House of Commons

Thursday 27th March 2014 Commons Chamber

Thursday 27 March 2014

The House met at half-past Nine o’clock

Prayers

Thursday 27th March 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 27th March 2014 Commons Chamber

The Secretary of State was asked—

[Stella Creasy (Walthamstow) (Lab/Co-op)]

1. What steps he is taking to reduce the effect of rises in water bills on the cost of living.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

7. What steps he is taking to reduce the effect of rises in water bills on the cost of living.

[Mr Speaker]

I call the Secretary of State. Welcome back.

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

Thank you very much for your welcome, Mr Speaker. May I quickly thank all hon. Members from across the House who have kindly sent me good wishes?

In November, I wrote to water companies stressing the tough times that households are facing and the vital role the industry can play to help reduce costs. Companies have responded positively. Most are holding bills down in 2014-15, with flat or declining bills proposed from 2015. The Government encourage water companies to introduce social tariffs for vulnerable consumers. Three companies now have them in place, with at least nine more expected by 2015.

[Stella Creasy]

I thank the Secretary of State for that answer, but two weeks ago his officials told the Public Accounts Committee that his Department did not actually have a target or a measure of what “affordable” means, so when he says that water companies are acting to bring bills down, does he even know what target they are aiming for?

[Mr Paterson]

We believe this is an issue that should be decided locally by local companies consulting local consumers, and I am very pleased at the progress being made by companies in the current review.

[Mrs Lewell-Buck]

The WaterSure scheme helps vulnerable households to pay their water bills, so will the Minister explain why he did not support Labour’s amendments to the Water Bill, which would have made information about WaterSure prominent on customers’ bills?

[Mr Paterson]

We are absolutely clear that this issue should be decided locally by local companies. There is already a huge amount of information on bills, and there is a limit to the amount that can be given on one particular document.

[Mrs Caroline Spelman (Meriden) (Con)]

Of course, the cost of water is relative to that of other utilities. Unlike the energy industry, the water industry has social tariffs, and the Government have stepped in to help 70,000 households. Does my right hon. Friend agree that those schemes help people to pay something towards the cost of the water they use, which is better than defaulting?

[Mr Paterson]

My right hon. Friend is absolutely right. There should be a contribution, but in some cases it should be reduced. There is no free lunch. Every time there is a reduced rate for some, it has to be covered by all other hard-working consumers paying their bills.

[Mr Gary Streeter (South West Devon) (Con)]

In Devon and Cornwall, water bills have traditionally been high, but they have been reduced this year by 7%, thanks in no small measure to the Government’s support for hard-pressed households. Will my right hon. Friend congratulate South West Water, which has listened to local people and has just submitted a five-year plan showing that water bills may well fall by 13% in real terms over the next five years, even though it is increasing capital investment by 19%? Is that not an example of what progressive water companies can do if they listen to their local people?

[Mr Paterson]

I am very happy to join my hon. Friend in congratulating South West Water on what it has done. A reduction in bills is in marked contrast to what happened under the previous Government, when bills went up by 20%.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

We welcome the Secretary of State back to his place after his recent appointments.

On Tuesday, Conservative and Liberal Democrat peers blocked Labour’s proposals to help households that are facing growing water bills at a time when their incomes are being squeezed more and more. As we have already heard, one in 10 households are now paying more than 5% of their income to the water companies, yet as the Secretary of State has admitted, the Government are refusing to lift a finger to help them. Will he tell us the specific reasons why this Government have opposed Labour’s proposals for a national affordability scheme?

[Mr Paterson]

I am grateful to the hon. Gentleman for his kind comments.

We are continuing the policy left by the previous Government that this should be voluntary—that is how they legislated as recently as 2010. We are clear that this is an issue that should be decided locally, because if there is a reduction for some customers, it has to be paid for by the remaining customers in that area. We are very pleased that we are seeing progress. We now have a robust Ofwat, unlike under the previous Government, and we are going to see significant changes in prices. We must also remember that we have to keep investment coming in from domestic and foreign sources, because every 1% increase in interest adds £20 to a water bill—there is a balance here.

[Mr Philip Hollobone (Kettering) (Con)]

One of my rural constituents in Kettering has just received a £7,000 water bill, owing to Travellers and Gypsies illegally tapping into the water supply. Anglian Water says that it can do nothing; the police are um-ing and ah-ing; and there have been threats of intimidation against the constituent concerned. Will the Secretary of State or the Minister with responsibility for water kindly agree to meet me and my constituent so that we can resolve this dreadful situation?

[Mr Paterson]

I am grateful to my hon. Friend for raising that local issue. He should immediately get in touch with the water Minister, the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson). We will take it up and see how we can help.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

2. What changes he plans to make to policy on bovine TB; and if he will make a statement.

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

We published our draft strategy for achieving officially bovine tuberculosis-free status for England in July 2013 for consultation. The final version, which we will publish shortly, will outline our comprehensive plan for tackling the scourge of bovine TB in England.

[Angela Smith]

I am sure the Secretary of State agrees with me that if the report confirms that a significant number of badgers—well above the recommended 5% limit—took more than five minutes to die, that would be a very serious matter because it would prove that the cull was inhumane. In that circumstance, would he not think it vital to reconsider the policy and to abandon absolutely any plans for rolling out culling later in the year?

[Mr Paterson]

I received the panel’s report only recently. I am considering it, and I will come back to the House in due course, when it has been fully considered.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

16. Does my right hon. Friend agree that although the badger cull may have played a part in tackling bovine TB in other countries, in the UK it has proved more difficult to achieve our desired result? Will he therefore agree to look at all other options, and accept that if one course of action fails, it is time to look for another?

[Mr Paterson]

My hon. Friend mentions other badger culls. The most obvious nearby country that has had one is the Republic of Ireland, where the number of cases went down from 44,903 in 1999 to only 15,612 last year. There are clear lessons to be learned from other countries—my hon. Friend is absolutely right—but the circumstances here are not entirely the same. That is why our strategy encompasses a whole range of other activities involving the vaccination of badgers, the vaccination of cattle and a strict cattle movement regime, which has been a key to success in other countries.

[Ian Paisley (North Antrim) (DUP)]

The scourge of bovine TB, as the Secretary of State rightly calls it, is unfortunately increasing in Northern Ireland. With that in mind, and given that we have only a catch, test and release scheme and would love to have a scheme that actually dealt with the badger, will he consider calling his counterpart in Northern Ireland and setting up a national conference, which he could chair, to address the removal of this plague from our land?

[Mr Paterson]

I was Secretary of State for Northern Ireland, so the hon. Gentleman knows that I respect the protocols of devolution. We have regular discussions at ministerial and official level on matters agricultural. He is absolutely right, however, to raise the contrast between what has happened in Northern Ireland, where diseased badgers have not been removed, and the dramatic reduction in southern Ireland.

[Mr Laurence Robertson (Tewkesbury) (Con)]

Will my right hon. Friend update the House on the development of vaccines for badgers and, indeed, cattle?

[Mr Paterson]

I raised the issue with Commissioner Borg on my first day back, a week last Monday. We are pressing on with the development of a cattle vaccine but, sadly, it will take some years: we have to develop a vaccine that is valid and works; we have to develop a DIVA test to differentiate between vaccinated cattle and diseased cattle; and we then have to get a legal process. I am afraid that that is going to take at least 10 years.

[Huw Irranca-Davies (Ogmore) (Lab)]

I genuinely welcome the Secretary of State back after his operation. It is good to see him back.

When the Government’s approach to TB was resoundingly rejected by Parliament two weeks ago, the Secretary of State was on a chocolate factory visit. He had previously stormed out of a debate before another Government defeat on badger culls, muttering, “I’ve had enough of this.” If he has really had enough of this, as more and more Government Members have, will he at least have the courage of his convictions and give Parliament a vote in Government time before proceeding with any more of these failed badger culls?

[Mr Paterson]

I am grateful to the hon. Gentleman for his kind comments.

I do not recollect storming out of anywhere. We have been punctilious in keeping Parliament informed through regular statements, and the issue comes up regularly at questions. The last vote, with a majority of 61, very clearly endorsed our strategy, which is very wide and encompasses other actions. [Interruption.] The last vote on a substantive motion showed considerable support, with a majority of 61, for our strategy. The hon. Gentleman has got to get beyond the issue of culls. Our strategy encompasses vaccination of both species, significant changes to our cattle movement regime and tighter biosecurity. He should concentrate on the whole strategy, which was endorsed in Parliament by 61 votes.

[Roger Williams (Brecon and Radnorshire) (LD)]

I welcome the Secretary of State’s using all means at his disposal to control the disease. One of those is the polymerase chain reaction test, which will be able to identify infected live badgers and the setts in which they live. Will he ensure that all the available resources go into promoting that test, which could have a role in controlling bovine TB?

[Mr Paterson]

My hon. Friend is absolutely right to say that it would be a huge change if we could use PCR to analyse diseased badgers on the spot. That would change the whole debate and would be an enormous help in disease reduction. We have been working closely with the university of Warwick and are bringing in other agencies to see whether we can accelerate that work. Sadly, PCR is not yet reliable enough. If we can get a greater than 50% chance of identification, it will cause a sea change on this issue.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

3. What steps he is taking to prevent redundancies among staff working on flood protection at the Environment Agency.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)]

The chief executive of the Environment Agency has been clear that the planned reduction in posts, which is necessary to ensure that the agency has an affordable business structure, will not affect its ability to respond to flooding. The Environment Agency will prioritise the resilience that is needed to manage flood incidents and recovery. The additional £130 million of funding that was announced in February and the £140 million that was announced in the Budget for the repair and maintenance of vital flood and coastal defences will mean that there is no reduction in the Environment Agency’s flood and coastal risk management job numbers.

[Tom Blenkinsop]

The Prime Minister promised that the reported plans for 550 redundancies among flood protection staff at the Environment Agency would not be put in place. Will the Minister confirm how many flood protection staff the EA plans to make redundant over the next two years?

[Dan Rogerson]

As I set out in my original reply to the hon. Gentleman, the agency prioritises flood and coastal defence work. The extra money that we have put in place to support that work means that it can look again at how it is managing jobs across the agency. Of course, like all other Government Departments and agencies, the Environment Agency has to respond to the need to tackle the deficit. However, we are putting money in place to ensure that our flood and coastal defences are run and maintained properly.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Does my hon. Friend agree that making more use of internal drainage boards and local farmers is a cost-effective way of making the flood protection repairs that are needed?

[Dan Rogerson]

My hon. Friend makes a very good point. We have excellent internal drainage boards that are doing work across the country. There are proposals to set up new internal drainage boards in a number of areas to build on those successes and to make use of local knowledge. We will support that approach where it is appropriate and where a model can be found to bring it in.

[Toby Perkins (Chesterfield) (Lab)]

11. I hear what the Minister says about the country’s resilience and about flood defences. We were flooded badly in Chesterfield in 2007, so my heart goes out to everyone who has suffered so badly this winter. Does he not think that the many people in the Environment Agency who have worked so tirelessly will be feeling pretty disgruntled that after all the work they have done and at a time when all of us are worried about flooding, they are seeing huge numbers of job cuts?

[Dan Rogerson]

The hon. Gentleman is absolutely right to point to the devastating impact that floods have had in the past. Some of his constituents will still be feeling the effects of what they went through at that time. Environment Agency staff work very hard—those who are directly involved in flood and coastal risk management and those from other areas in the agency who came in to support them during the recent extreme weather events. I have visited many of them in areas of the country that have been affected. As the chief executive takes forward the proposals to ensure that the agency meets the challenges of the future, I know that he will take account of all the skills and the expertise that it has and preserve them to ensure that we build on the work that has been done and keep everybody safe.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

4. What recent discussions he has had with the Environment Agency on waste fires.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)]

I have had three meetings with the Environment Agency on waste fires in the last six months, including a discussion on Tuesday this week with the noble Lord Smith of Finsbury, when we spoke about the fire at the waste site in my right hon. Friend’s constituency. The two previous occasions were a meeting on 30 October 2013, which included my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) and the chief executive of the Environment Agency, Dr Paul Leinster, and a meeting on 27 November 2013 with the noble Lord Smith and Dr Leinster.

[Sir Alan Beith]

Bearing in mind that the Environment Agency failed to deal effectively with persistent and massive breaches of licensing conditions by Blackwater (North East) Ltd, leading to the Thrunton fire, surely the agency owes it to my constituents to remove the potentially polluting waste and charge the cost to Blackwater or its insurers, rather than the burden falling on the landowner who has done so much to help?

[Dan Rogerson]

My right hon. Friend has been assiduous in raising all the matters connected with that awful fire and the mismanagement of the site by the company. His constituents have been very lucky to have had him acting on their behalf. In my discussions with the agency, I have made it clear that we will do all we can to support all those who have been on the right side of this, but we need to consider carefully the correct method of making sure that the polluter pays in this instance.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Minister not realise that the Environment Agency has been haemorrhaging good staff? It is very important that we curb the cowboys and poor operators in the waste sector who do so much damage to our environment, but we just have not got the people or the resources in the Environment Agency to do that properly now.

[Dan Rogerson]

I have a great deal of respect for the hon. Gentleman and in the past we have both been members of the all-party group on this issue. The fact is that we have excellent staff in the Environment Agency working very hard on these issues, and in the recent Budget we secured an extra £5 million to tackle waste crime. It is a priority for the Government, and we should ensure that the businesses that operate effectively, fairly and safely are protected from those that act unscrupulously. That is why we are investing extra money in tackling this issue.

[Nick Smith (Blaenau Gwent) (Lab)]

5. What steps his Department is taking to encourage water companies to introduce social tariffs; and if he will make a statement.

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

The Government published social tariff guidance for water companies in June 2012, enabling the introduction of social tariffs from April 2013. Three water companies now have social tariffs in place, with a further three set to introduce them this year. Another six companies have plans to introduce social tariffs from 2015, while others are consulting with their customers.

[Nick Smith]

Ofwat says that profit margins are exceptionally high in this industry. What will the Government do to bring prices down, given the cost of living crisis in this country?

[Mr Paterson]

Unlike the last Government, we will have a robust Ofwat. Under the last Government, bills went up by 20%. We are seeing a robust Ofwat now working on the new price programme, and that will see a reduction or held prices and increased investment. A balance must be struck because we have to keep the confidence of domestic and foreign investors. A 1% increase in interest means £20 on a water bill.

[Julie Hilling (Bolton West) (Lab)]

6. What progress has been made on the implementation of the recommendations of the Elliott review of assurance of food supply networks.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

They were interim recommendations; Professor Elliott’s final report is expected later this spring. We are discussing the interim report with interested parties, and we will carefully consider the supporting analysis in his final report before making a formal response.

[Julie Hilling]

People need to be confident that what is on the packet is what is in the packet. The Prime Minister’s machinery of government changes in 2010 created confusion of responsibility between the Department for Environment, Food and Rural Affairs, the Food Standards Agency and the Department of Health. Will the Minister acknowledge that the Prime Minister’s short-sighted changes weakened consumer protection and were misguided?

[George Eustice]

No, I do not agree with that. It was right to separate policy making from enforcement. The issue we had with horsemeat was not a failure of policy: it was a failure of enforcement. Since then, we have increased funding to £2.2 million to help to support local authorities to deliver the national co-ordinated food sampling programme. The Food Standards Agency is also developing a new intelligence hub to improve its capability in identifying and preventing threats, and to co-ordinate action across Government.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Professor Elliott confirmed the findings of the Environment, Food and Rural Affairs Committee that we have a severe shortage of public analysts and laboratories. He further found a gap in checks on cold-slab meats in cold storage and transportation. Can the Government act now, before the final Elliott report, to make good the testing by public analysts and public laboratories, and to address the other issues that Professor Elliott identified?

[George Eustice]

We will look carefully at the recommendation in Elliott’s final report, but the Food Standards Agency is working with industry and the European Commission to identify further targeted sampling programmes that could be carried out. As I said, we have increased the budget from £1.6 million to £2.2 million to help support local authorities. We have also introduced unannounced inspections of meat-cutting plants, and there have been more than 1,450 of those since 2013.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Some recommendations of the Elliott report refer to devolved matters and others to matters that are reserved across the UK. It is important that the UK Government, the Scottish Government, and other Administrations work closely together. When did the Minister last meet Scottish Ministers to discuss how we can ensure a co-operative approach across the UK on this important issue?

[George Eustice]

I meet Ministers from the devolved Assembly regularly. Most recently, I met last Monday the Scottish Minister responsible for farming and fisheries. We did not discuss this particular issue, but when the final report is published we will discuss its findings. We have had some discussions about the interim findings, and further discussions are taking place at official level.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Does my hon. Friend recognise the potential threat to our domestic food supply presented by changes to the common agricultural policy, particularly with regard to food produced in the uplands? If so, what plans do he and our Government have to protect, or ensure that there is a decent successor to, the upland entry level scheme?

[George Eustice]

We are in the process of concluding our implementation of the common agricultural policy, and we have made it clear that we will align the upland rate of the single farm payment with the lowland rate. We will shortly make an announcement on the moorland rate, which I know will interest the hon. Gentleman.

[Kerry McCarthy (Bristol East) (Lab)]

Answers to recent questions that I tabled show a massive drop in food testing under this Government: tests on food composition are down by 48%, and those on food labelling and presentation by 53%. Does the Minister share Professor Chris Elliott’s concern that cuts to food testing and inspection could compromise the safety of the food that people eat to such an extent that “people start to die”?

[George Eustice]

I am not sure I share that analysis. Since this crisis erupted more than 45,000 tests of beef products have been reported, and there have been no new positives since the reported incident of horsemeat last year. As I pointed out, we have also introduced unannounced inspections of meat-cutting plants, and there have been almost 1,500 of those since last year.

[Katy Clark (North Ayrshire and Arran) (Lab)]

8. Whether he has considered the recommendation of the Environmental Audit Committee in its eleventh report, Plastic Bags, HC 861, that the Government should remove the exemption of biodegradable bags from their proposed levy on single-use carrier bags; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)]

The Government response to the Environmental Audit Committee’s report on plastic bags is due by 7 April, and we are currently considering the Committee’s recommendations.

[Katy Clark]

Is the Minister aware of the likely damage to the UK plastics recycling industry if this exemption goes ahead, and will he meet representatives of the sector to discuss their concerns?

[Dan Rogerson]

I understand the sector’s concerns based on products that have been described as biodegradable in the past, but we are talking about the opportunity for new products to come forward. That is why we have offered money to those who can come up with techniques for separating different forms of bag. We are directing this initiative at the 7.1 billion single-use carrier bags—the figure comes from 2012. We want to tackle that and it is a popular policy that people support. We also want to provide opportunities for new more appropriate products to come forward.

[Michael Fabricant (Lichfield) (Con)]

My hon. Friend will know that there is a 5p tariff on plastic bags in Wales, and I would not say that it is so popular there. However, there is a big difference between bio-undegradable and biodegradable bags. Will the Minister speak to the Chancellor of the Exchequer and make it very clear that it would be unwelcome in England to have a 5p tariff on plastic bags if they are biodegradable?

[Dan Rogerson]

Building on my reply to the hon. Member for North Ayrshire and Arran (Katy Clark), we are considering the issues raised by the Environmental Audit Committee, as well as the representations we have received as we take the policy forward. Evidence from retailers and members of the public shows that they want us to do something to tackle single-use carrier bags.

[Mr Gregory Campbell (East Londonderry) (DUP)]

In his deliberations will the Minister take account of similar legislation that is going through the Northern Ireland Assembly?

[Dan Rogerson]

As the Secretary of State said in answer to an earlier question, we are interested in what has already happened in Wales, and what is being considered in Scotland and in Northern Ireland.

[Nigel Mills (Amber Valley) (Con)]

Would the Minister or Secretary of State care to visit a factory in my constituency that deals with plastic recycling to see at first hand what damage to that industry could be done if biodegradable material accidentally gets into the waste stream?

[Dan Rogerson]

I am clear that we want to build on the good work in plastic recycling. If the hon. Gentleman gives me more details, I am sure we can discuss whether we can go on that visit to match his request.

[Mrs Mary Glindon (North Tyneside) (Lab)]

9. What assessment he has made of the adequacy of his Department’s domestic funding and policies on climate change adaptation; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)]

The Government set out a wide range of actions and policies to address urgent climate risks in the national adaptation programme report, published in July last year. Spending on core climate adaptation work is consistent with the fluctuations in activity required by the five-year cycle set out in the Climate Change Act 2008. Spending also reflects the embedding of adaptation in wider Government work.

[Mrs Glindon]

In the light of the current Inter- governmental Panel on Climate Change report on the impact of climate change, will the Secretary of State advise us on whether he has finally had a briefing from the chief scientist on climate change?

[Dan Rogerson]

All Ministers in the Department regularly discuss climate change. I am delighted that the hon. Lady has raised those issues, which are crucial. That is why we are embedding policies to deal with mitigation and adaptation across the Government.

[Andy McDonald (Middlesbrough) (Lab)]

12. What steps his Department is taking to encourage water companies to introduce social tariffs; and if he will make a statement.

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

The Government published social tariff guidance for water companies in June 2012, enabling the introduction of social tariffs from April 2013. Three water companies now have social tariffs in place, with a further three set to introduce them this year. Another six companies have plans to introduce social tariffs from 2015, while others are consulting their customers.

[Andy McDonald]

With fewer than 25,000 people eligible for social tariffs, which are provided by just three water companies, does the Secretary of State believe that the voluntary approach is sufficient to help people who are struggling with water bills?

[Mr Paterson]

As I have said in answer to previous questions, we believe that that should be left to local companies. We are pleased that there has been progress—a number of companies have signed up—as will be clear in the next price round. As under the previous Government, who passed legislation in 2010, the regime is voluntary. We believe it is right for local companies to work with local consumers, because other consumers pay for those cheaper tariffs.

[Andrew Selous (South West Bedfordshire) (Con)]

13. What steps he is taking to protect bees.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

Bees and other pollinators are vital for the environment and our food production. We want to ensure they survive and thrive. The national pollinator strategy was drafted with the help of many interested organisations and is out to consultation. It refreshes our commitment to safeguarding bees and building on our long-established policies to support pollinators, including habitat and species conservation.

[Andrew Selous]

In Leighton Buzzard and Linslade, Leighton-Linslade town council, Central Bedfordshire council and South Bedfordshire Friends of the Earth have done excellent work in encouraging bees by planting wild flowers and leaving areas of grass uncut. That has made a huge difference—a lot of volunteers are onside. Will the Minister agree to come to see that work to see whether it can be replicated elsewhere? Perhaps at least one of his officials could come.

[George Eustice]

Yes, the initiative in Leighton Buzzard my hon. Friend describes is an excellent example of good practice in action. I will be delighted to visit his constituency in Leighton Buzzard—[Laughter]—and see the project myself.

[Mr Speaker]

A wonderful outbreak of good humour in the Chamber is always appreciated.

[Tim Loughton (East Worthing and Shoreham) (Con)]

15. What support the Government are making available to fishermen affected by the recent bad weather.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

We have made financial support available under the European fisheries fund to reimburse up to 60% of the cost of replacing lost or damaged gear. The Government will continue to pay lighthouse dues for another year, saving the industry up to £140,000. Various other support is available for businesses, including the option to apply to their local authority to get business rate relief for three months.

[Tim Loughton]

I congratulate the Minister on the recent announcement on helping very hard-pressed fishermen, who have been the unsung victims of recent floods. I am awaiting a reply from him to my letter—[Hon. Members: “Oh.”] It was written only recently and a holding reply has been received, so I am not complaining. While the help for the replacement of lobster pots and other gear is welcome in Shoreham, many of my fishermen have heavily mortgaged boats and cannot afford to pay their mooring fees and other such overheads. Can some assistance be given as a stop-gap to ensure they do not lose their moorings?

[George Eustice]

I will follow up with a response to my hon. Friend’s letter. The Department for Transport is looking at what support may be made available to help with ports. We are considering whether fishermen will be able to receive additional help from the business support fund, which, as I said, is being administered by local authorities, but I am happy to look into the individual cases he raises.

[Andrew George (St Ives) (LD)]

Welcome as the package is, I seek further reassurance from the Minister. Fishermen are having difficulty engaging with the scheme. If they have purchased the replacement pots already, they cannot receive any recompense, and the pots also have to have been lost on land.

[George Eustice]

On the latter point, I do not think that that is the case, but the Marine Management Organisation might want to see some evidence that the pots have been damaged or lost. In many cases, the MMO accepts a straightforward statement signed by a fisherman. There is an issue with retrospective payment, as the European Fisheries Fund does not allow for retrospectivity and we have had some discussions with the Commission. We are trying to get a better handle on how many fishermen are affected—we think it may be somewhere between 15 and 20 fishermen—so we are looking into this issue, and I had a meeting with officials on it just yesterday.

[Sheryll Murray (South East Cornwall) (Con)]

Fishermen in my constituency have been affected by the storms and by the dumping of dredged oil in Whitsand bay. Will my hon. Friend inform me of the cost of carrying out a survey on a recently identified alternative more suitable site, and join me in discussions with the dredging company?

[George Eustice]

I am aware that this is a very important issue to my hon. Friend. I visited her constituency and met some of her constituents who had concerns about the dredging. As she will know, the MMO makes licensing decisions of this sort in isolation from Ministers—it is separate. However, I can tell her that I have asked for an assessment of the cost of the environmental impact assessments necessary to designate a new site. I am advised that it would be approximately £130,000. I am, of course, happy to meet her and the chief executive of the dredging company to see whether we can identify a way forward.

[Andrew Bridgen (North West Leicestershire) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

The priorities of the Department for Environment, Food and Rural Affairs are growing the rural economy, improving the environment, and safeguarding animal and plant health. With flood prevention and management central to both the rural economy and the environment, last week’s Budget included a further £140 million for the repair and maintenance of flood defences, defences that in recent months protected more than 1.4 million properties and 2,500 sq km of farmland. This money is on top of the extra £130 million announced in February. Somerset was one of the areas hit hardest by the winter flooding. I spoke to the leader of Somerset council yesterday. He told me that, as part of the Somerset levels action plan, the intention is to start the initial dredge on Monday.

If I could make a brief comment on my return, Mr Speaker, I would like to send our congratulations to our colleagues in the US Congress, who on Tuesday erected a statue in the Capitol on the 100th anniversary of the birth of Norman Borlaug. His new advanced farming techniques, known as the “green revolution”, have, according to some estimates, saved 1 billion lives.

[Andrew Bridgen]

In North West Leicestershire, the new national forest continues to go from strength to strength, having a transformative effect not only on the environment but the quality of lives of local residents. Will the Minister outline what steps the Government are taking to promote tree planting across the country in the next 12 months?

[Mr Paterson]

I am grateful to my hon. Friend for highlighting the excellent work of the National Forest Company in his constituency and across the 200 square miles of the national forest. Across the country, 2,000 hectares of new woodland will be created through the planting of 4 million trees, as part of £30 million of Government investment in the next financial year.

[Maria Eagle (Garston and Halewood) (Lab)]

I welcome the Secretary of State back to the Dispatch Box after his eye operation.

Does the right hon. Gentleman agree with his Under-Secretary, the hon. Member for North Cornwall (Dan Rogerson), who said in a letter to a constituent that

“the Hunting Act is not under threat by the coalition government,”

and that it

“is not the Coalition Government’s policy…to amend the ban”?

[Mr Paterson]

I am grateful to the hon. Lady for her kind comments on my return. As she knows, we received an interesting report from a number of Welsh farmers, which presented a reasonable view that there is an increased problem of fox predation on lands since the Hunting Act 2004 came into force, but as the Prime Minister made very clear yesterday, sadly there is no agreement between the coalition parties, which is needed for an amendment to be brought before the House.

[Maria Eagle]

Following that answer and the Prime Minister’s admission yesterday, The Daily Telegraph is reporting today that Downing street has confirmed that there will be no vote on the full repeal of the hunting ban in this Parliament, contrary to the coalition agreement. Can the Secretary of State be clear with the House: will there be a vote in this House to repeal the hunting ban in this Parliament or not?

[Mr Paterson]

I think we have made it very clear. The commitment in the coalition agreement still stands and I have made it clear that a vote will come forward at an appropriate time.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

T2. Partnership funding for projects such as the Pickering pilot “Slowing the flow” scheme is being attracted from public sector bodies and, to a lesser extent, internal drainage boards. Will the Minister tell us what private sector partnership funding there has been and why the major review of partnership funding, which was expected to be published in October, has been delayed?

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)]

The Chairman of the Select Committee on Environment, Food and Rural Affairs is absolutely right to point out the important contribution that partnership funding is making. We anticipate £148 million coming forward across this spending review period, which will enable schemes that otherwise could not have gone forward. The question of private sector funding is important and it has come forward in a number of schemes around the country, but if local authorities or other public sector bodies want to make a contribution too, that is an equally valid way of bringing forward schemes that are important to keeping local people safe. However, I am happy to write to her and discuss how the review of partnership funding is progressing.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

T3. The Minister was kindly in his place yesterday when I moved the ten-minute rule motion to introduce a Bill on dog smuggling. Does he think this is an issue or does he think that those who are concerned about it are being over-alarmist? Would he be kind enough to meet me, along with one or two of the Bill’s co-sponsors and the dog charities involved, to discuss whatever his view and that of his officials happens to be?

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

I very much enjoyed attending the hon. Gentleman’s ten-minute rule Bill debate yesterday, as well as following his many questions on the issue since the new year. I have met officials on a number of occasions to review our approach and check that we have the right safeguards in place to prevent rabies coming in. There were some changes to the pet travel scheme, but we still think it is very stringent, in that all dogs coming in must be vaccinated and go through a period of three weeks before they can be moved. Nevertheless, I am more than happy to meet him to discuss the issue. I can also say that the European Commission is giving some consideration to rescue dogs coming from Romania. There was a little bit of concern last week about an incident where a dog with suspected rabies came from Romania to the Netherlands, even though that was subsequently ruled out.

[Nigel Mills (Amber Valley) (Con)]

T4. I know that the Secretary of State likes visiting chocolate factories, so may I urge him to come and visit the Thorntons factory in my constituency and join me in praising it for the 10% increase in exports it enjoyed last year? That increase was part of the overall growth in exports by the food and drink manufacturing industry, which is a great way of taking this country’s economy forward.

[George Eustice]

I would be more than happy to come and visit a Thorntons factory. Thorntons is a fabulous chocolate manufacturer and a great success story in the UK. My hon. Friend is right: the food and drink industry is our biggest manufacturing industry in the UK. There is great potential for export opportunities, which is why the Government have an export plan and why we have prioritised exports and done a huge amount of work to open new markets.

[Derek Twigg (Halton) (Lab)]

Following on from the earlier question from the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), 18 months ago there was a fire at a JL Sorting site in my constituency that took weeks to put out, but since then nothing has been done to remove the many tonnes of debris on the site and that is causing great concern as it is an eyesore and might lead to health problems. Will the Minister look again at how he can bring about change through the Environment Agency to ensure quicker enforcement to get rid of such debris more quickly?

[Dan Rogerson]

The hon. Gentleman is absolutely right. Things have not always been done as we should have liked in the past, and we are therefore investing an extra £5 million in tackling waste crime. I have asked the chief executive of the Environment Agency and Lord Smith to come back to me—as they are doing—with proposals for improving the position by toughening up regulation. The hon. Gentleman may wish to write to me about specific issues relating to the case that he has raised.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

T5. The Minister will be aware of the importance of recreational sea angling around the coast of west Wales. Have the Government conducted any economic study of its importance to jobs, and what they can do to protect them?

[George Eustice]

Last November I attended the launch of Sea Angling 2012, which did just that. It found that, in 2012, English anglers had spent £831 million on the sport. When indirect and induced effects are accounted for, that could support a total of more than £2 billion of spending. The report is available on the Marine Management Organisation’s website.

[Mr Ben Bradshaw (Exeter) (Lab)]

Will the Government please have another look at the exclusion of 70,000 leaseholders from their new flood insurance scheme? Most of those people are on modest or low incomes, and a number of them live in my constituency. As a result of their exclusion from the scheme, they either face massively increased premiums or cannot obtain insurance at all.

[Dan Rogerson]

We are examining the various leasehold options with the aim of ensuring that Flood Re deals with the problems of the least commercial leaseholders. Some large commercial landlords have leasehold properties, and we want to make certain that flood relief is focused on domestic policies. Of course, it will be possible for the contents insurance policies of leaseholders of all types to be ceded to Flood Re should that be necessary.

[Mr David Amess (Southend West) (Con)]

T6. Does my hon. Friend agree that the practice of puppy farming is a disgrace, and will he do all that he possibly can to discourage pet shops from selling kittens and puppies?

[George Eustice]

My hon. Friend is a long-standing champion of this cause. I agree with him that irresponsible breeding and selling of dogs is unacceptable, and we think that the relevant authorities should clamp down on it. Anyone in the business of breeding and selling dogs must have a valid licence from the local authority, and must also abide by the Animal Welfare Act 2006. Many pet shops have already stopped selling kittens and puppies, but we are more concerned about internet sales of puppies, to which animal welfare charities have drawn our attention.

[Julie Hilling (Bolton West) (Lab)]

Yesterday was the first anniversary of the death of 14-year-old Jade Lomas-Anderson after being attacked by four dogs in my constituency. The new legislation is welcome, but it does not solve the problem of dangerous dogs. What further plans does the Minister have to protect our communities, educate children and dog owners, tackle puppy farming, and prevent dogs from becoming dangerous in the first place?

[George Eustice]

Unless dogs are bred properly and socialised properly, they may become violent in adulthood. That is a big challenge for us, but we have increased sentences for those responsible for attacks on people by dogs, and we have changed the law so that prosecutions can be brought even when an attack takes place on private property.

[Mr Henry Bellingham (North West Norfolk) (Con)]

T7. Given the Secretary of State’s popular and correct decision to cancel the private finance initiative credit given to the Kingsland incinerator, and given that incineration is near the bottom of the waste hierarchy, does the Minister agree that the green investment bank should be investing in green technologies higher up the hierarchy, and that that does not include flawed incineration projects?

[Dan Rogerson]

Although energy from waste has its place, the Department fulfils its duty to ensure that any money that is invested through support from the Treasury goes to where capacity is needed. The hon. Gentleman has made a good point about the importance of driving resources up the hierarchy, but I think we should welcome the fact that the green investment bank is supporting innovators and new entrants to the sector.

The hon. Member for South West Devon, representing the Speaker's Committee on the Electoral Commission was asked—

[Mr David Burrowes (Enfield, Southgate) (Con)]

1. What assessment the Electoral Commission has made of the recent data-matching exercise in the movement towards individual voter registration.

[Mr Gary Streeter (South West Devon)]

The dry-run exercise to prepare for the introduction of individual elector registration involved matching all entries on the electoral registers against the database of the Department for Work and Pensions. The Commission’s report on progress stated that, although there was still a great deal of work to be done, sufficient progress had been made for us to press ahead with the historic change to IER, which will take place in June 2014. It will enhance individual voter responsibility and the security of, and confidence in, the electoral registration system, and—this is extremely important—it means that for the first time those who are eligible to join the electoral register will be able to do so online.

[Mr Burrowes]

What my constituents want is reassurance that the introduction of IER will bring about that greater security when a person enters the register, and that it will bring down electoral fraud and bring up confidence in the electoral system.

[Mr Streeter]

I think I can give my hon. Friend that assurance. IER will certainly increase the robustness of our democratic system, because a national insurance number and date of birth must be given before anyone can enter the register. For many people it will be easier to get on to our register because it can be done online. Particularly for younger people, who are a hard-to-reach group, the ability to enter the register online, with the necessary information, is a very good thing.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I have recently visited the Huddersfield electoral registration office in Kirklees, where the staff are doing a very good job during this transformative stage. They are worried that some of the technology is showing real glitches, however. Is the hon. Gentleman really sure that the scheme will be ready on time, and are we going to get more people voting at the next election?

[Mr Streeter]

The assurances I have received from the Electoral Commission are that the technology will work and that this scheme is ready to run on time. The hon. Gentleman has been a trailblazer, because it is very important that all of us visit our electoral registration offices to discuss with them the plan they have to get people on to the register. He has done that. We should all follow his example.

[Mr Speaker]

Trailblazer Sheerman; well, there’s a thought for the day.

The hon. Member for Banbury, representing the Church Commissioners, was asked—

[Martin Vickers (Cleethorpes) (Con)]

2. What the current estimated cost is of necessary repairs to cathedrals in England; and what steps are being taken to ensure that cathedrals remain open to the public.

[The Second Church Estates Commissioner (Sir Tony Baldry)]

The current estimated shortfall in the cost of repairs to cathedrals is £87 million over the next five years, over and above what the cathedrals are currently spending on repairs annually.

[Martin Vickers]

I thank my right hon. Friend for that answer. Does he recognise the importance of keeping our cathedrals open, as they are a magnet for tourism and bring benefits to the wider community and the tourist trade in particular? Will he ensure that the Church maintains a close working relationship with other parts of the tourist industry?

