of different careers. People often assume that the range of skills and careers in industry is narrow, but it is actually very broad and people are highly skilled in many different ways. I certainly want to see the packaging industry play a part in the “See Inside Manufacturing” programme. I will leave it to the hon. Member for Wrexham to decide whether to accompany Mr Paxman on a visit. It would certainly be good if were to get a broad range of people to see what the industry does.
Let me turn specifically to the challenges faced by the packaging industry. My hon. Friend the Member for Rugby raised the question of getting the balance right and of Government and public dialogue about the role of packaging. He is right that packaging and the packaging industry are not the principal problems in waste management. The statistic that packaging makes up less than 3% of landfill has rightly been mentioned. However, packaging clearly has a role to play if we are to ensure that we have a more effective waste strategy. Our approach is to work with producers and encourage a change in consumer behaviour. That issue was rightly mentioned in a number of contributions. When we consider how consumer patterns have changed in the past few years, we realise that we are a world away from where we were before.
We live in a 24-hour, seven-days-a-week culture in which people expect all kinds of produce that for our parents were never available at certain times of the day, let alone at certain times of the year. We expect them, however, to be available 24 hours a day, seven days a week. Inevitably, the industry has responded to that challenge and has changed the nature of how packaging is produced. I suspect that is why, as my hon. Friend the Member for Amber Valley has pointed out, people suddenly find themselves with things wrapped in things wrapped in things wrapped in things, and wonder why. It is right to say that if we were not to wrap effectively, we would find that food waste would be significantly greater. It is important that while we work with the industry—I will discuss the Waste and Resources Action Programme in a moment—we ensure that consumers are encouraged to change their habits positively.
Let me look briefly at what the industry is already doing because, as my hon. Friend the Member for Rugby has rightly said, that is often something that we do not recognise. It is important that we recognise that lightweighting of packaging in the supply chain has been going on for many decades. In the past eight years, household expenditure rose by 20%, but packaging increased by only 3%. While there has been, perhaps for an individual household, the sense that they have more packaging to recycle at home, the gap between expenditure and actual packaging strongly suggests that the industry is being responsive and responsible in this area.
Several hon. Members have raised good examples of that. Asda saved itself approximately £10 million in 18 months simply by changing basic packaging processes. The Home Retail Group looked at the dreadful waste one has when one gets a new sofa or new piece of equipment—not that we have been able to manage one of those in the Prisk household in recent years—and introduced reusable sofa bags. That particular retail outlet has cut packaging by 1,800 tonnes every year just by that simple change, which is an important example. My hon. Friend the Member for Penrith and The Border (Rory Stewart) raised the point that this industry has models of good practice, particularly regarding local impact in more remote areas, and he is right about that.
The hon. Member for Wrexham is right to say that there needs to be a good, open dialogue in the relationship between an industry sector and the Government. I have sought to develop and continue that in the Department. This is where I suspect the opportunity for the packaging industry, perhaps through such forums as the Green Economy Council, could help us crack the problem to which he has alluded. We have developed a road map, which allows us to look at the issue in the round. As we heard in the debate, the problem in packaging is that it is not quite as simple as just a sector. The nature of what it does inevitably means that it strays into areas relating to waste, water and energy. If we could encourage different parts of our industry to get into that dialogue, that would be good and it is certainly something that I want to encourage.
On energy costs, we recognise that our impact, when we look to set the right energy and climate change polices, needs to reflect both generators of electricity and their users. That is a natural tension in any form of energy or climate change policy. It is also important to stress that we, as a Government and not just as a Department, want to ensure that industry, and especially industry with a high or intensive use of energy, remains competitive. There is an issue about how different forms of energy have risen in price. Information from last year shows that, in the past five years, average industrial electricity prices have gone up by approximately 35% in real terms. In that same period, average gas prices have increased by 10%. It is therefore clear that there is a specific issue around electricity pricing, which might pose a risk to the competitive future of those sectors.
The hon. Member for Wrexham rightly pointed to a joint report by the TUC and the Energy Intensive Users Group. That is a powerful document that highlights the estimated cumulative impact of the future energy price in the coming years. That is why not only the Secretary of State in my Department, but our colleagues in the Department of Energy and Climate Change and in the Department for Environment, Food and Rural Affairs, are working together with the encouragement and involvement of Downing street to ensure that we specifically look at and address those concerns around industry.
Later this year, we will announce a package of measures, particularly for energy intensive businesses, where there may be a danger that their international competitiveness is affected. I appreciate that, per se, the packaging industry would not necessarily be classified as energy intensive. Self-evidently, however, some of the key materials it uses—metals and chemicals—are included. That is one way that we can help. I have always made it clear to industry as a whole that I want to know where the pinch points are—the carbon floor price is a good example—so that we do not end up with the danger that has been highlighted. We do not want unintentionally to export jobs and industrial capability, which in the end does not help the climate at all. Several hon. Members have raised that important point.
Mark Pawsey
Does the Minister have any particular advice for the packaging industry to ensure that it is considered as energy intensive and subject to the benefits that he has just outlined?
Mr Prisk
Yes; I want to encourage industry to ensure that specific aspects of the carbon floor price or other elements of our commitment to reduce carbon are incorporated, so that both my Department and other Departments are crystal clear as to where those issues are and that those issues are fed into the current dialogue. I know that there is a dialogue in hand at the moment, but it is important that the industry keep that pressure going.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I hope that the Minister will take from the debate the point that for most of the industry energy costs are significantly greater than the average profit margin, which is a massive issue that needs to be tackled.
Mr Prisk
I am mindful of that, and the hon. Gentleman has made a good point about overheads. Clearly, energy is a crucial issue. That is why, while we want to ensure that we set the right regulatory environment so that generators in renewables come forward, we do not unintentionally to create an unreasonable detrimental impact on the users of energy. That is a difficult balancing act to perform, but that is why we have made it clear that, while we want to pursue the regulatory framework, we want to look at those industries that find themselves under particular pressure with regard to their use of energy. Clearly, electricity rather than gas is the centre of that process.
Other regulatory issues have been raised with regard to waste policy. The waste strategy is focused on waste reduction, driving recycling and the reduction of packaging. We take the view that that can best be achieved in partnership with the sector. That comes back to the important issue, which a number of hon. Members have raised, about the balance between carrot and stick. We genuinely believe that voluntary agreements are one of the best ways forward. In a sense, that is the way in which WRAP operates. It started in 2000 and was designed to advise and help businesses change and innovate—for example, the Courtauld commitment focuses on how waste management can be improved. There have been some important changes. WRAP has been able to secure backing for infrastructure projects with savings of approximately 120 million tonnes of waste from landfill. It also backs programmes such as Rethink Waste, which looks specifically at working with manufacturers to reduce waste and improve resource efficiency. A number of hon. Members have mentioned food and drink. I point to the Federation House commitment, which is important.
In conclusion, this has been a positive debate. We recognise and value the industry, and the change that it is making is important. It is crucial to support and encourage consumer behaviour that enables innovation. We want to work with the industry in a positive dialogue in the weeks and months to come.
Debt Management Plans
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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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Nic Dakin (Scunthorpe) (Lab)
It is a pleasure to serve under your chairmanship, Ms Osborne, to have secured this debate, and to see so many hon. Members in the Chamber. Many other hon. Members have contacted me to say that they would have liked to be present, but unfortunately cannot attend. I thank the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), for meeting a delegation from the all-party group on debt and personal finance a few weeks ago. He had a positive discussion with us about debt management plans.
Unfortunately, increasing numbers of people are getting into debt. In the Scunthorpe county constituency, for example, the average debt of clients of the Consumer Credit Counselling Service is £16,870. I fear that the trend might continue in the years ahead. When people summon up the courage to ask for help in dealing with their debts, they need to get the best support to clear their debts, not to make matters worse. However, at present, people who try to take responsibility for their debts can find themselves at the mercy of unhelpful, aggressive and sometimes unscrupulous practices that can make dealing with debt an even more unbearable experience.
Gordon Banks (Ochil and South Perthshire) (Lab)
A debt management plan has a real purpose: to return something to the creditors, but also to get the consumer out of debt as soon as possible. Does my hon. Friend have similar concerns to mine, about the many instances in which consumers find themselves with more debt, rather than less?
Nic Dakin
My hon. Friend makes his point well. Under a debt management plan, a debt management company collects a single monthly payment from its clients and administers the repayments on their behalf to each of the non-priority creditors, such as for consumer credit debt. Usually, the client pays for the service, although some organisations will do it for free, such as the charity Consumer Credit Counselling Service and the company Payplan, which are funded through the “fair share” approach to debt management, the virtues of which my hon. Friend extols. Such an approach ensures that the creditor, rather than the debtor, pays for debt advice and support by returning a percentage of the payment made by the debtor to the debt management plan operator. The creditor, however, credits the debtor with the amount of the full payment. That is the best possible approach to debt management, because it aligns the debtor and the debt management company, which is in their interests and the interests of the creditor. That model enables charities such as CCCS to help the nine out of 10 people lacking the means to repay their debt.
Other debt management companies also behave responsibly, but some companies’ practice has significant risks for the client. Most DMCs charge an initial up-front fee, which can be quite high, as well as an administration fee each month, leaving the clients with less money to pay off their debts. CCCS estimates that clients of commercial DMCs will take up to two years longer to repay their debts.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I thank the hon. Gentleman for securing this important debate. Before my elevation to this place, I used to work for the citizens advice bureau movement, and I saw how debt problems had risen significantly in our community. The hon. Member for Makerfield (Yvonne Fovargue), who is present, surely shares that viewpoint. Is it not the case that those debt management companies often target the most vulnerable in society, and that their plans are doomed to fail, which is why we need regulation of the sector, and especially of debt sharks?
Nic Dakin
Although there is some good practice, which we need to recognise and celebrate, a number of DMC practices identified by the CAB cause me great concern: cold-calling and aggressive marketing; charging up-front fees for services that fail to materialise; or poor advice in some cases, particularly when other debt remedies would be more suitable for a client’s circumstances.
Justin Tomlinson (North Swindon) (Con)
It is a pleasure to hear the hon. Gentleman’s contribution on a subject on which he has spoken on many previous occasions. On his point about poor advice, the obvious answer is that we need some form of quality mark, so that when people seek help—more often than not, the most vulnerable people, who are least well equipped to ascertain whether they are getting good or bad advice—they have the assurance that they are taking the right steps.
Nic Dakin
That is a good point. We certainly need more in the system than is there. Other examples of bad practice include: failure to pass on payments to a client’s creditors; ignoring priority debts, such as mortgage or rent, fuel, and council tax, which involve the ultimate sanction of loss of home, fuel supply or even liberty; and excessive charges for debt management services. All such practices have occurred.
Tessa Munt (Wells) (LD)
I have been consulted by a debt management company in my constituency. The gentleman who runs that company said that, if I wanted to become a bailiff, he could probably make me one by next Monday morning, because the legislation on, and control over, the bailiff system is sadly adrift from what it should be, and an awful lot of bailiffs do not act as they should. Does the hon. Gentleman agree that the legislation needs to be tightened up, so that it gives some sort of scrutiny of the process?
Nic Dakin
The hon. Lady makes a good point which, in a sense, underlines that made by the hon. Member for North Swindon (Justin Tomlinson) about the need for tighter regulation, or a tighter quality mark, in this area generally. Recent research by the Association of Business Recovery Professionals has confirmed worries about a lack of impartial advice, insufficient information about fees, and agreement of too many debt management plans that were always going to be unworkable.
Jim Shannon (Strangford) (DUP)
The hon. Gentleman has been generous in giving way. Does he feel that, given the benefit changes that are to be made next year, there will be a greater need for debt management? Also, does he feel that the desperation that arises from debt will fuel an already volatile situation? Does he agree that social security officers and housing associations could give expert advice to help?
Nic Dakin
The hon. Gentleman makes a good point. Sadly, we are moving into more austere times, in which more people are likely to get into difficulty. Indeed, the Joseph Rowntree Foundation this morning published figures suggesting just that. The Office of Fair Trading reported widespread non-compliance, misleading advertising by businesses involved in the area, and a lack of competence among front-line advisers working for DMCs. Sadly, the OFT found that self-regulation is not working and continues to be an abject failure.
Yvonne Fovargue (Makerfield) (Lab)
Is my hon. Friend as concerned as I am that even where there is evidence of unfair practice, the OFT has taken more than two years to close companies down? In those two years, the companies still operate, make a profit and charge vulnerable customers. The OFT needs more power to investigate such companies and shut them down early.
Nic Dakin
My hon. Friend has much knowledge and expertise in this area, and she makes a powerful point about the need for the Government to act now to protect vulnerable people. I know that the Minister has concerns, and I look forward to his response.
Citizens Advice believes that there should be a statutory scheme, with better powers for the regulator, coupled with improved funding of free debt advice. The solution, to improve current arrangements and protect vulnerable people from getting further into debt as a result of the behaviour of those to whom they turn for support and advice, might be to have a regulated environment in which providers are independently audited to standards set by an independent body, fees are controlled, and there is clear certainty about the repayment term, for creditors and debtors alike.
Gordon Banks
My hon. Friend is generous in giving way. He has hit the nail right on the head. This is a little bit of advertising: I hope later this year to promote a private Member’s Bill on this very issue, providing for a statutory scheme that is binding and includes a rigorous audit process and a fee cap. Does he agree—this has already been touched on today—that when someone approaches a debt management company for advice, they are at their most vulnerable? If they are told, “Give me £50”, or £200 or £600, “and I will sort the matter out, and spread that payment over a period,” that is exploiting their vulnerability.
Nic Dakin
My hon. Friend makes a powerful point. We look forward to his private Member’s Bill, which will raise the issue again. We need a regime that will encourage providers to compete on quality, rather than the size of their advertising budget. Debt management plans would then be more likely to lead to debt repayment and genuine resolution of debt problems for the majority of customers who entered into them. That would be achieved at far lower cost than under the current regime, and would significantly increase the speed with which creditors were repaid. That would be good for debtors, good for creditors, and good for UK plc.
Damian Hinds (East Hampshire) (Con)
I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing this important and timely debate. I thank him and the Minister for allowing time for several hon. Members to make short contributions. The issue is not party political, and it is encouraging that hon. Members from six political parties are here. We had an opportunity to debate related issues in the House yesterday, and almost everyone now coalesces around the fact that a proper approach to the issue must have three strands: education, regulation and provision of alternatives. The important issue that we are discussing, which relates to a growing problem, touches on all three strands, but has to do with regulation especially.
I am a Conservative Member of Parliament, and not a great fan of new regulation, but this is one area where it is needed. It is astounding that when some markets are grappling with sometimes unreasonable regulation, regulation of debt management has not hitherto been more effective. I daresay some hon. Members may take a purely libertarian, “caveat emptor” view of the matter, but I have not yet met them. If I have, I have not heard them expressing that view. As has been said, the market that we are considering deals with some of the most vulnerable consumers. “Vulnerable” is a word that is used an awful lot these days for all sorts of things, but it applies in the purest sense in this case. Much as it may challenge our view of economic theory and so on, the fact is that many people are not making rational choices, and the debt solutions that they seek are often about the first advert that they see, rather than what is most appropriate for them.
Gordon Banks
The hon. Gentleman’s point is appropriate; people get sucked in by the first or last advert that they see. However, there is another side. As I have said, one objective must be to give money back to creditors, and the more that is paid in management fees, the less goes back to creditors. We certainly want to help consumers, but we must also recognise that creditors are entitled to repayment of debts.
Damian Hinds
The hon. Gentleman makes a fine point. The “fair share” model works for various not-for-profit organisations and can be effective. We should foster and encourage that. A lot could be done with regulation in this area. I want to focus on a couple of measures that the hon. Member for Scunthorpe mentioned, which are relatively straightforward and would be effective.
The first is the banning of cold-calling canvassing for new business, and the second is the banning of up-front fees. The two together would make a big difference. On up-front fees, many people suspect that some operators in the market have a cash-flow model that recognises that they may not be around for ever. Those are not the sort of debt management companies that we want. There are responsible operators, and those are the ones that should be encouraged.
I want to make a final, brief point about the visibility of various debt management services. The Consumer Credit Counselling Service, citizens advice bureaux and others offer free advice services, and the internet is an important source of information for people these days. When people get round to looking into ways of solving their problems, they should be able to find those services easily. I hope that search engine providers, particularly Google, which to all intents and purposes is the search engine provider, will be encouraged to act.
Mrs Jenny Chapman (Darlington) (Lab)
I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on securing this debate. Will the hon. Member for East Hampshire (Damian Hinds) add to his list a ban on the sale or passing on of information about people to debt management companies? We have been concerned about that practice in the motor industry, with regard to insurance claims. Does he share my concern that the same practice takes place in debt management?
Damian Hinds
I do indeed. By definition, a ban on cold-calling would include the selling of lists and the sharing of data.
I conclude on the point about search engine marketing, and encourage search engine providers, as part of their corporate social responsibility agenda, to take a different view, so that rather than considering only the pay-per-click bid times the click-through rate, they consider what they can do to help people in some of the most difficult circumstances. I again congratulate the hon. Member for Scunthorpe on securing the debate.
Yvonne Fovargue (Makerfield) (Lab)
I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on securing this debate, which we have needed for some time. I confirm that I believe that creditors must be paid, but the practices of some debt management companies do not encourage that. They load the fees up front, and recoup all their charges in the first two years. They provide no encouragement for people to carry on with a sensible plan, because the up-front loading discourages people from continuing after that period, and frankly they do not worry about that, because those two years are where they make their money. They cannot offer the full range of solutions, and are not allowed to do so, because only authorised providers can produce debt relief orders, and in the main those providers are citizens advice bureaux.
There was great concern last year when the financial inclusion fund was due to finish. Fee-paying debt-management companies were circling like sharks, thinking, “We’ll be the only option, and debt advice will not be available.” I urge the Government to consider a financial inclusion fund and free debt advice, because that is all that will stop some debt management companies.
I am worried about the link between such companies and high-cost lenders, some of which now have another arm: a debt management company. They get people into debt, charge them for that, and then put them through to their own debt management company, which will charge to get people out of the debt that it put them into in the first place. That is not acceptable. Regulation was introduced in the United States and Australia, which are not countries noted for over-regulation, and it has worked. That is why there is a proliferation of debt management companies here.
Gordon Banks
I suggest that my hon. Friend ask the Minister to look over the border at Scotland, where there is a system that works much better than that in the rest of the UK.
Yvonne Fovargue
I agree that regulation has worked, which is why American companies have come over here. It is too hot for them to operate over there, so they are now operating in England, and our consumers are suffering. Along with regulation, we must give the organisation that has the regulatory power the means quickly to close down companies, or suspend them from trading, when there is consumer detriment and bad practice. Two years is not acceptable.
I thank the Minister for listening last time we were here, and ask him to consider free debt advice. I appreciate that debt management companies have a role to play, but they must be regulated if they are to play the kind of role in society that we all want them to—a responsible role.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing this debate. I was pleased that he did, and it is good that so many hon. Members have contributed to it and aired their concerns. The Government are acutely aware of those concerns, and we share many of them. It is a sign of our desire to protect vulnerable individuals that debt management issues were a major part of the questions that we asked as part of the joint Treasury and Department for Business, Innovation and Skills call for evidence. The “Consumer Credit and Personal Insolvency Review” was published last year, and covers all aspects of the consumer credit life cycle, including what happens when things go wrong.
Hon. Members will appreciate that it is difficult to obtain a precise picture of the debt management industry, even to the extent of obtaining accurate figures for the number of plans in place. Some of the concerns that we have heard recognise that lack of information. I cannot give details today, but I am keen to improve the quality of information about the industry. I will say more about that when we publish our response to the call for evidence, which will be soon.
Despite the constraints, improvements have recently been made to protect the most vulnerable debtors. By extending the eligibility criteria for debt relief orders, we have enabled more of the most vulnerable people to find a way out of unsustainable debt. Some safeguards are already in place, although I understand that several of my colleagues would like us to go further, and I will go on to talk about that. Providers of debt management plans are required to hold a consumer credit licence, and holders of those licences are monitored by the Office of Fair Trading. The OFT has strong enforcement powers. Following its compliance review last year, it issued warnings against 129 companies, of which 43 have since left the market and investigatory work is ongoing in many other cases. The OFT is determined to see that work through as soon as possible.
The OFT has recognised the need to improve its guidance, and it recently published proposed revised guidance for debt management plans. That guidance sets out the standards that the OFT will expect of debt management businesses, and makes it clear that, among other things, such businesses must be fully transparent about the service on offer and the fees charged; explain to consumers the risks and benefits of each proposed solution; not use misleading names or advertising, including misleading web-based adverts; and ensure that the advice provided is in the best interests of customers. Any business that fails to adhere to that guidance can expect strong action to be taken against it, including, where appropriate, the removal of its licence. The industry has recognised the need to improve its practices, and it is welcome that a number of debt management organisations have joined the Debt Managers Standards Association, which, as the OFT has recognised, is trying to improve standards.
What more needs to be done? The Government believe strongly that those struggling with debt must be assured that they will receive the best advice and be directed to the solution most suitable for their needs.
Mr Davey
I am concerned about the time; perhaps I can make a little more progress and then give way to the hon. Gentleman.
Free and impartial advice is available for people in difficulty. We need to make sure that such advice is well publicised and that vulnerable people know where to find it and can avoid unscrupulous businesses that may seek to take advantage of them. We know about Citizens Advice, and I was pleased that the hon. Member for Scunthorpe mentioned the Consumer Credit Counselling Service, which is a fantastic organisation. He also, quite rightly, mentioned Payplan. We must ensure that people are aware that they can get quality advice for free. That is essential.
Hon. Members have expressed concern that the aim of some fee-charging debt management companies is to make money for themselves, rather than to ensure that an individual finds the appropriate solution for their circumstances. We have also heard, both today and on previous occasions, that some individuals who enter a debt management plan find that they emerge from that plan in a worse position. Clearly, that cannot be right.
I am concerned that those who are in a vulnerable position might seize on an advert that offers what appears to be an easy way out of their difficulties. If they are told that the organisation that they approach will deal with all their debt problems, they may not ask about the likely costs and that will create difficulties. The answer to that complex problem does not necessarily lie in more regulation. We need to empower debtors to find the right information, access the right sources of impartial advice, and find the solution that best meets their needs. We confirmed some time ago that we will fund the face-to-face debt advice project for a further year, while work is done to move the provision of such advice to a more sustainable footing. As my hon. Friend the Financial Secretary to the Treasury said yesterday in the House,
“it is the intention that the Money Advice Service—which is funded by the financial services industry—will take on that work.”—[Official Report, 4 July 2011; Vol. 530, c. 1254.]
It is important that free debt advice is available through Citizens Advice, the Consumer Credit Counselling Service and other quality, free debt advice services.
I want to look at what more can be done to ensure public awareness of reputable debt advice sources, whether online, over the telephone or face to face. Everyone involved in the debate—creditors, debt advice agencies and providers—should be involved in finding the best way forward. When we publish our response to the call for evidence, we will make proposals designed to foster that collaborative approach and help people with unsustainable debts to get the help and advice they need to take control of their lives once more.
Gordon Banks
The Minister talks about ensuring that creditors get the best advice. Many of the major lenders fund debt management processes through Payplan, for example. Is there any mileage in making the main funders of an organisation such as Payplan, which could be the major creditor of someone entering a debt management plan, have a role in guiding someone from a fee-paying to a non-fee-paying organisation?
Mr Davey
The hon. Gentleman makes an interesting point. It is surprising that many public bodies—whether local authorities, utilities or lenders—do not make those who cannot pay their bills or are in debt as aware as possible of quality, free advice services. We need to talk to those organisations because raising awareness is critical.
Mr Davey
I will give way in a moment to the hon. Lady; she made a very valuable contribution.
When people are in debt, that can affect their health and there could even be mental health consequences. We must ensure that people do not end up in the clutches of a company whose advert they heard and do not recognise that there are free, quality advice services. We must deal with that issue.
Yvonne Fovargue
Does the Minister accept that we must not only make people aware of the free agencies available, but ensure that those agencies have quick, available appointments? When somebody wants to get out of debt, they do not want to wait six weeks for an appointment. That is where the debt management plans win; they say, “We’ll deal with you immediately.”
Mr Davey
The hon. Lady makes a vital point. We must ensure that people are aware of all the different options. Online options are increasingly being taken up; they are effective and can be accessed 24/7. There is a high usage of online helplines, and if people are vulnerable or ill, they should have access to quick and quality face-to-face advice. I agree with the hon. Lady.
We have heard a number of ideas during the debate, and we will reflect on them, just as we have reflected during the call for evidence. We have heard interesting ideas such as that from my hon. Friend the Member for East Hampshire (Damian Hinds) about whether search engine providers ought to think about their social responsibilities when people search for advice. There are issues about audits and so on.
Mark Durkan (Foyle) (SDLP)
May I take the Minister back to when he referred to the more robust guidelines that the OFT will produce? He said that the OFT will move against firms that breach those guidelines, possibly by withdrawing their licences where appropriate. Who will determine when such action is appropriate? What will be the exact criteria? If those decisions are open to challenge, will the OFT end up having a paper power that it never exercises? The firm from which the OFT might wish to withdraw a licence will always have deep pockets, and the OFT might feel that a challenge is not worth its while.
Mr Davey
The OFT is the regulator. If it deems an organisation to have breached the guidance, it can act. Indeed, it has acted. Some 43 out of the 129 companies that it identified and investigated have left the market. The idea that it is a regulator that does not take action or track companies down if they do not behave properly is not correct. That does not mean, however, that we cannot improve the overall framework.
When I met the hon. Member for Scunthorpe and a number of his colleagues from the all-party group on debt and personal finance—which, I should say, is doing fantastic work—we had a number of discussions, some of which were reflected in the debate. We share a lot of the concerns that have been raised today. I cannot prejudge the response to the call for evidence, which will arrive soon, but I share the views of colleagues and we will take action.
Neuroblastoma
(12 years, 10 months ago)
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Neil Parish (Tiverton and Honiton) (Con)
It is a great pleasure to speak under your chairmanship, Ms Osborne. I thank Mr Speaker for granting me this debate on primary care trust funding for neuroblastoma. I am delighted to welcome the Minister with responsibility for care services and look forward to hearing his response to these grave matters.
Neuroblastoma is a rare solid tumour cancer that tragically occurs in very young children and infants, primarily under the age of five years. It accounts for 17% of cancer deaths in children. Only 100 children are diagnosed with neuroblastoma each year in the UK. That is a blessing in itself, but it is of little comfort to the parents coping with the emotional strain of knowing that their child must face the long, hard battle against cancer.
The disease is caused by the development of cancerous cells in neural crest nerve cells, which play a key role in the development of the sympathetic nervous system. Most neuroblastomas begin in the abdomen or adrenal gland, next to the spinal cord or in the chest. In nearly 70% of children diagnosed, the disease has metastasised, which means that it has spread to other parts of the body. That makes it a particularly hard cancer to treat. The disease commonly spreads to the bones, and it can cause pain and difficulty in walking. Occasionally, it can affect the spinal cord, causing numbness, weakness and loss of movement in the lower part of the body.
The symptoms depend on where the cancer starts and whether it has spread to other parts of the body. Initial symptoms can seem as innocent as tiredness, fever and loss of appetite. The vagueness of those symptoms makes neuroblastoma hard to diagnose in the early stages. Because neuroblastoma usually develops in the abdomen, the most common symptom is a lump in the stomach, which can make the child’s tummy swell, causing pain and great discomfort.
The disease is treated through a variety of means, including surgery, chemotherapy and stem cell replacement. However, even after those treatments, high-risk neuroblastoma remains a major cause of death due to malignancy—patients have a two-year survival rate of approximately 20%. On top of that, the majority of high-risk neuroblastoma patients will experience disease relapse.
It saddens me, then, that a young constituent of mine, named Sam Daubany-Nunn, is being denied funding by his local primary care trust to receive vital treatment in Germany that might well be curative. Sam was diagnosed with neuroblastoma at the age of 16 in July 2008. Such a diagnosis is quite unusual in someone as old as that. At the time, Sam was undertaking his GCSEs at Colyton grammar school. He went through eight hours of surgery, gruelling high-dose chemotherapy, a stem cell transplant and radiotherapy. Fortunately, he responded well to his treatment and, despite his illness, he excelled at school, achieving high grades in every subject. He went on to pursue his studies at sixth-form level. I met Sam and his family in Seaton in my constituency. They live in Uplyme, right on the border between Dorset and Devon. That is why Dorset PCT is in the dock today.
Sadly, Sam became ill again in October 2010 and the family were informed that he had relapsed and that the neuroblastoma had come back. Sam went through six further courses of chemotherapy, two cycles of metaiodobenzylguanidine treatment at University college London and another stem cell transplant.
Following that, a new treatment was added to the front-line protocol in the UK for all new children diagnosed. That new treatment is a targeted cancer therapy called monoclonal antibody therapy. Monoclonal antibodies are made in a laboratory and introduced to the body intravenously. They attach themselves to areas on the cancer cells. In this case, the antibodies bind to a protein called GD2 on the surface of neuroblastoma cells. Those antibodies operate as markers for the patient’s own immune system, encouraging it to attack and destroy cancerous cells. Without those markers, the immune system would not attack cancerous cells, as those tumours are part of the body.
I was pleased to receive a letter from my right hon. Friend the Secretary of State for Health in response to a point that I raised with my right hon. Friend the Leader of the House at business questions. The letter informed me that UK patients now get access to that treatment via the Cancer Research UK-supported European trial and that there is now wide clinical agreement that all children with high-risk neuroblastoma who might benefit should have access to monoclonal antibody treatment, as it increases survival rates to about 70%. That is extremely important. However, that clinical trial, led by Dr Penelope Brock from Great Ormond Street hospital, is not available in this country for relapsed cases—it is available for newly diagnosed cases only—and five or six patients a year would not meet the strict criteria for the trial.
A second trial is being established with wider eligibility criteria, and it will include those children who, like Sam, have relapsed, but it will not be available until January 2012. That is an unworkable time frame for neuroblastoma sufferers who cannot wait for the UK trials to start. That is certainly the case for Sam. As a result, some parents have opted to take their children for treatment in Germany, which is piloting the new trial that will be available across England in 2012. That has been paid for by their local primary care trust after an individual funding request. However, Dorset primary care trust, near my constituency, has refused to support the funding request in Sam’s case. His family have been raising funds to pay the €80,000—a very big sum—that the treatment in Germany costs. Indeed, they have remortgaged their house. Hon. Members will understand that not everyone can take that action, which is why I am raising this matter with the Minister today in the House.
Sam’s case is not isolated. After raising neuroblastoma funding in both the House and the media, I was contacted by a father whose son, Adam, suffers from neuroblastoma. Like my constituent, he is not eligible for the clinical trials in the UK and he made an individual funding request to Surrey primary care trust, which, like my constituent’s, was rejected. I understand that Adam’s father is now in contact with his local MP. I wish him and his family well and hope that he can receive the treatment that he needs.
That contrasts with the decision made by NHS Northamptonshire’s individual funding request department in an almost identical case involving a constituent of my hon. Friend the Member for Wellingborough (Mr Bone). I will take this opportunity to thank my hon. Friend for all the assistance that he has given me in this regard. A young boy named Zach, whose case my hon. Friend has previously debated in Westminster Hall and who, like Sam, was not eligible for the clinical trial, was offered funding for monoclonal antibody treatment in Germany. In its letter to the family, the individual funding request department made this clear:
“Given the timescales involved NHS Northamptonshire does not wish further obstacles to stand in the way of treatment and we have agreed that if necessary the cost of monoclonal antibody treatment in Germany would be covered by NHS Northamptonshire.”
Fortunately for my constituent, there has been a last-minute change of heart by Dorset primary care trust. I received a call last night from the chief executive of Dorset PCT, who informed me that it had reviewed Sam’s situation and concluded that his was a unique case and that it would be unfair not to support the request for funding. That is fantastic news, and I extend my thanks to Paul Sly, the chief executive of Dorset PCT, for his assistance and for reviewing the original decision. However, I cannot help but feel that this case may not have had such a happy ending had I not been contacted by Sam’s family, written to the chief executive of Dorset PCT, raised the matter in the House, written on the subject in the press and finally secured this debate today.
I emphasise that other families might not be able to raise the funds to go to Germany. It is essential that Samuel gets this treatment now; otherwise, his chances of survival will be hugely limited. That is why it is good to raise this matter. That raises the question of how two primary care trusts can come to two completely different conclusions and why some people should be denied potentially life-saving treatment in such an ad hoc manner. People should be treated fairly throughout the country, and although I realise that the PCTs probably have a great deal of autonomy, I urge the Minister to iron out the problems, if he can. We can then get to January and February next year, when monoclonal antibody treatment will be available in this country.
Finally, I want to read from the conclusion of the letter from Paul Sly, the chief executive of NHS Dorset and of NHS Bournemouth and Poole:
“Our local processes for individual treatment requests are set up to try to deal fairly with the vast majority of requests. However as we went through the request it became apparent that the only possible funding route for Samuel at this time was a referral to the National Cancer Drugs Fund. Unfortunately as the Fund only covers ‘drug costs’ they were unable to assist.
In the light of the above, we carried out a further review of Samuel’s situation and concluded it is unique for three reasons…the treatment will be available in the UK later this year…he meets the trial inclusion criteria…he has to have the treatment within a specified time frame and cannot wait for the UK trial to start”.
That is extremely important.
I have put the issue on record. I hope that the problems faced by Samuel Daubany-Nunn and his family will reach a good conclusion. I reiterate to the Minister that there are not many such cases in the country, but it is extremely important that people receive this treatment when they need it, otherwise their chances of survival are very limited. I therefore ask the Minister to look at the general process. I am certain that NHS Dorset will honour the position that it has taken in its letter, but I am naturally keen to ensure that the Daubany-Nunns get help with funding Samuel’s treatment, because they very much need it, and it is only fair that people are treated similarly throughout the country.
The Minister of State, Department of Health (Paul Burstow)
It is a pleasure to take part in the debate. I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing it. A quintessential feature of Adjournment debates is that they give Back-Benchers the opportunity to bring to the attention of the House and a wider audience issues that are of real importance to the lives of our constituents—literally, in this case. I therefore thank the hon. Gentleman for bringing this issue before us.
Few things are more distressing for a parent than learning that their child has cancer. Everyone’s heart would go out to any family that found itself in the same circumstances as Sam’s family, and I shall say more about their case in a moment. First, however, I want to say a little about the Government’s overall approach to paediatric cancer. I then want to say something about neuroblastoma and the Government’s approach to it. Finally, I want to say something about this case.
On paediatric cancer services, the Government are committed to improving outcomes for all cancer patients, especially children and young people who have to deal with this disease at such a young age. That means ensuring that patients have timely access to high-quality treatments based on the best available clinical evidence. That is very much the Government’s ambition and goal. We want to deliver care that is safe and effective and that provides the best possible experience for young patients. Let me highlight a number of things to demonstrate that commitment.
First, we will ensure that the recommendations in the guidance from the National Institute for Health and Clinical Excellence on improving outcomes for children and young people with cancer continue to feature in all commissioned services.
Secondly, one of the recommendations includes ensuring that children and young people with cancer are offered entry to any clinical research trial for which they are eligible and that adequate resources should be provided to support such trials. We expect providers and commissioners of services to be mindful of that recommendation, and that goes to the heart of the hon. Gentleman’s concerns about the lessons that need to be learned from this case.
Thirdly, NICE guidance recommends that children who are not eligible for clinical trials should be treated according to agreed treatment and care protocols based on expert advice and that resources should be provided to monitor and evaluate progress and outcomes for the patient.
Fourthly, we have committed more £150 million over the next four years to the expansion of radiotherapy capacity and to ensuring access to proton beam therapy for all high-priority patients who need such treatment. Evidence shows that, compared with standard radiotherapy, PBT leads to improved outcomes and reduced acute and late effects, such as growth deformity, loss of hearing and lowered IQ, which can lead to learning difficulties. We are exploring options for developing PBT facilities in England to treat up to 1,700 patients a year.
Through the national cancer survivorship initiative, we are improving the quality of services supporting the long-term needs of children and young people. That needs to provide for a seamless transition from children’s to adult services and a constant focus on outcomes.
We are demonstrating the affordability and efficiency savings that one-to-one support for cancer patients can bring. Based on the emerging evidence from test sites and the core principles defined by the children and young people group, four models were identified and are being piloted in four sites to help to bring innovation to the delivery of support for children with cancer. Those models include a primary treatment centre aftercare model; a shared care model of aftercare, in which care is shared between the primary treatment centre and GP and primary care services; and a nurse-led model of care, which may include variations such as a telephone or text message model of aftercare.
The Royal Marsden hospital, in my constituency, has tested the benefits for the patient experience of introducing a clinical nurse specialist to their late-effects set-up. That has been combined with developing psychological screening tools to improve access to appropriate psychological therapy services. A number of things are therefore being done, as we strive generally to improve paediatric cancer services.
Let me turn now specifically to neuroblastoma. As the hon. Gentleman said, neuroblastoma is a cancer of specialised nerve cells involved in the development of the nervous system and other tissues. It can occur anywhere in the body, but it most often occurs in adrenal glands, particularly in the tummy, as he said.
About 100 children, usually under the age of five, are diagnosed with neuroblastoma each year. Of them, about 50 are in the high-risk group, with the most serious forms of the disease. We want to give every one of those children the best chance to beat the disease by ensuring that they have access to specialist oncology centres and good access to clinical research trials.
The UK has a good and long track record of achievement in basic cancer research, and the Department of Health invests more in cancer research than in any other area of human health. We now have the highest national per capita rate of cancer trial participation in the world. That is relevant to the debate, because there is now wide clinical agreement nationally that all children with high-risk neuroblastoma who might benefit should have access to a trial of monoclonal antibody treatment.
For the benefit of the hon. Gentleman and others who are following the debate, I should explain that the monoclonal antibody is not available as a normal drug supplied by a pharmaceutical company. To obtain it, a production run must be commissioned and produce enough doses to treat a large number of children. Most UK patients will now access this treatment through the Cancer Research UK-supported European phase III trial. The trial is led in the UK by Dr Penelope Brock from the Great Ormond Street hospital, as part of the UK Children’s Cancer and Leukaemia Group.
On 12 May, my ministerial colleague Lord Howe was privileged to visit Great Ormond Street to see at first hand the impact of Dr Brock’s work on families affected by neuroblastoma, as well as the real hope it offers to those most seriously affected. The national cancer research network of the National Institute for Health Research provided the NHS support for the trial, which is running in all 20 childhood cancer clinical trial centres across the UK. It is anticipated that the trial will recruit 160 children between 2009 and 2013, and it is estimated that about 40 children a year in the UK will be eligible for the treatment.
The hon. Gentleman was right to raise concerns about children, particularly those with high-risk neuroblastoma, who have unfortunately been considered ineligible for the first trial. Dr Brock is now setting up a second trial, which should benefit those five or six patients a year who do not meet the strict eligibility criteria for the first study. The Department has agreed to fund a second batch of antibody for that purpose. I understand that Dr Brock is planning to run the second trial in five centres in England, from this autumn—not next year.
The proposal is with the clinical trials academic review board for Cancer Research UK, and once it is approved it will go to the Medicines and Healthcare products Regulatory Agency for approval. While the trial proposal is progressing, Dr Brock’s colleague in the European monoclonal therapy trial, Professor Holger Lode, has been piloting the new trial at the SIOPEN centre in Germany, which the hon. Gentleman mentioned. It is perhaps inevitable that one or two patients will be identified as needing the treatment while the trial proposal is going through the necessary approval stages. The hon. Gentleman highlighted in that regard his own constituency case and that of the hon. Member for Wellingborough (Mr Bone).
I am aware that some PCTs have paid for patients who meet the eligibility criteria to go Germany for the treatment. Non-routine treatment abroad will usually be considered in exceptional circumstances and primary care trusts may at their discretion take into account the individual circumstances of the patient and authorise treatment abroad that they do not normally fund. Each case needs to be considered on its merits as issues such as progression, relapse and the use of second-line treatments can all affect an individual’s suitability for treatment, including clinical trials. Each case needs to be discussed carefully with experts in the field.
The hon. Gentleman talked about his case experience and Sam’s diagnosis and mentioned the good news that the PCT has further considered the matter and, I understand, has taken into account Dr Brock’s views about the way the trial will work. I think that that has materially affected the judgment that the panel made originally and allowed it to make a new decision to allow for the funding of the monoclonal antibody treatment in this case.
I hope that the treatment, which, I understand, may already have started, will be a success and that that will be further good news for the family and offer them hope for the future. I hope that the hon. Gentleman will pass on my best wishes and those of my ministerial colleagues for Sam’s future and the success of the treatment and that we shall draw lessons from the case to ensure that, when other PCTs consider cases with exceptional circumstances, they are properly aware of the criteria that they should use.
Great Lakes (Africa)
(12 years, 10 months ago)
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Eric Joyce (Falkirk) (Lab)
I want to say a few words, in opening, about the nature of the debate. It is a little unorthodox, in the sense that normally there would not be several hon. Members speaking in such a short debate; however, there was great interest in the subject. The all-party group on the great lakes region of Africa went to the Congo recently. I was not on that trip. There is a great deal going on there, of course, and I am sure that the Minister will say more.
Although most hon. Members who are present are aware of the broad context and much of the detail, it is worth setting out some of the things that are happening. Some things that are happening in the Democratic Republic of the Congo are very important, one of which is that very soon, we hope, there will be an election. That is planned for November, which is a little later than it might have taken place. Nevertheless, it is a good sign. The UK was very involved the last time round, and sent several official observers. Members of this place and the other House went with non-governmental organisations to observe the elections. It was a very successful election process for the region, all things considered. There was a good, high turnout at the last presidential and prime ministerial elections in the DRC, and an independent commission ran things. International observers from all sorts of NGOs, UK bodies and Governments thought it went pretty well. There was a pretty good tick in most of the boxes.
Some years later, there is a rather different backdrop to the elections. The cost of the elections last time was about $225 million. One assumes that the cost is similar this time, but the international community was more reluctant, understandably, to find the large amount of money needed to run such a large-scale election in a place as difficult as the DRC, which is the size of western Europe but covered in tropical rain forest, making the logistics very complex. The election was well run last time, but this time there are one or two question marks. That is not to say that the election will not be legitimate. However, political development in the country over the past five years has been modest.
I have met Mr Tshisekedi, the person who would probably be considered the leader of the opposition, in so far as one can be considered to exist. He is an important figure in Congolese politics, and he is capable of putting together an alternative platform in the presidential re-election campaign. At root, however, it seems to be a fairly basic offer. One assumes that unless the elections are run tidily and independently, there will be questions about the process.
The elections have been put back a bit, and the constitution has been changed to take out the second round in the presidential elections. That is significant, as some think that President Kabila may not win a second round. Nevertheless, he will certainly get the majority of votes in the first round; so many people stand as presidential candidates that it is hard to prevent that, but who knows? What gave the last election considerable legitimacy was the fact that it was a tightly run process; the result was 57% to 43% in the second round, which was a clear result for everyone. It was clear that there was a genuine opposition, albeit the chap who was the opposition is now banged up in The Hague. That is a pity, but there it is.
This time round, the electoral commission is being run by an ally of the President, which is cause for concern. This is primarily a Foreign and Commonwealth Office issue, but although the Minister may have a view, my instinct is that he will want to wait and see how it goes. It is fair to say that we should let the processes take place and express our judgment after the elections. The elections are important, because they change other things that are happening at the same time.
Jim Shannon (Strangford) (DUP)
Does the hon. Gentleman agree that the formation of an integrated and professional army that does not abuse the people, but gives them the chance to express themselves, is important? It is essential that people can use the ballot box unhindered.
Eric Joyce
I thank the hon. Gentleman for making that profound point. We cannot do anything in countries such as the DRC unless we have security. We cannot have justice, effective infrastructure, hospitals and schools if people are too frightened to leave their houses or move around the place safely. In parts of the east—not only there, but significantly in the east—that is very much a fact of life for many. They live in dour conditions, and security is of the first order.
The FARDC, the army, has a history of having some competently trained people—trained in conjunction with the UK and the French. I do not want to say anything pejorative, but it does not have a high capacity, if I could put it like that. It has one or two people who are perfectly competent, and a large number of people who are not. First and foremost, the DRC needs a proper security regime, but in a good way; in effect, the country needs the army function, rather than a policing function. At a different stage of development, we would be talking about police, but it is a case of the army trying to maintain law and order.
There are some programmes, particularly from the United States, and there is a common European effort to assist in building capacity, but it is a long-running process. One of the early things that has to be done is to get the army to behave decently towards its own people. Poor discipline—it often breaks down, particularly in the east, where deployment of the army is coincidental to the mining operations—is a matter that should be scrutinised by us and international authorities, but the hon. Gentleman makes a profound point.
I turn to the question of minerals. The DRC is enormous, and its mineral reserves are unbelievably huge. One thing that prevents their full exploitation is that many companies are still concerned about the environment and corruption, and the damage that that does to their brand. The DRC produces about 18% of the world’s diamonds, but mainly in an artisanal manner; they are not produced industrially, as one might imagine it being done in South Africa, because the big companies are reluctant to play in the DRC. Some companies have invested in proper infrastructure—they have built proper mining operations—but they find things quite unstable at the moment.
I have waxed rhapsodic endlessly in the main Chamber, and in Westminster Hall, about a deal that involved First Quantum Minerals. It is a quite famous case that also involved ENRC, a FTSE 100 company, but I do not want to bang on too much about it and bore all who have heard me talk about it before. The essence of the case is that if there is an unstable trading environment, a company’s reputation could be damaged by one or two decisions that a Government may make in places such as the Congo, which may make it difficult for companies to invest properly.
First Quantum was the largest taxpayer in the Congo, which collects very little corporate tax and almost no income tax per annum. At the time, First Quantum was employing several thousand people at a mine in Kolwezi near the Zambian border. The mine was effectively expropriated by the Government, sold on for a small amount and then sold on again for a large sum. The question is where the bit in the middle went. No one knows, but we can guess. That, of course, makes it hard for other mining organisations, who saw that mine being expropriated, to invest in DRC. Sadly, that mine is an exemplar of what can happen; it sits empty, basically rotting, with no work going on there. There are no jobs. Companies that can provide several thousand jobs are a rarity all over the Congo, but particularly in the east and south, where jobs are a lifeline for the extended family. Those jobs have gone; there are no operations, and of course no tax is being paid.
As other Members wish to speak, I shall conclude by mentioning PROMINES. I am speaking without notes, so I am not sure whether I have mentioned it already, but ProMines is an excellent effort by the British Government, working in conjunction with other Governments, to increase transparency in the mining industry, and to make it legit so that people can invest with confidence. I understand that things were held up briefly at the time of the First Quantum deal, because the World Bank was concerned about that expropriation. The project stalled as a result, but I believe that it is on the go again. It is an essential developmental issue and a super idea. I hope that Minister will speak about it when the debate concludes.
Paul Uppal (Wolverhampton South West) (Con)
I am delighted to serve under your stewardship, Ms Osborne. I congratulate the hon. Member for Falkirk (Eric Joyce) on securing this most important debate.
I shall highlight some of the ongoing problems in the DRC, and particularly the eastern region. Time will not allow me to go into the topic in great detail—I am sure that everyone is aware of the complex and wide-ranging problems that the country faces—so I shall speak instead about women in the DRC, and the frightening and dangerous situation that many women face.
In a recent survey by leading gender experts, the DRC was named as one of the worst places in the world to be a woman. Sexual violence is widespread there, and there are instances of it being used as a weapon of war. I am encouraged that, in recent years, the international community has highlighted the problems of women in the DRC and has campaigned against sexual violence. However, as news reports show, the issue is ongoing, with hundreds of women—and also men, I understand—being sexually assaulted.
To empower women, we need to ensure that stability and peace are brought to the region, a point made by the hon. Gentleman. I was disappointed to learn from news reports yesterday that violence has marred the registration process for the elections. It is important for the international community to ensure that elections are free and fair, and that everyone is able to vote—most importantly, of course, women. If better governance is to be created, it is imperative that the elections be conducted correctly.
I was encouraged to read the Foreign and Commonwealth Office action plan to implement stricter legislation on sexual violence. Progress has been made in recent years with the Congolese law on rape in 2006, coupled with a better understanding and legal qualification of what constitutes rape, and the introduction of UN Security Council resolution 1888. Stability is essential, but we must work to tackle the attitudes and conditions that allow such violence to take place. Training and education for the army is essential, but it must be coupled with a strong legal system that will bring those who commit such crimes to justice.
Tackling corruption is vital. We must also ensure that high-level officials are brought to justice for crimes committed. Government aid to local NGOs, including that provided by the UK, is imperative to ensure that those organisations have the funding to allow them to reach people in towns and villages across the DRC. Such organisations can also encourage women to speak out, empower them to be involved in public life and help to reconcile them to the past. They can also address the issues at a local level. The NGOs will remain after the conflict ends and help to ensure that women’s rights continue to be protected. Those are short-term measures, so let me address more long-term issues.
Sexual violence should not just be seen in the context of the instability in the eastern areas. It did not originate from the conflict; the conflict intensified an existing problem. Discrimination against women is of long standing and will need to be tackled, alongside promoting peace, to ensure that women are in a better situation in the years ahead.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
I congratulate my hon. Friend the Member for Falkirk (Eric Joyce) on securing this important debate and the hon. Member for Wolverhampton South West (Paul Uppal) on his contribution. The hon. Member for Oxford West and Abingdon (Nicola Blackwood), Lord David Chidgey for the Liberal Democrats and I were part of an all-party parliamentary group that had the privilege to visit the DRC in May. The two speeches covered some of the issues that we addressed and I want to say a bit more about each of them.
As the Department for International Development is responding to this debate, may I begin by praising the excellent work that it is doing in the DRC and the great lakes region more broadly? It was encouraging to see that the work that was started under the previous Labour Government is continuing under this Administration.
I echo what my hon. Friend the Member for Falkirk said about the elections. Will the Minister tell us what progress has been made towards free and fair elections? My hon. Friend also mentioned the importance of monitors in the previous election. Clearly, monitoring will be even more vital if the election is to be run by the Congolese themselves rather than by the international community, as has happened previously.
I echo what the hon. Member for Wolverhampton South West said about the role of women in the Congo. Although we met some amazing women politicians in the region, women are sorely under-represented in Congolese politics. When we were in Goma, we met women who had survived rape and other forms of gender-based violence. An incredibly courageous five-year-old girl who had been the victim of a rape calmly told this group of strangers from the United Kingdom the story of her ordeal, which she had already had to describe in court.
I ask the Minister to say something about progress towards the millennium development goals. There is real concern about the continuing high levels of infant mortality in the Congo and low levels of primary school enrolment.
A major focus of our visit was the minerals question, which my hon. Friend rightly focused on today. Perhaps the Minister will update the Chamber on progress at a European level to some kind of European version of the Dodd-Frank legislation that has been adopted in the United States.
At the end of the visit, I had the opportunity briefly to go to Kigali in Rwanda, which has made remarkable progress since the genocide in 1994. The United Kingdom has played an important role in supporting that progress. Clearly, there are concerns about relations between Rwanda and the DRC, especially in relation to the impact of the Rwandan Government’s wish to invoke the cessation clause in December 2011, which might exacerbate tensions in the Kivus. I would be grateful to the Minister if he were to say something about that today.
Clearly, there is concern about lack of freedom of the media in Rwanda. I had an excellent meeting with the UK high commissioner in Kigali, and I recognised that the British Government are supportive of efforts to see an opening up of the Rwandan media. I want to put it on record that I appreciate the efforts that are being made by the UK high commission in Kigali.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Gentleman has raised his justifiable concerns about Rwanda. Having been to Rwanda myself with RESULTS UK earlier this year, one of the things that came home to me are the great strides that have been made there. Kagame might have his critics, but if he was being toted around Africa as part of a transfer system for political leaders, he would probably be No. 1 in the African transfer want league.
Stephen Twigg
I agree with the hon. Gentleman. In the five years when I was out of the House, I worked with the Aegis Trust, which established the Kigali memorial centre to the genocide. As friends of Rwanda, we should put it on record that incredible progress has been made under President Kagame, but we must also be candid when we have concerns. I want to put my concerns on the record without in any way detracting from the truly remarkable achievements of that country since 1994.
The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien)
I thank the hon. Member for Falkirk (Eric Joyce) for securing this debate and for giving me the opportunity to reply. I am glad that DFID has been chosen to reply, because it will give me a chance to cover some of the development issues. Much of what is relevant to the DRC is Foreign and Commonwealth Office business, but hopefully I will be able to cover both areas.
The hon. Members who have recently returned from their visit to the region will have had a rewarding and informative visit, as indeed I did when I went with the Minister with responsibility for Africa on a joint visit to the DRC. I went to Rwanda last year. Great challenges remain in all the areas that we visited. The overriding priority is to continue to bring sustainable peace and prosperity to the great lakes region.
There are also an enormous number of potential opportunities, but many of them are choked off, because the conditions for them to be usefully explored are simply not yet in place. Much of the potential is still largely untapped. Let me address the points that have been raised by setting them in the appropriate context. I want to take this opportunity to explain how her Majesty’s Government, through DFID in particular, are trying to help to unlock the potential in the DRC and the great lakes region.
The DRC is still recovering from the shock of Africa’s first inter-state war in the modern age, which was laid on top of decades of corruption and misrule. Recovery is hampered by continuing lawlessness and armed violence, particularly in the east. The country is physically disconnected, and politically highly disjointed. The hon. Members for Falkirk and for Liverpool, West Derby (Stephen Twigg) have mentioned that the elections must be seriously monitored. That monitoring process will be welcome, because it will encourage independent verifiability At the same time, we must work with civil society organisations to enable them to use their voice and express the various views across the DRC. We all welcome the broad sentiments that were expressed. We hope that the elections go well, and we will do everything that we can to assist the country at this time. It is important for the credibility of the Government that the elections go well. At the same time, though, we must not rush to judgment, and we must enable the process to go through rather than assuming the worst.
The DRC has some of the worst social indicators in the world, and it is far from achieving any of the millennium development goals, which is one of the questions that I have been asked. Violence against women is endemic and horrifying. The country is second to the bottom of the “doing business” league table. Although growth has been sustained through the past decade, the public purse is still far too small to meet basic needs, so there may well be a very small tax take on taxable transactions of value even under normal regulatory conditions. Clearly, there is a lot of work to be done there.
We must all recognise that the MDGs are way off track. That is true whether we consider the number of children being enrolled at school or the number of girls staying on at school. All of us who care about development issues need to consider how we can meet the MDGs and how the UK, through DFID, can make a transformative difference and help to deliver on those MDGs, The DRC has to be our main focus, which is something that we are determined to do.
There are signs of hope, and our new country programme in the DRC aims to build on those signs. Macro-economic management has improved, which led to international debt relief being granted last year, as I am sure hon. Members know. In addition, levels of violence are slowly dropping, although the amount of violence in the DRC is still extremely high as measured against all comparators. Nevertheless, we must recognise that there has at least been progress in terms of the trend rate. And the DRC Government are showing a greater will—the practice is a long way behind, but there is a greater will—to get the minerals sector under control. I do not mean “control” along the lines of one unfortunate recent incident, which actually amounted to sequestration. What I mean by “control” is appropriate regulation, whereby there is an appropriate opportunity for businesses to take a risk in a predictable environment and for there to be a yield to the country’s exchequer under a system of democratic and transparent accountability, which will then be used for the benefit of the people of the DRC rather than to reward any form of elite.
Anas Sarwar (Glasgow Central) (Lab)
I am sure that the Minister is sick of the sight of me, after he spent two hours in front of the Select Committee on International Development this morning discussing this very region and specifically Burundi. I want to make a point about mineral extraction. As he knows, members of the International Development Committee have recently returned from visiting the DRC and one of the most shocking statistics that we heard while we were there is that $400 million of gold is extracted each month in the DRC, but only $28,000 is paid in tax each month for that gold. What is his Department doing to try to get greater transparency and hopefully some binding agreements along the lines of the extractive industries transparency initiative and the Dodd-Frank Act?
Mr O'Brien
The hon. Gentleman is entirely right to make that observation. There are various estimates about the DRC, but what he has just said is broadly what we all understand to be the case. Part of the answer lies with what the hon. Member for Falkirk hinted at earlier. He suggested that the lack of confidence among foreign direct investors—confidence they can take the risk of going into the DRC and using their world-class skills to extract the unique assets that the DRC is particularly blessed with—means that 80% or more of all the gold that is mined in the DRC is extracted by artisan extraction, as is the case with the other valuable minerals found in the DRC that are sought on world markets. Of course, that makes it almost impossible to capture the revenue from that activity within any kind of regulatory environment.
That is why we are putting such emphasis in the design of the DFID programme on considering what will create the conditions for private sector development. By that, I mean not just foreign direct investment, which is important, but measures that will help regional economic integration. That economic integration is important not only in the east of the region, which we discussed extensively in the International Development Committee this morning, but across the various corridors in the region, particularly the north-south corridor that includes the copper belt in Zambia and the Katanga region of the DRC. That corridor will be vital for the future of many countries in southern and eastern Africa as trade passes up and down it.
The hon. Member for Glasgow Central (Anas Sarwar) referred to the extractive industries transparency initiative. As he knows, we are a strong supporter of that initiative for resource-rich countries. It is absolutely the right way to ensure that, as part of the measures to build confidence and credibility, people are genuine in both countries—both the UK and the country from which the materials are being extracted—and companies must sign up to it. Both the hon. Gentleman and I welcome the DRC’s efforts fully to implement the EITI.