[Sir Tony Baldry]

I entirely agree with my hon. Friend. Cathedrals are incredibly important in terms of heritage. Lincoln cathedral, which is in my hon. Friend’s constituency in the diocese of Lincoln, needed repairs to its stonework, and I am very grateful, as I am sure is the whole House, for the announcement in the Chancellor’s Budget of £20 million to help cathedrals. I hope that some of that money will be able to find its way to Lincoln cathedral.

[Michael Fabricant (Lichfield) (Con)]

9. My right hon. Friend will know that Lichfield cathedral urgently requires rewiring, but it will be unable to access funds from the Heritage Lottery Fund. Will it be able to access money from the generous grant made by the Chancellor of the Exchequer so that we can repair the wiring, if not the roof, while the sun is shining?

[Sir Tony Baldry]

There is clearly an urgent need to rewire Lichfield cathedral; indeed, if it is not done, there is a real risk that the cathedral might close. It was exactly for that sort of purpose—repairing guttering, rewiring—that the Chancellor very generously included provision for £20 million in his Budget. I look forward to visiting Lichfield at some point when the rewiring is done.

[Mr Ben Bradshaw (Exeter) (Lab)]

3. What the Church of England’s policy is on priests entering a same-sex marriage; and what guidance has been given on what would happen to a priest who did so.

[Sir Tony Baldry]

Clergy and ordinands remain free to enter into civil partnerships. The House of Bishops in its pastoral guidance distributed on 15 February said that it was not willing for those in same-sex marriages to be ordained to any of the three orders of ministry—deacon, clergy or bishops—and that

“it would not be appropriate conduct for someone in holy orders to enter into a same-sex marriage, given the need for clergy to model the Church’s teaching in their lives”.

As with any alleged instance of misconduct, each case would have to be considered individually by the local diocesan bishop.

[Mr Bradshaw]

In light of the recent Pilling report, does the right hon. Gentleman believe it would be sensible if a hard-working, popular priest got married with the full support of his or her parish and congregation and was then disciplined, sacked or defrocked?

[Sir Tony Baldry]

The situation is clear. The Church of England’s understanding of marriage remains unchanged: marriage is a lifelong union between one man and one woman, and under the canons of the Church of England marriage is defined as being between a man and a woman. The canons of the Church of England retain their legal status as part of the law of England and I would hope that no priest who has taken an oath of canonical obedience would wish to challenge canon law and the law of England.

[Mr David Nuttall (Bury North) (Con)]

4. What the anticipated return is on the Church Commissioners’ investments for the current financial year.

[Sir Tony Baldry]

The Church Commissioners are finalising their asset valuations and anticipate the total return for 2013 to be about 15% to 16%. The continued steady return will enable the Church Commissioners to continue the level of support that they give the ministry of the Church of England.

[Mr Nuttall]

I am grateful to my right hon. Friend for that reply. In the light of it, can he say what support the Church Commissioners might be able to make available to fund local community projects to encourage growth in the Church at parish level?

[Sir Tony Baldry]

I hope that during the course of this coming year the Church Commissioners will be able to make about £90 million available to support local community projects—projects in the diocese of Manchester and throughout the country—and to help serve the whole community of the country, making it clear that the Church of England is a national Church.

[Tim Loughton (East Worthing and Shoreham) (Con)]

Does my right hon. Friend share my concern that Church Commissioners’ investments might be being added to by the increasing trend for high charges for access to cathedrals and important Church establishments, led by Westminster abbey, which people need to take out a mortgage to access these days? Does he agree that the practice of other countries’ giving a discounted rate to local people or seasonal rates for access so that local people can access their churches would be appropriate?

[Sir Tony Baldry]

My hon. Friend will find that in other countries the system is different. For example, in Germany the state supports all the cathedrals and churches, whereas the Church of England has to fund all our cathedrals and all our churches itself. We have the stewardship of more grade I listed buildings than any other entity. If my hon. Friend wants to go to worship in the cathedral, he can always do that for free, but I do not think anyone would object to tourists who want to see the heritage of a cathedral having to pay a modest amount to see that and support it.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

5. How much money the Church Commissioners anticipate they will be able to distribute to dioceses across England to support their mission in 2014.

[Sir Tony Baldry]

The Church Commissioners support the mission of each diocese depending on its need. Each diocese generally receives between £1 million and over £3 million, but that covers only a small proportion of the cost of running the Church. We must never underestimate the importance of the generous giving of church congregations, which accounts for most of the rest.

[Miss McIntosh]

The village church is at the heart of rural life, and I am delighted to say that the Bishop of Knaresborough is joining us for a celebration of the countryside on Saturday. What is the split between rural and urban pay from the diocesan contribution? I ask because the costs of running rural parishes are extremely high.

[Sir Tony Baldry]

My hon. Friend is right to say that the parish church is invariably at the heart of English village life. It is difficult distinguishing between urban and rural dioceses, as many dioceses are very mixed. Her diocese of York receives between £2.5 million and £3 million each year. The dioceses with the greatest deprivation, Durham and Manchester, receive more than £3 million. We are trying to ensure that adequate financial support is provided by the Church Commissioners and the Church as a whole both to parishes in inner-city areas and to rural parishes serving important villages in her constituency, because the Church of England is a national Church which must reach every part of England.

[Andrew Selous (South West Bedfordshire) (Con)]

6. What steps are being taken to help dioceses and parishes engage and take action with reference to the Church growth research programme.

[Sir Tony Baldry]

The findings from the Church growth research programme have been disseminated widely within the Church, and are informing diocesan strategies and practices at parish level. Further practical online resources are being developed and events are being planned to help dioceses and parishes to engage with the research and take action.

[Andrew Selous]

Does my right hon. Friend agree that many examples of good practice are available, where church congregations have increased significantly, often through using the Alpha course or courses such as Christianity Explored? Does he also agree that church planting could be looked at, too?

[Sir Tony Baldry]

My hon. Friend will know that the most significant growth in the Church of England has been identified in fresh expressions of church, church planting and midweek attendance at cathedrals. I am sure he will be pleased to know that only this week the Archbishop of Canterbury chaired the first meeting of an evangelism task group, because growing the Church of England is, obviously, an extremely important challenge for the Church of England.

The hon. Member for South West Devon, representing the Speaker's Committee on the Electoral Commission was asked—

[Helen Goodman (Bishop Auckland) (Lab)]

7. When the Electoral Commission will reply to the letter from the hon. Member for Bishop Auckland of 6 March 2014 regarding donations from Scythian Ltd.

[Mr Gary Streeter (South West Devon)]

The Electoral Commission responded to the hon. Lady on 14 March.

[Helen Goodman]

I am grateful to the hon. Gentleman for that reply. I have now seen the reply from the Electoral Commission. I raised the matter because Scythian is owned by a person who worked for Dmitry Firtash who has just been arrested in Vienna, and that raised questions about the money. The Electoral Commission seems to be relying on the recipient of the money to do the checks. Does he agree that that is an incredibly weak situation for the Electoral Commission to put itself into?

[Mr Streeter]

It is the system set up by this Parliament, and the matter has been thoroughly investigated, under the existing rules, by the Electoral Commission, which found that the participants had complied fully with all the rules.

[Mr Philip Hollobone (Kettering) (Con)]

8. If the Electoral Commission will take steps with relevant Government Departments and other public bodies to ensure that whenever a citizen comes into contact with a public agency for an administrative reason a check is made to see if they are registered on their local electoral roll.

[Mr Streeter]

The Electoral Commission will carefully consider, with the Cabinet Office, any such proposals for improving the efficiency of electoral registration processes, as it is to monitor the implementation of individual electoral registration during 2014 and 2015. If such a process appears to be viable, the commission will recommend that the Government bring forward any necessary measures to allow it to take place.

[Mr Hollobone]

When a constituent gets in touch with me, I always check to see whether they are on the electoral register. If they are not, I give them advice on how to get registered. Will my hon. Friend, who I am sure does exactly the same thing, urge the Electoral Commission to drive the Cabinet Office to introduce that sensible proposal?

[Mr Streeter]

This is a good idea and it is something that the Electoral Commission will certainly consider over the next 12 months. As my hon. Friend suggests in his question, it will ultimately be a matter for the Cabinet Office and for this House to change the rules, but I personally strongly support the initiative that he is taking.

Crossing at Gipsy Lane, Leicester

Thursday 27th March 2014 Commons Chamber

Keith Vaz (Leicester East) (Lab)

- Hansard - - Excerpts

It is a pleasure—[Interruption.]

Madam Deputy Speaker (Mrs Eleanor Laing)

- Hansard - - Excerpts

Order. Will hon. Members leaving the Chamber do so quickly please ?

Keith Vaz

- Hansard - - Excerpts

I wish to present a petition on behalf of Mrs S Kaur, Patricia Pitter, Kade aged five, Dillon aged eight, Mohammed Khan, Mr Mistry, and Councillors Bhatti, Clair, Osman and Newcombe. The petition has gathered 158 signatures from local residents. They are very concerned about a crossing in my constituency that crosses Gipsy Lane, Leicester. At the moment, there is a crossing but cars are not stopping at this pedestrian crossing. They would like to see a pelican crossing installed, which would mean that cars would have to stop. I went there last Saturday. The cars did stop when I arrived with a delegation of residents, but it is very clear that cars are not obeying the law. We hope that with this petition they will be able to do so.

The petition states:

The Petition of residents of Leicester East,

Declares that the zebra crossing on Gipsy Lane, Leicester is unsafe as the drivers do not stop long enough, they drive through when pedestrians are half way across the road and further declares that the Petitioners are concerned that there is an accident waiting to happen on this road.

The Petitioners therefore request that the House of Commons urges the Department for Communities and Local Government and Leicester City Council to investigate installing a pelican crossing at this site.

And your Petitioners, as in duty bound, will ever pray.

[P001337]

Business of the House

Thursday 27th March 2014 Commons Chamber

10:31

[Ms Angela Eagle (Wallasey) (Lab)]

Will the Leader of the House give us the business for next week?

[The Leader of the House of Commons (Mr Andrew Lansley)]

The business for next week is as follows:

Monday 31 March—Second Reading of the Wales Bill.

Tuesday 1 April—Second Reading of the Finance Bill.

Wednesday 2 April—Opposition day [unallotted half day]. There will be a debate on an Opposition motion. Subject to be announced, followed by motion to approve a statutory instrument relating to terrorism.

Thursday 3 April—Statement on the publication of the fourth report from the Work and Pensions Committee on support for housing costs in the reformed welfare system, followed by a debate to be nominated by the Backbench Business Committee, followed by a general debate on civil service reform. The Select Committee statement and subjects for debate were determined by the Backbench Business Committee.

Friday 4 April—The House will not be sitting.

The provisional business for the week commencing 7 April will include:

Monday 7 April—General debate on justice and home affairs.

Tuesday 8 April—Consideration in Committee of the Finance Bill.

Wednesday 9 April—Continuation of consideration in Committee of the Finance Bill.

Thursday 10 April—Business to be nominated by the Backbench Business Committee.

Friday 11 April—The House will not be sitting.

I should also like to inform the House that the business in Westminster Hall for 3 April will be:

Thursday 3 April—Debate on incapacity benefit migration.

[Ms Eagle]

I thank the Leader of the House for announcing next week’s business. I also take this opportunity to mark the funeral of Tony Benn, which will begin at St Margaret’s church shortly. As we heard in the fulsome tributes last week, Tony Benn was one of the great parliamentarians of our age, and we will miss him.

Will the Leader of the House join me in congratulating the competition authority for listening to the Leader of the Opposition and announcing an inquiry into the big six energy firms? After SSE showed yesterday that it backs the Leader of the Opposition’s plan by freezing its prices, perhaps the Leader of the House will tell us why his party still do not. Will he give us an assurance that, while the investigation is ongoing, consumers will be protected from any more unfair price rises?

We have the Second Reading of the Wales Bill on Monday, which gives further powers to the Welsh Assembly. Given that it wants these new powers as soon as possible, will the Leader of the House confirm when he expects the Bill to reach Committee stage?

My hon. Friend the Member for Wansbeck (Ian Lavery) has today published his Bill to abolish the bedroom tax, after the House supported its introduction by 226 votes to one. As there is no time left for private Member’s Bills to have a realistic chance of getting a hearing, will the Leader of the House arrange for us to debate this Bill in Government time? After all, the House has expressed a strong view and it is not as if the Government are overly busy with their own legislation.

It seems that this Government are becoming more and more Orwellian. Last week we had beer and gambling for the proles, and this week the Justice Secretary has been forced to defend his ban on prisoners being sent books. The author Philip Pullman has called the change “disgusting” and “vindictive” and one unnamed senior Tory Minister briefed the press that the Justice Secretary

“wins the prize for the Government’s least enlightened Minister”.

Will the Leader of the House tell us whether he agrees with the Justice Secretary and his ban on books in prisons?

This week, we have been debating the Chancellor’s missed opportunity Budget. Across the country, people are £1,600 a year worse off, long-term youth unemployment has doubled and according to the Office for Budget Responsibility, energy prices are rising at twice the rate of inflation. The Chancellor called it a Budget for savers, but the OBR revealed that the savings ratio will have halved by 2018. The Chancellor said that it was a Budget for makers, but productivity remains weak and the trade gap has widened. The Chancellor said that it was a Budget for doers, but real wages have fallen by 2.2%. This was a Budget of spin. The Red Book revealed the depth of the Chancellor’s failure and buried in the small print was yet another stealth tax cut for Britain’s biggest banks. Next Tuesday, we will discuss the Finance Bill. On every crucial measure—living standards, growth and debt—the Chancellor has failed.

The Government are fast acquiring a reputation for staggering incompetence. They said they had an economic five-year plan, but it is already running four years late. They said that universal credit would save money, but it is now costing an unbelievable £160,000 per person, and their trebling of tuition fees is drowning students in debt yet bringing in no extra money. What a Government for the Liberal Democrats to prop up. Faust sold his soul to the devil for unlimited knowledge and worldly pleasures; the Lib Dems have sold their souls for a mess of pottage

[Mr David Heath (Somerton and Frome) (LD)]

No, we haven’t.

[Ms Eagle]

You have—sold your soul for a mess of pottage. [Laughter.]

In the hotly fought race to be the UK’s next EU Commissioner, I am sure that the Leader of the House will be delighted to hear that his odds have dramatically shortened and he is now the clear front-runner. As we get closer to a reshuffle that might ship him off to Europe, I wonder whether the Leader of the House would like to agree with his local Conservative councillor, Mark Howell, who has said that South Cambridgeshire would “love” to have Boris Johnson as its next MP? I for one would miss our exchanges if he did decide to go.

There are still 406 days until the general election, but recently Lord Tebbit said that

“the coalition has…gone past its sell-by date”

and that it is

“beginning to smell a bit“.

Gwyneth Paltrow and Chris Martin have just announced their separation, so I would like to suggest that the Leader of the House gets them in as advisers. Their strategy of “conscious uncoupling” sounds exactly like what this Government are trying to do.

[Mr Lansley]

I am grateful to the shadow Leader of the House for her questions. Today is an opportunity for many Members to say farewell to Tony Benn at St Margaret’s and I was very glad that we were able to do so formally in the House last week. Indeed, many Members were able to do so individually in the Chapel during the course of yesterday evening.

The hon. Lady asked about the big six. The Secretary of State will make a statement to the House immediately after questions, but it is clear that the Government are taking action. In its announcement about the price freeze, SSE said that the Government’s decision to cut the taxes that add to energy bills was the

“principal factor in SSE being able to make this price commitment”.

There is a world of difference between an effort on the part of the Opposition to try to buck the market, as they always want to do, and an effort on the part of this Government to get a competitive market that delivers the greatest possible benefits to consumers. In that context, I was staggered that by voting against the Budget the Opposition voted against measures that would cut energy costs for energy-intensive industries, including in some of the areas that Labour Members represent where jobs depend on the competitiveness of manufacturing. Those same measures will help in the long term to reduce energy bills for consumers in this country.

The Wales Bill will have its Second Reading next week, and I will announce when its Committee stage will be. As it is a constitutional Bill, however, I hope that we will find time, before too long, for it to be considered on the Floor of the House. We are anxious to bring forward the Wales Bill—that is why we have introduced it in this Session—and the debate next week will allow us to hear from the shadow Secretary of State for Wales whether he is in fact, as he appeared to be in the Welsh Grand Committee, against the devolution of powers relating to tax to Wales. This is an astonishing position: the Government are in favour of further devolution to Wales, and the Opposition are against it. They will have to explain themselves.

I agree with the Lord Chancellor in relation to prisons. There is not a ban on books. There is, on the part of the prison authorities and the Ministry of Justice, a determination to act to make sure that security in prisons is maintained. There are libraries in prisons and there is access to books. We have to make sure that the security is appropriate.

I would say that the hon. Lady was attacking the Budget, but her approach was a bit limp to be described as an attack. The Budget is clearly a success. The fact that Labour Members voted against the Budget will, I am afraid, return to haunt them. What happened in the last couple of days has been very curious. When challenged yesterday on whether Labour Members had in fact voted for higher taxes on business, the shadow Chancellor was busy denying it, having the day before voted for exactly that to happen. Then yesterday, they voted for—at least most of them did—the cap on welfare, while at the same time in private the shadow Chief Secretary was busy trying to tell everybody,

“It will be much better if we can say all the changes that the Government has introduced we can reverse”.

So Labour Members are voting against the Budget and denying it, and voting for the cap on welfare and denying that. I do not know where they are coming from or going to; what I do know is that they will have to explain themselves. In particular, they cannot vote against a cap on housing benefit, against the overall cap on the benefits a household can claim and against plans to limit the annual increases in benefits, and at the same time vote overall for the cap.

I hope that we will raise a glass to those who are entering into marriage this weekend—for the first time, those who are entering into same-sex marriages, as well as the no doubt thousands of others who are entering into marriage. I was pleased to note that in 2011, there was an increase in the number of people getting married in this country. I hope that the measures that we have taken on same-sex marriage will help to promote, as my support was intended to do, the lifelong commitment that marriage represents.

On the justice and home affairs debate on Monday week, which I announced in provisional business, I hope the House will welcome the fact that we committed to returning to the House for a further vote. We will do so later this year, before formally applying to rejoin the measures we are seeking to rejoin, following the House’s support for the opt-out. We are grateful to the European Scrutiny Committee, the Home Affairs Committee and the Justice Committee for their reports on the matter. The planned debate on 7 April will provide Parliament with an opportunity to debate those issues and the Select Committees’ reports, in order to seek the views of the House, as we have always made clear that we will, prior to any specific measures being rejoined later in the year.

Finally, in the course of the debate yesterday evening between the Deputy Prime Minister and the leader of the UK Independence party, I was slightly staggered by what Nigel Farage said about Ukraine and Russia. Actually, in the House of Lords yesterday, in response to the statement that was repeated from this House, Lord Pearson of Rannoch also made a remark to the effect that the cause of the crisis was the EU’s relationship with Ukraine, and not Russia’s. I think it is outrageous that UKIP should be behaving as apologists for President Putin. I hope that they will withdraw the comments.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

Will my right hon. Friend tell us what the point is of the Osmotherly rules? They require the Government to respond formally to Select Committee reports within two months of their publication, or six months at the very latest. It is with great regret that I must tell him that the Public Administration Select Committee has today published a report criticising the Government for failing to respond to our report on the business appointment rules, which are very controversial and not very satisfactory, for 20 months. We published the report in July 2012 but are still waiting for a response. We feel that we have been extraordinarily patient. Does he agree that his Department ought to have a system for chasing Government Departments on behalf of the House to ensure that they respond to Select Committee reports on time?

[Mr Lansley]

I am grateful to my right hon. Friend for his question. I see it as part of my role to represent the House in the Government as well as to represent the Government in the House, so I will of course ask my right hon. Friend the Minister for the Cabinet Office to respond to the report that the Committee published this morning. The purpose of the Osmotherly rules is to give civil servants guidance on how they should make themselves accountable to the House.

[Diana Johnson (Kingston upon Hull North) (Lab)]

In the week when we heard the fantastic news about Siemens bringing 1,000 green jobs to Hull, which comes on the back of the announcement that Hull will be the city of culture in 2017, I was dismayed to learn that Channel 5 is proposing to make a further documentary, based in Hull, about people in the north living on benefits. May we have a debate on responsible documentary making that does not build on stereotypes about the north and that shows the positives, because the north is a thriving place, with people in work and doing very well?

[Mr Lansley]

I certainly agree with the need to accentuate the positive. We need continuously to highlight the fact that, in contrast to the loss of 1 million manufacturing jobs under the previous Government, we are now creating jobs in manufacturing, establishing our competitiveness and seeing inward investment of the type the hon. Lady describes, which is extremely welcome. I hope that the way the local business community, and indeed Hull itself, have got behind local enterprise is something that can be accentuated, rather than the negative stereotypes.

[Mr Heath]

May we have a debate on the vital role of public transport in rural areas? I know that the Government understand that, but I do not think that some local authorities, and certainly some bus companies, do. For instance, First Bus recently decided no longer to route its 267 bus via the village of Rode, which will effectively cut off those who does not have access to a private car from the city of Bath. It is a scandalous state of affairs, and I want something done about it.

[Mr Lansley]

My hon. Friend makes a point that I know concerns many Members. Where there is a lack of demand for particular services, it is obviously for local authorities to decide how best to use their grants to support bus services in some of the most rural areas. He rightly raises that point, and I will refer it to my right hon. and hon. Friends at the Department for Transport and seek more details for him.

[Helen Jones (Warrington North) (Lab)]

Today a report on the police’s handling of domestic violence cases has shown appalling failures and some horrifying treatment of victims, yet when we have raised in the House the fact that reports of domestic violence are rising and fewer cases are being passed to the Crown Prosecution Service, those concerns have been dismissed. Now that the Home Secretary has announced to the press that she is taking charge of the police response, will the Leader of the House arrange for her to make a statement to the House on what she will do to address the appalling failures that have taken place on her watch?

[Mr Lansley]

Many Members will have been very concerned by the report Her Majesty’s inspectorate of constabulary published this morning. I certainly was, as one of the four police forces identified as failing to meet the standard required was Cambridgeshire constabulary, which serves my constituency. I will talk with the Home Secretary, but I would not characterise her response in the way the hon. Lady did. I think that the Home Secretary has been foremost in her handling of the matter, for example in the way she has brought forward or strengthened action plans for dealing with violence against women and girls. I will ask her to find an opportunity to update the House by means of a statement of some description before too long.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Brain tumours are the biggest cancer killer among under-40s, and tomorrow is Wear A Hat day in aid of brain tumour research. We are very fortunate in Harrogate and Knaresborough to have a dynamic local charity called the PPR Foundation founded by a local lady, Pamela Roberts, who does great work raising funds for brain tumour research. Please may we have a debate about how we can raise awareness of the symptoms of brain tumours among the under-40s?

[Mr Lansley]

It is important that my hon. Friend raises the work that PPR and Pamela Roberts are doing, and I am grateful to him for doing so. When I was Secretary of State, I was very aware of the continuing risk of brain tumours, particularly among younger people, and the lack of diagnosis and treatment options. That is one of the reasons we took the decision to invest £150 million in the establishment of proton beam therapy centres. It is a continuing issue. I will of course raise it with my hon. Friends at the Department of Health, but if he is in his place next Tuesday when they respond to questions, he might find a further opportunity to do so.

[Dr William McCrea (South Antrim) (DUP)]

The police in Northern Ireland have stated that if the National Crime Agency is unable to operate fully in Northern Ireland, that will have a detrimental impact on their ability to keep people safe and combat serious and organised crime. Will the Leader of the House find time to debate this important subject on the Floor of the House?

[Mr Lansley]

I am grateful to the hon. Gentleman. I am sure he will know from past answers at business questions and statements by my right hon. Friends that we regret that a legislative consent motion was not made available on the legislation in order to allow the National Crime Agency to operate in Northern Ireland. I hope we can continue to make progress in this direction. I cannot offer time on the Floor of the House for a debate, but I hope there will be further opportunities for us to make progress.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

The new boss of High Speed 2, Sir David Higgins, astonishingly announced to the Transport Committee that the Second Reading of the HS2 hybrid Bill would be on 29 April. I do not tend to believe that until I hear it from the Leader of the House. It is evident, however, that we are getting closer to the petitioning process, so when will the House provide to those affected by this project details of the physical arrangements for that process? Will he consider waiving the £20 fee, particularly for those who are disabled and OAPs? Will he give some thought as to whether the hybrid Bill Committee ought to visit each of the constituencies affected by the project to take petitions and evidence from constituents who are disabled, elderly, or frightened by the processes of this House?

[Mr Lansley]

My right hon. Friend is quite right to say that the timing for the Second Reading of the Bill is a matter for the business managers, and I will announce it to the House in due course. Members of the House would always be advised to wait for such an announcement at business questions. She raises an important point. The petitioning period will take place after Second Reading, and I hope that the House and those outside the House will have as much notice as possible about its start date and duration. I am not in a position to provide that information at the moment, but I will speak to the Department for Transport and ensure that the relevant action is taken. The hybrid Bill Committee will be able to make visits outside Westminster, and I am sure that its members will want to acquaint themselves personally with the line of route and areas affected. In addition, the petitioning process will ensure that they obtain a comprehensive view of the issues for those directly and specially affected by the route.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Leader of the House agree that universities are absolutely a jewel in the crown of our society and essential to the wealth creation and civilisation of our nation? Does he know that Huddersfield university is this year’s university of the year? I know he has got quite a good university in his part of the world. Does he agree that we can only go on for so long paying university staff very poor wages and salaries that have not had an increase that would attract top talent? When can we have a debate about this, because the future of our universities depends on the quality of staff we attract and retain?

[Mr Lansley]

The hon. Gentleman is right: I am proud to represent Cambridge university in this House, along with my hon. Friend the Member for Cambridge (Dr Huppert). As we all know, universities are central not only to the long-term prospects of students, but to our economic prospects and competitiveness. They are also principal engines for growth in many of the areas in which they are located. They are tremendously important. I am delighted that the coalition Government’s reforms have led to increases in the number of students; to more disadvantaged students and students from black and minority ethnic communities going to university; and to more opportunities as we open up and get rid of the limits on access for students. That is all positive.

Universities are, however, self-governing institutions and the pay they offer staff and their relationships with them are matters that they govern themselves. Although the House will rightly debate university matters from time to time, I hope Members will understand that this is a matter for universities rather than for Government.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

It is rather a pity that Ofgem has reported the big six to wherever they will go. Smart metering is the way in which we as a nation can address how we use our energy, yet we have not standardised the technology, what we will do with the data or how much it costs. May we have time in the House to discuss the way in which we save energy in this country, and energy security? Smart metering has an enormous role to play: it is very simple to do, it is tax neutral and it will actually help everybody in this country.

[Mr Lansley]

My hon. Friend raises an important point. I cannot promise a debate, but he might want to seek an Adjournment debate or find another opportunity with colleagues. I hope that more of these important technologies are being put in new homes as they are built. It is also, rightly, a matter for the regulator to ensure that we achieve energy efficiency as part of securing greater progress in carbon reduction and energy security.

[Graham Jones (Hyndburn) (Lab)]

May we have a statement on the east Lancashire train line? It has no trains on it, which is a bit of a joke. I was promised a statement by the rail Minister, the Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond), in January, but it has not occurred. Wages in Manchester are considerably higher than those in my constituency and the rail line will give employment opportunities to my constituents and put them in a far better position to gain employment in this tough area in difficult times.

[Mr Lansley]

The hon. Gentleman will forgive me if I am wrong, but my recollection is that there has been a Westminster Hall debate on such issues.

[Graham Jones]

Not on the east Lancashire train line.

[Mr Lansley]

Perhaps it was not on that issue specifically, in which case I apologise. I will, of course, raise the issue with my colleagues at the Department for Transport, who I know will be anxious to provide the hon. Gentleman and, perhaps, the House with information.

[Mr Peter Bone (Wellingborough) (Con)]

I have learned today of another reason to dislike the European Union: the idea that it will deprive the Leader of the House of the opportunity to be here is absolutely outrageous. Did he listen to the LBC debate on the EU yesterday and hear the leader of the fourth party in British politics say that only 7% of our laws are made by the European Union? The Deputy Prime Minister quoted the House of Commons Library, but I have spoken to Library staff, who have confirmed that he was referring only to primary legislation. If we take into account the thousands and thousands of statutory instruments, we will see that the actual figure is much higher. Could the Leader of the House arrange a statement by the Deputy Prime Minister next week to clarify that?

[Mr Lansley]

I think we all recognise that primary legislation is critical. Although there is an enormous amount of legislation, the question of who makes our primary laws is an issue on which we should focus. I am grateful to my hon. Friend for his solicitous remarks. I cannot comment on such issues, because they are matters for the Prime Minister, not for me, happily—it is up to him.

[Ms Angela Eagle]

Oh, come on! Should we place a bet?

[Mr Lansley]

No, because I do not particularly approve of gambling. I listened to the debate yesterday and thought that, on the facts, the Deputy Prime Minister had the better of the argument. All the way through, however, I thought to myself that a debate about Europe is all very well, but what the British people want is an in/out referendum. The leader of the UK Independence party cannot deliver it and the Labour party and our Liberal Democrat friends will not deliver it—only the Conservative party will deliver a referendum.

[Nick Smith (Blaenau Gwent) (Lab)]

There is a long-term trend of falling voter turnout among young people. It is good that we will get online voter registration in June, but may we have a statement on the possible introduction of online voting to help to address this big problem?

[Mr Lansley]

We are of course making progress on individual electoral registration, which I hope will allow people in England and Wales to register online for the first time from June. We are putting the maximisation of registration at the heart of our work to improve the electoral system, but we want to make sure that individual electoral registration is working well before we consider any further changes. I have to say that there are concerns about whether e-voting can be made secure from attack and fraud, so although it may be something to consider, it is not a priority for us at present.

[Julian Sturdy (York Outer) (Con)]

May we have a statement on the delayed Presumption of Death Act 2013? This month marks the fifth anniversary of Claudia Lawrence’s disappearance, and it is encouraging that further information has emerged following the “Crimewatch” appeal last week. The legislation is of the utmost importance to the families whose loved ones have gone missing, and the delay only serves to compound their anguish.

[Mr Lansley]

I am sure that Members from across the House are aware of the cases that have caused considerable distress and rightly led to the House approving the Presumption of Death Bill. If I may, I will talk to my right hon. and hon. Friends at the Ministry of Justice about what steps are being taken to bring the Act into force.

[Barry Gardiner (Brent North) (Lab)]

This weekend, the Intergovernmental Panel on Climate Change will publish its fifth assessment report on the impacts of climate change. Given that the final draft of the report covers disruption to the economy, disruption to water availability, changes to the food supply and adverse health impacts, I am not quite sure which Secretary of State it would be best to get the Leader of the House to ask to make a statement: it could equally be the Secretary of State for Business, Innovation and Skills, for Health, for Energy and Climate Change, for International Development or for Environment, Food and Rural Affairs. If there could be a conscious uncoupling between the Deputy Prime Minister and Mr Farage next week, the Deputy Prime Minister might come to the House to give a statement on the impact report.

[Mr Lansley]

These important issues are taken very seriously across Government. We must take far-reaching steps to mitigate the impacts of climate change. As it happens, the Secretary of State for Energy and Climate Change will respond to questions next Thursday, and he is the appropriate lead Minister to whom the hon. Gentleman should direct his questions.

[Andrew Bridgen (North West Leicestershire) (Con)]

With two of the largest brick manufacturing companies in the country based in my constituency, I very much welcome announcements in the Budget to aid energy-intensive industries and the doubling of the annual investment allowance to £500,000. May we have a debate on the measures taken by this Government since they came to office to help private sector businesses expand in line with our long-term economic plan to rebalance our economy?

[Mr Lansley]

I know that businesses, such as the brick manufacturers to which my hon. Friend refers, have benefited considerably from the recovery promoted by this coalition Government. The Budget’s support for their future competitiveness—not only in doubling the annual investment allowance, but in taking steps to ensure that energy-intensive industries can access competitive energy prices—is very important for such key manufacturing businesses.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Will the Leader of the House provide time for a debate on a thorny issue that I have raised in the House on numerous occasions? Tens of thousands of people in Northern Ireland who were born in the Irish Republic during the past 40 or 50 years are denied the right to get a British passport, although many people in Northern Ireland can avail themselves of an Irish passport on the same basis.

[Mr Lansley]

If I may, I will talk to my right hon. Friends the Secretary of State for Northern Ireland and the Home Secretary about that matter. I cannot promise a debate at this stage, but I will endeavour to secure further replies for the hon. Gentleman.

[Robert Halfon (Harlow) (Con)]

Has my right hon. Friend seen my early-day motion 1206?

[That this House pays tribute to the good work of school crossing patrollers in Harlow; notes that they provide a vital service for Harlow’s school children, are important figures of reassurance for the community, help keep roads safe and speeding to a minimum; is concerned that Essex County Council (ECC) is considering the future of school crossing patrols around Essex; further notes that school crossing patrollers have offered alternative ways to save money; and urges ECC to do everything it can to support school crossing patrols and secure a strong future for them.]

Essex county council is having a conversation about reducing school crossing patrols. May we have a debate on the importance of such patrols? Will the Government consider whether any other budgets could be used, such as the education budget, so that we can support hard-working Harlow lollipop men and women? Will my right hon. Friend raise this matter with other Departments?

[Mr Lansley]

I am sure that my hon. Friend’s constituents will be grateful, once again, for his vocal support for interests in his constituency. I shall raise the issue with the Department for Education and the Department for Communities and Local Government to see what position they take. He and the House will understand that, important as school crossing patrols are, where they should be provided and the funding for them are matters for the county council. I do not encourage him to think that Ministers will intervene directly, but I am sure that they will give him advice on the effectiveness of school crossing patrols in promoting the safety of children.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

May we have a statement on the Floor of the House about the Government’s carbon floor price policy? They brought in that tax, and its effect on industry is four times worse than the taxes of our EU competitors. No company has yet received the compensation. The original compensation is not as much as was promised and has been delayed by another two years. May we have a statement to update the House on why the Government are making things so hard for industry, particularly in the north-east?

[Mr Lansley]

I encourage the hon. Gentleman to talk to energy-intensive industries and ask them what they think of the Budget. The answer he will get is that the Budget did absolutely the right things. Time and again, we are hearing the representatives of manufacturers and businesses in this country welcome the Budget. It is a disgrace that the Labour party does not put the interests of business first and that it voted against the Budget.

[Guto Bebb (Aberconwy) (Con)]

Small businesses have been crucial to the economic growth and employment growth in my constituency, and they are grateful for the many measures that the Government have implemented to support that employment growth. Is it possible to have a debate in the House on the changes to statutory sick pay, which might have an inadvertent effect on those small businesses?

[Mr Lansley]

My hon. Friend will know that the abolition of statutory sick pay was recommended in Carol Black and David Frost’s independent review of sickness absence. The Government agreed with them that the system was outdated and that it reduced the incentive to manage sickness absence in the work force. The Government are reinvesting the money that is saved into the new Health and Work Service. That will help small businesses, which often do not have occupational health provision, to manage sickness absence in a more proactive way and to get their employees back to work sooner than under the old system. Frankly, as we all know, that is also in the best interests of the employees. Employees will be able to take advantage of a new tax exemption on medical treatments that are recommended by the service or an employer-arranged occupational health service.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Yesterday my hon. Friends the Members for Sedgefield (Phil Wilson) and for Houghton and Sunderland South (Bridget Phillipson) visited the Scottish Parliament to set out why people in the north-east are keen that the UK stays together. They proved to be just as popular up there as they are down here. Given that the vast majority of people in England, Wales and Northern Ireland want the UK to stay together, may we have a debate in Government time about why we are better together?

[Mr Lansley]

I am happy to agree with the hon. Gentleman that we are, as a Union, better together. It is in the interests of Scotland and it is in the interests of the people of England, Wales and Northern Ireland. Happily, we had an opportunity recently to debate Scotland’s place in the Union through the good offices of the Backbench Business Committee. I know that many Members across the House feel that it has become increasingly obvious, not least since the publication of the White Paper by the Scottish Government, that their numbers do not add up and that their arguments do not stack up. The arguments for the Union to stay together are increasingly compelling and will, I hope, be given increased exposure through this House to the people of Scotland.

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

Does the Leader of the House have any knowledge of what the process will be for the fundamental review of our flood defences, following the lessons of the last six months? Whatever the process is, will there be a debate on the Floor of the House so that hon. Members can make a contribution to the review?

[Mr Lansley]

I know my hon. Friend agrees that there is much for which we can commend the professional and volunteer services, individuals and communities for their response to the exceptional weather conditions. We know that some aspects of the response and recovery require improvement, and we are committed to reviewing the lessons learned from recent events. Some of those reviews are under way, including reviews of the loss of electricity, the transport disruption at Gatwick and to rail services, and the response of service providers and local authorities. The Department for Communities and Local Government is pursuing a review of the Bellwin scheme. The Department for Environment, Food and Rural Affairs is conducting an internal operational review of its handling of flood incidents to improve future operations. As my hon. Friend will be aware, the Prime Minister has set up a new Cabinet Committee, which he is chairing personally, to oversee the recovery effort and ensure that lessons are learned and action taken across that broad range of issues.

[Jim Shannon (Strangford) (DUP)]

Shooting sports are worth £1.6 billion to the economy. They create 70,000 full-time jobs, they take place over two thirds of the countryside, and they account for £250 million and 2.7 million work days being spent on conservation, all from followers of shooting sports. Will the Leader of the House agree to a debate or a statement on this matter, which brings so much good to our countryside?

[Mr Lansley]

I agree with the hon. Gentleman. I know from members of the British Association for Shooting and Conservation what tremendous work they do to promote conservation of the countryside, as well as pursuing a legitimate sport. I cannot promise a debate, but I know that many Members may be interested in the points he raises and he may find support for an Adjournment debate, which would give an opportunity to highlight those benefits.

[Mr Philip Hollobone (Kettering) (Con)]

May we have a parliamentary debate on successful local initiatives to get hard-to-place young people into the world of work? During such a debate, I would be able to highlight and congratulate Tresham college and its deputy principal, Rachel Kay, who organised Experience Kettering, a work experience-matching event last Friday, which more than 60 local young people attended, most of whom have secured work placements with local employers. Is this not just the sort of successful local initiative that we need to encourage around the country?

[Mr Lansley]

I am grateful to my hon. Friend for raising that. It is tremendously important. I pay tribute to the work that he and so many people across Kettering are clearly putting in to give young people opportunities for work experience and to enter the world of work. Happily, that is something we as a Government are doing as well, including through the 1.6 million apprenticeships already begun under this Government. The fact that youth unemployment is now lower than at the election is tremendously important. The youth claimant count is down by 118,000, long-term youth unemployment is down by 37,000 since last year, and through the youth contract we are giving lots of young people additional opportunities for work experience, which, with the traineeships and apprenticeships, is giving them much more diverse and appropriate routes into the world of work.

[Nic Dakin (Scunthorpe) (Lab)]

Despite the answer that the Leader of the House gave my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), the reality is that energy-intensive industries are detrimentally affected by the coalition’s carbon floor tax. Not a penny of promised compensation has been given to them yet, and the Budget said that something would come over the hill in 2016. May we have a debate now on the impact of this Government’s unilateral carbon floor tax on energy-intensive industries?

[Mr Lansley]

I reiterate what I said to the House. It is clear that the steps we are taking recognise that while we are meeting our objectives to deliver on decarbonisation, we must make sure not to do so in a way that discriminates against and disadvantages energy-intensive manufacturers in this country. That is what we are doing and what the Budget does.

[Mark Field (Cities of London and Westminster) (Con)]

We all appreciate that the timetabling of business in the House is an art more than a science. It is also the case that too much scrutiny of legislation happens in another place, which is a poor reflection on this House. Given the relatively light business expected in the next Session—rather like the present Session in terms of legislation—will my right hon. Friend give some thought to ensuring that more Committee stages are taken on the Floor of the House, not just for constitutional Bills but for the more controversial clauses, which would allow all Members to have their say in properly scrutinising Government legislation?

[Mr Lansley]

I am sorry, but I have to disagree with my hon. Friend. First, the amount of time spent in scrutiny of legislation in the two Houses is broadly comparable. Secondly, the time spent in scrutinising Bills—not least by allocating two days to Report in this House—is substantially higher in this Parliament than it has been in previous Parliaments, and is providing exactly the opportunity for scrutiny that he seeks. Thirdly, it is a matter of participation by Members. For example, on the Second Reading of the Criminal Justice and Courts Bill, I was staggered that only three Opposition Back Benchers were willing to debate that important Bill—and one of them was a Whip sent to the Back Benches to make up the numbers.

[David Mowat (Warrington South) (Con)]

For the last decade or so, there has been a significant gap in transport and infrastructure spend between London and the English regions—perhaps as much as 15 to 20 times per head. Much of that has been caused by Crossrail 1, which has been very successful but has been responsible for part of that gap. Before we commit money to Crossrail 2, may we have a debate on its relative priority to similar projects in the English regions?

[Mr Lansley]

During the Budget debate, and later this year when the announcement is made on the national infrastructure plan, I hope that my hon. Friend and the House will see our continuing commitment to developing infrastructure across the regions of England, as well as across the United Kingdom as a whole. He will have noted that, as the Prime Minister made clear the other day, we have spent £8 billion on supporting rail and transport infrastructure in the north of England, and we will have an opportunity, ere long, for the House to support the High Speed Rail (London – West Midlands) Bill, which potentially will be the most important project this century for providing access to, and improving, rail infrastructure in the north of England.

Energy Markets Competition Assessment

Thursday 27th March 2014 Commons Chamber

11:16

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

With permission, Mr Deputy Speaker, I would like to make a statement on competition in the energy markets. Today Ofgem, the Office of Fair Trading and the Competition and Markets Authority have published the first annual assessment of competition in the energy markets, and I have made copies available to the House.

Efficient, open markets made up of diverse businesses competing for trade are the best way to ensure that consumers get the best deal on price and service. Strong and independent regulation of competition helps consumers too, because constant political interference for short-term gain can add to long-term risk and costs.

When the coalition Government took power, we inherited energy markets that were not working in the best interests of the people of Britain. The supplier base had shrunk from 15 majors in 2000 to just six in 2010—Labour’s big six. Many people found it difficult to switch. The profusion of more than 350 complex tariffs and complicated bills, for example, made it difficult for people to work out how to get on the right tariff for their circumstances. The wholesale market was also dominated by the big six as they either supplied themselves or opted for over-the-counter deals with no transparency.

The coalition Government, working with the regulator Ofgem, have set about the long task of improving the energy markets to make them work for consumers. We have opened up the markets to new suppliers and generators. Labour’s big six now face 18 new retail competitors whose market share has more than doubled since 2010. The best-buy energy tables are now dominated by the independent suppliers. Tariffs are simpler, bill formats clearer, and the process for switching suppliers is being speeded up. According to the latest statistics, compiled by ElectraLink and Energy UK, almost 3.5 million people switched electricity suppliers last year, and independent suppliers gained more than 700,000 new customers—about 20% of switchers. In January and February this year, almost 500,000 people switched suppliers, with independents gaining more than 200,000 new customers—more than 40% of switchers.

The wholesale markets are also being opened up, with liquidity in the day-ahead market transformed. The forward markets are set to follow suit under Ofgem’s market maker reforms to be introduced from next week, so the energy markets have improved since 2010. Despite all these reforms, however, the Government are determined to do more.

That is why in October last year we announced that Ofgem, working closely with the Office of Fair Trading and the Competition and Markets Authority, would undertake annual reviews of the state of competition in the energy markets. That first annual assessment, and its recommendations, back our decision to turn to the independent competition authorities.

This expert review has found five areas in Britain’s energy markets of real concern that need further investigation. First, a low level of trust and lack of engagement in the energy market by consumers, which is not compatible with healthy competition. Secondly, evidence that the markets retain the geographical pattern that existed before privatisation, and can mean higher prices for customers who do not switch from their home supplier. Thirdly, evidence of possible tacit co-ordination between energy companies, which includes a strong alignment of pricing announcements in timing and extent. Fourthly, barriers to entry and expansion for new companies that make it difficult for them to challenge the big six. Finally, evidence that the big six have seen increasing profits that do not appear to reflect increasing efficiency, which is indicative of a possible lack of competition.

Although the assessment notes that there has been real progress in improving competition in recent years—especially in the growth of the number of independent suppliers—the big six are still dominant with a 95% share of the domestic energy supply market. In the electricity markets, the big six operate a model of vertical integration that is not transparent, and forward markets that are not currently liquid, as I have argued from this Dispatch Box. Although Ofgem’s new market maker reforms may assist that, the assessment rightly wants to dig deeper. However, as the assessment today shows, it may be that vertical integration is in the consumer’s best interests and can ultimately save people money. The assessment cautions against rushing to judgment or to solutions, as some have sought to do.

It is not just the electricity markets that we need to address. On average, people spend £150 more per year on their gas bills than on their electricity. The gas market does not have a vertically integrated structure. Britain’s gas wholesale market is one of the most liquid in Europe, with large volumes of gas bought and sold openly between suppliers and producers. The assessment shares my concern that parts of the gas market, particularly the domestic gas supply market, may not be delivering for consumers. Latest analysis suggests that profit margins for gas supply are around three times higher than that of electricity, with some companies making five times the profit supplying gas, compared with the profit margin on electricity.

In the light of that assessment, Ofgem is now proposing a tough but sensible course of action: a full market investigation reference. That would be undertaken by the new Competition and Markets Authority, which has the robust powers required to investigate the market and take the action needed to strengthen competition. As the Minister responsible for the decision to create that powerful new competition body, I am particularly pleased that Ofgem is proposing to make energy markets its first major task. A market investigation reference is a course of action that should not be lightly undertaken, particularly when the energy market is going through radical changes to introduce new low-carbon generation while ensuring security of supply. Tackling those issues through independent competition authorities provides companies and investors with the confidence that the process will be evidence-based, fair and just, and free from political interference.

Today Ofgem has published the legally required consultation on its proposed market investigation reference, which will run until 23 May, and it will make a final decision on referral by the summer. If a reference is made, the Competition and Markets Authority must complete its work within 18 months, which means we can expect its report and recommendations before the end of 2015. While the competition authorities take forward that work, the Government will continue to support families, individuals and businesses, and will bring forward policy packages throughout the year to put consumers in control of their energy bills, help the fuel poor, and further support competition. That will include: halving switching times; customers off dead tariffs; the first fuel poverty strategy in more than a decade; smart meters installed; help for those on prepayment meters; boosting the green deal; criminalising market manipulation; and boosting independent suppliers. That is a course of action that consumer and business groups such as the Federation of Small Businesses, Which?, Consumer Futures, and Citizen’s Advice have called for. Energy companies such as npower, E.ON and EDF have also argued that a market investigation reference would be the best way to restore consumer trust and decide what changes are needed on the basis of the evidence.

On the basis of the evidence provided by the regulators published today, this is the right course of action to take. It is not a quick fix, but it is the right way to restore people’s trust that the energy markets are working for their benefit. It is the right way to create long-term certainty for investment. The Government strongly support the process. I urge the whole House to join us in that.

11:25

[Caroline Flint (Don Valley) (Lab)]

I thank the Secretary of State for early sight of his statement. The Opposition welcome the decision to refer the energy market to a competition inquiry. The launch of a full-blown market investigation is confirmation that the energy market is broken, but while it is happening, consumers should be protected from any more unfair price rises, and energy bills should be frozen until 2017.

Does the Secretary of State accept that Ofgem’s decision to refer the energy market for a full competition investigation is a clear admission that there are serious problems with the way in which the energy market works? Does he believe that the Government were mistaken to reject the proposal put forward by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) for a competition inquiry in 2011?

In the light of today’s report, what assessment has the Secretary of State made of the effectiveness of Ofgem? As he will know, in the past six years, Ofgem has undertaken three major investigations into the energy market. In none of those did Ofgem feel the need to make a reference to competition authorities, or indeed to acknowledge that there are fundamental structural problems with the energy market. Just last December, the Secretary of State told the House:

“Ofgem is fit for purpose.”—[Official Report, 2 December 2013; Vol. 571, c. 634.]

However, is not today’s decision a clear admission that Ofgem has failed to protect consumers? Will he therefore ensure that the market investigations look not just at the players in the market, but at the regulator, too?

In the Secretary of State’s statement, he made the bizarre claim that the energy markets have improved since 2010, but the chief executive of Ofgem today told the BBC that it referred the energy market for investigation for the very reason that conditions in the market have got worse. Is the Secretary of State saying that he disagrees with that assessment?

Today’s assessment also clearly identifies vertical integration as one of the main issues for a full market investigation. The Secretary of State seems conveniently to have forgotten that the last Conservative Government privatised the energy industry and removed the restrictions on vertical integration. Therefore, if he wants to blame anyone for that, he should take it up with his colleague, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon), who was a Minister at the time.

The Secretary of State has previously claimed that a ring fence between the generation and retail arms of energy companies had real problems and could push up prices. Therefore, in the light of today’s report, will he admit that he was wrong to rule out Labour’s proposals for a ring fence?

I want to ask the Secretary of State a few specific questions on the details of how the investigation will work. First, will the market investigation cover small businesses as well as domestic consumers? Small businesses face many of the same problems as households but enjoy fewer protections. Does he agree that it would be a mistake to exclude them from the remit of the market investigation? Secondly, on the timetable, when does he expect Ofgem formally to refer the energy market for investigation, and when will the investigation begin? Thirdly, when does he expect the CMA to appoint a market reference group to undertake the investigation?

The only reason for the statement today is the speech by my right hon. Friend the Member for Doncaster North (Edward Miliband) at the Labour party conference last year. The Secretary of State, the Prime Minister and the energy companies all said that a price freeze was unworkable and impossible to deliver. Yesterday’s decision by SSE showed that a price freeze is possible, and today’s confirmation that the energy market is broken shows that it is needed by all customers. The public want radical action to reform the energy market, as Labour has proposed, but while the review takes place, they rightly want to know what help they can expect now. If I were standing where the Secretary of State is standing, I would take action to impose a price freeze for all consumers. Instead of defending the big six and asking for their co-operation, why does he not just enforce a price freeze now?

[Mr Davey]

First, I welcome the right hon. Lady’s welcome for today’s announcement. That is very important for people outside this House to see: not just consumers and small businesses who will be the beneficiaries of this action, but investors and the industry. Cross-party agreement on the way forward to promote competition in energy markets is very important for investment, so I strongly welcome her welcome. Political agreement is a good step forward for energy markets.

I disagree, I am afraid, with some of the right hon. Lady’s other comments. Of course I agree that there are serious problems. One of the reasons why the Government have been reforming energy markets from day one is that we thought there were problems. One of the reasons we asked Ofgem and the competition authorities to do this work is because we were impatient that not more was happening in the markets. What is interesting about the referral is that the Leader of the Opposition could have done it when he was doing my job, but he refused to take this measure. He refused to do so when he had the power, so I have to say to her that Labour does not really have a leg to stand on. Labour created the big six; we are taking action to create competition.

I am surprised that the right hon. Lady continues to bash Ofgem, the independent regulator. It has taken action in the past few years, particularly under this Government, to improve competition. I thought Labour supported the retail market review and the wholesale market reforms of the market maker obligation. I know she was not on top of reforms in the wholesale market, but Ofgem has taken that action and is now proposing the referral. In the spirit of welcoming the statement, she should also welcome the action Ofgem has taken. Labour set up Ofgem and when the Leader of the Opposition was doing my job he reformed it to make it more effective, so it is ironic for the right hon. Lady and the Opposition to criticise their creation that they reformed.

The right hon. Lady asked one or two specific questions. She asked me whether small business would be covered in the reference. Yes, it will. That is, of course, the independent competition authority’s business, but we believe that it will be and that it should be. On the timetable, as I set out in my statement, we expect the consultation to finish by 23 May. Ofgem will then make its final decision. We expect all of that to happen and the assessment to get going before summer.

The right hon. Lady asked about the price freeze. The problem with Labour’s blanket price freeze is that it is a pro-big six policy. Labour created the big six and it is supporting the big six. Of course SSE is able to have an energy price freeze—it is a big company. Big companies have the balance sheets that enable them to buy 18 months ahead. We have never said that the big six could not have a price freeze. It is the smaller competitors who oppose the price freeze. When the Leader of the Opposition made his announcement to the Labour conference, it was the small companies that were complaining, saying that it would put them out of business. That is the true Labour party: putting the smaller competitors out of business.

The right hon. Lady needs to reflect on all her policies. I am delighted that she has, at long last, changed her mind and agreed to the market investigation reference. That is good to hear, but the Government have been acting to help people with their bills through the warm home discount for the 2 million lowest income households, through the average £50 we took off bills before December, and through our work on energy efficiency and switching. We have been extremely active and will continue to be active during the review, as will Ofgem. The Government are in favour of better prices through more competition to deliver secure green energy.

[Mr Tim Yeo (South Suffolk) (Con)]

I warmly welcome my right hon. Friend’s statement and, in particular, the recognition by Ofgem—belated, admittedly—of both the market failure and the dangers of vertical integration in the energy industry. Will he confirm that although it is absolutely right for the Government to do everything they can to promote competition in the energy industry, it would be dishonest for any Government, either current or future, to pretend to consumers, anxious as they are, that energy bills may never rise in future? By far the biggest component in the energy bill is the wholesale price of gas, which is completely beyond the Government’s control.

[Mr Davey]

My hon. Friend is absolutely right, and that is one of the problems that many have with the official Opposition’s policy. Governments do not control wholesale prices. We have seen large increases in wholesale gas prices over a long period, primarily driven by the increase in energy demand from countries that are growing such as China and India. My hon. Friend is absolutely right to say that we cannot control that, but we can do everything in our power to help people, whether by promoting competition or helping people to save energy through energy efficiency.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Bearing in mind that the “State of the Market” competition report contains a number of different headings of concern about the market, has the Secretary of State done any work, or will he do any, on the relative urgency of those headings? If he is considering referring the headings in Ofgem’s report to the CMA inquiry, does he think the two-year time scale will give his Department sufficient urgency to deal with them all?

[Mr Davey]

First, for the avoidance of doubt, it will be Ofgem that makes the referral to the Competition and Markets Authority, not me. However, I want to make it clear to the House that we have been acting on competition issues in energy markets from day one in 2010 and will continue to do so. Where evidence is brought to our attention or Ofgem’s that more can be done, we will do it. As I said in my statement, consumers can look forward to our work with the industry to drive forward faster switching times, for example. We want to halve switching times, so that competition works for people and they can get the best deals in the market. We are not going to do nothing during the review; we are going to be very active. However, the review is critical to doing a deep dive and getting a deep analysis of what is going on.

[Christopher Pincher (Tamworth) (Con)]

My right hon. Friend is quite right to suggest that the vast array of tariffs, which the last Government allowed to proliferate, is one reason why many people are deterred from switching supplier, but so, as he says, is the speed at which one can switch. Will he say a little more about how we will drive down and halve switching times, so that people can enjoy lower energy prices, rather than the frozen prices that the Opposition want, but which, rather oddly, in the same breath they say are too high?

[Mr Davey]

My hon. Friend is absolutely right. We are rather more ambitious than the official Opposition: we want to see low energy prices through competition, not just to freeze them. He is right that reducing the number of tariffs is important—the Labour party refused to do that in government—and the retail market review by Ofgem, which the Labour party wants to abolish, has led to a reduced number of tariffs. As for switching times, which he has focused the House’s attention on, we have already been working with the industry through Energy UK, which has a body working with all other parts of a chain of companies involved in switching customers. We will report later this year on the progress we believe can be made and how it can be made. It is complicated, but we are determined to deliver it.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

On 12 February, the Secretary of State criticised Labour’s critique of the wholesale energy market as deeply flawed, so does he think he is as stupid as he looks right now?

[Mr Davey]

It is always nice to have charm in the House. I have to tell the hon. Gentleman that Labour’s proposals include introducing a pool. The problem is that the day-ahead market, which is like the pool, has grown dramatically under this Government. That is one of the reasons why I said that Labour’s policies are absolutely flawed: because the Opposition have not looked at what is actually happening. Indeed, I asked the right hon. Member for Don Valley (Caroline Flint) in that debate whether she had read the report and it was clear that she had not. That is one of the reasons why we think Labour’s policy proposals are flawed.

[Sir Andrew Stunell (Hazel Grove) (LD)]

As a Liberal Democrat, I very much welcome today’s statement and the vigorous way in which the Secretary of State set about it. Does he share my view that it is amazing that Labour, having set up both the big six energy companies and Ofgem to regulate them, should now be so grudging about his taking the action necessary to ensure that consumers get a fair deal?

[Mr Davey]

My right hon. Friend is absolutely right. The Labour party created the big six, and now it seems to be worried about the fact that we are trying to take action. Its policy would entrench the big six, and would undermine the competition that we have delivered. The Labour party set up Ofgem, and now it wants to abolish it. People listening to the Labour party and looking at its record must be astonished that it has the gall even to pretend that it has a sensible energy policy.

[Nia Griffith (Llanelli) (Lab)]

In its report on energy prices and fuel poverty, the Select Committee said that Ofgem was failing consumers because it had not been properly using the powers at its disposal. Can the Secretary of State tell us what action he took as a result of that report, why prices have not fallen, and why consumers have repeatedly found themselves in financial difficulties because the Government did not act earlier?

[Mr Davey]

I think that recommendations made by the Select Committee to Ofgem are matters for Ofgem. In the Energy Act 2013, we set out a new approach for my Department, working with Ofgem, and provided for the introduction of a strategy and policy statement. We have made the reforms that we believe are needed to ensure that Ofgem works well with the Government in promoting competition. I am delighted to note that, although the Labour party still seems to want to abolish Ofgem, it supports its proposal for a market investigation reference.

[Mr Philip Hollobone (Kettering) (Con)]

I am sure that residents of Kettering will welcome the inquiry into the electricity and gas markets.

I was interested to hear what the Secretary of State said about vertical integration. Surely the problem is the small number of energy suppliers that are vertically integrated. If 20 energy suppliers were vertically integrated, there might be the requisite level of competition. If a small number of energy suppliers were not vertically integrated, that might work. Surely the lethal combination for consumers is a small number of suppliers that are vertically integrated. I shall be extremely surprised if the inquiry does not conclude that that vertical integration needs to end.

[Mr Davey]

I am pleased that the competition assessment is focusing on vertical integration, because I think that it needs to be looked at. Ofgem proposed the introduction of a market making obligation because it wanted to tackle some of its concerns about vertical integration. However, the consultation document states:

“We recognise that there are benefits to vertical integration in terms of cost efficiency…and in terms of supporting investment to maintain security of supply. However there are also costs in terms of barriers to entry.”

The report is balanced, and, unlike the Labour party, has not rushed into making a judgment. Everything cannot be the fault of vertical integration. The gas market is not vertically integrated, but I believe that there are serious problems related to competition in the domestic gas supply market.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Any review of the energy market is welcome, but yesterday, referring to nuclear power, Scottish and Southern Energy said

“the deal which the UK government has reached with EDF”

—the French energy giant—

“over the construction of two reactors at Hinkley Point…will add considerable costs to consumer energy bills for 35 years.”

Will the “full market investigation” cover the cost of nuclear power and its effect on comprehensive spending review bills, and if not, why not?

[Mr Davey]

The investigation will not deal with that, because it involves policy on the generation mix. A mixed, diverse source of low-carbon energy is the best way in which to protect the consumer. There are Members of Parliament and, no doubt, many people outside who know the future—who have a crystal ball and know what the various technology costs will be in the 2020s. Perhaps SSE has a crystal ball; perhaps the hon. Gentleman has a crystal ball, but I do not. I have created a framework in which there is competition between technologies, and I believe that that is the right way in which to proceed.

[Mr Peter Bone (Wellingborough) (Con)]

I am amazed that the Labour party wants to freeze energy prices when they are high, when wholesale prices are falling, and when the Government are reducing—as the Prime Minister delicately put it—Labour’s green crap. Would the Minister care to congratulate the Prime Minister on reducing subsidies for green energy, thereby driving prices down for the consumer?

[Mr Davey]

It is always nice to be able to agree with my hon. Friend on the odd occasion—[Interruption.] Not necessarily on everything he said—the right hon. Member for Don Valley (Caroline Flint) is very worried about that—but on his point about the Labour party and competition, I do agree.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

One of the headline findings of the market assessment in the Ofgem press release is that switching has fallen in recent years:

“There was a brief spike in late 2013 but no indication of a permanent increase.”

Indeed, there has been a substantial reduction since January this year. Given that switching has so far not really had the effect in driving down prices that the Secretary of State suggested it might, why should we expect consumers to wait for two years for the outcome of this assessment to see some action being taken to drive down prices?

[Mr Davey]

I am glad the hon. Gentleman has raised that point. Switching rates have fallen in this country primarily because of the end of doorstep selling. That method of trying to persuade people to switch was one of the reasons why switching numbers increased in the early days after privatisation. However, all Members in their constituencies will have experienced cases of doorstep mis-selling, and it was the many problems that that caused that led many people in this House and the regulator to say that it was not an acceptable way of driving competition. Doorstep selling has gone out of the picture and that has been the main cause of the reduction in switching. We have therefore had to address that and look at new, innovative ways to try to get the rate of switching going back in the right direction. That is why we are looking at simpler bills, fewer tariffs, collective switching and faster switching times. We are relentless in trying to get those switching rates back up again, and the recent evidence suggests we are on the right track.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I welcome my right hon. Friend’s statement. Does he agree that the whole House today should be backing Ofgem and the investigation, which I believe is in the long-term interest of consumers—and the key is “long term”?

[Mr Davey]

I strongly agree with my hon. Friend and I am genuinely pleased at the way in which the discussion has gone among the parties in the House. It is important that we allow the independent competition authorities the time to get to the bottom of the matter. Let the professional experts deal with it, and let the political parties listen to them and follow their advice.

[Sammy Wilson (East Antrim) (DUP)]

The report highlights that, because of local monopolies, barriers to entry and colluding between the big six, they have been able to hold on to 95% of the market share and increase their profits. Is that not an indication that now is the time for quick action rather than further reviews, and would one quick action be to reduce the subsidies to the renewables industry, which the Secretary of State’s own Department admits currently add 10% to energy bills?

[Mr Davey]

I certainly do not recognise that figure, and the hon. Gentleman needs to look at what has been driving up bills: it has been the price of wholesale gas. Whether it is that trend in the past decade or the events in Ukraine and Crimea, people should worry about relying on just importing gas from abroad. We need to diversify, so we need to invest in renewables, nuclear, carbon capture and storage, and energy efficiency. We need a diverse approach. That is the best way to ensure that we get prices down and keep the market competitive.

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

In December, the Secretary of State said that Ofgem was not fit for purpose. He has also said that we cannot rely on guesswork to fix the energy markets. Why will he not admit that today’s decision to refer the energy market for a full market investigation is a clear admission that the market is broken and Ofgem is not fit for purpose? May I also offer him some polite advice? He does not need to rely on guesswork; he needs to listen to the Labour party.

[Mr Davey]

I am grateful for the hon. Lady’s question, but I have been accused by the Opposition of saying—in the same debate, I believe—that Ofgem is fit for purpose and that Ofgem is not fit for purpose. I believe she was quoting her Front-Bench colleague, the right hon. Member for Don Valley (Caroline Flint). I will let the hon. Lady try again next time.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

In November 2011 the Government ruled out a full energy market investigation. Is the Secretary of State willing now to admit that the Government got it wrong and made a mistake, and can he explain to the House the difference between tacit co-ordination and collusion?

[Mr Davey]

On that last point, one is illegal and one is not, but I think we can all agree that they both need to be investigated by the independent competition authorities. It is interesting that Labour is complaining—at least, some Labour Members are complaining—that we did not make this referral before, given that Labour’s leader, when Secretary of State, refused to make the market investigation reference. Let us remember that in the previous Parliament electricity bills and gas bills increased faster on average each year than they have done under this Government. He had all the reason to make that reference to try to improve competition, but he flunked it when he had the chance.

[Barry Gardiner (Brent North) (Lab)]

May I extend my sympathy to the Secretary of State, as it must be galling for him to have to make this statement to the House, particularly with his minder, the right hon. Member for Sevenoaks (Michael Fallon), present? The Secretary of State has known for many years that what the Labour party has been saying, and what the Select Committee has been saying, has been correct, but he has been prevented from doing anything by the Treasury. Now he has had to come to the House to accept that all the things we were asking for—the Competition Commission referral, a proper examination of this situation and addressing vertical integration—are going to come to pass on his watch. Having said that, can he explain why, when the profits made by the companies in Europe are between 2% and 3%, whereas in this country they are between 5% and 7%, he will not do anything now?

[Mr Davey]

If the hon. Gentleman reads the assessment, he will see that the competition authorities have focused on that last point. On the market investigation reference, I have to remind him, again, that it was the leader of his party who flunked that opportunity. I also have to tell the hon. Gentleman that he should read the record, because Labour’s spokesperson in this area, the right hon. Member for Don Valley, was saying just a few weeks ago that a market investigation reference was not a good idea, that to make such a reference would be to kick things into the long grass and that it should not happen. I am glad that Labour has changed its position.

[Nick Smith (Blaenau Gwent) (Lab)]

In his statement, the Secretary of State says, and has just acknowledged, that there is “evidence that the big six have seen increasing profits that do not appear to reflect increasing efficiency”—too right! So why does he not acknowledge that he has been too slow to act today?

[Mr Davey]

I completely disagree with the hon. Gentleman; this coalition Government have been acting from day one. We inherited Labour’s big six. We have deregulated, and we now have 18 independent new suppliers taking on the big six. The best buy tables show that people can save hundreds of pounds by switching from Labour’s big six to the new competition that has come about under this Government. We have been making lots of efforts, but because we are impatient and frustrated and we want to do more, we set up this annual competition assessment and we welcome its proposals today.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I welcome the Secretary of State’s statement. I always remember him as a fair-minded, independent Liberal Democrat, and I get on very well with him, but it does stick in my craw when I hear him repeating this Conservative mantra about the big six and Labour. I have been in this House long enough to remember the botched privatisation of the energy sector, which is at the heart of the rotten energy sector we have inherited today. That is the truth, and he is better than what he said today.

[Mr Davey]

I like the hon. Gentleman, despite his question. It is not a Conservative mantra—it is a Liberal Democrat mantra, a coalition mantra and a consumer mantra. Let us remember that the people who have been calling for this reference include Which?, Citizens Advice, Consumer Futures and the Federation of Small Businesses, and we are delivering on that today.

[Dr William McCrea (South Antrim) (DUP)]

No matter what politicians say in this Chamber today, many of our constituents believe that they are being ripped off on energy costs. How can we assure them that the cost of electricity and gas is a genuine cost and has not been set by a cartel of the big six?

[Mr Davey]

The hon. Gentleman can do that by backing this reference by the competition authorities, which will ask all those questions. I say to him and his constituents that if they are worried now, they should look at the best buy tables and use the competition that is there now. I hope that, as a result of this reference, we will supercharge that competition. There is choice now, because this Government have brought it in.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Last but certainly not least, the voice of Hyndburn, Graham Jones.

[Graham Jones (Hyndburn) (Lab)]

I was most interested in the answer that the Secretary of State gave to my hon. Friend the Member for Blaenau Gwent (Nick Smith)—that he had had four years of impatience or that he had been impatient over the period. Looking back, does he not regret that the Energy Act 2013, which took more than a year to go through Parliament, does not contain a single concrete measure to improve competition in either the wholesale or the retail energy market?

[Mr Davey]

Even though the Act may have taken a year to get through this House, I am afraid that the hon. Gentleman did not manage to read it. We had measures supporting Ofgem from both its retail market review and its wholesale market review. There was also the overall reform of the electricity market to ensure that we had competitive markets for the future. I am afraid that the hon. Gentleman is wrong.

Quality Workplace Pensions

Thursday 27th March 2014 Commons Chamber

11:56

[The Minister of State, Department for Work and Pensions (Steve Webb)]

With permission, Mr Deputy Speaker, I will make a statement setting out the actions that this Government are taking to ensure that the pension schemes into which workers are enrolled are of high quality and provide value for money. The steps I shall outline today are the latest in a sequence of groundbreaking changes that are revolutionising the pensions landscape.

As we move towards our goal of enrolling 10 million workers into pension saving, we need to ensure that those savings are invested in value-for-money schemes that are well-governed. So today, I can announce that this Government will introduce a package of measures to protect people against high and unfair charges; ensure schemes are well-run; and turn our pensions market into a world leader for disclosure and transparency. Through the new measures, this Government will be the first to get an iron grip on the issue of pension charges. We are going to put charges in a vice; and we will tighten the pressure year after year.

In our pre-Christmas consultation, we consulted on three options for capping pension scheme charges: an across-the-board cap of 0.75%; a comply-or-explain cap, allowing schemes to go up to 1%; or a simple 1% cap. You may be aware, Mr Deputy Speaker, that there were those who, to use a technical term, suggested that we might wimp out on these choices—that we might give in to the vested interests of the pensions industry. I hope that the announcements of my right hon. Friend the Chancellor last week show that the Government are without fear or favour when it comes to the financial services industry. I can tell the House today that of the three options, we have decided to go with the toughest of the three.

At the heart of our plan is a charge cap of 0.75% for the default funds of all qualifying schemes, with equivalent caps for schemes with combination charge structures. The cap will apply from April 2015, and it will apply to all schemes used for automatic enrolment. That means that we will deliver on the timetable in our consultation document to have a full cap in place by April 2015.

I can also confirm that we are today publishing a full impact assessment of these changes, which has received a green fit-for-purpose rating from the Regulatory Policy Committee. Over the next 10 years, the new charge cap will transfer around £200 million from the profits of the pensions industry to the pockets of savers. After the charge cap is implemented, we will make further changes, year after year, to tighten further our grip on unfair charges.

As well as meeting the 0.75% cap, from April 2016 schemes will be prohibited from taking money from people's pension schemes to pay for sales commission. Schemes will have to end the practice of increasing the charges of people who are no longer employed by the sponsoring employer of the scheme—so-called active member discounts or more accurately deferred member charges. That is in line with the recommendations both of the Work and Pensions Committee and the Office of Fair Trading. It is not right that people should pay more in charges simply because they have moved employer and consequently stop contributing to a scheme. These charges are particularly unfair in the context of an increasingly flexible labour market, where people change jobs more regularly and are therefore more likely to become deferred members.

On transparency, the Office of Fair Trading uncovered 18 different names for and configurations of charges. The charges are often hidden and complex. Today, I can confirm that in a further measure to shine some light into the dark recesses of the pensions industry, we will introduce full standardised disclosure of all costs and charges that will make scheme comparisons a reality for the first time. The transaction costs hidden in complex and opaque investment chains will be exposed, giving new clarity about where members’ money is really going.

From April 2015, trustees and those who represent members’ interests in pension schemes will have a duty to obtain information on all scheme charges. We will start work straight away with the Financial Conduct Authority to develop standardised measures of transaction costs. We will use that information to consider whether another turn of the vice is needed in 2017 to take our reforms even further, potentially by including transaction costs within the default fund charge. In addition, in 2017 we will consider whether the base charge cap of 0.75% is to be reduced further.

As well as focusing on charges, we are strengthening the way in which schemes are governed. Our governance reforms will ensure that there are people running schemes in members’ interests and that they scrutinise the costs and charges that affect their members’ pots.

We want members of so-called legacy schemes as well as those people enrolled into schemes being sold today to receive good value for money. The OFT identified that charges are currently a quarter to a third higher in schemes that were sold before 2001. Those schemes have gone unscrutinised for too long. We therefore welcome the independent audit of legacy and other high-cost schemes put in place following the OFT’s recommendation, in which my Department is involved. The audit is scheduled to be completed by the end of this year and we will take any further action necessary in the light of those findings to address the poor value that has been allowed to persist in some of the older pension schemes.

The pension system we inherited was broken. The coverage of workplace pensions was declining. The value of the state pension was declining. The only growth area in pensions was the mass means-testing introduced by the previous Government as a last-ditch attempt to prop up a failing system. Through our bold and innovative changes, we will reverse that spiral of decline. We are following up our radical reforms to the state pension, the successful implementation of automatic enrolment and last week’s bold Budget announcements with another measure that will help to put pension provision back on its feet.

This is a full-frontal assault on poor value for money from a Government on the side of people who save. These changes are a major step in our wider programme of pensions reform, safeguarding the hard-earned savings of those who work hard and do the right thing. This truly is another landmark day for pensions policy and I commend our plans to the House.

12:02

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I thank the Minister for notice of the statement.

Rare is the day when the Government appear to adopt an Opposition policy lock, stock and barrel. Rarer still is the day when the Government appear to adopt two of the Opposition’s policies lock, stock and barrel. Today, the two broken markets identified by my right hon. Friend the Member for Doncaster North (Edward Miliband)—energy and pensions—have been accepted by the Government, who have made concessions in that regard. They are two big wins for the Opposition.

We welcome those concessions. We welcome the Prime Minister’s announcement on Wednesday that an energy freeze from SSE is a good thing. Perhaps we will finally see the Government reversing their tax cut for millionaires, although that might damage the Minister’s new-found interest in the market in Lamborghinis. The Government have belatedly accepted that the market in pensions, as in energy, is not working for consumers. We welcome this historic change of Conservative and Liberal heart. It is a retreat from free-market dogma.