On the Dodd-Frank issue, I hope that the hon. Gentleman knows that my right hon. Friend the Chancellor made it clear at the G20 Finance Ministers meeting in February that the British Government support the development of new international rules that, to some degree, are prompted by the Dodd-Frank Act in the US. Such rules would require oil, gas and mining companies to report payments that they make to Governments. The UK seeks to make progress on that issue in both the G20 and, very importantly, within the EU. This process will work if we move together, so that both a combined, common purpose and combined, common standards and values are reflected in the way those reporting mechanisms are developed.
While I am discussing minerals, perhaps I should talk about PROMINES, which the hon. Member for Falkirk referred to. As he knows, the British Government are co-funding that project with the World Bank, and I was grateful for his complimentary remarks about it. It is a major minerals sector reform programme. A PROMINES agreement is about to be signed with the DRC Government, and it will tighten up regulation in the DRC’s minerals sector. Obviously, we hope that it will improve conditions for mine workers and increase tax revenues from mining, which is another issue that we have discussed. That agreement has been cleared by the World Bank’s executive board, and we expect the DRC Government to sign it within the next few weeks. That is progress.
If the hon. Gentleman will forgive me, I will not comment on the particular case of First Quantum Minerals, because it is the subject of an ongoing dispute.
In recent years, we have gathered a lot of evidence about how to work effectively in war-torn and fragile states, and the key issue is ensuring that we learn from that evidence. Learning from such evidence, alongside a renewed emphasis on results and value for money, has helped us to develop the new country programme that we have now put in place for the DRC. Through that programme, we believe that we can deliver fantastic results in what is, by any test, one of the world’s most difficult aid environments. We believe that we can combine major improvements in basic services, which are much needed, with new efforts to promote trade and investment and, of course, new efforts to create wealth. If we can find ways to create wealth for the broader population, that would be the biggest reliever of poverty.
Over the four-year period of the spending review, we have a total aid budget for the DRC. For the two inner years of that four-year period, we have settled on a budget of about £147 million and £165 million respectively. We will review the progress that is made in the DRC, because we want to ensure that milestones are being identified and that we are achieving results. If progress is made, we have signalled that we want to have a total aid budget for the DRC over the four-year period of about £790 million. That would obviously mean a significant increase in the two outer years of that four-year period.
Without wanting in any sense to undo the absolutely essential element of being in a partnership with the DRC Government in this work, the modalities of delivery have to take place. Often that means that we are unable to use Government systems—for no other reason than that the Government systems do not exist. We must ensure that there is a sense of “earned increase” because progress has been banked and secured, because it is real and sustainable, because it is pro-poor and because it does not benefit those for whom aid might be regarded as being unjustified.
That aid programme will allow us to address the point that was made very forcefully by my hon. Friend the Member for Wolverhampton South West (Paul Uppal) about women in the DRC who are subject to appalling violence, including sexual violence such as rape and female genital mutilation, and who lack access to economic opportunities, including any form of land registration, which would give them the incentive to move into the economic sphere. We hope that we learn the lessons about all those factors.
Jim Shannon
Does the Minister have any concern about the influence of China in the region at present? I believe that there is great concern about it among a great many people in this Parliament and indeed in other countries, too.
Mr O'Brien
The issue is how we all operate in the various countries of Africa. The essence of that is partnership and recognising that we can make a great contribution through development spend, giving aid where appropriate but also having a programme whereby over time we can graduate away from giving aid. Equally, China has an enormous interest in terms of capital expenditure and infrastructure development. Instead of seeing that as a form of competition, there is a real opportunity, which we hope to develop, of having more of a consortium approach, whereby we can partner and perhaps use some of our technical assistance skills allied to the resources of what is unquestionably the world’s greatest capital investor. We must also ensure that the benefits of such investment are truly mutual, because nobody enters into a contract without mutuality. Moreover, mutuality must include the poor people of the countries in which the operations take place. Those are ideas that we want to take forward.
I am very conscious that this debate is not only about the DRC but about Rwanda and Burundi, too. Although the neighbourhood issues, not least those affecting areas across the border from Rwanda, are still not sufficiently calm, settled and satisfactory, there has been enormous progress given the cycles of conflict that have played out over recent decades, both in the post-colonial period and more recently. I am pleased to see the hon. Member for Liverpool, West Derby in Westminster Hall today, because I know myself, having been to Rwanda, the great work that the Aegis Trust has done to find a fitting and indeed deeply moving memorial to the events in Rwanda in the 1990s—it defies belief that those events were taking place in our lifetime.
The future progress of Rwanda cannot be taken for granted. There is still an awful lot that needs to be done to build upon the successes that have been achieved so far. There must be strong and legitimate institutions, security and the rule of law to ensure that there is a more open political space, an ability to tolerate media plurality and a lessening of the strains with neighbouring countries. As is widely known, we have a plan to increase our commitment to Rwanda in the future.
I will touch on Burundi briefly. Burundi was discussed extensively in the International Development Committee this morning, but in the last half-minute of this debate I hope that I can at least summarise matters and say that we have thought very carefully about the appropriate modality of delivering continuing aid to Burundi. In particular, we can work through TradeMark East Africa, which is the operating end of the East African Community, and Burundi stands to benefit enormously from the improvements in infrastructure and lowering of costs that are necessary to participate in economic development, while other donors—particularly multilateral donors—fill the gaps.
Written Ministerial Statements
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Insolvency Service
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
I have today agreed to the publication of the Insolvency Service’s Corporate Plan for the period 2011-15.
Over the past 18 months there has been a significant fall in the number of bankruptcies which has driven the number of new compulsory insolvency cases dealt with by the official receiver down from 78,000 cases in 2009-10 to an expected level of 45,000 to 55,000 cases in 2011-12. In response to this, the service has cut its costs principally by reducing its staff complement from 3,200 to 2,100 by May 2010.
While this is a significant reduction in capacity in a relatively short time, I am satisfied that the service will be able to maintain the levels of service that it achieved in 2010-11 and so I have decided that the service’s targets for timeliness, customer satisfaction and efficiency should be maintained at 2010-11 levels. The service will aim to achieve a real-terms reduction in insolvency case administration fees of 2.5% compared to last year.
At the same time as insolvency case numbers have fallen, the average value of assets in bankruptcy estates has also fallen, making the insolvency case administration fee more difficult to recover and putting upward pressure on the service’s bad debt position. In response to this, in 2011-12 the service, working with BIS, will review how it raises and collects the case administration fee and whether it is possible to move to a more effective and lower-risk fee regime which is fair to those affected, relying less on internal cross-subsidy and leading to lower fees overall.
Action will continue to be taken against bankrupts and company directors in respect of financial misconduct or dishonesty and the service will continue to investigate the affairs of companies in the public interest. Since 2009 the service has undertaken a stakeholder satisfaction survey of the level of confidence in its enforcement regime, achieving an overall confidence level of 68% and 64% in the two surveys to date. I have asked the service to explore what drives this confidence level so as to facilitate work towards a return to a 68% confidence level during 2011-12. I have also set a timeliness target in relation to the instigation of disqualification proceedings against company directors in appropriate cases.
I have set the service targets in relation to the timeliness of releasing reports to creditors in insolvency cases, and of processing claims for redundancy payments. I have also asked the service to at least maintain the overall satisfaction levels of its principal customers and users.
The corporate plan will be available from today, 5 July 2011, at:
http://www.insolvency.gov.uk/aboutus/CorporatePlan.pdf. Copies of this document will also be placed in the Libraries of both Houses.
Insolvency Service Published Targets | 2010-11 Target | 2011-12 Target |
|---|---|---|
Customer Focus | ||
User satisfaction levels as measured through the Agency User Satisfaction Index1 | 90% | 90% |
Case Administration | ||
Level of real term reduction in fees for insolvency case administration | 2.5% | 2.5% |
Percentage of reports issued to creditors within eight weeks | ||
for bankruptcy cases | 92% | 92% |
for company cases | 80% | 80% |
Enforcement | ||
Stakeholder confidence in the Insolvency Service’s enforcement regime | 68% | 68% |
The average time from insolvency order to the instigation of disqualification proceedings in appropriate cases | 19 Months | 19 Months |
Redundancy Payments | ||
Action redundancy payment claims | ||
within 3 weeks | 78% | 80% |
within 6 weeks | 92% | 93% |
1This is a combined indicator covering bankruptcy and redundancy cases. |
In addition to these targets the service is required to meet Government-wide targets relating to replying to correspondence from Members of both Houses of Parliament, and making payments to suppliers, as follows:
Other Targets | 2010-11 Target | 2011-12 Target |
|---|---|---|
Reply to correspondence from Members of Parliament within 10 days | 100% | 100% |
Process payments to suppliers within 30 days | 100% | 100% |
The Government have also instructed Departments and agencies to maximise levels of payment of undisputed invoices within eight days.
ECOFIN (12 July 2011)
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The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council will be held in Brussels on 12 July 2011. The following items are on the agenda:
Savings Taxation Directive
The savings directive forms part of the EU’s “good governance in taxation” agenda, which complements G20 efforts to improve international tax co-operation and reflects latest OECD standards on tax transparency. Depending on the progress of negotiations, the Council may hold a further discussion on amendments to the directive, which seek automatic exchange of tax information with the aim of combating cross-border tax fraud. The UK fully supports the aims of the amending directive, and hopes that the EU can move towards an agreement.
Presentation of the Polish Presidency work programme
The Polish presidency will present its ECOFIN work programme for the second half of 2011.
Follow up to the G20 Deputies meeting in Paris on 8-9 July 2011
Ministers will hold an exchange of views on the main outcomes of the G20 deputies’ meeting, which is scheduled to discuss the following issues of interest to ECOFIN: the global economy and framework for strong, sustainable and balanced growth, reform of the international monetary system, financial regulation and commodities.
Follow-up to the June European Council on 24 June 2011
Council will discuss the outcomes of the European Council, where leaders concluded the first European semester, and welcomed the near completion of the implementation of the comprehensive package of measures it agreed last March to stimulate growth and to strengthen economic governance. The Government achieved their priorities: assurances that the European financial stability mechanism (the EFSM) would not be used for Greece; language that actions taken as a result of the European Banking Authority’s stress tests would be consistent with international standards; and strong language on world trade, Doha, deregulation and the single market.
Bank stress tests
This discussion follows on from the June ECOFIN dinner, and Ministers will hold an exchange of views on the European Banking Authority stress tests, which are due to be published in the first half of July. The focus is likely to be on communicating the results, and how to link the results to the backstops measures put in place by member states to address potential vulnerabilities in their banking systems. The Government believe that it is important to increase confidence in the European banking system through the implementation of coherent and transparent measures to address any vulnerabilities. It is also important to demonstrate the EU’s commitment to medium-term reforms, as agreed internationally, by implementing Basel III in full.
11th Facility for Euro-Mediterranean Investment and Partnership (FEMIP) Ministerial meeting
FEMIP brings together the whole range of services provided by the European Investment Bank to assist the economic development and the integration of the Mediterranean partner countries (Algeria, Egypt, Gaza/West Bank, Israel, Jordan, Lebanon, Morocco, Syria and Tunisia). Ministers will discuss FEMIP’s three-year operational plan (2011-13) and approve its annual report 2010; trust fund activity report 2005-2010 and the way forward; conclusions and follow-up of the 2011 FEMIP conference on the potential of public/private partnerships; and topics for its conferences in 2012.
Tax Policy
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The Economic Secretary to the Treasury (Justine Greening)
I can announce today that the annual rate of the ring fence expenditure supplement (RFES) for the North sea fiscal regime will be increased from 6% to 10%, following discussions with industry initiated at Budget 2011. This provides extra support for investment in the North sea, including in marginal fields that qualify for the current field allowance, and will also support the ongoing considerations on new categories of field allowance.
In the March Budget, as part of a package of measures to help motorists cope with high petrol prices, the Government announced a fair fuel stabiliser that would be funded by higher taxation of the profits from oil and gas companies when oil prices are high. The Government said at that time that they would consider with the oil and gas industry the case for a new category of field that would qualify for field allowance to support investment in marginal fields.
In the course of those discussions with industry, the Government have identified that the ability of a company to benefit fully from the field allowance is dependent on whether a company has sufficient current taxable income against which to off-set expenditure. This is addressed to some extent by the ring fence expenditure supplement, which currently allows companies with insufficient taxable income to uprate losses by 6% for six accounting periods.
The increase to 10% will help ensure existing field allowances work more effectively and equitably to support investment in marginal fields. It also brings RFES in line with the discount rate typically used by the sector.
Increases in the rate of supplement may be made by order. The Government intend to lay the necessary order before the House of Commons in the autumn, with the increase in RFES effective from 1 January 2012.
The OBR will publish the full scorecard costings of this measure over the forecast period at the time of its autumn forecast. Initial estimations are that the change is expected to cost around £50 million a year by the end of the forecast period (2015-16).
The Government will continue to engage with oil and gas companies on the case for new categories of field qualifying for field allowance, and will provide further updates to Parliament in due course.
Fire and Rescue Control Services (England)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)
Today the Government are publishing their response to the consultation on the future of fire and rescue control services in England announced in my statement to the House of 13 January 2011, Official Report, column 22WS. This followed the closure of the FiReControl project in December 2010.
First I would like to thank all those who responded to the consultation—the Department received 61 responses, including from most fire and rescue authorities and services, by the closing date of 8 April. The great majority of those responding to the consultation believed that improved resilience and efficiency—and the enhanced technology needed to support these—were as important today as when FiReControl began in 2004. Most responding also agreed with the Government’s preferred approach of achieving these objectives now through encouraging increased collaboration—in a locally determined manner—with some Government support. This approach will deliver efficiency and resilience benefits for fire and rescue authorities in the best way for their area, as well as build national resilience through local solutions.
I am announcing today that the Government are making available £81 million for fire and rescue authorities in England to improve the resilience, efficiency and technology in their control services. As a guideline, this will provide up to £1.8 million for each authority. Authorities will be invited to submit their plans by 4 November 2011. The plans will be assessed for value for taxpayers’ money and resilience improvements.
In addition, a further £1.8 million will be made available to the fire and rescue sector for initiatives likely to deliver co-ordination and resilience improvements across the fire and rescue services, such as the development of common technical and procedural standards.
I am very grateful to the Local Government Group and the Chief Fire Officers' Association for their co-operation in developing this proposal. They have agreed to be part of the oversight process. Today I will be circulating further guidance, together with a copy of the response document, to all chairs of fire and rescue authorities and chief fire officers. A copy of the response document will be available on the Department for Communities and Local Government website. Copies have been placed in the Library of the House.
Homes and Communities Agency Regulation Committee
(12 years, 10 months ago)
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The Minister for Housing and Local Government (Grant Shapps)
I wish to inform Parliament that Communities and Local Government has obtained approval for an advance from the Contingencies Fund to allow the recruitment and appointment of a chair, with support arrangements, and for the recruitment of committee members, for the reformed Homes and Communities Agency’s (HCA) Regulation Committee ahead of Royal Assent of the Localism Bill, which is currently before Parliament.
Bringing forward this expenditure through a Contingencies Fund advance will enable efficiency savings to be achieved and provide significant reductions in public spending.
The HCA’s Regulation Committee will focus on the economic regulation of the social housing sector. Economic regulation provides investors with necessary assurance that the sector is properly governed and financially viable.
Parliamentary approval for resources of £14,000 for this new service will be sought in a supplementary estimate for Communities and Local Government. Pending that approval, urgent expenditure estimated at £14,000 will be met by repayable cash advances from the Contingencies Fund.
Animal Health Executive Agency
(12 years, 10 months ago)
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The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
The 2010-11 annual report and accounts for the Animal Health Executive agency was laid before Parliament today.
Environment Council
(12 years, 10 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
My right hon. Friend the Secretary of State for Energy and Climate Change and I represented the UK at the Environment Council in Luxembourg on 21 June. Stewart Stevenson, Scottish Minister for Environment and Climate Change, also joined the delegation.
At the beginning of the Council, the presidency presented its progress report on the proposal for a directive on control of major accident hazards involving dangerous substances (“Seveso III”), which highlighted the key issues that remained for discussion during the Polish presidency, in particular: the scope of the directive, the provisions on public information and the inspections regime. The Council noted the progress report.
Ministers agreed Council conclusions on the EU Biodiversity Strategy to 2020. There was very strong support for the strategy itself, but some debate around whether to endorse the associated targets and actions proposed by the Commission, or to leave these for further discussion. There was general acceptance that the actions needed further discussion, but the Commission and several member states were keen that Council should specifically endorse the targets now, as a means to influence discussions in other fora, such as on the EU budget and CAP reform. Others, notably Denmark and Italy, argued that they should be subject to fuller examination first, to avoid the risk of signing up to something that would not be achieved. I was able to accept language that endorsed the targets, but only if the targets, as well as the actions, took fully into account international agreements. I highlighted the recently published Natural Environment White Paper, the UK National Ecosystem Assessment and the England Biodiversity Strategy. I identified the importance of delivering biodiversity objectives through a reformed CAP. Conclusions were ultimately agreed that endorsed the strategy, considered that the strategy and its targets were a key instrument to enable the EU to reach its overall 2020 target and emphasised the need for further discussion on the actions.
The Council then adopted conclusions on the protection of water resources and integrated sustainable water management in the European Union and beyond. There was an exchange of views on expectations for the upcoming Commission blueprint to safeguard Europe’s water resources to be produced in 2012. I stressed the importance of the protection of water resources and integrated sustainable water management and the need to put in place measures to conserve and make better use of these resources. The forthcoming Commission “fitness check” provided an opportunity to thoroughly review existing EU water legislation to ensure it was effective and fit for purpose and I highlighted the importance of integration of water issues into other policies, notably agriculture. On the issue of water shortage and drought, I emphasised that the importance of these topics does not mean that further EU legislation in this area is necessarily required, as some member states propose.
Over lunch and into the afternoon session Ministers discussed the conclusions on the Commission’s roadmap for moving to a competitive low-carbon economy in 2050. My right hon. Friend the Secretary of State called for these to welcome the important analysis in the roadmap; endorse the cost-effective trajectory it sets out including the milestones for 2020, 2030 and 2040; and set a timetable for the Commission to produce further analysis of the policy changes needed to deliver these reductions. Only one member state refused to note the Commission’s finding that a 25% domestic emissions reduction in 2020 was on this cost effective pathway, and so discussion ended with the adoption of presidency conclusions reflecting the majority view.
A progress report on the proposal for a regulation on the possibility for member states to restrict or prohibit the cultivation of GMOs in their territory developed into an exchange of views. Those member states which support the proposal strongly endorsed the progress made. The UK and Germany, among others, reiterated our concerns about the impact on the single market and WTO obligations; and the potential negative impact on safe products finding their way to the market. The UK supported proportional and pragmatic regulation on the cultivation of GMOs and while we supported subsidiarity, this should not be at the expense of the single market or the EU WTOs obligations. We encouraged the Commission to ensure the effective operation of the current system.
Under other business France called for an EU management plan for cormorants, the Netherlands for action on nanomaterials, and Denmark spoke on not using credits from industrial gas CDM projects for compliance with the effort sharing decision targets. The incoming Polish presidency outlined its environment priorities: biodiversity; resource efficiency; climate change (adaptation and preparations for the conference in Durban); and, preparations for the UN Rio+20 conference.
Single Payment Scheme
(12 years, 10 months ago)
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The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
Thirtieth June marked the end of the regulatory payment window for payments under the 2010 single payment scheme (SPS.) At that point, the Rural Payments Agency (RPA) had paid a total of £1.75 billion to some 103,604 claimants. That leaves a total of some 594 claimants to be paid up to a maximum of £25 million. It is likely that further work will reveal that some of these cases are not eligible for payment and most of the remainder cannot be paid at present due to reasons such as probate.
These figures demonstrate that RPA has succeeded in paying over 99% of eligible claimants within the payment window and met the EU benchmark of 95.238% of the total value of payments to be made, so avoiding the prospect of late payment penalties. This is particularly pleasing given the focus this year on ensuring accuracy of payments in order to begin drawing a line under the legacy of IT and data problems that have dogged the agency since the chaotic implementation of SPS in 2005. Significant progress has been made on legacy data correction activity so providing greater confidence for farmers about their subsequent scheme year payments. Nevertheless, I recognise that a significant number of farmers had to wait longer than usual for the payment, which I regret.
I recognise also that there remains much for the agency to do in terms of making payments to both the remaining 2010 claimants, including top ups to those who received an initial hardship payment, and those who are due additional sums for the 2005-09 schemes. The remaining backlog of potential error cases also needs to be reviewed and overpayments notified to claimants and recovered. This significant volume of work will be undertaken alongside processing of 2011 scheme payments.
Over the summer, the RPA chief executive, Mark Grimshaw, will be developing a strategic plan for the agency with his new executive team. This will include an evidenced-based review of what the payment timetable for SPS 2011 might look like, to be both challenging and realistic. The plan will be put to the RPA oversight board for approval in the autumn and the final version published soon after. More generally, the board will continue to monitor the agency’s efforts closely to ensure a line is finally drawn under all the legacy data issues over the coming year.
I will continue to keep the House informed on the agency’s progress.
Interpretation and Translation Services
(12 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
Against a background of the need to make economies right across the public sector I announced, in a written ministerial statement on 15 September 2010, Official Report, column 46WS that the Government were proposing to make changes to the provision of interpretation and translation services across the justice sector to cut the cost and make more efficient provision while safeguarding quality.
In pursuit of that aim the Ministry of Justice conducted a competitive dialogue procurement process to explore how these services could be delivered more efficiently, before taking a decision on the way forward. That process resulted in a proposed framework agreement with a single supplier, under which justice sector organisations could contract for language services as needed. Having sought and taken account of the views of interested parties the Government have decided that a framework agreement is the best way to meet their objectives.
The Ministry of Justice will contract under the framework on behalf of Her Majesty’s Courts and Tribunal Service and the National Offender Management Service. Other justice sector organisations, including police forces, have indicated that they intend to sign contracts under the framework agreement as soon as they can. In some cases this will be when pre-existing contracts come to an end.
The framework agreement will deliver significant administrative and financial savings over the current approach. It will do this by introducing market forces into language services provision and providing a single point of contact available to staff at any time of day for the provision of all language services, including interpretation, translation and language services for the deaf and deaf-blind.
Language services will now be booked through various mechanisms including a secure internet portal, telephone or e-mail. This does away with the current time-consuming and inefficient process of making direct telephone contact with each individual interpreter to check their availability for work. A single request will be all that is required, reducing the burden on staff.
Interpreters’ details will be held centrally on a new register maintained by the supplier, which will be freely accessible to the justice sector and legal practitioners.
The Government have always been clear however that efficiency cannot be at the expense of quality. Clear quality standards specify the qualifications and experience required for interpreters to work in the justice sector. A strict code of conduct sets out the high standard of professional conduct expected of them. A robust, accessible complaints process has also been designed, with effective sanctions to ensure that breaches of these standards are investigated and dealt with proportionately and properly.
The supplier will be obliged under the framework to increase the pool of appropriately qualified, experienced and security cleared interpreters beyond the current limits, and to collect and monitor detailed management information to allow better planning for future needs. Failure to do so will result in the supplier being financially penalised.
Moving over to the framework agreement will result in a more efficient and effective service for the public which is forecast to result in savings of at least £18 million on the current yearly spending in this area of £60 million. It will ensure, through the various benefits it offers, that the Government continue to be able to provide access to efficient, high-quality language services for those in need, while getting value for money on behalf of the public.
Airport Co-ordination (London Olympics)
(12 years, 10 months ago)
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The Secretary of State for Transport (Mr Philip Hammond)
As part of the Government’s strategy to ensure successful delivery of efficient transport services for the 2012 London Olympic games, I am today announcing the introduction of new measures to limit disruption and delay to all flights using airports in the south-east of England during the expected period of peak demand for air services for the games.
The Airports Slot Allocation (Amendment) Regulations 2011, laid before Parliament today, will come into force on 1 August 2011. They will temporarily amend the existing regulations so as to provide new powers to ensure that during the games period the available air space capacity over the south-east of England will be able to accommodate the maximum possible number of extra flights, while minimising the risk of disruption or delay to existing services. These regulations will cease to have effect on 31 December 2012.
In conjunction with the new regulations, and following two rounds of consultation, on 1 August 2011 the Secretary of State for Transport will designate the airports listed below as temporarily co-ordinated until 15 August 2012, but only in respect of slot allocation during the period of 21 July 2012 to 15 August 2012 inclusive. This period corresponds to the anticipated peak demand for air services for the games.
In the south-east of England, Heathrow, Gatwick, Stansted and London City are already co-ordinated airports. Airports that will additionally be co-ordinated for the Olympics period are: Birmingham airport, Blackbushe airport, Bournemouth airport, Cambridge airport, Chalgrove airport, Coventry airport, Cranfield airport, Damyns Hall aerodrome, Denham aerodrome, Dunsfold aerodrome, Duxford airport, Elstree airport, Fairoaks airport, Farnborough airport, Goodwood aerodrome, Lee-on-Solent airport, Leicester airport, London Biggin Hill airport, London Luton airport, London Oxford airport, London Southend airport, Lydd (London Ashford airport), Manston airport, North Weald airfield, Old Sarum airfield, Peterborough Conington airfield, RAF Northolt, Redhill aerodrome, Rochester airport, Shoreham airport, Southampton airport, Stapleford airport, Sywell aerodrome, Thruxton airport, White Waltham airfield, Wycombe air park.
During this period all flights operating in controlled airspace and intending to use a co-ordinated airport will need to obtain, and operate in accordance with, pre-booked take-off or landing slots. Slots will be allocated by Airport Coordination Ltd, the existing UK slot co-ordinator, in accordance with the relevant EU regulation.
Local Sustainable Transport Fund
(12 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I am pleased to announce that the Department is today awarding £155.5 million to support authorities in delivering local economic growth while cutting carbon emissions from transport.
The Department has received 73 bids to tranche one of the local sustainable transport fund from 66 lead authorities. All bids were for small projects requiring less than £5 million funding from DfT. Twelve bids were submitted as “key components” to large projects.
Proposals were assessed against the criteria as published in the “Guidance on the Application Process”, which was published on 19 January. Successful proposals were those judged to perform well against the twin objectives of supporting the local economy and facilitating economic development, and of reducing carbon emissions.
If proposals met these initial criteria, they were also scored on their potential to deliver wider social and economic benefits, to improve safety, to bring about improvements to air quality, or to promote increased levels of physical activity.
Proposals were required to demonstrate financial sustainability with benefits enduring beyond the life of the fund, to incorporate a credible delivery plan, and to include a commitment to make a local contribution towards the overall costs.
In line with the published guidance, an assessment of value for money was undertaken. The Department is confident that the overall package of proposals approved in this first round represents high value for money.
I have decided to fund 39 proposals in this round. Thirty-four proposals will be funded in full and a further five proposals will be funded in part. Thirteen proposals are considered to have potential when scored against the fund criteria, but in my view require further work. Their promoters will be invited to improve their offer and resubmit to the Department in February 2012, or to improve their offer in the context of their large project proposal, where this proposal is shortlisted. The full list of decisions is attached.
By the deadline of 6 June, the Department received 19 expressions of interest for larger projects (requesting between £5 million and £50 million funding from DfT). I intend to announce at the end of July the shortlist of those authorities invited to prepare a detailed business case for their proposal. Detailed business cases will be submitted to the Department by December 2011. The Department has received 41 expressions of interest for tranche two small project funding, for submission by February 2012. I intend to announce successful projects in this second round in the early summer of 2012.
I am very pleased that all eligible local authorities across England (with the exception of the Isles of Scilly) have now applied for funding to the local sustainable transport fund, either as a lead bidder, or as a partner authority to a large project. The fund has been well received by local government and I am confident that it will be effective in addressing the two key objectives of supporting growth and cutting carbon.
DfT Funding (2011-15) | |||
|---|---|---|---|
Local Authority | LSTF Project Name | (£m) | |
North East | |||
Darlington | Local Motion | 4.076 | |
Durham * | South Durham embracing Local Motion | 2.008 | |
Redcar and Cleveland | Get Moving Redcar & Cleveland | 1.490 | |
Tyne and Wear ITA | An Active Future for Tyne and Wear (Key Component) | 4.904 | |
North West | |||
Cumbria | Lake District Sustainable Visitor Transport Beacon Area | 4.890 | |
Merseytravel | Facilitating Sustainable Access to Employment in Merseyside (Key Component) | 4.877 | |
Sefton * | Sefton & West Lancashire Visitor Economy Project | 1.550 | |
Transport for Greater Manchester | Greater Manchester Commuter Cycle Project (Key Component) | 4.938 | |
Yorkshire and The Humber | |||
South Yorkshire ITA | A sustainable journey to work in South Yorkshire (Key Component) | 4.981 | |
West Yorkshire ITA through Metro (West Yorkshire Passenger Transport Executive) | (1) DITA Connecting the Dales (2) “Getting transport to work”—An initiative to support the sustainable growth of employment in West Yorkshire (Key Component) | 1.102 4.169 | |
York | Sustainable Transport York—a programme to “reduce carbon emissions, stimulate economic growth through influencing travel behaviour and encouraging modal shift” | 4.645 | |
East Midlands | |||
Leicester | Leicester - Fit for Business | 4.418 | |
Nottingham | Nottingham Urban Area LSTF Key Component Bid (Key Component) | 4.925 | |
West Midlands | |||
Birmingham | Bike North Birmingham | 4.123 | |
Dudley | Brierley Hill Active Travel Partnership (BHATP) | 0.362 | |
Herefordshire | Destination Hereford | 4.973 | |
Shropshire | Shropshire Sustainable Transport Package | 4.990 | |
Telford and Wrekin * | Telford Future – local action for sustainable growth (Key Component) | 3.526 | |
Warwickshire | Stratford-upon-Avon Local Sustainable Transport Project | 4.995 | |
Worcestershire | Choose how you move 2 | 2.815 | |
East of England | |||
Hertfordshire | BIG HERTS BIG IDEAS (Key Component) | 1.990 | |
Luton | Sustainable Luton Improvement Partnership | 4.996 | |
Peterborough | TRAVELCHOICE PLUS | 5.000 | |
Southend-on-Sea | Smarter, Active and Sustainable Southend | 4.816 | |
Suffolk | Lowestoft Local Links | 5.000 | |
Thurrock | Thurrock Sustainable Travel Choices | 5.000 | |
South East | |||
Brighton and Hove | Lewes Road Corridor | 4.030 | |
Hampshire | Hampshire Sustainable Transport Towns | 4.076 | |
Kent * | Growth without Gridlock | 2.273 | |
Oxfordshire | The Oxfordshire Arc: Supporting Employment Growth and Accessing Higher Education & Healthcare in Oxford (Key Component) | 5.000 | |
Reading | Sustainable Access for Reading: Overcoming Barriers & Boundaries | 4.902 | |
Southampton | Southampton Sustainable Travel City | 3.960 | |
Surrey * | Surrey TravelSMART (Key Component) | 3.930 | |
South West | |||
Bristol (in partnership with Bath and North East Somerset, North Somerset and South Gloucestershire) | West of England Key Commuter Routes (Key Component) | 5.000 | |
Devon | Breaking the link between economic growth, carbon and congestion | 4.941 | |
Plymouth | 1) Plymouth Connect 2) ITSO Smart Ticketing throughout All South West England | 1) 4.330 2) 2.980 | |
Swindon | SWIFT (Swindon Workplace Initiative for Transport) | 4.472 | |
*Partial funding approved. |
Local Authority | LSTF Project Name | |
|---|---|---|
North East | ||
Middlesbrough Council | Sustainable Middlesbrough | |
Northumberland County Council | South East Northumberland Sustainable Travel Towns | |
North West | ||
Blackburn with Darwen Borough Council | Blackburn with Darwen Connect Programme | |
East Midlands | ||
Derby City Council ** | Derby Sustainable Travel | |
Nottinghamshire County Council | Nottinghamshire sustainable market towns | |
Rutland County Council | Travel 4 Rutland | |
West Midlands | ||
Stoke-on-Trent City Council | North Staffordshire Sustainable Transport Package | |
East of England | ||
Cambridgeshire County Council | Travel for Cambridgeshire | |
Central Bedfordshire Council | My Journey: Travel Choices for Central Bedfordshire | |
Norfolk County Council | Connecting Norfolk to Growth | |
South East | ||
West Sussex County Council | West Sussex Sustainable Travel Towns | |
South West | ||
Gloucestershire County Council | Cheltenham and Gloucester Sustainable Travel Programme | |
Somerset County Council | Moving Bridgwater Forward | |
As a Key Component bidder, Derby will be invited to incorporate their key component package into their Large Project business case if shortlisted. If not shortlisted, Derby will be invited to resubmit to Tranche 2. |
Local Authority | LSTF Project Name | |
|---|---|---|
North East | ||
Hartlepool Borough Council | Access Hartlepool | |
Stockton-on-Tees Borough Council | Stockton Active Travel | |
North West | ||
Blackpool Council | Jump-starting Blackpool’s sustainable transport future: -Combating climate change, improving quality of life -Supporting the local economy, growing sustainable tourism | |
Cumbria County Council | Cumbria Connected | |
Yorkshire and The Humber | ||
North Lincolnshire Council | International Gateway Area Wide Travel Plan | |
East Midlands | ||
Derbyshire County Council | 1) Matlock-Buxton Cycle Ring and Connections 2) Sustainable Transport in North East Derbyshire | |
Leicester City Council | Bike Club Plus | |
Northamptonshire County Council | Connecting Northamptonshire | |
West Midlands | ||
Solihull Metropolitan Borough Council | Lets Go Local | |
Walsall Metropolitan Borough Council | Active Sustainable Travel and Road Safety Scheme (A*STARS) | |
Wolverhampton City Council | Creating Capacity and Connecting Places | |
East of England | ||
Bedford Borough Council | Access to Bedford | |
Essex County Council | The Essex Integrated County Towns Smarter Choices Programme | |
Luton Borough Council | SEMLEP Inter-urban Bus Improvements | |
South East | ||
Buckinghamshire County Council | 1) Smarter Business Travel Solutions 2) Sustainable School Travel Support | |
Medway Council | Medway gets active! | |
Milton Keynes Council | Milton Keynes Walking and Cycling Network Improvements, Information Provision and Promotion | |
South West | ||
Dorset County Council | School Travel Health Check (STHC) | |
Borough of Poole | Poole Town Centre and Hamworthy Smarter Choices Package |
Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Harris of Richmond)
My Lords, before the Minister moves that the first statutory instrument be considered, I remind noble Lords that in the case of each statutory instrument the Motion before the Committee will be that the Committee do consider the statutory instrument in question. I should make it clear that the Motions to approve the statutory instruments will be moved in the Chamber in the usual way. If there is a Division in the House, the Committee will adjourn for 10 minutes.
Land Registration (Network Access) (Amendment) Rules 2011
(12 years, 10 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Land Registration (Network Access) (Amendment) Rules 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the noble Baroness, Lady Royall, beat me to the punch by whispering across the point that I was going to make. Looking at her sitting in solitary splendour, I am reminded of the advice that you face your opponents but your enemies are behind you.
The rules before us today amend the Land Registration (Network Access) Rules 2008, which make provision about network access agreements. These are agreements with the Chief Land Registrar conferring authority to have access to the Land Registry’s electronic network on a person who is not a member of the Land Registry.
The purpose of these draft rules is to ensure that the criteria that applicants for a network access agreement must meet are consistent with the terms of the Legal Services Act 2007, which makes provision for the regulation of persons who carry on certain legal activities.
It may be helpful if I say something about land registration legislation and the Legal Services Act before considering these rules in more detail. The Land Registration Act 2002 enables the Chief Land Registrar to set up a land registry network to be used for electronic conveyancing. It provides that a person who is not a member of the Land Registry staff may have access to the network only if authorised by a network access agreement entered into with the Chief Land Registrar. The Land Registration (Network Access) Rules 2008 provide the criteria to be met by an applicant for a network access agreement, and also some of the terms that a network access agreement must contain. A conveyancer with a network access agreement can make electronic applications to the Land Registry that may result in a change to the register of land.
The Legal Services Act 2007 regulates the provision of legal services in England and Wales. Among its provisions, it sets out which legal activities are “reserved”, and who can carry out those reserved legal activities. One category of reserved legal activity is “reserved instrument activity”, which includes preparing certain conveyancing documents for the purposes of the Land Registration Act 2002, and making applications or lodging documents for registration with the Land Registry. Under the Legal Services Act, only an “authorised person” is allowed to carry out a reserved legal activity. “Person” includes a body of persons. The authorised person may be authorised to carry out all or only some of the reserved legal activities. It is a criminal offence to carry on a reserved legal activity if a person is not authorised to do so.
Much of the Legal Services Act 2007 came into force in 2010. Later this year, it is expected that further sections of the Act will come into force that will allow for the introduction of licensed bodies, which are commonly referred to as alternative business structures. The purpose is to relax the statutory and regulatory limitations on the ownership and management of legal practices to allow for greater flexibility and choice in the provision of legal services.
The Land Registration (Network Access) Rules 2008 came into force before the changes made by the Legal Services Act. At that time, the provision of reserved legal activities was subject to the provisions of the Solicitors Act 1974 and various other enactments. The network access rules were drafted to be consistent with those enactments. At that time, the regulation of legal services was based around the regulation of individual solicitors, barristers, licensed conveyancers and notaries. Under the Legal Services Act, there is a move towards the regulation of bodies that deliver legal services.
Now that the Legal Services Act has made changes to the regulation of legal services, and more changes are on their way with the introduction of alternative business structures, it is necessary to amend the network access rules for consistency with the new legislation. It would be inappropriate for the Chief Land Registrar to enter into a network access agreement with a person or body that was not authorised under the Legal Services Act to undertake land registration activities.
The rules before us today amend the criteria to be met by applicants for a network access agreement to bring them into line with the Legal Services Act and to make adjustments to take account of alternative business structures. These rules will allow for a person or body that is authorised under the Legal Services Act to carry on legal activities relating to land registration, or a person or body that employs such an authorised person who will undertake those activities or direct and supervise them, to enter into a network access agreement, provided that they also meet other criteria set out in the network access rules. One class of body that can currently enter into a network access agreement will be unaffected—a government department. This is because of the exemption for public officers from the provisions of the Legal Services Act.
In addition, amendments have been made to the definition of “intervention”, and “disciplinary proceedings” to include reference to licensing authorities which will regulate alternative business structures; and the insurance criterion has been amended so that the words correspond with wording used in the Legal Services Act.
Members of the Committee will see that the amendments will come into force on the day that Section 71 of the Legal Services Act comes into force. That section will allow for the commencement of alternative business structures. In drawing up the amendments, the Government intended to ensure a level playing field for all legal service providers—whether traditional conveyancing practices or alternative business structures. This reflects the policy behind the Legal Services Act.
The Lord Chancellor must consult such persons as he considers appropriate before making rules relating to access to the Land Registry’s electronic network. An impact assessment was also undertaken. The majority of those who responded to the consultation and impact assessment supported the proposals.
In summary, the rules update the criteria for entitlement to a network access agreement with the Chief Land Registrar, reflecting provisions already made by the Legal Services Act. I therefore commend these draft rules to the Committee.
Lord Thomas of Gresford
My Lords, the important point that should be appreciated—I am sure that it is—is that when a title is registered, it is an absolute title. It can be obtained by fraud or by any other means, but it is an absolute title, once registration has been granted. That means that the person who owns that title can sell it on and deal with it as if it were his own. Any issue as to how that registration has been obtained is left for litigation. Therefore, it is crucial that the integrity of the register is maintained. So much depends on trust. We trust that the people who make these applications will do so honestly, with proper consideration of all the issues and in the interests of their clients. That is why we have all these rules, which endeavour to ensure that the very competent staff of the Land Registry are not deceived by applications from outside.
What is this all about? It brings the alternative business structures system into the position of being an authorised applicant to deal with the Land Registry. I have expressed my views on these alternative business structures so often that I sound a little like Cassandra. However, I foresee trouble. If there is trouble in the future, it is not the lawyers who will suffer; they will do very well. It is the consumer and the customer who will suffer.
There is a lack of confidence in the way that this has been put forward. The summary of the impact assessment says on page 3, under the heading “Other key non-monetised benefits by ‘main affected groups’”:
“The proposals will avoid the potential costs to Land Registry customers outlined in the base case by ensuring only persons authorised to prepare and make applications relating to land registration are able to do so”.
That states the obvious; it is the position at the moment. The summary goes on:
“Land Registry customers may further benefit if the new definition of ‘conveyancer’”—
that is, these rules—
“leads to better quality conveyancing practices compared to current levels”.
Why it should lead to better conveyancing practices than the current system, under which conveyancing is carried out by qualified lawyers or managing executives, I do not know. The summary continues:
“Ensuring ABS firms fall within the definition should also lead to increased competition in the conveyancing market, which may provide efficiency benefits for society, and direct benefits for Land Registry customers in the form of lower prices and/or increased choice”.
The sort of situation that I envisage, particularly in a tight housing market, is that developers will offer a conveyancing service, or an ABS. They will have an interest in the outcome of the conveyance of their own homes and access to the registry. They may act for both parties. All the checks and balances that have developed over the years to protect the consumer and householder will be weakened.
I have had my usual rant on this subject, so I shall leave it at that. I cannot say that I welcome this measure.
Lord Hodgson of Astley Abbotts
My Lords, I had not intended to intervene on this matter but since “network access” appears in the title of the rules that we are discussing, I seek reassurance from my noble friend about the checks that are being made to ensure that those who are not authorised do not obtain access. Something that has recently come to public notice is the ELMER database, which is operated by the Serious and Organised Crime Agency. This is where reports of suspicious activity are collected for purposes of investigating money laundering. It appeared that the rules were perfectly tightly drawn, and that only SOCA and police forces throughout the country could obtain access to the information that is contained there. There are now 1.2 million records on the suspicious activity report database. Subsequently, now it transpires that actually all sorts of social security departments and other operations are able to get into the database. Given the importance of this, and the critical nature of the functions being carried out, it would be good to know that careful checks are being made to ensure that people who are not entitled to access do not get it.
Baroness Royall of Blaisdon
My Lords, I shall make a brief intervention on this, with a couple of quick questions. In the Explanatory Notes somewhere it says that the first alternative business structures will be established in October this year. Is it anticipated that that is the case? Furthermore, there is mention of an informal consolidated text in the document. What is the state of an informal consolidated text, as opposed to a proper consolidated body of law?
I very much welcome the update of the Land Registry portal guidance notes, which will be important. However, following on from what the noble Lord, Lord Thomas of Gresford, has said, and the noble Lord, Lord Hodgson of Astley Abbotts, there are clearly potential problems with this order. There is to be a post-implementation review in 2015. I have two things to say about that. In view of the concerns expressed by noble Lords, are the five years before there is any sort of review not a little too long? If consumers have been found to be suffering as a result of this order, perhaps the Government might seek to act before then. If the review finds that the policy objectives of the order have not been met and that consumers have been harmed as a result, will the Government seek to act and revise the order in some way to ensure that consumers do not continue to suffer as a result?
Lord McNally
I am grateful to noble Lords who have participated. On the important question of when alternative business structures will be introduced, the Legal Services Board and the Ministry of Justice are working towards October 2011 for implementation. The noble Baroness was in government long enough to know that saying that we are working towards that is as firm a commitment as I can make at this precise moment—but that is the objective.
On the question asked by the noble Lord, Lord Thomas, about the importance of the integrity of the Land Registry process, I need no urging on that. I am the Minister responsible for the Land Registry. One thing that I continually impress on colleagues from other departments is that we have a very important public asset in the trust that people put in the Land Registry process, and rightly so. For the great majority of us, the title and ownership of our property—those of us who are house owners—represents the biggest investment that we ever make in our lives. So the integrity of that process is extremely important. Although I have heard before the doubts expressed by the noble Lord, Lord Thomas, about alternative business structures, I would not go so far as to describe him as a Conservative on matters of legal structures.
Our aim is to bring what we hope will be some exciting competitive pressures into the delivery of legal services, and those responsible for delivery will keep a close eye on things. In a recent meeting on related matters, the noble Baroness, Lady Hayter, attending in her capacity as chair of the Legal Services Consumer Panel, expressed confidence in the overall checks and balances being put in place. Alternative business structures will provide opportunities for practitioners from different professions, legal and non-legal, to join up to ensure that it is economically viable for them to continue to provide legal and associated services and gain efficiency savings.
Although we promised a review after five years, Land Registry constantly reviews its practices and will review the network access rules if alternative business structures result, paying particular regard to consumers.
The noble Lord, Lord Hodgson, spoke about the use of databases—I think that he referred to the suspicious activity database. Thorough checks are made before entering into network access agreements and continuing checks are made to make sure that there is no abuse. However, the noble Lord raised an interesting broader point. The advance of technology has meant that the ability of the state and private industry to amass vast amounts of information about the individual could pose a threat to their civil liberties. I shall quote, as I do frequently in other places, something that the noble Lord, Lord Thomas of Gresford, once said to me. He said that in a free society there must be a limit to what the state knows about the individual. In our modern world, vast amounts of information are amassed. What is more, there is almost limitless technological ability to exchange that information unless checks and balances are put in place. That is partly the responsibility of government and Parliament.
I hope that I have covered the points that colleagues have raised. As I have said, the measures bring the various Acts into kilter and anticipate new structures. On that basis, I hope that the Committee will agree the Motion.
Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011
(12 years, 10 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, as the Committee will be aware, the Rehabilitation of Offenders Act 1974 exists to support the resettlement of offenders into society where they have demonstrated that they have put their criminal behaviour behind them. After a prolonged period of time, therefore, the Act declares convictions spent and an ex-offender need no longer declare them. When they apply for jobs, or seek insurance, they need not disclose this information and subsequently not suffer the potential discrimination as a result of it.
There must of course be exceptions to this rule. Where, for example, someone is applying to work with children or with vulnerable adults, it is appropriate that the employer knows the full history of the individual. The exceptions order to the Act is the means by which this is achieved.
The exceptions order lists certain activities that are exempt from the Act. This means that where an individual is applying for a job within a specified activity or is involved in specified proceedings, their full criminal record history is available to the employer. If an individual has a conviction that has been declared spent, the prospective employer will then see it. We must be careful not to jeopardise the operation of the Rehabilitation of Offenders Act, so the activities listed on the exceptions order are only those that present an opportunity for people involved to cause harm to the public or the work concerned is of a sensitive nature, which might include children, the finance sector or national security.
This careful balance between allowing offenders to lead law-abiding lives by removing barriers and maintaining public protection needs to keep pace with the present. The exceptions order must therefore remain up to date with developments elsewhere. The order presented today is an illustration of the Government seeking to maintain this balance in line with the developments occurring in the financial and legal sectors.
Noble Lords will know that wide proposals for reform of the Rehabilitation of Offenders Act are being considered by the Government. Today is not the day to debate these, and I cannot make further announcements at this stage.
The current exceptions order enables the Financial Services Authority to take spent convictions into account when authorising a person to carry out regulated activities under the Financial Services and Markets Act 2000. This amendment will enable the Financial Services Authority to take spent convictions into account when authorising a new category of business—payments institutions.
Payments institutions were brought within the scope of regulation by the Financial Services Authority in 2009. They provide payment services, for example enabling cash to be placed in or withdrawn from a payment account, and range from large credit card companies to sole traders offering to send money abroad for a small fee. Money remitters, for example, transfer large amounts of money to and from overseas, with many specialising in remitting funds to specific accounts, such as in India, Pakistan or Poland, on behalf of immigrant communities. In many cases these customers are financially disadvantaged people, who have limited access to the banking system.
There have been a number of failures of business in the money remittance industry, and the failures have uncovered an element of mismanagement, financial impropriety or fraud. It is therefore important that the Financial Services Authority can assess those responsible for management of these businesses before authorising them to carry on business. This amendment will therefore bring payments institutions within the exceptions order so that the Financial Services Authority can take into account the full background of those responsible for the management of these bodies.
The second amendment relates to the introduction of alternative business structures, which will allow lawyers and non-lawyers to work together to provide legal and non-legal services. These bodies will be licensed and regulated by licensing authorities. Two new roles—head of legal practice and head of finance administration—are being introduced and will be responsible for an alternative business structure’s compliance with their licence. Licensing authorities must be satisfied that individuals applying to be heads of legal practice and heads of finance administration are fit and proper persons for appointment. In particular, not only will persons in these roles be responsible for compliance with the body’s licence, they could have access to vulnerable clients, client money and personal or sensitive client information. Making this amendment means that licensing authorities can seek information on previous convictions and cautions from applicants seeking to take up the role of head of legal practice and head of finance and administration. This will ensure that they are fit and proper for appointment.
I am aware that a further request has recently been made by the Legal Services Board for non-lawyer owners and managers of alternative business structures to be added to the exceptions order. At this early stage, no decision has been made. We will of course give careful consideration to this request, and this process is under way.
The final amendment is one of wording only. There is currently an entry on the exceptions order relating to “actuary”. The term is currently defined in the exceptions order as,
“a member of the Institute of Actuaries or a member or student of the Faculty of Actuaries”.
On 1 August 2010, these two bodies merged to become the Institute and Faculty of Actuaries. In order to continue to give effect to the applicable exception the definition is to be updated to reflect this change.
I hope that I will have the agreement of all noble Lords that the exceptions order is an important means of protecting the public. The instrument presented today responds to the latest analysis of risks. It therefore ensures that legislation is up to date and effective in its aim, while maintaining the vital balance towards the resettlement of offenders that the Rehabilitation of Offenders Act seeks to achieve. I beg to move.
Lord Hunt of Wirral
My Lords, I declare an interest in the global firm of solicitors, Beachcroft LLP, where I have been a partner since 1969, and as vice-chairman of Justice. I say that with trepidation in the presence of the emeritus chairman of Justice—my noble friend Lord Goodhart—because Justice must deserve a great deal of credit for the original rehabilitation of offenders legislation.
However, I need help from my noble friend the Minister on giving a commitment—a commitment that was given by the party opposite when it had responsibility. I also gave personal commitments when I was leading for the Opposition from the Front Bench and made it clear, right at the outset, that a single set of regulatory standards would be required for alternative business structures.
The Minister has received a fascinating brief from his officials to explain the mistake in singling out “head of legal practice” or “head of finance and administration”. I warmly commend the officials for having thought up this reason, but it was two years ago that we made it clear that it is the owners and managers of the alternative business structures who must be the people in the spotlight. It may well be that they will need under them a head of legal practice or finance and administration, but at the end of the day the key role played by the owner/investor/manager of the alternative business structures must mean that they should be subject to the same authorisation rules as solicitors in regard to disclosing criminal offences. Why? Because we must ensure, as both Front Benches agreed we had to, that convicted criminals are not able to become owners and managers of legal practices.
It is not just that a request has only just been received from the Legal Services Board, because it was in June 2009 that the Solicitors Regulation Authority made it clear that a single set of regulatory standards would be required. Why on earth this is not included now I just do not know, because what it means is that someone who has served a sentence for a serious crime such as money laundering does not have to disclose this when applying to be an owner or investor in an alternative business structure firm.
I suppose that my noble friend can immediately move to give me assistance by promising that there will be a further order to rectify this omission, which will then make it clear that the exemption of course also applies to owners and managers of ABS firms, as well as to the heads of legal practice and finance and administration within those firms.
Lord Dholakia
My Lords, I thank my noble friend the Minister for the explanation that he offered on the order. My noble friend Lord Thomas of Gresford has commented on some aspects of the order, particularly in relation to the Legal Services Act 2007 (Appeals from Licensing Authority Decisions) Order 2011. I intend to build on that. However, let me make a confession first. My noble friend Lord Hunt just wanted a minute from me, but in that minute he has stolen half my thunder. But I can build on what he said—and certainly the Minister might look sympathetically at why we are making this request.
As one who is promoting the Rehabilitation of Offenders (Amendment) Bill, I am aware that this order is adding additional exceptions to the Rehabilitation of Offenders Act, which does not include external owners. The matter was brought to the attention of the Ministry of Justice by the Solicitors Regulation Authority, which said that a single set of regulatory standards will be required, based on the existing ones for solicitors and traditional law firms and on the assumption that all potential owners of alternative business structures will have to disclose all previous criminal convictions. It would be very helpful to know from my noble friend the Minister why the Government have not included external owners in the list of exceptions. The Solicitors Regulation Authority is clear that it will not be able to subject external owners and managers to the same standard of fitness and propriety checks as apply to solicitors. I am told that the SRA conducted a public consultation and no objections were raised about alternative business structure owners and managers.
Will the Minister now intervene to ensure that the liberalisation of the market can occur with appropriate public protection? My Private Member’s Bill includes exceptions in serious cases, and that is right; it is how it should be, if we are to build the confidence of the public in the structures that we promote. The crux of the matter is to establish a strict regulatory regime so that serious criminals cannot take control of legal practices. This is where changes are necessary.
There is a clear divide between what the Ministry of Justice is proposing and what is required by the SRA of the Law Society. It would be helpful to have the Minister’s reasons for this order. It poses difficulties for the SRA, whose task it is to establish standards, and it is the SRA’s view that it cannot license ABS until these exceptions are in place.
Lord Thomas of Gresford
My Lords, I support my noble friends in their comments. On the previous occasion, as I am sure the noble Lord will recall, I used the illustration of having appeared in Hong Kong in a case where I was instructed by what turned out to be a Triad-backed solicitor’s firm. The solicitor was merely the front man. Therefore, the owners and managers of a firm must be of a proper standard.
While my noble friend was replying to the previous debate, I suddenly recalled that within the past three years I have represented someone charged with stealing a house. It was a fairly unlikely charge, which I had not come across before, but there were two solicitors in the dock with the person in question. This is the real world. This is where people who are undesirable can move in and take advantage of the legal system if it does not contain all the safeguards. The necessity for owners and managers of alternative business structure firms to be subject to the same checks as every other solicitors firm is essential, so I support my noble friend.
Baroness Royall of Blaisdon
My Lords, I also support what noble Lords opposite have said. Of course, as the Minister said, we have to be careful not to jeopardise the workings of the Rehabilitation of Offenders Act 1974, but there clearly have to be exceptions. Like noble Lords opposite, frankly I do not understand why this order does not encompass ABS firms, or the head of legal practice and head of finance administration, to which the Minister referred. In view of the strong feelings that have been expressed in Committee this afternoon, I wonder whether the Minister would consider taking back this order and relaying it once proper consideration has been given to the inclusion of the owners of ABS firms. I think that all noble Lords present would like to see one single set of regulations. That would make for much better government and much better governance, and I should be grateful for the Minister’s views.
If the noble Lord is not able to take back this order—and he may not be able to do so—I should be grateful for an assurance that he will come back in the very near future with another order that encompasses the ownership of ABS firms. I quote from his honourable friend Jonathan Djanogly, who, when speaking for the Conservative opposition in the House of Commons—I am afraid that I do not have the words of the noble Lord, Lord Hunt of Wirral, in front of me—said:
“The effectiveness of fitness-to-own provisions is a crucial element of the public protections that need to be in place before external ownership of ABS firms can safely be permitted. It is essential to avoid the spectre of law firms being owned by criminal elements”.—[Official Report, Commons, Legal Services Bill Committee, 22/6/07; col. 300.]
I think that, unless we have an order before us in the very near future that encompasses ABS firms, we will indeed have that spectre before us.
Lord McNally
I knew I was right when I said that the enemies are behind me, but very constructive enemies they have been. One of the benefits of this procedure is that we can examine orders such as this in a non-partisan but expert way. As much as it is within my power to give the assurances that the noble Baroness, Lady Royall, has asked for, I give those assurances. The points that have been made by my noble friends during this debate should be treated with proper urgency. I am not in a position to withdraw the order, which covers matters that it is important to take forward. However, the noble Baroness is quite right: in opposition both Jonathan Djanogly in the other place and my noble friend Lord Hunt made it very clear that the effectiveness of fitness-to-own provisions was a crucial element of the consumer protection measures that needed to be in place for all ABSs. That position has not changed.
I can assure the Committee that the gist of this debate—or at least Hansard—will be made known to my colleagues in the Ministry of Justice, along with the strong message that a sense of urgency is needed in taking this matter forward. The argument that a compelling case and a clear understanding of the potential risks are needed to justify inclusion in exception orders is valid. Licensing authorities have a range of regulatory powers and will be required to put in place strict licensing rules to ensure that licensing bodies are properly regulated and consumers adequately protected.
Nevertheless, I accept the point made by my noble friend Lord Dholakia. I hope we can carry forward his initiative in producing a new Private Member’s Bill that updates the Act. If we are to get general public support for a rehabilitation of offenders Act, and carry public confidence in it, we must have exception orders to give the protections that the public require. Certainly, the case made today for owners being part of the Act is, to my mind as a lay man, almost unanswerable. I hear what has been said. It would seem only natural to a simple lay man that owners and managers of ABSs should be included in the order. I will take the very strong recommendations of this Committee back to colleagues. In the mean time, I ask the Committee to accept this order.
Corporate Manslaughter and Corporate Homicide Act 2007 (Commencement No. 3) Order 2011
(12 years, 10 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Corporate Manslaughter and Corporate Homicide Act 2007 (Commencement No. 3) Order 2011.
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the commercial order would implement Section 2(1)(d) of the Corporate Manslaughter and Corporate Homicide Act 2007. The amendment order would add two categories of person to the list contained in Section 2(2) of the Act. These are persons owed a duty of care by virtue of either being held in the custody area of UK Border Agency customs facilities or being held in Ministry of Defence service custody premises.