This is the second time—the Minister alluded to this—that I have welcomed a Government proposal to cap pension charges. The Minister refers in his statement to delivering on his timetable, but what he does not say is that it is a new timetable. In October, the Minister rushed into a four-week consultation with a view to capping pension charges from April 2014, five days from now, but his impact assessment was condemned as not fit for purpose by the Regulatory Policy Committee. Today, the Minister has confirmed that no charge cap will be in place until 2015, a year from now. That matters because in the Government’s own figures, someone who has worked hard to save £100,000 in their pension pot for retirement and is charged 1.5% for the next 12 months will pay a hefty £1,500 in charges, so why the delay, given the difference that will be made by a cap set at the level the Labour party suggested and given what the Minister has recommended today? Why the delay in not introducing it today? That £1,500 might not be enough to purchase a Lamborghini, but it could well amount to a deposit on the two-door Corsa that the whole world now knows the Minister drives.

This is so important because pensions market failure has significant consequences for millions of savers. The Minister knows that, by 2017, 11 million people will be auto-enrolled—3 million now and 4.5 million by the election. That is why it is so urgent. The Minister promised a full-frontal assault on pension charges in October. Whoever has heard of a full-frontal assault that comes with a 12-month notice period?

The Minister and I both know that governance is the key to better pensions, so when will the independent governance committees that the Labour party has called for be implemented? Will he give us clarity on that? In his review for the Business Secretary, another Liberal Democrat, Professor Kay concluded that excessive churning by fund managers was reducing the value of pension assets. Will the Minister pledge to the House today that all fund management costs, as set down in Labour’s amendment to the Pensions Bill, will be disclosed as part of the policy? Furthermore, to whom will the fund manager costs be disclosed? The statement mentions trustees and others, but who are these others?

Let me finish on a note of consensus: an Opposition are always delighted when a Government adopt their policy. To have two significant Opposition policies adopted in one day is truly a success for my right hon. Friend the Leader of the Opposition, and for the Labour party. We welcome the Government’s endorsement of our policy. It matters so much because of the difference it makes to pension savings, but we will continue to scrutinise the detail of the proposals as it emerges, because in pensions the devil is always in the detail, and this Government certainly have form on that point. We welcome this endorsement of Labour policy and we will look further at the detail.

[Steve Webb]

I understand why the hon. Gentleman wants to talk about energy and income tax rather than pensions: he has nothing to say on the pensions announcement.

The hon. Gentleman said that we have adopted Labour’s policy. I thought he might say that, so I thought I would have a little look at what Labour’s policy was. The first evidence we have is their record in office, when they had 13 years to cap charges and did precisely nothing. But we do have more recent evidence—he mentioned the leader of the Labour party and his views on the subject, so I have a done a bit of research. Clearly, The Guardian was briefed by Labour, and the leader of the Labour party called it an “all-out attack” on rip-off pension charges, so that is good. Patrick Wintour said in September 2012:

“Ed Miliband will promise to end rip-offs in the pensions industry”—

that is good, is it not?

—by putting a 1% cap on pension charges”.

I wonder whether he has moved a bit because he saw what we were doing. I get a slight sense that might be the case.

The hon. Gentleman asked about the timetable. Our consultation document made it clear that every scheme would have a cap in place by April 2015. We are today delivering on that timetable. [Interruption.] The hon. Member for Leeds West (Rachel Reeves) says, “What about April 2014?” If they are seriously suggesting that we should apply a charge cap with a few days’ notice, it shows how little they understand about how employers work and how the pensions industry works. Unless they are calling for us to announce a cap at a few days’ notice, which would be pretty irresponsible, we are delivering on the timetable that we set out.

The hon. Gentleman asked me some specific questions. The independent governance committees will have to be in place by April 2015, but the Association of British Insurers and the Office of Fair Trading have agreed that they will put them in place before that date. The legal requirement is April 2015, but we expect to see them in place before that.

The hon. Gentleman asked who the costs have to be revealed to. The trustees or the independent governance committees, who will act on behalf of the members and will have the technical expertise to understand all the detail, get the information, but they will form a judgment about the format in which they pass it on to scheme members. Scheme members need to understand about charges, but probably not in the full gory detail that trustees and governance committees would. The point is that for the first time there will be people in every pension scheme acting on behalf of the scheme member, and that is a radical step forward.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I welcome the statement, which is good news for the savers of Suffolk Coastal. Will my hon. Friend say a little more about how he is tackling the unfair active member discounts in workplace pension schemes?

[Steve Webb]

I certain will, and it was very much the savers of Suffolk Coastal we had in mind. Active member discounts have been going on far too long. They are one of the hidden charges, and people are ignorant enough already of the charges in their pension schemes, through no fault of their own, even when they are active members, but when they move on to a new firm and a new scheme they probably have no clue what the charges are in the scheme they have left. Therefore, from April 2015 even schemes that retain active member discounts will be unable to go above 0.75%, which will stop many of them, and by April 2016 they will have to have been worked out of the system altogether.

[Dame Anne Begg (Aberdeen South) (Lab)]

The shadow Minister failed to persuade the Minister that the Opposition might have been responsible for some of these changes, but I wonder whether he will acknowledge that many of the measures he has announced today were recommended by the Work and Pensions Committee. In particular, we hope that we have played some part in ensuring that costs and charges are capped and transparent. He said that transaction costs will not be part of the cap but that there is some action on them. How likely is it that transaction charges will be part of the cap at some time in the future?

[Steve Webb]

I am grateful to the hon. Lady and hope that I acknowledged in my statement the contribution her Committee has made to some of the measures. On transaction costs, from this time next year trustees and governance committees will have a legal duty to obtain information about all costs and charges; we will be working with the Financial Conduct Authority, staring immediately, to try to define them all. The shadow Minister came up with a list the other day, but there will be things missing from it. As soon as a phrase appears in an Act of Parliament, the industry will change the name of it. We must therefore ensure that we are as comprehensive as possible. We are certainly open to the possibility that that should go in a charge cap. We would not want to do that in a way that discourages transactions that are in the interests of members, but clearly we want to avoid gratuitous transactions intended only to generate charge income, rather than to further the interests of members. It is certainly something we will return to, particularly in the light of the transparent information that will become available for the first time because of these measures.

[Nigel Mills (Amber Valley) (Con)]

I welcome the charge cap, which shows how far we have come from the days of stakeholder pensions and the level of charging that was allowed. Will the Minister update the House on some of the other ideas for reform that are out there, such as defined ambition schemes and large aggregator schemes, which might also give savers a better deal?

[Steve Webb]

I am grateful to my hon. Friend. Stakeholder pensions were the previous Government’s one attempt to limit charges. He will recall that they initially introduced a 1% cap—again, we have seen the colour of their money—before going back on that and allowing 1.5% for 10 years. I have always wanted to say that we will take no lectures from the Labour party, and he has now given me the chance. On defined ambition schemes, we will be taking that agenda forward, and I hope to have more to say about that when we publish our response to the consultation document. With regard to large-scale pension schemes, the command paper we are publishing today included a section on scale that I think he will find interesting. We think that the pot-follow-member model is the best way of ensuring that people build significant pension pots with the person they are currently saving with.

[Julie Elliott (Sunderland Central) (Lab)]

Why is the Minister waiting a year to introduce the full cap and a further year to ban people taking money from pension schemes to pay for sales commission? Why is he not acting much sooner?

[Steve Webb]

There is a perfectly straightforward answer to the hon. Lady’s question. When we asked firms to enrol their staff automatically, we asked them to plan 12 months ahead, because it takes a long time to set up a pension scheme, to choose a pension scheme and to communicate with scheme members. A firm sitting down today to plan for April 2015 knows the rules of the game today so that it can choose its scheme in an informed way. She asked why we have allowed a further year for commission and active member discounts. Clearly, if either of those takes a scheme above 0.75%, which many do, they will have to comply immediately in April 2015, but many of those are based on complicated contractual arrangements in pension schemes. We have to strike a balance between unpicking all those and focusing the pensions industry on delivering automatic enrolment, which is a key priority for the next 12 months.

[Richard Fuller (Bedford) (Con)]

Whether the Select Committee or the shadow Pensions Minister wish to claim credit is of secondary importance to my constituents, who today can feel a little more confident that they are not being ripped off. I thank the Minister for actually doing something about this, rather than just claiming credit. One of the most important things is that people can easily see what charges will be imposed in future. How will his proposals help to make that clearer for people?

[Steve Webb]

I am grateful to my hon. Friend for his kind comments. The challenge with this market is that the people buying the pensions are essentially the employers of the firm, not the staff. We need to ensure that when firms are shopping around for pensions for their workers they get clear and straightforward information about what the charges will be and that they will be capped. Scheme members clearly need to be able to access information about charges in a straightforward and transparent way. It is a slightly odd market, because people are buying on their behalf and, because of automatic enrolment, scheme members cannot negotiate a different price; they just have to take the price they are given. Our focus is therefore very much on ensuring that the people who make the choices on pensions—in this context, the employers—have clear advice and the cap to ensure that they and their members cannot be ripped off.

[Mark Durkan (Foyle) (SDLP)]

The Minister has indicated that further work will be done to try to tackle the whole ecosystem of charges and combinations of charges. What does he believe will actually trigger a decision in 2017 to capture some of those charges in the cap?

[Steve Webb]

I am grateful to the hon. Gentleman. Our central interest in all this is the well-being and welfare of scheme members. We would not put transaction costs, for example, into a cap if we thought that might result in certain transactions that would benefit scheme members not taking place. On the other hand, if we thought that there was overtrading or that people’s money was being invested in a way that generated income that did not benefit them, we would need to take account of those issues. One of the challenges we face in making policy in this area is that so little is known about what is going on. Step one is therefore to get transparency so that we know the scale of what is going on and what sorts of charges there are out there, and then we can make an informed decision.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I warmly welcome the statement. Strong, quality workplace pensions are critical to dignity and security in old age. Who does the Minister think will be the big beneficiary of these changes?

[Steve Webb]

I am grateful to my hon. Friend. As I have said, we estimate that around £200 million over the next 10 years will go from the pensions industry to savers, which we think will cover around 2 million pension savers, many of whom will work for smaller firms, because we know that the biggest firms have been able to negotiate good deals with providers. That is good news for people who work for Britain’s small firms, in particular, who might not otherwise have got good value for money in their pensions.

[Sheila Gilmore (Edinburgh East) (Lab)]

I am grateful to the Minister for coming to the House to make a statement, unlike some of his colleagues who have slipped out an important announcement in a written ministerial statement today rather than coming to the House. Will he give us a little more detail on the changes he proposes to make to governance and say when we can expect to see them introduced, because they will be very important in allowing people to be confident that some other form of charging is not emerging to replace it?

[Steve Webb]

I am grateful to the hon. Lady. The principal change, although not the only one, is the introduction of the requirement for independent governance committees. With trust-based governance there are member-nominated trustees and a fiduciary duty on trustees, but with contract-based pension schemes provided by insurance companies there is a question, as has often been argued, of who is acting on the members’ behalf. The IGCs will have to be in place by April 2015 and they will have various duties. The way in which they are set up is described more fully in the document—I know she will not yet have had a chance to read it. I think that she will welcome the changes, which mean that whatever sort of pension scheme someone is in, there is somebody there looking out for them.

[Mr Philip Hollobone (Kettering) (Con)]

Residents of Kettering will welcome these measures to improve the quality of workplace pensions. The reason for automatic enrolment in the first place is that a lot of people are either frightened by pensions or do not understand them, or they might be young people who think that pensions are irrelevant. Under the quality scheme that the Minister has announced, may we have a stamp of quality on the documentation to reassure workplace employees? May we also have a common-sense, plain-English helpline that people can phone without any difficulty so that they can have the complexities of their pension arrangements explained? Can we also ensure maximum transparency of portability of pensions between workplaces?

[Steve Webb]

My hon. Friend raises a number of important points. On kitemarks and the like, we are placing a legal duty on firms to use for auto-enrolment only schemes of a requisite quality, so it will not be a matter of individual employees wondering whether their scheme is good enough—they will know it is good enough because their employer will not be allowed to enrol them into a scheme that is not so. All schemes will be of the requisite standard. He is right that people need places to go for advice in amongst the complexity. Our Department sponsors a body called the Pensions Advisory Service. I encourage all Members of the House to refer their constituents to TPAS, which is a free, expert and very good service. I must confess that I occasionally ring it myself.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I welcome this move. The Minister said, in effect, “We are going to put charges in a vice and we will tighten the pressure.” That sounds as though it might bring tears to the eyes of some of the pension providers, which may be no bad thing. He also talked about shining “sunlight into the dark recesses”. Those are good clichés and this is a good, progressive move forward. However, what is he going to do to ensure that instead of the eyes of people who are enrolling, and will enrol in future, glazing over whenever they think about pensions, they know there is transparency and know what is the likely outcome whenever they come to retire?

[Steve Webb]

I assure the hon. Gentleman that so far the response to automatic enrolment has been excellent. Despite predictions to the contrary, nine out of 10 of those who have been enrolled have stayed enrolled, which is a tremendous vote of confidence. In general, people have more trust in their employer than in financial services providers or even—dare I say it?—politicians, so we are using the employer route such that employers will ensure that the schemes they are using for their workers are of requisite quality. I also assure him that the language I used in the statement, though designed to be colourful, is also backed up by some hard reality.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Many will welcome the overdue cap and the possibility of lowering it further. On the pre-2001 schemes, may I press the Minister to act as soon as possible, because far too many people have lost too much money already to countenance much further delay?

[Steve Webb]

The hon. Gentleman is right. One of the problems, as with transparency, is that we do not know enough about the nature of these schemes and what the charges are. In some cases, they are high-charging but come with guarantees, so people are getting something for their money. An audit is going on at the moment. The pensions industry is having to produce a lot of information about all these schemes. That is often very difficult because pension companies have been bought, sold and merged; just getting the data is the first challenge. As soon as we know exactly what is going on and what further measures we can take to improve the welfare of consumers, I assure him we will do so.

[Nick Smith (Blaenau Gwent) (Lab)]

We have heard today that the independent audit on legacy and older pension schemes is still in hand. When will the further reforms that the Minister is talking about be brought forward, because there are some very high costs in these schemes?

[Steve Webb]

I agree. I have already met the chair of the new audit committee, and one of my senior officials serves on it. This work is now under way. Providers are being asked for data. That represents a significant cost to them, but we need those data. The deadline for that work is the end of this year. I have talked about some measures being taken years down the track, but this work will be completed this year. We will not just sit and wait until a letter arrives on my desk on Christmas day, or whatever. We are keeping close to the review, and as we learn from it and decide what action we can take, we will do so as soon as possible.

[Barry Gardiner (Brent North) (Lab)]

The Minister spoke of the “bold” pension proposals in last week’s Budget. Now that the Chancellor has allowed people to cash in their pension pot instead of purchasing an annuity, can the Minister confirm that, under his Department’s rules on care costs, local authorities will now be able to insist that they do cash them in, thereby pushing them over the threshold where they have to contribute to their own care costs?

[Steve Webb]

The hon. Gentleman raises an important point, which is that these changes have a number of knock-on effects within our Department and the Department of Health. Of course, we will make sure that the spirit of the Chancellor’s announcement is carefully reflected in the way Departments carry on. These flexibilities do not come in for another year, so we still have time to work through detail of the sort that he properly raises.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Last, but certainly not least, the voice of Middlesbrough South and East Cleveland—Tom Blenkinsop.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

Thank you, Mr Deputy Speaker.

I find the Minister’s statement fascinating given that he said only recently that putting a cap on pensions was like trying to put

“a price cap on a tin of baked beans”.

I wonder whether he read this in yesterday’s Financial Times:

“Labour led the way with criticism of the annuities market and high opaque fees on pensions, long before the coalition took action.”

Would he care to comment on that very good article?

[Steve Webb]

I would. It is no coincidence that that newspaper is printed on pink paper. It has run stories about our plans for a price cap which, now that we have made our announcement, will be shown to have been wholly inaccurate. Those who have subscriptions to that newspaper might wonder whether they can always believe what they read in it.

Point of Order

Thursday 27th March 2014 Commons Chamber

12:24

[Sheila Gilmore (Edinburgh East) (Lab)]

On a point of order, Mr Deputy Speaker. Have you received any notification from the Secretary of State for Work and Pensions or any of his Ministers that they propose to make an oral statement to this House on the early exit of Atos from the contract for work capability assessments? That is a matter of concern to many Members of this House, and I thought that perhaps we could hear whether there has been such an application.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

We can rest assured that I have not been give any such notice. I am sure that people will already be listening, and the matter is certainly on the record.

Backbench Business

Thursday 27th March 2014 Commons Chamber

High Court Judgment (John Downey)

Thursday 27th March 2014 Commons Chamber

12:25

[Mr Nigel Dodds (Belfast North) (DUP)]

I beg to move,

That this House has considered the background to and implications of the High Court judgment on John Downey.

Let me put on record our thanks and gratitude to the Backbench Business Committee for tabling this important subject for debate in the House this afternoon. I also want to put on record the fact that the debate has been requested by all the parties from Northern Ireland represented in this House, including the Social Democratic and Labour party and the Alliance party, as well as the hon. Member for North Down (Lady Hermon). Representations were made to the Backbench Business Committee by those parties and the hon. Lady, and also by the hon. Member for Tewkesbury (Mr Robertson), the Chairman of the Northern Ireland Affairs Committee, so the debate has cross-party support. Following the Attorney-General’s statement in this House on 26 February, it is important that we have this opportunity to debate at more length and in more detail the background to and implications of the High Court judgment in the John Downey case.

It would be right and proper for me to begin by putting right at the forefront of this debate the names of the four soldiers who died in the Hyde park bombing on 20 July 1982. I pay tribute to the memories of Lieutenant Anthony Daly, Trooper Simon Tipper, Lance Corporal Jeffrey Young and Squadron Quartermaster Corporal Roy Bright, who died in the horrific IRA bombing on that day. It was one of the most notorious incidents of the entire IRA campaign. It touched very, very many people and is to this day remembered by so many for the deaths of those soldiers, but also for the deaths of the horses that occurred, and the terrible images that were shown on our TV screens and in our newspapers.

We will obviously come on to debate in detail all the issues surrounding the administrative scheme for on-the-runs, the implications of the Downey judgment, the political fallout, and all that, but it is important to remember that at the heart of this case are families who have had visited upon them not only this terrible tragedy but the terrible iniquity of justice having been denied to them. That has been very eloquently, movingly and emotionally put by the families’ representatives. We all feel for those families today. Indeed, their hurt and anguish is also felt by very many other victims of terrorism in Northern Ireland and elsewhere across the United Kingdom. When they look at this judgment and see the revelations regarding the administrative scheme, the hurt they feel from the loss of their loved one is brought home to them all the more as they realise that there are not only people out there who negotiated what turned out to be a “get out of jail free” card scheme, but people in Government who were prepared to implement such a scheme behind the backs of the public and Parliament—a scheme that those victims knew nothing about.

The judgment in the John Downey case was revealed on 25 February. The court had actually ruled the previous Friday, but the judgment was not made public until, as I understand it, consideration had been given to a possibility of an appeal by the Attorney-General. He decided not to appeal the case, so it would be useful if the Secretary of State could give an indication, when she responds, of the reasons why no appeal was made against the judgment.

The news that Downey would not be prosecuted and that the prosecution would be stayed was bad enough in terms of the individual case, but what came as a real bombshell to the public and everybody concerned was the revelation of the administrative scheme for on-the-runs. As I have said, the fact of the matter is that the scheme was not the subject of any kind of parliamentary debate, discussion or scrutiny at any time over many years. It had no statutory or legal basis and there was no public awareness of it. I will come on in more detail to some of the allegations that have been flying about that people should have known about the scheme and that there was enough information in the public domain—as if it was good enough, in relation to a matter of such importance, to say that we should have all been able to put together the pieces of the jigsaw, instead of having a normal process, with a statement and a debate, through which we could properly consider all the matters.

[Naomi Long (Belfast East) (Alliance)]

I thank the right hon. Gentleman for placing the people who are most important in this debate—the victims of this crime—at the centre of what he is saying. Specific allegations were made against the right hon. Gentleman and his current party leader in Jonathan Powell’s book, which claimed that they were fully aware of the OTR scheme and happy for it to go ahead, provided that the blame was laid at the door of David Trimble. Would the right hon. Gentleman like to comment on the record about that specific allegation, which has been repeated throughout?

[Mr Dodds]

I am very happy to take that on board and I will deal with it in detail when I come to that part of my speech. I have listened to a lot of the commentary and the only allegation out there about the Democratic Unionist party is one reference in one tiny section of one book. Interestingly enough, it was never mentioned in the memoirs of the right hon. Member for Neath (Mr Hain). I will come on to it later, but what it refers to is not the on-the-runs administrative scheme, but the issue of whether the Government were going to introduce legislation. It came after the talks at Leeds castle. The Government intended to introduce legislation and we made it very clear that that was a matter for them, but that we would not sign up or subscribe to it and that we would oppose it in the House of Commons, as we did, and table amendments to it. It did not relate to the administrative on-the-runs scheme, which was done as a dirty deal behind the backs of everybody concerned. I will come on to the issue in more detail in due course.

[Lady Hermon (North Down) (Ind)]

I am grateful to the right hon. Gentleman for taking another intervention so quickly. Will he take this opportunity to confirm that the Downey judgment makes it perfectly clear that Mr Gerry Adams, the president of Sinn Fein, requested an invisible process to deal with on-the-runs, and that is precisely what he got—a deal in secret?

[Mr Dodds]

I can confirm that. The hon. Lady is absolutely right to say that it is revealed in the court papers that Gerry Adams said that

“it would be better if there was an invisible process for dealing with OTRs”.

Indeed, the day after that revelation was made, Gerry Kelly, who became, as it turns out, the postman—

[Mark Durkan (Foyle) (SDLP)]

A man of letters!

[Mr Dodds]

He is described as many things in Northern Ireland—most famously, of course, as the Old Bailey bomber. This is the man who was given the letters by Government officials and others—we are yet to hear the precise details—and who then communicated their contents to the people concerned. The night after that was revealed, he said on “The Nolan Show” on television that Unionists were kept in the dark because if they had known there would have been a crisis, so Sinn Fein itself admits that Unionists were kept in the dark and that there was an invisible process. The attempts by some people to now say, “Well, everybody knew about it,” simply do not wash. Indeed, a colleague of the hon. Member for Belfast East (Naomi Long)—he is her party leader—who just happens to be the Minister of Justice in Northern Ireland, with responsibility for the administration of justice and policing, has made it very clear that he knew nothing about it either. I will come on to that later. The claims that people knew about the scheme do not wash.

There was considerable shock at the revelations, at the fact that justice had been denied, at what people saw as the rule of law being undermined and at the behind-the-scenes nature of the scheme. There is still considerable anger in the Province about the way in which things have come out. Sinn Fein has alleged that it is some kind of synthetic anger, that this is an issue about which people should not be too concerned and that it is not really an issue at all because everybody knew about it. That simply does not wash either. The anger in the community—not just on the Unionist side, but across the board—is real and palpable. People feel that justice has been denied and that the scheme has been characterised by years of deceit and is, in effect, devoid of any kind of morality.

We have made it clear throughout that we opposed and continue to oppose any kind of amnesty. Indeed, I think there is consensus across the House that there should be no amnesty for past crimes and terrorism in Northern Ireland. When we raise the issue of amnesty, we do not do so in a narrow legal sense; we are clear that there should be a proper pursuit and interrogation of suspects, and questioning leading to prosecution where evidence is available. In other words, not only should there not be any kind of amnesty in law passed by this House; there should not be any kind of effective or de facto amnesty by the back door either. Although it is said that this is not an amnesty—I understand what has been said—the reality is that in the case of Downey, for him in his circumstances, it amounted to an amnesty. That is the reality.

We know from the police and others that some 228 people were considered under the scheme. When the Secretary of State speaks, I would be grateful if she could update the House on the precise number of people involved. Our understanding is that the scheme began in 2000-01 and that 174 letters had been issued by 2002. The scheme came to a stop for a while and a Bill to grant amnesty to OTRs was introduced in 2005, but ended up collapsing—it did not go anywhere because of strong opposition from so many people. Members of Sinn Fein were in favour of the Bill, but when they came under attack because it also applied to members of the security forces and others they decided that they wanted an approach based on an amnesty for terrorists and their people, but not for soldiers, police officers and others. It was a one-sided approach and on that basis the legislative approach collapsed.

[Lady Hermon]

Will the right hon. Gentleman confirm to the House exactly when the Bill was withdrawn—I believe it was in January 2006—and perhaps look at the sequence of events? Three days after his Christmas lunch, the then Prime Minister, Tony Blair, wrote a confidential letter to the president of Sinn Fein to say that he would ensure that the administrative scheme was expedited so that any remaining OTR cases were dealt with before he left office—presumably, within six months.

[Mr Dodds]

I am very grateful to the hon. Lady, because I do not now need to go through the next part of my speech. She has outlined the sequence of events immediately after the legislation was withdrawn, and she is absolutely correct. The administrative scheme was ramped up, and the police set up a special unit to deal with it and look at all the cases. When the coalition Government came into office in 2010, the scheme was continued. As we now know, 38 cases have been considered in the period since 2010.

As I have said, there were 228 cases in total, and I understand that 192 letters were issued. There are other statistics for the numbers that were returned, for the people who were arrested and for the people who were investigated. I would be grateful if the Secretary of State updated us on the precise details.

[Naomi Long]

Was the right hon. Gentleman as surprised as I was to find out from the Secretary of State’s written ministerial statement earlier this week that in order to know how many letters had been issued and cases processed, Sinn Fein’s own records are now one of the sources of information? The Government now have to consult Sinn Fein to find out how many letters were issued by Government.

[Mr Dodds]

I was interested to read that statement, but nothing surprises me any more about this scheme, quite frankly. One advantage of the current array of investigations and inquiries is that, between them all, we will get to the bottom of all the facts, uncover exactly what has gone on and, I hope, get to a better place as we move forward.

[Bob Stewart (Beckenham) (Con)]

In practical terms, if someone on the run is given an amnesty, the police would presumably take their name and photograph off wanted lists. I am slightly surprised that people did not realise that amnesties had been granted for nearly 200 people, because their names and photographs had presumably been taken off wanted lists. Does he have a view on that?

[Mr Dodds]

The hon. Gentleman raises the issue of amnesty. As was borne out in the Downey judgment, in reality, someone in possession of a letter of comfort issued by whoever it was—again, the inquiries will no doubt probe who gave authority for or signed off the letters, as well as to whom they were transmitted, and so on and so forth—could use it in court as a shield against prosecution even if evidence existed, provided that the information that they were being pursued or that evidence existed had not been communicated to them. That is my understanding of the situation in relation to Downey. Effectively, because a mistake was made on the facts in the Downey case, he could use the letter as a shield against any further prosecution, and the prosecution was stayed. For him, it was an amnesty, and given the double jeopardy rule, he cannot now be prosecuted for the particular crimes relating to the Hyde park bombings. Of course, prosecution remains open for other crimes, and I hope that the prosecution authorities and the police are looking into that matter.



My party and others opposed any relief or amnesty, or any scheme that would allow on-the-runs to evade justice. That has been our consistent position for many years. We opposed the legislation when it came before this House in 2005. The recent suggestion by the Attorney-General for Northern Ireland, John Larkin, that there should be an amnesty as part of the Haass process has been rejected by us and others. As a party, we opposed the provisions of the Belfast agreement in relation to the early release of prisoners, whereby people who had been convicted by due process—some of them, on both sides of the community, had been convicted of the most heinous and horrible crimes of terrorism—were allowed to walk free from prison if they had served more than two years. We opposed that part of the Belfast agreement, while other parties, which opposed this scheme, supported it.

The point has of course been made—it is a fair one—that at least the early release scheme was known about and was in the public domain. It has even been described as a terrible betrayal of victims by the right hon. Member for Neath, who has said that he understands the hurt that it caused. It was at least open and out there, and people knew about it when they voted in the referendum in 1998.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does my right hon. Friend agree that the galling thing about the Downey case is that had the scheme not come to light—he has outlined it, and our and many people’s rejection of it—it would still be continuing to this very day?

[Mr Dodds]

My hon. Friend makes a very good point. He is absolutely right that had it not been for the revelations in the Downey case, we would still be in the dark about all this. The two-year release scheme was obnoxious, and it remains obnoxious because anyone convicted of a terrorism-related crime that took place before 1998 can still avail themselves of its provisions. If someone is now found who has evidence against them of an offence that occurred before 1998 and was related to terrorism in Northern Ireland, they can go to prison for at most two years. That continues to cause great offence in Northern Ireland, but at least that scheme was out in the public domain. It was debated in this House and debated publicly, and decisions were taken as a result. However, there was never such transparency in this scheme. As my hon. Friend has pointed out, we would still be in the dark if we had not had the Downey case.

We need to find out how this all happened—who knew and when they knew—and to examine the scheme’s legality. We also need to ensure that another Downey case never happens, and that such letters have no effect when it comes to being able to stay prosecutions.

When the details emerged, the Attorney-General made a statement in this House on 26 February, but it appeared to many people that that would be it. There was no indication in any statements made at the time that there would be any further consideration of the matter. Indeed, Ministers were on the radio at lunch time that day saying that, as far as they were concerned, that was the end of the matter and nothing more could be done.

As the House knows, the First Minister of Northern Ireland—my party leader, Peter Robinson—made it very clear that had he known about or been made aware of the scheme when the restoration of devolution was negotiated, we would not have been able to proceed with devolution on that basis. He said that the matter was of considerable concern, given that policing and justice has become a devolved matter, that it is now the responsibility of the Northern Ireland Assembly and the Northern Ireland Executive, and that the Justice Minister is responsible for those matters. He said that given that the First Minister, the Justice Minister and the parties in Northern Ireland, apart from Sinn Fein, were not aware of the scheme, it needed to be addressed urgently. He made it very clear that there had to be a judge-led inquiry.

I welcome the fact that that inquiry was announced by the Prime Minister on 27 February. I welcome the fact that on that day, the Secretary of State also issued a statement, which said:

“We will take whatever steps are necessary to make clear…in a manner that will satisfy the courts…that any letters issued cannot be relied upon to avoid questioning or prosecution for offences where information or evidence becomes available now or later.”—[Official Report, 28 February 2014; Vol. 576, c. 39WS.]

I welcome the fact that Lady Justice Hallett has been appointed. Her terms of reference are in the public domain. The intention is that she should report by the end of May.

Some people in Northern Ireland were critical of the appointment of the judge-led inquiry. Some of those people had nothing to offer other than base political point scoring and have not contributed anything towards getting to the bottom of these matters. We were very keen that the inquiry should not be dragged out over a long period, as we have seen with so many inquiries that relate to Northern Ireland matters, and that it should not lead to a panoply of lawyers trooping in and out, extending the process so that we did not get an outcome for months, if not years. I therefore welcome the fact that it will be a short, sharp, judge-led inquiry that will be able to examine the papers and deal with many of the issues.

I welcome the fact that the Northern Ireland Affairs Committee, under the chairmanship of the hon. Member for Tewkesbury, has taken steps to set up an inquiry. The Justice Committee in Northern Ireland, under the chairmanship of my friend Paul Givan, the Assembly Member for Lagan Valley, has also initiated an inquiry. It had its first session on 25 March, at which the permanent secretary at the Department of Justice appeared. Interestingly, the permanent secretary, who is a former official in the Northern Ireland Office, admitted to having knowledge of the secret OTR scheme while in that role, but apparently he did not feel that it was necessary to inform the Justice Minister of it when he became permanent secretary at the Department. That raises questions as well, but it is for the Justice Committee in Northern Ireland to pursue them.

[Naomi Long]

As a former Minister, the right hon. Gentleman will know that a civil servant is not at liberty to give information about the role that they played as a civil servant for one Minister to a new Government taking office. Although it may seem bizarre and frustrating that that knowledge was available in the Department of Justice, it would have been thoroughly inappropriate and, in fact, illegal under the civil service code for the permanent secretary to have shared it with anyone.

[Mr Dodds]

I understand that completely. We are all aware of the rules about disclosure in relation to previous Ministers and all the rest of it. That is one reason why the judge-led inquiry is so significant and important. The judge will be able to inquire into the papers and have before her the various documents, even if they relate to previous Administrations. That matter is also important for the other inquiries, because we must get to the bottom of all the facts and of who knew what and when.

[Mark Durkan]

The point made by the hon. Member for Belfast East (Naomi Long) reinforces the fact that this arrangement was, in effect, a secret. Civil servants are quite free to comment on issues that past Governments have dealt with and that they were engaged in when they are matters of public policy and when it is sensible for the understanding of the current Minister to have the benefit of that background information. The very fact that the civil servant felt so precious about this matter underscores the fact that it was a secret arrangement.

[Mr Dodds]

The hon. Gentleman has put it very well. Documentation and papers relating to the civil servant’s time in the Northern Ireland Office would not be made available to the current Minister of Justice, but it beggars belief that no reference to the scheme could be made anywhere at all by any official. As the hon. Gentleman put it so well, it was because there was a preciousness about ensuring that the secrecy of the deal was maintained.

I am glad that the Police Service of Northern Ireland is also reviewing the process that led to the issuing of the letters. A team of 16 detectives has been assigned to the review. It will investigate the circumstances of each of those who received a letter. It will also re-examine the original checks that were carried out by the specialist PSNI team to which I referred earlier, which led to the Public Prosecution Service being told that none of the individuals was wanted. The police have made it clear that investigations into killings and other incidents may be reopened if mistakes or new evidence are uncovered.

It is important to note that all the inquiries and investigations that are under way are complementary. They will work together. Some of them will concentrate on the more political aspects and ramifications of this dirty deal; some of them will consider the legal side of it and look at the documentation and papers; and some of them, no doubt including the Justice Committee, will want to probe what the status of the scheme was post-devolution, when policing and justice were devolved. The police will look at the matter in the terms that I have just indicated. All the inquiries and investigations are complementary, all of them are important and all of them must get to the truth. They must find a way forward that implements what the Secretary of State indicated in her statement in February after this was announced, which is that there can be no bar on the questioning, prosecution and investigation of cases, and that they must be brought to court.

I want to talk briefly about how this whole issue has been handled in respect of informing Members of Parliament and the public. I raised a point of order on 5 March, in which I said that

“examination of the parliamentary record going back over a number of years indicates that there were occasions on which the House may have been misled by ministerial statements, whether oral or written.”—[Official Report, 5 March 2014; Vol. 576, c. 905.]

I know that it is not the responsibility of current Ministers to speak for previous Ministers, but it is important that we hear in this House, on the record, from those previous Ministers whether they stand over the statements that they made in this House. When one reads those statements now, it is very clear that there was certainly an economy in the truthfulness of what was said.

I refer, for instance, to the question that was asked on 11 October 2006 by Peter Robinson to the then Secretary of State, the right hon. Member for Neath:

“Although we welcome the earlier answer from the Minister of State that no legislation is to be brought before the House, will the Secretary of State reassure the House…that no other procedure will be used to allow on-the-run terrorists to return?”

The then Secretary of State answered:

“There is no other procedure.”—[Official Report, 11 October 2006; Vol. 450, c. 290.]

The hon. Member for North Down subsequently asked, on 1 March 2007,

“what measures the Government are considering to deal with ‘on the runs’ other than further legislation or an amnesty.”—[Official Report, 1 March 2007; Vol. 457, c. 1462W.]

The right hon. Member for Neath replied, “None.”

[Lady Hermon]

I am most grateful to the right hon. Gentleman for allowing me to intervene on that point. He has quoted a reply that was given to me by the then Secretary of State for Northern Ireland, the right hon. Member for Neath (Mr Hain). It is important to note the date of that reply, which was at the beginning of March 2007. We know from the Downey judgment that the first meeting of Operation Rapid within the PSNI was chaired by Norman Baxter on 7 February 2007. It is of considerable regret that the right hon. Member for Neath is not here today. However, may I say in his defence that, quite properly, he attended the funeral of his colleague and dear friend Tony Benn, and that he has a family commitment today?

[Mr Dodds]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the right hon. Gentleman resumes, may I gently point out to him that he has been speaking for 35 minutes and there are 14 Members who wish to speak in this debate? I do not think they would appreciate a time limit, which may be necessary if he goes on for much longer.

[Mr Dodds]

I shall be brief. Given the gravity of the situation and the need to ensure that these matters are properly aired, I do want to give time to other hon. Members to contribute.

The hon. Member for North Down has rightly pointed to the reasons for the absence of the right hon. Member for Neath. We understand also that the Minister of State has another commitment. [Interruption.] I am glad to see that he is now present, although he was not here for the start of the debate.

All sorts of allegations are floating about and it is said that everybody should have known about the scheme. We have dealt with the Sinn Fein comments. We know about their claims that there needed to be invisibility and that the scheme needed to be hidden in case there was a crisis. We have had references to the Eames-Bradley report, but examination of it does not bear out the allegation that the scheme was known. We have seen allegations about the Policing Board. When one examines the record—I will not go into the detail—again, that is disproven.

On the Powell book, I have dealt with that matter clearly. This was not about the administrative scheme. It was about the legislation that was being brought forward, and it is completely wrong to allege that the DUP was somehow part of any kind of information sharing in relation to the scheme. I make no allegation that other politicians in Northern Ireland knew about the scheme either.

[Naomi Long]

Would it be right to say that this scheme was already in train at the point when those allegations were made? The scheme was already operating behind everyone’s back, and that was almost being redressed by saying that people had knowledge that they did not have.

[Mr Dodds]

The hon. Lady is right. The consensus that exists in relation to the approach by all the parties in Northern Ireland generally and many other commentators bears out the fact that this matter was withheld not just from the public, but from the political classes in Northern Ireland and those who were dealing with negotiations at that time.

I close by saying that there are issues about the authority for the continuation of the scheme after 2010 when these matters were devolved, and that will have to be looked at by the judicial inquiry. There are also grave implications for the continuation of the Haass process, although I do not think it should be called the Haass process any more as Mr Haass has gone, not to return. On the talks about the past and about parades and flags, there is no doubt that talks and discussions were continuing, negotiations were taking place, and one party at the table was aware of the scheme that provided an effective amnesty for certain individuals. Not to have it revealed, for others not to know anything about it, was a grave betrayal of trust.

There are those who would say that the answer to all this is to throw everything up in the air at Stormont, get rid of devolution and get back to direct rule. Well, this scheme illustrates what happens when politicians in Northern Ireland do not have their hand on the tiller.

I speak to some of our Unionist friends back home, who urge people to tear down what has been built up, who say that as a result of this we should all get out of Stormont and bring the whole thing down. But when we look at the issue of the iniquitous, immoral and deceitful on-the-runs scheme, when we look at the issues of the Parades Commission and the flying of the Union flag, what do we find they all have in common? They are the product of direct rule. They are the product of a situation where Unionists—I say this as a party political point—did not have influence or power in relation to that decision making. It would be a travesty to suggest that the way to correct the ills of this scheme is to tear down devolution at Stormont.

It is important that the inquiries all take their course. We eagerly await their outcome. Let us put it on record that as far as this party is concerned, if these matters are not adequately and properly dealt with in the way the Secretary of State outlined in her statement on 27 February, we will have to return to the issue again. This is not going to go away.

13:00

[Mr Laurence Robertson (Tewkesbury) (Con)]

I apologise to the right hon. Member for Belfast North (Mr Dodds) for missing the first few minutes of his speech. Thankfully, he spoke for half an hour so I was able to hear most of it.

I was part of the team that approached the Backbench Business Committee to ask for this debate. Up to that point we had had only an hour of discussion in the House of Commons when I tabled the urgent question on 26 February. This debate is useful because an urgent question does not allow the House full discussion.

Since 2010 the Select Committee has tended to concentrate on economic issues. We have looked at corporation tax, air passenger duty, fuel laundering and smuggling and the amounts of money being lost. We have touched on the armed forces covenant, and we are coming to the end of an inquiry into the structure of banking in Northern Ireland. In other words, we have tried to help to regenerate the economy in Northern Ireland, believing that to be very important for the prosperity of the people who live there, and with a view to attempting to cement the peace that has been achieved over the past 16 years or so. I am sure Committee members would have been happy to take that policy forward towards the next general election. However, that changed on 25 February.

Speaking for myself, I was not aware of any such scheme. I was obviously aware that the John Downey case was being considered as I got a telephone call that day explaining the judgment and letting me know the background to it. It came as a complete surprise to me that there was any such thing as an administrative scheme. It was a big surprise because in 2005 through to January 2006 I led for the Conservative party on the Northern Ireland (Offences) Bill, which attempted to grant an amnesty across the board. It was the realisation that that amnesty went across the board that caused Sinn Fein to stop supporting the Bill, and the Bill was subsequently withdrawn. I received a telephone from the then Minister of State, who asked to see me. He informed me that the Government were, in his words, pulling the Bill. There was no support for it and it was not going to happen.

I was not aware at that point or earlier or up to 25 February that there was any other way of dealing with the so-called on-the-runs. The Select Committee found itself in a changed position after 25 February. I have never known the members of that Committee to be so exercised over any issue as they have been over this, which has persuaded us to launch an inquiry into the background to this scheme and everything connected with it, despite the fact that there is a judge-led inquiry appointed by the Government, which we welcome, and an inquiry is being held by the Justice Committee in the Assembly, the leader of which I met just the other day. Both inquiries are welcome, and we will probably concentrate on different areas.

We start with the case itself and a stay being put on the case. We have taken legal advice on the matter. I am advised that the Government cannot appeal a stay. That was the advice that I received just yesterday. I would be glad to hear the Secretary of State’s response to that because it seems an extraordinary judgment that possession of a letter can take on greater importance than a murder charge. I make no suggestion as to whether Mr Downey is guilty or innocent. That is not the role of a politician and I do not have the facts to hand. But a murder charge was made—in fact, a charge of multiple murder and injury—yet possession of a letter appeared to assume greater importance than that charge. I find that very surprising indeed.

[David Simpson (Upper Bann) (DUP)]

Does the hon. Gentleman agree that there is a possibility that the letters in the Downey case may not have been sufficient in themselves without political influence?

[Mr Robertson]

I thank the hon. Gentleman for his intervention. He is a valuable member of the Select Committee and I am grateful to him for his support on this and many other issues. The point he makes is correct. Not being a lawyer myself, I cannot make a judgment on whether that is normal. My suggestion is that perhaps it is not normal. I understood courts always to look at the facts before them, but in this case the court seems to have relied on this letter, which concentrated on the fact that the PSNI did not want to question Mr Downey. It said only that in the PSNI’s belief no other police force in the United Kingdom wanted to question him—it was not a categorical assurance. That letter, weak and flimsy though it may sound, seems to have taken on a greater importance because of the political process. I would be the first to say that it is very important that we do not unravel the peace process or undo the enormous achievements in Northern Ireland, but the rule of law applies here, as well as the separation of powers between the Executive, Parliament and the courts, which has to be observed. I suggest that all the inquiries have that as the central motivation behind their opening.

[The Attorney-General (Mr Dominic Grieve)]

I may be able to help my hon. Friend. The judgment in the Downey case speaks for itself, and one needs to read it. It is very straightforward in its language about the terms of what had happened and the impact that the judge felt it had on the fairness of any prosecutorial process. Beyond that, to pick up a point that was raised earlier, that judgment was considered with great care by the Crown Prosecution Service, using independent lawyers’ advice, and the CPS was clear that it was not possible to appeal against it. CPS staff came and explained that to me and, having listened carefully to what they had to say, I shared their view.

[Mr Robertson]

I am grateful to the Attorney-General for that clarification of the possibility of appealing in that case. That certainly was the advice that I received yesterday from an eminent QC—

[Nigel Mills (Amber Valley) (Con)]

I am a little confused. I thought that the reason for the lack of an appeal was that there was no realistic prospect of success, not that there was no process by which an appeal could be made. Is the position that there was no possibility of an appeal for technical reasons, or is it that the appeal had no chance of being successful?

[Mr Robertson]

My understanding from our discussions yesterday was that a stay cannot be appealed.

[The Attorney-General]

The decision of the judge was capable of being appealed. I hope I made that clear when I made my statement in February. It was possible to appeal against the decision but, for the reasons I have just given, the view was taken that it had no reasonable prospect of success.

[Mr Robertson]

I am again grateful to the Attorney-General for that clarification, although it is in some contradiction to the advice I received from Queen’s counsel yesterday. Perhaps this matter could be taken up further, but at this stage it is probably better to move on from the case.

[Sammy Wilson (East Antrim) (DUP)]

Given that this is not just about the judicial process but about the political confidence that people can have in assurances that were given in this House, and whether there was an attempt not only by the last Administration but by the current one to help terrorists guilty of crimes escape the consequences, does the hon. Gentleman agree that—regardless of how slim the chances were of a successful appeal in judicial terms—politically the right thing to do would have been to appeal?

[Mr Robertson]

I agree with the hon. Gentleman, and that is why the conflicting advice we have received has to be explored further. If a stay cannot be appealed, it cannot be appealed, but if—as the Attorney-General suggests—the issue is that there is no prospect of overturning the judgment, my view as a non-lawyer is that we should consider an appeal. It is extraordinary that a letter, which appears to be ambiguously worded, can take on greater importance than a charge of multiple murder. I do not know whether it is unique, but it is extremely unusual.

[The Attorney-General]

I rise again only to say that the decisions of the Crown Prosecution Service cannot be taken on a political basis. Indeed, insofar as I exercise functions in relation to the administration of justice, I have to ensure that those are not taken on a party-political or other political basis. It might often be convenient politically to do something, but if it is not justified on an objective consideration, it would be quite improper to do it.

[Mr Robertson]

I do not think that anyone would disagree with what the Attorney-General has just said. The problem is that the judgment in the Downey case appears to have taken the political situation into account, and that is what concerns everyone. Royal pardons appear to have been given, but I do not know what they were given for or which crimes were being overlooked. If that was not done on a political basis, I do not know what constitutes a political basis. The point that we are trying to make is that such decisions should be made on a legal basis, not a political basis.

The one good aspect is that the judgment has blown open the whole issue and drawn attention to what has been going on. The Northern Ireland (Offences) Bill was introduced in 2005, presumably because it was felt necessary to put the scheme on to a statutory basis, to give it a public airing or some respectability. It now seems that the scheme had been running since 1999, but it was six years before the Bill was introduced. The Bill was dropped, but the scheme continued. Was the scheme legitimate for all that time? If it was, why the need for the Bill?

As the right hon. Member for Belfast North said, the 1998 legislation—some of which I also voted against, for all sorts of reasons—addressed very unpalatable issues, but at least we could debate and vote on them publicly.

[Nigel Mills]

There was a referendum on it.

[Mr Robertson]

My hon. Friend, who is a valuable member of the Select Committee, points out that a referendum was held on that legislation. That was completely in the open, so why was this scheme not made public? We will need to look at that issue.

It is claimed that the letters were just assurances that no one was being looked at by the PSNI; it was just an administrative scheme and simply a matter of informing people that they were not wanted. But we are also told that the scheme was crucial to the peace process and if it had not been done, the whole peace process would have somehow unravelled. Both those statements cannot be correct. If it was just a matter of clearing the police computer and moving things on, it cannot have been crucial to the peace process.

[Bob Stewart]

Something that puzzles me relates to whether the crime was committed in Northern Ireland or in London. We know the answer: it was committed in Hyde park, which is the responsibility of the Metropolitan police. I do not understand how the PSNI can issue an immunity letter in that case, because it suggests that the Metropolitan police do not have any responsibility.

[Mr Robertson]

My hon. Friend makes an important point. I do not want to go back to the Downey case in too much detail, because I am trying to make progress, but it was an extraordinary judgment.

I also question who received these letters: who are the on-the-runs? If a completely innocent person received a letter saying that they were not wanted by the police, that would be extraordinary. It does not happen; there has to be a reason why people were on the run. What exactly does “on the run” mean? What were they suspected of doing? What did they fear the police thought they might have done to put their names forward? Why did they need confirmation that they were not wanted? That is central to the whole debate.

I am also concerned about the number of letters that appear to have been sent out. I am not quite sure of the exact figures, but those I have suggest that 221 letters were sent out, with 10 being provided by the Prison Service, which I find a little confusing, and four by the Government of the Republic of Ireland, which I find a bit worrying. That is according to the statement made by the Secretary of State a couple of days ago. We are told that that does not amount to an amnesty, but what about the royal pardons? Again, the advice I have received is that those are normally issued following a miscarriage of justice, not to prevent a case from being brought against a person in the first place, and that prompts the question of what the pardons were issued for.

The timing of this issue is unfortunate, as I said during the urgent question. As we speak, the PSNI is advertising for people to come forward as witnesses to the Bloody Sunday killings of 1972.

[Mr John Baron (Basildon and Billericay) (Con)]

Will the Committee’s inquiry also examine what seems to be a contradiction in that the final sentence of a written statement of 25 March states:

“If the Government had been presented with such a scheme on coming to office, we would have stopped it.”—[Official Report, 25 March 2014; Vol. 578, c. 16WS.]

That prompts the question of why the letters continued to be issued.

[Mr Robertson]

We will certainly ask about that, and I do not know why it was not devolved to the Northern Ireland Assembly when a Justice Minister was in place—a Justice Minister who confirmed to me and other members of the Committee that he did not know anything about the scheme. I do not know why the matter was not devolved, but it is something we will consider.

As I was saying, the PSNI is looking for people to come forward as witnesses to the Bloody Sunday killings. Let me say straightaway that I do not believe in any amnesties. If republicans have committed crimes they should be charged, if loyalists have committed crimes they should be charged, and if members of the security forces have committed crimes they should be charged. This seems to be a one-sided scheme. In 2005 the Government tried to open it up to everybody, but it was rejected by all parties and withdrawn because we do not believe in amnesties. It seems, however, that there is a scheme for certain members of the community but not for others, which cannot be right.

My hon. Friend the Member for Basildon and Billericay (Mr Baron) is quite right and the Committee will certainly consider why this issue was not devolved following the devolution of policing and justice in April 2010. We also published the terms of reference on 11 March. They are quite comprehensive and we want to carry out a full and deep inquiry. We do not want it to run on for ever, but we will certainly do it properly and interview a range of people including past and present Secretaries of State, Ministers, police officers, relevant civil servants, and others. The first session will be held next week with former senior police officers. Yesterday we appointed two eminent barristers—I cannot name them at the moment—including a Queen’s counsel, to become special advisers to the Committee during this inquiry.

It is important to recognise the progress made in Northern Ireland over the past 16 years, but there are no amnesties and no excuse for violence. The rule of law must be upheld by all concerned, so although I regret the need to delve into the past once again, it is sometimes necessary to do so in order to secure the future.

13:24

[Naomi Long (Belfast East) (Alliance)]

I thank you, Madam Deputy Speaker, for calling me so early in the debate, and I apologise to the House and to other hon. Members, particularly the Secretary of State, for the fact that I will not be able to remain in the Chamber for the whole debate owing to circumstances beyond my control. I am also grateful to the Backbench Business Committee for granting time to consider this issue today. It is a sensitive and serious matter, not just from a Northern Ireland perspective, but for the UK as a whole, given the way in which this scheme appears to have circumvented the will of Parliament and allowed others to circumvent due process under the law.

Let me put my remarks into context by setting out a number of points. Like the right hon. Member for Belfast North (Mr Dodds), I agree that the centrality of victims in issues of justice and dealing with the past must be reflected, recognised and given respect. It is one thing to be honest with victims in Northern Ireland and tell them that they may never receive justice because of the passage of time or a lack of evidence, but it is another thing if, where people have the opportunity to pursue justice, it is denied to them, either by a process that is concocted as this one was, or by any other mechanism that seeks to prevent people from pursuing justice. Like others who have already spoken, I would oppose—as would my party—any form of amnesty.

When discussing this issue it is important that we do not seek to diminish in any way the progress that has been possible as a result of the wider peace process in Northern Ireland. All Members of the House, I think, value the progress that has been made over the past 15 years, and all want to see it furthered rather than regressed. However, it ought not to be peace at any price, and there must be some sense of moral foundation on which we move forward as a society. I believe that this process has failed to engender a sense of confidence among the Northern Ireland public that a moral compass was operating in the Northern Ireland Office at the time these issues were dealt with.

I recognise that all peace processes contain issues of transitional justice, where normal justice arrangements are in some way changed or altered to address specific circumstances. We accepted that in Northern Ireland—to varying degrees, I must say—and that it was done on a particular basis. However painful the early release schemes, they were endorsed by the public directly in the Good Friday agreement referendum. There were other cases of transitional justice where elected representatives endorsed a process. For example, there was limited immunity in the case of decommissioning, and because of the wider benefit of recovering those weapons it was accepted that they would not then be used for forensic testing in order to incriminate those who handed them over willingly. There was an acceptance by public representatives, on behalf of their constituents, that that was a fair, right and just thing to do. Equally, for the recovery of the remains of the disappeared, limited immunity was provided for those who gave information so that they would not incriminate themselves in doing so. The greater good being served was that those families who had suffered the horrendous torture of not knowing the final location of the remains of their families would perhaps be able to get some truth.

Those cases are distinct from this one, however, because they were either considered here openly in Parliament, with the acquiescence or at least the full knowledge of the political representatives who sat here, or endorsed in the Good Friday agreement by a public referendum. The issue we are discussing did not flow from the Good Friday agreement, and no amount of repetition will change that.

I remember voting for the Good Friday agreement, and how difficult it was to do so in the light of the early release scheme. It was one of the hardest things for me to swallow, as somebody who believes in the rule of law. I voted for that agreement, however, because I believed that it was in the greater good, as did the majority of people in Northern Ireland. No reference to the on-the-runs or any other issue of this nature was put to the people of Northern Ireland, and neither were they given the option to vote on that issue. For others to suggest that this scheme was a natural flow from the Good Friday agreement is absolutely false. It was not endorsed by the public or the representatives. More than that, when the tidy up was brought in to try to put this issue on some kind of statutory footing, Parliament rejected the attempt to extend the amnesty, which we now know has been given to those who received these letters, to other categories of person who may have been seeking similar comfort. Parliament rejected that, yet it went ahead.

The allegation is that, without the letters, the peace process would not have survived. No one denies that the issue of on-the-runs did not exist. The question was how it could be addressed in a manner that would keep the principles and foundations of justice intact. At that time, the Alliance party proposed a tribunal process, in which people would have their cases reinvestigated and tried in open court, but they would have to present themselves in person to face justice and their alleged victims to do so. My party has been consistent that no widespread amnesty, such as that floated by the Attorney-General for Northern Ireland, is an acceptable way forward. It was wrong then and it is wrong now. I go further and say that two wrongs will not make a right. The answer in this case is not to say, “Let us universally wipe the slate clean”, but to resolve it so that justice can be done fairly and squarely for everyone in Northern Ireland.

[Lady Hermon]

Will the hon. Lady take this opportunity to put on record her candid assessment of the damage done to public confidence in the prosecution service and—I say this with great sadness—in the Police Service of Northern Ireland by the ramifications and revelations of the Downey case?

[Naomi Long]

I am more than happy to do so.

The timing is significant. Over recent years, there has been a perception in the loyalist community in particular that justice acts in a differential way, and not to their benefit. I have not shared that perception, but I am hugely aggrieved that, as a result of the case, it has been compounded, because no loyalists and no members of the security service had access to the scheme. Only members of Sinn Fein or people who came through Sinn Fein had access to the scheme. In fact, there are complaints from other republicans who fell out of favour with the Sinn Fein leadership that even they were not able to access the scheme.

Therefore, justice in Northern Ireland was acting in a partial way during that process, which has undermined public confidence and further damaged people’s respect for the PSNI by implication—the PSNI was asked to do that job by the Government of the day, and did as it was asked to do, as is its duty, but its role in the process has tainted the public view of it. It has been incredibly damaging, and a huge amount of work will need to be done as a result to recover people’s confidence in their politicians, in the justice system and in the wider peace process.

That is why, from the beginning of the negotiations, the Alliance party was clear that side dealing and secret dealing would end up being the undoing of the peace process, not its underpinning, because the truth will out, and when it does, the ramifications, having been kept secret in the first place, are as significant as the deal originally done. It is better to face the truth and deal with the consequences of failure there and then than it is to continue a charade and a false perception of progress, which is shaken to its core when such things later emerge. I feel very strongly that the case has undermined people’s confidence in the process, and that a lot of work needs to be done to restore it.

On the inquiries, other hon. Members have outlined the variety of inquiries taking place in the Assembly, the Policing Board and the House of Commons Northern Ireland Affairs Committee, but I want briefly to consider the inquiry being undertaken by Lady Justice Hallett. That inquiry was always to be narrowly focused and swift, which is to be welcomed. However, I am slightly concerned by the increasingly narrow focus of the inquiry. We would be well advised to keep that under a watching brief. In letters issued to Lord Thomas by Julian King, director general of the Northern Ireland Office, Mr King appears to very narrowly circumscribe the role of Lady Justice Hallett and how far her investigations can go. For example, Mr King has advised that she will not need to look at every individual case as part of her inquiry. For me, that raises questions about who will do the sampling of cases she will look at and on what basis the sampling will take place. How will we ensure that she has the opportunity to look at the different wording in the letters that were issued over the period? The wording did change. Some people received letters saying that unless new evidence was discovered, they would not be requested for trial, but others were told that they would not be requested unless new cases were discovered, which is entirely different in terms of importance. How will we know that every variety of letter and text will be thoroughly investigated unless each case is looked at in detail? Indeed, without reviewing each case, how can we know whether there are errors in other individual letters? Only by looking at each case and the evidence on which those assertions were made can we know whether any of the others were erroneous.

The Downey ruling and the stay based on it make clear that they are not based on the fact that the letter was issued in error. In fact, the reading of the judgment suggests that the ruling was not even based on the content of the letter. The content of the letter coupled with the testimonies of the right hon. Member for Neath (Mr Hain), Jonathan Powell and Gerry Kelly, who set out their view of the intent behind the letter, were important in the ruling. That is hugely important, because—clearly—the intent was that those people would not face prosecution. That was taken into account in the judgment.

It is understandable that people want to know who knew what and when, and what the process was, not least my colleague the Northern Ireland Justice Minister, particularly given that the scheme continued to operate under devolution, interfering—that is the only word I can suggest—with the devolved responsibilities of the Justice Department and other devolved structures of government. It is important to know that, but it is more important to know the import of the remaining letters. The Secretary of State’s view remains—she has made it clear—that those letters ought not to be treated as an amnesty, but it remains to be seen how a court would view them in the light of the judgment, which was not appealed, and in the light of the evidence given in the judgment of the intent of the letters at the time. Will saying that they no longer count retrospectively count for anything in a court of law? We wait to find out whether they count for anything or not.

Having said that, it is crucial that we decide where we want to go from here. Victims who for reasons beyond our control may never receive any justice are still out there. Some might receive justice, but many will not. We have said for a long time to successive Secretaries of State that we require a comprehensive process to deal with those issues in a manner that ensures that openness, integrity, truth and justice are placed at the core of our peace. The cases should not be treated as commodities to be traded in our political process, corroding respect for the rule of law both within the process and within the communities we represent.

We have in the past cautioned against side deals and their toxic effect. We now need to focus on getting to the truth and on learning the lessons of flawed process and side dealing. We need to refocus our community and find that comprehensive way forward on dealing with the past, for which we have called for some time. I agree with the right hon. Member for Belfast North, who said that the Haass process—for want of a better terminology —needs to move forward with new vigour, because we need to provide answers on the footing of openness, transparency, honesty and justice, for those families who still await the outcome. We need to bear in mind the hurt and aggravation of the families of four soldiers who will never know the outcome because of the application of double jeopardy in the Downey ruling.

13:38

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak in the debate, which I do with a level of concern. I am not a victim of the so-called troubles or a resident of Northern Ireland. I am especially cautious about interfering in the legacy of a past that is not entirely mine.

I join the various sympathies that have been expressed to the victims of the Hyde park bomb and their families and friends. This is a terrible way to end any attempt at a justice process for them. It does great damage to the reputation of justice in the UK, both on the mainland and in Northern Ireland, that we have evidence to prosecute someone, but for a rather unfortunate reason cannot have a fair trial in a public court to see whether they are guilty. The families deserved that in the Downey case.

As many Members have said, there is an issue with the whole process. Somehow, our system of justice, of which we should be proud, has gone horribly wrong. We need to ensure that we know the extent to which it has gone wrong and that no further injustices are done. The point was made earlier that the idea of the royal prerogative of mercy was to correct miscarriages of justice, not create them. I fear that this process has created some miscarriages of justice. That is the last thing we should have done.

We are all entitled to expect a fair and transparent legal and judicial process, with a trial in an open court by one’s peers where everyone knows what happened, everyone can hear the evidence and everyone can understand the verdict to which the jury comes. In a closed, invisible process, not only do we not get a trial in a public court, we do not even know who has had these letters or why, and we do not even know who has had the royal pardons. That cannot be right. We need to get to a stage where the process is transparent, and where the people of Northern Ireland and the mainland know who has had these letters and what they say. Transparent justice is the only fair situation.

On the background to the case, what strikes me as important, both in the case and in the verdict, is the intent behind the administrative process. What was the idea of issuing the letters? As was mentioned earlier, we appear to have two extreme views on that. One says that the letters were essential to making the peace process work; that Sinn Fein desperately needed them to play a full part in the process. The other extreme is that the letters were merely a factual statement of the state of inquiries that did not confer new rights on anybody, and that if there was a change of heart or new evidence was found—perhaps if a more competent file review was done and evidence was pieced together—there could still be a prosecution. With my layman’s non-lawyer logic, I would assume that the letters were largely worthless—yesterday we were not looking for a certain individual, but perhaps tomorrow we will be—and that nothing in them could be relied on. That does not appear to be the status of the letters in the very comprehensive Downey judgment.

[David Simpson]

The hon. Gentleman mentions the royal pardons and royal prerogatives. Does he agree that, apart from all the letters that were issued, the greatest insult to the victims and to the people of Northern Ireland is that royal pardons were given to people who were potentially murderers or bombers?

[Nigel Mills]

It clearly is an insult. I will leave it to the hon. Gentleman to decide whether it is the greatest insult. I am not a victim, I was not involved and I do not live in Northern Ireland.

I can fully understand that to achieve peace people on all sides had to hold their noses and swallow some things they really did not want to swallow. Perhaps this is something that people ought to have had to swallow. Perhaps we should have been transparent and said, “Look, there can’t be any peace without some solution on on-the-runs.” Perhaps that should have been in the Belfast agreement, and perhaps it should have been in the referendum. It was not, however, and that means that it should not have happened. It should either be there, with everyone knowing about it and accepting it, or it should not be done. The secrecy is perhaps one of the greatest insults: justice has been circumvented in secret.

What I cannot get over is why this process was entered into. Why did the process exist? Why would Sinn Fein want the process and apply for letters unless everybody involved believed that it conferred some right or new situation whereby one would no longer be prosecuted for something one would otherwise be prosecuted for? I have no reason to go on the run and I am not aware that I have done anything that would require me to go on the run—

[Sir Gerald Howarth (Aldershot) (Con)]

The Whips may have something to say about that.

[Nigel Mills]

The Whips may have those ideas.

If I was genuinely fearful that I might be prosecuted, I might not wish to remind the authorities that I existed unless I thought that a valuable assurance would result from the process. Reminding them to have a look at my file, which may have been buried in some long forgotten cabinet, gathering dust, would be a strange thing to do if I was below the radar in Northern Ireland or elsewhere. I can only assume that the process was meant to confer a valuable right or assurance that the individual was free to come back to the United Kingdom, or to be more visible in the United Kingdom, and would not be subject to prosecution.

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

Just to reassure my hon. Friend, the letters did not confer an amnesty. They are not “get out of jail free” cards. It was always the case that there were statements of facts about a person’s status in relation to the police and prosecuting authorities at a particular time. The reason for the judgment in the John Downey case is that he was sent a letter that was factually incorrect. The letter said that he was not wanted by the police when he was. It was the fact of that mistake—the fact that the letter was incorrect and that Mr Downey acted on that letter—that was the basis of the judgment in the Downey case. It was not the fact of the letter itself.

[Nigel Mills]

I am grateful to the Secretary of State for that clarification. That still leaves me in a situation where it is hard to understand the purpose of the letter, if it was not meant to be something one could rely on. This gentleman was carrying this letter around with him every time he entered the UK. Why would he do that if it could be superseded at some point?

[Mark Durkan]

If we are to place any burden on what the Secretary of State has just said, does that not create a very serious danger that the case law arising from this case in future will be that anybody can claim an abuse of process based on any mistake in communication they received from a Government official at any level?

[Nigel Mills]

Yes, there is a real question about what the legal status of the letters is now. We can argue about whether they were intended to be amnesties. The question has now become: has this judgment somehow elevated their status to something that was not intended?

The end of paragraph 45 of the Downey judgment refers to a letter sent by the then Prime Minister, which said:

“The Government is committed to dealing with the difficulty as soon as possible, so that those who, if they were convicted would be eligible under the early release scheme are no longer pursued”.

That is basically saying that somebody who could have been prosecuted and would have got a two-year sentence would now no longer be pursued. I am not sure how I can construe that as just being a factual statement. It appears that the intention of the Prime Minister at the time was to give some assurance that people who had gone on the run would not be prosecuted in that situation. That strikes me as being an amnesty under any other name. As the old saying goes: if it looks like a duck, walks like a duck and quacks like a duck, it is a duck. This looks very much like it was intended to be an amnesty.

[Naomi Long]

It is constantly raised that the letter was issued in error. However, in the judgment the real influence came from the content of the letter combined with the testimony given as to what the effect of the letter ought to be. Personally, having read the judgment, I think that the issue of the erroneous nature of the letter was in many ways a red herring. If another letter, accurately written, had been presented with the same testimony from the right hon. Member for Neath (Mr Hain) and the others who gave testimony, the effect would have been exactly the same.

[Nigel Mills]

Yes, I think the hon. Lady must be right on that. The judge seemed to think that the process was meant to confer some kind of assurance on people and that the letter had to be read in line with that, but I am no expert.

We ought to look also at the concerns expressed at the start of this process by the then Attorney-General, who is quoted in paragraph 36 of the judgment. He said that he was

“seriously concerned that the exercise that is being undertaken has the capacity of severely undermining confidence in the criminal justice system in Northern Ireland at this most sensitive of times. Individual prosecution decisions have to be justifiable within the framework in which all prosecution decisions are reached and I am not persuaded that some unquantifiable benefit to the peace process can be a proper basis for a decision based on the public interest”.

Those concerns have not arisen retrospectively; there were concerns at the time about what the process would really mean and what it would be seen to mean to various people in Northern Ireland. That is why I welcome the inquiries into this situation.

[Bob Stewart]

My hon. Friend is niggling not in a bad way, but in a great way, on this process. If, as the Northern Ireland Secretary has just said, these letters are not “get out of jail” cards or amnesties, can we have all those who have received them put before a court of law?

[Nigel Mills]

I am grateful to my hon. Friend. One thing that needs to come out of the various inquiries is what the current legal status of the letters is in the light of the judgment and, if we are not happy with that legal status, how we can get to a legal position that we are happy with. It might be possible—I am not a lawyer; I do not know—for the Northern Ireland Office, the Secretary of State, the Attorney-General or the Minister of Justice in Northern Ireland to write to every recipient of such a letter and say, “Just to be clear, you can’t rely on these things to avoid prosecution if there’s evidence that justifies a prosecution.”

This all prompts the question: what was the point of the Historical Enquiries Team—now part of the Police Service of Northern Ireland—going back and re-investigating all those old cases if, I assume not to its knowledge, 200 or so people whom it might have been investigating as part of that process had a letter saying that past evidence would not be used to bring a prosecution? What was the point of that process?

[Lady Hermon]

Will the hon. Gentleman also comment on the odd timing of Mr Downey’s letter? We know from the judgment that it was signed off on 20 July 2007. I would briefly remind the House that in 2007 we had a successful First Minister, Ian Paisley senior, sitting with the Deputy First Minister, Martin McGuinness. Indeed, so good was their working relationship at the time—they took up office at the beginning of May 2007—that they were unfortunately nicknamed the “Chuckle Brothers”. However, the peace process in Northern Ireland was very secure in the early spring of 2007. Sinn Fein had come on to the policing board, and the IRA had decommissioned in 2005. What was there to save in the peace process by signing off Mr Downey’s letter in July 2007?

[Nigel Mills]

I suspect the hon. Lady knows the position far better than I, so there is not much need for me to add anything to what she has said.

To return to the status of the letters, if we do not like it, we need to discover the process for, if anything, restoring the position to what we think it should be—that they do not confer any kind of amnesty. If that requires a Bill to come before this House, perhaps we should do that. Given the devolution of justice, it might require something to go through the Assembly. I suspect that that might be a political challenge under the circumstances, but it is important that one of the outcomes of the inquiries is getting the legal position to where it should be, in the interests of fair and transparent justice for all the victims, on all sides.

I do not see how we can have a process that applies to only one community and not the security services. I think that was a grave mistake in entering into this process. Clearly it would have been better to have a full debate on the amnesty. We could all have had a vote on an amnesty—if it had not gone through, everyone should have been prosecuted where there was evidence; if it had gone through, it would be put behind people. That is clearly a debate that can be had now—it was had nearly a decade ago—but we have to take the assurances of all the Northern Ireland Members who are here for this debate that that is not something that would be welcomed in Northern Ireland. There is no desire for that amnesty.

I have no great knowledge of Northern Ireland law. However, having sat through some inquiries on the Select Committee on Northern Ireland that looked at the equalities position in Northern Ireland and the power of the law to prevent one community from being favoured over another, I cannot see any way under Northern Irish law that there could be a process with any legal effect that so obviously favoured one community over the other. If I was a loyalist who feared prosecution or who perhaps was being prosecuted, I might be arguing and saying, “Wait a minute, there’s been this process for one side that ought to have applied equally. I should have had the right to apply for that letter. If I had been given that letter, I could have my prosecution stayed.” Indeed, I believe that might be the subject of a case. If I was a member of the security services who might face prosecution, I would be making that exact point as well: “Wait a minute. Why wasn’t I given the chance to write in 2000 and ask if I was being investigated and whether there was any evidence against me? If I had received my letter, I could have had my prosecution stayed.”

We have created a mess, and not just for the recipients of these letters. We might not like the position they are in now, and in every prosecution of someone from the security services or the loyalist side, I am sure the first thing their lawyer will do is try to get their prosecution stayed on the grounds that the process did not apply equally to all members of the community. We have created a mess, and the actions of the then Prime Minister and Secretary of State—which, as is clear from the judgment, deliberately created a process that was designed to achieve that—are thoroughly shameful to British justice.

This is perhaps one of the bleakest episodes that we will ever see, because it has tarnished a peace process that did not need tarnishing—a process that is working and needs to work. It was heartening that the leader of the Democratic Unionist party was clear earlier that he did not want the institutions torn down—he did not see that as a solution or something that would give a political advantage—and that the institutions need to be made to work. Whatever the outcome of the inquiries, I hope that all the parties stick by that. The best way forward is for the process to advance and the institutions to get stronger, not to try to unravel them, no matter how shameful this case was.

13:49

[Mr Gregory Campbell (East Londonderry) (DUP)]

The Downey case unfortunately brings into sharp focus some of the problems that we have as a society in dealing with the past. As I said in an intervention, we are in the unfortunate position of knowing that if the Downey case had not materialised, we would still be oblivious to the pernicious influence of the administrative scheme in Northern Ireland.

Since the Downey case, those of us who were not in possession of knowledge of the scheme have been criticised by those in Sinn Fein, who say that had we been informed in the run-up to any agreement on the scheme, we would have opposed it, and that was part of the reason for our being kept in the dark. After that was seen to be somewhat obtuse and ludicrous, the same people in Sinn Fein said that we knew about the scheme all the time. They tried to quote various judgments that might have made some passing reference to a scheme that required to be carried out. However, there never was any reference in the public domain, and as my right hon. Friend the Member for Belfast North (Mr Dodds) said, anything that was put in the public domain, either in the House or outside, precluded a scheme of this nature. In fact, the right hon. Member for Neath (Mr Hain), the former Secretary of State, made it absolutely clear that there was no scheme. Full stop. Period.

[Lady Hermon]

May I draw the hon. Gentleman’s attention to the characteristic features that were mentioned by the right hon. Member for Neath (Mr Hain)? I am sorry that he is not here this afternoon, and I have explained why I understand he cannot be here. The Downey judgment, which is now in the public domain, contains written testimony submitted by the right hon. Gentleman, who said:

“The procedure was in a number of ways wholly unprecedented.”

Another characteristic was that

“the scheme progressed in a non public manner. Confidentiality was maintained for the individuals who submitted their names to the scheme; neither the names of the applicants nor the outcome of the applications were subjected to publicity.”

That is in the public domain, so for Sinn Fein to claim that we all knew about this and that we all have amnesia about it now is absolutely untrue and very insulting.

[Mr Campbell]

I thank the hon. Lady for that very enlightening quotation, which simply proves the point that what unites people right across Northern Ireland—with the exception of those who used to advocate violence and excuse or defend it—is that we are all rightly appalled at the secret nature of the scheme.

It has also been said—others have alluded to this—that members of the Policing Board were in some way briefed, but when we examine the record, we see that no one was ever briefed on such an administrative scheme. Of course, everyone knew that there was an outstanding issue with on-the-runs. There were those who said, “This matter must be resolved,” and those of us who were determined to say, “If it comes before Parliament and there is any possibility of us having some input into a resolution that means giving people immunity for what they have done in the past, we will resolutely oppose it.” That much is absolutely clear.

Others have mentioned the Eames-Bradley report, and the fact that one of its authors, Mr Bradley, said that people knew about the scheme. However, when we look into the matter, it is absolutely clear to us that, whoever may have been informed privately, no one was informed publicly. There was no public reference whatsoever to a scheme of this nature.

[Dr William McCrea (South Antrim) (DUP)]

It might be interesting to find out when Mr Bradley himself knew, and who told him.