The purpose of the commencement order is to implement Section 2(1)(d) of the Corporate Manslaughter and Corporate Homicide Act 2007—which I shall refer to as the “custody provisions”. The amendment order will extend the provisions to facilities not already covered in the Act; namely, Ministry of Defence service custody premises and customs custody facilities which have now become the responsibility of the UK Border Agency.
Before going into the detail of the orders, I shall briefly remind Members of the Committee of the context surrounding the custody provisions. The Corporate Manslaughter and Corporate Homicide Act 2007 created an offence whereby an organisation could be found guilty of corporate manslaughter if the way in which its activities were managed or organised resulted in a death and amounted to a gross breach of a relevant duty of care to the deceased. The breach must be grossly negligent and a substantial part of it must have been in the way activities were managed by senior management.
The offence was created to deal with the problem of obtaining convictions of corporate bodies because of the operation of the identification principle, which required the prosecution to show that the offence was in essence committed by the “directing mind” of an organisation. This meant that, in some instances, because of the complexities of the decision-making process in big companies, it was not possible to identify a single individual—that is to say, the directing mind—with specific responsibility for the failing. The new offence allows an organisation’s liability to be assessed on a wider basis, providing a more effective means of accountability for very serious management failings across the organisation.
The majority of the Act came into force on 6 April 2008, with the exception of the custody provisions, whose implementation Parliament agreed would be delayed by three to five years. During the final stages of the Bill’s passage through Parliament, a lengthy discussion took place as to whether deaths in custody should be covered by the Act. After much debate, the then Government were finally persuaded to accept clauses that would extend the Act to the management of custody, but argued that custody providers would need time to prepare. A compromise agreement was reached to the effect that the custody provisions would be implemented between three and five years after the Act came into force. The Bill was passed on this basis. Custody providers have since indicated their readiness to implement the provisions in two reports to Parliament, published in 2008 and 2009.
The custody provisions do not create additional duties. All custody providers already owe duties of care to detainees. The commencement order makes these duties of care relevant for the purposes of the offence in the Act, which means that, once commenced, an organisation responsible for the management of custody, including a government department, could be convicted of corporate manslaughter if its management failings led to a death.
The commencement order simply illustrates the coalition Government’s long-standing commitment to commence a provision which we fought for during the passage of the Bill. We felt then, and still do now, that there is no good reason why a victim of a failing by a government department should not be afforded the same protection as the victim of a failing by a private corporation. We believe that the state has a particular responsibility to those for whom it has a duty of care, such as persons held in custody, and should lead by example. Having established that custody providers are ready to comply with the custody provisions in the Act, we are here today to debate commencement of the provisions at the earliest available opportunity.
We are here today also to debate an amendment order which brings military and customs facilities into the scope of the Act. This is an important amendment that ensures that the law will be applied consistently to all custody providers. The intention to extend the Act is nothing new; it was signalled in the annual progress report that I have already mentioned, and we have been assured by the relevant departments that the custody providers concerned are ready for implementation.
As with commencement, the question is not so much why extend but what possible reason can there be not to extend. I put it to the House that there is none. I believe that both orders constitute positive and necessary developments, and I trust that the members of this Committee will agree.
Lord Thomas of Gresford
My Lords, it is helpful to put this order into some context. The corporate manslaughter provisions were considered by the Independent Advisory Panel on Deaths in Custody. When one looks at the statistics on page 9 of the report, which was a joint Ministry of Justice and Home Office report, one sees that in 1999 there were 643 deaths in state custody. That number has reduced in the past two years to 483 and 366, but that is a lot of people who have died in custody. It is important that there should be corporate responsibility, not simply for claims of negligence but for criminal claims. We are very pleased that this order is now being introduced.
I have two questions for the Minister. One relates to service custody. Do I take it that the Ministry of Defence could be criminally liable for a death in service custody abroad? The other matter that concerns me is whether the private organisations that provide prison accommodation and in particular transport come within the provisions of the Act, so that any default on their part means that they will be subject to criminal liability as well as to liability in civil law.
Lord Goodhart
My Lords, I would like to step in briefly on this matter. The law dealing with the liability of corporations for offences, or matters for which the corporation has been responsible, has been inadequate in recent years. In particular, to make the corporation liable for homicide, as in this case, or for other purposes, it has been necessary for it to be shown that not only was the corporation itself negligent but that negligence could be attributed to a directive member of the corporation. Therefore, I very much welcome this particular piece of this particular order.
I should mention also that a recent and important change in this law came into effect a couple of days ago with the Bribery Act, which makes liability for bribery subject not to any particular identification of any particular individual who is responsible but simply to the incompetence of the corporation itself. Therefore, I very much welcome this particular amendment.
Baroness Royall of Blaisdon
My Lords, I, too, welcome the orders. As the Minister said, at the time of the passage of the Corporate Manslaughter and Corporate Homicide Act 2007 there was much discussion about this issue in both Houses. It was absolutely right that the Bill should encompass this particular aspect, because it is important that an organisation can be found guilty of manslaughter if the way in which its activities were managed or organised causes a death. That is absolutely right. It is particularly important for the victims’ families because they need the certainty that such deaths can be properly investigated and authorities brought to justice.
I have only a couple of questions. My first question relates to the custody suites in the UK Border Agency and the Ministry of Defence. Is it intended that there will be a review of those specific holding and detention areas? Like the noble Lord, Lord Thomas of Gresford, I would like an assurance that those in the private sector who are responsible for the custody and transporting of offenders can also be brought to justice.
In the other place, a member of the DUP asked whether or not there had been discussions with the Northern Ireland Assembly. It was not absolutely clear from the Minister’s response what discussions had taken place with the Assembly. I realise that they are a separate entity but it is important that discussions should take place between the Assembly and the Government and I would grateful for information from the Minister.
Lord McNally
I thank all noble Lords who have contributed to the debate and for the general welcome that has been given to the orders.
On the question asked by my noble friend Lord Thomas of Gresford, Section 28 provides that the Act extends only to England, Wales, Scotland and Northern Ireland; it will not apply to Ministry of Defence facilities abroad. If I am wrong about that I shall write to my noble friend. However, I believe that to be correct.
On the issue of private providers, which was referred to by both the noble Baroness, Lady Royall, and my noble friend Lord Thomas of Gresford, the Act applies to contracted services. Contracted service providers of custody will continue to be responsible for their actions in delivering safe custody. The Act does not place new duties on them. We will retain residual responsibilities in relation to the management and monitoring of the contractual arrangements, and they will be covered by the Act in this respect. They will have the same duties of care.
On the issue of inspection, in respect of the Border Agency customs facilities, a review relating to the care of an arrested teenager was initiated as a result of a death in custody in 2007 and is due to be finalised by the Chief Medical Officer. Once the recommendations have been finalised, the UKBA will be reviewing its processes and initiating an implementation programme.
In respect of the MoD, the Army has reviewed its need for service custody facilities and in September 2010 endorsed some recommendations, including an immediate reduction of authorised unit custodial facilities from 67 to 22.
The points made by the Committee have been extremely relevant, not least the rather chilling figures of the number of deaths in custody. Over recent years—this applies also to the record of the previous Administration—there has been a consistent attempt by government to address the problems. My noble friend Lord Thomas will agree that the bald figures cover a range of reasons for death in custody. Nevertheless, in recent years the police, prison authorities and all those who have a duty of care have made a real effort to address the reasons for deaths and to prevent them wherever possible. They have changed techniques for dealing with violent prisoners, changed the furniture in cells and limited opportunities for suicides. They have introduced a whole range of activities and initiatives to tackle the problem.
There is no doubt that the Government, as the state, freely accept in this order the responsibilities that they imposed on the private sector with the initial Act. I remember my noble friend Lord Goodhart and others pressing these matters when we were in opposition and I am pleased that we are able to bring these orders together.
Criminal justice is devolved in Northern Ireland and the local Minister and Assembly have the relevant commencement powers under the Corporate Manslaughter and Corporate Homicide Act, which we understand the Assembly is looking at. I am the Minister in the MoJ responsible for contact with the devolved Assemblies and Administrations and I shall make sure that our views on and experiences of this aspect are made available to our colleagues in Northern Ireland.
Lord Thomas of Gresford
In relation to private provision of prison and transport facilities, what is the relationship between those private facilities and the department? Could the department resist a charge under the Corporate Manslaughter and Corporate Homicide Act on the basis that the responsibility has been contracted out? My noble friend may not be able to answer straightaway, but I would be grateful if he could clarify that at some stage.
Lord McNally
I certainly cannot answer that directly; I will have to write. It is an interesting point. I shall not mention providers by name, but if a private prison or a private transporter of prisoners was guilty of corporate manslaughter, would the line of responsibility run back to the MoJ? I take it that that is the point. It is an interesting point. I suspect that, on the one hand, the suggestion would be that the responsibility for the corporate manslaughter would be that of the provider and that the provider would be charged; on the other hand, there is the argument that the MoJ should never have given the contract to such a body in the first place. This is what makes this job both interesting and frightening at times. I shall write to my noble friend to clarify.
Corporate Manslaughter and Corporate Homicide Act 2007 (Amendment) Order 2011
(12 years, 10 months ago)
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Lord McNally
That the Grand Committee do report to the House that it has considered the Corporate Manslaughter and Corporate Homicide Act 2007 (Amendment) Order 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
Charities Act 2006 (Principal Regulators of Exempt Charities) Regulations 2011
(12 years, 10 months ago)
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Baroness Verma
That the Grand Committee do report to the House that it has considered the Charities Act 2006 (Principal Regulators of Exempt Charities) Regulations 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
Baroness Verma
My Lords, I shall take together this order and the Charities Act 2006 (Changes in Exempt Charities) Order 2011. The two instruments relate to the regulation as charities of three classes of state-funded educational charity: academies, sixth-form colleges, and foundation and voluntary schools.
The changes in the exempt charities order will reconfer exempt-charity status on sixth-form colleges and foundation and voluntary schools. Academies are charities and will become exempt charities from 1 August 2011 by virtue of the Academies Act 2010.
The principal regulator regulations will appoint principal regulators for all three groups of exempt charities, with the duty to promote their charity law compliance. Exempt charities have not been regulated in the same way as other charities. The general law of charity applies to exempt charities, but they are exempt from many provisions of the Charities Acts, cannot register with the Charity Commission and are exempt from its supervisory powers. The categories of exempt institutions, in so far as they are charities, are mostly set out in Schedule 2 to the Charities Act 1993.
Historically, exempt status was usually conferred by legislation on charities that were already regulated, so additional supervision by the Charity Commission was considered unnecessary. However, this was challenged in 2002 by the then Prime Minister’s Strategy Unit, which found that the position was anomalous, confusing for the public, and potentially risked the integrity of charitable status.
Most respondents to a public consultation in 2003 agreed that exempt charities benefiting from the advantages of charitable status should come under some form of regulatory oversight as charities, but concerns were expressed that duplication or new regulatory burdens should be avoided.
The Charities Act 2006 marked a new approach. Wherever possible, a body that already has oversight responsibility will become the main or “principal” regulator for an exempt charity or group of exempt charities. Principal regulators have a new duty to promote charity law compliance in the charities for which they are responsible. They have two key roles: first, providing tailored advice for their sector or signposting to relevant guidance to help trustees meet their legal obligations; and, secondly, stepping in where something goes wrong. In serious cases, it is likely that the Charity Commission will also need to be involved.
The aim of the principal regulator approach is for smarter regulation that maintains trust and confidence in charities but avoids regulatory duplication by using the regulator’s existing processes and procedures to promote charity law compliance. Where it is not possible to identify a principal regulator for a charity or group of charities, they will cease to be exempt and, if their income exceeds a £100,000 annual income threshold, will be required to register with the commission.
Although that is not the case for any of the charities we are considering today, since 2006 there has been phased implementation of this new approach. In some cases the 2006 Act itself removed exempt status from groups of charities, but it also provides the Minister for the Cabinet Office with a power in Section 11 to remove, or to confer, exempt charity status from a charity or class of charities. This power can be exercised only if the Minister is satisfied that the change is desirable in the interest of ensuring appropriate or effective charity regulation of the charities or charity concerned. In addition, the 2006 Act provides the Minister with the power in Section 13 to appoint a principal regulator for an exempt charity or class of exempt charities.
The 2006 Act increases the extent to which exempt charities are subject to the Charity Commission’s regulatory jurisdiction in Sections 12 and 14 and Schedule 5. But importantly, the Charity Commission cannot exercise its regulatory compliance powers in relation to an exempt charity without first consulting the exempt charity’s principal regulator—in Section 14 —and it cannot open a statutory inquiry into an exempt charity unless invited to do so by the principal regulator listed in Schedule 5.
I will now summarise the changes that these instruments will bring about, which were announced to Parliament in a Written Ministerial Statement on 30 March this year by the Minister for Civil Society, Nick Hurd MP, and the Under-Secretary of State for Education, the Minister responsible for schools, my noble friend Lord Hill.
Taking each of the three categories in turn, I will deal first with academies. Academies will, from 1 August this year, be exempt charities when Section 12(4) of the Academies Act 2010 is commenced. As of 1 July there were 801 academies in England. There are no academies in Wales.
During the debate on the Academies Act 2010 it was proposed that the Young People’s Learning Agency should be appointed as the principal regulator of academies. However, following the review of public bodies, the YPLA will, subject to parliamentary approval, be succeeded next year by the Education Funding Agency, an executive agency of the Department for Education. Therefore it is now considered more appropriate to appoint the Secretary of State for Education as principal regulator of academies, because he has existing funding and regulatory roles.
In practice, the YPLA and its proposed successor, the EFA, would carry out much of the necessary information gathering which would then be used to report to and advise the Secretary of State on his principal regulatory role. The principal regulator regulations therefore appoint the Secretary of State as principal regulator of academies.
The second category is what I have referred to as foundation and voluntary schools. In fact, it includes the following bodies: the governing bodies of foundation, voluntary and foundation special schools, foundation bodies established under Section 21 of the School Standards and Framework Act 1998, and connected institutions.
There are believed to be over 8,100 of these charities in England, and 175 in Wales. Historically they have been exempt charities, but in January 2009 they ceased to be exempt, although transitional provisions pending a final decision on their status have meant that they continue to be treated as if they are exempt. These transitional provisions are due to expire on 1 September, having already been extended twice.
In 2010 the Cabinet Office consulted on the proposal to reconfer exempt charity status on foundation and voluntary schools, and appoint an appropriate principal regulator. Responses strongly supported the proposal to reconfer exempt charity status, although views differed over which personal body should be appointed as principal regulator.
The Department for Education regulates these charities under education law, so is ideally placed to take on the role of principal regulator. This ensures compliance with charity law while avoiding regulatory duplication, in line with the Government’s commitment to reducing the burden of regulation on schools.
The changes in the exempt charities order reconfers exempt charity status on these foundation and voluntary school charities. The principal regulator regulations appoint the Secretary of State for Education as principal regulator of these charities in England and Welsh Ministers as principal regulator of these charities in Wales.
Following detailed analysis by the Cabinet Office, working with the Charity Commission, the Department for Education and Welsh Assembly Government, these arrangements are considered to provide the most appropriate regulatory oversight of foundation and voluntary schools as charities, while keeping the burden of regulation to a minimum.
The third and final category is sixth-form college corporations. There are currently 94 sixth-form college corporations in England and none in Wales. They were created following amendments made to the Further and Higher Education Act 1992 by the Apprenticeships, Skills, Children and Learning Act 2009. It was always intended that they would be exempt charities, as this was the status of the institutions that became sixth-form college corporations in April 2010. For this reason, the commission has not required sixth-form college corporations to register.
As with foundation and voluntary schools, the Department for Education has an existing regulatory oversight role under education law. It is ideally placed to take on the principal regulator role, promoting compliance with charity law through existing procedures without additional regulatory requirements. The Charities Act 2006 (Changes in Exempt Charities) Order confers exempt status, as was intended from the outset, and the principal regulators regulations appoint the Secretary of State for Education as their principal regulator.
I should add that we also propose to appoint the Secretary of State for Education as principal regulator of certain exempt charities connected to academies and sixth-form colleges. This will have to be done separately by a negative procedure statutory instrument, as regrettably these charities were overlooked when the instruments before us were laid.
The duty imposed by the Charities Act 2006 on principal regulators of exempt charities is forward looking. This means that they are required only to promote compliance by the charity trustees with charity law obligations arising on or after, or ongoing on, the commencement date. Principal regulators will not be required to take action relating to matters which occur before the commencement date and in connection with which no charity law obligation is continuing at that date.
The Office for Civil Society and the Charity Commission have worked closely with the Department for Education, the YPLA and the Welsh Assembly Government on these proposals, and key representative bodies of the schools and colleges have been kept informed of progress. No significant concerns have been raised about the forthcoming changes or the instruments that will give effect to them.
For exempt charities under the principal regulator regime, there will be little, if any, noticeable impact on a day-to-day basis. They will continue, as now, under their existing regulatory regime, albeit with their regulator also promoting charity law compliance.
For academies and sixth-form colleges, the YPLA will continue to have a role. The principal regulator regulations make provision for this by amending the Apprenticeships, Skills, Children and Learning Act 2009 to enable the YPLA to assist, advise or provide information to the Secretary of State for Education as principal regulator. An impact is likely to be felt only when something goes badly wrong and the regulators need to intervene.
The Charity Commission is currently developing memoranda of understanding to formalise the details of the relationship between the principal regulators and the commission. It is also setting up a committee of principal regulators which will meet annually to share best practice.
The impact of the changes made by these instruments will be reviewed within three years of commencement. Although a statutory review of the 2006 Act will begin later this year and will include an evaluation of the changes made by the Act to exempt charities, this will be too soon to properly consider the impact of the changes made by these instruments.
These instruments will ensure that academies, foundation and voluntary schools and sixth-form colleges are regulated appropriately and effectively as charities but through existing oversight mechanisms to ensure that regulation is proportionate. I therefore commend this order to the Committee.
Lord Phillips of Sudbury
My Lords, I am grateful to my noble friend the Minister for that introduction. I broadly welcome the regulations. I have one specific, rather gritty point to put to her. I have given notice of it to her officials, so I hope that it may be possible for an answer to be available today. I have one general point on which I would be very interested in her response and then another general point which needs to be made in the light of the regulations.
I shall deal with the gritty point as quickly as I can. It arises out of the statutory instrument dealing with principal regulators. Regulation 7 introduces a new section, Section 71A, into the Apprenticeships, Skills, Children and Learning Act 2009. New subsection (1) gives a discretion to the Young People’s Learning Agency to provide the principal regulator, the Secretary of State, with information that he or she may need in order more effectively to carry out his or her duty as regulator. We have already heard today that the YPLA is likely to be replaced in not too long a time by the education funding agency. I hope that that does not mean that we shall need further amending legislation to substitute EFA for YPLA. But why only a discretion? Surely the YPLA should be under an obligation to provide assistance, information or advice to the principal regulator, so long as it is a reasonable request. The Minister might like to comment on that.
My first general observation relates to the particular character of a government department as a principal regulator. There is growing anxiety within the charity sector about the preservation of what is an absolutely fundamental characteristic of any charity: its independence. It is often not understood among the wider public that one of the bedrock guarantors of the integrity of each and every charity—however small or large it is, whether it has trustees appointed by outsiders or not, and whether it is funded from a particular source or not—is that it has absolute independence and responsibility for its own affairs. Its trustees have one sole purpose in life, which is to forward its charitable purposes to the best of their ability for the benefit of the public.
Having the Secretary of State for Education as the principal regulator is sure to involve conflicts of interest all along the way. Whatever Government are in power, they will have their own agenda. The voluntary sector is a very important part of the provision of education generally. The measure seems to warrant a little more thought. I do not for a moment propose to question the Secretary of State for Education being principal regulator in these statutory instruments, but the concern is germane and relevant. Perhaps the Minister will take back to the Government the need for some informal, internal consideration of the independence factor, as I call it.
Lord Phillips of Sudbury
There was a cock-up in prior legislation that led to the need for the second of these statutory instruments to confirm that sixth-form college corporations should have exempt status re-conferred on them. There is no question or doubt that their exempt status was removed from them unintentionally. I commend whoever wrote the helpful Explanatory Memorandum on the delicate language employed therein. It explains:
“Sixth form colleges which are charities had their exempt status removed by the ASCL Act. It is unclear whether this was intentional”.
Wonderfully clear it was not. I make this point not to make fun of those who were party to the error. The parties most responsible for it were in this place, because it is we who churn out, day in and day out, tidal waves of primary and secondary legislation. It is we who fail to scrutinise adequately that tidal wave, and it is we, therefore, who did not see when the ASCL Bill was introduced that by an unintentional side wind these sixth-form college corporations were deprived of their valuable exempt status. It seems as though they have been in a sort of ghostly limbo until now, but at least we are putting them out of their misery.
I wanted to raise this issue because it is not often that such a blatant example of the weight of interlocking legislation is clearly shown to be false in its outcomes. I put it to the Committee that charity law has become barbaric. Happily, when I started practising law, nine times out of 10, such matters would never darken the doors of a lawyer’s office, but those days are long gone. We are, even in these instruments, creating another web in which to catch the unwary, forcing the prudential into seeking expensive advice and generally making the voluntary sector a victim of our excessive endeavours.
Lord Hodgson of Astley Abbotts
My Lords, my noble friend Lord Phillips, from his lengthy experience in the charity field, has carried most of the points with him. I shall attempt to sweep up behind a little, if I may, and raise a couple of issues. Before doing so, I need to declare interests as president of the National Council for Voluntary Organisations and as chairman of the Armed Forces Charities Advisory Company.
I wanted to speak on this issue because, first, the concept of exempt charities is complex and their structure and rationale is not immediately apparent. Secondly, these exempt charities are of course educational charities, and it is around education and health, but particularly education, that the whole issue of public benefit and charitable status revolves in the case of private schools. Therefore, it is important that we give these instruments a proper degree of scrutiny.
One danger and one problem or issue that arose during the passage of the Academies Act was whether we had undermined the issue of presumption, because the Act merely stated that these institutions would be charitable, full stop. Having spent a great deal of time earlier removing presumption and making sure that all charities had to justify their public benefit status, it seemed strange and possibly dangerous that we would suddenly say that a group of charities—in this case, schools—was exempt. Therefore, the question of how they are going to be regulated and the nature of the regulator is important.
As for when the regulator takes over from the Charity Commission, originally the 2006 draft Bill suggested that exempt charities could only disappear. Originally, the Bill as drafted allowed only for exempt charities to be removed; the original concept was that they would finally fade out. However, some of us, including my noble friend Lord Phillips and I, decided that it would be better to have a two-way valve, not a one-way valve. Indeed, it is the two-way valve that is being used to create a new category of exempt charities.
When we examined some of the exempt charity regulators, there were some surprises, which have a read-across to this debate. The regulator for universities is the Higher Education Funding Council for England. It has always been surprising that that is the regulator because it has no charitable knowledge at all; it is merely a funding body. I shall come back to that again in connection with the proposals for the regulator and the Secretary of State in the current regulation. We have had some grave disappointments. Given that we were trying to create a proportionate regime, it was a shame that the MoD was not prepared to take on some of the requirements of the exempt regulation for Armed Forces charities, because there are many hundreds of them and they require a particular light touch.
On the upside, you can have light-touch and proportionate regulation focused on a particular group of exempt charities, but there is a down side, which is regulatory arbitrage. You can find ways to fall between the cracks of the regulatory regime, which is something that we have to be very careful about. As I understand it, there will be two principal regulators. One of them is the Secretary of State for Education—that is very clear, although there are some down sides that my noble friend has just mentioned—but in the Welsh situation the regulator is a “responsible person”, which is defined in Regulation 6(2). It means a person who,
“is or was … a Welsh Minister”,
was,
“acting on behalf of the Welsh Ministers”,
or was,
“a member of a committee established by the Welsh Ministers”.
This is not an attack on the devolution process but it does mean that nobody is identified as the regulator for the Welsh educational institutions. I think that responsibility should lie with someone, or some defined body, and there is a danger here of having an amorphous and opaque nature of responsibility with regard to Welsh educational institutions.
On the question of memoranda of understanding, through which we can avoid regulatory arbitrage, I assume that there will be two—one with the English regulator, the Secretary of State, and one with the Welsh person. It will be interesting to know from my noble friend who that person will be in the light of the rather opaque drafting of the regulation. This will be the first time that we have had two regulators—one for England and one for Wales. As I look through the other exempt regulators, I see that DCMS regulates museums and galleries for both England and Wales. We are now dividing them for the first time and creating an interesting precedent.
I share the concerns that my noble friend Lord Phillips raised about role of the Secretary of State for Education in respect of England. This is a tiny part of his empire and can hardly have the attention that it might deserve. There is the issue of independence that my noble friend underlined, as well as the question of conflicts of interest that may arise in the future. I was quite attracted by the idea that the YPLA should be a regulator. If it is to be succeeded by the education funding agency, so be it. After all, if the Higher Education Funding Council is doing universities, why should the education funding agency not do this group of educational institutions? As the Explanatory Memorandum says:
“In practice, the YPLA (and its proposed successor the EFA) will carry out much of the necessary information gathering which would then be used to report to and advise the Secretary of State”?
Why not just have them carry out the role? It would be a good devolution of power. It would remove the role from the Secretary of State and avoid the conflicts of interest to which my noble friend referred.
In conclusion, I understand that these are technical questions. I am sorry that my technical e-mailing skills are not sufficient to have been able to get them to my noble friend in advance of this afternoon’s debate, but I think that they are important. In these stringent, difficult and suspicious times, we need to maintain the culture of the charity brand, especially in the field of education. Some precedents are being set here and we need to be careful that we are not doing something that we will later regret. I think that, in line with the Government’s overall policy, devolving power for regulation to the lowest possible level is appropriate, and therefore I do not quite see why the Secretary of State has to have a continuing role here. That seems to be centralising rather than devolving.
Baroness Royall of Blaisdon
My Lords, I, too, am grateful to the Minister for introducing these orders. Of course, it is right to ensure that there is proportionate but effective oversight of charities under charity law while keeping the regulatory burden to the minimum necessary, but that regulation must be effective and ensure proper compliance with charity law. Therefore, I share the concerns of noble Lords who have spoken about the potential conflict of interest and perhaps the impact on the independence of charities if the Secretary of State is to be the regulator for so many of these institutions. I, too, think that again this is a demonstration of centralisation rather than enabling organisations to flourish, and that dismays me. I should be grateful for the Minister’s views but I also hope that the Government will reflect on potential conflicts of interest in relation to the Secretary of State’s role as regulator and his role as Secretary of State for Education.
I find no reference to free schools in the documents before us and I do not understand their status. Are they charities or not? I do not know. All academies are included. However, I do not know what the status of free schools is and I should be grateful for some clarification. If they are charities, who is the principal regulator?
In the Academies Act 2010, as the Minister said, it was agreed that a principal regulator would be required for academies and, as noble Lords have said, it was proposed that this should be the YPLA. Then along came the Public Bodies Bill and the aim to abolish the YPLA. Of course, the Bill is still in Committee in the House of Commons.
I have a few questions. First, is it not precipitate to appoint the Secretary of State for Education as the regulator when the YPLA has not yet been abolished? Like the noble Lord, Lord Hodgson, I wonder why the Education Funding Agency should not be the regulator rather than the Secretary of State. Secondly, the memoranda of understanding are clearly extremely important and I wonder whether Parliament will be able to see them before they are concluded.
My last question is a small one. The section relating to monitoring and review is a little perplexing. A review is supposed to commence later this year. However, this will be pretty worthless in relation to the regulator because the review of the 2006 Act is expected to follow shortly after the change is made by these regulations. Essentially, I am asking: why have two reviews? Why not have one review in three years’ time? That would obviate a lot of work that will go into reviewing in the mean time.
Baroness Verma
I am grateful for the extremely knowledgeable contributions of noble Lords this afternoon. I start by thanking my noble friends Lord Phillips and Lord Hodgson, and the noble Baroness, Lady Royall, for their warm welcome to these regulations. Many questions have been thrown at me; I shall try to respond to them in the order in which they were asked. I thank my noble friend Lord Phillips for prior notification of his questions. I passed his notes to the civil servants. I hope that, through my response, he will be reassured that we have taken his concerns seriously. I am pleased that my noble friend Lord Hodgson’s train arrived on time so that he was able to tease out of me further details of an extremely complex area of law.
In response to my noble friend Lord Phillips, the YPLA is fully committed to supporting the Secretary of State in his or her role as the principal regulator. The consultation went across all the agencies, all of which agreed that the Secretary of State would be ideally positioned to be the regulator. The YPLA has worked closely with the EFA, the Department for Education, the Cabinet Office and the Charity Commission on the development of the Secretary of State’s role as the principal regulator. Much of what the YPLA will do will be to support the Secretary of State as part of the existing day-to-day functions of the regulator. In practice, I am not sure that we should see the YPLA refusing any reasonable request from the Secretary of State for advice and information. I hope my noble friend is reassured that the YPLA, when it is replaced by the EFA, will continue to fulfil its role of supporting the Secretary of State.
I come to independence, on which I think my noble friend is about to challenge me.
Lord Phillips of Sudbury
I am grateful for what the noble Baroness said but why can the regulations not just say that the YPLA “shall” provide reasonable assistance, information and advice. Why not “shall” instead of “may”?
Baroness Verma
Since this is a legal and technical matter, perhaps I could write to my noble friend. I know that such words can change the law very quickly, and I shall not be drawn into that trap by my noble friend today.
On the issue of independence, both the Charity Commission and the Cabinet Office are satisfied that the appointment of the Secretary of State for Education and the Welsh Minister as principal regulators will not give rise to an inherent conflict of interest. The commission and the principal regulator will work together to ensure that a charity’s independence is maintained. The functioning roles already have accountability. There is no conflict, since assurance is largely derived from the funding function and both roles require similar levels of assurance.
We all accept that the law on exempt charities is an incredibly complex area with a complex history. More than anybody else in this Committee, my noble friend is aware of the difficulties that this law raises. I accept that we would rather be in a better position, but we are where we are and it is difficult to unpick some of the complexities. As a result, we should go for a simpler legal regulatory framework for exempt charities. It has always been intended for exempt charities to be exempt. When the ASCL Bill was enacted, it was agreed that this would be done through exempt-charity SIs. That is what these instruments do.
My noble friend Lord Hodgson spoke on the MOUs. Principal regulators are not expected to be experts in charity law. It is not their job to be, nor is it their duty to promote charity law unless charity law compliance requires it. Expertise in charity law lies with the Charity Commission. That is why the commission has investigation and enforcement powers in relation to exempt charities.
My noble friend also asked why the Education Funding Agency is not the regulator. As I said to my noble friend Lord Phillips, the EFA will be an agency of the Secretary of State. It will not have a separate legal personality, so it cannot be appointed as the principal regulator.
Lord Hodgson of Astley Abbotts
Will the MOU be in place when the regulations come into force on 1 August?
Baroness Verma
I have been told by my experts behind me that it will be shortly afterwards.
The noble Baroness, Lady Royall, reminded us of the effectiveness of the regulators. The principal regulator approach will not mean less effective regulation. It will be entirely valid to use different models of regulation to fit the circumstances so that we end up with smarter regulation that maintains trust and confidence in charities. Using an existing regulator’s processes and procedures to oversee charity compliance avoids costly and wasteful duplication.
The noble Baroness asked also about free schools. Free schools are a type of academy. They are charities in the same way as other academies. She asked also about the MOUs between the Charity Commission and principal regulators. MOUs will be published on the Charity Commission website. We are happy to deposit copies in the House Library.
I suspect that I have not given satisfactory answers to my noble friends who are experts in this area. I hope that they can be assured that I will provide written responses to questions to which they feel they have not answers.
The regulations are about making the system leaner and smarter. I therefore commend them to the House.
Charities Act 2006 (Changes in Exempt Charities) Order 2011
(12 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Verma
That the Grand Committee do report to the House that it has considered the Charities Act 2006 (Changes in Exempt Charities) Order 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
Distribution of Dormant Account Money (Apportionment) Order 2011
(12 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Verma
That the Grand Committee do report to the House that it has considered the Distribution of Dormant Account Money (Apportionment) Order 2011
Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments
Baroness Verma
My Lords, this apportionment order marks the culmination of a long process to do something useful with dormant account money. The Dormant Bank and Building Society Accounts Act 2008 created the legislative framework required to use this money for the good of society while protecting the rights of account holders. In line with the original Act and in consultation with the Big Lottery Fund, which is the designated distributor of dormant accounts money, England, Scotland, Wales and Northern Ireland are all determining their own spending priorities for it. As the Prime Minister announced in July of last year, England’s portion will be used to set up a big society bank.
Current estimates suggest that there is about £400 million of eligible dormant accounts in the UK. Some of this will be kept back to meet claims from customers, as is right and proper. However, the Reclaim Fund estimates that between £60 million to and £100 million will be released for public spending over the course of the first year. Subsequent releases will be made according to the rate of reclaim.
This order sets out how the money available for public spending will be apportioned between England and the devolved Administrations. In accordance with communications at the time of the original Act in 2008, the order divides the money on a per capita basis; in other words, in line with the Barnett formula. Based on the latest population estimates by the Office for National Statistics, the percentages are as follows: England, 83.9 per cent; Scotland, 8.4 per cent; Wales, 4.9 per cent; and Northern Ireland 2.8 per cent. While the application of the Barnett formula to the apportionment of dormant account money is in line with previous expectations, the decision to use the formula was made only after a period of consultations with the devolved Administrations, as required by the Act.
Following the passage of the transfer of functions order on 31 January, the Minister for the Cabinet Office had responsibility for leading this process. Prior to the formal consultations, Cabinet Office officials informed officials in the devolved Administrations and territorial offices of the Government’s intention to use the Barnett formula, thereby preparing the way for the ministerial process.
The formal consultation process was conducted through an exchange of letters between the Minister for the Cabinet Office and his ministerial counterparts in the devolved Administrations during March and April. A number of concerns were raised about the use of the Barnett formula, principally revolving around the established criticisms that the formula is outdated and does not take into account the varying needs across the constituent countries of the UK. I can assure noble Lords that we have considered these concerns very carefully. However, based on advice from the Treasury and in line with normal devolved spending, we maintain that the formula remains the most transparent, robust and sustainable method of apportionment. This judgment was communicated to the devolved Administrations in letters from the Minister for the Cabinet Office on 6 April, thereby formally ending the consultation process.
While keeping within the constraints of the parliamentary timetable, we have been keen to ensure that the apportionment order is passed as soon as possible so that the dormant account money can be put to good use as soon as the first tranche becomes available later in the summer. While England’s portion will be used to establish a big society bank, which will help build a social investment market and broaden the finance options open to civil society organisations, with the passing of this order, Scotland, Wales and Northern Ireland will be able to use their portions to fund their own social and environmental programmes. I therefore commend the order to the Committee. I beg to move.
Lord Higgins
My Lords, I have a long-standing interest in the question of dormant bank accounts. Indeed, at one stage I was an arbitrator on the claims resolution tribunal for dormant accounts in Switzerland.
I have only one or two points to make on the order, the first of which concerns the question of distribution. As the Minister said, there were considerable discussions on this issue. She said that in the course of the discussions the devolved Administrations argued that the allocation of the money should be changed and that it should be distributed in relation to the various needs of the devolved areas, whereas the very good and helpful brief states that it does not take into account need. It is not the same thing. “Need” implies that certain groups of people have a need for money as against the overall allocation—which, presumably, will happen in the course of normal government decisions.
In all events, could the Minister say what evidence the devolved Administrations produced to argue that it ought to be done on the basis of need? Whatever one thinks about the Barnett formula—and many views have been expressed about it, not least by the noble Lord, Lord Barnett—I have come to the conclusion of the Treasury that this is probably right way of doing it.
The second point, which is interesting, is that this money is normally going to go, as I understand it, to the Big Lottery Fund. The money going to the devolved Administrations—I presume, the Minister will correct me if I am wrong—will be allocated by the fund. However there is also an intriguing passage in the Explanatory Memorandum, which states:
“With the Prime Minister’s announcement on 19 July 2010, England’s portion is committed to setting up a Big Society Bank, which will be a social investment wholesaler”.
I am not at all clear what a “social investment wholesaler” is—perhaps the Minister could clarify that. But in all events it looks as though England will have its chunk allocated to the big society bank, whereas the other devolved Administrations will not.
I understand and support the idea of a big society bank, and the idea of the big society, which the Prime Minister is understandably so enthusiastic about. But if that is so, why has an apparently arbitrary decision been taken, which I do not think is reflected at all in any of the legislation, that England’s portion shall go to the big society bank, rather than any of the other uses which the lottery fund might have used it for?
Although we have a Big Lottery Fund which is responsible for making this kind of decision, it is apparently to be overruled in this case by the Prime Minister’s statement. I am not the least bit clear what the financial and legislative basis is for his decision to overrule that, and why—instead of the normal process of going through the Big Lottery Fund—we suddenly find it is to be done by a big society bank. No doubt that has not been set up yet. I presume there will be some delay, whereas if it went straight to the Big Lottery Fund, the money would be allocated immediately, or at least much sooner than it would under the arrangements set out in the Explanatory Memorandum. I would be most grateful if the Minister could clarify those particular points.
Lord Maclennan of Rogart
My Lords, my noble friend Lord Higgins has raised a number of the points which I would otherwise have raised, but we wish to reinforce his inquiries. I note that the money is being handled in Scotland, Wales and Northern Ireland by the Big Lottery Fund. What prioritisation, if any, is being indicated by the Governments of the countries to which power has been devolved? What relationship is there between the views of the Governments in these countries and the Big Lottery Fund? Will it be open to them to seek to influence the judgment of what is apparently being described as money for the public sector? It is to my mind rather odd that no public consultations were deemed necessary to consider this matter, or other matters related to the distribution of the dormant account moneys, since the amount is not negligible. I would be very interested to know if—in the course of the discussions about how the money might be divided up—any representations were made by the devolved Governments about how the money ought to be spent. Were they content with the proposal that it should be left to the discretion of the Big Lottery Fund?
So far as the reliance upon the Barnett formula is concerned, there have been many occasions—some recently in our House—when the limitations of the formula have been considered. Perhaps this is not the occasion to reopen that question, but it is a little disappointing that we have received an indication that the Barnett formula is considered to be the best method of financing the Governments of the devolved countries, without any indication that any sort of inquiry has been made by the Government.
It appears that some interesting suggestions have been canvassed by experts in this area. I draw attention in particular to the views of Professor Iain McLean of Nuffield College, Oxford, on how other countries tackle this problem. He drew attention to the example of how the Australian provinces meet to decide these issues. The time has come at least to put in hand significant research, because there is a widespread perception that the Barnett formula’s outcomes are not just inequitable. However, it would be a mistake, on the back of this order, to carry that out as far as it has been carried out in other forums.
The question of the amounts of money available is of great interest, and I am happy to have heard from my noble friend that the sums anticipated for this year are in the order of between £60 million and £100 million. Have any assessments been made as to whether those sums will be a one-off, or whether they will continue and, if so, at what level? I realise that that is a difficult issue to hypothesise about, but if any work has been done, it would be interesting if it could be shared with the Committee. I am grateful to my noble friend for what she has said.
Baroness Royall of Blaisdon
My Lords, I, too, am grateful to the Minister for her introduction. I certainly support the order and I am glad that the money will be distributed. I recognise that now is not the time to discuss how the dormant accounts money is to be spent, nor is it the time to have a discussion about the big society bank. However, I have reservations about the big society bank because, while I believe that it will help some people and organisations, it is a very small answer to the problems that they will encounter as a result of cuts in local authority services.
The noble Lord, Lord Maclennan, asked whether the noble Baroness thought that the £60 million to £100 million that it is estimated will come from dormant bank accounts this year will be a one-off, or if such an amount of money can go into the big society bank every year. If it is a one-off, my concern about the viability of the big society bank is exacerbated because, if there is to be a bank that will really fulfil what is likely to be an important role in supporting charities and civil society, it has to be more sustainable than something that will get possibly £60 million next year—or possibly not. Who knows? That raises some concerns.
I hear what the noble Baroness says about the Barnett formula. Discussions have taken place on whether or not there are other options and, clearly, the decision has been taken and has come down in favour of the Barnett formula. It would be interesting to know what discussions have taken place, and with whom, in order to reach that decision. I am concerned about its specific impact on Wales because it is widely recognised that Wales tends to lose out as a consequence of the Barnett formula.
As I said, I am glad that the money is to be distributed and welcome the order. However, it raises profound concerns which must be addressed, if not today then in the future.
Baroness Verma
I thank my noble friends and the noble Baroness, Lady Royall, for their broad warm welcome for the order. I expected the order to raise questions, on some of which, I am afraid, I shall have to write to noble Lords.
My noble friends Lord Higgins and Lord Oakeshott raised concerns around the use of the Barnett formula and asked why not other formulas. It was found that the Barnett formula was the most robust way of allocating the money. The Big Lottery Fund’s way of distribution is not a government formula and therefore does not have a wider standing beyond the distribution of lottery funds. The Government recognise that concerns have been expressed about the system of devolved funding; however, their position remains that the priority is to reduce the budget deficit and that any decision to change the current system must await the stabilisation of public finances. However, we have to find an alternative and, until we do, noble Lords will have to accept that the Barnett formula has its strengths.
My noble friend Lord Higgins asked about the term “social investment wholesaler”. The big society bank will be a social investment wholesaler. It is a term used in dormant accounts legislation and is one of three areas where English dormant accounts can be spent. The other two are youth provision and financial inclusion and capability.
My noble friend Lord Clement-Jones asked about public consultation on the distribution of dormant accounts. The Government carried out a public consultation on how the English portion of the dormant accounts should be spent prior to the 2008 Act. As a result, the dormant accounts Act allows the English portion to be used for youth provision, financial inclusion and capability or a social investment wholesaler.
I was asked about the monies going into the big society bank and whether this would be a one-off. We have £60 million to £100 million that we are going to allocate. However, there is a reclaim fund and we need to see how much of that is drawn on. Of course, if money is then still left, it is only right and fair that it is put to positive and good use through the big society bank so that people and smaller organisations can draw on it. The decision will, of course, be made after the independent reclaim fund has looked at how the progress of reclaim has worked.
The questions that were asked today centred basically around confidence in ensuring that the monies reach the right people and that we are making the best use of the dormant accounts. I think there is agreement over the framework that we are using, which was passed in 2008. Since taking office, the Government have worked hard, taking the necessary steps to make sure that money from dormant accounts made available for public spending is put to good use as soon as possible. A reclaim fund has been established by Co-operative Financial Services and authorised by the FSA. As I have indicated from the outset, the estimated £60 million to £100 million from dormant accounts will be released by the fund over the first year. It is imperative that we are able to spend this money as soon as possible.
In taking the decision, the Government have considered thoroughly some of the concerns that noble Lords have raised today. I stress to the Committee that we understand that there are criticisms of the formula we are using. However, it has proved to be currently the most transparent and easily understood formula of all those that are around. I hope noble Lords will be satisfied. I know I have not been able to respond to all questions but I undertake to ensure that all noble Lords are written to. On that basis, I commend the order to the Committee.
Lord Higgins
My Lords, I should like to seek a little further clarification. I stress that I am, despite all its imperfections, in favour of the use of the Barnett formula for the allocation of funds between different parts of the United Kingdom. However, that does not solve the problem of which formula is being used to distribute the money, as against distributing it between the regions. I am anxious to save my noble friend unnecessary correspondence. Why, instead of the normal procedure being used—whereby the money for each of the regions goes into the Big Lottery Fund—is the money suddenly being siphoned off into the big society bank? Apparently this is not happening in the regions, although one would have thought that the big society was a UK-wide concept. Why do we suddenly find the allocation of resources—apparently contrary to the Act, although I might be wrong about that—being left to the big society bank, rather than to the existing arrangements set out in legislation? Alternatively, why is it not all going to the big society bank? How do the criteria for these two bodies differ?
Baroness Verma
My noble friend of course wants far more detailed clarification than I am about to give him. I undertake to ensure that such clarification is passed to all Members. However, the devolved Assemblies and authorities can make orders to restrict the kind of purposes and people to which money from dormant accounts may be distributed. That comes under Sections 19 to 21 of the Dormant Bank and Building Society Accounts Act 2008; some safeguards are already in place. However, I completely understand my noble friend’s concern. Therefore, to ensure further clarity, I would rather undertake to write and give a much fuller explanation that will, I hope, satisfy him.
Lord Higgins
My Lords, I am afraid that an exchange of correspondence does not clarify something in the same way as having it dealt with on the Floor of the House. Can I be clear? What is the financial basis of the Prime Minister’s statement, allocating this money to the other fund, rather than to the Big Lottery Fund?
Baroness Verma
As I said earlier to noble Lords, the Prime Minister has made it clear that for him the priority in England is to be able to set up the big society bank to ensure that dormant accounts are used for the needs of organisations in England. My noble friend is now querying the needs of the devolved Assemblies. However, I would give justice to my noble friend only if I could write to him and to other noble Lords because I would not want to have something misread or misheard in giving clarification. I may be able to do so now but, then again, I may not.
Under the Dormant Bank and Building Society Accounts Act 2008, following the transfer of functions order the Minister for the Cabinet Office must give directions to the Big Lottery Fund on how the English portion should be spent. I am not quite sure that that will satisfy my noble friend and therefore I continue to say that I shall write to noble Lords.
Lord Higgins
I am most grateful to my noble friend. I look forward to her letter to see whether the Minister can, in fact, make such an order.
Ministerial and other Salaries Act 1975 (Amendment) Order 2011
(12 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Verma
That the Grand Committee do report to the House that it has considered the Ministerial and other Salaries Act 1975 (Amendment) Order 2011
Relevant documents: 19th Report from the Joint Committee on Statutory Instruments
Baroness Verma
My Lords, this is an order that my right honourable friend the Prime Minister has specifically requested to formalise in legislation the coalition Government’s policy on ministerial salaries, as announced on 13 May last year. The order was laid before Parliament on 21 March and agreed to in the Delegated Legislation Committee in another place on 21 June.
The order, which is intended to remain in force for the lifetime of this Parliament, will ensure that ministerial and other officeholder salaries are reduced in legislation as they have been reduced in practice since the coalition Government took office. The salaries and offices affected are specified in the amendment order and these salaries cannot be at any other rate during this Parliament without further amendments to the legislation. Lords Ministers can be assured that their salaries will remain as listed in the order until the Dissolution of Parliament.
The Government’s policy is that Ministers’ total remuneration is 5 per cent less than that claimed by equivalent Ministers in the former Government. In the case of Lords Ministers, “total remuneration” in the context of the order simply refers to their ministerial salary. For Commons Ministers, it refers specifically to ministerial and MPs’ pay taken together, with the reduction then applied solely to the ministerial salary element. Since entering office, therefore, Ministers have waived their entitlement to receive a full ministerial salary and have been receiving a reduced salary ever since.
The order also ensures that ministerial and other officeholder pension contributions and future accruals are brought into line with the reduced ministerial salary levels. Currently, Ministers and other officeholders receive reduced salaries but, because of the rules governing ministerial pensions, their contributions have to remain based on their entitled level of salary as set by the Ministerial and other Salaries Act 1975 as it stands. This has meant that departments have had to make up the shortfall in pension contributions between the reduced and the entitled levels of salary for Ministers and officeholders. The amending order will eliminate the need for departments to do this and will save the Government approximately £100,000 per year.
As I mentioned, ministerial and other officeholders’ salaries are currently governed by the Ministerial and other Salaries Act 1975, as amended. The salaries of all Ministers, the Speaker in each House and the six paid opposition officeholders fall under the remit of this Act. These individuals have been informed of this order and the changes that it will make to the Act. Currently, increases to ministerial salaries are linked to the average increase in the mid-points of the senior Civil Service pay bands. This order will effectively nullify the link during this Parliament but it will apply again after the Dissolution of Parliament.
I should point out that over several years ministerial salaries have not, in practice, remained in line with the legislation. Since 2008, Ministers in the former Government had waived any entitlement to increases in their salary. This order will therefore bridge the gap that has grown between the legislation and what is happening on the ground. Given the Government’s policy on a Civil Service and wider public sector pay freeze, it is right that Ministers show leadership during this time of financial constraint. Since taking office, this Government have saved around £700,000 on Ministers’ pay. Over a full five years, this will represent a £4 million saving. I commend the order to the Committee.
Lord Maclennan of Rogart
My Lords, I welcome the opportunity that the laying of this order gives to enable some scrutiny of the policy lying behind it.
The practice of making alterations to the levels of ministerial salaries is not new, and particular aspects of this order are worthy of consideration. It is perhaps remarkable that since 1975 there have been 30 previous examples of alterations to ministerial salaries. My noble friend the Minister has made it clear that to some extent this is, on this occasion, gesture politics. It is about signalling to those in the public sector that Ministers are also bearing some of the brunt of the financial situation that the country is in. It has to be said, however, that the savings to which my noble friend has referred are rather minuscule. It might reasonably be inquired as to whether such savings might have been better made by reducing the total number of Ministers, which seems inexorably to have increased over the past 100 years—notwithstanding the devolution of power and the apparent commitment of the present Government to decentralise power further. There has been no shedding of Ministers to accommodate that philosophy.
I wonder whether the setting of an example by Ministers will be regarded by those in the public sector as amounting to anything more than a row of beans, in the light of the fact that large cuts in the public sector are being made among civil servants and public authorities around the country. If savings of public funding can be made at that level, some thought ought to have been given to saving at the top in Whitehall. The question arises of why the Government have taken an inflexible view to this order, which does not match or mirror what has happened in the past? Circumstances change, and it is to be hoped that they will change within the lifetime of this Parliament. To set these proposals in stone, as apparently the Prime Minister has decided to do, does not seem to be a pragmatic approach to ministerial pay.
From the point of view of clarification, I should be interested to know what the true position is concerning the changes in the pension arrangements. My understanding is that this is not intended to be retrospective in its effect and that the raising of the contributions will take effect only when the order comes into force. I should be most grateful for my noble friend’s comments on some of these points.
The Earl of Courtown
My Lords, I am most grateful to the Minister for telling the Committee that there has been a £700,000 saving in ministerial salaries. However, does that take into account those Ministers, Whips and Members of the Front Bench who do not receive a salary? I should be interested to know how many Members on the Front Bench in this House and the other place are not in receipt of a salary. If they are not, do they accrue any form of pension benefit? I think that the Ministers in this House do a grand job—the same as when the noble Baroness, Lady Royall, was in power—and they are not paid nearly enough. I look forward to hearing what my noble friend has to say.
Baroness Royall of Blaisdon
My Lords, I declare an interest as being in receipt of a ministerial or other salary. I have been for some time and I am very grateful to the Government.
I am also very grateful to the Minister for pointing out that the previous Government also had a policy of not increasing salaries. Of course, I am attracted—I would be, wouldn’t I?—by the idea from the noble Lord, Lord Maclennan, that, rather than reduce ministerial salaries, there should be a reduction in Ministers. I jest but I believe now, as I did when we were in government, that there are too many Ministers. I do not think that that should have an impact on salaries but I firmly believe that there are too many Ministers—in the other place, of course—although Ministers work phenomenally hard.
I am not sure what the noble Earl was getting at but I think that it is wrong in principle for there to be unpaid Ministers. A Minister is a Minister; they do a fantastic job and should be paid accordingly.
Of course, when everyone in the whole country is having to tighten their belts, it is right that those in receipt of ministerial salaries should do likewise. Resources are limited and we have to take our share of the pain. Although I would strenuously argue that the cuts to our public services in general are too deep and being made too fast, I do not think that that is the case in relation to ministerial salaries. The Prime Minister was correct when he acted as a sort of catalyst for this legislation.
Baroness Verma
Again, I start by thanking my noble friends and the noble Baroness for their broadly warm welcome for the order and for their questions about ministerial salaries. I should like to start by responding to the point made by my noble friend Lord Maclennan—whose name, I hope, I have got right this time—about it being gesture politics. The fact is that we need to show that we in government are prepared to take some of the bites that are going to affect every single citizen because of the financial difficulties that this country is in. I want to resist saying that it is gesture politics: we have a duty to show that we are willing to take some of the pain. It may not look as though it is a lot of the pain but those of us who work incredibly hard feel that it is only right that we all share in it, and the previous Government did the same.
I should also like to thank my noble friend for his kind words. Ministers in both this House and another place work very hard and often with gruelling hours on subjects that we have to get our minds around very quickly, as is the case today. This is not my normal remit—and I think that is true of the noble Baroness, too.
There are 13 unpaid Ministers in government, three in the Commons and 10 in the Lords. The former Administration had the same number of unpaid Ministers before leaving office, with nine from the Commons and four from the Lords. The Government believe that the number of Ministers should be dictated by need, and on this basis have carefully considered all the appointments that they have made. Because of the nature of the coalition Government and the challenge of delivering the programme for government, the Prime Minister did not think that it was possible to reduce significantly the number of Ministers at this time. However, the Government have reduced the number of Ministers who regularly attend meetings of the Cabinet. I hope that has answered my noble friend’s question.
The Earl of Courtown
Perhaps I did not explain well enough the point that I was really making. The Minister said that at the other end there are three Ministers not in receipt of a salary, and 10 noble friends at this end. At least down the other end they receive a parliamentary salary.
Baroness Verma
My Lords, I enter into territory that is way over my pay grade, and the safest option for me is now for me to retreat into a safer area. I shall respond to the question about pension contributions. It is correct that these measures are not retrospective; salaries in the amendment order come into effect when the order comes into force. On the question of unpaid Ministers who might be in receipt of pensions—no, it deals only with salaried Ministers. Unpaid Ministers are not entitled to a pension under the parliamentary pension scheme.
I am not getting much more inspiration from behind me on any further questions, so I undertake to write to noble Lords on any questions that have not been answered.
Communications Act 2003 (Maximum Penalty for Contravention of Information Requirements) Order 2011
Baroness Rawlings
That the Grand Committee do report to the House that it has considered the Communications Act 2003 (Maximum Penalty for Contravention of Information Requirements) Order 2011
Relevant documents: 23rd Report from the Joint Committee on Statutory Instruments
Baroness Rawlings
My Lords, telecommunications are a vital part of the UK economy, worth over £35 billion in GDP alone. Perhaps more significantly, they help to underpin our online and internet economy—the largest per capita ICT market in the world and the driver of innovation and growth in the UK. It is absolutely critical that in this fast-moving and dynamic sector we have the necessary regulatory framework capable of keeping pace with market developments and technological change. This is why the Government have implemented the European framework on electronic communications. Those changes became law on 26 May this year. The changes to the framework are, first, good for business, which will benefit from the improved regulatory framework to encourage investment, and, secondly, they will provide greater competition and innovation among electronic communications providers. They will be beneficial, too, for consumers, who will gain from access to higher-quality and lower-cost communications services. Benefits for the former will include improved, reasonably priced choice of supplier and contract terms. For the latter, they will include strengthened rights on privacy and confidentiality, with faster switching processes and improved accessibility.
The UK approach to implementation has been light touch and has the support of business. It has been informed by a comprehensive and open dialogue with the people concerned, as well as a determination to avoid all over-regulation.
The framework contained a number of amendments granting new powers to Ofcom, the independent regulator. The powers will make certain that Ofcom has the appropriate tools to carry out its statutory functions effectively. These functions include the ability to make regulatory decisions on the markets. In order to make them effective, Ofcom needs access to information held by communications providers.
If the providers do not comply with information requests, it will hinder Ofcom in fulfilling its duty as the communications regulator. This could prevent Ofcom making informed decisions relating to remedy of the market and consumer protection. This could have detrimental impacts on both the communication markets and the consumer.
Amendments to Article 10(3) of the authorisation directive as well as to Article 21a of the revised framework directive require that Ofcom be able to levy dissuasive financial sanctions for most breaches of the regulatory obligations, including its information-gathering powers under Sections 135, 136 and 191 of the Communications Act 2003. Ofcom already has powers to impose financial penalties for breaches of these provisions, but the current limit for such penalties is only £50,000. Having reviewed the maximum level of the penalty, the Government no longer believe that this level of penalty is sufficiently dissuasive to prevent non-compliance with information-gathering requests.
The Government see the ability to levy an increased penalty for failure to comply with an information request as key to making certain that Ofcom has the necessary information available to make effective and correct regulatory decisions. Recent changes to the Ofcom enforcement regime in relation to silent calls raised the maximum level of penalty that Ofcom can levy for breaches from £50,000 to £2 million. This amendment to the Communications Act 2003 will mirror that increase in the maximum level of penalty in respect of non-compliance with requests from Ofcom for information. Other financial penalties in the Communications Act have been increased, too, to sums above the current penalty. For example, there will now be no financial advantage to companies refusing to answer an information request and taking a £50,000 penalty, as the maximum level of penalty will be £2 million. The use of this power by Ofcom must be appropriate and proportionate to the breach of the information-gathering powers under the relevant sections of the Act. The Government are clear that the UK has no discretion on the implementation of these provisions. We must therefore provide for dissuasive penalties, as they are the law and are required by the European directive.
The Government consulted on a change to the level of penalty as part of our wider consultation last year on the implementation of amendments to the European framework for electronic communications. Respondents from across both the telecommunications sector and the consumer rights groups were broadly supportive of this proposal. They recognised that it is of fundamental importance to the conduct of Ofcom’s regulatory functions under the framework that it is able to gather whatever information it needs.
Respondents also agreed that it is important that Ofcom is able to levy dissuasive penalties, particularly on those operating short-term scams where the potential gains can exceed the amount of the fine. The people concerned also struck a cautionary note, arguing that, given the high level of the potential fine, its levy should be proportionate to the type of breach of the information requests. I am pleased to say that this is recognised in our approach.