[Mr Campbell]

Yes, indeed. I understand that Mr Bradley, who is the former vice-chairman of the Policing Board, said that the issue had been brought before the board. In fact, he had left the board at that stage.

Let me now turn to the question of intent, which is the very kernel of the issue. What was the intent of the administration that initiated the scheme, and what was the intent of the administration that continued it? What was the intent of those who were sending the letters, and what were the perception and understanding of the recipients? That is the key to the entire matter.

It is abundantly clear to everyone that the intent of the letters was to reassure people who might have believed—for a reason that we all understand—that there were circumstances in which, if they either came back to Northern Ireland or were approached by an officer of the law in another jurisdiction in which they happened to be, they could at some point in the future be made accountable for crimes in which they were suspected of having been involved. It is clear that they believed that the letters made them immune from that, and believed that they would be protected or sheltered in some way from the investigation of actions with which they had been associated in the past. For that very reason, Sinn Fein was quite happy to be the messenger of the tidings that would have been brought to the recipients of those letters.

It has been said—this was mentioned by the hon. Member for Belfast East (Naomi Long), who has had to leave the Chamber—that when news of the Downey case broke, disillusionment in some sections of the Unionist community became more apparent. I have a very different view. All that the Downey case did was crystallise some of the disillusionment that had been apparent for a number of years in sections of the Unionist community, and bring it into public focus. Unfortunately, we now have to try to repair the damage that the Downey judgment has done, along with a series of other issues.

The underlying principle is that those who supported terror in the past have used the potential of a return to violence as a bargaining chip, and not for the first time. Many of us believe that during the negotiations leading to and following the Belfast agreement, and, undoubtedly, during the negotiations relating to the administrative scheme, there was always the spectre—the prospect—that if this was not agreed to, violence could, unfortunately, return. Our view is very clear, and it is that we cannot be held to ransom by people who make threats or insinuations that bad times could return.

[Mr Dodds]

My hon. Friend has made an important point. May I reinforce it by asking whether he recalls, as I do, that at the time of the negotiations on the devolution of police and justice powers to Northern Ireland, when certain issues still needed to be cleared up and properly debated, some people—including Members of this House who, at that time, held ministerial office—told us that if we did not devolve those powers, there would be violence on the streets and the strength of the dissidents would increase? Even after the devolution of the powers, we have problems with dissident terrorists, so that is a bogus argument.

[Mr Campbell]

That is another instance of the use of a threat that will continue to be used. In fact, just this week we heard a prominent member of Sinn Fein say that there could be a crisis in the making. Well, we have had seven years of uninterrupted devolved government, and notwithstanding all the difficulties that have arisen during those seven years, there has not been a crisis. There may be a physical revolving door at the entrance to Stormont, but there has not been a revolving door in terms of devolution. We have survived many of these mini-crises and problems, some of them invented and some real.

Let us focus on what will happen in the near future. I have no difficulty whatsoever in saying that the current devolution process in Northern Ireland is sufficiently robust to withstand any prosecution of any member of Sinn Fein, however senior, if it can be demonstrated that that person has been guilty of involvement in terrorist acts in the past. I am currently trying to establish whether that is the case, as it may well be—and if it is the case, it would be an act of cowardice, of political expediency, if anyone were to say “We cannot proceed with that prosecution because doing so might jeopardise the political process in Northern Ireland.”

As I have said, we have had seven years of uninterrupted devolution, and hopefully it will continue. I have been part of the process for those seven years, and I believe that we must work to improve it, but we must not allow it to be held to ransom by those who want to make progress in terms of further concessions to the throwback period during which many of them were involved in violence. They want to expunge their previous involvement from the record, and that must not and cannot be allowed to happen.

Today, thankfully, we have had an opportunity that has been denied to us in the past. The light of truth is now being brought to bear on the administrative scheme, but it is unfortunate that it is being brought to bear so belatedly. Had it been brought to bear at the time of the scheme’s initiation, the reality and the outcome might have been very different.

14:08

[Sir Gerald Howarth (Aldershot) (Con)]

I am pleased to be able to take part in the debate, and congratulate all who were responsible on arranging it. This issue is important and incredibly sensitive, and we should all approach it with care and consideration. The tenor of the debate has been very much in that spirit so far, and I warmly welcome it.

Let me associate myself particularly with the remarks addressed by my hon. Friend the Member for Amber Valley (Nigel Mills) to the families of those who were murdered in cold blood in Hyde park on that terrible day. That was one of a number of outrageous attacks on Britain’s armed forces, who did their level best for 38 years— under Operation Banner, the longest military operation in British history—to bring peace to Northern Ireland. I pay tribute to my right hon. and gallant Friend the Member for South Leicestershire (Mr Robathan) —who was here a moment ago—and to my hon. and gallant Friend the Member for Beckenham (Bob Stewart), who was also present earlier. During the troubles, 3,500 people were killed, and about 1,000 of them were members of Her Majesty’s armed forces.

I will touch only briefly on the current case, as I want to concentrate on its implications. Having reflected since this case hit the headlines, I think that there probably had to be a scheme of some sort to try to deal with the on-the-runs, and there was inevitably going to be a messy outcome. I have listened carefully to the remarks of the right hon. Member for Belfast North (Mr Dodds) and others, but I note that in a written answer on 1 July 2002 Mr Quentin Davies—then a Conservative Member, but now, of course, on the other side having taken the Labour Whip and thereby getting a passport to the other place—asked the Secretary of State for Northern Ireland

“if he will make a statement on his plans to inform persons suspected of involvement in terrorist activities that their cases will not be pursued.”

Dr John Reid, now Lord Reid, answered:

“We are still considering how best to implement the proposals which we and the Irish Government made in relation to this following the Weston Park talks.”—[Official Report, 1 July 2002; Vol. 388, c. 136W.]

He answered another question as follows:

“As a result of inquiries received and referred to the prosecuting authorities and the police, 32 individuals have been informed over the past two years that they are not wanted for arrest in relation to terrorist offences. —[Official Report, 1 July 2002; Vol. 388, c. 137W.]

That is by no means an open statement explaining a specific scheme, but clearly it did indicate that something was afoot. I do not think one can argue that Parliament was not informed; it was, through the medium of the written answer to a parliamentary question. We are busy people, however, and we face a torrent of e-mails and information from all sides, and I think it is unfortunate that it was not possible to make a more explicit statement to the House of Commons and Parliament more generally about what the Government were planning to do.

It is clearly the case that, as the hon. Member for Belfast East (Naomi Long) said, a lot of people have had to swallow hard and hold their noses about some of the decisions that were made, and she mentioned how hard she found it to accept the early release scheme, but she also made another point: that this scheme, which was not fully explained to Parliament but clearly was in evidence, arose out of discussions between the British Government and the Irish Government. She also made the point that there appears to have been no such arrangement in respect of anyone other than those suspected of republican terrorism. That raises fundamental questions that I am sure my right hon. Friend the Secretary of State for Northern Ireland will want to address. I am encouraged, however, by what she said at the Dispatch Box earlier in our debate, and she has put in her written ministerial statements that these letters were not intended to be an indemnity; they were not intended to be “get out of jail free” cards. I hope that message will be clearly got through to all those involved in this.

As I am sure the House recognises, as the Member of Parliament for the home of the British Army, Aldershot, which also formerly was for 50 years the home of the Parachute Regiment, I have a special interest in these matters, and it is on behalf of those of my constituents who were in Londonderry on that tragic day of 30 January 1972 that I seek to speak. At this point I would like to pay tribute to the former Secretary of State for Northern Ireland, the right hon. Member for St Helens South and Whiston (Mr Woodward), who is present today. I took a delegation of former soldiers to see him when he was Secretary of State and they and I could not have been more courteously and properly received by him. That is not to say he took their side, but it is to say that I thought he was extremely professional and extremely fair, and I thank him very much for that. I think this is the first opportunity I have had to say that publicly, although I did have the opportunity of saying it to him over a cup of coffee this morning.

We are considering today the implications of the John Downey case, however, as much as who knew what and when, and what the letters mean and so forth. For me the implications are that that raises again the issue of the treatment of the soldiers who were in Londonderry on 30 January 1972. I understand that that has been exacerbated by a decision taken by the Police Service of Northern Ireland to erect posters in Londonderry—I have not been there, but I am told this is the case—appealing for witnesses to come forward to provide evidence about that tragedy. We are talking about an event that took place 42 years ago, and it is astonishing for the PSNI to be appealing for witnesses now, not just 42 years later, but, indeed, four years after the Prime Minister made that memorable statement early in his premiership to the House in June 2010.

I have constituents who are now in their 70s and 80s who were there. They had to go through 12 years of the Saville inquiry, costing £200 million, and they had hoped that the Saville inquiry would draw a line under this, but now they find that not only is the matter not concluded, but the police deem it their business to put up these posters inviting people to give evidence. What on earth have they been doing over the past four years—leave aside the previous 38 years—to obtain that evidence?

The Prime Minister made it clear that the prosecuting authorities in Northern Ireland are entirely independent of any political process. Therefore, this is entirely a matter for the PSNI. It is astonishing that it feels the need to do this now, and I say that to make this point, too: it is the PSNI who are responsible for the whole disaster of the John Downey case in the first place. It was they who, in the vernacular, screwed up and failed to provide the Northern Ireland Office with information about what the Metropolitan police were looking for. My constituents are now invited to have confidence in an inquiry carried out by people who completely screwed up in the John Downey case.

[Sammy Wilson]

When the hon. Gentleman makes these allegations, perhaps he should bear in mind who issued these letters, who initiated the process, and which Government continued the process. Indeed, his own Secretary of State has issued 43 of these letters since the current Government came to office. If there has been a screw-up, surely it was a screw-up on behalf of the politicians, who continued to operate what they knew was a secret and dirty deal.

[Sir Gerald Howarth]

I understand the hon. Gentleman’s point, and, indeed, I understand the passion with which he makes it, and I spoke on BBC Radio Foyle saying I thought there was a covert deal. I merely refer to the written answers in 2002 to illustrate that there was evidence. I did not know about it even though I was a shadow Defence Minister at the time, but there was evidence that these matters were being discussed. Whether or not they should have been discussed is another matter. What is clear—this is where I agree with the hon. Gentleman—is that this arrangement appears to have been, and continues to be, entirely partial. In other words, it applies only to those believed to be responsible for republican terrorism, and a legitimate matter to which the Secretary of State needs to turn her attention is whether this arrangement, to which this Government have also clearly been party, is fit for purpose, in so far as it is partial.

I wish to continue my point, because I am conscious that lots of hon. Members wish to speak and I wish to discuss a particular aspect: the case of my constituents who were serving the Crown. Whatever the verdict of the Saville inquiry, these men were doing their level best to try to hold the ring to keep the peace, and on that day there was a distinction between them and the rest of the community—they were in the uniform of Her Majesty’s armed forces. They were clearly visible and they were identifiable. They faced a crowd and were confronted by armed men lurking in the shadows, indistinguishable from the civilian crowd. It is hugely important to differentiate between the cold-blooded, premeditated murder of the kind we saw so many times conducted by republican terrorists and loyalist terrorists, and the heat-of-the-battle mistakes made by members of Her Majesty’s armed forces. To the extent that we sent them there, we cannot absolve ourselves entirely of responsibility in these matters.

So I do make a distinction and I do pose the question to this House: are we to accept that these men who were doing their best—I accept the verdict of the Saville inquiry, difficult though I find it, having spoken to many of these guys—and their behaviour should be equated with that of Ivor Bell, who was accused a few days ago of aiding and abetting in the cold-blooded murder of Jean McConville, a mother of 10 and one of the disappeared? I submit that there is a substantial distinction between these crimes, and between these men and whoever was responsible for placing the bomb in Hyde park or the bombs in Guildford, Birmingham and elsewhere.

I lost a very close friend, murdered on his doorstep in north London—Ross McWhirter, of the “Guinness Book of Records”. He was shot down on his doorstep and lay dying in the arms of his wife. We on this side have lost a number of our colleagues, murdered by the IRA—in cold blood, by people indistinguishable from the rest of the community. So we are not untouched by these matters, but I do agree with everyone that we need to move forward.

Before concluding, I wish to contrast what I have just said about the cold-blooded, premeditated murders to which the terrorists were party and what the Prime Minister said in his statement:

“Those looking for premeditation, those looking for a plan, those even looking for a conspiracy involving senior politicians or senior members of the armed forces, will not find it in this report.”—[Official Report, 15 June 2010; Vol. 511, c. 740.]

So whatever the mistakes—the failures—identified by Saville in his report on the activities of the Paras in Londonderry on 30 January 1972, there was no premeditation; this happened in the heat of battle. It is important that we recognise that we have a duty to the soldiers we sent there, and I think there is a case that natural justice needs to be brought to play in this matter. Surely it is not fair, 42 years on, nearly half a century later, that these men, who were doing their best, along with the 250,000 others who served in Northern Ireland, should still have this question mark hovering over them in the evening of their lives—

[Bob Stewart]

In their old age.

[Sir Gerald Howarth]

In their old age, as my hon. and gallant Friend says.

I remind the House that we suffered in Aldershot, for on 22 February 1972 an IRA attack killed six civilians and one Roman Catholic padre, Padre Weston. It is true that one man was convicted—he served four years in prison and died in prison—but others were involved in that and they have never been brought to justice. I have not called for a public inquiry into what happened in Aldershot then and the bombing of the mess of the 16th Parachute Brigade, but if what is happening continues, there will be pressure on me to say, “Okay we had that inquiry into the events of 30 January 1972 in Londonderry, so what about having a public inquiry into what happened in Aldershot?” I do not think that would serve a purpose. So I do believe that, as my hon. Friend the Member for Tewkesbury (Mr Robertson) and the right hon. Member for Belfast North said, things in Northern Ireland have improved—its economy is growing and there is peace—and it is important that we look to the future.

Let me close by saying that I agree with the Prime Minister that we need to

“come together to close this painful chapter on Northern Ireland's troubled past.”—[Official Report, 15 June 2010; Vol. 511, c. 742.]

Let us do that and, in order to do that, I would like the House to consider the point that those who served as servants of the Crown in Northern Ireland do deserve to live out their days without having the threat of prosecution lingering over them.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. May I say to hon. Members that the length of the speeches thus far means that if everybody makes the same length of speech, some Members will be disappointed in this debate? Rather than set a time limit I am going to ask hon. Members to speak for about 10 minutes. This will not be on the clock; I am asking Members to look at the clock when they start speaking and speak for about 10 minutes—if they take 11 minutes, there is no great panic. In that way, everybody will be able to get in. If people take longer, I will, regrettably, need to have a time limit. I think we can all co-operate and make sure that everybody gets the time they need to make their contribution to this afternoon’s debate. That gives us not a huge amount of time for the wind-ups, but sufficient, I hope, to deal with the points that are being made.

14:28

[Mark Durkan (Foyle) (SDLP)]

Thank you, Madam Deputy Speaker, and I join others in thanking the Backbench Business Committee for acceding to the request that I tabled for this debate. It was of course tabled by the complement of sitting MPs for Northern Ireland and supported by the Chair of the Select Committee on Northern Ireland Affairs.

The parties that sought this debate interpret some of the issues in the background differently, and perhaps will have some differences of emphasis and interpretation in terms of the implications. What absolutely unites all of us was our frustration at how we all appeared to be both insulted and implicated by the terms in which some people responded to this judgment and the fact of it. I understand why he cannot be here today, but I include in that the right hon. Member for Neath (Mr Hain). The rest of us were not all in on this in the way he and, sometimes, Sinn Fein has implied. We have seen the adoption of contradictory positions. On the one hand, Sinn Fein has said that everyone knew all about this, and that this is an entirely confected concern now and, on the other hand, it has said that it was out of sensitivity to other people that it was secret and had to be done in that way.

When one reads the whole judgment, it is absolutely clear how long and persistent Sinn Fein was in pursuit of the case for a scheme. It is also clear that a scheme was running from pretty early on. It went through various different mutations, but it was never enough. There was always the need for something more and for something else. What comes through is that in all the negotiations between Sinn Fein and the British and Irish Governments, Sinn Fein was usually negotiating for itself and its people. It was never about the broad interests of the people or the agreement and its implementation. It was never about the Irish democratic interest or about the interests of the nationalist community in Northern Ireland; it was about Sinn Fein and its people. That is what comes through consistently in the evidence.

Contrary to the way in which the media have tended to treat this issue since the court case, it is also clear that the court rested most of its judgment not so much on the content of the letter but on the import of the letter based on the evidence provided in the affidavits from, among others, the right hon. Member for Neath and Jonathan Powell. The two key people who gave evidence to the court that helped to bring about the judgment then condemned and criticised the rest of us, in the media and in other outpourings, for our reaction to it, for questioning its implications and for raising issues in relation to the background.

Let us be clear: the right hon. Gentleman has rested a lot on the fact that it was publicly known that there was a Bill in 2005. Yes, there was a Bill in 2005. The Northern Ireland (Offences) Bill—misnamed the “on-the-runs” Bill—went far beyond the issue of on-the-runs. It was not just that it provided for a scheme that we now know about, except that it included loyalists and members of the security forces. It went far further and deeper than that. It was a deeply offensive and insulting scheme that used terms such as “special prosecution” to dress up the fact that people were basically going through a process for immunity—they did not even have to go to court to get that immunity; and they did not even have to apply for the certificate themselves. Of course, victims did not have to know about it. However, if something arose in relation to any case and someone wanted to compel a witness to appear, the witness had to appear. The person who was benefiting from the certificate would not have to appear. They would not have to spend a day in court or look a victim in the eye, but a victim who fundamentally disapproved of this whole bizarre, obscure and sick process for which the previous Government were ready to legislate in 2005 would have been compelled to appear on penalty of contempt. That is how strange it was.

We also must remember that the big scheme of 2005—the general scheme of amnesty—with its architecture of special tribunals, appeals commissioners and special prosecutors was never cited at the time by the Democratic Unionist party as a deal breaker on the way to what everyone knew was going to be an agreement that would see a restoration of devolution with Sinn Fein and the DUP in partnership in the Office of First Minister and Deputy First Minister. We all knew in 2005 that we were on the way to that. There had been the abortive comprehensive agreement in December 2004. We all knew that the talks were ongoing and that they involved the British and Irish Governments and Sinn Fein and the DUP. When this Bill appeared, people were rightly aghast, but the DUP did not make it a deal breaker. Other issues were deal breakers, such as how the First Minister and Deputy First Minister were to be appointed and about what was going to happen with north-south reviews. This scheme, the worst one that the British Government were prepared to legislate for, was not in itself a deal breaker. That is the point that Jonathan Powell might have been referring to in his book. Whether it is accurate to say that a letter had been sent to Ian Paisley, I do not know. I know that there are many other things in Jonathan Powell’s book that are not accurate. But I do know from when I was strongly opposing the Bill in Committee that the then DUP MP for East Belfast told me that he did not understand why I was investing so much political capital in trying to stop a Bill that was a done deal.

The DUP’s concern was to ensure that everyone knew that the deal was done under David Trimble, so that they could hang it around his neck. The constant misleading reference to Weston Park, which was made at the time of that Bill and in the very court case that led to the Downey judgment, has continued because the Government of the day contrived to say that everybody was in on it and that it was agreed by all parties at Weston Park. It was not agreed by all parties at Weston Park. First, all parties were not around the one table. Secondly, there was no agreement at Weston Park. The different parties were being talked to by the two Governments about different things. It was no way to run a process, and we loudly complained about it at the time. We said that there would be more side deals, sub deals and shabby and secret deals, which would end up corrupting the process. Those chickens have now come home to roost. It is not the case that this was agreed at Weston Park by us. When the two Governments published a paper after Weston Park that included reference to the on-the-runs issue, we made it clear that it was not part of the agreement and that we understood that people were making a case around an anomaly. We did not see it as part of the agreement as such.

Let us look at some of the arguments that have been made since this has become public. On the one hand, we hear from Government and others that these letters are not an amnesty; the right hon. Member for Neath has told us that the letters are not an amnesty. Yet he goes on to say that because these letters are now known about, there should be a general amnesty, including for the soldiers, loyalists and others who might possibly face charges in relation to Bloody Sunday. It is strange to say that the scheme is not an amnesty, but if it becomes publicly known then there should be an amnesty for everyone else.

If people did receive indications from the police and prosecuting authorities that there were no grounds for pursuing them and that there was no live interest in any possible case against them, I see that as entirely fair. If, however, as with the soldiers on Bloody Sunday, there is an inquiry on the basis of evidence, that has to take its course, just as it must for anybody else. I share people’s disgust at the way in which this scheme has been conducted—where it has been worked through as a Shinners list. One party goes to the police with a list of names and the list seems to grow all the time. When we first heard about the on-the-run scheme, we were told that it involved only a few dozen people. Now we know that it is many, many more. We said that there would be many more, but were told by Tony Blair and others that that was wrong. Sinn Fein, which says that it believes in an Ireland of equals, has complained about political policing. It has criticised some investigations into offences since 1998 and has said that those investigations amounted to political policing, even though they were driven by evidence from victims.

If anything is political policing it is when the police end up providing a scheme on a parti pris basis, with one political party for a certain political motive, just because that has been brokered or directed by the Government of the day, and that is what has happened in this instance. I do not go along with the hon. Member for Amber Valley (Nigel Mills), who I know takes a deep interest in our affairs, in saying that we now need to know the names of everybody who received letters. The fact is that the people who got letters were those whose names were not known to the police; they were not actually being sought in any way. Some people took themselves on the run for different reasons. They could have been supergrasses who thought that they would be at more risk. Some might have felt that they were at risk of being under duress to turn supergrass themselves on the very limited information that they might have had. Many people might have had their own reason for taking themselves outside the jurisdiction.

We never had an objection to a scheme that was about notifying people who were outside the jurisdiction that they could return without being in peril of arrest. When we said that and when we opposed the 2005 Bill, we were told by the then Government that that could not be done and it would not be enough, and Sinn Fein was saying the same.

[Lady Hermon]

May I press the hon. Gentleman a little further to clarify his position and that of his party? Victims’ families feel extremely aggrieved by the Downey judgment and the fact that they now know that suspected murderers, perhaps of their loved ones, have been given an administrative letter. If members of those families come forward and ask the Secretary of State to confirm whether someone who is alleged to have been involved in the murder of their loved ones has received one of the administrative letters, surely to goodness the hon. Gentleman and his colleagues would support the release of that information to those families.

[Mark Durkan]

I want all families to get as much information as they possibly can. The Government do not seem to be sure how many letters they sent and are now having to refer to Sinn Fein to find out who might have got letters, so I am not sure how reliable that would be.

The answer to this added grievance for those who suffered grief during the troubles might lie in ensuring that the scandal surrounding the scheme does not damage the Haass process and its prospects for dealing with some of the outstanding issues about the past and making good the difficulties with the mechanisms for dealing with individual cases, including the police ombudsman’s powers on past cases and the difficulties with the Historical Enquiries Team.

That work should be supplemented with and complemented by the hugely important thematics arm provided for in the Haass proposals. It is our view, which we raised during the Haass talks, that we need to address not only what happened during the troubles but how the past has been treated since the troubles. At times, there has been dereliction and a collective failure in the process, because we have not addressed promises made to victims and pledges made about the past in the Good Friday agreement.

Some of us tried in talks after talks to say that we should deal with the promises made to victims and the past, but, for instance, in Hillsborough 2003, when the Social Democratic and Labour party and Alliance party were arguing for a victims’ forum, partly with an eye towards considering what could be done about the past, that was vetoed because the Ulster Unionist party and Sinn Fein did not want it. Of course, at Hillsborough 2003 the two Governments produced yet another statement on the on-the-runs, saying that they would deal with the situation through a scheme that would apply to all scheduled offences. That was why it was pretty dishonest of Sinn Fein to then say that it was shocked to discover that the 2005 Bill included everybody and anybody. That was clear from day one of the Bill, but it took it until December—weeks into the process—to withdraw its support. The opposition that some of us voiced to the Hain-Adams Bill helped to mobilise victims’ groups to put pressure on Sinn Fein to withdraw its support. The Government nevertheless persisted in coming up with a bespoke scheme for Sinn Fein and this administrative scheme, which they kept relatively private.

I know that you gave us some advice on time limits, Madam Deputy Speaker, but as I led the bid for this debate I want to make some points in anticipation of some of the things that I might find myself asked by the Select Committee on Northern Ireland Affairs.

In some of the talks subsequent to the withdrawal of the Bill, such as those at St Andrews and, latterly, those that led to the devolution of justice and policing, we asked, by the by, what was happening about the on-the-runs as that had clearly been a big issue in all the previous declarations and we did not seem to be hearing about it at those talks. We were quietly told that it was not an issue and that we should forget about it.

I am particularly sorry that we do not have the benefit of the presence of Paul Goggins today, a Minister who served with absolute distinction and aplomb in the course of all this. He would have had insights to reflect on from that period. I know from conversations I had with him at St Andrews and in other places that there seemed to be a concern that the SDLP would create problems for Sinn Fein because our objections to what was being done in relation to MI5 were too vocal—because we got too outside of ourselves—and that if we asked too much about the on-the-runs, there was a danger we would spook things for the Democratic Unionist party and create difficulties. It is not our business to create difficulties for anybody; we want the process to move forward—but it must move forward on the basis of ethics and morality.

The right hon. Member for Neath has sought to say a lot about a lot of us in this regard. He says that we must move on and that there needs to be a wider process of amnesty. He will know full well that in South Africa a key piece of language used in the law that established the Truth and Reconciliation Commission was the phrase

“to enable South Africans to come to terms with their past on a morally accepted basis and to advance the cause of reconciliation.”

That is what we have to do. The Bill that the previous Government tried to introduce in 2005 was not a morally accepted basis for dealing with the past, nor is this scheme. The Haass proposals offer us a morally acceptable basis for dealing with the past, and one thing that should be clear is that, whatever else there is disagreement over in the text of the proposals, one point on which there is no disagreement is the part that repudiates amnesty as a basis for dealing with the past. The right hon. Gentleman has also commended Eames-Bradley to us, saying we should calm down and get back to it and to Haass. They both say that amnesty is no basis for our dealing with the past.

We are told that the letters are not an amnesty. We are also told that everybody knew about them, yet one of the people who tells us that, Jonathan Powell, has also said that of course the letters were private as they were nobody’s business but that of the police and those who received them. Nobody’s business. The victims and the wider democratic public have no business in them whatsoever. The idea is that a private scheme can produce letters that will then be someone’s private property—but they can then be produced in a court and have the effect that the letter appeared to have in this case. That effect was down not to any legal strength or standing—we are told that the letter was a mistake—but to the import it was given by other evidence. The suggestion was not so much that the peace process might fall apart if the prosecution proceeded, as they were perhaps too subtle for that, but that the state could never be trusted again by anybody in any negotiation or any process if the mistaken word of an official under such a shaky scheme was not seen to be upheld.

The imperative was that the word of the Government through this mistaken letter from an official had to be seen to be upheld at all costs. Many words have been given out in this process that have not been upheld. The promises made to victims in the Good Friday agreement have not been upheld. The commitment of the British Government to legislate for a Bill of Rights has not been upheld. The solemn commitment at Saint Andrews about an Irish language Act and so on have not been upheld. Clear commitments were made that if Judge Cory recommended public inquiries, including in the case of Patrick Finucane, there would be a public inquiry, but they were completely absconded from—mind you, that has no implications for anybody as it is just about the broad democratic process. Those were merely commitments made in Parliament.

In relation to the points made by the hon. Member for Aldershot (Sir Gerald Howarth), we should remember that this House was told on the day of the Saville report that any evidence that was there to be pursued by the police and considered by the prosecution authorities would have to be so pursued and so considered and that the process would have to take its course from there. That was a solemn commitment and a solemn pledge from which, unfortunately, the right hon. Member for Neath and the hon. Member for Aldershot seem to want the Government to abscond. There are all sorts of double standards here; it is not just Sinn Fein who are guilty of double standards in this whole sordid process.

14:39

[Bob Stewart (Beckenham) (Con)]

Today, we are talking about events in London on Tuesday 20 July 1982. In particular, we are debating the consequences of an explosion—about 20 to 25 lbs of high explosive was packed with nails to cause maximum casualties, and hidden inside a Morris Marina car—in South Carriage drive near Hyde park. It was placed there by the so-called “England department” of the Irish Republican Army, and the bomb killed four members of the Blues and Royals as they rode to change the guard on Horse Guards.

Apparently, John Downey, who was arrested at Gatwick in May last year, was a leading operative of the so-called “England department” of the IRA. Yet he felt he was immune from prosecution, because he had in his possession a letter saying that he was not wanted by the Police Service of Northern Ireland, which appears to have been issued as part of the bargaining between the authorities and terrorists during the Northern Ireland peace process. When the letter was issued to Downey, the authorities either missed the fact that Downey was wanted on a 20-year arrest warrant for his alleged part in the July 1982 Hyde park bomb, or they decided to ignore the fact.

I totally understand why so many people are utterly dismayed by the fact that a suspect for the murders of four soldiers by IRA terrorists has apparently been granted immunity from prosecution. To my mind, it was an extraordinary mistake by both politicians and police in Northern Ireland. All of us here today in Parliament should send a clear signal that murder is murder and those responsible for it should face the full rigour of the law.

I remember 20 July 1982 extremely well. At the time, I was a company commander serving in Northern Ireland; unknowingly, I was also only six months away from being directly involved in a similar atrocity at Ballykelly, where I personally lost six soldiers killed by terrorists on 6 December 1982. It has had a tremendous impact on me.

In the Hyde park bombing, there were not just four deaths, but 31 other people were wounded. Seven horses were killed and several others hurt. Some older Members may remember the heroic Blues and Royals horse called Sefton, who became something of a national hero for making such a great recovery after the incident.

To their immortal memory, like my friend the right hon. Member for Belfast North (Mr Dodds), I remind the House of the names of our men who were killed in this atrocious barbarism.

Lieutenant Anthony Daly was aged 23 and had been married only 27 days before he was murdered. I gather his mother was waiting at Horse Guards to proudly watch her son carry out his duty as escort commander. Corporal Roy Bright, aged 36, was carrying the standard. A senior soldier, Roy did not die at the scene but in hospital three days later. Trooper Simon Tipper, aged 19, died on the street. He had been married less than a month and must have been looking forward to a great life with his new bride. Finally, I must name Lance Corporal Jeffrey Young, who was just a week before his 20th birthday. With his wife Judith, he already had two children, who will never remember their heroic father. He died in hospital a day after the attack.

Neither must we forget—and we have not raised this matter—that the same IRA team, which must have consisted of several people, was also responsible for a second explosion that day. It killed seven Royal Green Jackets bandsmen in Regent’s park a few hours later. It would be remiss of me not to at least name them, too. Their names, without rank, because it does not matter any more, were Graham Barker, Robert Livingstone, John McKnight, John Heritage, George Mesure, Keith Powell and Laurence Smith. May their souls also rest in peace.

I gather that Mr Downey has at some stage raised horses, which I find somewhat ironic, and I would dearly like to see him brought to trial in whatever way we can. However, I accept that may seem unlikely, but in the meantime, as I have mentioned, there were others in his team. One other person has also been identified and taken to court, but there must have been others in the team that carried out this attack.

Everyone in this Chamber without exception will agree with this: let all who have committed criminal acts in Northern Ireland sleep unsoundly. I very much hope that one day the authorities will knock on their door, wherever they are, and bring them to book.

14:55

[David Simpson (Upper Bann) (DUP)]

It is good to follow the hon. Member for Beckenham (Bob Stewart). I agree with everything he has said, and it was said with great passion.

The day that the Downey case fell in the courts in the Old Bailey was a very sad day indeed for British justice. Not only was a terrorist released on to the streets again, but the families who had lost loved ones were left with no recourse, because the Government have said there is no course of appeal, and the old wounds were all opened up again.

The exposure of the on-the-runs—or OTRs—administrative scheme and royal prerogatives was a stab in the heart of our British values of justice. The entire scheme was based upon a lie. Its creators claim that the early release scheme in the 1998 Good Friday agreement created an anomaly for those who were on the run. It did no such thing.

There were many fundamental problems with the Belfast agreement, and that is why the Democratic Unionist party rejected it and negotiated the new St Andrews agreement. However, it did have a clear mechanism for dealing with pre-1998 offences. A person could be brought before the court, receive a fair trial and if convicted, serve time in jail. The sentence would have been a mere two years, thanks to the likes of the Ulster Unionist party and the Progressive Unionist party, who signed the 1998 pact, but victims would at least have had their day in court and an opportunity for justice to be done.

This conspiracy drew in a range of our institutions by acts of commission and omission. Parliament was bypassed and misled. The legislation for OTRs at that stage was withdrawn because it was unwanted, both by Parliament and by the public. It was rejected because it was repugnant, but at least it offered some level of oversight and licensing to prevent reoffending. The scheme that the Government and the Northern Ireland Office came up with did none of that. Their contempt for Parliament included deliberately misleading it, and all the political parties except Sinn Fein, on how they were dealing with the OTRs.

[Lady Hermon]

Will the hon. Gentleman take this opportunity to confirm that although all the parties objected to the obnoxious Northern Ireland (Offences) Bill, the Government in power at the time would have pushed it through this House had it not been for Sinn Fein belatedly registering its opposition to it? It was dropped because of Sinn Fein’s opposition, not the overwhelming opposition of the general public, RUC widows and others.

[David Simpson]

The hon. Lady is absolutely right.

No unionist would be surprised by the role the Northern Ireland Office at the time had in the design and implementation of the scheme. At the time, its pandering to republicanism and its contempt for Unionism and its representatives were a permanent feature of direct rule. However, it drew the Police Service of Northern Ireland into its dirty deals as well. In a question to the assistant chief constable—I believe it was Assistant Chief Constable Harris—my colleague on the Policing Board, Mr Thomas Buchanan, asked about the OTRs. The PSNI’s response was this:

“At this moment in time, there are no on the runs we are aware of residing in Northern Ireland, and if there was information to suggest there were individuals who are wanted for crime living within this jurisdiction, then we would be very anxious to learn of that.”

That was in 2010. That gave the impression that there was a desire to catch criminals, but the scheme was doing exactly the opposite.

[Ian Paisley (North Antrim) (DUP)]

My hon. Friend knows that the former deputy chair of the Policing Board, Mr Bradley, has publicly stated that the board was briefed about the on-the-runs and knew all about it. Will my hon. Friend go further today and dismiss that as a fantasy?

[David Simpson]

Yes, I certainly will. It was an absolute fantasy, as the evidence that has come from Policing Board representatives over the past few weeks confirms.

At the same time the OTR scheme was running, the PSNI established the Historical Enquiries Team. It was supposed to be a systematic approach to give every victim the opportunity for justice. The OTR scheme now draws a long shadow over all the HET’s work. Some will conclude that as one section of the PSNI tried to put people before a court, another was helping them to avoid it.

I will not speak for long, because I know that many other Members wish to speak.

[Lady Hermon]

Will the hon. Gentleman allow me to intervene?

[David Simpson]

I apologise to the hon. Lady, but I want to move on and so will not give way, because many Members wish to speak.

The constituency I represent, as those who know Northern Ireland will understand, has a big contingent of security force personnel, both past and present. I know from my discussions with those individuals and organisations that they are totally disgusted by this scheme. Their attitude is that it took courage to put on the uniform of the Crown forces to defend the people and Northern Ireland, and if someone in their organisations stepped out of line, the full rigour of the law was brought upon them, and rightly so, they emphasised. But there are people who have been on the run and who went away on their holidays, and they were on the run because they were conscious of what they had done, and they got letters to give them reprieve. There is one law for one organisation and one law for another. It is despicable. It has opened a can of worms.

My last point is about the royal prerogatives. It would be interesting to discover who has received the royal prerogatives. Has Mr McGuinness? Has Mr Adams? Has Mr Kelly? I will go further. As the House knows, and as I have mentioned before, a number of members of my family were assassinated by the IRA. Have some of the people who carried out those murders received the royal prerogatives? It is disgusting. It is wrong. The victims out there are suffering. We promised them justice, but a lot of them will never see it. I am glad that both inquiries have now opened. We look forward to the Select Committee inquiry, which will go into every nook and cranny. We will, at some stage, discover who initiated this and when. We will discover who allowed this to happen.

15:04

[Dr William McCrea (South Antrim) (DUP)]

The revelation that has emerged about the so-called on-the-runs administrative scheme demonstrates that the previous Government committed a monstrous betrayal of the rights of many of their own citizens. They actively conspired with Sinn Fein, the political wing of the Provisional IRA, to deny hundreds of UK citizens the prospect of ever seeing justice for their relatives who had been murdered or injured as part of the terrorist campaign waged by the IRA in Northern Ireland and in Great Britain.

If it achieved nothing else, the collapse of the trial of Mr John Downey at least brought into the open the nefarious plot that our own Government had a hand in. It is now time to establish the full and complete truth about this scheme—who started it, who knew about it, and what other agencies were implicated in it. There are now no fewer than four separate inquiries of different natures taking place into this scheme. I welcome each and every one and believe that they can complement each other.

Before we progress to some of the details about this issue, it is worth looking at first principles. When they were elected to office in 1997, the Labour Government headed by Tony Blair vowed to be the most open and transparent Government that the country had ever had. To that end, they introduced, among other things, the Freedom of Information Act 2000, which was designed to ensure that, within the limits of data protection and national security, people would be able to scrutinise the work of those who governed them. It is contrary to that commitment to openness and transparency that no Government Minister ever saw fit to come to this House to inform Members of a dirty deal that was going on with Sinn Fein-IRA. It is at variance with the other actions of previous Governments in opening up Government to public accountability that they would keep such an important matter hidden from the scrutiny not only of this House but of Her Majesty’s Opposition and all the Northern Ireland parties—except, of course, Sinn Fein.

This raises an important political point. In Northern Ireland, progress is dependent on the mutual consent of both the major traditions that exist within our community. Despite the fact that there has been a consistent and vast majority in support of the Union throughout the duration of the troubles in Northern Ireland, Unionists recognise the necessity of finding accommodation with those who hold to the minority viewpoint with regard to Ulster’s constitutional position. In that context, the fact that the Government connived behind the backs of the Unionist community to deliver the scheme was bad enough, but their action also represented a betrayal of the constitutional nationalist tradition in Northern Ireland.

The Government acted in a secretive and one-sided fashion because they knew that had the details of this scheme been made public, they would not have been able to carry with them this House or the greater number of people from the Unionist and the nationalist backgrounds in Northern Ireland. They knew that they were doing wrong, and that is why they tried to hide their actions from everyone, except themselves as a Government and Sinn Fein. The Bible says:

“The wicked flee when no man pursueth”,

and that seems apt today. The Government fled from scrutiny but no one pursued because they tried to hide what they were doing—yet this sordid deal could not remain hidden for ever.

The secret scheme whereby one political party submitted names of individuals who were on the run to receive so-called comfort letters was not merely immoral but represented a subversion of justice and made a mockery of the rule of law. When clear and direct questions were asked previously, including of senior Ministers, we were not told about the scheme. For example, in October 2006, when we asked in the House whether such a procedure existed, we were told:

“There is no other procedure.”—[Official Report, 11 October 2006; Vol. 450, c. 290.]

On 1 March 2007, the hon. Member for North Down (Lady Hermon) asked

“what measures the Government are considering to deal with ‘on the runs’ other than further legislation or an amnesty.”—[Official Report, 1 March 2007; Vol. 457, c. 1462W.]

The right hon. Member for Neath (Mr Hain) replied: “None.” That one-word answer raises a serious question about the veracity of the then Government’s position. It is therefore right to establish whether the House of Commons has been deceived. We need to have the truth.

As I have said, different inquiries are looking into this matter and each complements the other. It is vital that together they exhaustively examine all the relevant information and question all the relevant people. It is now apparent that there were no lengths to which the Blair Administration would not go in the interests of political expediency. Those who carried out some of the most heinous crimes must never be allowed to escape responsibility for the suffering they caused. The victims of those crimes cannot escape their pain and they should have the right to bring the perpetrators to justice. The outcome of the Downey case was morally wrong. No one should be beyond the law.

[Lady Hermon]

I am extremely grateful to the hon. Gentleman for allowing me to intervene. Although tributes have rightly been paid by Members on both sides of the House to the victims of the Hyde Park bombing in 1982—I add my condolences to those families and friends who lost loved ones—it is right to put it on the record that Mr Downey, who walked out of the Old Bailey, was suspected of involvement in not only the Hyde park bombing but the Enniskillen bombing, in which many people lost their lives and many others were injured, and the murder of two members of the Ulster Defence Regiment who served gallantly in Northern Ireland.

[Dr McCrea]

I thank the hon. Lady for her intervention and I agree wholeheartedly with everything she said. The shadow over this debate is that of not only the Hyde park bombing but every other atrocity that was carried out during the campaign throughout the United Kingdom. There was no justification for the campaign of terror and no justification for the slaughter of the innocent. This House ought to once again unreservedly condemn the actions of the IRA and those who brought sorrow and grief to the United Kingdom for so many years. One thing about the Downey case is that, thankfully, it has exposed all those others who received what they believed to be letters of comfort, and I would suggest that he is probably not their favourite cousin.

I realise that I have to draw my remarks to a close. If someone is on the run, I want them to fear the police, the courts and the rule of law. I want them to fear the fact that one day justice may catch up with them. I can assure them today that if it does not catch up with them here on this earth, they will stand before God, whether they believe in Him or not, and face His judgment and wrath.

In the aftermath of the Downey case judgment, the Secretary of State said:

“We will take whatever steps are necessary to make clear to all recipients of letters arising from the administrative scheme, in a manner that will satisfy the courts and the public, that any letters issued cannot be relied upon to avoid questioning or prosecution for offences where information or evidence becomes available now or later.”—[Official Report, 28 February 2014; Vol. 576, c. 39WS.]

The Democratic Unionist party will insist that the Government follow up those words with concrete action.

Finally, the royal prerogative of mercy has been mentioned. I have lived for the past nearly 50 years in a community that went through the nightmare of terrorism. South Londonderry used to be the killing fields of IRA murders in our Province. I gathered with many widows and many children down those years, as I did with my own family, grieving and sorrowing over the passing of our loved ones. When I hear that the likes of Liam Averill—a murderer in my community—is supposed to have received the royal prerogative of mercy, that is absolutely disgusting. It is laughable in a certain way that the big provo hero crawls to Her Majesty to get a royal prerogative of mercy, but it is also disgusting and sickening. I would like to know who advanced his name and who advised Her Majesty to execute the royal prerogative of mercy for the likes of the murdering thug Liam Averill. I would also like to know the names of the others who received the royal prerogative of mercy, because I can assure the House that there was no mercy from the provos for my family and the other families in Northern Ireland who suffered grief and who to this day continue to suffer heartbreak at the loss of their loved ones.

15:14

[Lady Hermon (North Down) (Ind)]

It is very kind of you, Madam Deputy Speaker, to call me in this very important Back-Bench debate. I am happy to put on the record my thanks to the Backbench Business Committee for allocating such an extensive period for it. I am very grateful to right hon. and hon. Members who have taken interventions throughout the debate. I will try to contain my comments to less than 10 minutes, so that those who have been so generous to me have an opportunity to speak at length.

[Ian Paisley]

Will the hon. Lady give way?

[Lady Hermon]

Of course. I will put into practice what I have just said.

[Ian Paisley]

Given that the hon. Lady is an esteemed and very skilled legal expert, will she refer to the possible opportunities that now pertain to try to get someone such as Mr Downey with his experience—an alleged mass murderer—back into our courts, whether by warrant, extradition or whatever?

[Lady Hermon]

I am most grateful to the hon. Gentleman for intervening so early. That is a really interesting question. My honest and frank answer, as he would expect from the hon. Member for North Down, is that Mr Downey of course resides in Donegal. That is his place of residence and his domicile. Frankly, after the Downey case and its revelations, I have absolutely no confidence that this British Government would request the extradition of Mr Downey. I would love the Secretary of State to intervene now to say that I am completely wrong.

[Mrs Villiers]

rose—

[Lady Hermon]

Oh, the Secretary of State is intervening.

[Mrs Villiers]

I emphasise that such decisions are for the prosecuting authorities, not for politicians.

[Lady Hermon]

I am very grateful to the Secretary of State for making that very interesting point, which brings me to a matter that I hope she can resolve later this afternoon. Like many hon. Members, I am really curious about the legal status of all the comfort letters or administrative letters issued to more than 200 cronies, pals or comrades of Gerry Adams. That is what they had to be: they were exclusively republican activists—terrorists—but they were buddies of Mr Adams.

I wrote a letter to the right hon. Member for Neath (Mr Hain), and I have asked him to clarify some of his replies in early 2007. As I have said, I am very sorry that he is not in the Chamber, but he has explained why he cannot be here. I do not want to criticise him, because when we have disagreed, we have always managed to have a very good working relationship. I will not therefore, in his absence, pick up the questions raised by other hon. Members about his replies in early 2007. Perhaps the hon. Member for Ealing North (Stephen Pound), who will wind up for the Opposition, will at some stage try to reconcile the irreconcilable. Before he speaks, perhaps he would take the opportunity to check the replies of the right hon. Member for Neath, which have been quoted by several Members, and try to reconcile them for us, which would be very helpful.

To return to the Secretary of State’s intervention, I tabled a written question to the Attorney-General asking him to rule on the legal status post the Downey case. I had a very courteous reply, as one would expect from the Attorney-General—of course drafted by very efficient civil servants—and it was a perfect parliamentary answer in that it was extremely brief. His reply, dated Monday 24 March, states:

“I have made no assessment. The status of the letters is a matter that may be considered by the right hon. Dame Heather Hallett in her review.”—[Official Report, 24 March 2014; Vol. 578, c. 43W.]

There was discretion for Lady Justice Hallett to look at the status of the letters that had been issued. However, the following day, I learned from an online report by the BBC’s Northern Ireland correspondent, Vincent Kearney, that Lady Justice Hallett

“is not expected to reach a conclusion on the specific legal effect of individual letters, or any action taken or not taken as a result of the letter being sent”.

That quotation is from the letters that were exchanged between the director general of the Northern Ireland Office, Julian King, and the Lord Chief Justice of England and Wales.

In the Secretary of State’s intervention, she was clear that there would be an independent decision on whether to issue a request for the extradition of Mr Downey from Donegal. Will she intervene on me and explain who exactly has the remit to tell the people in Northern Ireland, the people in this House and, indeed, the recipients of the more than 100 administrative letters what exactly is the legal status of those letters post-Downey? Have they been rescinded or have they not been rescinded? Do the recipients sleep easy in bed or do they not?

[Mrs Villiers]

I am happy to reiterate what I have said on a number of occasions over recent weeks. The letters were merely a statement of fact about whether an individual was wanted by the police at that time on the basis of the evidence that was available. They do not confer an amnesty. Nobody who has one should think that it immunises them from prosecution. If the evidence is present now or in the future to justify a prosecution, it will be taken forward.

[Lady Hermon]

I am very grateful indeed to the Secretary of State for what I think was a clarification. She said that it is not an amnesty. What exactly is the legal status? Will she also confirm, when she is winding-up—unless she wants to intervene again, of course—that the files remain open? We need an assurance that the files are open and that further evidence is being sought by police services throughout the United Kingdom, including the Police Service of Northern Ireland.

I would hate to think that the recipients of these comfort letters had had the assurance when they received their letter that their file was closed and nobody was looking for further evidence. I say that with a really heavy heart, because in reading the Downey judgment, it is clear that the Historical Enquiries Team, to which other hon. Members have referred, made inquiries about Mr Downey in relation to offences that had allegedly been committed in Northern Ireland and apparently received a negative response. That is really worrying and troublesome.

Apart from assuring the House that this is not an amnesty, we really need a commitment from the Secretary of State that she will leave this House—at the end of the debate, not now—and ask the Attorney-General about the legal status. Given that Lady Justice Hallett is not going to look at the legal status of individual letters or, indeed, of all the letters, as we know courtesy of the exchange of letters with the director general of the Northern Ireland Office, it is obviously the responsibility of the British Attorney-General to give a clear legal ruling on their status. That is absolutely imperative.

I am sorry that I keep staring at the Secretary of State and encouraging her to intervene as and when she can, but I am doing so quite deliberately. She will know that, after the Downey case, the shock that permeated through this House, across Northern Ireland and across other constituencies in the UK where there have been terrorist bombs was enormous. The vast majority of us had believed before the Downey case that there was the rule of law. This country is held in high esteem around the world because we uphold the rule of law. We now know, post-Downey, that the rule of law did not apply to the comrades of Mr Adams. He asked the then Prime Minister Tony Blair for an invisible process, and that is exactly what he received.

I tabled several questions to the Secretary of State, and I am sorry to say that she gave the same holding reply—the same stock answer. Such stonewalling was most regrettable. Interestingly though, the Secretary of State assured me on several occasions that

“the Prime Minister announced that a judge would be appointed to undertake an independent review to provide a full public account of the operation and extent of the administrative scheme for dealing with so called “on-the-runs”, which will include a factual check of all letters issued.”—[Official Report, 12 March 2014; Vol. 577, c. 207W.]

I emphasise the phrase “all letters issued”. That sentence was repeated in several written answers I received, and I understand that it is repeated on the Downing street website, because it was of course the Prime Minister’s idea to have this independent inquiry. We discovered on Tuesday, courtesy of the Belfast Telegraph, that the exchange of correspondence between the Lord Chief Justice of England and Wales and the director general of the Northern Ireland Office, Julian King, reveals that Lady Justice Hallett will not look at all the letters, but at a sample. It must be obvious to the Secretary of State that the written answers I received, with the undertaking that “all letters” would be considered, and the clarification by Julian King about a sample, are inconsistent. That inconsistency must be resolved this afternoon.

I tabled a painful question in which I asked the Secretary of State about the two most senior RUC officers who were murdered during the troubles, Chief Superintendent Harry Breen and Superintendent Bob Buchanan. Their families and John McBurney, the solicitor for one of the families, believe that some of the recipients of these comfort letters are alleged to have been involved in those murders. I ask the Secretary of State to give a firm assurance this afternoon that if the Breen family or the Buchanan family—or any other family of the victims of bombings and other hideous crimes—seek clarification about whether the murderers of their loved ones received one of these tawdry, dreadful, secret, scheming little letters, she will ensure that they get a clear reply, yes or no. That would be enormously helpful.

15:28

[Mr Shaun Woodward (St Helens South and Whiston) (Lab)]

I wish to associate myself with the remarks made by all hon. Members about those who lost their lives in the Hyde park and Regent park bombings. They were terrible crimes on the day they were committed, and some decades later they remain terrible crimes. It is always difficult to follow Members from Northern Ireland because they speak from such extraordinary personal experience and from personal loss. Sometimes it is really hard for other hon. Members, whatever their convictions, to speak after those who speak from the heart because they experienced the tragedy at home.

Listening to hon. Members on both sides of the House, I am of the view that the need for Justice Hallett’s review is critical, and the Secretary of State is right to expedite it. There are disadvantages in it not being a full, independent judicial review, but we know from Lord Saville that the time it would take to assemble such a review would be extremely damaging, not only to the ongoing political process in Northern Ireland but to the peace process. Indeed, the arguments around that so-called euphemism, “on-the-runs”, are testimony to why I think this review needs to come up with its findings quickly.

I was Secretary of State by a few weeks when the letter was issued to Mr Downey. As such, I take responsibility for my officials in the Northern Ireland Office, and I am happy to do so. They always acted with the most extraordinary integrity, and, as the Attorney-General set out when he spoke to the House a few weeks ago, there is no reason in any shape or form to doubt in any way the wisdom and actions of those officials or civil servants.

It is helpful to put on the record—again, I will co-operate with Justice Hallett however that is desired—that this was an administrative process. I absolutely understand the remarks of right hon. and hon. Members, and their questions about whether it was more than that, but I entirely endorse the view, expressed by the Secretary of State and by my predecessors, that the letters were designed to be statements of fact. They were part of an administrative scheme that, as the Attorney-General said, operated independently of the Government. It was intended to identify those individuals who, although they might believe they were unable to return to the jurisdiction without fear or arrest, would in fact face no prosecution or arrest if they were to return.

It is for Justice Hallett to ascertain whether that was the case, as I believe, but I put it on record that at no point during my tenure—which, I think, was the longest of any Secretary of State in Northern Ireland under the previous Administration—did I have reason to believe that it was ever more than an administrative process. That said, the judgment in the Downey case throws up some important questions that, as Secretary of State for those years, worry me greatly, and I am grateful to Justice Hallett for coming forward on this matter. In particular, paragraph 133 of the judgment makes it clear that:

“The PSNI did not alert the DPP (NI), or anyone else, to the fact that the defendant had been wanted by the Metropolitan Police in relation to the Hyde Park Bombing at the time of the critical correspondence in June/July 2007, or—”

and this should worry all of us—

“to the fact that the defendant was still wanted by the Metropolitan Police in…2008.”

Paragraph 137 states:

“Again, nothing was done to alert the DPP (NI), or anyone else, in relation to the defendant being wanted by the Metropolitan Police in connection with the Hyde Park Bombing.”

Those are very serious issues, and it is right that a judge consider them urgently. What they throw up is not that this was not an administrative process, but that there were clearly serious errors within that process. That throws up the question of when those errors were discovered, what happened to that information, and what course of action followed.

[Lady Hermon]

May I encourage the right hon. Gentleman to make it absolutely clear that during his long, and I think successful and happy time in Northern Ireland, the words “Operation Rapid” were not words that he heard, and he did not know about them until he read the Downey judgment? Is that what he is saying to the House?

[Mr Woodward]

Dare I say that there is a fashion when former Secretaries of State, as it were, and sometimes even serving Ministers, can sometimes hide behind forms of words? I am not suggesting that to the hon. Lady for a moment. I am not aware that we discussed the words “Operation Rapid”, but it is more than possible that pieces of paper will be found on which that phrase will appear. I say simply to the hon. Lady that it would be disingenuous for me remotely to suggest that I did not know we had an administrative process in order to establish facts. What was absolutely clear to me, by whatever name it was known, is that this was a factual operation, and in no way was the Northern Ireland Office, in any shape or form, at any point in the time I was there, or known to me before or after, interfering in that process. It was a matter of delivering those points of information.

Let me be clear to the hon. Members for South Antrim (Dr McCrea) and for Upper Bann (David Simpson) that, if the letters, in any shape or form, were reprieves or amnesties, I would share the feelings they have set out this afternoon, but at no point was I led to believe, at no point did I believe, and at no point did anybody ever tell me, that the letters could or would be used as reprieves or amnesties. They were statements of fact. I entirely understand hon. Members’ feelings if they believe the letters were anything other than that. They were not designed to be a reprieve or an amnesty. They were designed only as statements of fact to tell those people whether they were or were not wanted.

[Lady Hermon]

I am extremely grateful to the right hon. Gentleman for his generosity. Norman Baxter, who is not a Member of the House, was the PSNI officer in charge of the scheme and is named in the Downey judgment. He gave evidence to the Northern Ireland Affairs Committee on 11 November 2009. He said:

“One of my responsibilities before I retired was to conduct a review of on-the-runs, that is persons who are outside the jurisdiction. I can assure the Committee that there was an extremely unhealthy interest by officials in the Northern Ireland Office about prioritising individuals who were on the run and about ensuring that they were cleared to return to the North.”

That is not a term I would use, but it is what he said. In fairness to Norman Baxter, who was named and criticised in the Downey judgment, he has put it on the record that pressure was put on him by officials.

[Mr Woodward]

It is always dangerous to extrapolate from one person’s words and somebody else’s conclusion. One talks about “an interest”, but the hon. Lady’s refers to it as a “pressure”. All I can say to her is that, if there were questions from the Northern Ireland Office, as far as I am concerned, they could only ever be questions about facts. They could not in any way be about trying to interfere or change the outcome of any inquiry. The Secretary of State should know that, given the now legal status of the letters, the hon. Lady is entirely right to pose that question. It would be grossly misfortunate if the Justice were not to address that question. I remind the House that the situation is about an abuse of process, not just a letter. The entire process, of which the letter is a part, has been thrown up by the judgment.

That throws up the question of whether or not a status is conferred on the letters now—the letters were issued, as we thought, as statements of fact—that takes them beyond statements of fact. That is an issue of confidence. As the Secretary of State considers the debate—I expect her not to reply this afternoon, but to take away many of the considered comments made by right hon. and hon. Members—she should consider that the Downey judgment genuinely throws up the question whether or not letters issued in good faith by Ministers and the Northern Ireland Office as statements of fact are now more than statements of fact. If that is the case, the House deserves to know. It will be very difficult to rebuild confidence, which has been damaged across the process, without answering that question.

I am conscious of the time and do not wish to prevent other hon. Members from speaking. At the end of Justice Hallett’s review, we will have answers to some questions but not all. What will remain are questions of how we deal with some remaining dimensions of the past. The hon. Member for Aldershot (Sir Gerald Howarth) rightly puts back on the table the issue of the soldiers who were named and effectively indicted through the Saville inquiry. For them, in their old age, terrible worries ensue. Nobody should be above justice and I would never argue that whoever may be involved should be above justice. However, the case throws the issue on to the table once again and the Secretary of State may wish to reconsider it. That does not mean dragging out the discredited 2005 Northern Ireland (Offences) Bill, but perhaps we are approaching a point at which it would be sensible to consider a process that allows us to deal quickly and effectively, but only if it is fair, with those individual cases that arise out of dealing with the past of the troubles in Northern Ireland. It is an intolerable situation for those paratroopers to face, as the hon. Member for Aldershot set out so eloquently. It is equally intolerable for those who were victims of the troubles. I am not remotely suggesting that we revive the discredited 2005 Bill, but we know that Northern Ireland needs to move out of the past—not in the sense of forgetting its past, but it needs to move out of the grip of the past where that part of the past is a millstone around its neck.

[Mark Durkan]

The right hon. Gentleman refers to the eloquence of the hon. Member for Aldershot. I would hope that in doing so he is not endorsing the hon. Member for Aldershot’s description of the events of Bloody Sunday as mistakes in the heat of the battle.

[Mr Woodward]

Not for one moment. The hon. Member for Aldershot was kind and generous enough to say that when I was Secretary of State I always tried to deal with all these issues with impartiality. That does not mean to say that I do not think it is quite proper for right hon. and hon. Members eloquently to make cases on behalf of those they wish to represent. Whatever view Members may have, the House would have to recognise the distinction with which the hon. Gentleman has represented the case of those who were, of course, serving British interests by being soldiers in Northern Ireland at the time. That is not in any way to be a judgment by me on whether they acted in one area or another, appropriately, rightly or wrongly, but it is none the less to recognise the role they played.

I very much hope that the House will find time to debate Justice Hallett’s review when it happens. Perhaps the Secretary of State will confirm that the Government will give Government time for a full day’s debate on that review, because I think it is essential to rebuild the confidence that has been damaged by the errors that were made by the PSNI. It is crucial that the Government are able to re-establish confidence, and that this administrative process to deal with people finding out whether they were wanted or not wanted is restored to its credibility as an administrative scheme, and not some back-handed way of dealing with them in a special high-handed way.

15:42

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

I, like others, welcome the opportunity to speak in the debate. I thank those responsible for making it happen. I wish to extend my sympathy again, and that of my party, to the relatives and friends of those killed in the Hyde park bombs, and beyond that to all victims and survivors generally. I do not wish to retread all the ground well covered by others, in particular by my hon. Friend the Member for Foyle (Mark Durkan).

My main concern is that we must deal with the real issues raised by the Downey case in a mature and responsible way that does not do any further damage to the potential for political progress in Northern Ireland that is necessary at this time. It is now very clear that serious errors were made in the management of Operation Rapid, and that those errors compromised victims’ rights to justice. The way this process was administered came at the expense of establishing an honest and robust system that could have dealt adequately with any anomalies that were out there in relation to on-the-runs or others. That could have been done in an accountable and transparent manner.

It is in the interests of the public and the victims to provide honesty and clarity on all aspects of the establishment of this so-called administrative scheme. People I have talked to want to know what went on. They want to know how those involved were selected to qualify for a letter and how some others in similar circumstances did not qualify. Indeed, they want to know—Members have referred to this already—why some people needed a royal pardon. Were they wanted for questioning, but did not quite qualify for the letters? There are many unanswered questions, and people out there want answers, because confidence in politics has been damaged and we need to restore it.

We in the SDLP have repeatedly made clear our concerns about the letters and the whole shady process that followed the collapse of the so-called on-the-run Bill in 2006. Many aspects of the process that led to the collapse of the Downey trial remain extremely unclear. Answers must be given about how it all happened, why it happened and who made it happen. I cannot accept—I do not think any of us can—any disingenuous suggestion or bogus claim that somehow, by a system of osmosis, we were all aware of everything that happened after the collapse of that Bill or that we should have been, even though we are told that it had to be secret. They cannot have it both ways. Claims have been cast around and about in some quarters that information was available to those who wanted or needed it. I want to refute that and state clearly and unambiguously that it is totally inaccurate. None of us who was near, around or about politics at the time was aware of the size and shape of the problem. We certainly knew there was an issue with on-the-runs—a concern, a problem, an anomaly—but nobody knew what was going on in the undergrowth.

This whole process has defied the public’s most basic political expectations of openness, transparency and good governance. It comes as little surprise to me, and should come as little surprise to anybody else, that so much stress has been caused since this shady process began to unravel. I hope that the review led by Justice Hallett will begin to shed some light on how the process was so appallingly badly handled. As a member of the Northern Ireland Committee, I will be doing all I can to pursue the truth—the whole truth—through the inquiries that have been set up. We have a responsibility to investigate, but, I believe—and I would urge others to do so—in a responsible manner. As far as I am concerned, there is no room for political manoeuvring or grandstanding. We need to use the opportunities afforded to us to address concerns properly and answer the questions of victims, survivors and their families, who are vulnerable and at the receiving end of this whole affair.

In Northern Ireland, victims issues are deeply sensitive. There must always be empathy, respect and sensitivity given to victims, most of whom have suffered in silence for many years. Neither empathy, respect nor sensitivity has been evident in the Downey case or the manner in which it has been handled. It is my view that victims and survivors are our first priority and should never be made to feel that they are being treated as an irritation or a problem that can be wished away in the interest of political expediency. We in the SDLP will try to treat victims with respect at all times. Any process that we support to deal with the past will have victims at the centre and be keenly sensitive to their concerns. For many victims, the Downey case has confirmed their worst fears and further undermined their lack of confidence in the whole process of truth, justice and reconciliation.

Let me turn for a couple of moments to the Haass process and the future, which is as important as the past. Like others, I am concerned to ensure that we do not allow ourselves to be prisoners of the past, yet at the same time we have to deal with the hangover and the problems of the past. Some have already tried to use the Downey case as an excuse to walk away from the party leaders’ negotiations that followed the Haass discussions. We cannot let this episode become an excuse to do any further damage or walk away from the negotiating table that Richard Haass helped to create. The aftermath of the Haass process is still in effect today and continues as leaders of the main parties in Northern Ireland are meeting. We are dealing with the very real challenges of the past, parading and flags. Those challenges are still with us. They have been there a long time and will remain for as long as we fail to face up to them.

Individual politicians and political parties have little right to keep complaining about issues if they refuse to take responsibility or commit to finding solutions to major problems.

Through the Haass process, we arrived at a number of positive options and concrete solutions to many of the difficult challenges that face us, especially when it comes to dealing with our past. Lord Eames said last week that issues relating to the past, parading and flags were all intertwined, and that if we solved one of them, we would begin to solve the others as well. It is essential for all of us in Northern Ireland to do all that we can to reach honourable compromises on all these issues. We cannot let the Downey case be used as an excuse for not dealing with the past; indeed, it seems to me to demonstrate the very reason why we must actively, honestly and honourably deal with the past and get to grips with it. It provides us with the impetus that will enable us to get our feet firmly back under the negotiating table and make the hard yards on the hardest of problems. It is unfortunate that the Ulster Unionist party has signalled its intention to detach itself from those negotiations.

We need honest engagement and honourable compromise, now and in the future, more than ever before. The problems that we have out there will not go away until we face them in a mature and honest way. The Downey issue is a perfect illustration of the fact that, while covert side deals and shabby quick fixes can be used for short-term purposes, they are very damaging in the long term. What we badly need are honest, open and transparent discussions with honourable conclusions.

During our efforts in the peace process over the last 20 years, we have benefited from an enormous amount of good will throughout the world. We must not squander that by failing to take on the hard issues that will allow us to finish the job and define a better future for Northern Ireland. I recently spent a week in Washington and New York, and was heartened to hear President Obama and Vice-President Biden echo the words spoken by ex-President Clinton during his recent visit to Derry. They said “Finish the job, finish the job”, and I appeal to all to help us to do that.

15:51

[Sammy Wilson (East Antrim) (DUP)]

I, too, welcome the fact that we are debating this important issue. Although the debate has been dominated by Northern Ireland Members, I believe that the issue should concern not just politicians from Northern Ireland, but every Member of the House. At the beginning of his speech—it was a very forensic speech, which should be welcomed—the hon. Member for Amber Valley (Nigel Mills) almost apologised for being involved in the debate, but I believe that he as much as anyone else should be concerned about the issues arising from the Downey case.

The whole matter has been brought to the fore by the hurt caused not to people in Northern Ireland, but to people in this very city who were blown apart by an IRA bomb, and, of course, to many others. The hon. Member for Aldershot (Sir Gerald Howarth) mentioned many constituents who had served in the Army, and also the IRA bombs that had hurt people in his constituency. This is an issue that affects Members throughout the House, because people in their constituencies, including people in this part of the United Kingdom, have been affected by the activities of those who received the amnesty letters—for that is what they are, however the Secretary of State wishes to describe them.

A second reason why all Members should be concerned is the fact that the House of Commons has been brought into disrepute. I believe that not just the last Government but the current Government have been sullied by the scheme whose outcome we saw in the recent court case. It calls into question whether the public can trust the words of those who want and ask for the responsibility of governing the country. Numerous assurances were given in the House: Members were told that the issue had to be addressed, and that when it was addressed, people would know about it. The hon. Member for Aldershot, who is no longer in the Chamber, was the only Member to suggest today that perhaps we should have known—that the information might have been there, but we had missed it. He said “We are busy people, we get e-mails and so forth”. He also quoted what had been said by the then Secretary of State, Dr Reid, in answer to a question. Dr Reid also said at that time that

“we have committed ourselves to resolving this issue but have not decided how it will be resolved”,

and added:

“When we have reached a conclusion, we will of course come back to the House.”—[Official Report, 20 March 2002; Vol. 382, c. 253.]

That did not happen.

One conclusion that was reached, of course, was to introduce the on-the-runs legislation. On at least two occasions after that was withdrawn, the then Secretary of State indicated, as has been pointed out by the hon. Member for North Down (Lady Hermon) and my right hon. Friend the Member for Belfast North (Mr Dodds), that he had no alternative proposal, despite the fact that the scheme was put in place not long afterwards.

I want to make something clear. I have listened carefully to what the right hon. Member for St Helens South and Whiston (Mr Woodward) said. He stated, “This was purely an administrative scheme.” I have also served in a Government Department in Northern Ireland, and the one thing I can assure the House of is that no official, off their own bat, would start an administrative scheme as sensitive as this one, with all its political ramifications, without clear political direction and political origin. It may have eventually taken on an administrative life, but it started off with a conscious decision by politicians. They were politicians who had promised that when they came to address the issue, the facts would be known to the House and—as Dr Reid said, because he realised how sensitive the issue was—to the victims. Promises were, therefore, broken.

One reason why this debate is important is that it is about confidence in this House and in the word of politicians. The Labour party was then in government, and I have listened closely to what the shadow Secretary of State has said. When he was interviewed about the matter, he talked about it having caused hurt but said—I am quoting him almost exactly—that he did not believe the Labour party had anything to apologise for. I believe it does have something to apologise for. It must apologise first to those families who now know they will never get justice because of the double jeopardy rule. It owes an apology as well to those members of the public who have been misled by promises made by successive Secretaries of State in this House, and it also owes an apology to Members of this House.

The current Government cannot escape their responsibility either. When the new Administration took over, seamlessly, there was no indication that they had inherited an administrative scheme which had trundled on. Indeed, the Secretary of State still insists that the letters are virtually meaningless. If they are virtually meaningless, why are they so important to the peace process? If they are virtually meaningless, why did Sinn Fein send scores of names to the Northern Ireland Office to get meaningless bits of paper, and why do those who received those meaningless bits of paper now feel quite happy not to be on the run any more, but to enter the United Kingdom? It just does not add up.

The Secretary of State argues that the letters are meaningless because of what may happen if new evidence comes to light. As the hon. Member for Foyle (Mark Durkan) has pointed out, we are not clear whether that is evidence on existing cases or evidence only on new cases, but this applies only if new evidence comes to light. Given the information that the hon. Member for North Down (Lady Hermon) has provided to the House today, we know that already there are not just connections or contacts between the Northern Ireland Office and those who would be investigating, but, as Norman Baxter said, there is extremely grave interference in the process.

We have to ask: what instructions are being given to the police? What instructions are being given to the Historical Enquiries Team? It could be, “That person has received a letter, so do not be following any new lines of inquiry, do not be opening any new cases and do not be looking any further at any allegations made about them.” I do not know whether the inquiry’s remit will cover finding out whether any of those who have received such letters have subsequently had any investigation into their cases by the HET. It would be interesting to know that, but I suspect that the answer is no. The Secretary of State may say, “If new evidence comes to light, these letters will not mean anything”, but of course if it can be ensured that no new evidence comes to light, the letters do amount to an amnesty.

If we want an indication that that might be the case, let us examine the case presented by my hon. Friend the Member for South Antrim (Dr McCrea)—that of Liam Averill. Why could Liam Averill not benefit from the scheme? It was because the evidence was already there—he had been serving a prison sentence. He had escaped from prison and a letter was no use to him, so he had to have the royal prerogative of mercy. If any indication were needed that the letters amount to an amnesty—to a certainty that someone will not go to jail—we need only look at the case of Liam Averill, the way in which the assurances have been given by the Secretary of State and the evidence given by the police of the interference by the Northern Ireland Office in these cases.

[Stephen Pound (Ealing North) (Lab)]

I apologise for interrupting the hon. Gentleman’s flow. He and I both served for many years on the Northern Ireland Affairs Committee, and I remember the evidence of Norman Baxter well. May I gently suggest to the hon. Gentleman that he may have slightly heard something in the evidence that the rest of us did not hear, for the words he quoted this afternoon were rather stronger, more specific and, dare I say it, more accusatory than the words I heard? May I simply ask that he look at the transcript of that evidence again?

[Sammy Wilson]

The transcript states three words, “extremely unhealthy interest”, which I do not think anyone, unless they really wanted to, could interpret differently. Such an interest in these cases would indicate that there was interference by the NIO. An “extremely unhealthy interest” cannot mean anything else. If the interest was “unhealthy”, it surely means that the NIO was seeking to direct the inquiry in a way that a policeman felt was not right. If it was “extremely unhealthy,” it was overbearing—that is how I reach my conclusion and I do not think I am reading anything into it. I am coming to a conclusion that is borne out by the facts, one which people must come to if they are to believe that the letters mean anything.

The one thing I do know is that Sinn Fein would not have been happy with the letters if they did not mean something. I can recall around the time of the on-the-runs sitting in studios with Sinn Fein spokesmen who, without the least bit of irony, bleated on and lamented about all these poor people who were separated from their families and could not come home to see their grannies, mummies, sons and daughters because they were on the run. There was no sense of irony arising from the fact that they were on the run because they had permanently separated many people from their families by killing them. If anyone suggests that they would have been happy with a letter that did not remedy that situation, I would say that their argument is extremely weak.

This is an important issue because, by implicating the police, it has undermined the rule of law. I know that the hon. Member for Aldershot tried to put the blame totally on the police in Northern Ireland by saying that they screwed up, and that had they not screwed up this would not have happened, but I believe that it would have happened anyhow. As has been shown in the court judgment, the letter was as important as the information that was contained in it.

The police have been implicated, because they have had to produce the information. I do not know how much direction the police were given, but I would have expected them, knowing the implications of this, to have felt obliged to tell the Policing Board. Yet, anyone hearing the police when they gave evidence to the Policing Board—this was not some constable, sergeant or inspector who might not have been passed all the issues, but an assistant chief constable—could not have concluded anything other than that the police were pursuing these cases. With regard to the on-the-runs, he said.

“There is then an investigation which follows into the individual and the crimes that they may have been involved in, and then this is subsequently reported to the Public Prosecution Service (PPS) where test for prosecution is met. We have been working through this process over the last number of years and it continues still to be available. So in effect, as we become aware of a name in a particular incident, we carry out a cold case review and an investigation and report that to the PPS to see then if the test for prosecution is met or any other work that may be done. The powers of arrest will exist for the original offences and there can also be Bench Warrants applied to through the courts if needs be, or if it is in relation to offences in respect of breaking out of a prison, the Prison Act also applies in respect of returning people to prison.”

That was the substance of the evidence that the police gave. There was no indication that there were some individuals for whom letters were being signed so that they could walk free—so that they could come into the jurisdiction and be sure that there would be no prosecution against them.

The rule of law and the integrity of the police—shame on those in the senior ranks who allowed themselves to be associated with this—is at stake. Many individuals in Northern Ireland are saying, “Look, I break the law, I am rightly pursued. Every avenue is used against me.” Yet here we have people who, in some cases, are guilty of mass murder walking free. For all those reasons, I believe that this has been an important debate and that the inquiry is an important inquiry. I hope that we will get to the truth of the matter about who has got these letters, whether or not investigations are still going on, whether the Northern Ireland Office is interfering in any way and stopping investigations or new leads being followed and what the implications are for the judicial process.