The Government are aware, however, that not all the people concerned agreed with the proposed increase in the level of sanction. Some suggested that the current level of penalty for failure to comply is already dissuasive and claimed that there is little evidence that companies are not complying with information requests.
The Government have looked long and hard at the level of the sanctions available to Ofcom under its information-gathering powers. We have worked closely with the regulator, Ofcom, to analyse and test its powers, including its current enforcement powers. We firmly believe that Ofcom’s enforcement powers in relation to the information-gathering requests made under Sections 135, 136 and 191 of the Communications Act 2003 are not equivalent to the other enforcement powers available to Ofcom and are not genuinely dissuasive. Therefore, we will increase the level of fine that Ofcom can levy for failure to comply with an information-gathering request up to a maximum of £2 million.
This will be done for the following reasons. First, the Government are aware that some communications providers have refused to comply with an information request or have provided inaccurate information on a number of occurrences during the years 2009 and 2010. Some respondents claimed that the current level of sanction available to Ofcom was already sufficiently dissuasive. The Government, however, have seen evidence that suggests that there is a lack of deterrent effect in the current regime. This means that businesses can, and do, take the risk of not providing accurate information as requested or providing any information. Potentially, therefore, they gain financial and other business advantages through the delay, and even the avoidance, of the full effect of Ofcom’s enforcement powers under the Act. This in turn can have significant detrimental impacts on both markets and consumer protections.
Secondly, non-compliance or delayed compliance with information requests under Sections 135, 136 and 191 of the Communications Act 2003 hinders Ofcom in fulfilling its duty as regulator. We see the ability to levy an increased level of penalty for failure to comply with an information request as key to making certain that Ofcom has the necessary information available to make effective and correct regulatory decisions.
Thirdly, increases in the level of sanction in other areas—for instance, silent calls—could provide communications providers with an incentive to refuse to respond to an information request and face a penalty of a maximum of £50,000 rather than answer the request, demonstrate a breach of other regulatory burdens and risk a far higher penalty.
Fourthly, the penalty will apply only to those who do not comply properly with Ofcom’s information requests. Two million pounds is the maximum level of fine that Ofcom will be able to levy, and the penalty imposed in any specific case must be, as I said, proportionate to the breach.
Her Majesty’s Government believe that this order is a necessary and important change to the powers of the regulator, Ofcom. This change will help to make certain that Ofcom is able to make fully informed decisions on the market it regulates; this can only be good for business and good for consumers. Therefore I commend this order to the Committee.
Lord Clement-Jones
My Lords, I understand the purpose of this order; the reasons for it were very cogently set out by my noble friend. European directives in the telecoms area have been extremely important in making sure that we have a level playing field in telecommunications across Europe. I doubt anybody would deny that the European framework is extremely important. However, this is only one part of the implementation of the changes to the European framework of directives. The question that occurs to me is: why are we not dealing with all the other aspects of the changes at the same time? One could then see the full context in which those changes are being made. I wonder whether I may have missed three statutory instruments this month, which is easily done, especially in this House. I may not have missed them—they may be coming down the track—but it would seem convenient for us to deal with them and this rather draconian order at the same time. The impact assessment that comes with the Explanatory Memorandum deals with the whole slew of other changes being made to the European framework and the other five directives that are part of it. Therefore, it would have been convenient to deal with them at the same time.
As the Minister says, the consultation broadly supported raising the level of the sanction to £2 million. However, “dissuasive” is, on the face of it, quite a subjective word. I wonder whether the Minister could define “dissuasive”—a word she used three or four times in the course of her excellent introduction. For instance, what is dissuasive about a penalty of £2 million as opposed to £1 million? I wonder whether this is less of a legal definition and more of a value judgment. I am perfectly okay with it being a value judgment, but we need to accept that it is and that it is a judgment made by the Government, who are not really objective in the circumstances.
I fully understand the nature of the changes being made to the authorisation directive in terms of specific sanction. However, I find parts of the impact assessment confusing. Looking at the impact assessment that deals with the authorisation directive, policy option 1 is:
“Implementation of the Authorisation Directive—articles for which there are no options in implementation”.
Then we move swiftly on to policy option 2, which is:
“Preferred implementation of the Authorisation Directive—articles for which there are options in implementation”.
Which option have we chosen? It is not clear to me from this impact assessment which option we have chosen. I assume that we have chosen policy option 2, but there was no explanation of that in the Minister’s introduction. It would be extremely valuable if she could explain which of the policy options has been adopted. Indeed, perhaps I was not even looking at the right impact assessment; that is always a possibility.
Lord Moynihan
My Lords, my intervention on this will be very brief. I echo my noble friend’s comments about the Minister’s excellent introduction. I should like the Minister to give us a little more clarity, if possible, on the consultation outcome. The rise from £50,000 to a maximum of £2 million, based on a value judgment, is large. Descending on the £2 million is the issue that I shall focus on. Could the Minister, in replying, let us know a little more about the level of response to the consultation exercise which was supportive of the figure of £2 million? The Explanatory Note includes a breakdown of small groups and groups that took different views, but I should be grateful if the Minister could tell us whether there was overwhelming or significant majority support for the proposal that she has brought to the Committee today.
Lord Stevenson of Balmacara
My Lords, I, too, welcome the Minister’s introduction, which was extremely fulsome and interesting. Like other noble Lords who have spoken, I understand and broadly welcome the objectives of the order. However, I, too, have a number of points that I want to draw out and the Minister to respond to when she is able to do so.
We understand that the need for the order is the EU directive and the requirement to implement the better regulation directive. The Minister said that she had no discretion on that, but there is quite a lot of discretion within the directive because it does not specify a figure of £2 million, as has already been mentioned by the noble Lord, Lord Clement-Jones. It is a ministerial decision that this is the way to be “appropriate”, “effective” and “dissuasive”—the terminology used. Is it appropriate? Will it be effective? Will the net effect be dissuasive? That point came through in earlier speeches and I shall be interested to hear the Minister’s response.
As far as we can tell, Ministers have judged that £50,000 in fines is not dissuasive. Whichever way we read the impact statement—it was rather a heavy read—the evidence may support that level of penalty as regards certain companies, and certainly for those where the returns are much greater than £50,000 for an alleged breach of not providing the information. However, is it really appropriate to increase fines by 40 per cent in order to remedy a lack of provision of information? It is not exactly on the same scale as the examples given by the Minister. The only real example that I could find was where companies were undertaking short-term scams, although it was not clear what those were—perhaps we could have a discussion about them in the response—or what sort of returns there were on them. If they were that profitable, I should like to know more about them.
To explain, we are not really against the order but there are some questions. Is £2 million the right figure? The argument that it is the same figure that they have used in other places is not sufficient. We need to know more about what the £2 million does in terms of dissuasion and whether it is indeed appropriate and effective. Has consideration been given to another penalty? We were given one option, which was discussed, but it would not be difficult to think of a more dissuasive penalty in a situation whereby, as a result of the lack of the provision of information, the company concerned gained significantly in its trading activities. It is quite hard to see what that would be, but let us assume that that is the case. If the company made a significant profit as a result, perhaps the appropriate and dissuasive penalty would be the removal of that gain.
The potential impact on a smaller company certainly came through in some of the responses but has not really been picked up on. Many companies in this field do not have profits greater than £50,000 per year. To be fined at the level of £2 million is an awesome thought.
We were told that there was a large consultation but I agree with noble Lords that the information about who was actually consulted is not available. We were told that the responses were broadly supportive but we were unable to identify—certainly by size or by range—what those companies were. On reading the impact statement, it seems that the evidence used was only the 11 cases that have been considered by Ofcom since 2005, of which three were multiple occurrences. So we are talking about only eight different cases, which seems to be quite a small sample on which to base such a draconian increase.
In making a judgment that this measure is appropriate and proportionate, the Government are acting as both judge and jury. I am not sure that that is the right way to approach this. I would have liked to have seen more quantitative evidence in the impact statement.
The comment made in some of the paperwork is that as a result of this change there may well be an increase in the number of appeals made against such fines. That will obviously cost and it may be that the overall effect is not significant. In her summation, the Minister said that this would be good for business and good for consumers. I am not sure. This is more likely to be another example of gold-plating what is required by the EU directive, which is aimed at providing only appropriate, effective and dissuasive powers. It is not a fixed amount. It is perhaps not so much gold-plating but platinum-plating. It is hardly a light touch; rather, it is a heavy plundering.
Baroness Rawlings
My Lords, this has been a constructive small debate, and I am very grateful to noble Lords who have contributed. The change that I have outlined today will raise the level of penalty that the independent regulator, Ofcom, is able to levy for a breach of its information-gathering requests from £50,000 to £2 million. It is a necessary and welcome part of the United Kingdom’s implementation of the European framework on electronic communications. As in any fast-moving and dynamic sector, it is vital that the regulator is able to make necessary and timely decisions in response to changes in the market. The increase in penalty will help to make certain that the regulator’s enforcement powers for such a breach are sufficiently dissuasive and that the United Kingdom is fully compliant with European law.
I turn to the questions from my noble friend Lord Clement-Jones. The other changes have been passed and were made law on 26 May. They were passed by negative resolution in a statutory instrument. The change has been decided with Ofcom, and £2 million will make certain the equivalence with other enforcement measures.
We have listened to many people concerned, who have said that the level of this penalty must be proportionate to the breach. My noble friend Lord Moynihan asked for more details of the consultation level. We conducted a full and proper consultation from autumn last year. The response from industry was clear; it is vital that Ofcom is able to make properly informed decisions about this fast-moving sector. This means gathering all the necessary information through the effective and proportionate use of its information-gathering powers. Although a small number of businesses raised limited concerns about the level of the penalty sanction, the majority of the people concerned supported the Government’s proposals. In fact, all respondents to the consultation recognised that it is important for Ofcom to be able to levy dissuasive penalties for the breach of such powers, particularly on those operating short-term scams, as I mentioned, when the potential gains to the operator can exceed the amount of fine.
Four hundred and twenty organisations were consulted, and from 70-plus came replies. There were also more than 80 separate meetings, events and round tables with the industry, the regulator and consumer groups.
The noble Lord, Lord Stevenson, asked whether the change was necessary and whether it was not gold-plated. Changes to Ofcom’s information-gathering powers are intended to enable Ofcom to fulfil its role as the regulator more effectively. This change should not place significant burdens on industry, and it will apply only to businesses in breach of the UK regulation.
The noble Lord, Lord Stevenson, asked as well about the choice, which was between keeping £50,000 as a maximum and finding a sum that was consistent. There were more than 70 responses to the consultation, and most responses on this change were in favour of the £2 million sum. Only some of the larger companies were against.
The short-term scams mostly concern premium rate numbers run for 30 days. Sums run into the hundreds of thousands. They have been a serious concern for the regulator and for the European Commission.
The noble Lord asked about the impact on smaller businesses. The penalty does not have to be £2 million; that is the maximum. As I said earlier, it needs to be appropriate and proportionate. It is for Ofcom to decide, subject to appeal to the Competition Appeal Tribunal.
Her Majesty’s Government believe that this is a necessary and important change to the powers of the regulator. As I said, it will benefit both businesses and consumers. I recommend the order.
Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011
Baroness Rawlings
That the Grand Committee do report to the House that it has considered the Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
Baroness Rawlings
My Lords, the legislation we are debating this evening concerns category B3 gaming machines. These are slot machines which currently allow a maximum stake of £1 and a maximum prize limit of £500. They are most commonly found in adult gaming centres – which are more frequently referred to as “AGCs” – and bingo premises. Under the provisions of the Gambling Act, a maximum of four of these machines can be offered by an AGC, while bingo premises may offer a maximum of eight.
The Categories of Gaming Machine (Amendment) Regulations 2011 will increase the stake limit for B3 machines—that is, the maximum amount that can be staked on a single game—from £1 to £2, while the Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011 will vary the maximum number of these machines that AGCs and bingo clubs can offer customers to 20 per cent of the total number of gaming machines available for use on an individual premises.
The changes have been requested by the amusement and bingo industries. The AGCs and bingo clubs have been struggling for some years with difficult trading conditions arising from the economic downturn. These difficult trading conditions are also affecting other related sectors, in particular British gaming machine manufacturers and suppliers. The British Amusement Catering Trade Association—which represents the majority of the AGCs and gaming machine manufacturers in Britain—estimates that revenues across the industry are now down some 36 per cent since 2007, with over 250 arcades and 1,300 jobs lost. BACTA also estimates that gaming machine manufacturing output has dropped by 40 per cent since 2006, with employment in the sector down by 33 per cent during 2009. Alongside this, figures produced by the Bingo Association show that 128 clubs have closed since 2006, with gross gaming sales having fallen by some £900 million since 2008-09 and employment down by nearly 30 per cent since 2006.
Category B3 gaming machines are an intrinsic part of the business model for AGCs and bingo clubs. They are very popular with adult players and generate significant levels of revenue for these businesses. These changes will allow them to adapt and develop their business model to meet the challenges of the current economic climate.
Amusement arcades and bingo halls are some of the oldest tourism and leisure businesses in Britain and occupy unique roles in the leisure industry. The AGCs in Britain employ nearly 20,000 people. They are often a vital part of many seaside towns, where they form an integral part of the local tourism offer and are significant employers not only in terms of individual premises but also in supporting businesses involved in manufacturing, supply and maintenance.
Bingo clubs also form a significant part of local economies in terms of employment. The industry employs some 17,000 people. But they also play a wider role. Some 3 million people in Britain play bingo, and bingo clubs very often provide a valuable social amenity. They fulfil an important social function in many communities, especially for older and retired people—older women in particular.
However, gambling is different to other industries. For the overwhelming majority of people in Britain, gambling is a pastime, and does not present any problems, but for a tiny minority of people it is a darker business. The 2010 gambling prevalence survey showed that problem gambling levels in Britain had increased from 0.6 per cent to 0.9 per cent of the adult population over the last three years. That is nearly half a million people. This risk is why gambling in Britain is carefully regulated. In the case of gaming machines, a robust regulatory framework is in place. There is a comprehensive licensing system for operators, manufacturers and suppliers; and stringent rules covering access, supervision, and the technical standards of the machines. Regulations also strictly control the amount that customers can stake and win, and the numbers and types of machines gambling premises businesses can offer.
This regulation works. Britain has very low rates of problem gambling compared to other jurisdictions. However, as a consequence operators face restrictions around the types of commercial decisions they have to take to maintain and grow their businesses. They are unable to adjust product pricing to absorb increasing costs, and as machine numbers are set centrally, they are limited in how they can respond to demand and tailor their offer to meet local circumstances. Amusement and bingo industries have therefore asked the Government to change the rules around category B gaming machines to allow the stakes permitted to be raised and the incidence of such machines increased.
Following a public consultation, the Government are persuaded that the situation facing AGCs and bingo clubs is sufficiently grave to justify a recalibration of the stake limits and entitlements for B3 machines. By bringing forward these measures the Government want to give greater flexibility to these businesses to make the necessary commercial decisions about the products they offer customers for B3 gaming machines in Britain—both through new machines and new game formats, thereby offering a boost to the manufacture and supply sectors.
The Government would like these businesses to thrive, but not at any cost. I referred earlier to the level of problem gambling in Britain and I want to make it clear that protection of the public—especially young and vulnerable people—will remain paramount. A public consultation on these measures closed in January, and a wide range of views for and against was expressed. The Government have taken notice of these views and are confident that these matters do not present a risk to problem gambling. They balance meeting the needs of business with protection of the public. The fact is that what research there is about the impact of gaming machines on problem gambling is inconclusive. There is no clear evidence—further research is continuing; but it will take time to bear fruit, and in the mean time businesses are suffering and jobs are being lost.
Let us bear it in mind that the 2010 prevalence survey showed that participation in slot machines has decreased since 2007 from 14 per cent to 13 per cent. Based on the available evidence, the Government do not see B3 gaming machines as a risk to the public. In fact, the current regulations have led to unintended consequences: such is the demand for B3 machines from customers in AGCs and bingo clubs that operators have often resorted to splitting their premises artificially in order to meet this demand. This is not conducive to effective regulation.
The measures we are debating this evening are not simply about allowing operators to install more machines and charge more for their use. They should stimulate demand for new B3 game formats and new machines across the amusement and bingo industries, thus offering a timely boost to manufacturers and suppliers as operators look to refresh their offer. Operators will be able to respond to customer demand without having to play fast and loose with the regulations by artificially splitting their premises.
The Government estimate these measures should see an injection of up to 3,000 new B3 machines into the market as operators take advantage of more flexible machine entitlements. This could see an increase in revenues of £8.5 million a year across these industries. This is a modest amount, but it will offer security for social and economic assets in local areas and protect jobs. It will make the difference in keeping smaller bingo clubs open and provide a potential lifeline to many small family-run arcades, particularly in seaside towns, which are struggling in the current economic climate.
Finally, the Government are committed to removing unnecessary red tape and barriers to create the conditions for growth in the leisure economies. Consequently, these measures are a minor adjustment to the regulatory framework put in place by the Gambling Act. They are not about promoting gambling; they are about providing long overdue help to many tourism and leisure businesses. We want amusement arcades and bingo clubs to remain competitive in these tough economic times. These are some of the oldest tourism and leisure businesses in Britain, employing between them some 37,000 people. They are important elements of many local economies, particularly in seaside towns, as I said. We want them to thrive. I commend the regulations and the order to the Committee.
Lord Clement-Jones
My Lords, I thank my noble friend the Minister for her introduction, which I believe makes a strong case for redressing the balance, as I see it, between licensed betting offices on the one hand, and arcades, AGCs and bingo clubs on the other. She mentioned figures, which are contained in the Explanatory Memorandum, about the closures of bingo clubs and AGCs over the last few years. There are some 400 closures—391, to be precise. That illustrates the problems that those establishments have faced over the past few years.
I pay tribute to BACTA and some of the other organisations for the persistence with which they have pursued this issue on B3 machines. We have to accept that the previous B3 regime encouraged premises to get round the limits by splitting their space up into separate areas, as the Minister mentioned. This announcement has been mooted for some time; indeed, when one looks back at debates on orders on C and D category machines under the previous Government, it was clear that there was a debate over whether the B3 changes could be made at that time. Certainly, favourable noises were made by Mr Sutcliffe and others, but nothing was ever really done about it. So I welcome very much that that is now happening.
There are some issues, however. What worries me is that these things are done so often in a piecemeal fashion. We had the C and D changes in 2009, and we are having these B3 changes now. It is extremely important that there is a regular review of these issues, and that the state of economics of bingo clubs and AGCs is regularly examined. They are an important part of the amusement economy—indeed, the seaside economy. I note that the Minister in the other place is a Member of Parliament who represents a seaside town. It is very important that there should be regular reviews. I believe that a regular stakes and prizes review used to take place. I do not know whether it is planned to reinstitute that on, say, a regular three-yearly basis. There seemed to be some hint in what Mr Penrose said in the other place that that might be the case. However, it is important, if possible, to make that commitment.
Review is also important to see the impact that these new machines will have, not only on the establishments but on the public’s gambling habits. It was notable from the debate in the other place that there are differences of view over the impact of this order on the sheer number of machines that might be introduced. There was clearly a wide discrepancy between the Government’s quite low figure of 3,000 extra machines and the figure cited by others, which was considerably higher.
There is also the question of which other establishments should be able to benefit from changes in machines. Not everybody goes to bingo halls or AGCs. Snooker halls have also come up in debate. I hope that the Minister and her colleagues in the DCMS will also consider that issue.
Finally, one thing puzzles me. I think that this is a sensible order and the right way to proceed. However, it appears that the Gambling Commission has a different view on how these additional B3 machines should be calculated. It would be helpful if the Minister could explain where the Government differ from the Gambling Commission, and why they have decided not to accept its advice in these circumstances.
Lord Moynihan
My Lords, I also support the government proposals before the Committee. I echo the comments of my noble friend about the effectiveness of BACTA, the trade body for the British amusement industry. It is good to see highly professional trade associations working with small, family-run businesses, many of which are based at the seaside and more than 500 of which are members. BACTA does excellent work and has done so for several years.
What struck me about the Minister’s speech was that she looked at the economic impact over the past five or six years; indeed, she went back as far as 2006 at one stage in her statistical analysis. Over the past five years, the reality is that the serious decline has happened in the past two years. In other words, the economic impact of this is getting more and more serious. We can see that from the background against which, over the past two years, there have been approximately 200 arcade closures, representing some 800 job losses. However, there are many more than those 800 when you consider the part-time nature of positions over the summer. In addition to the loss to local businesses, there is a direct knock-on effect on related enterprises such as souvenir, gift and high street food and beverage shops, many of which are based in seaside resorts. The life-blood of those seaside resorts is local businesses—those gift shops and high street shops. It is good to note that the work being done by so many of these small, family-run businesses at the seaside generates local activity and employment.
However, those businesses are under very serious economic constraints, because of which the Prime Minister made a pre-election pledge to throw a lifeline to the traditional British amusement industry by reversing changes made under the Gambling Act 2005 to the operation of amusement machines. These proposals give effect to that pledge and would see a return of a maximum stake for category B3 machines from £1 to £2, as the Minister said, and an increase in machine entitlement to 20 per cent of machines sited, or four machines, whichever is the greater. According to some of the estimates in the impact assessment, this small change that the Committee is considering would raise in the order of £8.3 million for the industry. I ask my noble friend: is that the correct figure? If so, the financial assistance will alleviate some of the pressures threatening the industry since the introduction of the Gambling Act 2005, and other economic pressures felt by the sector. I therefore support the measures.
Out of interest, I ask the Minister whether, given the proposed increase, the next generation of machines will have the capacity to take a £2 coin, or will we have to plug in two £1 coins? We have not touched on the related issue of whether the Government are considering increasing the prize limit from £500 for category B machines in the future and, if so, when.
I thank my noble friend for her comments—it was, again, another eloquent opening speech. I emphasise that given the speed of economic decline in this sector it would perhaps be of value to the Government in the future to revise the levels we are talking about today on a more frequent basis than they have done in the past.
Lord Stevenson of Balmacara
My Lords, I start with a complaint. In volunteering to undertake this slot—no pun intended—I felt peculiarly disadvantaged because I have never knowingly interacted with a gambling machine of any type. I may have led a very sheltered life but it has never come my way. There is plenty of space in here so we could have had a demonstration or a machine to play with while the Committee sat for hours on earlier orders. At least we would have better understood the mechanics, if not the economics, of the industry. I hope that when the Minister replies she will respond to that in an appropriate way.
There is no concern about the aim here, which is to allow the business more flexibility to respond to the economic climate. I recognise the unintended consequences of the current regime, where operators are manipulating the rules by artificially splitting premises. I wonder what an artificial split of premises is, but I think we get the picture.
The key is that in the Government’s judgment this will not undermine the central aim of the Gambling Act 2005, which is, of course, public protection and ensuring that gambling is crime free, fair, open and protects children and vulnerable adults. We have heard reassurances from the Minister and I do not think that these changes will undermine that.
The noble Lord, Lord Clement-Jones, referred to the Gambling Commission, which is the Government’s principal adviser in this area. It is interesting that its various comments, which are seeded throughout the impact statements and other documents that we have seen, suggest that gambling machines are becoming a little less popular—although the decline is relatively small—and that they do not seem to lead to problem gambling. In our regime, prizes are quite low by international comparison, and the combination of that and a robust licensing regime suggests that there is room to make the changes proposed.
On the other hand, the recommendation from the Gambling Commission is that we should not look at changes in areas such as B3 machines in isolation, a point picked up by other noble Lords; we need a wider prospectus when we are considering changes. That point did not come through well in the documents that I saw. This is a complicated situation, and not only within the venues and places we are talking about. Changes here will redouble pressures for changes elsewhere, as has been mentioned. In some senses— although one does not wish to restrict choice in these matters—if we are really concerned about the growth in gambling, any increase in availability is, in principle, a bad thing.
On the consultation, I read in the documents that there were 92 consultees—mainly from the industry, although there were some consumer groups—and that they were offered a wide range of options, ranging from do nothing to changes in relation to floor space. Like the noble Lord, Lord Clement-Jones, I was perplexed that the Government did not accept the advice from its principal adviser, the Gambling Commission, on this matter and went for option 5, the model wanted by the industry. The Gambling Commission wanted option 6, which required that the increased number of machines permitted should be related to floor space, which is the common sense and logical position. Anything else would be rather odd to calculate as you would have an assessment of the total number of machines and then a proportion of that subject to a floor limit. That does not seem a robust way of doing this. The size of the premises is important because it will reflect the number of people who can use it. That would be a better way but, nevertheless, it will be interesting to hear the Minister’s response on this.
There are three or four points on which the Minister might reflect before she responds. Clearly, the Government have to balance the growth in popularity of the B2 machines in betting offices and the impact of the proposal on other gambling centres, which might draw customers away, rather than try to maximise the spend from existing customers in existing premises. That would be a problem, and I am not sure whether the view is that that will be the case. I think that it is not the case, but we nevertheless need to keep an eye on this.
I agree with the noble Lord, Lord Clement-Jones, that there will be a need for a regular review of this whole area, not just because of the integrated way in which all the various venues and machines fit together, but because we do not know enough about the way that gambling trends are going—particularly problem gambling trends. If we are talking about 500,000 people, that is a sufficient number for us to want to keep an eye on the situation. We do not really know what will be the total number of machines, consequent on the changes, and it would be interesting to have regular feedback on that.
There is mention in the documentation of the impact of tax on the way that the industry will work, and there is the suggestion of a machine games duty. I am not sure whether the level for that has yet been set, or whether that proposal has been implemented. When the Minister responds, can she give us some information on that, because it will be an important aspect of this? It would also be useful to track more accurately the change in takings. The figures that the noble Lord, Lord Moynihan, mentioned were startlingly large. If the measures indeed generate more than £8.3 million in additional revenues in this area, we would like to know about that. It was also mentioned somewhere in the documentation that the Government are a bit doubtful about the BACTA figures on generating income. Again, it would be helpful if the Minister could respond on that.
Finally, there is mention of further research being carried out by the Responsible Gambling Strategy Board and the Responsible Gambling Fund that could feed into this regular review. The outcome of that will be awaited with interest.
Baroness Rawlings
My Lords, this has been a very helpful debate and I thank all noble Lords who have spoken. I thank my noble friend Lord Clement-Jones for his support, and I will try and answer his three questions. The first was regarding a regular review, which the noble Lord, Lord Stevenson, also wanted to know about. We would like a more systematic approach to be in place, and we are minded to return to a triennial review system, as the noble Lord, Lord Clement-Jones, mentioned. We hope to develop this area with the industry and the Gambling Commission, and to explore how it might work. There are no plans for the moment to make changes to stake and prize limits for B2 machines.
The noble Lord’s second question was regarding other establishments. The Government have made clear their commitment to the British amusement industry to deliver these measures. The Minister for Tourism is meeting Rileys Clubs Ltd tomorrow, Wednesday 6 July, to discuss this issue, and it would be wrong to pre-empt that meeting.
On the noble Lord’s third question, also mentioned by the noble Lord, Lord Stevenson, the Gambling Commission originally favoured an approach based upon floor space. The Government took these views into account but felt, on balance, that the 20 per cent formula would be better placed to meet the needs of both the AGCs and bingo clubs, plus, it would offer a real boost to the machine manufacturers.
My noble friend Lord Moynihan is very knowledgeable in this area, because I believe he took through the previous Bill. I totally agree with him regarding the seaside resorts and that the Prime Minister supported this at a very early stage. As to the estimate of the economic benefit set out in the impact assessment, the impact assessment was considered by the independent regulatory policy committee and was assessed as being a reasonable estimate of impact. We therefore believe that it is an accurate estimate.
The noble Lord asked whether the new generation of machines would take the £2 coin. Yes, they will.
I am sorry that the noble Lord, Lord Stevenson, has never tried slot machines, because they are rather fun for a flutter, but perhaps your Lordships' House is not quite the right place to have them.
Lord Stevenson of Balmacara
I mentioned it only because the age profile and ambience here seemed so appropriate.
Baroness Rawlings
Oh, well. Perhaps that is another place and another time.
The noble Lord asked a more serious question about tax, which of course is a matter for the Treasury. Decisions on the eventual rates and thresholds for a new duty will be made by the Chancellor in the 2012 Budget. The Treasury has launched a consultation on the design characteristics of the new duty. We would urge all interested parties to engage as fully as possible with the Treasury on this matter. I am aware of the industry’s concern about any additional tax burdens and have made my Treasury colleagues aware of the industry’s difficult economic situation and the need to minimise burdens on operators.
This has been a very constructive debate. I thank all noble Lords who have contributed. I commend the order to the Committee.
Categories of Gaming Machine (Amendment) Regulations 2011
Baroness Rawlings
That the Grand Committee do report to the House that it has considered the Categories of Gaming Machine (Amendment) Regulations 2011.
Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.
House of Lords
Diplomatic Missions: Unpaid Congestion Charges and Parking Fines
(12 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Faulkner of Worcester
To ask Her Majesty’s Government what steps they are taking to recover unpaid congestion charges and parking fines incurred by diplomatic missions.
Earl Attlee
My Lords, two-thirds of all foreign missions pay the London congestion charge, but as diplomatic missions are immune from prosecution in UK courts, there is no legal course of action which Her Majesty’s Government or local authorities can take to enforce payment of the congestion charge or parking fines. The Foreign and Commonwealth Office, Transport for London and other local authorities continue to press non-paying diplomatic missions to pay the clearly outstanding congestion charges and parking fines.
Lord Faulkner of Worcester
I thank the Minister very much for that Answer—disappointing though it is, I am afraid. Does he agree that this is an absurd situation which cannot go on indefinitely? The total in unpaid congestion charge penalties rose from £36 million at the start of last year to £52 million by the end of April. Is not the answer perhaps for the Prime Minister or the Foreign Secretary to sit down quietly with the American ambassador—who owes £5 million of those fines to the people of London—and explain to him that this is not a tax: it is a legitimate charge for services rendered under Article 34 of the Vienna Convention on Diplomatic Relations? If the American ambassador were to do it, I am sure that the others would follow.
Earl Attlee
My Lords, the noble Lord suggests that this situation could go on indefinitely. My noble friend Lord King, who briefed me, told me that he had to deal with this issue during his time in office, so it is a long-running problem. On the noble Lord’s second question, I understand that the mayor has had a chat with the President of the United States, but he still did not get very far.
Lord Trefgarne
My Lords, will my noble friend forgive me if I rain on his parade? Is he aware that the collection of congestion charges by Transport for London is a pretty haphazard affair? Some of us have had the misfortune, and on at least two occasions, of an allegation that we had not paid when we had.
Earl Attlee
My Lords, I have had a brush with Transport for London over the congestion charge and, unfortunately, I found it to be deadly efficient.
Lord Berkeley
My Lords, can the noble Earl tell the House whether the President of the United States and his very long and low-slung car—which went aground in Dublin, we are told—and his retinue of 40 other cars paid the congestion charge when they came to London last month?
Earl Attlee
My Lords, I expect that they probably claimed diplomatic immunity.
Baroness Doocey
My Lords, I declare an interest as a Member of the London Assembly. Does the Minister agree that the abolition of the western extension zone gives the Government a new opportunity to renegotiate this long-running saga?
Earl Attlee
My Lords, the situation is simple: we believe that the Government of the United States should pay these congestion charges and parking fines as they occur. It does not really matter how far out the congestion charge zone goes, these fines and charges are due.
Lord Davies of Oldham
My Lords, the Minister is right: sagas last a long time, and so has this particular abuse—for it is an abuse of our hospitality when charges are not paid by foreign embassies. Why does the Minister not talk to his Foreign Office colleagues and suggest that Foreign Office staff from this country working overseas will not pay any charges until we reach the sum that is owed to us by those delegations that refuse to pay legitimate charges?
Earl Attlee
The noble Lord will recognise that diplomacy is a very delicate matter and that such a course of action would be extremely ill advised.
Lord Glentoran
Will the Minister say what success the previous Government had with this problem, which has been going on for many years?
Earl Attlee
My Lords, I would like to keep this non-partisan. All Governments put pressure on the Government of the United States and other countries. I am pleased to say that we have had some success with Kazakhstan, which has managed to regularise its overdue parking fines.
Lord Pearson of Rannoch
My Lords, have the Government made a study of how the United Kingdom pays similar fines in other jurisdictions? Do we obey their rules: is it only they who do not obey ours? How do we stand elsewhere?
Earl Attlee
My Lords, the noble Lord makes an extremely important point. Our diplomats are very careful to pay all outstanding charges when they are overseas. We discourage any parking offences and in the United States our diplomats pay toll charges, which are equivalent to our congestion charge.
Lord Strathclyde
My Lords, my sense is that the House would like to hear from my noble friend Lord Tebbit and then from my noble friend Lord Avebury.
Lord Tebbit
My Lords, could we not experiment with wheel clamping the CD-plated cars of particular embassies? That might have a good effect—and while we are about it, we could try wheel clamping one or two Lib Dem Members of this House.
Earl Attlee
My Lords, I am sure that my noble friend knows the details of the Vienna Convention on Diplomatic Relations, under which diplomatic cars are inviolable. Therefore, we cannot clamp them.
Lord Avebury
My Lords, perhaps I may make a helpful suggestion. The Government should seek statutory power to tow away any vehicle that has been the subject of several previous parking fines that remain unpaid.
Earl Attlee
My Lords, I repeat the point that I just made. Diplomatic cars are inviolable. The other problem is that we could get into a tit-for-tat situation with our diplomats overseas. I suggest that that would not be a sensible course of action. It would be much better to continue to apply the pressure that we do.
Lord Pearson of Rannoch
My Lords, how does the noble Lord equate his last answer with his answer to me in which he said that we obey the rules overseas? How could there be any tit for tat?
Manufacturing: Investment Growth Forecast
Lord Sheldon
To ask Her Majesty’s Government what is their forecast for the growth of manufacturing investment in the current year.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, the Government do not make forecasts of growth in manufacturing investment specifically. However, the Office for Budget Responsibility has forecast total annual business investment growth of 6.7 per cent in 2011. This forecast is underpinned by an extended period of low interest rates, reductions in the rate of corporation tax and strong growth in profitability. The findings of independent surveys by the CBI and the manufacturers’ organisation, the EEF, also suggest that manufacturing investment will increase in 2011.
Lord Sheldon
My Lords, I thank the noble Baroness for that reply. On 28 April the Prime Minister said that there had been an increase in manufacturing output and exports in the previous 12 months, but on 25 May the EEF, the manufacturers’ organisation, commented that although there was export growth, manufacturing investment was down. This was confirmed in June by the Project Management Institute. How does the noble Baroness consider these matters?
Baroness Wilcox
There is no doubt that we have gone through a soft period in the last three months. However, the latest surveys from the CBI and the EEF suggest that output will grow overall in the second quarter of 2011, with manufacturers expecting growth to continue well into the third quarter.
Lord Razzall
My Lords, in the light of her Answer and indeed the Question put by the noble Lord, Lord Sheldon, might this not be a moment for the Minister to endorse the Statement last week by her colleague the Business Secretary that Britain’s economy must undergo a cultural revolution to prevent manufacturing losing so many school leavers and high-flying graduates to the City? What steps are she and her department prepared to take to promote the See Inside Manufacturing programme, in which young people visit schools to encourage others to train as career engineers, thereby helping our exports and manufacturing?
Baroness Wilcox
The Government are well aware—certainly my boss, the Secretary of State, is well aware—that advanced manufacturing is what will take our country forward in the future. Investment in technology, investment in skills and investment in the very thing that my noble friend has just mentioned are what will take us forward.
Lord Peston
I do not know where the Minister gets her figures from, but the Office for National Statistics, in its latest published figures on business investment, tells us that business investment fell in the first quarter of this year; so I would like to know who she is quoting as superior to the Office for National Statistics. However, is not the main question about the level of manufacturing output? Is the Minister aware that virtually everybody who is looking at the forecasts, for both the British and the global economy, now expects us to start going through a period of a fall in the expansion of manufacturing output locally and globally? Is that not a matter that the Government ought to be taking rather seriously?
Baroness Wilcox
We are predicting growth—not very exciting, but we are. We must always remember that over the past 30 years manufacturing has declined as a share of the economy; as a sector it has grown and continues to grow.
The Lord Bishop of Derby
My Lords, I hope you will allow the Bishop of Derby to ask the Minister about Bombardier in the context of the very important commitment to manufacturing investment. Could the Minister indicate to us where the design and making of trains fit into a strategy within which we have to invest in manufacturing; and what investment in manufacturing in that strategy would have to say to a highly skilled workforce in a place like Derby that it is facing collapse through lack of investment and lack of opportunity?
Baroness Wilcox
There are a lot of questions from the right reverend Prelate. I will answer as many as I can, or as many as my Leader will allow me to. We all know about the announcement that Bombardier made this morning that 1,200 jobs would be lost at the plant in Derby. The company had already told us that this was going to happen regardless of whether it had won the Thameslink contract. As we know, this particular industry is very volatile. The company has had enormous contracts, it is coming to the end of them and it did predict that it would lose jobs. As a volatile industry, it has to hire and fire at will, but we hope that it is a temporary situation. We are doing everything that we can to try and help it grow. We are introducing 21 new enterprise zones across the local enterprise partnership areas, which will benefit from superfast broadband, lower taxes and lower levels of regulation and planning controls. At the end of the day, it is very important for us to support our industry wherever we can.
Lord Hughes of Woodside
My Lords, did the Minister not hear on the one o’clock news today the chairman of the Derby company, I believe, who gave no indication that it was going to have troubles anyway, and who claimed that the reason for Siemens getting the contract was that the Germans actually support Siemens through subsidies? If we have to have competition in the European Community, why can we not have it on a level playing field?
Baroness Wilcox
There is no doubt that it is always a shock when we do not get a contract like this. Today, the Transport Secretary and the Business Secretary have written to the Prime Minister underlining the need to examine the wider issue of whether the UK is making best use of the application of the EU procurement rules. I think this House will be very glad to hear that.
Lord Vinson
Does the Minister agree that for the first time for many years the pound is close to parity level, which helps make our industry, at last, much more competitive internationally? Would she like to suggest to the Treasury that, in future instead of having just an interest rate policy or an inflation policy, we should also have a rate of exchange policy that might help us to support our industry over many more decades in the future?
Baroness Wilcox
My noble friend makes a very important and interesting point, and I shall take it back.
Lord Young of Norwood Green
My Lords, it was more than a shock for Bombardier employees who have lost their jobs. Even more worrying, perhaps, is its ability to bid for future contracts, such as Crossrail. The point I want to emphasise is that British manufacturers are failing to capitalise fully on the weak value of the pound as factory growth lags behind continental nations led by Germany. The purchasing managers’ index of UK factory output fell to 51.3 per cent last month, just above the 50 per cent—
Lord Young of Norwood Green
I will be—that marks the divide between expansion and contraction. That is the lowest reading since September 2009. What steps are the Government going to take to ensure that British manufacturing is able to respond to an environment where the value of sterling should enable it to have a competitive advantage?
Baroness Wilcox
We are having a competitive advantage in countries such as China and India, where we are growing. That is very important to us. Competing with our European colleagues is one thing, but taking new business abroad from the BRICs is even more important to our country at this time.
Audiovisual Media Services Directive
Lord Clement-Jones
To ask Her Majesty’s Government whether they intend to review the operation of the Association for Television on Demand in the regulation of video on demand under the Audiovisual Media Services Directive.
Baroness Rawlings
The AVMS—audiovisual media services—directive has been implemented by way of co-regulation under which Ofcom has given the day-to-day responsibility to the Authority for Television on Demand, which to simplify I will refer to as ATVOD in future. It is for those two bodies to make certain that the system works. Ofcom plans to review this after March 2012. Ministers are aware of the range of concerns that have been discussed with Ofcom, ATVOD and the industry.
Lord Clement-Jones
My Lords, I thank my noble friend for that reply, which is reassuring because surely ATVOD is everything an industry-based co-regulatory scheme should not be: expensive, too wide in scope, far from light touch and, indeed, already giving rise to litigation. I am delighted to hear that the DCMS will be making sure that ATVOD is fit for purpose.
Baroness Rawlings
My noble friend Lord Clement-Jones makes a very good point. Our regulations specifically require that the fees be justifiable and proportionate in respect of each provider. We are aware that the regulations will inevitably have a cost, but we look to the regulators to make certain that that cost is minimised.
Baroness Gardner of Parkes
ATVOD is a very difficult name that we are all trying to come to terms with, but is it a fact that a number of companies have refused to pay the first full-year contribution?
Baroness Rawlings
My noble friend Lady Gardner is absolutely right. Some have not paid, but this is being looked at and is why Ofcom is going to be the backstop to follow these points through.
Baroness Jones of Whitchurch
Will the Minister explain exactly what backstop powers Ofcom has retained in order to intervene if it feels that ATVOD is not carrying out its functions properly? Does she agree with the original point made by the noble Lord, Lord Clement-Jones, that it has exceeded and expanded its role way beyond that which was designated in the original directive and that it needs to focus much more carefully just on raising standards in the video-on-demand industry?
Baroness Rawlings
My Lords, this has been gone through because of public consultation, and the actual responsibilities delegated to ATVOD include setting and collecting the fees from the VOD service providers to meet the estimated costs of carrying out ATVOD functions. ATVOD’s power to set and collect fees is subject to Ofcom’s prior written approval.
Baroness Benjamin
My Lords, in a recent survey, 20 per cent of eight year-olds said that they had seen nudity online. Is my noble friend the Minister aware that on the most popular websites, children are exposed to advertising of an adult nature and are invited to explore links to very explicit websites? If so, will the Government consider encouraging Ofcom to take further measures to protect children and young people from being targeted in this way by putting in place simple practical steps so that online media owners can take action to prevent clear-cut examples of inappropriate content appearing in places where children are likely to see them?
Baroness Rawlings
My noble friend Lady Benjamin makes a very valid point, and it is necessary for the Government to encourage simple steps to be taken. The Government believe that protecting children from harmful content in our media is of the greatest importance. That is why, following the implementation of the audiovisual media services directive, providers of certain video on-demand services will now be required to comply with minimum standards set under the directive. In 2010 these requirements were incorporated into UK law. They include the use of effective access controls.
Lord Inglewood
Does my noble friend agree that the whole system for the regulation of video on demand and other digital television-type and actual television services is hugely complicated? As the recent report of the Communications Committee pointed out and recommended, it would be to everyone’s advantage, not least of all the public’s, if it became a bit simpler.
Baroness Rawlings
I totally agree with my noble friend that it is hugely complicated, and it has taken me a great deal of time to get to grips with it, but we recognise that there may have been some initial problems with the regulation in the area, which is why we have looked to ATVOD and Ofcom to resolve these issues.
Sudan: Framework Agreement
(12 years, 10 months ago)
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Lord Alton of Liverpool
To ask Her Majesty’s Government, in advance of Southern Sudan’s independence on 9 July, what is their assessment of the likely impact of the Framework Agreement signed at Addis Ababa on 28 June on securing peace and security in the region.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, we fully support the ongoing discussions in Addis Ababa led by President Mbeki. We assess that for it to secure peace and security in the region, the framework agreement must be used by both sides as a basis for the immediate cessation of hostilities.
We continue to urge north and south to negotiate to resolve all outstanding comprehensive peace agreement issues.
Lord Alton of Liverpool
My Lords, I thank the Minister for his reply. Does he accept that for any of us who travelled in Southern Sudan during the war there, when some 2 million people died and 4 million others were displaced, any celebration of Southern Sudan’s landmark independence this coming weekend is tempered by these terrible atrocities which have been committed in recent days on the basis of ethnicity and political affiliation, and by the dire failure of the ceasefire to stop the violence or displacements?
As the comprehensive peace agreement expires this weekend, and given the United Kingdom’s role as guarantor and as one of the brokers of that agreement, will the Minister say whether we have raised, in the UN Security Council, the importance of sustaining, rather than withdrawing, a continuing UN peacekeeping presence in the area, and the importance of a robust Chapter 6 mandate? Will the Minister also comment on the bleak warning given by the most reverend Primate the Archbishop of Canterbury last weekend that he could see another Darfur beginning to unfold in southern Kordofan, Abyei, and the areas to which I have alluded?
Lord Howell of Guildford
Naturally, on the last point, we hope that this warning, which no doubt is justified by the long history of atrocities, is not fulfilled. As to the noble Lord’s question on the comprehensive peace agreement, in theory it ends on 9 July with the independence of Southern Sudan, but it has been recognised that key issues are yet to be resolved and must be talked about.
As for our role with the United Nations, the UN Security Council, as the noble Lord knows, has extended the remit of UNMIS until 9 July and has signalled that it wants the remit to continue beyond then despite the continued strong opposition of Khartoum, which says that UNMIS must remove itself. As well as that, United Nations Security Council Resolution 1990 empowers the Ethiopians to move into Abyei. They are on their way, although they have not yet arrived. Those are the activities of the United Nations and we continue to play a full and central part in them.
Lord Chidgey
Is my noble friend aware that the chair of the Sudan Disarmament Immobilisation and Reintegration Committee has estimated that with the current level of resources, when the conflict ends it will take at least six years to assimilate 150,000 surplus soldiers back into civilian life? What assistance do the Government plan to provide to speed up this DDR process and reduce the risk of what is a major security threat to the region?
Lord Howell of Guildford
Clearly, this is one more problem on top of the problems of refugees, resettlement, basic development and provision of infrastructure in the two countries; notably, in Southern Sudan, which is a very poor country, and in the north. I can give my noble friend only the general answer that my right honourable friend the DfID Secretary of State has indicated that our substantial and detailed programmes to meet these and future problems will continue and will be administered in a very detailed and hands-on way.
Baroness Kinnock of Holyhead
My Lords, the Minister will be well aware of the enormous needs of the new country soon to become a reality on Saturday. Those needs include health, education, infrastructure and huge gender disparities—92 per cent of women in Southern Sudan are illiterate. Will the Minister comment on the heavy criticism now regularly made of the slow disbursement of aid through the pooled donor fund which is being used? Will he further comment on the need for long-term, predictable funding, rather than the unpredictable, short-term financing that is currently happening?
Other post-conflict countries, such as Mozambique, Rwanda and Sierra Leone received long-term funding after the conflict ended, and Afghanistan still receives long-term predictable funding. Will the UK push for a five or 10-year commitment to funding for essential services, such as health and education, in the new Southern Sudan?
Lord Howell of Guildford
All that the noble Baroness says is correct. The model followed elsewhere is that which should be followed in the division of Sudan. It is very difficult. A lot of the activities are unco-ordinated and need better co-ordination. However, it is very hard to see beyond the present pattern of continuing an ugly conflict. As soon as we can see beyond it, these post-conflict arrangements should be put in place. For the moment, I can only say that these are the right ideas. We are moving towards them but there are some ugly, immediate problems that have got to be overcome in order for peace to break out and for these very poor countries to begin to move on the long-term pattern to development with suitably arranged financial funding behind them.
The Lord Bishop of Wakefield
My Lords, does the Minister agree that the efforts made by the former South African President, Thabo Mbeki, in brokering the framework agreement demonstrate the viability and stability of both states of the Sudan, will to a large extent remain dependent on the continued support and assistance of the international community in helping both sides to resolve the outstanding issues? In the light of the report of the European Union Committee of this House, what steps are Her Majesty’s Government taking with their European partners to hold the Khartoum Government to the agreement?
Lord Howell of Guildford
For a start, as the right reverent Prelate surely knows, we are backing and funding to a substantial degree the African Union implementation panel, over which President Mbeki presides and into which he is putting enormous efforts. That is our expression of support for the continuing work of the panel and of the products of the panel, including the framework agreement signed on 28 June, to which the noble Lord, Lord Alton, has already referred. We hope that will stay in place and will secure the beginnings of some order, particularly in South Kordofan where a whole confused range of Arab and non-Arab forces—some allegedly belonging to the south but in the north, and some in the north but belonging to the south—are fighting each other. We are backing the Mbeki implementation panel and, through that, many African Union people think that the best solutions will come.
There is an argument, which I only put before your Lordships, that while we must support the humanitarian efforts and do everything we can to support peace, the African Union itself is anxious that it and not outside powers should solve its problems.
Lord Luce
My Lords, since Southern Sudan is proceeding this week towards independence—in what we all agree is a very dangerous and very precarious situation which could lead to further disasters—may I reinforce the point made by my noble friend Lord Alton that, as a sponsor of the comprehensive peace agreement and with all our responsibilities over 60 years with the Sudan, we should pull out all the stops to persuade the international community, particularly the African community, to help hold the ring in that part of the world?
Lord Howell of Guildford
The noble Lord will recognise, I am sure, that we are doing so. Enormous efforts are being made on the diplomatic front, both in the UN and with the African Union and with all other parties involved. On top of that, the UK is one of the chief funders and backers of development—medium, short and long-term—in both Khartoum Sudan and Southern Sudan. We are not merely talking and making pleas for the ceasefire, of course we have to do that, but we are putting our money where our mouth is and making very substantial and solid commitments to a better future for these countries, which we hope will begin after 9 July.
Baroness Tonge
My Lords, the Minister will know that, sadly, oil reserves play a very great part in the troubles of Southern Sudan and indeed in the government of Sudan generally. The Chinese are very involved with oil extraction in Sudan. Will the Minister tell us whether our Government had any conversations about the Sudan with the Chinese when they visited?
Lord Howell of Guildford
I am very glad that my noble friend raised that issue. We tend to overlook the fact that the Chinese nowadays not only have a commercial involvement in many regions—particularly this region—but need to match their commercial involvement with some diplomatic responsibility. I am happy to say in the Sudan situation that is beginning to be evident. Our own envoy has had contact with the Chinese envoy and the Chinese have made some extremely helpful statements in support of calming the situation and overcoming the difficulties in the disputed areas of Abyei and South Kordofan. We are finding that Beijing’s old stance of not wanting anything to do with anybody else’s foreign policy is in this area beginning to give way to a more realistic and responsible attitude. That can only be helpful and we intend to work with it.
Phone Hacking
(12 years, 10 months ago)
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Lord Fowler
To ask Her Majesty’s Government, in view of the public concern over phone hacking following the latest reports, whether they will immediately undertake to set up an independent inquiry once criminal proceedings are complete.
Lord Fowler
My Lords, I beg leave to ask a Question of which I have given private notice.
The Minister of State, Home Office (Baroness Browning)
My Lords, once again our thoughts are with the Dowler family. As the Prime Minister said, these allegations are truly dreadful and the police should pursue their investigations wherever they lead them.
A police investigation into allegations of phone hacking is currently under way. It is important that the investigation is allowed to proceed and that the conclusions be made public. A number of parliamentary inquiries and other reviews are also under way, and a number of individual cases are currently before the courts. This represents a broad span of activity across several aspects of this issue and the Government believe it most appropriate to consider the outcome of the police investigations and these various inquiries before deciding whether any further steps are necessary.
Lord Fowler
My Lords, I thank my noble friend for the reply, but I urge her to go further. I declare an interest in that I was once a journalist, but my view of the press is that newspapers are there to expose injustice and abuse of power, not to illegally intrude into the private lives of the public.
Is my noble friend aware that since January of this year I have asked four Questions on the Floor of this House on phone hacking? Steadily, month by month, the revelations have become more and more serious, with today’s revelation about Milly Dowler almost beyond belief and certainly beyond contempt. Are we not now confronted with one of the biggest scandals affecting the press in living memory and with clear evidence that a deliberate conspiracy has taken place against the public? Will she therefore recognise that this is not a matter of party politics but of protecting the public, and that the only way that that can be done successfully is by an eventual independent inquiry looking at all the evidence? Why cannot the Government commit themselves to that today?
Baroness Browning
My Lords, I can understand my noble friend’s concern, and the concern of the House as a whole, at what is a truly shocking matter. This morning the Home Secretary, appearing before the Home Affairs Select Committee in another place, described what has happened, with the new information that has been received, as shocking and disgusting. She reiterated today that we must await the outcome of the police investigation, but she stated that, if these allegations are found to be true, there will need to be new avenues to explore.
Lord Rosser
My Lords, we support the call of the noble Lord, Lord Fowler, for an independent inquiry. The latest disturbing allegations about phone hacking will only have strengthened the feeling that parts of our national newspaper industry regard themselves as being above the law and having no need to fear any action from the Press Complaints Commission. The Minister’s reply to the noble Lord, Lord Fowler, will just not do. How many more potential phone- hacking scandals have to be unearthed, and how many more denials that they knew what was going on by editors and News International top executives do there have to be, before this Government recognise the failings of previous investigations—by the police, by News International and by the Press Complaints Commission—and act? Will the Government set up an independent inquiry into phone hacking and the culture and practices of at least part of the national newspaper industry that have allowed these things to happen?
Baroness Browning
My Lords, as noble Lords will know, this matter is subject now to a robust investigation by the Metropolitan Police. The MPS has provided a public update and made it clear that it can say no more at this stage. Surrey Police, which is responsible for the Milly Dowler investigation, is also making no comment. Accordingly, this remains an ongoing operational matter for the police on which Ministers can neither interfere nor comment in any substantive way. The proper course is for the investigation and the independent review of previous evidence to be allowed to proceed without interference.
Lord Prescott
My Lords, the hacking of Milly Dowler’s mobile is, so far, the latest and most obscene action of this company of the Murdoch press. Will the Minister confirm that it is still the Government’s view that these criminal acts are irrelevant to Murdoch’s purchase of BSkyB? Is the Minister also aware that the regulator Ofcom has a duty and a statutory responsibility to investigate matters of privacy? Have the Government asked Ofcom for its advice on that matter before they come to a decision on BSkyB?
Baroness Browning
My Lords, I have every sympathy for the noble Lord, Lord Prescott, who I believe is himself a victim of this phone-tapping scandal. Phone tapping or hacking is illegal and is not a matter that the Government regard lightly. It is an offence for a person intentionally to intercept without lawful authority any communication in the course of its transmission. That applies equally to the media. The noble Lord asked me about the decision that my right honourable friend the Secretary of State for Culture, Olympics, Media and Sport has to make about BSkyB. The House will be aware that the Secretary of State in that department has to follow guidelines as already set out in law. He will follow those guidelines in making his decision.
Baroness Williams of Crosby
My noble friend the Minister is obviously doing everything that she can to try and help the House, but might she consider the very serious situation in which there has been a considerable loss of trust both in police inquiries and in the work of the Press Complaints Commission? In that situation, would the Minister agree that we need a more fundamental look at the whole situation that now confronts us—one in which the media feel that, to some extent, they do not have to abide by the normal rules of civic behaviour in our society? Therefore, should we not very seriously consider the proposal of my noble friend Lord Fowler, given that such an independent complaints committee might recover trust from the public in making recommendations about what should be done?
Baroness Browning
I fully understand why my noble friend raises the issue of trust, because from the beginning these matters have been conducted in ways which have given the public great concern. If I may, let me quote to my noble friend the words of Sir Paul Stephenson, given that the Met is now conducting a very robust and vigorous investigation, whose conclusions, once made, will be ones on which I believe we can rely. Sir Paul Stephenson has said that questions should be asked once the criminal inquiry and any judicial process have been concluded. As I mentioned, the police investigation is ongoing and it is a matter for that inquiry and that investigation to conclude. At that point, Sir Paul Stephenson said, questions should be asked. I can assure the House that we will consider the outcome of police investigations as well as other inquiries that are under way. I am not saying to the House today that we will not have an inquiry, but while police investigations are under way I cannot be pressed on that.
Lord Fellowes
My Lords, does the Minister agree that, at the end of this episode, it would be a good thing for the Press Complaints Commission either to be given statutory powers or to be wound up?
Baroness Browning
My Lords, I am aware that the chairman of the Press Complaints Commission has expressed her grave concerns today that the News of the World lied in giving evidence. She was extremely angry that the Press Complaints Commission had been misled. That is a very serious matter, and I am sure that my right honourable friend the Secretary of State for Culture, Media and Sport will want to take account of her views on that matter and what has happened with the Press Complaints Commission.
The Lord Bishop of Manchester
My Lords, it seems to me that two issues are germane to this debate. One is the tragic matter of Milly Dowler and, clearly, the judicial inquiry has to be pursued in that direction and the police allowed to do what they are meant to do. The second issue seems to me to be a much deeper one and also a matter of some urgency for this House to address once the particular inquiries relating to Milly Dowler are over. The noble Baroness, Lady Williams, referred to what I believe are some serious underlying ethical issues about this whole matter that this House must address and as soon as possible. I hope that the Minister, while clearly having to make the point about the present inquiries, will give a more robust response to what has been said in all quarters of this House this afternoon about the need for the deeper issues to be addressed.
Baroness Browning
I thank the right reverend Prelate for the way he couched his question. He clearly understands from my replies that I cannot engage the House today in a full debate on this, because we are waiting for these investigations and legal outcomes to be made public, but I have no doubt that once they are in the public domain, we shall return to this subject with much vigour.
Baroness Anelay of St Johns
My Lords, I regret that we have reached the limit of 10 minutes on the Private Notice Question.
Arrangement of Business
Baroness Anelay of St Johns
My Lords, my right honourable friend the Leader of the House of Commons made a business Statement yesterday to set out how the other place would be invited to take the Police (Detention and Bail) Bill thorough its Commons stages on Thursday 7 July. The two-clause Bill was published in draft last night and will be introduced into the Commons later today.
The Explanatory Note sets out why the Government consider that the Bill merits expedited consideration by both Houses. In short, the Bill will restore the law on the calculation of time spent in police detention to what it was commonly understood to be prior to the High Court judgment of 17 June in the case of Hookway. That decision held that police detention runs uninterrupted for a maximum of 96 hours from the point at which detention is authorised, whether or not the person is on bail. The decision has significant operational implications for the ability of the police to investigate offences and protect the public. It is for those reasons that the Government propose to expedite the passage of the Bill rather than wait for the outcome of the appeal to the Supreme Court, the result of which is in any case uncertain.
It may be convenient for noble Lords to know that the usual channels have agreed to invite the House to take the Bill through all its Lords stages in the course of Tuesday 12 July, next week. We propose to start that day with the Second Reading of the Police (Detention and Bail) Bill. We will then pause, while continuing in that pause with the Committee stage of the Localism Bill. That will give Members of the House the opportunity to table amendments to the Police (Detention and Bail) Bill and the clerks the opportunity to prepare a Marshalled List. Later that day we will take the Committee stage in the usual way, after proceedings on the Localism Bill. If the Police (Detention and Bail) Bill is not amended in Committee, the Report stage and Third Reading will then be taken formally. We will finish the day, I hope, with the notification of Royal Assent. The next edition of the forthcoming business will set out this programme when it is published tomorrow morning.
A speakers list for the Second Reading is now open, and the clerks have agreed to accept amendments to the Bill immediately after its First Reading—that is, from the end of Thursday 7 July. This order of business is of course subject to the will of the House, and on Monday my noble friend the Leader will move the Motion proposing to take the stages in one day.
Marine Navigation Bill [HL]
Nationality, Immigration and Asylum Act 2002 (Juxtaposed Controls) (Amendment) Order 2011
(12 years, 10 months ago)
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Lord Strathclyde
That the draft orders and regulations be referred to a Grand Committee.
Localism Bill
(12 years, 10 months ago)
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Lord Jenkin of Roding
Lord Jenkin of Roding
My Lords, I hope that I will be able to deal with these amendments quite shortly. Last Thursday my noble friend Lord Shipley made an admirable speech on the clause stand part debate before the amendments came up, and advanced all the arguments that I would have made in support of this group. The main difference between my noble friend and me was that he expounded his objectives—eloquently and adequately, I thought—and I have tabled the amendments that would give effect to them.
I do not intend to take the House through each of these several amendments. However, I can say that the amendments have four main purposes in relation to the possibility of a referendum on the council tax in an area where it is thought that the council tax increase has been—to use the word in the Bill—excessive. It should not be for the Government to lay down what is excessive. There has been a lot of talk about this being a new form of rate-capping. I know something about that, having dealt with that in an earlier part of my political life. This is intended to be a protection for council tax payers against an increase in council tax which goes beyond what they feel to be fair.
The first point that I would like to make is that it should be for local people to determine whether they find a suggested council tax increase excessive. Therefore, my amendments in a sense come under four groups. First, there are amendments which would delete the Secretary of State’s powers to determine what constitutes an excessive rate of council tax—this is likely to be very different in different circumstances in different areas around the country. Secondly, it should therefore also be for the local authority to decide when a referendum should be held. That should not be determined by central government. If localism means anything, this is exactly what it is supposed to mean. Thirdly, it should be the councils, rather than the Secretary of State, which should decide how the referendum is going to be conducted. Finally, there are amendments which would delete powers for the Secretary of State to make a whole raft of regulations, on, among other things, setting out the question to be asked in a referendum, the allowable publicity accompanying a referendum, and how votes ought to be counted.
I have dwelt on this issue before. The rhetoric of Ministers in this Government has been that this is a brand new start, a real decentralisation of power from Whitehall to town hall and county hall, and that it is going to be a rejuvenation of local authorities. Yet one only needs to look at the size of the Bill to realise that, while that may be the objective, it is certainly not being produced in this Bill. The Bill is full of detailed directions, and powers to make regulations to give further detailed directions, as to how local authorities are to use what is supposed to be their new freedom.
I am not going to say more than that, or go through all the details. I hope that Ministers—who are going to have an unusually long gap between this Committee stage and the Report stage, which will come after the Recess—will have a good, hard look at this Bill, to see whether some of this centralisation and central direction, and this business of telling local authorities how to have their freedom and how to behave themselves, can be removed from the Bill. I can assure my noble friends on the Front Bench that it will be extremely popular among the local authorities, which have had their hopes raised that they are at last going to have freedom from central direction, and then find that this Bill does nothing of the sort. I beg to move.
The Lord Speaker (Baroness Hayman)
I have to inform the Committee that if this amendment is agreed to I cannot call Amendments 129LZZA to 129LZZF by reason of pre-emption.
Lord Greaves
My Lords, I have added my name to amendments in this group and I agree with everything that the noble Lord, Lord Jenkin, has said.
I am sure that most Members of this Committee, never mind the whole House, will not spend a lot of time reading the details of Schedule 5 to the Bill and all the ways in which the Secretary of State will be able to lay down very detailed powers and instructions for local authorities on how to carry out council tax referendums. However, these measures are extraordinary, and typical of a huge amount in the Bill. If the Bill constitutes localism, it is extremely detailed top-down localism.
I have seven amendments in this group, six of which are effectively the same. They seek to remove the description of high council tax increases as “excessive”. The Bill says that if a council wants to impose a council tax increase which is higher than the Secretary of State thinks is appropriate, as agreed by the House of Commons, it will be described as excessive. This is bad legislation. The word is prejudicial rather than neutral and is almost a slogan. One of the things that the Secretary of State will be able to do is to determine the question in any referendum that takes place. I can imagine a question such as, “Do you agree with your council that they should impose an excessive rise in the council tax this year?”. That is the effect of “excessive”. Legislation should be neutral and should not use such words. My amendments seek to delete “excessive” and replace it with,
“higher than the level recommended by the Secretary of State under the provisions of this Chapter”.
That is what the legislation should say. It should be value neutral and simply set out what the position is. Of course, if the noble Lord’s amendments were all passed, mine would be pre-empted and would fall. I would be delighted if that were the case as I would rather not have these detailed prescriptions there in the first place. However, if we are going to have them, we should use proper language and not political slogans.
My Amendment 129LABA concerns the date of the referendum. It probes the Secretary of State’s ability to lay down detailed instructions on this and seeks to ascertain why councils cannot be left to deal with this themselves. However, this is in effect already covered by the rather more sweeping amendments of the noble Lord, Lord Jenkin, and therefore I do not need to speak to it further.
Lord McKenzie of Luton
My Lords, first, I wish to speak to the amendments spoken to by the noble Lord, Lord Greaves, with which we sympathise. It is not just a case of semantics and of substituting one form of words for another. For the reason that he has outlined, we agree with him that if “excessive” is used in the legislation it will inevitably end up in the question that is put to the voters in a referendum, as it would be the technical term. We are denying local authorities the right to campaign for the council tax increase that they want. If we want to approach this matter in a neutral way, the very least we can do is to remove prejudicial legislation, as the noble Lord termed it.
The Minister may well say that “excessive” is not a new term and that it is embodied in the current capping legislation. However, there is a difference between that position and what may happen in the future because the current arrangements for capping will not be put to a popular vote. Therefore, that term is effectively an internal term rather than one that would inevitably feature in the referendum question on some basis or other. For that reason, I believe that we need to recast the term that is in the legislation.
I agree with the noble Lord, Lord Jenkin. It is a central point of our concern with this legislation that it is stuffed with detailed powers and that the Secretary of State has to draw back from the nominal rights that it is seeking to give to local authorities. I doubt whether the gap between finishing Committee in July—if we do—and Report in September is long enough to unpick some of the stuff that has come from our discussions today, but at least there is perhaps a longer gap than usual. Our attitude to the amendments of the noble Lord, Lord Jenkin, depends on precisely where the Government are on this. When last Thursday we had our first canter around the issue of capping powers, it was said that all Governments of all persuasions had held to themselves a reserve power. If in fact it is the Government’s position that they are eschewing that power, we do not feel obligated to hold to the position that I think I outlined—that it is difficult for us to deny the current Government those powers if we took them in past years. If that is not one of the criteria of the Government, that point falls away. When he responds, perhaps the Minister can tell us whether the Government see the arrangements currently included in the Bill as capping powers, whether they believe that they should have the right to hold those powers, or whether they are, by one formulation or other, happy to let local electors decide on what the appropriate level of council tax should be. If his response is, “Well, we think there should be reserve capping powers and this is what the Bill is about”, that is one thing, but if the argument is that the Bill is about making sure that electors are the final arbiters in this, that helps us in our position on the matter.
I say to the noble Lord, Lord Jenkin, that there is a question about his formulation. Under the Government’s proposition, a level of council tax, if deemed excessive, requires the authority to produce a substitute calculation. As I understand it, a substitute calculation is one that is not excessive. I suppose that most authorities in this position would compute a substitute council tax that was just a smidgen short of what the excessive level would be. I am not quite sure, on the noble Lord’s formulation, what that substitute calculation would be and what would happen in circumstances where there was a referendum, 5 per cent of the electors called for it, and they did not support the level of council tax that was proposed. What are the consequences of that? If the noble Lord could help us with that point, it would be appreciated. It is clear under the Government’s propositions what the consequences would be, but I am not quite sure what the consequences would be under the noble Lord’s formulation.
I think that this has been a very helpful debate. It is incumbent on the Minister to say whether the Government see the powers as capping powers and believe that they need them, or whether that is not their position and this is basically about letting electors decide what the appropriate or inappropriate level of council tax would be.
Lord Tope
My Lords, I suppose I can rise to speak on behalf of the only party in this House that is unencumbered by a history of support for capping, but I will try to resist too much temptation there. My name is obviously with my noble friend Lord Greaves on his amendments. I think he is right and I hope that the Government will consider very carefully that fairly simple change to wording which, as others have said, is actually very important. If these provisions are to be in Bill—like my noble friend Lord Greaves, I would rather that they were not—it is important that we have a neutral wording and not a prejudicial wording, which “excessive” must be, especially if that wording is likely to be used either as part of a referendum question or at least in support of any such referendum.
My particular reason for wanting to say a few words now is to support the noble Lord, Lord Jenkin, both in his general and particular plea. The general plea relates to much less regulation and dictation from the Government, a message repeated throughout the Bill. It is salutary to remember that when Ministers first announced the Bill, it was greeted with a pretty widespread welcome right across local government. The aim and intention as enunciated by Ministers was, broadly speaking, welcomed. We knew that there would be some things in here that we would be less happy about, but we thought that most things we would be fairly happy about. Then we came to see the detail of the Bill and the extent to which, as others have said, if it is localism at all, it is localism top-down. It is also prescribed by ministerial regulation and it is potentially constrained by Secretary of State powers. I join the noble Lord, Lord Jenkin, in urging Ministers, during what will be a longer than usual gap between Committee and Report, to take courage and look seriously at whether we need to be so risk averse that we hedge everything with regulations, Secretary of State powers, and so on. I said at Second Reading that if we mean localism, we have to trust local government. Some may occasionally get it wrong, but is that a reason to legislate for the vast majority that are to be trusted and should be trusted?
I turn now to the particular of this, which is about council tax capping. I do not have to be quite as measured as the noble Lord, Lord McKenzie. I do not have to carry that history and I understand that. It is council tax capping, as others have said. In reality, it is probably the most effective capping that a Government have ever had, because I suspect that very few, if any, local authorities will take the risk of setting what is prescribed as an excessive tax. It will be a huge risk: not just the risk of whether they can or cannot win a referendum but the cost and administrative upheaval of having to rebill later.
That seems to me to fly in the face of a fairly basic principle of localism. I have always believed that it was a fundamental democratic principle that local councillors are elected—personally, I wish that they were elected under a fairer system, but, nevertheless, they are elected —to determine the needs of their local community and to balance those needs with the level of tax that has to be raised to meet them. That is a tricky balance. Then they are accountable for their decisions to the people who elect them, the local people. We come back to the fact that if there is to be a referendum on council tax levels, it should be the local people who determine the need for a referendum, not the Secretary of State. To me, that is what localism is about, and that is why I support both the general statements of the noble Lord, Lord Jenkin, and his particular in the amendment.
Earl Attlee
My Lords, this is a large group. I shall speak first to Amendments 129LZZZA, 129LZZG, 129LZZH, 129LZZJ, 129LZAA, 129LZAB, 129LZC, 129LZE, 129LZF, 129LABZA, 129LABZB and 129LBA.
These amendments from my noble friend Lord Jenkin would require a referendum to be held only in response to a local petition signed by local electors. I understand what my noble friend seeks to achieve. That may indeed be purer localism than the Government's approach, but there would be grave practical difficulties in going down that road. My noble friend seeks to allow the timing to be determined locally, but time will be very short for such a petition to be organised, as council tax must be set in early March. If democratic control is to be effective, and not just cause financial confusion, the electorate's endorsement or otherwise of the authority's decision should follow very soon after. Given the binding nature of the referendum, it would be necessary to establish that each signatory of the petition was a local government elector in the area. That would be a difficult, time-consuming, contentious and potentially expensive precursor to the main event, the referendum itself.
The amendments leave in place the notion of substitute calculations, but do not resolve with any certainty the basis on which those calculations should be made. In effect, the authority will be saying, “If you do not like this level of council tax, we will adopt that one”. Who is to say that the electorate will not feel the substitute to be excessive as well?
Baroness Farrington of Ribbleton
Will the Minister indicate a preparedness to discuss between Committee and Report the implications of the amendment moved by the noble Lord, Lord Jenkin of Roding? Having had discussions with the noble Lord when he was Secretary of State and I represented local authorities, I think the Government would find helpful such discussions on the practicalities of the issues, which appear to be the issues that the noble Earl, Lord Attlee, is relying on. The noble Lord, Lord Jenkin of Roding, is very knowledgeable about the history and the implications and he would be extremely helpful if the Government were minded to move to quell the fears of the noble Earl, Lord Attlee.
Earl Attlee
My Lords, I am extremely grateful to the noble Baroness because I passed by my handwritten notes and did not read them out. My noble friend Lord Jenkin set some homework for Ministers during the Recess. We will carefully consider the Committee’s deliberations, and we are grateful for all noble Lords’ counsel, even if we do not agree with all of it.
The amendments in the name of my noble friend Lord Greaves would change the wording of new Section 52ZB so that an authority is no longer required to determine whether it has set an “excessive” increase in council tax. Instead it is required to determine whether the increase is,
“higher than the level recommended by the Secretary of State”.
We consider that it would not be appropriate to change the wording of the new section in that way. The question of whether an authority’s relevant basic amount of council tax for a financial year is excessive will be decided in accordance with a set of principles determined by the Secretary of State and approved by the House of Commons. If an increase in council tax is then set locally that exceeds the level anticipated by those principles, it is perfectly reasonable to call it excessive. The increase might be justified, but the authority will have to persuade the electorate of that. It would be excessive because it exceeded the norm adopted by most authorities. The Government’s policy on this must be set against the background that average council tax increases have been high over the years, and in many years higher than inflation. This Government have taken steps of their own to help move away from this position, notably by funding a council tax freeze for this year. Ultimately, however, the best way to control excessive local expenditure is to make sure the local electorate can put a stop to it.
Lord Greaves
The Minister said that it will be up to the local authority to persuade the local electorate of the case that it is putting forward. Is it not the case that local authorities will not be allowed to spend money on campaigning in such referendums?
Earl Attlee
My Lords, I am not certain of the details, and I hope we will come to a suitable amendment to debate that.
Lord Jenkin of Roding
The noble Lord, Lord McKenzie, asked that specific question last Thursday, and my noble friend gave this very specific answer:
“The noble Lord, Lord McKenzie, asked whether authorities can campaign for the proposed increase in council tax. No, it is intended that they cannot. They must put the facts to the electorate and leave them to decide but individual councillors will be free to campaign”.—[Official Report, 30/06/11; col. 1971.]
Is he saying that that stands, or is that not right now?
Earl Attlee
I am extremely grateful to my noble friend for refreshing my memory. He is absolutely right; that is the current situation.
Lord McKenzie of Luton
The Minister seems disinclined to accept the amendment, which would remove the word “excessive” from the legislation. Will he give an undertaking that the word “excessive”, as applied to the proposed council tax of any local authority, will not have to feature in any referendum question?
Earl Attlee
My Lords, I hope to give the noble Lord some comfort on that. Within the context of that policy, the Government think they are right to refer excessive increases and to require that such increases be approved via a referendum. There is enough flexibility in these provisions to enable sensible principles to be defined. The Secretary of State has the power to set different principles for different categories of authority; and, in exceptional circumstances, if an authority is unable to discharge its functions in an effective manner or unable to meet its financial obligations, he can disapply the referendum provisions altogether.
Lord Beecham
What sort of categories might the Secretary of State have in mind? Is the noble Earl referring to types of authority, or are there some other criteria that the Secretary of State is likely to adopt?
Earl Attlee
My Lords, my understanding is that they are the different types of precepting authorities, but I will clarify that in writing to the noble Lord. No doubt there will be other matters that we will need to write on in due course.
Many noble Lords have asked me questions. The noble Lords, Lord Greaves, Lord Tope and Lord McKenzie, suggested that the word “excessive” in a referendum question might prejudice the result. Noble Lords made me think hard about this point but inspiration arrived. It might be possible to ensure that referendum questions do not prejudice the matter, and we will consider this point over the Summer Recess.
The noble Lord, Lord McKenzie, asked whether these measures are capping powers and whether the Government would be happy to see voters support a higher and excessive level. If voters make an informed decision to support higher council tax, the Government will be perfectly happy. That is the principle behind the legislation. In view of what I have said, I hope noble Lords will feel able to withdraw their amendments.
Baroness Scott of Needham Market
Before the noble Lord decides what to do with his amendment, will the Minister undertake during this gap to look at some dictionaries for definitions of “excessive”? I have taken advantage of the new rules of the House and googled the word. The definitions all say that it describes a quantity or amount exceeding that which is justifiable, tolerable or desirable—for example, excessive drinking. So will the noble Lord accept that “excessive” is a term that has connotations, whatever its original and absolute meaning might be? I agree with my noble friend Lord Greaves that it does not have a place in legislation.
Earl Attlee
My Lords, I cannot agree with my noble friend's point that it does not have a place in legislation, but I undertake to consider whether the word “excessive” is appropriate in the referendum question.
Lord Greaves
I am grateful for that; it is a step forward. If the Government are to do that over the Recess, will they consult the Electoral Commission about that matter, as it is a referendum question?
Earl Attlee
My Lords, I think it would be extremely unlikely that we did not take advice from the Electoral Commission.
Lord Jenkin of Roding
My Lords, we have spent more than half an hour on this amendment, following the speech of the noble Lord, Lord Shipley, on Thursday. I think the Government have got the message. I am extremely grateful to my noble friend Lord Attlee for undertaking to cogitate on these matters between now and Report. I understand some of the difficulties that his officials have put before him, but I was very encouraged to hear him say that he read from his own handwritten notes in response to the noble Baroness opposite when he said he would look at all these matters again. In the light of that assurance, I hope the noble Lord, Lord McKenzie, will forgive me if I do not go into detail about what the results of this might be. I do not regard these amendments as an infallible way of achieving the overall purpose of less top-down government control and more control by devolved local authorities. They are accountable to their electors and I suspect that my noble friend Lord Attlee really will look at this, as he said he would. I shall be happy to help him, and I shall perhaps bring along some of those who have been advising me on these matters. I beg leave to withdraw the amendment.
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, this is a straightforward matter and I hope it will not detain us for long. In determining the principles by which a level of council tax is considered to be excessive—or whatever replacement word we may have—the Secretary of State can adopt different principles for different categories of authority, a point just raised by my noble friend, but such principles must apply to all authorities in the same category. There is nothing new in that and similar arrangements operate under existing capping rules. In determining categories of authority, the Secretary of State must take into account any information which he thinks is relevant. In the interests of transparency, this amendment simply requires those reasons to be set out in the report on the principles, which must be laid before the House of Commons.
This is especially important because, in government terms, these matters are to be determined by the public. I do not know whether the Minister can expand a little on what type of principles are likely to be identified in the circumstances which would help members of the public, if they were to vote, and how and what information would be conveyed to them.
Earl Attlee
My Lords, this amendment appears to assume that the Secretary of State will inevitably determine different categories of authority in a set of principles. That is not necessarily the case. The proposed new Section 52ZC allows the Secretary of State to determine different categories of authority, but he may also decide to apply the principles equally to all authorities. Without pre-judging the Secretary of State's decisions, he may, for example, determine as a category districts, councils, counties, metropolitan boroughs, police or fire authorities, which I think fully answers the question that arose in the previous group of amendments. That would be a matter for the Secretary of State to decide on a yearly basis. The Secretary of State is already required to set out his principles in a report to the other place. It is inevitable that the reasons for the principles will be debated there before the other place gives its final approval. Therefore, the proposed new clause is unnecessary and I urge the noble Lord to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for his reply. The amendment would have operated not only in circumstances where there was differentiation between different sorts of authorities but where there was no differentiation, because presumably, in making the judgment, the Secretary of State would have had to take into account a certain amount and range of information. I was simply seeking a situation where, when it came to the information to be taken into account in making the determination, either everyone will be in the same category or there will be different categories, but either way this should be transparent and included in the report that goes to the House of Commons. If the Minister says that that would inevitably be the case and it would be covered in the report, I am happy that that is on the record and I beg leave to withdraw the amendment.
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, I shall speak also to the other amendments in the group. I hope that noble Lords will forgive me if my speech is not so brief. Amendments 129LZB and 129LAB seek an identical wording. The first relates to the substitute calculations of a billing authority, the second to substitute calculations of a precepting authority. Each calls for the inclusion in accruals of non-domestic rates in addition to the redistribution of non-domestic rates. This does no more than make provision for the localisation of the business rate in due course. In the absence of such an adjustment, by what mechanism will these calculations take account of localised business rates, should that be where we end up? Prior to this happening, perhaps the Minister will confirm the position of redistributive non-domestic rates. Will he confirm that currently, taking one year with another, amounts collected are fully redistributed? Will he also confirm that there are no plans or discussions concerning the possibility of charging amounts against the national pool before redistribution?
Amendment 129LAC concerns the recovery of the costs of a referendum. New Section 52ZN(7) allows a billing authority to recover from a precepting authority the cost of holding a referendum. However, new Section 52ZN(8) gives the Secretary of State powers to deny or modify the right of a billing authority to recover such costs. The impact assessment estimates that the cost of a referendum, depending on the size of the local authority and whether other elections are held at the same time, could be between £85,000 and £300,000. Therefore, not inconsiderable sums are at stake. In what circumstances is it envisaged that recovery of referendum expenses would be denied to a billing authority? Does the Minister consider that the term,
“incurred by the billing authority in connection with the referendum”,
will cover the costs of rebilling in the event of a referendum not supporting the level of council tax calculations—in other words, the costs associated not only with the referendum but with its consequences? If the term is not meant to cover that, how is this otherwise catered for?
Amendment 129LE deletes a range of regulation-making powers that the Secretary of State has in connection with a referendum. In this respect, it is more focused and less ambitious than that of the noble Lord, Lord Greaves. The powers extend to the question to be asked; publicity; the limits on expenditure; the conduct of the authority, its members and its officers; when, where and how voting is to take place; how the votes are to be counted; and the disregarding of alterations in a register of electors. Frankly, it is outrageous that these matters cannot be left to an individual local authority. Amendments 129LF and 129LG deal with another matter.
As the legislation currently stands, the Secretary of State has power to determine that the referendum provisions are not to apply, notwithstanding that a council’s tax calculations are, in his view, “excessive”. The Secretary of State can do this if he considers that, without that level of increase, the authority would be,
“unable to discharge its functions … or … to meet its financial obligations”.
Our amendment is an opportunity to probe the meaning of this, but also to argue for an opportunity for a local authority to request an independent assessment of whether the criteria are met. There was limited debate in Committee in the other place on this issue. The line that the Minister was taking was that this safeguard was really only about a crisis or a catastrophe; for example, the collapse of BCCI, where the Western Isles had invested heavily. Clearly there are extreme examples, but where principles are applied to a local authority as part of a category of authorities, they do not sufficiently take account of its specific circumstances.
The Minister discussed the application of this safeguard where it was an issue about the level of services and how they were provided. In the House of Commons Bill Committee of 8 February, col. 440, he argued that local authorities had to set a budget that was lawful and would enable them to fulfil their statutory functions. However, if such a lawful budget was deemed excessive, it would only stand if supported in a referendum; if not, it could logically be the position that the authority would therefore be unable to fulfil its functions. The fact that the Ministers may be satisfied in aggregate that local authorities have been provided with sufficient resources—and we might argue about that—does not mean that each and every one in the same category will be. It may be that a particular authority has encountered issues of provider failure, litigation and redundancy costs, possibly because it is in transition to a delivery model that the Secretary of State might find more acceptable. It may be that some of the issues, for example, relating to contract litigation, where it might be genuinely difficult to provide sufficient information for a realistic assessment in a referendum at a particular point in time, could be in point; indeed, it could be prejudicial to a local authority’s case for it to do so. Sometimes it would difficult to condense quite sophisticated legal issues into information that would accompany a referendum question. So we have two fundamental points that these particular amendments are seeking to probe.
What does the Minister see as the boundaries of the use of these provisions? Discussion at the other end suggested that they were only to be applied in extreme, catastrophic circumstances. We postulated other circumstances—but not routine—where a local authority should not be forced through a referendum with all the costs and uncertainties that this entails. Our amendment, as well as being a probe, also sets out an alternative route for a local authority to benefit from this provision, whatever its boundaries. There should surely be a right to some independent assessment of whether these provisions apply. I would not commit it to the precise mechanism that we have set down; I simply raise the issue of the principle. I beg to move.
Lord Greaves
My Lords, I have a later amendment, Amendment 129LEA, which is on its own. I would have included it in this group if I had quite understood what the latter part of the amendment tabled by the noble Lord, Lord McKenzie, was about. The new Section 52ZR, which the Bill would insert into the Local Government Finance Act 1992, provides for the Secretary of State to give a direction,
“that the referendum provisions do not apply”,
because,
“the authority will be unable to discharge its functions in an effective manner or … the authority will be unable to meet its financial obligations”.
When speaking in the stand part debate introduced by my noble friend Lord Shipley last week, the Minister referred to this briefly when he said that these provisions would be used only in very extreme circumstances, such as,
“where the High Court has exercised its powers to appoint a receiver where an authority has failed to service its debt”.—[Official Report, 30/6/11; col. 1971.]
I do not know how often that happens, but I do not think it has happened, certainly in England, in my lifetime. It seems very rare, so I tabled Amendment 129LEA for the purpose that the noble Lord, Lord McKenzie, tabled his amendment: to probe the Government on exactly what kind of circumstances this provision might be used in. In view of that, I will listen carefully to the answer in this grouping, and I will not move my amendment when we get to it.
Earl Attlee
My Lords, Amendments 129ZB and 129LAB would add the words “non-domestic rates” to new Section 52ZF(3)(a) and new Section 52ZJ(4)(a). There is no need to do this. The wording “redistributed non-domestic rates” covers the sums that would have to be taken into account in respect of non-domestic rates when an authority carried out its original council tax calculations.
The noble Lord, Lord McKenzie, asked whether amounts of non-domestic rates are fully redistributed. The answer is yes, by virtue of Schedule 8 to the Local Government Finance Act 1988. When making substitute calculations to determine an amount of council tax that is not excessive by reference to the principles under the new Sections 52ZF and 52ZJ, an authority must use the amount determined in its previous calculations for redistributed non-domestic rates. This is because an authority should not be able to change its estimate of the amount it will accrue in the year in respect of redistributed non-domestic rates to calculate an amount of council tax which complies with the excessiveness principles.
Lord McKenzie of Luton
Perhaps I can help the Minister. The purpose of these amendments is much more straightforward than that. It is simply to try to cater for the situation where we no longer have redistributed non-domestic rates but have directly billed non-domestic rates. That is the sole purpose.
Earl Attlee
My Lords, these are complex matters, and I am advised that I should read it all out.
Subsection (8) of new Section 52ZN provides the Secretary of State with the power to modify or disapply a billing authority’s entitlement to recover costs in connection with a council tax referendum from a precepting authority. Amendment 129LAC would remove this provision. This power is needed so that the Secretary of State may make different provision for the recovery of costs in a situation in which a number of billing authorities are required to hold a referendum on a major precepting authority’s increase in council tax but one billing authority fails to do so. In this situation, it would not be appropriate for those billing authorities to recover their costs from the major precepting authority. Provision may instead be made for the billing authorities to recover their costs from the defaulting billing authority. We are aware that the Delegated Powers and Regulatory Reform Committee’s report on this part of the Bill recommended that this power should be subject to the affirmative procedure. We will consider that recommendation carefully and will return to the matter in due course, if required.
Amendment 129LE seeks to limit the matters the Secretary of State may make provision for in regulations regarding the conduct of council tax referendums. The regulations would include setting out what is acceptable in terms of publicity, expenditure, the conduct of authorities, their members and officials, and the counting of votes, so these are significant issues. We consider that it is important that these matters be prescribed in regulations, as an authority will be bound by the result of the council tax referendum, in contrast to a local referendum. It is intended that the regulations made under these powers will be modelled on the Local Authorities (Conduct of Referendums) (England) Regulations 2007, which make provision in relation to the conduct of referendums on local government executive arrangements. I can assure the noble Lord that the regulations will be subject to consultation with the Electoral Commission.
Lord Greaves
The Minister said that the billing authority—I am thinking in terms of a two-tier area with counties and districts—may be able to recover its costs. Should that not be automatic if the referendum is in relation to the level of council tax set by the county council, for example?
Earl Attlee
My Lords, I can assure my noble friend that my words are very carefully chosen.
Lord McKenzie of Luton
My Lords, I thank the Minister for his very full response to these amendments. We will need to read the record to see what we wish to take forward from this, but I just want to follow up the point about the reserve powers that the Secretary of State is to have.
I can see that such powers would be necessary in a range of circumstances—including in catastrophic circumstances, at one end of the spectrum—and we are not arguing that, at the other end of the spectrum, there should be an automatic right to go to an unelected body to try to get off the consequences of this legislation. However, there could well be circumstances in-between. It may be that the solution would be—and perhaps this is what the Minister was suggesting—that you would separately designate a particular authority as a special category, but in general these regulations will be applied to groups of authorities, if not all of them together. Although the Government may well take the view that in aggregate they have enough to fulfil their functions, there could be circumstances of individual authorities where that is simply not the case. To be able to convince an electorate in a referendum that that is the case may not always be easy. There could be circumstances around litigation or sensitive commercial discussions where simply to spell out the upside and downside of that information provided in a referendum could be detrimental and prejudicial to the local authority. Therefore, has there not got to be some other safety valve in those sorts of circumstances, which are not the authority defaulting on its debt but the authority potentially getting into quite severe difficulty because of the potential downside of a court case, for example? It would be left not able to raise the level of tax that it thought that it should be able to deal with.
That is the point we are probing, which we have coupled with a right for an independent assessment in those circumstances. I ask the Minister to consider that point seriously. Whatever the supposed evils of capping at the moment, one of the benefits was that at least it was looked at on an authority-by-authority basis. If you had an authority which was in a sense in a particular circumstance, that could be taken account of within the principles that had been set. That seems to be not available under this formulation, which is a real issue.
Earl Attlee
My Lords, while not agreeing to take the matter away, I will unpack the issue with my officials and, if necessary, write to the noble Lord.
Lord McKenzie of Luton
I am very grateful for that. I beg leave to withdraw the amendment.
Earl Attlee
Earl Attlee
My Lords, government Amendments 129LA and 129LB ensure that only residents and not business voters are entitled to vote in any council tax referendum in the City of London. This addresses an anomaly which has become apparent since the clauses were originally drafted. Without the amendment, business voters in the City would be able to vote in a council tax referendum even though they are not resident in the area. The amendments therefore provide that it is only the residents of the City of London who can vote, which will bring the City in line with the position in the rest of England regarding council tax referendums. I beg to move.
Lord McKenzie of Luton
“( ) On application by a relevant authority, the Secretary of State may direct that the substitute calculations referred to in subsection (5) may be increased by an amount determined by the Secretary of State.”
Lord McKenzie of Luton
My Lords, Amendment 129LAA seeks another safety valve for limited, possibly exceptional, circumstances. Where an authority’s council tax is deemed to be excessive, it will be required to hold a referendum. If the referendum does not approve the basic amount of council tax, the council tax is set by reference to a substitute calculation. A substitute calculation is an amount predetermined by the authority, which would not be excessive under the rules. One might suppose that in most cases the substitute calculation would be just below what the Secretary of State would deem to be excessive. Our amendment would offer a route to an authority to seek to have the substitute calculation increased by an amount to be determined by the Secretary of State. So we are not suggesting that this should be a reference to independent assessment.
We do not advance this proposition as a general route to overturn the results of the referendum—it would be necessary to develop specific criteria. However, there may be circumstances where a local authority should not be bound by the substitute calculation—for example, picking up a theme in relation to the previous amendment, events may arise between the commencement of a referendum and its conclusion which, if reflected in the information provided, might influence the result. It could be a contractual matter with adverse consequences; it could be announced closures of major commercial undertakings, particularly if they were localised NNDR, which could have a significant impact on the council’s revenue base.
What would happen if there was a genuine challenge to the result of a referendum? If this challenge were sustained, what is the position? Would the local authority have to apply the substitute calculation, notwithstanding that an adverse result in the referendum was found to be unsound? How would that all work?
Earl Attlee
My Lords, this amendment seeks to allow an authority another bite at the cherry if it loses a council tax referendum. It also is surprising to note, given the previous debate, that the amendment would give the Secretary of State a new power of direction. A council tax referendum will present a clear option to voters: to vote for either the authority’s preferred increase or for an increase that does not breach the excessiveness principles. This amendment would allow the authority to apply to the Secretary of State to set an excessive increase in council tax when the local electorate have voted against this, thus allowing him to override the referendum result.
The noble Lord suggested that an extraordinary situation could arise locally. However, the electorate would be aware of that when they chose whether to vote for an excessive increase or not. The principle of this provision is that the local electorate should take the decision and not the Secretary of State. The Secretary of State has a power to direct that the referendum provisions are not to apply. However, he may use this power only where the authority is unable to discharge its functions in an effective manner or is unable to meet its financial obligations. The expectation is that this power would only be used in exceptional circumstances, such as where the High Court has appointed a receiver where an authority has failed to service its debt. It would not be appropriate for the Secretary of State to be able to direct that an authority may set an excessive increase in council tax and take the power of veto away from local electors as a matter of routine. I therefore urge the noble Lord to withdraw his amendment.
Baroness Scott of Needham Market
Will the noble Lord consider a scenario in which a local authority is required to increase substantially its council tax because it has to pay one of the EU fines being introduced by the Government in an earlier part of the Bill?
Earl Attlee
My Lords, I hope that the need to pay an EU fine will be an exceedingly unlikely event.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Lord for his response but I do not think he really dealt with the question about an EU fine. It is provided for in this Bill and if the provision is removed we would all be delighted. A fine could be visited on a local authority at the last minute potentially after it has set its budget and its referendum detail is public.
I want to return to what happens if there is a challenge to the referendum—the Bill allows for that—and that challenge is sustained. If a local authority is deemed to have an excessive council tax increase—we must stop using that term otherwise it is going to be inculcated in our own speech as well as the text of the Bill—it has to hold a referendum. If that referendum does not support the council tax increase but is subsequently determined to be flawed, what are the consequences? It seems to me there are no provisions for the Secretary of State or anyone else to bring redress to the local authority which has been on the receiving end of malpractice in respect of the referendum.
Earl Attlee
My Lords, I imagine that the local authority will have to adhere to its reduced budget but, if I have anything to add on that point, I will write to the noble Lord.
Earl Attlee
Earl Attlee
“(ba) the amount of any levies and special levies—(i) issued to it for the year, or(ii) anticipated by it in pursuance of regulations under section 74 or 75 of the 1988 Act, or(c) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of, or including, the whole of its area.”
Earl Attlee
My Lords, I shall speak also to government Amendments 129N to 129U. This group of amendments addresses two specific issues concerning the calculation of whether an authority’s council tax is excessive. First, the amendments ensure that a referendum on a council tax rise is not triggered solely because of planned expenditure which has already been explicitly supported in a local referendum. The amendments apply where a qualifying local referendum is held across the whole of the billing authority area, the county council or the GLA. In such circumstances, an authority may be able to disregard qualifying expenditure that it estimates it will incur in taking steps to give effect to the result of that referendum when calculating whether an increase in council tax is excessive. This means an authority will not have to take this expenditure into account when determining whether it must hold a council tax referendum.
The conditions for qualifying expenditure and qualifying local referendums will be prescribed by the Secretary of State in regulations. The regulations will include matters such as the information that must be available in advance of the local referendum, the time period within which the local referendum must have been held and restrictions on the expenditure that may be disregarded. For the avoidance of doubt, we are making changes only to the calculation which determines whether a council tax is excessive. We are not changing the calculation of council tax itself.
Secondly, the amendments ensure that increasing levies, which have to be treated as part of the billing authorities and certain major precepting authorities’ expenditure for council tax purposes but are outside their control, do not tip the balance in requiring an authority to hold a council tax referendum. These amounts will therefore also not be taken into account when an authority calculates whether its council tax is excessive. I beg to move.
Lord McKenzie of Luton
My Lords, I think that I am grateful to the noble Earl for his explanation but I would like to read the record. These seem not unreasonable amendments.
Earl Attlee
“(2A) In the case of a major precepting authority that is a county council, any reference in this Chapter to the authority’s relevant basic amount of council tax for a financial year is a reference to the amount that would be calculated by it in relation to the year under section 42B(1) above if section 42A above did not require or permit it to take into account—
(a) the amount of any levies—(i) issued to it for the year, or(ii) anticipated by it in pursuance of regulations under section 74 of the 1988 Act, or(b) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of its area.”
(i) to take into account the amount of any levies issued to a constituent body for the year,(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London”
(i) to take into account the amount of any levies issued to a constituent body for the year,(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London”
“(9) In this section—
“local referendum” has the meaning given by section 42(1) of the Localism Act 2011;
“qualifying expenditure” means expenditure in relation to which the prescribed conditions are met;
“qualifying local referendum” means a local referendum in relation to which the prescribed conditions are met.”
Lord Greaves
Lord Greaves
My Lords, we now move on to Chapter 3 of Part 4 of the Bill, excitingly titled “Community Right To Challenge”. I have seven more amendments in this group, along with my noble friend Lord Tope, and there are a couple from the Labour Party. These are the first of a series of amendments on this community right to challenge part of the Bill which I am moving on behalf of the Liberal Democrats on the basis of the criterion which the noble Baroness, Lady Andrews, put forward at Second Reading—workability. This is a completely new idea and a completely new set of provisions. It is extremely important that, when they leave this House, they leave in a workable condition. They may already be in a workable condition, or they may not. Our job is to make sure they are, whether or not they require changes.
The basic principle—in rather obscure language, I have to say—is that,
“a relevant authority must consider an expression of interest”
if submitted by a relevant body that is interested in,
“providing or assisting in providing a relevant service”.
I have to say that back in Colne this is not the language people use and, no doubt, when the community right to challenge gets down to the grass roots, people will have a plainer English explanation of what it is all about. The relevant authority is, as set out, a principal local authority in England, or a body set out in Clause 68(2)(d), which reads,
“such other person or body carrying on functions of a public nature as the Secretary of State may specify by regulations”.
Here we have more mysterious regulations specifying mysterious people. Before the Bill leaves this House we need to know who these people are, at the very least.
A “relevant body” is defined as,
“a voluntary or community body … a body of persons or a trust which is established for charitable purposes only … a parish council … two or more employees of that authority”—
in other words, two or more employees of the council whose services are being challenged—
“or … such other person or body as may be specified by the Secretary of State by regulations”.
It is not a surprise to find that there, since it is what we find everywhere in the Bill, but, again, we need to know what it means.
A “relevant service” which is being challenged on the relevant authority by the relevant body is,
“a service provided by or on behalf of that authority in the exercise of any of its functions, other than” …
and “other than” is, effectively, a service that the Secretary of State makes regulations saying shall not be subject to the challenge. Yet again, we have a power to the Secretary of State that we need to understand.
This, in many ways, is the nub of the problem. This is framework legislation, skeletal legislation, and there is a huge amount down to regulations. It might seem boring to keep saying this, but in every part of the Bill this seems to be the fundamental problem. What we have here is a new idea—what I would describe as a spiffing wheeze—that has been dreamt up by the Government. It has actually been dreamt up by the Conservative part of the Government and I do not complain about that; a coalition is a coalition of two parties and each party has a right to bring its own spiffing wheezes to the table. We have to find out how this is to be done as I do not think that we are being told that at the moment. I would like all these specific powers for the Secretary of State to be removed, or at least a lot of them.
Is there any hope that we are going to see draft copies of the regulations before the Bill leaves this House? We do not have them for Committee stage. Will we have them by Report? If we do not have them by then, I can see that there might be a certain amount of bother in the House.
That is all I that I really want to say about this. I have some more notes but they just repeat what I have said, so I will not say it again. The noble Baroness, Lady Farrington, is going to express shock and surprise that I have not said it three times.
Baroness Farrington of Ribbleton
Most certainly not. The noble Lord, Lord Greaves, ceased to surprise me about 20 years ago. My point is that it is very helpful for other parts of your Lordships’ House to know when we are dealing with a government view or whether it is a jolly wheeze thought up by one party—on this occasion, according to the noble Lord, by the Conservative Party. I hope that members of the Conservative Party in your Lordships’ House will tell us when a jolly wheeze has their support but not that of the Liberal Democrats. It is a new form of coalition Government, and I am enjoying it.
Lord Greaves
The noble Baroness is, unusually, wrong. It is not a new form of coalition Government; it is how most coalitions work. Different parties bring different proposals to the table, compromises and trade-offs are reached and, one hopes, the best ideas from each of the parties come through. All I am saying is that it is no secret that the community right to challenge, as it is now called, and indeed the community assets that we will move on to discuss after this, came from the Conservative Party. I am not criticising that party for that or saying that I do not support it.
When I opened my remarks I said clearly that what we have to do with a new, untried, untested idea is ensure that it is going to work. If it does not, one of two things will happen. A lot of difficulties will be caused on the ground because the idea has not been thought through properly or, alternatively, it will be realised that it has not been thought through properly before these myriad regulations are produced and it will never happen, the regulations will never happen and perhaps the chapter will never be commenced. What I and the Liberal Democrats are trying to do is to be satisfied that the proposals are workable before they leave us so that they are actually a great success when they go out there.
Lord Beecham
My Lords, the amendments in my name start with Amendment 130ZBA. In estate agents’ parlance, the key to property is always described as “location, location, location”. When it comes to this legislation and the work of the Civil Service in advising Ministers, the phrase seems to be “regulation, regulation, regulation”, and it is to that that this amendment is addressed. The purpose of Amendment 130ZBA is to require the Secretary of State, before making regulations prescribing which services may be tendered and which not after an expression of interest, to consult with the Local Government Association or any public bodies to which the relevant section would apply. That echoes pleas that fell on unsurprisingly deaf ears last night in this Chamber on the police reform Bill where similar requirements were sought that the Home Secretary would require that police commissioners consulted with local authorities in respect of various matters. That did not appeal to Ministers but I rather hope that on this occasion Ministers will acknowledge that it would be sensible and right for the Secretary of State, before making regulations around this issue and indeed others in the Bill, to consult with a representative body for local government.
The second amendment would simply take out Clause 68(9). It is similarly designed to reduce the regulatory function to which other noble Lords—the noble Lords, Lord Jenkin and Lord Greaves—have referred. I hope the Government will acknowledge that no harm will be done to them, and indeed the general tenor of the legislation will be improved, if they were to accept these amendments.
Baroness Hamwee
My Lords, I am sure that they use plain English in Colne. I imagine that it is very direct language, and I very much doubt that they use the term “spiffing wheeze” or “jolly wheeze”. My noble friend may have forgotten that the department has actually issued a plain English guide to the Bill.
Baroness Hamwee
But do they read the plain English guide to the Localism Bill? That says, on the community right to challenge, that many local authorities,
“recognise the potential of social enterprises”.
I hope that my noble friend Lord Shutt of Greetland, who I think will respond to the debate, will be able to say a word about whether in the Government’s mind social enterprises are something different from community groups. Many social enterprises are in fact businesses. That is not a criticism, but they are very different from community groups. The application of these provisions to social enterprises is interesting. The guide refers to them providing,
“high-quality services at good value”,
and delivering services “with”—that is, with local authorities—“and through them”. I was interested in the “with”, which, in the legislation, finds its manifestation in,
“assisting in providing a relevant service”.
I do not know whether my noble friend is able at this stage—we may need to wait for the regulations, which I, like the noble Lord, Lord Greaves, hope to see before too long—to explain what that assistance might look like.
Lord Shutt of Greetland
My Lords, I thank those who have contributed to this series of amendments. We have a fresh start here, in that the community right to challenge will hand the initiative to voluntary and community bodies with good ideas about how services can be run better, and more cost-effectively, ensuring these ideas get a fair hearing, and will give them the time to organise themselves to bid to run these services.
In making my preparations for the day, I spotted the word “regulation” more than once. I thought the best thing to do is to take this head on. Much of the detail of how the community right to challenge will work is to be included in regulations. In response to amendments from noble Lords which touch on this detail, I will often have to explain that we are currently carefully considering issues that have been raised in our recent consultation. It is important that we get the details right. I would like to reassure noble Lords that, on various issues on which we have consulted, we propose to set out the way forward prior to the Report stage of the Bill. I am not promising, but if we can, we will see if we can get some draft regulations. That may not be possible in all cases but we will endeavour to do so.
I understand what my noble friend Lord Greaves said. I had not thought of “jolly wheeze” as featuring in his vocabulary. However, community organisations are part of the Liberal Democrats’ vocabulary. Therefore, this measure may have been suggested by one part of the coalition but I readily embrace it as a means of giving communities an opportunity to come forward with better ways of delivering local services. However, we need to see what is in the regulations, on which consultation is still taking place.
Lord Beecham
Will the noble Lord confirm that the Government accept the recommendations of the Delegated Powers Committee regarding regulations under this part of the Bill being subject to the affirmative procedure?
Lord Shutt of Greetland
My Lords, the Government are considering those recommendations. I will not make any promises on that but I believe that they are very likely to take serious account of the committee’s views. It would be very unusual if they did not.
Amendment 129V would remove the Secretary of State’s powers to specify requirements for expressions of interest in regulations. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right but this power would prevent a recalcitrant authority requiring an unnecessarily burdensome amount of information that would stymie a relevant body wishing to use the right.
Amendment 130ZB would remove the Secretary of State’s power to exempt services from challenge. Taken with Amendment 133ZK, which would remove the power for the Secretary of State to specify the grounds for rejecting an expression of interest, which we will consider later, this amendment would give relevant authorities discretion to reject a challenge to any of their services. As I have already explained, we have taken these powers to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right, but this power would prevent a recalcitrant authority rejecting expressions of interest out of hand.
Amendments 130ZA, 131ZA, 131G, 131H, 131E, 131F and 131DA would remove the Secretary of State’s powers to make changes to the right in regulations. Amendments 130ZA and 131ZA would remove the power to add relevant authorities and bodies. Amendments 131E and 131F concern the power to amend the definition of a relevant body and voluntary and community bodies. Amendments 131G and 131H concern the power to make any amendments to this chapter of the Bill that are necessary as a consequence of adding relevant bodies and authorities, including making changes to regulation-making powers. Amendment 131DA would remove Clause 68(9), which contains many of these powers.
We have taken these powers to enable us to keep pace with change and appetite for extension of the right. For example, the powers to add, amend and repeal relevant bodies and amend the definitions of voluntary and community bodies enable us to ensure that these definitions continue to reflect the types of organisation representing communities.
Amendment 130ZBA would require the Secretary of State to consult representatives of relevant authorities and other public bodies affected by an extension of the right. We have recently concluded a consultation on our proposals to use the various powers with all those with an interest in the right and we will consider the need for consultation on future changes. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded from the challenge.
I should respond to the noble Baroness, Lady Hamwee, who mentioned one type of social enterprise. I have certainly seen in my life numerous names representing organisations that are not a sole trader or public limited company but which have some social, community, environmental or other involvement. It seems that it does not stop. I think that the important thing is that other forms of enterprise might appear but that we are yet to hear from. The way that the script is written covers anything that might happen in the future. In those circumstances, I trust that the amendments will not be pressed.
Baroness Hamwee
Before my noble friend responds, I wonder if I may just say a word about that last point on social enterprises. A community body is defined in Clause 68(8) as a body carrying on activities,
“primarily for the benefit of the community”.
No one would quarrel with that, but the distinction between a community and a voluntary body as defined, is a reference—or, in the case of a community body, lack of reference—to profit, to it not being carried on for profit, or to what happens to the profit. Reading the words,
“primarily for the benefit of the community”,
I wondered whether that was to be read as including how profit is dealt with, whether it is to be ploughed back for the benefit of the community. Perhaps this is another matter for regulations. However, the distinction might be relevant in giving us a flavour of how the Government expect this new arrangement to work. Maybe it is a question of letting 1,000 flowers bloom, and so on.
Lord Shutt of Greetland
Letting many flowers bloom is the position. Clause 68(5) refers to a “voluntary or community body”, and the noble Baroness has mentioned the differences there; to a body “established for charitable purposes”; to the parish council; and then to “two or more employees”, and “more” could be considerably more. How that “more” then establishes itself is another way forward. There are clearly two features here: the elements of “voluntary”, “community” or “charitable”; and the way in which employees choose to organise themselves. They are lumped together, but in many minds—in my mind at any rate—they are two distinct ways forward.
Lord Beecham
The noble Lord may recall that I have an amendment dealing with precisely that matter, which we will discuss later.
Lord Greaves
My noble friends Lady Hamwee and the Minister are straying on to matters covered by future amendments. I remind my noble friend that she might have suggested some of those amendments. As for the idea that this is all about letting 1,000 flowers bloom, I invite my noble friend the Minister to come on over the tops and have a look at Colne at the moment. It is in an absolutely beautiful condition thanks to Colne in Bloom. There is a massive display of flowers; far more than 1,000. On the other hand, letting 1,000 flowers bloom did not do much good for Mao Tse-Tung. It has different connotations.
The Minister referred to recent consultations. Can he give us an assurance that the Government will publish a pretty full account of the results of those consultations and the evidence that they got? Will it be possible to access them?
Lord Shutt of Greetland
I do not have it to hand, but I am pretty certain that they are to be published on 2 August. I think that that is the statutory date when the results of the consultation must be published so that people know what people have had to say, so that will be done.
Lord Shutt of Greetland
That formal consultation has now finished, but I am pretty certain that, bearing in mind that this is still going through your Lordships' House, other views will still be taken into account—but not in the formal consultation.
Lord Greaves
Will what is published be a pretty good summary of what people said in the consultation, as well as of the Government's views? I think that the Minister is saying yes to that. That is good news, as was the fact that the Minister said that the department will endeavour to prepare draft regulations. People may have to work hard over the summer; some of us will be watching from the south of France.
The Minister referred to unnecessary, burdensome information required by a recalcitrant authority. That is the same way of thinking: that councils cannot be trusted to do things right, that some of them will be recalcitrant and that therefore everybody, even the great majority who will do it right anyway, must be lumbered with the alternative unnecessary, burdensome information, which is all the rules and regulations which come from central government to councils.
We are aware that the Department for Communities and Local Government is losing a lot of its staff. Who and where are the staff who will be employed to produce all that vast range of new rules and regulations—which, in our view, are unnecessary? We are not saying under any circumstances that there is no need for regulations, Secretary of State orders or secondary legislation. We are saying that the scale and amount of it is out of hand and will be more so as a result of the Bill.
The Minister rightly said that we are in favour of pushing power down into communities, and that expressions of interest should not be rejected out of hand. We all agree with that, but many later amendments in this part are about safeguards to ensure that the process will not be dangerous or cause difficulties and problems. We will come to those.
The Minister said that councils need to keep up to date and, for example, reflect the types of organisation representative of their communities. I am sure that that can be done without taking all those extra powers. The problem is that if the power for regulations is there, regulations will be produced, in some cases at great length. Far from keeping councils in order, in many cases they will simply prevent councils doing things in the best way for their local circumstances.
My final point, to which, again, we will come, is that the Minister said that some powers are to make it possible for the Secretary of State to exclude additional services from the challenge. The problem is that we do not know which services will be included and which will not. Again, we will come to amendments that will probe that.
It has been a useful introduction. I say thank you to noble Lords who have taken part and to the Minister for his attempt to be helpful. I beg leave to withdraw the amendment.
Lord Patel of Bradford
“( ) the expression of interest includes evidence that a substantial number of the service users affected by the service support the expression of interest.”
Lord Patel of Bradford
My Lords, as has already been explained, Clause 68 concerns the duty placed on relevant authorities to consider an expression of interest. It is a very important clause, as it provides the foundation for the community right to challenge process. The duty sets out the definitions of relevant authorities and bodies, definitions that we have already discussed and that we shall debate further in two or three later amendments. It also sets out the terms by which an authority must consider an expression of interest. That is the part that the amendment would strengthen.
Think for a moment about the meaning of this chapter, and indeed the thrust of the Bill: it is about the central role and importance of local communities in determining the ways in which services are provided. When we talk about communities, whether we use the terms, “community organisation”, “body” or “group”, we must be very careful about what we mean. There is always a risk that we assume that a particular community group, voluntary body or even a local authority understands all the communities that use services or represents them. Clearly, we cannot have a situation in which any individual or group can challenge the provision of a particular service and have a right for their expression of interest to be considered. We must also guard against the interest being too narrow. When considering services it is only right that the views of those who use the services should also be considered in any challenge. It is, after all, the service users who will be most affected by changes made as a result of the challenge.
I have worked for many years with a great number of service users from the full range of health and social care environments, including those with mental health problems, alcohol and drug addictions, those involved in the criminal justice system, and with people of all ages, including the very young and older people. My experience consistently is that service users are not only very willing and keen but very capable of saying what they think about services and how they would like to see them improved. I would like to think that among the reasons a local authority would accept a community right to challenge and go through a procurement process for the service is because they want to see improvements. I cannot think of a better way of doing this than by ensuring that service users are involved in the process.
Of course, we have then to consider how many service users should be involved. What is the optimum number? What might the minimum number be? I have no easy answers, but I am sure that other noble Lords will want to express a view on this. It seems to me that the number should be substantial, given the profound impact that any change in provider could have on those using the service. This approach gives credence to service users as a body of people whose views must be considered. It also places a duty on those wishing to lay an expression of interest to make sure that they have adequately consulted the service users, or are at least in a position to do so. I would argue that there is also protection in taking that approach. By ensuring that the views of those most affected by any proposed change are taken into account, we can avoid the situation in which potential bodies seeking to challenge the current provision are not doing so solely in their own interests.
I hope that the Minister will be willing to consider this amendment and that he can give me some strong reassurance on what steps will be taken to ensure that the views of those using services are taken fully into account. I beg to move.
Lord True: My Lords, I have some sympathy, of course, for the direction that the noble Lord is coming from, but he himself touched on important questions of practicality. There are a lot of questions of practicality in these clauses. Many local authorities are in the process of seeking to set up charitable trusts, social enterprises, and other organisations such as those that were referred to in Clause 5. I am not quite sure how the views of the service users would be established by those wishing to make a challenge or put forward an expression of interest. If there were a small social enterprise to be formed from among a group of local authority workers out of their interest in sustaining high-quality services, it would be proposed that they have focus groups, referendums or other means to establish the reaction of service users. Although well intentioned, the amendment might actually put obstacles in the way of local authority workers establishing social enterprises or bodies.
I am a little nervous about the direction in which the amendment would take us. Clause 70 contains rules for local authorities and how they should consider expressions of interest; there are duties laid upon local authorities to take into account how any expression of interest would promote the well-being of people in the local authority area. So although I understand where the noble Lord is coming from, this may add an extra complication to an already complicated piece of legislation, and I could not support the amendment.
Lord Shutt of Greetland
My Lords, this is the other side of the coin in terms of whether one is being too prescriptive. This amendment would require a relevant body to demonstrate that a substantial number of service users support its proposal when submitting an expression of interest. This puts an unnecessary burden on relevant bodies, and the relevant authority if it must verify the information. Where more than one relevant body submits an expression of interest, service users could be approached several times, which may be frustrating and confusing. This will be magnified by the fact that local people will use many different services. We agree that expressions of interest should reflect the needs of service users. Relevant bodies will often have excellent insight into these needs. The Bill enables relevant authorities to specify periods for the submission of expressions of interest in particular services. They could, for example, set periods that would enable relevant bodies to take into account the results of any consultation with service users, undertaken as part of the commissioning cycle. We are considering how service-user needs might be reflected in the requirements for an expression of interest. I hope, under these circumstances, that the Minister will feel it appropriate not to press the amendment.
Lord Greaves
The Minister said that more than one relevant body might submit an expression of interest in a particular service at any given time. I am trying to think of an example. Two community groups might be interested in taking over a particular park. They might be at daggers drawn and they will not want to put in a joint bid. How does the authority decide between those two community groups? I am trying to avoid using words like “relevant bodies”. Anybody out there listening to this discussion will not have the slightest clue what we mean by “relevant authorities”, “relevant bodies” and “relevant services”. But if two community groups want to run the same park—for example, because it is on the border of two quite different areas—how does the council decide which one to deal with?
Lord Shutt of Greetland
My Lords, the council concerned will have its own procedures for dealing with these things, but the chances are that one submission will be better than the other. If they are bang on equal, it might come down to price, but councils have their own decision-making ways. If the submissions are almost identical, councils will just have to look at them with great care. But it would be strange if they were identical. One could look at what lies behind the application, the strength of the body, whether it looks sustainable and whether the committee of the organisation looks as if it is there for the long haul. I am quite certain that these are all things the authority will be looking at.
Lord Beecham
Can the Minister indicate that on this topic, at least, there will not be regulations from the Government?
Lord Shutt of Greetland
The noble Lord is asking, in effect, to put a regulation into the Bill. The government line is that we do not need it in the Bill and therefore this is regulation-free.
Lord Greaves
To go back to the question I asked, the answer my noble friend gave is probably OK if the two applications come in at the same time or within the same council cycle so that they can be discussed by whatever procedures a particular council has to deal with these matters. But does the Bill not say that once an application has been accepted and is being considered, no more applications for the same thing can be made and accepted? Therefore, if one came in today and the other came in a couple of months later, perhaps in response to the knowledge that the first one had gone in, it could not be accepted. How would that be dealt with?
Lord Shutt of Greetland
I shall have to come back to the noble Lord on that. There two ways in which these expressions can be made: one is that once we have an Act of Parliament, people can, as it were, just pitch; and the other is by authorities saying, “We are looking at various things and this is the starting date and this is the finishing date, when we look forward to people making expressions of interest”. If it were the latter, it would be quite clear when expressions of interest could be made. If people were just making a pitch, an authority might look at that and be surprised that something else turned up later.
Lord Patel of Bradford
The Minister said that the best that he could offer was to put this into regulations. That is obviously welcome. However, I am disappointed. The noble Lord clarified the problem of practicality for me. I have worked in health and social care for about 20 years and every service that is delivered will never say that it will never engage with service users. Everyone is very happy to say, “Yes, we will engage with service users”, but they do not do it, simply because they think that practically they cannot manage it, that they will not get any benefit from it, and that they will talk to too many service users and confuse them. Using the words of the noble Lord, Lord Greaves, this is utter nonsense.
You can engage with service users, and there was huge appetite for that. I can give noble Lords example after example of people with mental health problems having impacted on social policy and on the policy of the organisation and teaching professionals how they should inspect services. What matters is how we do that and the value that we give it. Perhaps I can give one example. Over the past 18 months, I have chaired a review group on the effectiveness of drug treatment in prison. We looked at the huge amount of money that we spend on drug treatment in prison, which is a very difficult environment. We brought together 20 experts: governors, a chief probation officer, experts in the drugs area and academics. Everyone came round the table to explore a strategy for commissioning and producing outcomes. We spent 18 months meeting, arguing and fighting.
One thing on which I insisted was talking to service users, offenders, people currently in prison, ex-offenders and their families. We were not given a budget for it because they said, “It is not practical. No offender or ex-drug user will engage with the process, but have a go”. On a shoestring budget and in the space of six weeks, we engaged user groups across the country and asked them to talk to offenders, users, carers and families. We anticipated that at most 50 people would respond, but in those six weeks 550 current and ex-offenders and drug users responded.
Ultimately, the views of those drug users affected the way in which the final report—the Patel report—was written. They underpinned everything that happened. This effected the best evidence base ever gathered on drug treatment in prisons. They mirrored what that evidence base said and highlighted what drug users want and how they want it. With their evidence and their views, we produced an outcomes model. That would not have happened unless we had engaged with the so-called most difficult, hard to reach groups. People have a huge appetite to be involved. It does not matter whether two or three groups want to consult with service users; they should, because while they are consulting them and asking them what they want, they might learn something about what they should be doing and how they should be delivering their service.
It is crucial that this provision—that you cannot deliver a service without engaging service users—is in the Bill. I am sure that in his heart of hearts the Minister believes that. It is an important thing to do. My anxiety about not putting that into the Bill is that services will not do it; it will be an excuse not to do it. You have to force them to do it because it delivers goods. I will go away and think about this, and I would appreciate it if the Minister thought more about it and talked to his officials to see whether there is any way in which we could strengthen the provisions of the Bill that push those heading the new services to talk to service users. It might not have to be a substantial number, or whatever the legal phrase is, but this should happen because it is fundamental to the issue of the community’s right to challenge. The Minister himself said that this was about handing power to the community. Service users are a key aspect of the community, so we have to push this.
Lord Shutt of Greetland
My Lords, I am holding the line with the Bill. Anyone who thinks about challenging must put together all sorts of things to prove the viability of their outfit and the people involved. If they have any wit, they will say that they believe that they can do it and will have done some work in order to prove that they are up to the job. If the noble Lord were a consultant to people wanting to put forward a proposal, that is the sort of thing that he would urge them and everyone else to do.
Lord Patel of Bradford
Absolutely—if I was a consultant, it would be done. Unfortunately, however, there are not many folk like me about. We can discuss rates later. I take on board what the Minister said. I will think about it further and I would appreciate it if the Minister, too, would think further about whether we can strengthen this. I am sure that the issue will come back when we consider further aspects of the Bill. In the mean time, I beg leave to withdraw the amendment.
Lord Jenkin of Roding
Lord Jenkin of Roding
My Lords, I shall speak also to Amendments 131 and 132. No doubt other noble Lords will speak to Amendment 130ZC. We have discussed the question of challenges to local authorities by local communities and other bodies that wish to run their services. I am looking for a more ambitious community right to challenge. I support what is in the Bill. It is a very useful expression of bringing forward one aspect of the big society so that local people can become involved not just in yapping at the heels of those who provide a service but in putting forward suggestions for how they could do it better. I like that—but why does it stop at local government services?
My right honourable friend Greg Clark, the Minister of State for Decentralisation and Planning Policy, recently gave a lecture on the subject to the Local Government Association. He was on the right lines when he stated that Ministers are considering inviting councils and their partners to bid to manage a range of public services using devolved budgets. This recognises that government services or services provided by non-departmental bodies at national level may be run better and with more sensitivity to local needs and circumstances if they are run at local level. They do not all have to be run nationally. That is the point of the amendment. I am trying to provide a way in which my right honourable friend’s aspirations could be put into practice across the public sector.
If we are going to get this whole process going—I admired the eloquence of the noble Lord, Lord Patel, when he spoke of what was necessary—we need to generate enthusiasm for, and understanding of, what is being offered. This should be across the board and not limited to local government services. Therefore, my amendment extends the right to challenge across all public services, not just those guided by local government. Local authorities should be able to express an interest in running devolved national public services on behalf of their communities, which should be able to offer to run the services. They may need help, which local authorities are best placed to deliver.
Looking at it again with rather greater reluctance, I have to say that the suggestion that local authorities should provide a list of the services that they might be interested in devolving smacks of bureaucracy and I am not particularly enthusiastic about it. I ought to withdraw the amendment; I speak to it with no enthusiasm at all and I am grateful to see that that view is shared.
I will concentrate on the other amendments in this group, which propose extending the measure to services provided nationally by central government and by non-departmental public bodies and so on, and giving local authorities the right to bid and the duty to help local communities to do this. If you take London as an example—I declare my interest as one of the joint presidents of London Councils—the figures show that in 2009-10 central government spent over £47 billion in London. Local authorities actually spent much less than that—about £29 billion—so only 40 per cent of the total is spent by local authorities. By extending this measure, you are opening up a substantially larger pool from which one could get services provided locally. Of course, not all services can be delivered locally but a great many are. I shall give some examples in a moment.
Extending the community right to challenge and to apply it to a wider public sector would effectively address a lot of the problems that are inevitably caused by national bureaucracy. That often stands in the way of operational efficiency and, in particular, local sensitivity. A council could say, “If we did it for you, we would have to do it for everybody”. How often has one heard that excuse? What we are looking for in this Bill is a greater opportunity for public services to be run locally, where they can be responsive to local needs and circumstances. I will give some examples in a moment.
One possibility is to have cross-departmental services that could be run effectively from a local level. Another is to empower local authorities to support local aspirations. Research commissioned by London Councils last year identified over 150 non-departmental public bodies that spend more than £100,000 a year that have an influence in London. If one takes account of even the Government’s recent efforts to try to reduce the number of these bodies, as in the Public Bodies Bill, London Councils estimates that at least 120 of these organisations remain active in the capital. Many of them are responsible for the delivery of public services for which local communities have no statutory ability to hold anyone to account. This is the target one is aiming at, the substantial number of bodies that deliver services locally but are not in any way locally accountable. Therefore local authorities should be able to help them.
The third point is that, if you are going to have a community right to challenge, for that to be a genuine one, it should be open to all regardless of the local community’s expertise or experience. It will need help and the local authorities are best able to give that. If you can achieve that, you will be achieving a degree of local accountability for the services that are there for local people. Not only communities but the local authorities themselves should have the ability to challenge national services on behalf of their communities and alongside other agencies, and to run services delivered by national public bodies within their area. This would ensure that communities have some local control and that there would be some local accountability.
The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, I must advise your Lordships that if this amendment is agreed to I will not be able to call Amendment 130ZA because of pre-emption.
Lord Greaves
My Lords, I have Amendment 130ZC in this group, which I will speak to in a minute. Before I do, I want to say that I think we agree with a very great deal, if not everything, of what the noble Lord, Lord Jenkin, has just said. We certainly agree with the broad thrust of his amendments. It seems illogical that if there is to be a system in which local people can, in the terminology here, challenge the existing providers of a service and suggest that they might do it better, that should be only for services that are provided by local government, not by other public bodies, because when it comes down to it services provided by local government, as opposed to other public bodies, are fairly arbitrary. There are good reasons for a lot of them, but for some of them it is not very clear why local government does them and someone else does not. It is certainly not clear why someone else does a lot of things and local government does not in this country. The division is arbitrary and it seems to me that the relevant criteria should be whether it is a local service and then whether it is desirable that this should apply to it.
We agree very substantially with the noble Lord’s Amendment 130, and with his Amendment 131, which would allow a local authority on behalf of its community to take over in appropriate places. Of course, there is a great question mark over how funding is going to be arranged. You immediately get into all sorts of questions about whether there would be ring-fenced funding for a particular service or whether it would be rolled up in the general local government grant, the existing formula funding or whatever is going to replace it, and how that would be organised. Nevertheless, those are not insuperable problems. Initially, one assumes that there would be ring-fenced funding for particular services that were transferred, but the basic principle is something that we would certainly support.
The noble Lord is not enthusiastic about his Amendment 132 requiring local authorities to produce a list of challengeable services. He suggested that it is bureaucratic. However, there is certainly another side of that coin because the Government are going to lay down a list of services that are not challengeable and that are excluded. Indeed, they are going to give themselves power in regulations to change that list from time to time, as we have already discussed. If people know what they cannot challenge, presumably they can work out what they can challenge, so it is not really a problem and the noble Lord’s amendment is probably unnecessary, whether or not it elicits enthusiasm.
My Amendment 130ZC would allow a district council in a two-tier area to challenge the county council and to suggest in certain circumstances that it could take over county services. There is an ongoing argument in some areas between districts and counties about what counties do and what districts do. In my own county of Lancashire, there was a great deal of devolution from the county to the districts in 1974. It simply followed existing practice with the old municipal boroughs and even some of the larger urban districts in the county. In recent years, the county council has been pulling services back and taking them to the centre, even though it is a large, far-flung council. I do not know exactly how far it is from north to south, but it cannot be far off 80 or 100 miles, and it is 60 or 70 miles from east to west, so it is a huge county. It is also an area with strong districts, some of which used to be county boroughs and are still resentful of having been downgraded, and some of which have always been strong municipal boroughs and are now the basis of strong districts.
District councils across the country vary hugely. Some are, frankly, quite feeble and weak affairs, and others try to behave as if they were unitary authorities but do not quite get away with it. Nevertheless, there are a lot of services that it can be argued would be better run at a local level and which in many cases have been. An example is local highway functions that cover not the main roads but local streets. In Lancashire, they were run by most of the districts until three or four years ago when the county decided to take most highway powers back to itself. Demonstrably, the system has not improved since then. Some would say that it has not got worse, but others might disagree with that. It is an area that could be challenged.
The whole area of leisure and recreation has a very local base to it in many cases. One example is country parks. Having a network of country parks across a wide council might be the best way to do it, or country parks might best be run at a local level and involving local people.
Lord Moynihan
I am grateful to my noble friend for raising that. Very briefly, a classic example of this are the national sport centres, which initially were set up to focus on excellence in sport and did so for many decades but which increasingly have come to serve the local community through community use and Sport for All. These are surely very good examples of where you can be far more aligned to local authorities—if they are run by local authorities—working with local clubs and with local governing bodies while protecting high-performance sport.
Lord Greaves
I am grateful to my noble friend for that intervention. Libraries are an example of this. In some parts of the country they are very controversial at the moment because they are being closed down on quite a large scale, while in other places they are not. So long as the existing funding for a library may be transferred to districts, there is no reason at all why districts cannot take libraries over. Indeed, the municipal boroughs before 1974 were the library authorities, and many of the fairly new libraries that now exist were built by the boroughs and not by the county council. If the county council is seriously looking at reorganising its library service, one of the ways in which it could perhaps increase the efficiency of libraries and local involvement in them is by transferring at least some of them to the districts. I am not saying that that is an ideal solution everywhere, but it is something that ought to be challengeable. There are a number of things like that.
As for national services, the ward I represent on the council had a recent problem of raw sewage flowing down from an inefficient septic tank system on a caravan site on a hillside and causing real problems to residents in the lane below. Noble Lords can imagine what their back gardens were like—not very pleasant at all. The Environment Agency became involved in this. It came and went and came and went, and the district council, which has no direct responsibility for it, became involved, and in the end it was the district council that actually organised the system, spent the money and connected the caravan site to the main sewage system. It then recharged the people who lived on the site and the people who own it. It was the district council that actually sorted it out on the ground, even though, as far as I could work out, the statutory responsibility lay with the Environment Agency. That is a classic example of the kind of service that, if transferred at a local level to a competent local council, might well be run better.
As for the river system, the Environment Agency is responsible for main rivers, but certainly in our part of the world some of the things that are classified as main rivers are tiny little streams. There is no reason at all why they should not be the responsibility of the district council. The district council has no statutory responsibility for rivers and it is not funded by government for it, but some district councils employ drainage officers because they are the sensible people on the ground who sort out flooding and drainage problems when they occur. How much better if they were actually statutorily responsible for it? I therefore support the noble Lord’s amendment with some enthusiasm, and put mine forward with enthusiasm as well.
Lord True
My Lords, I put my name to the first of the two amendments tabled by the noble Lord, Lord Jenkin, and I endorse all that he said. I can imagine my noble friends the Ministers saying that it is not possible to graft this on to the Bill at this stage, but the principle is a very good one, as my noble friends Lord Greaves and Lord Moynihan have also said. If the Ministers cannot accede to these amendments now, I hope that they might be prepared between now and Report to talk to local authorities and local government associations about ways in which local authorities might be given opportunities to suggest ways of localising more services.
I must apologise—and this may be a relief to some—that I have to attend a full council meeting later this evening, and if I am not in my place at 7 pm, with the less-than-coalitionist ardour that there is on opposition benches in Richmond I might find that a division is called. I could not support my noble friend on the list of challengeable services because—and he has made this point—it would cause bureaucratic problems for local authorities. I did not put down amendments to Clause 74, which comes later, because it would have been discourteous, anticipating that I was not going to be here. However, I must say that the other form of list that your Lordships will discuss later this evening might, in my estimation, need at least two officers to compile these kinds of lists. Therefore, while encouraging my noble friends the Ministers to resist my noble friend’s amendment, I also hope—in anticipation, as it were—that they will think more carefully later about the other lists that are imposed on local authorities in this Bill.
Finally, I support the suggestion about counties and districts, and of course I also support the principle relating to the Greater London Authority and London boroughs. Self-evidently, there are many things—in an earlier debate I gave the example of running high streets —that London boroughs could do far more effectively than a regional authority. I hope again that my noble friends the Ministers will consider that too.
Baroness Thornton
My Lords, perhaps I may ask a question. I have a great deal of sympathy for the noble Lords’ amendments. I am not sure what my Front Bench is going to say, but this sounds like a very useful discussion to have about how to extend local rights. My question, because I am a champion of social enterprises and the voluntary sector, is whether they, too, will be able to challenge for those national services that might appropriately be delivered at a local level. That would seem appropriate.
Lord Jenkin of Roding
Immediately, exactly the same bodies and people, including local charities and voluntary bodies, should be able to challenge these national services, in the same way as the Bill provides for them to challenge local services.
Lord Patel of Bradford
My Lords, I shall be very brief. I have listened carefully to what the noble Lord, Lord Jenkin of Roding, said, and I have read his amendment carefully. The basic principle of the proposal is exciting and warrants further investigation and explanation, although I agree that a list would be completely bureaucratic. As for the idea that we could take this a step further, I am excited by the community right to challenge aspect but would want to be assured that the amendments would not in any way, shape or form dilute the local community right to challenge.
Lord Shutt of Greetland
My Lords, I thank the noble Lords who have introduced these amendments. I wonder if I may deal first, out of sequence, with Amendment 132. This amendment would require local authorities to publish and maintain charitable services provided by all relevant authorities in their area. The Government are already asking local authorities to publish important information about services, and the Bill already enables relevant authorities to specify periods during which expressions of interest can be submitted for particular services, and requires them to publish details of these. This amendment would put additional administrative requirements on local authorities and falls into the trap of over-engineering the right, something which the Local Government Association has warned against.
Amendment 130 would change the definition of a relevant authority to extend community right to challenge to any public body. Amendments 131 and 130ZC propose changes to the definition of “relevant body” that would enable local authorities to challenge other relevant authorities, specifically government departments, agencies and non-departmental public bodies, under Amendment 131, and county councils, where the relevant body is a district council in a two-tier area, under Amendment 130ZC. The Bill already enables the Secretary of State to extend the right to other public bodies in regulations—back to our friend. Our recent consultation sought views on which other public bodies the right should be extended to. Many respondents said they felt that it should be extended to all public bodies. It was also suggested that local authorities should be able to challenge other types of relevant authority. Given this appetite, the Government are keen to explore the idea of extending the right to other public bodies. However, many of those respondents also felt that we should not rush into extending the right before evaluating its impact in its current form. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded.
My noble friend Lord Jenkin usefully gave us various examples. I would just say that the examples are such that other Ministers and departments would have to get thoroughly involved and, by jingo, there would have to be some joined-up government in all this. I warm to the theme that it is exciting. I am just wondering whether it is too exciting for this Bill at the present time.
Lord Jenkin of Roding
My Lords, I have been hugely encouraged by the amount of support all around the House for the fact that we should pursue this more ambitious right to challenge. I am very grateful in particular to the noble Baroness, Lady Thornton, for what she said, and for the enthusiasm and excitement of the noble Lord, Lord Patel. Turning to my noble friend, I have already indicated that I am not interested in the lists, and perhaps I should have withdrawn that amendment. However, it was encouraging to hear him say that the Government are keen to explore and that he would have to involve Ministers in other departments. If the localism ambitions are to be achieved then every department will need to be involved in this, not just the DCLG.
From what my noble friend Lord Attlee said in relation, for instance, to the discussions we had earlier about EU fines, I am aware that he now has to discuss this with all the other departments concerned, which is a good thing. If our amendments achieve that and nothing else, that would be worth while. My noble friend Lord Shutt has offered grounds for hope. A few weeks ago, when I discussed this with the Secretary of State, his reply was fairly brief. He said, “Really, we have got to be able to walk before we can run”. My noble friend used the phrase “before evaluating”.
I should like to feel that this is part of the Government’s ambition, something which we can look forward to as an extension of the right to challenge, and something which can be seen to be very much part of the coalition’s policy. Recognising that it might be difficult to put this provision into the Bill at this stage—it was not considered, I think, in the other place—we have to recognise that there are problems. However, I hope that my noble friends on the Front Bench will start consulting now with the other departments that will be involved. With that, I beg leave to withdraw the amendment.
Baroness Thornton
I am standing up to give the noble Lord, Lord Greaves, time to move his amendment, which comes before mine in this group.
Lord Greaves
My Lords, if the House is willing to be tolerant, I will admit that I was asleep.
The Deputy Chairman of Committees
My Lords, I have called Amendment 130ZD and it was not moved. I now call Amendment 130A.
Amendment 130A
Baroness Thornton
Baroness Thornton
In that case, I will speak to my amendments and give the noble Lord, Lord Greaves, a chance to catch up on his amendments in this group. Before I do so, I declare an interest as an ambassador for Sporta, the trade group of social enterprises which deals with local sports and leisure services, and as the founding chair of the Social Enterprise Coalition. I shall speak to Amendments 130A and 131A, and comment on some other amendments in this group, although I may leave that until they have been spoken to. My noble friend Lord Patel is right to say that Clause 68 is important. I have always believed that socially owned businesses, founded and run in this case by local people, have an important and valuable role to play in the provision of public services.
Amendment 130A seeks to put beyond doubt the kind of enterprise which can challenge and be considered appropriate to contract for the services under consideration. I seek clarification from the Minister about this because, as it stands, it seems that the expression of interest could be used by local authority employees setting up a private company. I believe that that might be a loophole that would need to be closed. Amendment 130A states that,
“after ‘authority’ insert ‘who have formed an organisation for charitable purposes or a community interest company or industrial and provident society’”.
That covers basically all the organisations that are not private enterprises.
Amendment 131A again seeks to make completely clear an issue which is, in a way, about the size of the organisation. I believe that there should be a requirement that the expression of interest can be initiated by a local organisation or in collaboration with a local organisation. Many national charities already provide and contract for services at a local level—for example, Barnardo’s and Action for Children, which I know about through a long association with them. I believe that those national charities, along with any national social enterprise—indeed, there are those that are contracting which are building social businesses providing social care—would want to contract for those services at a local level. But they have to prove that they are working collaboratively with local agencies to provide locally integrated solutions.
This would still allow national organisations, which have great skills and experience in delivering these services, to bid but would ensure that the Bill meets its main objective of devolving power and giving a voice to local communities. The involvement of a national social enterprise or a national charity may be the difference between a local body being able to challenge and contract for local services and it not having the capacity to do so. It is important that large and small, and local and national, collaborative working is part of this Bill and is put beyond doubt. That is what these two amendments are about. I beg to move.
Lord Greaves
My Lords, I apologise for falling asleep; it is these Zs all over the place which are doing it. I am not speaking to Amendment 130ZD, which I missed. However, Amendment 133ZN has exactly the same meaning. I was going to apologise for putting down the same amendment twice in the group but it seems that that was providential. I certainly have a great deal of sympathy and support for what the noble Baroness, Lady Thornton, has just said.
We put down amendments to take out the reference to employees not because we do not think that in appropriate circumstances it is a good idea for employees to take over running the services for which they are employed, but because we are not at all convinced that this Bill is the best place to legislate for employee buy-outs, employee buy-ins, employee takeovers or whatever. They do not quite fit with the concept of the community—however the community or somebody in the community is defined—making a challenge and saying, “We can run this service. Can we have a go please?”. Employees are very different in that sense as they represent the producer side of the service rather than the consumer side and, clearly, if consumers or citizens or residents take over a service, they become producers as well. Equally, employees can make the same journey in the other direction.
Lord Newton of Braintree
My Lords, I want to build with a couple of questions on what my noble friend Lord Greaves and the noble Baroness have said. Definition seems to me to be quite an issue on my scanning of this clause. The question that has just been asked about what community you have to be in, so to speak, is at least worth asking and it will be interesting to see the answer.
The other question is that I understand that there are definitions of charitable bodies and of industrial and provident societies. Is there a definition of community bodies? Where does the type of body known as a social enterprise come in all this? If you ask the Library for information on social enterprises, as I did once a few months ago, you discover that there are about six different definitions from different quarters. Is social enterprise embraced in all this? Is it defined in all this? Is it intended to be dealt with in the wrap-up clause about the Secretary of State having the right to define other bodies? A lot of definition problems are raised but not answered by this clause.
Lord Beecham
My Lords, I want to assist, in a sense, the noble Lord, Lord Newton, by clarifying the description of one particular—
Lord Jenkin of Roding
I apologise to the noble Lord, Lord Beecham, but for those of us who rely on the loop, the microphone is rather important.
Lord Beecham
I shall be very brief. My Amendment 131AA looks at the definition that the noble Lord, Lord Greaves, referred to in Clause 68(7). It seeks to tighten the reference to the surplus by saying that the fact that a body’s activities generate a surplus does not prevent it from being a voluntary body for the purposes of the section. The original clause says:
“so long as that surplus is used for the purposes of those activities”.
With my amendment, it would say:
“so long as that surplus is required to be and is used”.
In other words, it is not a casual use; it is a prescribed use of the surplus in the way that you would find in a charitable organisation. I hope the amendment is not unhelpful and that it just emphasises the nature of the organisation and that the surplus is required to be used—as well as, in practice, that it may be used—for the purposes outlined. I hope the noble Lord will think about that and perhaps take the amendment back or accept that it strengthens the intention of the clause.
Lord Patel of Bradford
My Lords, I shall be brief. I am specifically speaking to support Amendments 130A and 131A, both of which are concerned with the nature and type of relevant bodies that may submit an expression of interest under the community right to challenge.
As we have heard from my noble friend Lady Thornton, the purpose of Amendment 130A is to bring greater clarity to the definition of a relevant body—something the noble Lord, Lord Newton, raised—particularly to make it plain that this is intended to include not only charitable organisations but community interest companies and industrial or provident societies.
As the Bill stands now, the question as to what constitutes a voluntary or community body is unclear, as the noble Lord, Lord Greaves, has said. A voluntary body is defined in the Bill by virtue of not being a public or local authority and,
“the activities of which are not carried on for profit”,
while a community body is simply one that carries out activities for the benefit of the community. There is potential confusion here. For example, does the Minister intend that a public or local authority is also a community body, and what of community interest companies which are allowed to make a surplus? Does this mean that they are not voluntary bodies for the purpose of this? The amendment that my noble friend Lord Beecham has suggested may be helpful in this case.
I am a firm believer in the potential for local community and voluntary groups to deliver services, provided they are given the right support. I am concerned that without the additional clarification provided by Amendment 130A some important groups, including industrial and provident societies—which, as we are all aware, have a proud and significant history of representing local people—will be excluded from the community right to challenge. I hope the Minister will support the intention of this amendment.
Amendment 131A is closely related to these issues and similar in intent to one tabled by the noble Lords, Lord Greaves and Lord Tope. This concerns the question of whether those relevant bodies that may wish to use the right to challenge to become themselves providers of services are in fact from or primarily working within the local area. My concern is that once a challenge is made under the community right to challenge, it might not be local community groups that enjoy the transfer of services but big business or non-local providers. Therefore, it seems essential that in determining who can make an expression of interest to run a service, priority should be given to those local community groups first.
If localism is to mean anything in practice, it should be local groups who benefit and, as people who live and work in the area, they should be the preferred option. I accept that there will be some cases where it is desirable for a regional or national provider—such as Barnardo’s or National Children’s Home, as my noble friend Lady Thornton said—to initiate the process. They will have a strong specialist offer to give but even in these cases there will be real benefits in encouraging local involvement and local partnership. The risk is that this becomes an open invitation for non-local bodies to seek entry into an area. Again, I hope the Minister will agree that this would be undesirable and look to support the amendment.
Lord Shutt of Greetland
My Lords, there is rather a lot here and I thank noble Lords who have taken part. Before I come to my notes, Clause 68(5) refers to voluntary and committee bodies and they can be defined. It might not be absolute but they can be defined in some way or another. When the subsection says,
“a body of persons or a trust which is established for charitable purposes”,
it does not say there about the community. That can be national. It then says, “a parish council”, which is clearly local, and,
“in relation to a relevant authority, two or more employees”,
which might just be a partnership if it is two. If it is more, it can be any form of enterprise that was thought of. I am aware of the theology that exists in the different forms of co-operatives and so forth. There can be all sorts and then there is the catch-all in our friend, “regulations”.
Let us see how we can cope with the notes that have been made on specific amendments. Amendment 131A and 131C would require the voluntary and committee bodies to have some local connection, whether operating primarily in or for the benefit of the community in the relevant authority area, or working with a body that does. We are keen to encourage local and national bodies to work together to submit expressions of interest and bid for any subsequent procurement exercises, but many national organisations do excellent work locally in their own right—particularly for communities of interest, which may not always be well supported by a local group. We would not, for example, want to prevent the Alzheimer’s Society expressing an interest in running a relevant authority service. It is difficult to argue that it would not represent the interests of vulnerable, elderly people in a local area. These amendments could also prevent voluntary and community bodies that are successfully implementing innovations in service delivery from replicating their approach elsewhere.
Amendments 131AA and 131B propose different requirements around a voluntary body’s surplus. Amendment 131B would require that surpluses should be used for the “benefit of”, as opposed to being for the “purposes of those activities”,
“or invested in the community”.
Amendment 131AA would require that any surplus was,
“required to be and used”,
as opposed to simply being “used”,
“for the purposes of those activities or invested in the community”.
Amendment 131ZB would enable the Secretary of State to add “category of bodies” as a relevant body rather than “person or body”. I am not clear what material difference these amendments may make.
Baroness Thornton
Perhaps I may help the Minister with this because the point about my noble friend’s Amendment 131AA is that where a voluntary body generates a surplus, it can be legitimately used for several purposes. It can be used to undertake further activities consistent with the social aims, as set out in its governing document, which could include but not be restricted to local community benefits. It could be used to invest in strengthening the organisation itself, so that it becomes more resilient and can expand its work, and it can be used to repay loans and other investment. It might, for example, include a payment of dividends to shareholders following a community share issue within the limits established by the incorporation of the community interest company or the IPS. Those are safeguards against excessive private gain. I do not think this is the right amendment but the point is that it seeks to clarify whether points two and three are permitted within the Bill. We might need to discuss this further.
Lord Shutt of Greetland
I am even more confused but I will endeavour to look at that in due course. As I was saying, the Bill already states that a voluntary body’s activities should not be carried on for profit. The purpose of a voluntary body’s activities should surely be to benefit the particular community it represents. As for what the noble Baroness has said, we are in Committee and we can clearly look at this again, but I saw this in simple terms. I cannot get it out of my head, quite frankly, that you may get a community association bidding which, in its building, has a kitchen where it will do its meals on wheels. It might make a bit of a profit from the meals on wheels service in that community. It seems to me that if it makes a small profit from that exercise, it can use that for the benefit of the rest of the association that it is carrying on in that building. That is as I see it in simple terms.
Amendment 130A would require employees of a relevant authority to set up a charity, community interest company or industrial and provident society in order to submit an expression of interest. Requiring employees to form a specified organisation in order to submit an expression of interest and get a fair hearing for their idea would create an unnecessary and bureaucratic burden. It risks putting employees off exercising the right altogether. The Government are committed to giving public sector workers the right to bid to take over services that they deliver, and the community right to challenge implements this commitment for relevant authority employees.
Baroness Thornton
I am sorry for interrupting the Minister again but this is a very important point. I can cite two examples. Sunderland Home Care was set up by home care workers as a co-operative and, quite rightly, the employees of that local authority in Sunderland provided much better terms and conditions to contract with Sunderland Council. Greenwich Leisure started the whole movement of leisure trusts because Greenwich Council was going to close down its swimming pools— this was 10 or 12 years ago—due to something called rate-capping, which some of your Lordships may remember, and it was the employees who initiated the move to contract with the local authority to take over all the leisure services.
Those examples both make a surplus—and quite right too—because that is how they reinvest back into their local communities, so that the charges in Greenwich for leisure services are now much lower proportionately than they were. They are also both able to support contracting in other areas, so that Sunderland Home Care now provides training for home care workers across the north-east. The point about this amendment is that by defining the legal form that community groups, or any group of employees, use to do the challenging, we actually safeguard the social purpose against private profit being made which then does not get put back into the community.
Lord Shutt of Greetland
My Lords, I understand what the noble Baroness is saying, but there is a concern about being overprescriptive. It is important that we do not do anything to put employees off. We can return to this; there is no reason why not; but we know what the intention is. It is to free up the opportunity for employees to take part in a right to challenge. I am far from certain that we should be prescribing that there are these various routes and it is outside the theology if they take the fifth route and not routes one to four. We need to be a bit careful about that.
Lord Greaves
If there are not to be clear structures which are recognised as appropriate, how do you prevent the situation in which two employees make a right to challenge when they have absolutely no support from the rest of the employees, but because they have made the right to challenge, the process has to take place?
Lord Beecham
Before the noble Lord replies, may I point out that I have an amendment dealing with precisely that matter as well?
Lord Shutt of Greetland
I am quite clear that, if there are two employees, we are back to the whole business about looking at who is backing this and whether the people who will ultimately benefit from this service think that it is a good idea. It is unlikely that the local authority would say, “Off you go; you look a great pair”. It is very doubtful that that would be the case. That is the route to putting a stop to that. It may well be that our friend, regulations, will come into this as to the power of stoppage that there would be in these circumstances.
Amendment 133ZN would prevent the Secretary of State providing advice and assistance in using the right to a body that is formed of, or includes, any employees or ex-employees. That would introduce a disparity. It would mean that advice and assistance could not be provided to a voluntary and community body formed of employees and ex-employees, but could be provided to other voluntary and community bodies that did not contain such individuals. No decisions have been made on the form of any advice and assistance in using the right, but we expect to focus on those that need it most. This is likely to mean smaller, newer voluntary bodies, but it is sensible that we have the powers to provide assistance to any relevant body that might need it. I understand that an impact assessment has been done on this and the suggestion is that, across the country, £20 million will be required. It is not yet in any budget, but that is the suggestion in the impact assessment.
Clause 73(4) ensures that this includes employees who have formed a body to take on the delivery of a service, including where they have left the employment of the authority. This supports the Government’s commitment to give public sector workers the right to bid to take over the running of the service that they deliver. I trust that these comments will mean that these amendments are not pressed at the present time.
Baroness Thornton
I rather expected that the noble Lord, Lord Greaves, would be doing the heavy lifting at this point in the debate. I thank the Minister. We need to have further discussions about this to make sure that we are safeguarding things. I say to the noble Lord, Lord Newton, that definitions are not a problem here, because we are seeking to create a variety of different ways for local organisations and groups to set up social businesses which will be able to contract for services. The way that they will define themselves is by choosing a legal framework which fulfils the purpose as outlined in the Bill. There are only a few things that they could choose: a company with charitable purposes; a community interest company or an IPS, a co-operative of a different sort. There is a limited number. They define themselves, in a way. It looks complex, because there are lots of different ways of doing this and, in fact, the Government’s role in providing information support at local level will be very important. With that, I beg leave to withdraw the amendment.
Lord Greaves
“( ) This section does not apply to any company or other body or person the activities of which are carried out for profit.”
Lord Greaves
My Lords, I was very carefully not saying “Not moved” to any of those previous amendments.
I rise to move Amendment 131D, which is grouped with Amendment 131ZP and with the question on whether Clause 73 should stand part, which is to be moved by the noble Lord, Lord Patel, which should lead to another interesting debate. Amendment 131D is a probing amendment to stimulate a discussion which follows on from the discussion we have just been having about the nature of the organisations which might end up running local services, whether they are very local services, such as looking after a pocket park, or much more substantial services, such as taking over refuse collection. In relation to “relevant bodies”—in other words, the bodies that are challenging to take over services—my amendment would add the words:
“This section does not apply to any company or person the activities of which are carried out for profit”.
It is clear that there is not an absolute distinction between profit-making and non-profit-making bodies. We have already discussed the way non-profit-making bodies might make a surplus, but for the purposes of discussion, that is fair enough. Amendment 133ZP is a belt-and-braces amendment, which would insert the same wording at the end of Clause 73.
The fear about the proposed community right to challenge—and there is a lot of fear about the proposal—is that it will lead to the fragmentation, privatisation and commercialisation of a lot of council services; that, in the name of the community making the challenge and as a result of local community organisations, parish councils and whatever putting in the first challenge, the big boys will then come galloping in. The noble Lord referred to the risk of non-local bodies moving into the area. Perhaps there is a risk of local commercial organisations of a slightly cowboy variety, or, more likely, large corporate companies, coming in and taking over, all in the name of the community.
Lord Patel of Bradford
My Lords, I shall speak to Clause 73 stand part. On the face of it, the heading of the clause, “Provision of advice and assistance”, appears to be very welcome. However, I am struggling with the direction of travel here. This is, after all, the Localism Bill whereby we are led to believe that the Secretary of State wishes to roll back the mighty arm of the state, yet here we find a clause that gives an astounding new array of powers for the Secretary of State to interfere, I suggest, in local decision-making.
I shall outline the extent of that interference. Clause 73 at least begins as it intends to go on. First, we are asked to endorse the following:
“The Secretary of State may do anything that the Secretary of State considers appropriate for the purpose of giving advice or assistance to a relevant body”.
Now, while I am certain that the Secretary of State has only the best intentions and that he means to provide helpful advice and assistance, I struggle to accept the idea that this may include anything that he considers appropriate. I am also somewhat concerned at the use of the word “assistance”. What do we make of this? Exactly what does the Secretary of State have in mind for such assistance? Clause 73 goes on to give us an idea, which I again find a little troubling. Assistance may come in the form of,
“the preparation of an expression of interest … participation in a procurement exercise”,
and, as if this were not enough assistance already, it may also involve,
“the provision of a relevant service”.
I am left to wonder what the point is of the previous clauses in the community right to challenge chapter, when the conclusion appears to be that the Secretary of State is going to do it all.
I am not a lawyer, so I will leave it to noble Lords who are to ponder the implications, but I am fairly certain that interference by the Secretary of State in local procurement exercises may well be against competition rules, not to mention the likely effect of this on local governance.
The Secretary of State has not yet finished—there is more in this clause. We go on to learn that the Secretary of State may also do anything that he considers appropriate in the operation of the whole community right to challenge chapter in respect of a body or person that is other than a previously defined relevant body. Once more I am forced to question why the previous sections of the chapter were written and why noble Lords have spent the last few hours discussing such things as what constitutes a relevant body. It seems clear to me that this clause intends the Secretary of State to have the powers to bring into the community right to challenge, at any time or place as he sees fit, any body that he wishes.
The clause goes yet further. The Secretary of State also intends to interfere with finances. If it is the intention of the Secretary of State to provide “financial assistance” to local groups seeking to take up the community right to challenge, why does he not make that assistance available to local authorities that have local knowledge so that they may decide on its use? That would be something practical, and something which I have previously said is lacking from the Bill. However, this does not seem to be his intention. The reason that I am suspicious is that the Secretary of State feels it necessary to include in the definition of bodies to which he can give financial assistance those that are not relevant bodies under the earlier clauses. Can the Minister explain who these bodies might be, and why the Secretary of State needs these new powers?
I say again that this is not localism. The aim of the community right to challenge is to enable local voluntary and community groups, social enterprises, parish councils and local authority employees delivering a service to challenge a local authority by making an expression of interest in running any service for which they are responsible. I do not recall this meaning that the Secretary of State shall attempt to supplant this very local process in any way he considers appropriate, including placing new bodies that are not defined under the Bill into the process. We have already debated the potential limitations and lack of clarity about the current definitions of a relevant body, and I am quite sure that it is the intention of this House that this should not include the private sector.
I would have thought that the Secretary of State might have learned something from the recent debate over the role of competition in the health service about the risk of inviting the private sector to take over large parts of public services. If not, I am sure that my noble friend Lady Thornton could give him a quick lesson in this area. I have a strong suspicion—maybe wrongly—that this clause may well be a backdoor attempt to bring in such privatisation. Indeed, I believe that this is the same point exercising the minds of the noble Lord, Lord Greaves, and the noble Baroness, Lady Hamwee, whose commendable amendment seeks to restrict these new powers of the Secretary of State so as explicitly to exclude the private sector. However, I do not feel that this clause is one that can be corrected by amendment. The entire clause raises so many questions, and appears to fly in the face of localism and the intentions of the Bill.
It is for this reason that I oppose the question that the clause stand part of the Bill. I hope the Minister will either reassure me tremendously, or support my argument.
Baroness Hamwee
My Lords, I wish to ask one question, which has occurred to me only while listening to the debate—otherwise, it would have been down as an amendment. Does clause 73 extend to the Secretary of State giving directions to a local authority to provide financial assistance in this connection? The Minister can take it as my view that it should not.
Lord Shutt of Greetland
My Lords, Amendment 131D seeks to confirm that bodies which carry out activities for profit cannot be relevant bodies. Amendment 133ZP would prevent bodies which are carrying out profit-making activities from receiving advice and assistance in using the right to challenge.
The definitions of voluntary and community body have been designed to enable a range of civil society organisations to use the right. This supports the Government’s commitment to enable these groups to have greater involvement in running public services. This includes social enterprises and co-operatives, where not all profits may be reinvested in their activities or the community provided that their activities are for the benefit of the community. This requirement will ensure that any profits are indirectly focused on their activities. It will also ensure that large, multinational companies and big conglomerates cannot use the right to challenge. I am aware that that is a concern.
No decision has been made yet on the form that any assistance will take, but one would expect it to focus on those who need it most. This is most likely to mean smaller, newer voluntary and community bodies; but it is sensible that we have the powers to provide assistance to any relevant body that might need it. In answer the noble Lord, Lord Greaves, when I referred to the “power of stoppage”, that was my own phrase. I think that we have to look at regulations because it is not clear to me yet exactly how a local authority will cope when it encounters the whole business of people taking advantage of the right to challenge—whether it can just say “buzz off”, or whether, in the regulations, it cannot say “buzz off” unreasonably. I believe that this is something that has to be worked through in regulations. He referred to the figure of £156,000; that is the threshold figure in terms of the Public Contracts Regulations 2006. However, as well as the £156,000 threshold figure, there is a list of services in Part B of Schedule 3 to those regulations which is quite lengthy, to which that figure is not relevant. This includes education, health and so forth. There are a large number of things which would fall outside that.
It is important to understand that there is nothing in the Localism Bill which addresses procurement. Procurement is up to local authorities. Local authorities have worked out how they do that.
Baroness Thornton
I do not understand, then, why Clause 73(1)(b) talks about,
“participation in a procurement exercise”.
Lord Shutt of Greetland
That would be the exercise that is carried out by the local authority. It does not say how the authority should procure, it simply acknowledges that there will be a procurement exercise. I understand that these are wide-ranging powers, and I understand the noble Lord expressing his view on that. I think, however, that there are two quick responses—and the noble Baroness, Lady Thornton, will no doubt warm to this theme. It could well be that if employees are expressing an interest, under these clauses, provision could be made—and that may indeed be via a local authority rather than the Secretary of State—to give them help and assistance in forming a community interest company. That sort of advice and assistance, and seed-corn money, might enable such groups of employees to enter into expressions of interest. If they did not have that, they would be unable to.
Baroness Thornton
The noble Lord invites me to comment on this. My comment is that it is not the Secretary of State’s job to provide this advice and assistance. It is the local authority’s job, or else that of some association which is under its control. It is the Government’s job to provide the resources for them to do it. This gives too much power to the Secretary of State.
Lord Shutt of Greetland
The noble Baroness takes words out of my mouth. I did indeed say that that is exactly what could happen. I hope that, in the circumstances, these amendments will not be pressed, and that the clause will be able to stay. As I indicated right at the start, regulations are with us, and we will all need to see that we are happy with them. The noble Lord, Lord Greaves, said that he wanted convincing before the Bill leaves this House. It will be a while yet before it leaves.
Lord Patel of Bradford
Can the Minister give the House an idea of when the draft regulations on this clause will be laid?
Lord Shutt of Greetland
All I can do is repeat what I said at the beginning. Before we return to this, we shall either have draft regulations, or we will have an indication of where we are going. I cannot do more than that. I suspect that there is some work to be done on this, although some work is being done as we are going on. We have only just got the response to the consultation. Every endeavour will be made, because obviously it will assist their Lordships if this information is available.
Lord Patel of Bradford
I think that the wording we are discussing is almost duplicated in Clause 88, which will be opposed by the noble Lords, Lord Greaves and Lord Tope, so it is worth taking a second look at the extent of these powers. I am not entirely convinced that we have cracked this nut as lots of issues have not been debated fully.
Lord Newton of Braintree
I hope that I may hop in before the noble Lord, Lord Greaves, sums up, because I have been left in a state of confusion—as, I suspect, has the opposition Front Bench. I understand the point that this provision is not intended to let in large, multinational companies. We probably would not want to do that and in any case it seems to me that the number of large, multinational companies that would want to bid for small, local contracts worth less than £150,000 would be rather small. However, I am not clear whether it is the intention to do what this amendment appears to do, which is to ban even a small profit-making organisation. If that is the case, I am not sure that it is justified. If we consider meals on wheels provision, small catering companies provide sandwiches for local businesses and possibly meals for local old people’s welfare clubs. I do not see why they should be barred simply because they are making a profit, if they can provide a better value service than the organisations we are talking about here. I should like to know what the answer is to that.
Lord Shutt of Greetland
The quick response is that the community has the right to challenge. It is in the Bill—although I cannot turn to the relevant clause quickly—and was certainly in the consultation document, that there may well be circumstances where the community goes into partnership. Going back to meals on wheels, you could have the local community centre going into partnership with the local baker. Those sorts of things could happen, but the community has the right to challenge, not local businesses or conglomerates.
Lord Newton of Braintree
Can I be absolutely clear about that? I am sorry; I am becoming as talkative as the noble Baroness. I do not apologise for that as I think she is doing rather well. If a profit-making company were involved with a community body, would that be all right, even though it was making a profit?
Lord Shutt of Greetland
My Lords, it is my understanding that the community body could have as a partner another body that happened to be a profit-making body.
Baroness Hamwee
My Lords, I am relieved to hear the Minister say that, as the noble Lord, Lord Newton, seemed to be referring to competitive tendering, which we have experienced in different forms over the years. I want to pick up on a point that my noble friend made earlier. This is an observation rather than a question. The Minister said that the assistance would be given to whichever organisations needed it. I hope that the regulations will be written with a view to benefiting the community rather than the provider of the service. Those two things may be the same in the long run, but the benefit to the community should be the lens, as it were, through which one looks at the arrangements.
Lord Shutt of Greetland
My Lords, I understand the point that the noble Baroness is making. I will bear it in mind and take it back to the department.
Lord Greaves
My Lords, I thought that this group might lead to an interesting discussion. We have had an interesting discussion, which I do not think can end today. I have the sense that of all the groups we have discussed so far, this is the one on which my noble friend the Minister has batted on something of a sticky wicket. However, like a good Yorkshireman, he has rightly batted with a straight bat. There have been a few Bradfordians in the Committee today. The noble Baroness, Lady Eaton, has just gone but there are still a few of us left. The Minister does not quite qualify as a Bradfordian by a couple of miles, but he is still using a straight bat.
There are two fundamental issues in this group. One was raised by the noble Lord, Lord Patel of Bradford. The question of how this money is going to be handed out, to whom and what criteria will apply is very important. As we are all Bradfordians, I shall talk about Leeds. If there is an agreement between Leeds council and a big community-based group which would like to take over a lot of community-based services, and that happens, it seems to me very appropriate for government money to be used to assist that process. The process will proceed on the basis of co-operation and people agreeing that a particular group requires help and assistance to build up its capacity. However, if the money is handed out to large national organisations, whether they be charities or other bodies, in order to make speculative challenges or to come in after the challenge phase as part of the procurement for large-scale services such as children’s services or adult care services in large authorities, that would seem to me a less desirable use of the money. If it is to be used in relatively small or medium-sized amounts to bolster local community-based groups, that seems to me a good use of government money. However, I have problems with this provision being part and parcel of large national organisations taking over local services. That is the kind of thing that we shall have to probe further.
However, the fundamental issue in my amendments has not been confronted. My noble friend the Minister stated clearly that large commercial organisations, multinationals or others, will not be able to take part in the community right to challenge and will not be able to make expressions of interest. We all understand that but the problem arises at a later stage if it is a challenge for a service that costs £1 million a year to run and therefore has to be put out to a tendering process. As far as I can see, that would be very like the competitive tendering processes which used to be compulsory, and which some councils still carry out in order to get the best value because that is the way they want to do it. If that is to happen on a compulsory basis as a result of what was initially a community right to challenge, a problem will arise. Procurement does not appear in the Bill. I have been looking at where it might appear. Clause 72 is headed “Supplementary”. Clause 72(1) states:
“The Secretary of State may by regulations make further provision about the consideration by a relevant authority of an expression of interest submitted by a relevant body”.
That seems to allow the Secretary of State to make any regulations he wants about the whole procurement process. Clause 72(2) states that a relevant authority must,
“have regard to guidance issued by the Secretary of State”,
which, as we know, comprises instructions and does not even come to this place for us to nod it through. There are real issues here about the procurement process. If it is to be not in the Bill but in the regulations, the procurement regulations—if there are to be any—have to be among the regulations that the Minister manages to dredge out of the department before we get to Report. On that basis, I beg leave to withdraw the amendment.
Lord Greaves
“regarding services provided on behalf of more than one authority jointly”
Lord Greaves
This amendment is the first in a group of four amendments. In moving it, I will also speak to the three others. It is a miscellaneous group of different things that I put together to avoid getting leant on by the Whips. I think I can deal with these fairly quickly.
Amendment 131J is about how to deal with services provided by more than one authority jointly. The two adjoining authorities might be a district and a county in a two-tier system. I have a number of examples of that; I do not think I need to read them all out, but they include leisure facilities. Amendment 131K is about how the Government are going to review what is going on. This is an all new, untried and untested system that, we assume, will be brought into operation across the whole country at the same time, and the amendment is about how the Government are going to have a continuous review of what is going on, and continuous consultation with local authorities on how it is happening.
Amendment 133ZK provides more regulations and restrictions. It is about the rejection of an expression of interest. It seems to me that there are two stages at which things can be rejected. One stage is where the expression of interest is made and the authority can simply say, “We are rejecting the expression of interest and are going no further”. At the moment, Clause 70(8) says:
“The relevant authority may reject the expression of interest only on one or more grounds specified by the Secretary of State by regulations.”
That is crucial. Again, it would help if we could know what those regulations are; they ought to be in the Bill. The second stage is procurement, which we have been talking about.
Amendment 133ZL is a provision by which the relevant authority, the council, can carry on as before with the exercise, even if the relevant body—the community body or the parish council—withdraws its expression of interest or refuses to agree to modify the expression of interest. It is an indication yet again that once the process has started, it will continue and be very difficult to stop. That is, I think, of concern to some of us. We can see a situation in which a community organisation as defined is persuaded to put in its expression of interest. It is not really interested at all, but it gets the process going and is in league with one of the big boys, a big commercial organisation, which, if the figure is over £156,000, will then come in and try to clean up. There are real concerns that there are loopholes here that need looking at before the system is unleashed. I beg to move.
Lord Shutt of Greetland
Amendment 133ZK would remove the Secretary of State’s power to specify in regulations the grounds for rejecting an expression of interest. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will of course act within the spirit of the right, but the power to specify the grounds on which an expression of interest could be rejected prevents a recalcitrant authority from rejecting it out of hand and defeating the purpose of the right. I accept that, as my noble friend indicates, we are back to regulations.
Amendment 131J would give a Secretary of State a power to make provision in relation to services that are provided jointly by authorities in regulations. We would expect relevant authorities to take a common-sense approach to services that are provided jointly, and to agree together a period during which expressions of interest could be submitted and arrangements made for considering them and for carrying out any subsequent procurement exercise. However, provision in relation to jointly provided services can already be made if necessary under the powers in Clause 72.
Amendment 131K would require the Secretary of State to consult representatives of relevant authorities when making regulations of guidance, and to have regard to their views. We have recently concluded a consultation, with all those with an interest in the right, on our proposals to use the various powers that we have taken. We will consider the need for consultation on future changes.
Amendment 133ZL would remove the authority under this chapter for a relevant authority to undertake a procurement exercise when an expression of interest has been withdrawn or a relevant body does not agree to modifications to it proposed by a relevant authority, meaning that it has to be rejected rather than accepted. An authority might wish to carry out a procurement exercise in these situations if, for example, it is attractive to the type of service delivery set out in the expression of interest and if the authority wants to initiate a procurement exercise anyway, or if services are currently contracted out and the company needs to undertake a procurement exercise in order to maintain service continuity. Clause 71(7) provides clarity in stating that a relevant authority may determine whether to carry out a procurement exercise where an expression of interest has been withdrawn. I hope that that will persuade my noble friend to withdraw his amendment.
Lord Greaves
My lords, I will withdraw it in a minute. However, I will, as always, read carefully what my noble friend has said and decide whether any of the amendments in the group need further pursuit.
The more I hear this debate, the more I am concerned about the word “challenge”. I think “challenge” is wrong because it is an adversarial word. If any of these arrangements are going to work, there will have to be a willingness on both sides—that is to say, on the part of councils and the organisations that are making a bid to run services—to make them work. There has to be co-operation. If that is not there, frankly the arrangements are not going to work very successfully. What is needed more than anything else in many places is a culture change, which can best be created by people exhorting, explaining, being enthusiastic and persuading, rather than having hundreds of thousands of words telling people in detail what to do. If people do not like what they are doing, they will do it grumpily, and it will not work very well.
The only question I will ask my noble friend the Minister concerns all this talk of recalcitrant authorities. What estimate have the Government made of the number of local authorities which they expect to be recalcitrant in relation to this particular part of the Bill?
Lord Shutt of Greetland
I have no idea whether there is any estimate. When starting afresh with a new proposal, one of the things I think to myself is, “Could local government have done this anyway? Could it have said, ‘It could be that all sorts of bodies could do things rather better than us. Can we find ways in which we can give these opportunities?’”. I am doubtful that I have heard the answer. Therefore, because this has never been done, there might be a perception that this is the sort of thing that local government would not get up to on its own. The authorities could be recalcitrant in those circumstances, but in general I do not know, and I suspect that the calculation is not there because I do not see how you could get that calculation. However, it is worth looking at what has happened to date.
Lord Greaves
The Minister is tempting me to go into a whole new area, which I will resist, except simply to say that there is a culture in local government nowadays that is very different from what it was 30 or 40 years ago; you do not do anything at all, on anything and in any way, unless you have permission from the Government or the regional office, which has now been abolished, or someone else up there, to do it. People are scared to death of doing things because they have lawyers who tell them that not only can they not find the power in the legislation; they cannot find the instruction in the legislation and all the stuff that tells them exactly how to do it. That is the problem in local government now; it is in detailed bureaucratic thrall to central government, and we are about to pass a Bill that increases that.
Having made that counterpoint to what my noble friend said—which might have some justification but is, I think, part and parcel of the fact that people in Whitehall do not believe that local government can ever be trusted to do anything useful or sensible unless they are told how to do it as if they were in kindergarten—I beg leave to withdraw the amendment.
Lord Lucas
“Duty to consider requests
(1) A relevant authority must consider a request in accordance with this Chapter if—
(a) it is submitted to an authority by a parish or town council, and(b) it is made in writing and complies with such other requirements for requests as the Secretary of State may specify by regulations.(2) In this Chapter “request” means a request to a relevant authority that it should provide a service or perform a function (being a service or function that it already provides or performs, or is entitled to provide or perform) in a specified manner.
(3) A relevant authority in receipt of such a request shall accede to it unless doing so would—
(a) result in net additional expenditure or net reduced revenue, or(b) adversely affect that authority’s wider interests or policies.(4) In reaching a conclusion under subsection (3)(a), the relevant authority shall take into account all consequent changes in expenditure or income, including any amounts that the parish council is prepared to pay the authority, except that it may not take into account any net reduction in revenue resulting from the enforcement of civil penalties.”
Lord Lucas
My Lords, the amendment gives a town or parish council the power to put in a request to its superior council, whether that is the district, county or city council, to say, “We wish you to provide your services in a particular way”, or, “We wish you to exercise your functions in a particular way”, and for it to be imperative on the superior council that it accede to the request unless doing so would cost it money or interfere with its wider interests.
There are three principal themes behind the amendment, all of which we will come to in my later amendments. First, there is much to be said for producing something between the current status and some of the cathartic remedies offered in the Bill—in this case, the community right to challenge. It is a serious prospect to ask a small Hampshire town to take on rubbish collection, parking control or any other services that are provided on a large scale by the local authority, and probably belong at that scale, but it is quite reasonable for it to say to the local authority, “When the dustmen come round and spill a bag, we would like them to pick it up rather than leaving the contents on the ground, as your current contractor does”, or, “Please can you desist from parking control on Wednesdays, when we like to allow everyone free rein to get into the shops in the town centre”. To my mind, such requests should be acceded to, but we will never do it through the community right to challenge.
I propose this as a more gradual way, an in-between solution. We are giving such power and influence to town and parish councils that they will over the next decade or so grow much stronger than they are at the moment. There are many other things in which people have an interest locally—not just planning but the whole way in which their local services are provided—and it seems unreasonable that the only way they should have to influence those things is in trying to put together a consortium to take over from the superior council the whole provision of those services. If they can find a solid way to influence the services, if they can make a definite promise to their electorate that they will go to the superior council to ask for that to be done and to have every indication that it will, that will contribute to building strength at the bottom end of the council structure. That will produce a much more robust council when it comes to taking all the decisions that will be asked of it under neighbourhood planning. In strengthening communities and the basis for neighbourhood planning, the amendment has a role.
The third role concerns cities. In neighbourhood planning, we are producing a structure that will work very well in the suburbs and the countryside, where there is a great deal of value to be extracted from the planning process and where communities have a close interest in the way that development takes place. That is the case not only in the inner cities but in places such as in Battersea in London, where I lodge. There is really no interest in controlling development because it is a matter of minutiae and individual planning decisions. The place is built up, except for Clapham Common, and no one can touch that. There are no big decisions to be taken in our neighbourhood; there is no incentive to get together as a community under the provisions of the Bill. However, if the neighbourhood was to be granted any sort of control over the enforcement of parking, 50 per cent of households would come out to vote tomorrow.
I want the capabilities of neighbourhoods under the Bill extended to include the sort of things that people will care about in cities. In places such as Battersea, that is parking, music in pubs and licensing, and other such local authority functions. In the more impoverished parts of the inner city, it is likely to be education and provision for youth. Those are the sort of things that a community will care enough about to want to influence and that will provide the motivation for the creation of the sort of active neighbourhoods that the Bill is intended to achieve.
Lord Newton of Braintree
Prompted again by what I have heard—I hope that this is not out of order, because it raises a point about the clause with which we have just finished—this is the first reference I have seen to town councils as distinct from parish councils. Town councils are not specified as relevant bodies in the previous clause; they are included in the new clause. What is the position of town councils under the Bill?
Lord Greaves
My Lords, legally, town councils are parish councils. I think that is the answer the Minister will give. It is true, anyway. The noble Earl, Lord Lytton, is poised to come in again. A town council is a parish council that has passed a resolution under about three lines of the Local Government Act 1972 to call itself a town council. It can have a town mayor if it wishes, but it does not have to. I think that is all there is to say about it, but the noble Earl might have other things to say.
I strongly support the amendment moved by the noble Lord, Lord Lucas. It is ridiculous if a parish council can put in a lot of time and effort to consider taking over local services, has to do it through the expression of interest procedure and can then be outbid by other people. There is no sense in that. The Minister might say that it is unnecessary because if the district, unitary, county or whatever council agrees to it, it can happen anyway. My experience is of a borough council that tries to offload things to the parishes such as public conveniences when the parishes do not want to take them on, but that is a different matter. Throughout local government, there is a culture of conservatism and fear of taking on and doing more things. Changing that culture is the most important thing that we have to do. The amendment would be a very useful addition to the Bill.
The Earl of Lytton
My Lords, there is nothing like the words “parish council” to get me out of my seat. Noble Lords will know of my interest in parish and town councils. To answer the first question, the noble Lord, Lord Greaves, is right: fundamentally, structurally, parish and town councils are effectively synonymous. The differences are in the way in which they operate, but structurally in their clerks, membership and rules of engagement with which they have to comply, you can more or less say that the term is synonymous one with the other, except that one happens to apply to a town. It is an area where we have great difficulty with what we might call the family of parish and town councils, because town councils such as Weston-super-Mare have huge budgets and are on a principal authority scale, whereas many tiny rural parishes, although they may have quality parish council status, are extremely small. That lack of consistency makes it very difficult to deal with parishes as a cohesive whole.
I say straight away that I have not conferred with the noble Lord, Lord Lucas. I am very pleased that he has moved this amendment. There are some extremely good examples of where principal authorities have felt that they had the confidence to pass on to a parish or town council a function that they knew could be dealt with readily, cost-effectively and which was well within the capacity of the town or parish council concerned. But I am bound to say that nationally, the track record of passing things down to the lower tier has been fairly poor, taking things as a whole. That is one of the issues that lies behind localism. We need to get that straight.
What the noble Lord, Lord Lucas, suggested was a sort of localism-light in the sense of trying to avoid a bureaucratic and procedurally-driven process. On the whole I would welcome that as well. At Second Reading, I said that these things have to be rendered down to a localism scale—a community scale, not based on the sort of procedures and checks and balances that perhaps apply to the much more senior aspects that must be rightly dealt with by principal authorities.
I give one example. In my own parish council in Shipley in West Sussex, which is one of the largest geographically but has one of the smallest populations in the whole of West Sussex, a parish councillor commented some time ago on the problem the parish council was having with verges. People were encroaching on road-side verges by extending their gardens, filling-in road-side ditches, and doing all sorts of things that might include impairing forward visibility along the road. They were planting things, and so on and so forth. The verges, in so far as they were part of the highway, would have been vested in the highway authority, which in that instance is the county council. We know that all county councils are subject to cost constraints, and certainly West Sussex where I live is no stranger to that and has introduced some commendable measures to try to square the circle, so to speak. But it cannot be in all places at all times and it cannot police those verges. Such things should be preserved in the generality of the public interest—they are assets of community value in many cases but they are often orphan pieces of land. They may historically have been part of an enclosure plan or something like that which attached them to a particular estate or riparian owner, but over time, and with the process of land registration, that link has been lost. The boundary may have been drawn to an ordnance survey boundary that was set back from the hard edge of the road, so you end up with orphan strips.
Parish and town councils in some instances—I am not saying in every instance as they may not have the facility to do it—would like to get hold of those to manage them properly and make sure, in particular, that they are not filched by neighbouring householders or have things dumped on them where nobody seems to be responsible. They may get driven over because it happens to be a convenient place to pull off for dog walking, as happens in my part of the parish. That is just one example of something that could be of benefit.
In general, I support the amendment but there is a caveat. The words,
“net additional expenditure or net reduced revenue”
is a proviso that the noble Lord wants to insert under subsection (3)(a). There is a problem with activities, services and things being passed to parish councils shorn of any resource to deal with it. That is the classic thing that we refer to in parish and town council circles as double taxation. The parish then has to raise by precept a means of funding that expenditure because the principal authority has said, “Yes, you can have this but there is no funding to go with it”. I therefore enter a caveat on that. On subsection (4), I would flag up that it might be extremely difficult to verify, knowing what little I know about local government finance, to deal with the matters that the noble Lord is trying to cover there. I well understand his reasons for putting them in, but I do not know how you would prove it. However, in general I support the direction of travel of the amendment.
Lord Newton of Braintree
My Lords, I knew it was a mistake to mix with these experts. I had better apologise for not understanding the point about parish and town councils and indeed for stirring up the noble Earl, Lord Lytton, with his well-informed speech.
I want to make two observations, one of which builds on that. Town councils, in terms of their size and perception of themselves, can be, as in his example of Weston-super-Mare, completely different animals from most of the parish councils that I know. My constituency contained two main towns—the towns have not changed but the constituencies have—one of which was the main town, Braintree, and the other was Witham, which was almost the same size, with 30,000 people in those days and possibly more now, which had a town council. If I had tried telling them that it was just a jumped-up parish council, I would have expected to lose the odd vote at the following election. The Government appear to be saying that all these bodies, which are not insignificant, are just jumped-up parish councils. I do not think that that is very sensible. Whatever parliamentary draftsmen may say, it might be sensible to incorporate town councils in the wording of the Bill. I leave that thought with my noble friends.
Beyond that, there was one other thing that I wanted to say. I agree with the noble Lord, Lord Greaves, that district and borough councils are not always great at wanting to devolve downwards. Presumably one of the objects here is that they might be encouraged to do that in appropriate circumstances. The only thing I ask, having endlessly declared that my wife is a district councillor, is that nobody tells her what I have said.
Lord McKenzie of Luton
I wonder whether the noble Lord can help me on a point which is prompted by this proposition. If you are switching expenditure from one authority to another and precepting increasing on the one hand and reducing on the other, how does that play as far as the calculations for council tax referenda are concerned?
Lord Shutt of Greetland
My Lords, I need real notice of that last point as it is a bit technical. I have not heard of parish council tax capping. I have never heard of it and have a feeling that it is not there. That is the simple response to that.
It may be that having a little amendment putting parish or town in the Bill could be helpful so that nobody is in any doubt that parish means parish and town. I understand and accept that. Of course, there is no symmetry in the sense of the sizes of parishes or towns. For example, I was in the former Elland urban district council area, which never got parish council status, yet Todmorden, which is a borough council, did. There is no symmetry, but nevertheless this House has a wealth of experience of people involved in parish and town councils, so it is not surprising that such an amendment creates interest.
Through the legislation as a whole, we are enhancing the role of parish councils. They will be able to exercise the general power of competence when they meet certain conditions. They will be able to nominate assets of community value and we propose that they can express their intention to bid for an asset, triggering the full moratorium or window of opportunity. They will be able to initiate the preparation of neighbourhood plans and we will also be carefully considering the arrangements for parish polls as part of our proposals for local referendums.
However, we believe that Amendment 133 is a step too far and, in addition, is unnecessary and risks cutting across the intentions of the community right to challenge. We already expect local authorities to engage with their communities on services, including with parish councils, as part of the commissioning and engagement process. Where there are representations, we would expect these to be considered and taken seriously. If representations are made and concern over service delivery remains, parish councils are already named as relevant bodies under the community right to challenge. They would be able to issue a challenge to deliver the service if they believed they could do so differently or better. Relevant authorities will have carefully to consider these challenges.
Lord Greaves
Will my noble friend confirm that it will still be possible for district councils or any principal council to come to an arrangement voluntarily with their parish councils to transfer service delivery to the parish council outside the provisions of the community right to challenge?
Lord Shutt of Greetland
My Lords, I believe that is the case. I do not see that that should be disturbed by anything that the Bill is doing. The noble Lord talked about it the other way round, saying that sometimes district councils try to offload and the parish says, “No, we would sooner you kept doing this”. I do not see that there is any reason why that cannot be done under present arrangements. The right to challenge is a different principle. There is a risk that this amendment could catch relevant authorities in an endless and burdensome cycle of considering requests and counter-requests from different parish councils in their area that have different ideas and preferences as to how services should be run.
Finally, the amendment would risk cutting across the community right to challenge as a whole. Requests from parish councils to provide services differently, which might include the service being provided by the parish council or by another organisation, would potentially override expressions of interest from other relevant bodies. I hope that in the circumstances the noble Lord will feel able to withdraw his amendment.
Lord Lucas
I thank my noble friend for that reply but not for the content of it. We will come to these matters again. I understand what he is saying, but I think that the Government are falling short of the ambitions that they should have in his saying that. We are taking a step towards making parish councils serious bodies for which serious people in the community stand and expect to do serious things. To put them in a position where the only thing that they can promise their electorate is to take a particular attitude on planning is seriously missing a trick. There are many other things that good people in a community should have an influence over. They should feel that they can go to their electorate and say, “I will do this for you”, and not just, “I will go cap in hand to the district council” but “I will make a request that the district council has to consider”, or some equivalent. We ought to be looking at ways of empowering parish councils and particularly town councils in relation to the districts and the counties that sit above them. I am sorry that the Government feel that they have gone far enough in this legislation. I hope that when we get experience of parish councils and town councils being what they can be under this legislation, we will take a step forward.
It is not so much the problems of the noble Earl, Lord Lytton, that I am thinking about. His sort of parish under this Bill will become rich in opportunities to raise funds as a result of development, which will enable it to do whatever it wants with its verges. It really will not be a problem for them, but the Bill is a serious problem for city parishes, first of all because there are no parishes. If you look at my bit of Battersea, there are no lines drawn other than the ward boundaries, and they change every time the Electoral Commission has hiccups. There is no community on the ground, and Battersea is a relatively homogenous corner of London.
There are bits of London where you have an enormous mix of different communities with strong ties within them and very few ties between them and to the locality. To build a community there which can take advantage of the facilities in this Bill to influence planning requires that the organisations we create can have influence beyond mere planning. Most of the lives of people in the community are dictated by the ways in which the local authority chooses to spend money on them, to police them and to require things of them. If they want to do something as simple as having a real influence over the provision made for their children, particularly in terms of early years, youth clubs, youth provision and help into work, all of which are substantial programmes going through Government and through local authorities, they have no right to do so. No one can promise that under this Bill the neighbourhood will have a real influence on those sorts of things. Unless we offer communities that ability, we will never create the communities to take advantage of this Bill. This will be a Bill that does not happen in the cities because no one ever gets going because no one can create the consensus because there are no powers on offer that are relevant to the local communities.
I think that is a serious problem with the Bill and one that I hope the Government will think about. I hope that the Opposition will think about it, too, because I associate the Opposition with having some interest in cities from time to time. I was particularly disappointed by the noble Lord’s lack of interest in this amendment. I hope I manage to interest him in some of my later ones. It seems sad to me that the Opposition are just interested in the rural vote and have no care left for cities. Perhaps that is being left to the Liberal Democrats, for whose support I am grateful. I beg leave to withdraw the amendment for now.
Corporate Governance and Accountability
Lord Harrison
To ask Her Majesty’s Government what steps they are taking to improve corporate governance and accountability with respect to social and environmental issues.
Lord Harrison
My Lords, the UK corporate governance framework is built on the principle that shareholders exercise oversight of company boards. The publication last year of the UK stewardship code marked a recognition that this ownership role needed to be taken more seriously by the institutional investment community. Indeed, I believe the code should include oversight of environmental, social and governance issues, not simply because it is the right thing to do or because these issues have a material impact on company returns, but also because it translates into a competitive advantage for business. Sadly, shareholder scrutiny does not always work, as in the case of the BP oil spill due to lax safety standards. Two months before that disaster, a shareholder resolution on tar sands—a similar method of oil extraction to deep-water drilling—which was put forward to increase disclosure of the risk involved, was rejected by 90 per cent of shareholders. As the noble Lord, Lord Freud, commented in a recent debate,
“some pressure on the BP board by its shareholders in relation to environmental issues, might have been especially valuable to the company”.—[Official Report, 15/3/11; col. GC 28.]
I later asked a question of the noble Lord, Lord Freud, along similar lines. He indicated that the Government had no ideas for new regulations in the current climate but they are open to creative ways of improving the quality of disclosure. So I ask the Minister: are the Government continuing to explore non-regulatory ways to encourage better reporting by pension funds, and what assessment, if any, have the Government made of the adequacy of the reporting at present? We need to improve matters.
The UK stewardship code encourages fund managers to disclose their voting records and the Government have confirmed that it is important that all institutional investors disclose their voting. Voting and engagement on social and environmental issues is an important part of an investor’s toolkit for managing risk that could affect savers and yet, after years of voluntary codes, only 64 per cent of fund managers and 21 per cent of pension schemes publicly disclose their voting standards. The Government have reserve powers to make voting disclosure mandatory. Are they thinking about it and under what circumstances might they contemplate it? Are they open to ideas of improving the quality of pension funds’ disclosures on the management of environmental and social risks? Perhaps the Minister could tell us.
Another, besetting problem is the short-term approach to these matters. As Paul Abberley, CEO of Aviva Investors, recently put it:
“If you are investing in a company with a long-term time horizon, it very much matters to know about sustainability issues, but if you are taking a time horizon of an average holding of six weeks, you might take the view that there may be a time bomb ticking but it is unlikely to go off in my holding period”.
I am very pleased that Vince Cable, the Secretary of State, has announced a review of economic short-termism and published a call for evidence on a long-term focus for corporate Britain. In addition, he has appointed Professor John Kay to oversee that with questions such as how best to ensure that the timescales over which companies and fund managers operate match the interests of clients and beneficiaries. Equally, how do you establish the most effective means of boosting transparency for clients, underlying beneficiaries and companies themselves?
Another worry is the misinterpretation of the fiduciary duty. The FairPensions report, Protecting Our Best Interests: Rediscovering Fiduciary Obligation—I am pleased to acknowledge the help from FairPensions for this debate—was published in March 2011 and received a good hearing from Ministers Ed Davey and Steve Webb. I wonder whether the Government will respond to this, to encompass and clarify. Howard Pearce of the Environment Agency pension fund argues that,
“all pension funds will need to adopt a climate change-proofed financial investment strategy in the future to enable them to fulfil their fiduciary duties”.
However, fiduciary duties should demand an enlightened approach to social and environmental issues, but we all know that too often they are invoked to justify the reverse. Pension fund members are told that their fund cannot be concerned with stopping climate change because it has a fiduciary duty to maximise returns. On closer analysis, that seems daft.
I am a great supporter of narrative reporting. I think it is an improvement on what we have had before in company reports. Nevertheless, we have problems relating to unreliable information. Many investors say that the lack of verification makes it difficult for them to rely on narrative reports, which can be misleading or present a rose-tinted view of the world. The OFR included an enhanced audit, requiring a higher standard of verification than is currently the regime. Sometimes it is up against incomplete information. Many companies focus on peripheral corporate citizenship activities undertaken during the year, such as volunteering—I am wholly in favour of volunteering—rather than on key social and environmental risks to their core business such as water, security and scarcity. No official guidance has been published on what constitutes an adequate report. Perhaps the Minister can comment on that.
A third problem is inadequate enforcement. The regulator has judged that two-thirds of annual reports fall short of legal requirements in relation to principal risk, yet in 2008-09 it did not take enforcement action against a single company. The regulator is not resourced to take active enforcement action and generally responds only to complaints from investors and NGOs. In the light of that, I ask the Minister whether the Government can confirm that they still intend to bring forward proposals specifically to drive up the quality of social and environmental reporting, as indicated in the coalition agreement. Do the Government accept that better reporting will achieve their objective only if investors have confidence in it? Do they therefore agree that any new reporting regime must contain improved mechanisms for guaranteeing the reliability of information, whether through enhanced audit or more robust enforcement? I declare an interest as the vice-chairman of the All-Party Group on Corporate Governance.
In conclusion, I ask the Minister whether she can put the matter in this frame. Sometimes we worry about the introduction of legislation but, to my mind, and in my assessment of it, we have to create a view that consideration for environmental and social and corporate governance is not a chore but a cheerleader for a better approach to what a company is doing. It can enhance its competitiveness within the market if it complies not only in a tick-box way, but with verve, inspiration and interest. I ask the Minister whether, when they think about it deeply, her Government are capable of leading the charge of encouraging companies to take this more positive attitude, which I think will carry with it the appropriate approach to something which is very important to investors, to shareholders and to pension fund holders for the future. I am very grateful to all those who are to contribute to this debate. I look forward to the Minister's reply.
Baroness Northover
I remind noble Lords that this is a time-limited debate. When the clock shows “3”, noble Lords will have had their time.
Baroness Bottomley of Nettlestone
My Lords, the House is grateful to the noble Lord for identifying a subject that is of such concern that we all wish that this had been an all-day debate rather than just an hour's debate. I share his view that, for all the stakeholders in the debate, the institutional community is not sufficiently well engaged currently and the stewardship code offers a serious opportunity.
The fact is that we in the UK should be proud that UK companies have been at the forefront of the process. A large majority of major UK firms publish high-quality social and environmental information on an annual basis. Many produce stand-alone reports dealing with financial and social performance. Frankly, many of them are too large, too lengthy, too detailed and sometimes irrelevant. Those of us who have been Ministers for a certain time know that the way to silence Ministers is to bombard them with paper, and a corporate report lasting 500 pages is a way of befuddling rather than informing.
Companies see the importance of good corporate ethics and strategy and of reporting properly and fully about the full nature of their activities. I agree with the noble Lord that volunteering is not the same as human rights, female empowerment and avoiding child labour. We already go further in non-financial disclosures than most other EU members. I am concerned about further stringent regulations that might impose a significant administrative burden on firms without a corresponding gain in transparency.
I declare an interest as I am on the UK advisory committee of the International Chamber of Commerce. We have drawn attention to the fact that allowing a certain degree of discretion in non-financial reporting enhances transparency by allowing companies to focus on issues of more relevance and materiality to their business operations. By contrast, the tick-box approach, which I think many of us would like to avoid, would produce a sea of data and information, at considerable cost to UK plcs, that would be impenetrable to all but the most persistent reader. I think the CBI has similar views.
It is understandable that there is a desire for greater clarity. Since the Companies Act 2006, on which I made my maiden speech in this House, we have seen great development. My honourable friend’s department, BIS, has consulted on narrative reporting. We are fortunate to have her as our Minister because she had a significant commercial business career and was also chair of the National Consumer Council, so she can balance all the interests involved. Perhaps she will let us know what the Government are doing to improve the quality of narrative reports to ensure improved disclosures on the environmental and social impact of corporate activities.
Above all, I want to emphasise that the ability of global business to be a force for good, for female empowerment, for sustainability and for anticorruption in many parts of the world, should not be underestimated. As we look for modifications, we should remember the opportunities that are there.
Lord Haskel
My Lords, my noble friend Lord Harrison outlined the benefits of good corporate governance and reporting. Do they increase profits, the rate of return or shareholder value? I do not think that anybody knows. Therefore, strong forces oppose these activities and see them as a waste of money that distracts management from dealing with competition. Because one cannot show them as assets on balance sheets, they have no effect on shareholder value. These issues change with fashion. They are unpredictable and have little impact on the short-term horizon of many managers.
A good metaphor for these conflicting views is the way in which we manage our forests. The Minister may find the subject of forests painful, but the metaphor is not mine: it came from Mark Goyder, the founder of Tomorrow’s Company. We can cut down trees and harvest wood for an immediate cash benefit; then we are left with barren land. Alternatively, we can nurture the forest, plant for the future, take out the dead wood and let new plants and wildlife thrive in the forest, and thereby open up new horizons. Many of us would like to know which companies are good at forestry so that we can deal with them, work in them or invest our savings or pension funds in them.
Many of us like to drink Fairtrade tea and coffee because we know that everybody in the value chain has had a square deal, or we may look for the Carbon Trust Standard mark that tells us that an organisation has tackled its emissions. Branding enables us to make this choice. Helpfully, as my noble friend reminded us, Tomorrow's Company has produced a stewardship code that incorporates many things that we are debating this evening. Will the Government support and facilitate a branding exercise to enable us to recognise the good companies that play such an important social and environmental role in our economy?
Lord Newby
I thank the noble Lord, Lord Harrison, for introducing the debate. I declare an interest as an adviser to companies on issues of corporate governance and responsibility. There is no doubt that the past decade has seen a sea change in attitudes to social and environmental accountancy, with both voluntary codes such as that of the Global Reporting Initiative, which has been widely taken up across the world, and statutory provisions such as the Companies Act 2006, which has already been referred to and which has required companies in the UK for the first time to report on their social and environmental impacts.
The previous Government planned to go slightly further and introduce a full operating and financial review, before Gordon Brown got cold feet at the last minute. The principal difference between an OFR and what we have under the Companies Act is the requirement for some sort of audit. While I agree with the noble Baroness, Lady Bottomley, about wanting to avoid a pure tick-box approach, at present the quality of reporting on social and environmental issues is extremely mixed. Only 9 per cent of companies that Deloitte surveyed reported on their carbon emissions in line with Defra guidelines. Reporting by companies of community investment is both extremely difficult and patchy. Requiring an audit would improve standards. Under the Climate Change Act, the Government have the potential to make carbon reporting by companies mandatory. Does the Minister think that the time has come for that provision to be brought into effect?
Of course, reporting by companies is only part of accountability. The other part, referred to by a number of noble Lords, is the accountability of those who invest in companies. For many years, investors have been remarkably uninterested in social and environmental performance. This is beginning to change because people can see, not least in relation to climate change, that how companies relate to the environment will have a material effect on their long-term sustainability, particularly in some of the extractive industries. It will also be logical for pension funds, because of the long-term implication of companies’ environmental and social impacts, to take account of those factors in their investment decisions. However, as we have already heard, there are serious concerns about whether they can do that legally, given their fiduciary duties. Do the Government believe that a review of that issue is now appropriate?
Baroness Young of Hornsey
My Lords, I, too, thank the noble Lord, Lord Harrison, for securing this debate. I will declare my interests. I work with various organisations concerned with ethical and sustainable fashion, including Made-By, the Centre for Sustainable Fashion and Cotton Made in Africa. I am also a patron of Anti-Slavery International.
Many of us balk at the idea of introducing more legislation and complex regulation, especially when some businesses are taking the initiative. For example, the Responsible Sourcing Network has created a pledge for US and European companies publicly to state their opposition to the use of forced child labour in the harvesting of Uzbeki cotton and to refuse to use it in their products. There must also be firm action from the EU, and from the Governments and importers in those countries that trade with Uzbekistan.
Self-regulation and voluntary measures on their own are not always enough to secure the necessary support for the people and environments that are most vulnerable to exploitation. Reacting to stakeholder demands for greater transparency and responsibility, Governments in Europe and the US are legislating on corporate governance and accountability. In 2008, Denmark adopted an amendment to the Danish Financial Statements Act requiring large businesses and listed and state-owned companies to account in their annual reports for their work on CSR. Spain has made a similar move with the Sustainable Economy Act, which came into force in March 2011.
Where do we need to be? We should aim high. Sir Geoffrey Chandler, founder of Amnesty International’s business group and a former director of Shell and of the National Economic Development Office, argued that all businesses should be required to ensure that their operations and supply chains comply with the Universal Declaration of Human Rights. An important step towards this aspiration would be to include a requirement in the combined code of corporate governance that businesses should report annually on the measures that they are putting in place to achieve this, to uphold the rule of law and to ensure environmental sustainability in their international operations.
Professor John Ruggie, UN special rapporteur on business and human rights, argued for measures to advance corporate legal responsibility through countries establishing extraterritorial jurisdiction over corporations for violations of international laws and conventions. What plans for action do the Government have to improve the quality of social and environmental reporting, and how might they move towards the high aspirations articulated by Sir Geoffrey Chandler and Professor Ruggie?
Lord Patten
My Lords, I want to make three points before the clock strikes three. First of all, I strongly believe in the corporate, social and environmental agenda. I equally strongly believe in the enterprise economy in this country. It is extremely important that our growth agenda succeeds at a time of fragile economic recovery. Therefore I believe it is extremely important that across the piece, in the areas of environmental responsibility and corporate social responsibility, there is no more unnecessary loading of unnecessary regulation on the shoulders of businesses, which are trying to create jobs and employment opportunity. It is extremely important to counterbalance the quite proper pleas for better reporting, greater clarity and all the rest that we have seen. Along with our growth agenda, we also have, as a coalition, a happiness agenda. I know that the Minister wants to make me happy, and I hope that she will indeed make this Back-Bench Peer happy in her wind-up speech by saying that we are not going to have any more unnecessary regulation in this area of corporate social responsibility and environmental social responsibility between now and 2015.
Secondly, there are of course some successful companies that have made very good money by selling themselves quite properly as ethical producers. Body Shop and Lush are examples from the cosmetics world, while Ben & Jerry’s and Innocent are producers in the worlds of ice creams, fruit drinks and vegetables. By comparison, most companies make cars, build buildings or supply services and try to be good corporate citizens, just as most individuals try to be good individual citizens. They are generally now, I think, very responsible in these areas. The noble Lord, Lord Harrison, who has a good track record for introducing interesting debates of this sort, said in his very interesting speech that he wanted more companies to take the view that this was an important issue. In my experience, in declaring my own financial and corporate interests, I think most companies do indeed take this very seriously and have already taken the view that this is something that they should do. In other words, it has entered into their corporate DNA. Just as belatedly, in the slipstream we are seeing the need to have more women and greater diversity on the boards of our companies getting into the DNA. It is lagging a bit and still has some way to go, but with the enactment of the Bribery Act last Friday, we are going to see ethical training and ethical codes also coming along and getting into the DNA of companies. That is a very considerable agenda indeed and I think that the direction of travel is right.
Lastly, investors and institutions have been criticised for perhaps not being active enough, particularly those that hold shares for a short period. I welcome very much the Government’s encouragement for greater employee share ownership. I think that is a very good thing, and as the Government and others try to explain why participating in a capitalist economy is a good thing, at the same time they should stress financial benefits and their promotion and the opportunities for people with shares newly given to take an active interest in the social and environmental agenda of the companies of which, after all, as employees, they are now part-owners.
Baroness Sherlock
My Lords, the Minister may struggle to make us all equally happy, but I hope to find some common ground at least. I add my voice to those who look at the reasons why environmental and social reporting should be something that we promote. For a start, it would help to increase public trust in business and in those who regulate it, which we could do with as much of as possible. Nevertheless, reporting requirements are mainly there to make sure that stakeholders can make informed judgments about companies. If we overly limit that to too narrow financial information, we fail to take seriously the indirect, unintended or non-financial costs—or indeed benefits—of corporate activity. The consequences are very serious. In economic terms, it fails to account for externalities and in practice can distort a market. In social terms, it fails to take account of the full range of stakeholders who have a legitimate interest in the company's activities because they—we—are affected by them.
Is the noble Lord, Lord Patten, right in saying that no more regulation is needed? I fear not. If we look at the environment, it seems very clear that voluntary reporting simply cannot deliver results on the scale and at the pace that is necessary to meet the reduction in emissions that British law already requires. In my view, carbon reporting should therefore be mandatory, at least for large companies. In terms of social accounting, we have heard ample evidence that current narrative reporting requirements are not being followed. A recent report from the Corporate Responsibility Coalition summarised the problems pretty well as follows:
“vague corporate obligations … insufficient auditor involvement and … weak enforcement”.
Apart from that, it is going swimmingly.
There is good practice out there. I discovered recently that the first plc in Britain to produce an audited social report was not a corporate giant but Traidcraft, a medium-sized company founded in Durham in 1979 to fight poverty through trade. I am sure that my noble friend Lord Haskel has enjoyed some of its chocolate bars and tea. In 1993, Traidcraft published an audited social report, and I hope that the Minister has had the opportunity to look at its social accounts. I found them fascinating. They told me more about the impact of that company not just on its customers, members and supporters but on its supply chain right the way through to its staff and the lives of the very farmers out in developing countries. That is a true social report. I encourage the Minister to comment on it and to share some of the methodology with larger companies. There is so much more that companies could do. If they will not, they must be required to, I regret. At the very least, we should see full monitoring and compliance with the current requirements. However, we also need some guidance on what should be reported on, and we need an audit standard and, crucially, a timetable for when disclosure of social data will be verified. If data cannot be verified, it simply undermines their legitimacy at all. We may, in fact, discourage people from doing this rather than encourage them.
Lord German
My Lords, I declare my interest as a trustee of a pension fund, and I want to speak exclusively about the investment in pension funds. It is there, of course, where people are investing their money day in, day out, month in, month out, preparing for the world in which they want to live when they retire. That is why social and environmental issues are going to be extremely important for them. However, the chain of command, as it were, between the investment itself—from the pension fund investors right through to the people who manage the money on their behalf—is very long indeed. It is very difficult to see transparency through that route. That is why I think it is important that these issues should be discussed and understood right throughout that long chain.
Since 2000, pension funds have had to state the extent to which they take into account social, environmental and ethical considerations. However, much of the reporting has been very much a tick box, where people would tick a small box or put in a straight statement, which would not give enough information to the person whose money was going into that investment fund. We believe that, from the disclosure of information, you get more empowerment and that the person who is putting their funding in is getting more empowerment for their money. We have had years of voluntary codes, yet only 64 per cent of fund managers and 21 per cent of pension schemes publicly disclose their voting records so that the investors in that company can see them. Obviously, investors have a right to know and understand, but disclosure is only the first step to empowerment in the part-ownership that they have in the company.
The Government have reserve powers, which they have taken, to make voting disclosure mandatory if voluntary disclosure does not generate sufficient improvement. Of course, the coalition agreement contains a commitment to,
“reinstate an Operating and Financial Review to ensure that directors' social and environmental duties have to be covered in company reporting and investigate further ways of improving corporate accountability and transparency”.
I know that the Government have consulted on this and are intending to launch a further consultation in July; but could the Minister tell us where the direction of travel is on this particular part of the coalition agreement and where it is likely to end up?
There are three key problems that I think we need to address in this whole area of pension funds. The first one is unreliable information; that is, the lack of verification, making it difficult for investors to rely on reports that look through rose-tinted spectacles. Secondly, there is the problem of incomplete information, with many companies focusing on corporate citizenship activities, such as volunteering, rather than on key social and environmental risks to their core business. Could the Minister tell us, in winding up, whether she intends to bring forward proposals specifically to drive up the quality of social and environmental reporting, as indicated in the coalition agreement?
Lord Moynihan
My Lords, I thank the noble Lord, Lord Harrison, for securing this debate. I declare an interest as a director of the US-based Rowan Group of companies and chair of its health, safety and environment committee.
I agree with my noble friend Lord Patten that the vast majority of companies see a clear alignment between social and environmental issues and their overall business strategy. However, some companies have a gap between their board’s aspirations with regard to social and environmental issues and the way they are enabled and enacted within their own organisations. I hope that tonight’s debate will enable government to work afresh with companies to close the gap between companies’ stated social and environmental policies and the actions and investments they make to pursue those objectives, particularly where the objectives may lack a clear financial return on investment or drive long-term rather than short-term benefits.
As my noble friend Lord Newby said, Deloitte, in its impressive analysis of sustainability and business today, concluded that while many companies promote the sustainability concept of the triple bottom line—pursuing performance in economic, social and environmental spheres—most companies primarily invest in environmental initiatives out of the three. I believe we live in a generation where there is an imperative for companies to consider broadening their efforts in the communities in which they operate as well as in the physical environment. In this context, I support the proposal for companies to drive for competitive advantage by helping them establish or maintain a voluntary social licence to operate in their target communities and markets; that is, to gain the support of the people who live and work in those communities and markets.
These objectives and principles can be embedded in the corporate governance criteria followed by all companies and, of course, in their reporting policies, not least where social and environmental issues are usually considered alongside safety within the remit of HSE committees. I agree with the noble Lord, Lord Harrison, that social, environmental and safety issues should all meet the legal and voluntary requirements to be fully and appropriately covered in annual reports and, I would add, in internal reporting to employees and, as the noble Lord, Lord German, has just said, to the investment community as well.
From my experience the energy sector, human safety and environmental protection, regulatory oversight of licensing, energy exploration and production require reforms and a new priority within corporate governance, even beyond those significant improvements already made by the sector and this Government. This is an area where co-operation and dialogue with government should be preferred to further primary legislation at this time.
Lord Whitty
My Lords, I congratulate the coalition on rectifying what I thought was part of a very bad mistake by the previous Government whereby, even though the noble Baroness’s department was all lined up to introduce operational and financial review provisions that would have required companies to report on social and environmental objectives, the carpet was pulled from under them by the Treasury, as the noble Lord, Lord Newby, said. I am glad that the intention is there; now let us see the reality.
I am going to dwell largely on carbon reporting, and I declare an interest as a member of the Environment Agency’s board. In that capacity, I chair the Environment Agency’s pension scheme, whose chief officer my noble friend Lord Harrison has already quoted, which attempts to ensure that our investments help to induce some more effective environmental and social reporting.
Clear environmental reporting, particularly on greenhouse gases, has a major effect not only on transparency but also on internal management behaviour and external investors’ priorities. Without clear, effective and audited reporting, we will not meet the changes that are required in company behaviour in order to meet the climate change objectives that were laid down with all-party support in the Climate Change Act.
The Climate Change Act provides enabling powers in this respect. It is also important to recognise that, as far as the institutions, particularly pension funds, are concerned, there is no conflict between a proper interpretation of fiduciary responsibility, an interest in climate-change proofing the activities, objectives and balance of activities of companies and investors of funds. Indeed, all such large bodies should include within their objectives a climate-change proofing strategy, but that is not the case.
As others have said, only just over half of large companies have any reporting of climate change objectives and, of those, only 22 per cent have any reporting that relates to the Defra guidelines. As the noble Lord, Lord Newby, said, only 9 per cent of larger companies fully comply, according to the Deloitte survey. That does not indicate—and I am afraid I have to differ with the noble Lord, Lord Patten—that there has been a change in the DNA of corporations, or at least in that of their auditors and accountants. As the noble Lord, Lord Moynihan, said, it may be that the good intentions of the board are not being reflected through the technical reporting responsibilities. However, without those indicators internally and externally, we cannot achieve the climate change objectives that we need, so they are a vital tool for those objectives.
I hope that the Minister will be able to say tonight that the wind is moving in the right direction on this and that we will see some action. I look forward to her response.
Lord Stoneham of Droxford
My Lords, I want to address two issues in the context of this debate. I believe that there is too much emphasis on short-termism in companies and there is often a danger of arrogance, particularly in dominant market positions.
Too many companies are pressed by the short-term-profit instincts of the stock market and investment banks and cannot think long term. I worked for a local newspaper company with strong family ownership traditions. It believed in investing long term for the next generation and for its local communities. We worried constantly about the dangers of overgearing in a very cyclical industry. It was taken over in 1999 by an executive team committed to a business model of borrowing, cutting costs and assuming that the boom would go on for ever. Ten years later, that company came to the brink of bankruptcy, and shareholder value today is 2.5 per cent of what it was in 2007. It simply never thought long term.
Successful companies can get introverted and arrogant. They can become oblivious to their communities and markets, particularly if they are too dominant in their markets. I believe the high-paying bankers got remote and out of touch with reality for those reasons. Even Tesco seriously contemplated unacceptable tax-avoidance schemes despite its prime dependence on British consumers, and News International, which I worked for at the time of the current phone-tapping scandal, but not as a journalist, perhaps will find that it became too arrogant with its success and out of touch in its pursuit of competitive advantage. Some of its executives lacked a hinterland that would have warned them against the consequences of their actions. It is frightening that a risk taken nine years earlier can finally catch up with that company.
We need counters to short-termism and arrogance. Principal shareholders are now largely pension funds, which should be primarily interested in the long term. Wider social responsibilities need instilling in directors to keep them in touch with their communities and markets. The key for the Government—and I am pleased that the coalition is reviewing this—is to clarify the requirements for company reporting, to improve identification of risks and to force directors to address their social and environmental concerns and risks. Greater concern for social and corporate responsibility should help counter company arrogance and complacency, and we should encourage the accountability of pension fund managers to their savers, so social and environmental risk is at the forefront of their responsibility as shareholders.
Lord Young of Norwood Green
My Lords, I also wish to congratulate the noble Lord, Lord Harrison, for introducing this debate on such an important issue.
I declare an interest as vice-chair of the Ethical Trading Initiative, which is a tripartite organisation whereby companies, trade unions and NGOs work together to improve the lives of workers throughout supply chains, which in today’s world are truly global. Companies that sign up to The ETI Base Code, which is based on the ILO conventions, agree that,
“Employment is freely chosen … There is no forced, bonded or involuntary … labour …. Freedom of association and the right to collective bargaining are respected … Working conditions are safe … Child labour shall not be used … Living wages are paid … Working hours are not excessive … No discrimination is practised … Regular employment is provided … No harsh or inhumane treatment is allowed”.
Needless to say, all these companies are on a journey, but there is a real pledge and commitment in their reporting to try to live up to these principles enshrined in the base code.
In this brief contribution I will touch only on the issues of transparency and accountability, which seem to me the key themes that have run through this debate. Let me quote from a speech that Ed Miliband made on responsibility. He said:
“On pay, companies should publish the ratio of the pay of its top earner compared to its average employee. If it can be justified by performance, they should have nothing to fear. We need shareholders to better exercise their responsibilities to scrutinise top pay. And we also need to recognise—as many great companies do—that firms are accountable to their workers as well as their shareholders. Some companies already understand that having an employee on the committee that decides top pay is the right thing to do. We should debate whether this requirement should be extended to all firms. And of course the same should be true in the public sector. So we need responsibility at the top of society, but we also need it at the bottom”.
On the need to avoid the short-termism that has been referred to during this debate, Ed Miliband said:
“It is worth recalling that JP Morgan founded his financial company on the idea that the ratio of pay between the highest and lowest paid employee should be no more than 20 to 1”.
Interestingly, the noble Lord, Lord Patten of Barnes—not to be confused with the noble Lord, Lord Patten, who spoke in this debate—recommended something similar in a contribution he made on Andrew Marr’s breakfast show. The new chair of the BBC Trust suggested that he was interested in the “very good ideas” contained in the Hutton report on public sector pay, which suggest not a ratio but certainly something like this 20 times approach. The Hutton report said that that pay multiples should be published and any increase in the figure should be explained publicly.
I want to end on this question of whether exhortation, as opposed to a bit more regulation, is the right way forward. We can see from this debate that there is still a long way to go on the quality of reporting from many companies. How important is this? We should focus our minds on the fact that, in October 2012, another 9 million people will start to be enrolled into pension schemes, in which their savings clearly will be at an investment risk because they will be members of defined contribution schemes. There is a real importance in ensuring that companies are not short term in their approach and that they genuinely recognise their environmental and social responsibilities.
I look forward to hearing the response of the noble Minister.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, I should like to thank the noble Lord, Lord Harrison, for raising this important and timely question on what steps the Government are taking to improve corporate governance and accountability on social and environmental issues, a subject that I have some knowledge of, because I wrote the first corporate and social responsibility document for Cadbury Schweppes, and, well you see where it got them. I am therefore going to try to answer as many questions as possible as I go through, because this really has been a most engaging debate. I am amazed that we have managed to get through so many speeches in such a short time with so many questions, and my noble friend is already telling me to get a move on, so I shall.
As my noble friend Lady Bottomley stressed, strong corporate governance must be at the heart of successful capital markets which work both for companies needing to raise capital and investors looking for solid and sustainable returns. It is essential for the long-term health of our British economy. It is equally clear that accountability and transparency are the bedrock of a vibrant corporate sector. They build trust and, as the noble Lord, Lord Harrison, said, underpin business decision-making and long-term performance. Britain has been a pioneer in developing high standards of corporate governance but we are far from complacent. A few weeks ago my right honourable friend the Secretary of State for Business announced that he had asked Professor John Kay to lead the review of the effect of British equity markets on the competitiveness of British business. This will address issues of vital importance to the long-term performance and governance of British quoted companies. I am delighted to note the support of the noble Lord, Lord Harrison, for the Secretary of State’s thinking on this.
My noble friend Lord Patten asked whether the Government will introduce further regulation. As we said in the call for evidence, on a long-term focus for corporate Britain the best solutions are those which are owned and driven by market participants and investors in companies. Therefore, we want to work with the companies and the City to develop business-led solutions.
My noble friend Lord Newby asked whether the Government should review fiduciary duties. The Kay review will consider whether government policies directly relevant to institutional shareholders and fund managers promote time horizons and effective collective engagement. If that is not clear, we will write. I am not sure whether I answered that correctly. We recognise the importance of social environmental issues to the long-term success of businesses. All directors have a general duty to have regard to the impact of the company’s operations on the community and the environment. That is reflected in the way in which they report to their shareholders, notably in the business review part of the company’s annual report.
The purpose of the business review is to help shareholders assess how the directors have complied with this duty. Quoted companies must provide information in the business review about environmental, social and community issues to the extent necessary for an understanding of the company’s business. Some companies already make high-quality disclosures but the standards are not applied consistently, as we have heard. Getting this right is crucial if we want to achieve balanced and sustainable economic growth. In the growth review, we gave a clear commitment to simplify the reporting framework. The work we have been doing on narrative reporting is important. Our aim is to give shareholders the information that they need to make well informed decisions without adding to the regulatory burden.
The noble Baroness, Lady Sherlock, spoke of introducing a higher audit requirement. In July, the Government will consult fully on these matters. They will of course need to avoid placing additional regulatory requirements on business unless there is clear evidence that they will help to improve the quality and relevance of the disclosures. We aspire to make reports less complex and cluttered. We will enable quoted companies to provide clear and relevant information to investors about strategy, performance and risk, using a more concise report with supporting information on the company’s website.
The noble Lord, Lord Harrison, asked what constitutes adequate reporting and assurance of the information contained therein. I thank the noble Lord for that question. An adequate report meets the needs of investors and, as such, investors should engage with companies to determine specific standards of assurance.
My noble friend Lord Patten asked whether the Government will introduce more regulation in narrative reporting. We want to ensure that we have the right framework, which would be a win for everyone. Boards should face less complexity and shareholders and other readers should be able to access information more easily. That means removing any duplicate requirements, improving guidance and making it easier for companies to adapt to national and international developments. Our consultation, which will run from July to October, will consult on proposals to address these aims and we look forward to receiving the views of many noble Lords who are here tonight.
The noble Lord, Lord Haskel, asked whether the Government will support a branding exercise. The Government support a range of industry-led awards in this area, which have proved to be very effective. They will continue to support these and I would encourage the noble Lord to help us in this.
The noble Baroness, Lady Young, asked whether the Government will bring forward proposals specifically to drive up the quality of social environmental reporting as indicated in the coalition agreement. The answer is yes. The Government’s consultation will address the issue of how social and environmental reporting can be better integrated into the narrative reporting framework to drive up the quality of the disclosures of this information.
In answer to the question asked by the noble Baroness, Lady Sherlock, no decision has been taken yet on whether to regulate. The consultation is aimed at understanding whether regulation is necessarily the best way to ensure consistency in reporting. My noble friend Lord Newby and the noble Lord, Lord Whitty, asked whether the time has come to review the reporting of environmental emissions. The Government have launched a consultation to consider options including a voluntary alternative to promote more widespread and consistent reporting of greenhouse gas emissions by companies in their annual reports. This was an open consultation with no preferred option. It closed today and it will report in the autumn.
We must keep an eye on the European and international agendas. Commissioner Barnier published his Green Paper on corporate governance in April and the Government will respond to it, ensuring that Britain continues to play a key role in shaping European thinking. My right honourable friend the Secretary of State for Business will be taking forward our thinking in the international arena this summer.
The noble Lord, Lord Harrison, asked whether proposals will be brought forward specifically to drive up the quality of social and environmental reporting as indicated in the coalition agreement. The answer is yes. The Government’s consultation will address how social and environmental reporting can be better integrated into the narrative reporting framework to drive up the quality of disclosures of this information.
Better governance is allied with stronger corporate responsibility, an issue we take very seriously. It is not just about businesses not doing harm; it is about them helping to build a better society. We are committed to helping businesses succeed so that they create the jobs, the wealth and the opportunity that our country needs. We want to encourage enterprise and make it easier for small firms to grow. Our commitment to business and the commitment we are asking for in return from all businesses, large and small, is set out in Every Business Commits. This responsibility deal between businesses and the Government asks them to show that they are serious about meeting their social responsibilities by, among other things, protecting the environment and supporting communities.
Finally, I should like to mention the recent review by the noble Lord, Lord Davies, Women on Boards, which highlighted the low numbers of women reaching senior positions in our companies. The report set out a body of evidence that showed that diverse boards are in a better position to make good decisions. A company and its shareholders profit from this. As a result of the report, things are already changing. The Financial Times reports that in the first two months of this year, 35 per cent of new FTSE 100 board appointments were women. If there is not enough change in the next few years then the Government will consider what further action they will take. However, the key recommendations of the noble Lord, Lord Davies, are for companies themselves. These are aimed at the larger companies, the FTSE 100 or 350. However, I would hope that all companies will think about the report and about how they can benefit from its findings.
The noble Lord, Lord Harrison, asked some detailed, important and pertinent questions about pensions as did the noble Lord, Lord German. My answer to them both is, as I have no doubt the noble Lord, Lord Harrison, knows, pensions are the responsibility of the Department for Work and Pensions and I will liaise with colleagues in DWP and write to both noble Lords to ensure I provide a coherent and joined-up answer.
As we work through these issues our conclusions will be informed by the principles underpinning our thinking on how to renew the corporate governance framework; a commitment to rebuilding trust; a determination to empower shareholders and a focus on protecting long-term values. We are not in the business of weighing companies and investors down with more regulation and higher costs but we are going to shine our spotlight on corporate governance to improve accountability and transparency and secure long-term, sustainable economic growth for United Kingdom companies. I wonder whether the noble Lord, Lord Harrison, would like to have a final thought. There is no reply but I am sure that if he wishes to—
Baroness Northover
I am more than happy to allow the noble Lord, Lord Harrison, to speak, given that we have a minute.
Lord Harrison
Perhaps before the Minister sits down, I could thank her for her thoughtful reply. I look forward to some of the developments from the Government. I would like to extend my thanks to all Members who have participated in what was a very interesting and fascinating debate. I hope that we can return to it as matters develop. Once again, I thank everyone.
Localism Bill
(12 years, 10 months ago)
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Lord Shipley
Lord Shipley
I shall also speak to Amendment 133ZB and I shall be very brief, because a number of the issues that I would have raised were raised earlier in amendments on this section. It is interesting that in this chapter, which has four pages, the Secretary of State is mentioned 19 times. It seems very odd that in a Bill about localism, the Secretary of State has to have 19 separate possible roles. My amendment is simply about how the timing and consideration of expressions of interest could be progressed. Put simply, relevant authorities would have to specify when these would be.
It seems to me that local government can be trusted to do more things for itself. Given that councils will have a power of general competence under this Bill, we might consider allowing them to prove that they are generally competent to do things for themselves and do not need the constant intervention of the Secretary of State in a whole range of ways which do not support the principle of localism. There is a key principle here: this is an example of where the powers of the Secretary of State could simply be written out of the Bill and local authorities could be given a responsibility for defining when expressions of interest could come in and when the authority would then consider them. As a consequence, the role of the Secretary of State and a considerable number of the 19 separate roles of the Secretary of State in this four-page chapter could be reduced.
Lord Greaves
My Lords, I have two amendments in this group, Amendments 133ZC and 133ZE. They are all about the maximum and minimum periods by which local authorities have to deal with expressions of interest and the rules and regulations that the Secretary of State will be able to make in relation to those. I can only underline what my noble friend Lord Shipley has just said.
Lord Beecham
My Lords, I also have an amendment in this group. First, I endorse what the noble Lords, Lord Shipley and Lord Greaves, have said in speaking to their amendments. My Amendment 133ZEA is effectively to replace the Secretary of State’s regulatory function—again we come across the Secretary of State’s regulations—with the relevant authority being allowed to determine and publicise the relevant periods between accepting an expression of interest and beginning the procurement exercise. That really ought to be a matter for local circumstances and local decision and not something prescribed nationally.
Lord Shutt of Greetland
My Lords, Amendment 133ZC would remove the Secretary of State’s power to specify minimum periods for the submission of expressions of interest. Amendment 133ZEA would require relevant authorities to set and publicise minimum and maximum periods between an expression of interest being accepted and a procurement exercise starting. Amendment 133ZE would remove the Secretary of State’s power to specify these periods, which would have a similar effect. We have taken these powers to ensure that power really is pushed down into the hands of communities.
The power to specify minimum periods for submission of expressions of interest will ensure that relevant bodies have sufficient time to prepare and submit them. The power to specify a minimum period between an expression of interest being accepted and a procurement exercise starting will, in particular, ensure that employees, where they are not the challengers, have sufficient time to decide whether they wish to organise themselves to bid, and do so effectively. This will support the Government’s commitment to give public sector workers the right to bid to take over running the services they deliver. It should also help smaller and newer voluntary and community bodies. The power to specify a maximum period will prevent a procurement exercise from being unnecessarily delayed.
The majority of relevant authorities will, of course, act within the spirit of the right, but these powers will prevent a recalcitrant authority from specifying periods that are so short that they stymie relevant bodies wishing to use the right. However, following our recent consultation, we are carefully considering whether some discretion could be given to relevant authorities on the timescales associated with the process to enable them to take account of local circumstances.
Clause 69(2) gives discretion to relevant authorities to specify periods during which expressions of interest could be submitted in particular services. Amendments 133ZA and 133ZB would instead require relevant authorities to specify periods during which expressions of interest in a particular service would be considered, changing the emphasis of this provision. Relevant bodies would then be able to submit expressions of interest at any time. However, this amendment could result in expressions of interest being submitted so far in advance that they would be out of date by the time the relevant authority considered them. The time within which a relevant authority must notify a relevant body of its decision on an expression of interest, provided for in Clause 71(4), is intended to provide time for consideration of expressions of interest. I trust that, in the circumstances, noble Lords will feel able to withdraw their amendments.
Lord Greaves
From my point of view, if this provides a bit more flexibility to deal with local holidays and things like that, it is welcome, but the whole thing is still complete nonsense. The idea that local authorities need to be told exactly what the minimum or maximum periods are, or need new rules to say, “This is exactly the flexibility you can have to increase it, or reduce it, or whatever”, is treating local authorities, as I said before, first of all like wholly owned subsidiaries of national government, and secondly like a kindergarten which needs to have its whole life organised for it by people from above. It is absolutely crazy and is typical of the entire ethos which lies behind the Bill. All the good stuff in the Bill is being ruined by this complete nonsense that local authorities have to be told what to do and how to do it in detail. I was thinking about this over dinner. I said before that it is to do with local authority cultures. Local authorities will never learn to be grown-up people who can make their own decisions and organise their own lives if this culture continues.
My honourable friend Andrew Stunell, one of the Ministers responsible for the Bill, complains almost every time I see him that he goes to local authorities and they keep asking him how they are going to deal with the new general power of competence. He says, “It is a new general power of competence and you yourselves will decide how you’re going to deal with it”. That is wonderful, but all through the Bill we have all these detailed regulations that go against that.
Local authorities nowadays will not do anything unless they have such regulations. So long as these regulations continue, local authorities will lack imagination and enterprise. They will be the opposite of what we want them to be. The civil servants and the Government have to let go. Until they do so, there is no hope.
Lord Shipley
My Lords, I agree with much of what my noble friend Lord Greaves has said. This is about the issue of competence. A power of general competence implies that people are able to do things because they are competent to do them, but for local authorities there is a separate meaning for “competence”, which is the ability to do it. Local authorities have the ability to do it; maybe some do not but many do. Those that do not will have to grow in the role to enable them to do so. However, a four-page chapter in which the words “Secretary of State” are mentioned 19 times should not be part and parcel of a Localism Bill. I hope that between now and Report that further thought will be given to this and that someone somewhere might attempt to remove some of these mentions of the Secretary of State so that the words appear only where they really need to. I beg leave to withdraw the amendment.
Lord Greaves
“(a) decide whether or not to carry out a procurement exercise relating to the provision on behalf of the authority of the relevant service to which the expression of interest relates, and(b) either—(i) carry out such an exercise, or(ii) negotiate with the relevant body on the terms on which the body may carry out the provision of the relevant service.”
Lord Greaves
I have this somewhere. Sorry, my Lords, I got a bit carried away with the previous amendment and stopped sorting my papers out. I shall speak also to my five other amendments in this group. There is also a Labour amendment in the group.
Amendment 133ZD follows a pattern of debate and amendments on this chapter in that it tries to give local authorities more freedom to make their own choices and attempts to minimise constraint by the Secretary of State. It would give local authorities the choice whether or not to respond to an expression of interest with a procurement exercise. We discussed this in some detail in our debates on amendments before the dinner hour, so I will not go into that in any more detail now. This is an area that I think we will want to come back to in later discussions.
The reason for Amendment 133ZF, which refers to Clause 70(6) and (7), is to try to find out what they mean. Subsection (6) reads:
“A relevant authority must, in carrying out the exercise referred to in subsection (2), consider how it might promote or improve the social, economic or environmental well-being of the authority’s area by means of that exercise”.
This is a welcome provision, because it suggests that, as part of dealing with the expression of interest that comes in, the social, economic and environmental well-being of the authority’s area has to be looked at. I assume that when it says “the authority’s area”, it also means the specific part of the authority’s area that the expression of interest refers to. It would be interesting to have a comment on that. Subsection (7) then says:
“Subsection (6) applies only so far as is consistent with the law applying to the awarding of contracts for the provision on behalf of the authority of the relevant service in question”.
This is simply an amendment to probe what that means in practice. I understand what it means on paper, but in reality what balance will be given when an authority is considering how to deal with a particular expression of interest, and particularly with the procurement exercise? If what really applies is the lawyers coming along and saying, “This is how this authority awards contracts, and this is how it has to be done”, the reference to social, economic and environmental well-being may not actually mean very much. Or does it mean that the authority’s rules on the awarding of contracts—its financial regulations and so on—can be changed in order to give more weight to the kind of things that we talked about earlier, such as community involvement and the enhancement of particular areas, even if that is not the cheapest way?
Amendment 133ZG would insert a new provision, which reads:
“Any contract or other agreement that the relevant authority enters into under the provisions of this section shall be time-limited”.
This might happen automatically, but it would be interesting to hear the Minister say what the Government’s view is. Does this hand over a local service for ever, or is it the normal sort of contract that a local authority would have with an outside contractor to provide a service, which would be time-limited to five or 10 years, or whatever it might be?
Amendment 133ZH would add four more provisions. The first is:
“Any contract or other agreement that the relevant authority enters into under the provisions of this section may be subject to such arrangements for supervision, monitoring and assessment as the relevant authority thinks are necessary”.
Is it a question of handing a service over to someone in the community, or an organisation comes in and takes advantage of the procurement exercise, who is then responsible for it lock, stock and barrel, or does the council still have a residual responsibility? Will it be treated like a normal council contract—for example, a contract for refuse collections and recycling—or is it something different? Will there be a lighter touch in supervision? Will there be any supervision whatever? If it is something that the council has a duty to do by law, and there is no supervision, how does that tie in with the council’s duty?
The second provision the amendment would add is that,
“Any contract or other agreement that the relevant authority enters into under the provisions of this section may be subject to stipulations about the minimum level of services that must be provided and standards relating to their provision”.
This is the same kind of argument. It is the kind of thing that would happen automatically with a normal council contract. Does it apply in this case? If it does not, what guarantees are there that a proper service will be provided in future?
The third proposed subsection states:
“Each such contract may contain provisions relating to the action that may be taken by the relevant authority if a stipulated level or standard of service is not provided”—
in other words, if people are not providing the service that they said they would provide when they made the expression of interest and when the procurement exercise took place. If they do not provide the service, what happens? Is the council responsible for stepping in and doing something about it, or does it just hold its hands in the air and say, “That’s tough, that’s the way it is”?
The amendment further states:
“Such provisions may include a procedure by which the relevant authority may take over the provision of the relevant service itself”.
In other words, if the provider is not performing adequately, can the council move in in default, as it can with a normal contract, and take over the service, or is it lost for ever once it is out in the community, even if it is no good?
Amendment 133ZJ would apply the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 2006, usually known as TUPE. Clearly, if it is a question of looking after a pocket park at the end of a street, that can simply be transferred to a community group such as the parish council. However, if these provisions were used to transfer a refuse collection service, TUPE provisions would normally apply. Do they apply in the case of transfers under this legislation?
The final amendment in the group, Amendment 133ZM, is headed “Application of duties”. It seeks to investigate whether the Equality Act 2010 will apply in respect of the provision of a relevant service under the Bill. Will it be deemed to apply to the relevant body when that body is providing the service? If all you are doing is looking after a pocket park at a very local level, common sense suggests that the Act will not apply, but if you are transferring a service that involves employing people and providing a significant service such as social services to people, does the equality legislation still apply to those services, some of which might well be duties on the local authority that are being carried out by someone else? I beg to move.
Lord Patel of Bradford
My Lords, the noble Lord, Lord Greaves, has raised important issues, and I look forward to the Minister’s response to them. I speak particularly to Amendment 133ZEC, which seeks to include a provision relating to expressions of interest. Clause 70(5) already calls on relevant authorities to consider the likely impact of any expression of interest on promoting or improving the,
“social, economic or environmental well-being of the authority’s area”.
I greatly welcome this and believe that it is an essential component of the consideration. However, I wish to strengthen it by including a consideration of equality. As noble Lords know, I have a long-standing interest in equality and feel passionately that this is a vital issue for all public services. I greatly welcomed the previous Government’s introduction of the Equality Act and have watched with some concern the current Government’s apparent retreat from many of the excellent provisions in that Act.
It seems appropriate that we should do all we can to ensure that equality is a prime consideration under the community empowerment chapters of the Localism Bill. The noble Lord, Lord Greaves, shares this concern. His Amendment 133ZM seeks to ensure that the provisions of the Equality Act 2010 that apply to relevant authorities will also apply to relevant bodies. I wish to go somewhat further than this as I believe we need to ensure that the existing equality requirements are strengthened. I wish to outline three reasons why this is important.
First, there is a risk that the community right to challenge could result in the exclusion of vital voluntary and community groups that currently empower people and ensure that local decision-making promotes equality. Groups working with specific communities, such as lesbian, gay, bi-sexual and transgender communities, black and minority ethnic communities, people with disabilities, and faith groups, should all be given robust support to take up the community challenge. Without specific protections to ensure this, such as a duty to consider equality, many of these groups would be passed over.
Lord Shutt of Greetland
My Lords, I thank the two noble Lords who have taken part in the debate. I have several notes here for responding to these things, and if I do not pick everything, I hope I can write to them afterwards.
We have to remember as a preliminary to all this that this is the Localism Bill and there are some new things here, but that that does not get rid of old things. Therefore, if something is in the law at the moment, no other apple carts are upset. That is the fact of the Bill. However, Amendments 133ZD, 133ZJ, 133ZM and 133ZEC address areas in which existing legislation will apply and where services are contracted out following a successful challenge under the right. Amendment 133ZD would require a relevant authority accepting an expression of interest to decide whether it was going to carry out a procurement exercise, and either carry out that exercise or negotiate with a relevant body on the terms on which it may deliver the service.
Clause 70(3) already requires the procurement exercise carried out by the relevant authority following a successful challenge to be appropriate and have regard to the value and nature of the contract that may be awarded as a result. Therefore, where the service is of a nature or value to which the Public Contract Regulations 2006 apply, the relevant authority will need to follow the procedures set out in those regulations for advertising, tendering and awarding contracts. However, where those regulations do not apply—for example, where the value of the service is below the threshold of £156,000 for local authorities or the services are otherwise exempt—authorities have the discretion to decide how to procure the service, just as they already do when contracting out services.
Amendment 133ZJ would require any contract that a relevant authority entered into following a successful challenge to be subject to the Transfer of Undertakings (Protection of Employment) Regulations 2006—TUPE. The TUPE regulations already specify the instances in which they will apply. We are not seeking to change those through the community right to challenge.
Amendment 133ZEC would require a relevant authority to consider whether acceptance of an expression of interest would promote or improve equality of service provision in its area. Amendment 133ZM would apply the duties with which a relevant authority must comply under the Equality Act 2010 when delivering a service to a relevant body delivering a service on its behalf.
Relevant authorities will need to comply with their duties under the Equality Act when delivering services directly, when considering expressions of interest, when contracting out following a successful challenge under the right, and when procuring services outside the right. As is currently the case, when contracting out services authorities will need to satisfy themselves that they have fulfilled their duties, for example by including appropriate requirements in contracts.
Amendment 133ZF would remove the requirement for a relevant authority's consideration of how it might promote or improve the social, environmental or economic well-being of its area through the procurement exercise, to be consistent with procurement law. The amendment would remove clarity where it is needed. A relevant authority considering how it might promote or improve the social, economic or environmental well-being of its area must do so in a way that complies with procurement law. Failure to do so provides a number of grounds for legal challenge.
Amendment 133ZH would enable a relevant authority to specify in relation to contracts entered into following a successful challenge: arrangements for supervision, monitoring and assessment; service levels and standards; and the action that may be taken by the authority where those are not met, including a procedure by which the authority may take the service back in-house. Relevant authorities can and do include requirements in contracts for performance and monitoring. The right does not restrict them from continuing to do so.
Amendment 133ZG would require contracts let following a successful challenge to be time-limited. Authorities enjoy the freedom to enter into contracts for whatever period is relevant to the needs of their service users and to the need to obtain value for money. The amendment would unnecessarily restrict that freedom. In other words, there is no prescription on that. That is not a regulation; it is not in the Bill.
In the circumstances, I hope that the amendment may be withdrawn.
Lord Greaves
My Lords, there have been a number of useful and welcome statements, which have helped us to understand how this might work. I will read them carefully, as usual. There are one or two other issues, such as the TUPE business, for which the Minister said that nothing has changed, but it might still be helpful to know how it might apply to different circumstances under the Bill. For the moment, I beg leave to withdraw the amendment. In general, they were very helpful responses, and I will read them carefully.
Lord Beecham
Lord Beecham
This amendment, and the other amendment in this small group, Amendment 133ZEB, relate to the situation where the challenge is made by two or more employees of the authority under the provisions of the Bill. The first amendment requires the consent of the majority of the workforce likely to be affected before the authority is obliged to accept the expression of interest. That seems a sensible precaution.
A previous amendment would have raised the number from two to five but, if I may say so, that is almost irrelevant. It would be wrong for a very small group of employees of an authority to have an expression of interest accepted without the support of people in the authority who might be affected by the decision to proceed with the challenge. I hope that the Minister would agree it would be essential in those circumstances for a majority of those who would be so affected to endorse the proposition, even if it were made by a relatively small number. It would not be a cumbersome or difficult exercise to test the opinion of the relevant workforce, and it would clearly be a sensible precaution.
The other amendment is based on concerns about the operation of EU competition and procurement law, particularly in the case of a service that had been carried out by the authority becoming outsourced. This is legal territory into which I venture with trepidation. It has never been my area of legal specialism; it is not an area in which perhaps many in my profession are all that confident. There seems to be a risk in these cases that when an undertaking has been carried out by a public body and outsourcing takes place with the relevant workforce, that may expose the procedure to the rigours of the competition and procurement laws that might then lead not to a community organisation taking over but a private enterprise, which is quite outside the intentions of the legislation.
The amendment would require the authority to take a view—and take advice, of course—about the potential problem. If it was not a problem, of course, the expression of interest could go ahead. If it were to be a problem the amendment would allow the authority to reject the expression of interest on the grounds of a serious risk of the intention of the expression of interest being frustrated by some entirely extraneous body being able to enter into the procurement procedure and win the contract. This is not intended to be a destructive proposal. On the contrary, it is intended to help the legislation fulfil its intentions, and I hope that the Government, if not tonight, will be prepared to look at these two amendments to see whether they can be adopted in the interests of their own position on the Bill. I beg to move.
Lord Shutt of Greetland
My Lords, Amendment 133ZDA would require that a majority of the workforce affected by an expression of interest submitted by employees of the relevant authority consented to a procurement exercise before it went ahead. We agree that employees affected by an expression of interest submitted by their colleagues should be engaged in the development of the proposal and we are looking at how this might be reflected in the requirements for an expression of interest. The face-to-face meetings, intranet updates and staff clinics undertaken when some 1,200 staff from the Hull Primary Care Trust transferred to a social enterprise under the NHS right to request scheme is a good example of how employees have been engaged in a proposal. However, when a local authority decides to undertake a procurement exercise for services outside the community right to challenge, there is no requirement to secure the consent of the majority of the workforce affected by it. This amendment may therefore act as a barrier to services being provided differently and better. Of course, the requirement for employers to inform and consult representatives and employees affected by a prospective transfer of employment will continue to apply.
Amendment 133ZEB would enable a relevant authority to reject expressions of interest when EU procurement or competition law is likely to apply. The Public Contracts Regulations 2006, which are part of our domestic law that implement EU procurement law, set out requirements in relation to procedures for advertising, tendering and awarding contracts when the value of the service is more than £156,000 for relevant authorities or the service is not otherwise exempt. Authorities will already need to comply with these requirements in deciding what kind of procurement exercise to carry out for a service, and will need to continue to do so following a successful challenge under the right. The amendment would enable relevant authorities to reject an expression of interest in all but the smallest services, dramatically reducing the scope of the right. I hope that the noble Lord will withdraw his amendment.
Lord Beecham
I will first deal with the rather strange analogy that the Minister has drawn between this situation where a small number of employees can precipitate a process and a situation where an authority decides to outsource. The noble Lord identified a case involving several hundred employees but it might well be even more than that. The trigger in that case is the authority; the trigger in the case in the Bill is potentially a handful of fellow employees making an approach under the provisions of the legislation, affecting substantially more. That seems to me to be quite a different situation. While one would hope that there would be a process of consultation along the lines that the Minister referred to in the case of Hull Primary Care Trust, there is nothing in the Bill that would require it. So I hope that the Minster will have another look at that.
In so far as the competition requirements are concerned, with respect, I think that the Minister is slightly missing the point that I am making, which is not about the general provision for procurement but about the particular circumstances that might apply to an undertaking of a public authority being outsourced by its workforce under the provisions of the Bill.
I understand that the Minister is not prepared to accept either amendment tonight, but I reiterate my request that these matters be looked at between now and Report. Otherwise, it may well be that we will have return to the issue at Report and potentially test the opinion of the House. However, at this stage I will withdraw the amendment.
Lord Greaves
Lord Greaves
My Lords, we now move on to Chapter 4 of Part 4 of the Bill, which relates to assets of community value and the compilation of lists of assets of community value by local authorities, the definition of community land, the procedures for including the land in the list, and so on. This is an important chapter. It is entirely new legislation, with new ideas and a new procedure. As with the right of community challenge, this House has, I believe, a duty to ensure that the legislation is workable.
I shall speak also to six other amendments in the group, which are in my name, and there are many other amendments in the names of other noble Lords. Amendment 133D, which leads the group, seeks to change the definition of what is to be in the list which the local authority maintains. Clause 74(1) states:
“A local authority must maintain a list of land in its area that is land of community value”.
We seek to change that to,
“a list of businesses in its area that are businesses of community value”.
This is a probing amendment to probe the meaning of “land”, “businesses” and “buildings”, which are all referred to in this part of the Bill. There is also something more fundamental behind it, which is the question of what, in a community, is of value to people. As far as this proposal is concerned, is it land, or is it what people do with the land; in other words, the businesses? There is a fundamental distinction and it is worth debating. There is also the matter of whether land, as such, should be maintained on the register or whether it should be dealt with in some other way. We will come to those amendments in due course.
Amendment 136ZAB—
Lord Beecham
Does the noble Lord have a view on the utility of Clause 74(2) which reads:
“The list maintained under subsection (1)”—
with which the noble Lord has just dealt—
“by a local authority is to be known as its list of assets of community value”.
Does he think that is useful or would he have in mind a further amendment about that?
Lord Greaves
I do not know. If the local authority is maintaining a list of land or businesses of community value, it will no doubt be known as the list of assets of community value. Whether the words are required in legislation is something I have long since stopped wondering about. I am sure that some of us could get round a table and reduce the size of this Bill considerably just by omitting stuff that appears to add nothing. I am not sure that that is our job. I would love to go through deleting stuff, but the Government would not accept it. When I do, they do not accept it. I have no real comment on that.
The Bill refers to a building or land specified in regulations, as a definition of the buildings and land which perhaps ought to be in the list of community assets. Again, it refers to a building or land, and appears to refer to a particular building or particular land, but it seems to me that it ought to refer to a class of building or land or a category of building or land.
Amendments 136ZB and 136ZC go together and are rather more specialist. Amendment 136ZB is quite long. It states:
“For the purposes of this section “land of community value” does not include … an allotment, common, open space, nature reserve or playing field in the ownership or management of a national or local authority or a charity whose purpose includes the management or conservation of that land for the public benefit … access land, or … land governed by an approved estate management scheme under section 19 of the Leasehold Reform Act 1967 or section 69 of the Leasehold Reform, Housing and Urban Development act 1993”.
Amendment 136ZC defines the terms. As defined in the amendment, access land is land defined as such under the Countryside and Rights of Way Act 2000. It covers very large areas. For example, the whole of the Lake District is access land, either because it is urban common or because it has been described as access land. Very large areas of the uplands of this country are access land, and many places have commons that are access land. Clearly this is land of community value, which is why it has been defined as access land on which people can engage in what I believe is termed “recreation on foot”. However, it would be ludicrous if all that land were to be included in this legislation. These amendments exclude it.
The list of allotments, commons, open spaces and so on removes from the Part 4 procedure land already reasonably protected by statute, and land where the present owners should not be encouraged to believe that they can offload it on other people or perhaps on public authorities. It is also desirable to simplify the creation of the lists. Many areas, large and small, are defined in this way and might be included. However, if they were it would be likely to lead to a large number of disputes that would be difficult to resolve.
The definitions of allotment, common and open space are similar to those in Clauses 163(3) and 183(10) in the London sections, which repeat definitions from previous legislation over the years. It should be noted that the definition of “allotment” does not include the normally understood meaning of allotment, which is either a statutory allotment under the Allotments Act 1922 or a council or other allotment probably let on an annual garden tenancy. These allotments are the specialist fuel and field garden allotments under an Inclosure Act, which some of us will remember discussing during the passage of previous legislation.
The amendments do not seek to prevent the transfer or leasing of any of these excluded classes of land to appropriate charitable organisations—by agreement and after full consultation with the public and those affected—but it should not be under the pressure of this procedure. These classes of land have protection that is long established and rather specialist, and it should remain.
Amendment 133E questions the five-year time limit for land and buildings that are included—
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, before we proceed any further, it might be helpful to Hansard and to the rest of the discussion if I give a short résumé of the purposes behind this part of the Bill. It has caused enormous consternation and we have had endless discussions—useful discussions. If the Committee will allow me, I will take five or 10 minutes to go into it.
The idea behind this chapter is very simple. We know already that many communities, both urban and rural, have lost the use of buildings or land that were important to them because they were sold privately or without an interested community group having time to raise the necessary funds. There are instances of an adult education centre in Calderdale, a Methodist church in Cornwall and any number of village shops and pubs, as well as other community assets, which noble Lords will be aware of in their villages and towns.
Local authorities can, of course, already choose to transfer assets to local community ownership or management. They can do so on favourable terms where it will promote local well-being under existing legislation. The Government have actively supported this and want it to continue. The assets of community value provisions that we are considering today are aimed at situations where the local authority does not choose to do so, and at assets owned by other public bodies and by charitable or private owners. We are giving communities the right to nominate assets of community value and local authorities a duty to list them if they satisfy certain criteria. Then, if—and only if—the owner of a listed asset decides to dispose of it, he or she will not be able to do so for a defined period. This will allow interested community groups the opportunity to prepare a business plan and raise the necessary funds to bid for the asset. The owner will not be restricted in marketing the property in preparation for its disposal during this period. The word “disposal” is used as opposed to “sale” because these provisions will apply both to freehold sales and to the granting and assignment of long leases. Those will be the definition of “disposal”. However, I can assure your Lordships that it is our clear intention that the provisions will not apply to transfers made by inheritance, gifts or transfers between family members and between partners in the same firm or trustees of a single trust; these will be able to proceed unimpeded.
We are continuing to explore other appropriate exemptions, and I would like to address these and other issues concerning the operation of the moratorium rules when we consider Clause 82, which may not be today. I also want to stress that these provisions do not restrict in any way the freedom of the owner of a listed asset to dispose of it to whomever they choose and at whatever price they choose. They only affect when they can do so. Furthermore, they do not confer a right of first refusal, unlike the Community Right to Buy scheme that operates in rural Scotland. Also, they do not directly place any restriction on what an owner can do with their property, once listed, while it remains in their ownership. This is because it is planning policy that determines the permitted use of a particular site. An owner can, of course, apply for planning permission for change of use; this will be dealt with by the local planning authority in the normal way. In that situation, the authority may consider the fact that an asset has been listed as a material consideration, or they may not.
We are acutely aware that we have to balance the community benefit that these provisions will bring with the rights of property owners. That is why we have built a range of safeguards into the process. Landowners will have a right to request that the local authority review a listing decision. We also intend to introduce a right of appeal against a review decision.
The Bill allows for the payment of compensation, and it is our firm intention to put in place a compensation scheme, administered by the local authority, which will consider claims for costs and loss incurred by non-public owners—that is, private owners—in complying with the requirements of the scheme.
The Bill provides for a number of more detailed aspects of the scheme to be set out in regulations. This will make it possible to review how those provisions are working after a year or two and to make adjustments if they appear necessary. It has also allowed us to consult widely on the details, and we have been carefully considering the 256 responses to the consultation, which ended on 3 May. They will inform our views about this as we go along.
There is another balance to strike. On the one hand, consistency across the country is desirable, giving certainty for interests represented nationally. This could be achieved by putting more detail in the Bill or in regulations. On the other hand, in encouraging localism, we want to allow local authorities to use their discretion and respond to local circumstances and views. There are amendments before us, which we will discuss in a minute, that support both these points of view, so following careful consideration of all the representations we have received we believe that certain things should be set nationally to ensure fairness, to safeguard people’s rights and to make it easier for citizens and communities to make use of these provisions alongside the others in the Bill. However, we also believe that there is considerable scope for local decision-making, and our intention is to use delegated powers frugally to ensure appropriate local flexibility.
We expect the debate to focus on four aspects of the provisions in particular. The amendments suggest that this is right. They are the definition of an asset of community value, who has the right to make a community nomination, the length of the moratorium periods and the types of disposals that will be exempt from the provisions. There are amendments about a few other matters. We have set out our current thinking on these and other areas of detail in the discussion paper deposited in the House Library last week, and I informed noble Lords that it was there. We will be happy to expand on our thinking on these areas when we debate the relevant clauses, and we can take into account what has been said.
I thought it might be helpful to put that in context and then, as we discuss the amendments, I will respond to them individually at the end of the debate.
Lord Cameron of Dillington
The Minister has set out in detail her view of Chapter 4. I have a completely opposing view of it. I have put my name to the stand part of every single clause to set out an opposing view at this early stage before we get into the detailed amendments. Is that in order, or does the Minister want to take some detailed amendments first?
Earl Attlee
My Lords, I suggest that we go into the detail of the amendments and then, if the noble Lord wishes, have a good stand part debate.
Lord Cameron of Dillington
On the whole of Chapter 4? At which stage? After the first amendment?
Lord Hodgson of Astley Abbotts
My Lords, I am extremely grateful to my noble friend for her explanation. She gave us quite a lot of information at a fairly rapid rate. I have been scribbling down some of the points that she made, and I found myself very sympathetic with her comments about the need for balance and the need to satisfy certain criteria. Then she turned to the question of consistency across the country and a national standard. That is where my Amendment 136 comes in. It inserts in Clause 74(5) the requirement that there should be a definition of an asset of community value. That establishes consistency across the country.
I have not participated in this Bill so far, so I should make it clear at the beginning that I support its thrust. I favour community empowerment. I think it is a good Conservative principle, and I am on the side of the little battalions. Indeed, having just chaired a task force on red tape and having seen hundreds of examples from across the country, one or two of which I may refer to later, I know how important and vibrant local community feeling is, so I very much support the localism idea. Perhaps I may take a minor swipe as I go past. It is rather extraordinary that we should, as a party or Government, appoint Sir Terry Leahy, the ex-chief executive of Tesco, as our adviser. Sir Terry Leahy has had a very distinguished career, building up Tesco nationally and internationally, but his entire career has been devoted to destroying localism. His plan, of course, is to have a Tesco store on every corner, and every butcher, baker and candlestick-maker should be wiped out. It is a slightly strange appointment, but there we are.
I agree with my noble friend that there is a balance to be struck between the community entitlement and the right to private property. This amendment, and indeed the later amendments which I shall be speaking to—probably at our next sitting of the Committee—seek to explore this balance and discover the Government’s thinking.
I first need to declare at least a couple of interests. The first is that I am the senior independent director of a listed company, which is one of Britain’s largest brewers and pub operators. We operate five breweries and over 2,000 pubs across the country, some of which are managed and some of which are tenanted; we are an integrated business, not a pubco. Some of what I say will therefore have a pub flavour about it, if I may use that phrase, but I think there is a good deal of read across to other assets which are of interest to the community and on which I am sure other noble Lords will wish to speak. The other interest that I ought to declare is that I am president of the National Council for Voluntary Organisations, and—before someone else points it out—the NCVO has briefed against my amendments, which just shows that that is what makes horse racing. There is clearly a balance to be struck.
My concerns and my reasons for speaking to this amendment are partly philosophical and partly practical. I will deal with the philosophical point first. As my noble friend has made clear, the right to enjoy one’s private property is an absolutely fundamental part of our society. The Englishman’s home is his castle: it provides stability for our society; it provides people with a stake in our society and in the order of that society. If I may exaggerate grossly to make a point, development experts will say that property rights are a key part of any country developing satisfactorily. If you do not know when your property may be removed from you, why bother to invest? Merely go and stick it in Switzerland and wait for the inevitable to happen. I am not in any way suggesting that there will be wholesale expropriation. I am, however, suggesting that there may be the law of unintended consequences. It may deter people from offering their assets for use by the community, for fear of precedent; and as noble Lords will have seen in the briefings we have had, woods, cricket pitches and use of buildings are all issues that have been raised by various interest groups talking about the background to this Bill. It would surely be a shame if we were to impede much worthwhile activity at a local level.
So much for the philosophy; what practically needs to be done? My amendment suggests that we should insert a definition on what constitutes an asset of community value on the face of the Bill. This will reduce the fear of the unknown factor. What factors and issues could be included there? I think there is an argument that it should only operate for local businesses. I understand that the wish is to have farm shops, village stores, restaurants and pubs, but national chains—even Sir Terry with his store—might not be as appropriate as an asset of community value. The question is also whether there is any alternative provision in the locality; if there are two restaurants or two pubs, for example, should one of them be able to be listed? As the noble Lord, Lord Greaves, said, there needs to be some distinguishing between the service that is being offered and the premises in which it is being offered. Many communities will like having a shop, a post office, or a shop and post office combined, but suppose it is bought up by the community and turned into an antique shop; that is rather a different issue.
Lord Cotter
My Lords, first, I thank the Minister for her comments. There is no question that I and many noble Lords engaged in the Bill, as well as those outside this Chamber, support the intention to support local communities by giving them a chance to have their say. This amendment has a particular point to make on behalf of businesses. It is designed to ensure that no private assets are put on the list. The fear is that, once a private asset is put on the list, it possibly will have an effect on the market value and thus make it more difficult to sell. That would be very discouraging and could tangibly affect not only the business people but the community as well, and have a negative impact on both the community and the owner of the business.
Local people might wish to list a very much appreciated local shop for fear that the owner might sell it on for use as flats or offices and deny the community a valuable asset. People could be overzealous perhaps in what goes on the list—I will be very interested to know what the Minister thinks of this—and will try to protect their much valued shop in this case. Of course, it can have a counterproductive effect on future businesses and they may feel that they could have, if you like, the rug taken from under them. I hope the Minister can understand what I am saying and can respond to this concern. The idea is to maintain the many things people would like to have in the community but at the same time to protect the property owner because the market value could be adversely affected.
Lord Gardiner of Kimble
My Lords, I want to speak to Amendment 136ZD in my name and that of my noble friend Lord Cathcart. My noble friend the Minister is aware that I raised reservations at Second Reading about this part of the Bill and the unintended consequences affecting private owners who allow their property to be used for community use. I thank my noble friend for her explanation earlier because it starts to clarify the intentions. However, the intention of this amendment is to provide greater clarity and also thereby allay justified concerns with a definition of an asset of community value and to provide clear guidance to local authorities, which is essential if we are to avoid confusion and unnecessary legal action which could be the case if we do not get this definition right.
I also think that we should strengthen the tests which have to be met in relation to nominations for the community asset register. We should firm up and define what is intended by community value. The primary requirement in all cases should be that assets of community value must promote social well-being through their past or current use. There should also be a secondary requirement, where local authorities consider it appropriate, of furthering the economic and environmental well-being of the community.
The amendment sets out the various factors that local authorities must take into account: current use; planning policies that affect the asset, which could include planning permissions already in place; what the nominator is proposing to use the asset for; evidence of wider support for the nominator’s proposals within the community; where there may be another site in the locality which could serve the same purpose. I think very much of the local library that might be closing but another publically owned property could be used for that purpose.
However, in accepting that exclusions from the listing will need to be in the regulations rather than in the Bill, the key one is that most residential premises must be excluded from listing. I say most because I can understand the asset where there is a pub where the living accommodation is secondary to the purpose. I am persuaded that village shops, post offices and pubs should be assets, which if communities wish to bid, they should be in a position to do so.
There are so many examples of private individuals enabling communities to use part of their residential premises and it is essential that the regulations make it absolutely clear that these premises are not included. I therefore hope that my noble friend the Minister will give this amendment due consideration and bring back on Report a comprehensive amendment on the definition of an asset of community value. As far as I am concerned the test will be that private owners will not in any way be advised that it would not be sensible for them to continue to allow their assets to be used by the community. If we do not get this right the net effect will be negative whereas what we are seeking to do is a positive thing for many communities.
Lord Moynihan
My Lords, I support Amendments 136, 136ZA and 136ZD, to which my noble friend has just spoken. In so doing I need to declare an interest as chairman of the British Olympic Association which has, among its principal objectives, the promotional of sport and recreation.
I seek guidance from my noble friend the Minister because I can see a great deal of good news for sport and recreation. Inasmuch as local authorities will have a duty to maintain a list of assets, the freedom to determine the form and content of the list, to set out specific requirements and to allow community nominations to be proposed, there is in many respects a presumption in favour of listing sport and recreation assets. I would have no problem whatever if this legislation applied exclusively to local authority or public sector facilities. Indeed, we had a lengthy debate this afternoon on Amendment 130, where my noble friend Lord Jenkin sought to insert,
“any public body, including, but not limited to, local authorities, government departments, government agencies and non-departmental public bodies”.
In that context, I see real benefit. As I say, I have no problem whatever with supporting it. On the contrary, it would enhance sport and recreation provision if the principles within this Bill, which I support, applied to those public sector facilities. Many playing fields owned by the Government and many local authority facilities would fall into that category.
However, as I read it and as I listened to the debate, Clause 74(1) and the amendments to which I speak apply to assets of community value wherever they are found, including on private property. Many noble Lords have understandable reservations regarding pubs and local shops, for example, but the situation regarding sport and recreation facilities is, I would argue, very different. Organised competitive sport in this country over the past 200 years has its roots in the relationship between landowners and sporting activity. Many cricket grounds, for example, are still located in the grounds of homes around the country. Many equestrian or sailing events and fishing activities are to be discovered on privately-owned land. The history of British sport rests on the amicable nexus between sport and recreation, on the one hand, and the good will of the private property owners—long may that remain the case—but as currently drafted the Bill risks halting that process.
The reason is this: that relationship is based on good will, on tradition, on the work of volunteers, the love of sport and recreation and, in many cases, clubs which have been formed, nurtured and flourished on the cornerstones of local communities to this day. As I understand it, the sole purpose in this context of the list would be to create transparency, providing a legislative process for local communities to bid for listed facilities. The bid, of course, could be rejected. Apart from that benefit of greater transparency, I seek guidance from the Minister because I do not see any further benefit. On the contrary, at the moment a mutually agreed sale can be agreed between the landowner and a community that uses those facilities. Simply put, the Bill provides for that transparency, then adds a whole series of measures which will negatively impact on the intention and good will of many landowners and homeowners to make their facilities available to the local community.
Let me cite an example. A private landowner who has a squash court attached to his property might want to provide a local village school with the opportunity regularly to use that court, but with this legislation the person concerned is unlikely to do so. He or she will certainly be very wary of so doing. When the property is up for sale, a search initiated by a future buyer may find that squash court is now listed under this legislation. A buyer making an offer may be time-constrained and thus walk from the sale or offer a reduced price. A buyer may well walk from a sale faced by a hostile local community, with the power of the press on their side given the publicised moratorium on the sale and the provisions in the Bill. I am sure that nobody in this House, on either side, can foresee this, but nevertheless there are risks that a future Government of a different political complexion might embed the full list in new right-to-buy legislation, damaging the value of the properties, or, looked at another way, putting a new tax on today’s market value of the properties. Put simply, many landowners will avoid these risks and shelve their plans to provide for sport and recreation today.
If my noble friend the Minister can allay these concerns I will rest persuaded, but on reading the Bill—I have not had the privilege that my noble friend Lord Hodgson has had of many letters or briefings on this subject; indeed, I have not had a single briefing—I am concerned that where there is good will among individual owners of properties, where, through their good will and intent, they build strong relations with their local communities, allow primary schools to access their land and use those facilities, the tennis court, swimming pool or squash court, the consequence of the Bill, which may be an unintended consequence, will be such that that individual immediately stops doing that any more for fear that listing will impact on the final value of the house. If there is a way to address that in the Bill and to recognise that nothing could be more damaging than multiplying that across the country with the negative impact that that would have on sport and recreation facilities and the negative impact that it would have on good will and local communities—which is what the Bill is all about in driving localism—I would be content to support the Bill, to move forward and to persuade my colleagues in the British Olympic Association that this is a subject that does not warrant the concern that it currently has.
Put simply, there are many landowners who I believe will avoid these risks, as I say, and shelve their plans to provide for sport and recreation. That would, frankly, be a disaster, particularly in the countryside, and I am sure that it is not the Government’s intention. As a result I ask my noble friend to address himself to my three amendments and to take this clause away in order to see how sport and recreation can be fully protected, particularly those facilities I have focused on this evening which are owned in the private sector by private landowners. I emphasise that I fully support the provisions of the Bill to free up many facilities that are owned in the public sector for community use—many playing fields we go past daily that are unused or underutilised—so that the local community can benefit from availing themselves of those facilities. If we can engage with that in the Bill and increase participation as a result, there will be real benefit, but if the unintended consequence is that we impact negatively on the good will in the private sector and among private landowners to make these facilities available, it would be a very sorry day for sport and recreation.
Lord Jenkin of Roding
I want to make one or two points. I have been hugely impressed by what my noble friends have been saying about this. I listened with care to what my noble friend on the Front Bench said about the objectives behind these provisions and I shall want to read that very carefully in order fully to understand. I am not sure, possibly as a result of my poor hearing, that I got it all, but I will read it.
My fear is due to the fact that the whole essence of localism is supposed to be building a partnership between local authorities and local communities. It depends for its development on the good will that will be generated by this process. I have put my name to a lot of amendments, including that to which the noble Lord, Lord Cotter, spoke earlier, because it seems to me that that is essential.
We are talking about public assets. I find it quite extraordinary that this is intended to apply to a wide range of privately owned assets. Businesses, yes—the noble Lord, Lord Greaves, made the point that, if there is a business such as a post office, a pub or something else that is going out of business, it is perfectly reasonable that a community might wish to say, “We can run this. We will take it over. We cannot open for the full time, but we will be open so many hours in the week” and be able to do that. That is a voluntary and community partnership.
What I find difficult is that this is all to be imposed by central government. There must be some way in which the statute could be drafted so as to build on the idea of community partnership with local authorities rather than giving everyone the sense that this is being imposed on them from the centre. One fact tells the story: there are 54 references to specific cases where the Secretary of State can issue regulations from the centre in this part of the Bill alone. The whole thing is being imposed from the centre.
I do not want to go on singing this song because I have sung it a good deal during the passage of the Bill, but the amount of detail that the Government are seeking to impose is absurd. Why do they have to decide and lay down what is of community value? Why can a local authority not establish criteria? Guidance could be given about the sort of principles, but does that need to be included in statute? Why does the Secretary of State have to decide who can make a nomination and who cannot? This gets the whole thing off on entirely the wrong footing, and it is the wrong sort of emotional approach to what one is trying to achieve—that is, localism, local responsibility and the ability of local authorities to respond to the desires of the local community. After all, the councillors are elected by people from the local community. That is the relationship that one should be building on. As a number of people, including my noble friends Lord Greaves and Lord Tope have said, this gives the impression that no one in Whitehall trusts local authorities unless they are being told what to do.
I am sorry, but I get quite hot under the collar about this because it rather upsets me. I have some sympathy with the noble Lord, Lord Cameron of Dillington, who put his name to the question on whether the clause stand part, to which I have also added my name. Having considered the details of the anxieties and objections of the local authority associations—I have them all here but I will not weary the House with them—I have come to the view that we cannot go ahead with this part in the way that it is currently conceived or drafted. The whole concept behind this seems to be drawn up on the wrong principles. I hate having to differ in such a rooted way from my noble friends on the Front Bench but one really has been driven to this. I have not had anything like the representations that my noble friends have had and have spoken about but, hearing them and realising what is behind this, I beg my noble friends to think again.
Baroness Thornton
My Lords, it is time that someone stood up and said how much they welcome what the Minister had to say and how much they agree, although it may not help her for me to say so from these Benches. On what the noble Lord, Lord Moynihan, said about Governments of a different complexion, I say to him that in my view my own Government were really rather timid on this matter.
Why does the community right to buy matter? There are thousands of community organisations in this country that need the right to buy. This is not about central government imposing something on the local community; it is about giving a right to buy. I shall take a moment to explain. Healthy, viable communities are in the interests of landowners and everyone else. The community right to buy in the Bill is a significant step towards realising the aspirations of localism, the big society, the good society and community regeneration—aspirations that to a high degree are shared across the political spectrum. It would be a bitter blow for hundreds of communities if these actually quite modest proposals were derailed in this House.
Earl Cathcart
My Lords, just for clarity, I point out that the noble Baroness referred to a “community right to buy”, whereas the Bill is actually about the right to bid. Did the noble Baroness mean “right to bid” rather than “right to buy”?
Baroness Thornton
Thank you for that clarification.
As the noble Baroness said, it is not about forcing a sale, or forcing landowners to sell to a particular bidder; it is about creating even more use of assets, some of which were previously liabilities. In the past, disused buildings, wasteland, schools, libraries, town halls and offices which were becoming redundant have all been used by local communities. The Bill promotes an extension of that activity. For example, in London the Westway Development Trust took over 40 acres of derelict land under the A40 to create a thriving community. In North Yorkshire local villagers bought a failing pub last year and have thus safeguarded a vital community resource. However, a major impediment to this has been the lack of a window of opportunity, to allow time for community groups to bid for key assets in their neighbourhoods before the assets are sold on the open market. Often key assets of huge community significance have slipped through their fingers as a result.
This is an important and practical step. The Government have sought to build safeguards into the Bill, to protect owners’ interests. It would be a great shame if we were to lose what would be a relatively modest step towards giving communities the right to make use of assets which they very much need.
Lord Flight
My Lords, as I understand it, what this is about, as the noble Baroness has just described, is the concept of a period of pause. It has not yet been specifically defined, but if the shop or the pub closes, the community might have a period of six months, during which to get the money together to buy it. During such a period the owner would be constrained from selling it.
In itself, that sounds not unreasonable. I am somewhat concerned at the length and complexity of legislation that that rather simple idea has given birth to. When I sit back and think about it, the issue of price is absolutely fundamental. As was just pointed out by the noble Earl, Lord Cathcart, this is a right to bid, not to buy. However, if the owner of the property does not wish to sell, or believes that he can sell at a much higher price, then clearly he is not going to sell, and so the right to bid is not going to do the community much good. Equally, if it turns into a right to buy, there is still the question: what is the price? Who is going to determine the price? Will there be some premium in the price? I am a little concerned that these very complex arrangements—the central objective might more easily be achieved simply by defining a time period in which community groups have grace to assemble the money—as they are presently structured may be self-defeating in a situation in which the owner is not willing to sell. To say that price should be left to market—well, what is market, when something has been listed? I am not sure that the provisions of the Bill can achieve their objectives without thinking about price.
The Earl of Lytton
My Lords, I need to declare my interest which I have not previously declared—there has been no need to do so until this part of the Bill—as a landowner and a practising chartered surveyor as well as my interest in local councils.
I need to bring a technical aspect to bear here. However, before I do so, I should like to comment on something said by the noble Baroness, Lady Hanham, in her introductory remarks. The provisions of the Bill go well beyond what might be described as the recovery of assets that were in, but have passed out of, community use. As regards some of the things about which the noble Lord, Lord Cameron of Dillington, is concerned, a much wider aspect seems to be appearing.
In my professional life I have prepared lots of lists of property assets. I worked for nearly seven years in the public sector and during that time dealt with a lot of things for local authorities, health trusts and government departments, so I know something about preparing lists. I suggest that the proposed list is very far from being a free bet. The process would involve drawing up, managing, publishing, and possibly providing free of charge, a list of indeterminate size and complexity. Why is that the case? It is because regulation cannot foretell what propositions will come forward as a result of the Bill’s provisions.
The obligation is subject to what the Secretary of State may decide following consultation. It is perhaps a pity that the Government have not yet published their response to the results of the consultation on their paper entitled, Proposals to Introduce a Community Right to Buy—Assets of Community Value. In due deference to the noble Baroness on the opposition Benches, the right to buy was not a term that she coined, it was in the consultation document, as I perceive it. I look forward to that response informing the Report stage of the Bill. I hope that I will receive a reassurance from the Minister that it will be forthcoming before that stage so that we all have time to consider it.
I go back to the list. There will be rules about content, additions, deletions and modifications. The list will have to delve into issues of ownership, some of them quite detailed and probably some that are commercially sensitive and may even be confidential. The list will have to be maintained alongside another “not in” list of failed nominations. All I would say at this juncture is that even on a conservative basis this will be a resource-hungry exercise for local authorities.
Lord Brooke of Sutton Mandeville
My Lords, like my noble friend Lord Hodgson, this is my maiden speech on the Bill. I intend it to be generic rather than go into detail and I hope, therefore, to be brief. I regret the hour at which we are holding this debate, although my noble friend the Minister showed admirable initiative in opening it with the statement that she did. It is a pity that the noble Lord, Lord Cameron of Dillington, did not have the opportunity to paint the larger landscape before we started getting into the detail.
I am speaking in particular to Amendment 136ZD, in the names of my noble friends Lord Gardiner of Kimble and Lord Cathcart, to which the former spoke a little while ago. I express my admiration for their exercise in clarification. The instincts that underlie generosity to one’s community are the big society writ early. I was a London inner-city Member of Parliament for nearly a quarter of a century, and London is nothing if it is not a collection of villages where the instincts of the big society apply. I have in a recent debate identified in my own constituency Pimlico and Soho as model inner-city communities, if in different modes. I have, however, had an address in Wiltshire for half my life and these characteristics of the big society or, as Burke might put it, the small platoon society, are perhaps evidenced even more vividly in the countryside because of the way everyone knows everyone else and where the roots of families are at least as deep as those of parallel families in the cities, if not more so.
I pay warm tribute to those who give of their substance in rural areas and demonstrate their recognition of local need and to the imaginativeness of their responses. My one plea to my noble friend the Minister is that that generosity of spirit should not be unduly curtailed by the letter of the law, which can turn the landscape into briars and brambles which deter rather than welcome sensible development. I, in turn, have welcomed the amendment as being an insurance policy to support one’s desire to be helpful to the community rather than to ring one’s assets around with defences against hazard.
I end with the amendment of my noble friend Lord Hodgson and support his Amendment 136, though by placing it in line 19 of page 61, it means it offers late rather than early assistance in illuminating the first four lines of that page. It is the opposite of the example once set by a Polish Bishop who was visiting a parish in his diocese, an episode that could be helpful to many a parliamentarian. When greeted by the curate, the Bishop said, “When I visit parishes in my diocese, I am accustomed to be greeted by the sound of bells, and that has not happened today”. The curate said, “My lord, there are three reasons. The first is there are no bells”. “Pray go no further,” said the Bishop. Although my noble friend Lord Hodgson has placed his amendment quite far down on page 61, I still think it is an extremely valuable contribution to the Bill.
Baroness Byford
My Lords, I have waited very patiently because my name is not added to any of those amendments, but I support the amendments tabled by my noble friends. I will pick up on what the Minister said to us earlier. In some ways it was a shame that my noble friend Lord Cameron was not allowed to express his broader concerns on the whole of this section. My noble friend quite rightly said that the Government have it in mind to introduce a right of appeal, so clearly they recognise that the Bill, as currently laid down, is far from satisfactory, and that we will get a compensation scheme later. My question to the Minister is: how soon will we have sight of what a compensation scheme might be, or when will we know what right of appeal will be formally moved hopefully between now and Report?
I have a farm in Suffolk that is listed in my interests here, but in this particular context I have no interests that are particularly relevant to this. However, I was formerly one of the patrons of ViRSA, which the noble Lady, Baroness Thornton will recognise. We dealt for many years with post offices being squeezed and unable to make a living in support of their long-term well-being—we are talking here of sub-postmasters and sub-postmistresses. In his amendment, the noble Lord, Lord Cotter, clarified quite well the difficulties that we face with this Bill. Are we talking about the loss of a facility that is established within one’s own community, or are we in fact looking at a facility, such as a post office, that is also someone’s dwelling place? Those are two very different issues, and my noble friend, when she comes to wind up, might perhaps enlarge upon that because it is crucial that we know exactly where we stand. For example, in some areas that I know, post offices that have been under threat have managed to relocate into shops, churches, or wherever. Provided that we keep them, it is very good that they have been enabled to remain and be a vibrant part of that particular community. To me, therefore, there is a great difference between a particular service that is offered and the buildings in which it is set. This has been touched on, but I would like the Minister to address that particularly.
My noble friends also expressed concern about land, and to a certain extent about personal privacy, and about investigations that could be made under the proposals in this section of the Bill that would also worry me. We know only too well of investigations of things that are held on computer disks and things that get moved around. Some of this might not be well held in the public domain, to be honest. This is the balance that we have to get right in the Bill. I support the Bill. As I said earlier on, I am a great believer in localism in its truest sense and from the lowest level. Noble Lords who have not heard me say before will hear me say now that, at the parish level, whether in cities or in country areas, localism is most important.
To pick up on a point made earlier, within local councils, authorities or parishes, there will be different interpretations of how they want to proceed. Again, I would be glad if the Minister could reflect on that in her response.
Lastly, I am concerned—not from my point of view, because we have no interest in it—that that could well have an effect on the land value or the land market of people's private, individual holdings. I hope that the Government will reflect on that.
As I said at the beginning, I am very grateful to my noble friend Lady Hanham for her statement on inheritance and gifts between families and trusts and considering the question of the holding for a limited time if those assets are bid for. I cannot see any reason why you would bid if you are not going to buy. There is no logic.
Baroness Byford
As my noble friend says, it would be the price, but one is not going to bid for something unless one has the ultimate purpose of wanting to buy.
I, too, am sorry that we are discussing this very important part of the Bill at this time of night, but we are. I am grateful to all noble Lords who have spoken and seek clarification from the Minister on many of the points made, which I fear will make us rather late finishing tonight. I thank my noble friends for proposing their amendments, which I support.
Lord Cameron of Dillington
My Lords, I have had a note from the government Front Bench saying, “Do say what you wanted to say”, but I believe that it is far too late at this time of night for me to say what I wanted to say. Like all good bedtime stories, as in The Arabian Nights, I will leave the next episode until we meet again.
Earl Cathcart
My Lords, obviously, I support Amendment 136ZD, ably proposed and argued for by my noble friend Lord Gardiner, to which I added my name. I shall not go over that ground again. I also welcome the opening remarks of the Minister. I did not catch all of it, and will read with interest in Hansard tomorrow exactly what she said. She may well have allayed some of the fears that we have heard about relating to this chapter.
Some months ago—it may have been many months ago—I recall the Prime Minister saying that he would bring forward measures for communities to save their village shop, pub and post office. That is an admirable idea, and here we have Chapter 4 before us, but now we have a huge expansion of the assets that communities can save to include all assets from which members of the community derive some benefit. That has put the cat among the pigeons for those landowners and others who allow their communities to enjoy the open spaces of their farms in one way or another. As other noble Lords have said, the unintended consequence of the way that the Bill is written is that landowners will withdraw permission for any activity on their land, a point powerfully put by my noble friend Lord Moynihan. That would be disastrous. If it were to happen, it would go against the grain of the big society, which is what the Bill is meant to be all about.
Amendment 133D goes some way to remedy that, as it focuses on business assets—that is, the village shop the pub and the post office—which, after all, was the original intention of the Prime Minister.
There is another amendment in the names of my noble friends Lord Jenkin and Lord Greaves, Amendment 136ZZB. That would leave out subsection (1) and insert that,
“the local authority will determine whether or not a building or other land is of community value”.
I am afraid that I do not share the view of my noble friend Lord Jenkin. I am slightly nervous of leaving it to a local authority to say what it thinks an asset of community value is. What if the local authority is signed up to the idea that all assets should be to the benefit of communities? That would be very dangerous for landlords and I do not think that I could support that.
In this area, I was having a similar thought about tabling an amendment that would try to take the matter back to business assets rather than all assets. My idea was to provide that “a building or other land may be of community value if it is used on a commercial basis by the local community”. That is very much in the same vein as the first amendment in the group—Amendment 133D—on business assets.
Lord Lucas
My Lords, this is going to make for a very interesting Division on Report. It will be fascinating to see who ends up in which Lobby.
I should declare an interest that I own an asset of community value—a woodland in Kent. I would be happy to go along with the Bill’s provisions but that is for me. It is my decision and my feeling about my relationship with the community. Any suggestion that assets of community value are restricted to assets that are already in community use when it comes to land is extremely dangerous. It produces exactly the side-effects that all my noble friends have been talking about of immediately causing assets to be withdrawn from community use.
There is no great function for this part of the Bill when it comes to rural communities anyway. Under the neighbourhood planning provisions rural communities with a lot of land and space to spare, and therefore an ability to develop, will be in a very strong position to do deals to support the businesses that they want to support and mould communities in their own ways. They are the great winners from neighbourhood planning. I suspect that suburban communities with decent amounts of space will do equally well. I am concerned about the example that was adduced about the problems that arise in cities where neighbourhood planning has very little to offer. Such communities by and large will not have the ability to tackle these things proactively, to accumulate wealth to be able to support or buy assets as and when they are wanted and to think ahead in the way in which it will happen in rural communities. I do not have an answer to the question posed by the noble Baroness, Lady Thornton, about what happens in cities, but for rural communities this part of the Bill is entirely unnecessary, as neighbourhood planning will do it all.
Lord Patel of Bradford
My Lords, I will be very brief as the noble Baroness, Lady Byford, covered many of the points succinctly. First, I thank the Minister for her intervention earlier. It was very helpful, but I think that we need to study the note in the Library. I have a feeling that this will be an iterative process. We would certainly welcome involvement in that and further meetings.
Notwithstanding the benefits that my noble friend Lady Thornton pointed out in respect of this clause to local communities and local areas, we recognise the good intentions and the thrust behind many of the amendments and the arguments that have been presented, together with carefully crafted amendments. We obviously need to look carefully at the practicalities of what this means. I can say certainly that the point made by the noble Lord, Lord Moynihan, struck a chord. It is clearly an issue that we need to take further and seek more clarification from the Government.
We agree with the comments made by the noble Lord, Lord Jenkin, in respect of the centralised delegated powers. We are completely on board with that. That issue has kept coming up throughout all the debates and needs to be looked at very carefully. As I say, I think this is going to be an iterative process. The amendments pose some very serious questions that we need to explore further, and I look forward to what the Minister has to say about that. We will certainly want to sit round the table with the Minister and others and look at this a bit more carefully.
Baroness Hanham
My Lords, this has been a longer debate than we would have hoped for at this time of night. I fully accept that this is not ideal but that is how the business has gone. We could not have stopped at 9.30 pm. I kept hoping that somebody would manage to keep the debate on the previous amendments going long enough for us to stop, but that has not been possible. We have had the opportunity now to discuss the amendments pretty widely and I will speak to them as well as I can in a minute or two.
I want to say from the outset that we are looking at this all the time. I hear what has been said and where I cannot answer questions put forward by noble Lords satisfactorily, we will clearly need to make sure that by the next stage we have had the sort of discussions the noble Lord, Lord Patel, is talking about. Indeed, we have already had considerable discussions on the points made. The fact that they have come up again probably means that we have not satisfied noble Lords and we will have to try and do that and look at making revisions to the Bill before the next stages.
In my opening remarks I tried to bring this back from being a very wide problem into being quite a simple, singular matter. The purpose behind these provisions is to try and ensure that, when a valuable asset in a local community comes up for sale, the local community has a window of opportunity to see if it can get the money together to buy it. I know this is happening all over the place. There are lots of examples already of people buying their local pubs or shops to keep them from going out of business.
There are also plenty of examples of people saying, “If only we had had a bit of time, we could perhaps have done something to preserve this and protect it for our local community”, and that is what we are offering here. It is not going to be a very long time; it is just going to be a short time for people to say, “That is a valuable asset. We have already said that we like it. If it comes up for sale, we want the opportunity to see whether we can, as a community, get the money together”. What the Bill does not do is say that they can buy that facility if they cannot afford it at the price that the seller is asking. During the time that the community is putting the money together, there is nothing to stop the person selling from going through all the negotiations and discussions that they want. At the end of the day, the seller may be perfectly happy to sell whatever it is to the community, and they can do that. There is nothing in the provisions that says that they cannot sell to the community at an early stage if they want to. All we say is that there is a window of opportunity for the community to find out whether they can do something.
Most noble Lords have not seen that as being unreasonable, but there is a certain feeling of pressure and compulsion about this which really is not there. The only compulsion, if I can put it that way, is the fact that the asset has to be notified in advance as being something in which the local community is interested. That is where a list comes in.
In a village, I do not know how many pubs people can claim to have an interest in. I am not sure how many assets there will be in a town centre in which people can have an interest, but probably not a lot. I do not think we are talking about a multitude of areas on which people will want to put their finger and say, “If you are going to sell it, this is an asset that we want”. Public assets can also be listed. If a local authority decides to sell a sports ground, for example, that is an area where this provision would intervene, so that it could have an opportunity to see whether it could buy it.
I shall read very carefully what has been said and I shall make sure that my colleagues do too. We have to be able to answer more clearly than I can tonight the concerns that are being raised. I cannot say that they are not justified because I cannot narrow it down sufficiently at this stage to say categorically that this will be the situation. As regards the fears expressed by noble Lords about land assets being devalued because part of the land will have been identified as an asset, a compensation scheme will come into effect. On the point about something on a list coming up in a land search, presumably someone will say it is there anyway, but I do not know whether that will devalue it. I do not see why it should just because someone is trying to get some money together. It might delay the sale, but there will be compensation if that happens.
The fact that my noble friend Lord Moynihan spoke about the loss of sports and recreation facilities if this goes ahead, and that other noble Lords commented on the fact that landowners will be advised not to let their land be used for any community facility, is something of which we need to take cognizance. If that is what is being said, and if that is a fear, that will stretch out further as we go through the Bill. We need to take note of that and I can assure noble Lords that we will discuss it and come back on that.
I will go through the amendments. Some people will be quite happy with what I am saying and others will not be. Going through the brief on the amendments will pick up some of the points that have been raised and may explain matters better than I can at this time of night.
We do not think that Amendment 136, tabled by my noble friend Lord Hodgson, is necessary. Clause 75(1) and (2) say that there will be an indication under regulations of what will be involved. We will try to see that there is reasonable coherence about that so that when we come to the next stage it is understood as well as it can be. It will involve buildings such as pubs and local community facilities. I am not sure how much wider it will go, but we will ensure that it is well understood. I recognise that there has been pressure from noble Lords for greater certainty, including over definitions. We are very grateful to noble Lords who have raised this matter. My noble friends Lord Gardiner and Lord Cathcart raised the issue in connection with Amendment 136ZD.
Amendment 136ZD also combines a primary requirement that assets of community value have been or are promoting social well-being with a number of factors that local authorities must take into account as secondary considerations in arriving at final decisions on listing. These include relevant planning policies, the use that the nominator is proposing for the asset, evidence of community support for the nomination and the availability of other assets locally that could serve the same purpose. As I said, we will give this careful consideration and consult more on it. In doing so, we will have in mind the recommendation of the Delegated Powers and Regulatory Reform Committee that any regulations under Clause 75 should be subject to the affirmative procedure.
There has been a lot of criticism about the number of regulations laid out in the Bill. One reason is that consultation processes have gone on and are going on, and some regulation will come about as a result of those consultations to make this part of the Bill work.
Amendment 136ZBA proposes an ingenious way of addressing concerns that have been expressed on behalf of landowners who make land or buildings available for community use. This point was made very clearly by my noble friends Lord Moynihan and Lord Gardiner. We have had a lot of discussion about this outside the House. I will take the example of a corner of an agricultural field used for the cricket club or disused clay pits to which people have access for walking. The suggestions in Amendment 136ZBA are interesting and we will give them further consideration.
We have some sympathy also with the intention behind Amendment 136ZAB, tabled by the noble Lords, Lord Greaves and Lord Tope. Since the provisions are breaking new ground, we will need to learn from experience how they work. However, we will need to give further consideration to those as well.
Amendment 136ZAC would limit the power to decide whether an asset meets the definition to a local authority and no other body. The present thinking is that it will be only the local authority, as defined in Clause 91, which can exercise that power as the democratic authority. My noble friend Lord Jenkin asked why this was being laid down from the centre and why local authorities could not make up their own minds about who will be able to nominate an asset, what the asset will be and whether it will go on the list. The centre is laying down only the ground rules for this. It would be impossible to leave it to local authorities to decide what an asset is without giving them guidance as to what an asset of community value might be, and whether there are limitations about which they need to know. Of course it will be up to local authorities to decide whether a community that is looking at something will be able to deliver or whether it is just putting forward a sighting shot. They will be in charge of making sure that the community is not simply using a delaying tactic but putting forward something that has a reasonable expectation of being successful.
I made it clear in my opening statement that it is our intention through regulations to exclude types of land such as residential premises from the listing—that point was made by my noble friend Lord Moynihan—unless, for example, they are integral to a pub or shop. If you have a pub with residential accommodation attached to it, you will not just be able to list the pub if it also has residential accommodation that is being used. We cannot support the remaining exclusions.
Amendment 133D fundamentally misconstrues the purpose of the provision by proposing to replace land and buildings with businesses. It is wider than that. It will not just be confined to businesses as such, but we need to talk about how much wider it is going to go. It would be entirely inconsistent with the rest of the chapter and would effectively exclude most public assets from these provisions, since they would not be considered to be businesses, although they are crucial to the aims of the policy.
On the other hand, Amendment 136ZA would limit land of community value to publicly owned land, or land that a private owner agreed is of community value. This would in effect limit it only to publicly owned land, since most private owners would probably not agree to make their land subject to the rules of the scheme. An owner can, after all, voluntarily choose to delay a sale to give a community group time to prepare a bid if they want to. They can also sell it to the community if they want to. By effectively excluding private assets from the provisions, this amendment would exclude some of the key assets that we want to help communities to save, such as the last village shop or pub.
Amendments 136ZB and 136ZC make a different point. They seem to propose excluding land for which public access is already guaranteed under statute, or which is very unlikely to be put on sale but which is self-evidently of community value. In both cases, while listing would be unlikely to lead to any further action, there is no reason, we believe, for not allowing such land to be listed to provide for the unlikely event that it does come up for disposal.
We have another series of amendments, all based on the same theme that local authorities should be allowed to operate the scheme as they wish within some very broad parameters set out in the Bill. It is a question of balance. As I have said, we will be considering that further.
I am conscious of the many questions raised by noble Lords, not all of which I have answered either in my opening remarks, in my response to the amendments or by what I have said. However, I hope that I have covered enough of them to make noble Lords realise that my ears are wide open to this. We appreciate that this is a controversial area of the Bill, but we have been having discussions and will continue to do so to see that we end up not with unintended consequences in this Bill but with what we believe would be a valuable asset, which is to be able to ensure that local communities have an opportunity, if it arose, to take over buildings of community value if they can afford to do so.
Lord Greaves
My Lords, I have lots of things to say about everything in this group, but I am not going to because I might get lynched if I tried. It is a while since anybody was lynched in this building and I do not want to be the next.
First of all, I thank the Minster for the very detailed care with which she has taken the debate on these amendments, even at this time of night. It has been extremely helpful. A lot of useful stuff will be recorded in Hansard, and I think it will help us very much in what is clearly going to be quite a lot of further debate on the rest of the groupings on this part of the Bill.
I just want to comment on Amendment 136ZBA. I did not comment on it when I originally opened the group because I discovered that I had a slightly out-of-date list of groupings and it was not on it, which caused me confusion. The Minister referred to this amendment and said the Government were looking at it sympathetically. The proposed amendment would exclude land and buildings that have an ancillary use of community value but where it is not the main use. This is a fairly well known concept in planning. I am not sure that it is exactly transferable but, where there is a sporting use or another public use that is ancillary, minor or part-time, it clearly has to be excluded. I believe that that would go a long way to solve the problems that were eloquently explained by the noble Lord, Lord Moynihan. I was very pleased indeed that the Minister said that the Government were looking at the concept raised in my Amendment 136ZBA.
Having said that, I now look forward to further debate on these matters on Thursday. I beg leave to withdraw the amendment.