Let me make one last point, and then I will finish. If the Government are as appalled by this situation as they suggest—the Secretary of State has said that the letters mean nothing and it will be made clear—why did they not, once they became aware of the scheme, make the situation quite clear to the Justice Minister at least? When policing and justice were being handed over in Northern Ireland, it was kept quiet from him. Why, when there are opportunities to appeal this decision, have they not appealed? I believe that the current Government are as much a part of the political cover-up and are giving as much political cover to Sinn Fein-IRA as the previous Government did. That is why the incident is a shameful one and it merits this debate today.

16:09

[Jim Shannon (Strangford) (DUP)]

I take the Floor greatly honoured to take part in the debate. I am always proud to represent my constituency in what is often called the greatest seat of democracy in the world, but today I have no pride in what has happened. I stand ashamed to learn what has been done by the previous Government and continued by the present Government.

I stood in this House in 2012 and raised the issue of why there had been no prosecution of Gerry McMonagle who, despite the overwhelming evidence, has never been tried for his crimes despite coming into Northern Ireland many times over the past number of years. As a result of what has happened in the past few months, I believe I know the reason.

In the Adjournment debate in this House at that time on the subject of Lexie Cummings, attended by my right hon. Friend the Member for Belfast North (Mr Dodds) and the shadow Secretary of State, I said:

“The family visit the grave of a true gentleman, Lexie Cummings, with questions in their minds and grief in their hearts. Who can answer their questions and give them closure? Questions must be answered, because the family cannot forget that Lexie Cummings was a good man and worthy of justice. They know that for a reason unknown to them, someone has seen fit to give an unrepentant republican murderer the opportunity to parade around, with no fear of justice, in his mayoral robes. That is cruelty in the extreme, and I am here today to ask for parity in the help provided to that family and others so that they can have closure“.

They deserve closure. I also said:

“It was an open-and-shut case, and yet questions must be answered. Why did William Gerard McMonagle not stand trial for the murder of Lexie Cummings? How was it that William Gerard McMonagle was allowed to travel across the border to safety and freedom, and to begin a new life, which has led to him being the mayor of Letterkenny today? Why was he never extradited, when it was known where he was? Why was there no co-operation between the Garda Siochana and the RUC to bring McMonagle to justice?”—[Official Report, 7 March 2012; Vol. 541, c. 980-81.]

Let me outline the case. In 1982, McMonagle was summoned to court to answer to the murder of Lexie Cummings. There was a mistake in the summons, and in the time that it took the RUC to get it corrected and bring it back, he walked out of court, walked across the border and never came back. I drew attention to the matter during my Adjournment debate in 2012 and also had an opportunity to speak to my colleague, Jonathan Craig, a Member of the Legislative Assembly who is also a member of the Policing Board. I asked him to make inquiries on my behalf. I believe that there is an evidential case to be answered by this gentleman for what he did and for the murder of Lexie Cummings.

I want to know why that happened, and what steps have been taken. It would be great to get an answer from the Secretary of State, because the former Minister of State answered in a non-committal way on that night, as some Members will remember. I believe that it was all down to a dirty backroom deal that began under Blair but was perpetuated by this Government. It gives me no satisfaction whatsoever to say that, but that is the way I see it. It was a deal in which unrepentant terrorist murderers were offered amnesty and even a royal pardon from the very royal family that they despised and wanted to kill—and, indeed, did kill in the case of Lord Mountbatten.

That is a bitter pill to swallow when I think of how proud people in Northern Ireland are to see their Queen and of the Jubilee visits during which Protestants and Catholics lined up for hours to catch a glimpse and show their respect. These men had vowed to destroy the monarchy and yet were more than pleased to get their hands on a royal prerogative pardon as facilitated by the Northern Ireland Office and the Secretary of State to wash away the repercussions of their disgusting crimes.

[Dr McCrea]

It is interesting that the said Liam Averill, who got the royal pardon, was back in court in Londonderry just a month ago, not for any of his crimes under the Terrorism Acts, but for charges related to drinking and driving a vehicle under the influence. The judge on the bench fined him £200, but of course he said he did not have £200. The judge said, “How much have you in your pocket?” He said, “I have £30.” “Right, I will change the £200 to £30.” Is that justice?

[Jim Shannon]

It most definitely is not, and everyone in this House would endorse that. It is an example of more salt being put in people’s wounds

There can be no earthly action that can ever wash away this guilt. I am also heartened that in the next world these people will answer for their crimes, as my hon. Friend the Member for South Antrim (Dr McCrea) mentioned earlier.

Sympathies given by a Minister of State about the deaths mean less than nothing to the families of my cousin Kenneth Smyth, murdered by the IRA on 10 September 1970, and Lexie Cummings. They are an insult to their memories and the memories of all the men and women who had their lives snatched away from them by murderers who were then hidden and protected by this Government and the previous Government. Is this democracy? No. Is this moral? No. Is this simply abhorrent and downright wrong? Yes it is. There can be no whataboutery and no justifications or explanations that can satisfy. Apologies have been heard, but they do not make black to be white, wrong to be right, or broken hearts to be mended. Do they rebuild trust? No, they do not do that, either.

In a question to the then Secretary of State in 2011 about the Historical Enquiries Team, I asked:

“The concern is that the investigations might not have been thorough, so does the Secretary of State accept that confidence needs to be instilled in the Unionist community”?—[Official Report, 30 November 2011; Vol. 536, c. 919.]

It is little wonder that the then Secretary of State would not agree, because they knew what had happened and what continued to happen on their watch, and they knew that it would not inspire confidence.

You can understand, Madam Deputy Speaker, why we on this side of the House and in this party—and I specifically—have concerns about how the Government have handled the matter. I look forward to the Secretary of State’s response; I hope she can take our points of view on board. I am deeply interested to hear how she will answer them and we look forward to that.

I want to mention a couple of other incidents, because I cannot let this occasion pass without mentioning them. There was the atrocity at La Mon hotel when many people were burnt alive—it is in my constituency. It has been intimated that some of those involved in that have risen to high positions, either in Northern Ireland’s jurisdiction or perhaps in jurisdictions elsewhere, in the Republic of Ireland. Do they have a paper of absolution that lets them get away with what they have done in the past? On behalf of the people in La Mon, I would certainly like to get more details about who has had absolution and how that has worked.

I also think of Ballydugan, where four Ulster Defence Regiment men were murdered. I knew three of those young UDR men personally. Eight people were arrested; they were questioned and then let out. Again, perhaps the Secretary of State can give us some indication of whether any of those eight people had papers of absolution or the “get out of jail free” card. If they had, I will certainly be asking for a re-investigation to be done in relation to them.

[Bob Stewart]

As a result of this extremely good debate this afternoon, I hope that those people with letters will get the message: they have not got a “get out of jail free” card. They have not got an amnesty, and the Police Service of Northern Ireland will now be turning its attention to investigating them and finding them.

[Jim Shannon]

That is exactly what I want to hear from the Secretary of State. I look forward to hearing that that is going to be the case.

The fact is now that not only have the Unionist people no confidence in the dealings of the Government, but the right-thinking moral nationalists are also disgusted by the revelations about the on-the-runs. Let me be rightly understood here: this is not simply an affront to one community but an affront to democracy and justice, and it will take some time for the people of Northern Ireland—whether man or woman, old or young, rich or poor, Protestant or Catholic—to ever again look without much suspicion on the actions of a Government who will take on terrorists on foreign shores, while protecting unrepentant terrorists on their own soil.

I hope that since 2010 Members will have recognised that I have tried in this House always to be very balanced. I have striven to look on the bright side in everything I do, as I do with my constituents as well, and I always attempt not to be too harsh in my comments. There is no bright side in this issue—just shady deals in back rooms. I cannot leave the debate with my usual hope and optimism that something can be done to make things better. Although the Secretary of State has tried to assure us that the letters cannot now be used as a “get out of jail free” card, will that restore confidence? There is a judicial review, but will that restore trust?

I have no plan or quick fix. Only openness and transparency will rebuild what has been destroyed because of what has taken place in the last few months. Many of my constituents have said to me, “I fear what else has been agreed behind our back.” If there is more bad news to come, Secretary of State, we need to know what that is going to be and whether there are any other shady deals that the previous Government have done and that this Secretary of State and the Government are carrying on.

I ask for the truth. The truth has to be heard here today. What I will always think of through this episode is the dirty dealing that rocked a nation and robbed trust in the very principles of democracy and freedom. That is how we feel about it.

The time has come to hold all the terrorists and murderers to account for their actions over the past 40 years, which they might think they have got away with. I believe that, as the hon. Member for Beckenham (Bob Stewart) said, it is up to the Secretary of State and this Government to make them accountable for their crimes, to do away with their bits of white paper and to put them in jail and let them rot there for the rest of their lives.

16:19

[Stephen Pound (Ealing North) (Lab)]

This is a sombre and sobering occasion. There are few occasions in this House when words are insufficient to describe the depth and strength of emotion that runs through a debate—today’s was more a threnody than a debate—and this was one such occasion. May I, like all Members who have spoken, place on the record my deepest sympathies, and those of my party, for the victims of the Hyde park and Regent’s park bombings in 1982? Their names have been read out twice today. Their names will live for ever more. We will remember them.

May I also, as has been the convention this afternoon, praise the Backbench Business Committee and the Northern Ireland Members who made it their business to lobby for this debate on the Floor of the House? If anyone doubts for a moment how raw the emotions still are or how relevant these issues remain, they will be disabused of such notions when they hear what we have heard this afternoon. I apologise for the fact that my right hon. Friend the shadow Secretary of State was unable to stay for the whole debate; there is a funeral today that he and other Members wished to attend.

In many ways we heard two debates this afternoon. On the one hand, we heard a legalistic argument about the legal consequence of this administrative process. I should put on the record the fact that, as the shadow Secretary of State stated in his letter to the Belfast Telegraph earlier this month, our party does not recant the introduction of the on-the-run administration. We say that despite the fact that “understandable anger”, and indeed fury, has been expressed at the subsequent error in the Downey case. I think that it is important to place on the record my hon. Friend’s words when he offered an unequivocal apology for the catastrophic error made in the issuing of the letter to John Downey:

“This has once again accentuated the pain for the families which never goes away and reduces the likelihood of them ever getting truth or justice.”

I cannot add to those points.

[Lady Hermon]

Are we to understand that the Labour party is blaming the PSNI for that catastrophic error and, in fact, commending the political decision made by Mr Blair and carried through by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and subsequently by the right hon. Member for Witney (Mr Cameron), that it is a good and defensible position that the on-the-runs, the pals of Mr Gerry Adams who are accused of the most appalling crimes committed in Northern Ireland and across the United Kingdom, have walked free? Is that the Opposition’s position?

[Stephen Pound]

The hon. Lady appears to be conflating two separate issues. To say that the Labour party, which was in government at the time, does not recant its position with regard to the administrative system in no way implies that people are walking free. People are not walking free. There has been no amnesty. It is crucial that we analyse and use the word “amnesty” with care. The hon. Lady, who is one of the most distinguished educators in Northern Ireland, is exact and precise about the etymology of the words she uses, but the word “amnesty” comes from the Greek word “amnestis”, which simply means forgetfulness—it has the same root as “amnesia”. In the context in which we are using it this afternoon—to mean a potential overlooking—it was so used only in the 16th century.

One of the things that we need to discover—I am sure that the Secretary of State will respond to this when she replies—is whether in the abuse of process there was a creative precedent or any sort of legality that arose from that. It is important, in view of the context and the great significance of this subject, that we are very precise in our language. The Secretary of State has said that there is no amnesty. We need to be precise about that and must certainly return to it.

In response to the hon. Lady’s suggestion, no, I am not seeking to blame the Police Service of Northern Ireland, and nor would I. I hope that she and they will accept my assertion of that fact.

[Dr McCrea]

If this was an honourable scheme or system, why was it devised behind the backs of the people of Northern Ireland, the politicians of Northern Ireland, and Members of this House; and why did only the friends of Gerry Adams get these letters, why was no loyalist included, and why did no soldier receive any letter of comfort?

[Stephen Pound]

Let me say, not for the first time, that I appreciate the hon. Gentleman’s personal pain, which is felt by everyone in this House. He deserves considerable respect for the courage he has shown in continuing to raise these issues despite such pain.

The answer to the hon. Gentleman is similar to the answer I gave to the hon. Member for North Down (Lady Hermon) when she asked me about reconciling the irreconcilable in connection with the previously quoted comments by the former Secretary of State, my right hon. Friend the Member for Neath (Mr Hain). In other words, on the Floor of the House this afternoon I cannot answer the question on the basis of the information that I have been given and of which we are aware. That is partly why the three inquiries are under way, and I hope that they will achieve results. I was not privy to the discussions at the time. My right hon. Friend was, and he has already made a statement. I have made a note in response to the hon. Lady’s extremely potent expression about reconciling the irreconcilable, and I will ask him for the answer, but I regret that I cannot give it on the Floor of the House this afternoon.

[Jim Shannon]

rose—

[Stephen Pound]

However, I can give way to the hon. Gentleman.

[Jim Shannon]

The shadow Minister will have heard me outline a case in which there is clear evidence that should be taken on board in convicting and taking to court a gentleman now residing in the Republic who carried out a murder in Northern Ireland. Does the hon. Gentleman feel, as I do, and as many of us in this House do, that where there is evidence there should be an investigation, that there should be no amnesty for anybody as long as the evidence is there, and if the case has not been tried before the courts, it is time that it was?

[Stephen Pound]

Let me say this unequivocally: absolutely, that is the law. Where there is evidence of criminality, the law must run its course. If the person is living in a foreign jurisdiction, that is an issue we have to consider. I regret the use of the expression “get out of jail free” card. No one is walking around with that in their pocket; that is not the case. I hope that these matters will come out when the House gets to consider the various reports, certainly the review led by Lady Justice Hallett.

While there are the issues of legality and fine points of law, the one thing that most people reading Hansard or listening to the debate would be struck by is the immense courage and bravery of many of the speakers who have, from their personal experience, expressed their views. I particularly praise the right hon. Member for Belfast North (Mr Dodds) for refusing to allow himself or his party to go down the nihilistic road of destruction and tear down the structures because of this issue. That is a courageous statement that would not be massively popular with every single element in his constituency, and he deserves praise and credit, as does his party, for making it.

The hon. Member for Belfast East (Naomi Long) said—I think that this resonates with many of us, and I will never forget it—that the matter we are discussing today has undermined the peace process, not underpinned it. It is that serious. We have to realise that this is not a minor administrative issue; it is a major point that has to be considered in depth, and I very much hope that the three inquiries will do so.

I want to leave time for the Secretary of State to respond to those points. As the Prime Minister said, this is not the time to unpick the peace process. It is not the time to say, simply and in the name of expediency, that everything that has gone before should be forgotten. It cannot. We have heard from many speakers today how painful, raw and fresh the wounds still are. We cannot forget. We have to analyse and discover what went wrong, and we have to be open and honest about it. The fact that the current First Minister and Justice Minister were not privy to all the decisions is profoundly regrettable. I say no more than that, but I am sure the House will appreciate how much of an understatement that truly is.

I am very grateful to my right hon. Friend the Member for St Helens South and Whiston (Mr Woodward) for his contribution, which was extremely frank, open and helpful, and I very much hope that he will be involved in the various inquiries.

We have spent this afternoon talking above all about a time of great darkness when things happened that we regret. Every single one of us must bend every bone and strain every sinew to ensure that if we achieve nothing else in this House, it will be a move forward from that darkness into the light, where we can be open, honest and transparent, and where there is a better future for the people of that very brave part of the United Kingdom, because, frankly, they deserve no less than that.

With that in mind, I support the inquiries. I am very grateful for today’s contributions and apologise for not being able to respond in detail to some of the points that have been made. However, I will ensure that my right hon. Friend the Member for Neath will respond—I can assure the House of that—and profoundly hope that when this matter is again ventilated on the Floor of the House we will have more information.

[Mark Durkan]

My hon. Friend says that, in the interests of truth, he will ask the right hon. Member for Neath (Mr Hain) to address the answers he gave saying that there was no scheme. At the time the right hon. Gentleman announced the withdrawal of the Bill, he said he would have to come back to the issue. That did not necessarily mean that he would come back to it in the House, but he did say that it would have to be addressed through other means. That is one of the reasons why some of us asked at subsequent talks, “What is happening about the on-the-runs?”, but we were basically told, “Shut up about it, because nobody else is worrying.”

[Stephen Pound]

If I have learned one thing in my life, it is that such language should not be used when speaking to people such as my hon. Friend or to any Member of this House, least of all Members representing Northern Ireland constituencies. I will certainly carry that message back. I think that the point my hon. Friend made earlier about precedent is one to which we will return, because it is of profound concern. If this document had no legal standing, did it create a precedent?

This has been a sombre and sober occasion. It is appropriate that we have been discussing matters of great moment this afternoon. I profoundly hope that the occasions on which we have to have such debates become fewer and fewer. May I thank all 15 hon. and right hon. Members who have contributed to this debate? Nothing that has been said on the Floor of the House this afternoon has been less than greatly impressive. It demands attention and will be acted upon.

16:33

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

I start by thanking the right hon. Member for Belfast North (Mr Dodds) for moving the motion with such a powerful and eloquent speech in opening a debate of outstanding quality. I pay tribute to all the right hon. and hon. Members who have taken part. Their contributions were authoritative, fluent and heartfelt.

I welcome a theme that has run through many of the speeches today—that despite the solemnity of this occasion and grave concern about the OTR scheme, we should still recognise the tremendous progress that has been made in Northern Ireland in the past 20 years, much of which is attributable to the Members who have taken part in this debate. That theme of optimism despite the setback of the OTR scheme was reflected in the words of the right hon. Gentleman, and those of the hon. Member for East Londonderry (Mr Campbell), my hon. Friend the Member for Amber Valley (Nigel Mills), the hon. Member for Belfast East (Naomi Long), my hon. Friend the Member for Tewkesbury (Mr Robertson) and many others.

Before I respond to the points made in the debate, I want to join in the tributes to the victims of the Hyde park atrocity. We have heard their names, and I want to read them out again—Lieutenant Anthony Daly, Trooper Simon Tipper, Lance Corporal Jeffrey Young and Squadron Quartermaster Corporal Roy Bright. They all lost their lives in one of the most brutal atrocities of the long years of the troubles.

Today, I want to acknowledge once again the deep sense of anger felt by so many people, not least in this House, about the judgment in the trial of John Downey and about the OTR scheme. I am sure that that anger and distress are felt most directly by the families of those who lost their lives in the Hyde park atrocity in 1982, and I want to reiterate my condolences to them. One can only imagine the depth of the pain caused by seeing the man accused of the crime walk free from court. But I know that this sense of anger has been felt more widely by other victims of terrorism who have never seen those who murdered their loved ones brought to justice, and many of whom I have met directly. I therefore want to reiterate today what I said in Belfast two weeks ago, which is that the Government are profoundly sorry for what happened in the Downey case, for reviving painful memories and for putting so many victims through the agonies of loss once again.

Turning to the questions asked by hon. Members, the scheme of which John Downey’s letter formed a part was established by the previous Government in 2000, as we have heard. It was accelerated following the rejection of the Northern Ireland (Offences) Bill in early 2006. That was the vehicle by which the previous Government had sought to give effect to commitments they had made at Weston Park in 2001.

The scheme mainly operated in this way. Sinn Fein submitted a list of individuals who believed that if they returned to the UK, they might be arrested by the police in connection with terrorist offences committed before the 1998 Belfast agreement. The names were then checked by the police, and in some cases by the Public Prosecution Service. If that checking process concluded that the lack of evidence available at the time meant that there was no realistic prospect of a successful prosecution, the individuals concerned were in most cases informed that they were no longer wanted by police in a letter signed by a Northern Ireland Office official.

Since the Downey case, the NIO has been engaged in an intensive exercise to reconcile the different information held by the NIO, the Police Service of Northern Ireland and Sinn Fein to establish the actual numbers dealt with under the scheme. That work has revealed the following provisional information: NIO records indicate that 207 names were provided by Sinn Fein or by solicitors acting on their behalf, while a further 10 names were identified by the Prison Service of Northern Ireland and four by the Irish Government, bringing the total to 221 names.

[Lady Hermon]

I intervene to make two points. First, will the Secretary of State explain how on earth the Prison Service of Northern Ireland was in possession of information indicating that certain people were on the run and was therefore in a position to pass on that information to the scheme? Secondly, I am sure that she would like to take this opportunity to extend her condolences in relation to those who lost their lives in Enniskillen and in relation to the two UDR men who were allegedly killed by Mr Downey, who left the Old Bailey free at the end of February.

[Mrs Villiers]

I of course extend my condolences to the relatives of those who lost their lives in the Enniskillen attack and, indeed, to all others who have suffered at the hands of terrorists, both in Northern Ireland and elsewhere.

The role of the Prison Service, along with other matters, is for the Hallett inquiry to consider. My understanding is that the connection with the Prison Service is that the individuals had absconded from prison and the Prison Service wished to know whether they were still wanted.

The PSNI’s records show that it received a further seven names that do not appear to have been passed to the NIO for consideration. As far as the NIO can establish at this point, the total number of cases in which the eventual outcome was an indication that the individual concerned was not wanted by the police appears to be at least 187, but the complexity in the way the process operated means that the full confirmed facts can be established only once the Hallett report has been published.

The process of reconciling the numbers has indicated that, within the totals that I have set out, 45 individuals had their cases considered under the current Government and that three of those names were passed by the PSNI to NIO officials during this Parliament. In 12 of the cases considered by the current Government, individuals were sent letters by the NIO stating that, on the basis of current evidence, they were not wanted by the police. No letters have been issued by the NIO since December 2012 and, as far as the Government are concerned, the scheme is over.

The outcome of the Downey case has led many to believe that the letters that were sent under the scheme amount to an amnesty from prosecution. That point was raised by my hon. Friends the Members for Beckenham (Bob Stewart), for Tewkesbury and for Amber Valley, the hon. Member for Strangford (Jim Shannon) and others.

[Jim Shannon]

Would the Secretary of State like to confirm on the record, in today’s Hansard, whether William Gerard McMonagle is one of the people who has a white paper that gives him absolution and that he will not be made accountable for his crime of killing Lexie Cummings? If the evidence is there but he has never been before a court, does she agree that he should be brought before one?

[Mrs Villiers]

I am not able to comment on individual cases today, but I assure the hon. Gentleman that if there is evidence to prosecute individuals, it is vital that the PSNI pursues that evidence and that prosecution takes place in the normal way.

[Mark Durkan]

On the status of the letters, when the Attorney-General spoke in the House on 26 February, in column 265 of Hansard, he said:

“Neither I nor the CPS were prepared to accept that the letter and the circumstances in which it had been given were such as to automatically prevent Mr Downey’s prosecution.”—[Official Report, 26 February 2014; Vol. 576, c. 265.]

Was the Secretary of State or the NIO asked to make that representation to the Attorney-General, because somebody seems to have made that case to him?

[Mrs Villiers]

The prosecuting authorities make their decisions independently of Government.

I want to reiterate to the House unequivocally that the letters do not confer an amnesty. Nobody who holds one of these letters should be in any doubt: they will not protect you from arrest or prosecution if the police can gather sufficient evidence against you; they are not an exemption, immunity or amnesty, which is something that could only ever be granted by Parliament; they are not “get out of jail free” cards.

[Lady Hermon]

It is very generous of the Secretary of State to give way and I do appreciate it. Will she please explain to the House, if one of these letters is not an amnesty and it does not represent immunity from prosecution, why on earth the coalition Government continued with this ghastly, immoral scheme in 2010 when they took over No. 10? Why did they not just let the normal criminal process run its course if it did not provide immunity and it was not a pardon for those who were on the run?

[Mrs Villiers]

I can only reiterate to the hon. Lady that the letters did not confer an amnesty or immunity. If they had, the current Government would have stopped the scheme immediately on coming to office. All the letters amounted to was a statement of fact regarding an individual’s status at the time in connection with the police and the prosecuting authorities. If the facts change and the evidential test is met, the individual concerned will be subject to due process just like anybody else. When the Government took office and were made aware of the arrangements, we allowed the checking process to continue on that basis. By that stage, it was coming towards its end. In the case of John Downey, as my right hon. and learned Friend the Attorney-General, has made clear, it was not the fact of John Downey having a letter that led the judge to stay the prosecution. It was the fact that the letter contained factually incorrect and misleading information, on which Mr Downey relied, that led the judge to rule that an abuse of process had taken place. Mr Downey should never have been sent a letter saying that he was not wanted because at all relevant times he was wanted by the Metropolitan police in connection with the Hyde park bombing.

Several hon. Members have raised concerns about the fact that the CPS decided not to appeal in the Downey case. As the House heard from the Attorney-General, careful consideration was given to whether an appeal should take place, but the CPS concluded that such an appeal would have no realistic prospect of success, and that is why it decided not to go ahead with one.

Recognising the severe concerns expressed in the Chamber and further afield—including by the First Minister, the Justice Minister and many victims’ groups—about the OTR scheme, the Prime Minister responded swiftly by establishing a judge-led inquiry into the scheme. As we have heard today, that inquiry will be chaired by an eminent judge from the Court of Appeal, Lady Justice Hallett. The terms of reference require the provision of a full public account of the operation and extent of the scheme, to establish whether other mistakes were made and to make recommendations. I assure the House that it will be a meaningful, exacting and rigorous process to get to the truth of what happened and to provide the answers for which the public are calling.

[Dr McCrea]

When the Prime Minister spoke about the inquiry, he said that the eminent judge would review all the letters. It now seems to be some of the letters. Can the Secretary of State confirm that the Prime Minister’s statement takes precedence and that all the letters will be reviewed by the eminent judge?

[Mrs Villiers]

I am grateful to the hon. Gentleman for raising that point. It was of course also raised by the hon. Member for North Down (Lady Hermon). Let me be clear: Justice Hallett is free to look at all the documents that the Government have and at all the cases. The exchange of correspondence to which the hon. Lady referred was designed to provide an assurance that, because of the limited time available, the judge was not required to conduct a detailed examination of every single case and that it was acceptable to focus on cases in which initial checks indicated there was a problem, as well as a sample of others. Inevitably, when we seek answers in a limited time frame, so that we get the answers we need, there are practical limitations on what the judge may be able to do. But I am very clear that she will be allowed to do exactly what she wants to do in relation to any one of those cases. I am sure that she will also look generally at the cases across the board.

Dame Heather indicated in a statement today that she will seek to establish the facts and, where necessary, accountability in relation to what happened, to find out who was and is responsible for what happened with the OTR scheme. I expect the judge’s report to be provided to me by the end of May, or by the end of June if the May deadline proves to be impractical. As hon. Members have pointed out—not least the right hon. Member for Belfast North in his opening speech—several inquiries are under way to get to the truth of what happened, including by the Northern Ireland Affairs Committee, the Justice Committee and the police ombudsman.

I agree with a number of the comments made this afternoon, including by the hon. Member for South Antrim (Dr McCrea), that in many ways these inquiries can be complementary and can combine to reveal the full truth of what has happened.

[Sir Gerald Howarth]

Will my right hon. Friend indicate to the House whether, in her mind, there is any prospect of the Downey case being reviewed, or is it now—unlike the rest of the cases—effectively a closed case?

[Mrs Villiers]

My understanding of the legal position is that it is most unlikely that the courts would allow the case of the Hyde park bombing to be reopened, but the position may be different for other offences for which Mr Downey might be pursued.

Returning to the Hallett report, until Dame Heather is able to report, there are limits to what I can say to avoid pre-empting her conclusions, but I wish to make clear this Government’s position on amnesties: we do not support, and have never supported, amnesties from prosecution. That is why both coalition parties opposed the legislation introduced by Labour in 2005, which was withdrawn in the face of widespread opposition, as emphasised today by the hon. Members for Foyle (Mark Durkan) and for Belfast South (Dr McDonnell).

Had the Government been presented when we came to office with any scheme that amounted to immunity, exemption or amnesty from prosecution, we would have stopped it immediately. This Government believe in the rule of law and due process, and that applies across the board to everyone. Those who are still wanted for crimes must expect the law to take its course, and those who received letters under the OTR scheme cannot rely on them to avoid questioning or prosecution for offences where information or evidence becomes available now or in the future. In conclusion—

[Lady Hermon]

I am sorry to interrupt the Secretary of State just as she is coming to the end of her comments, but she seems to have overlooked—by accident, I am sure—one vital point that concerns the legal status of the letters. The former, very distinguished, Secretary of State for Northern Ireland emphasised the importance of a clear ruling on the legal status of those letters, and in my contribution I specifically asked the Secretary of State whether, at the end of the debate, she would give an assurance that she will speak to the Attorney-General, and that someone, either Lady Justice Hallett or the Attorney-General, would tell us once and for all—including the people of Northern Ireland, the victims and their families, and those who hold these letters—what is their legal status.

[Mrs Villiers]

I felt I answered the hon. Lady’s question by stating that the letters were simply statements of facts at the time, which means they do not have any formal legal status. They were not an amnesty; they were merely statements of fact. I appreciate that another key theme running through today’s debate, and a source of the grave anger and concern expressed by the right hon. Member for Belfast North, and the hon. Members for East Antrim (Sammy Wilson) and for North Down, is that the facts of the scheme were not shared with the Northern Ireland Executive or fully shared with Parliament.

[Mr Woodward]

Will the right hon. Lady give way?

[Mrs Villiers]

Not for the moment.

On behalf of the Government I have expressed regret that we did not discuss the scheme with Ministers in the Executive, especially after we concluded in August 2012 that any new cases should be directed to the devolved authorities. That was clearly a point at which we should have discussed the matter with the Justice Minister, but we did not. Today I repeat that apology for not sharing the information about the scheme with the First Minister or the Justice Minister, and I welcome the apology made by the shadow Secretary of State for Labour’s role and the way in which the scheme was administered under the previous Government.

The scheme and the era of side deals that undermined confidence in the political process must come to an end, and we now need to look forward. Whatever the conclusion of the inquiries now under way into the OTR controversy, the imperative to deal with issues such as flags, parading and the past, and to push for real reconciliation, is as strong as ever. Indeed, the events of recent weeks provide a further convincing reason why Northern Ireland needs an agreed way forward on the past, with structures that can operate in a balanced, accountable and above all transparent way and command public confidence. I hope that the whole House can agree on that as we express once again our strong and unified support for Northern Ireland and its continuing journey towards a genuinely shared and reconciled future.

16:59

[Mr Dodds]

In the two minutes I have, I shall sum up. I thank everybody who has taken part in the debate. As my hon. Friend the Member for East Antrim (Sammy Wilson) rightly said, this issue affects not just people in Northern Ireland. It should affect Members from all parts of the United Kingdom. There are fundamental issues at stake.

[Mr Woodward]

Will the right hon. Gentleman give way?

[Mr Dodds]

Very briefly.

[Mr Woodward]

I am very grateful because the right hon. Gentleman gives me the chance to get on the record the fact that I deeply regret that the Secretary of State did not deal with the issue appropriately raised by the hon. Member for North Down (Lady Hermon). It is absolutely essential to continue the process in a bipartisan way. I think the right hon. Gentleman would also wish to raise this concern. We need to establish whether the letters are simply statements of fact, as I believe, or whether or not, as a consequence of the Downey judgment, they have taken on a different perspective. That is absolutely crucial. I deeply regret that the Secretary of State did not take my intervention and am grateful to the right hon. Gentleman for doing so.

[Mr Dodds]

I hear what the right hon. Gentleman says. No doubt aspects of the debate have raised more questions than answers. However, I do not accept the validation of the scheme given by the shadow Minister. The legal status will come out when the judge makes her report, but, given the implementation of this secret deal, the way it was done and the reason it was kept secret, for anyone to think it was simply about statements of fact stretches credulity. We will come back to those issues.

I thank everyone who has taken part in the debate. The themes we have touched on include putting victims at the heart of the matter—one theme was our concern for victims and justice. Another theme was the operation of the scheme and its effect. It is very clear in all quarters that there is no support whatever for any kind of amnesty. That is why there is anger about the way in which the scheme operated in effect in the Downey case.

We have explored the theme of what people knew and when. It is clear from contributions made by Members on both sides of the House that there is a consensus that politicians in Northern Ireland were kept in the dark, that Parliament was effectively kept in the dark, and that people knew about the scheme only if they were members of Sinn Fein. I acknowledge what the Secretary of State said about the fact that she kept the Northern Ireland Executive in the dark, even after the scheme was stopped. It would be useful to have an explanation of why that decision was taken.

Another theme is that the process was one-sided. The one-sidedness of the administration of justice in Northern Ireland is currently a massive issue. This issue plays into that.

I welcome the inquiries. Lady Justice Hallett has said today that she will fully and rigorously examine the scheme from its inception to date.

I am grateful for the opportunity to put on record some truths about the issue, but there will be an opportunity to return to it, and I look forward to doing so. All hon. Members can be assured that, as far as the Democratic Unionist party is concerned, unless it is very clear that the full truth emerges, that Downey or a case like it can never happen again, that the on-the-run scheme is put to bed completely—the Secretary of State has said that it is over—that the legal status of the letters is made clear, and that they do not protect anyone from now on and are effectively rescinded, we will have to return to this issue and deal with it again.

Question put and agreed to.

Resolved,

That this House has considered the background to and implications of the High Court judgment on John Downey.

PETITION

Thursday 27th March 2014 Commons Chamber

17:00

[Keith Vaz (Leicester East) (Lab)]

It is a pleasure—[Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Will hon. Members leaving the Chamber do so quickly please ?

[Keith Vaz]

I wish to present a petition on behalf of Mrs S Kaur, Patricia Pitter, Kade aged five, Dillon aged eight, Mohammed Khan, Mr Mistry, and Councillors Bhatti, Clair, Osman and Newcombe. The petition has gathered 158 signatures from local residents. They are very concerned about a crossing in my constituency that crosses Gipsy Lane, Leicester. At the moment, there is a crossing but cars are not stopping at this pedestrian crossing. They would like to see a pelican crossing installed, which would mean that cars would have to stop. I went there last Saturday. The cars did stop when I arrived with a delegation of residents, but it is very clear that cars are not obeying the law. We hope that with this petition they will be able to do so.

The petition states:

The Petition of residents of Leicester East,

Declares that the zebra crossing on Gipsy Lane, Leicester is unsafe as the drivers do not stop long enough, they drive through when pedestrians are half way across the road and further declares that the Petitioners are concerned that there is an accident waiting to happen on this road.

The Petitioners therefore request that the House of Commons urges the Department for Communities and Local Government and Leicester City Council to investigate installing a pelican crossing at this site.

And your Petitioners, as in duty bound, will ever pray.

[P001337]

Mental Health Care (Older People in Lincolnshire)

Thursday 27th March 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Harriett Baldwin.)

17:01

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

World Health Organisation figures show that mental illness is responsible for the largest proportion of the disease burden, at just over 22%, in the UK. That is greater than that of cardiovascular disease or cancer, each of which stand at about 16%. In our society, mental health simply does not receive the same attention as physical health. People with mental health problems frequently experience stigma and discrimination, not only in the wider community but from services they need to access. This is exemplified in part by lower treatment rates for mental health conditions and an historical underfunding of mental health care relative to the scale and impact of mental health problems.

However this problem may have arisen, it is persistent and the consequences are plain. People with severe mental illness have a reduced life expectancy of 15 to 20 years, even though the majority of the reasons for this are entirely avoidable. I cannot be the only one to think that this can no longer be tolerated in the 21st century. I am glad that the Government have made real progress in promoting the principle of parity of esteem with their commitment to put mental health on a par with physical health in the NHS. Central to this approach is the fact that there is a strong relationship between mental health and physical health, and that the influence works in both directions: poor mental health is associated with a greater risk of physical health problems, and poor physical health is associated with a greater risk of mental health problems.

I sought this debate to raise the particular issue of mental health care for older people in my county, an issue that can only continue to grow in importance as our population ages. The UK is experiencing a significant population shift, with both the size of the older population and projected life expectancies rising considerably faster than previously expected. Significant growth is expected amongst those over 65 in the next few decades, with the oldest age group of those aged 85 and above growing proportionally the fastest. As the population aged over 65 increases, the number of older people with mental health problems will also, inexorably, increase. The largest increase in numbers of any mental health problem will be seen in the rise of the numbers of people with depression, but there will also, undoubtedly, be significant increases in the number of people with dementia.

Surprisingly, perhaps, this will be compounded by co-morbidity with substance misuse in this age group. Although usually regarded as a problem affecting younger adults, abuse is overlooked in the elderly. In the next few decades, there are likely to be increasing numbers of older people exhibiting co-morbid symptoms, as alcohol and drug users from the baby boomer generation reach and pass retirement.

One of my constituents, a community nursing assistant at the Manthorpe centre in Grantham, has spoken to me about his concerns for the future. Although the centre is not in my constituency but in that of my hon. Friend the Member for Grantham and Stamford (Nick Boles), it provides mental health services for older people from all over Lincolnshire. As such, concerns have been raised with me about the reorganisation of services at the centre and elsewhere in the county. The job of a community nursing assistant, as my hon. Friend the Minister will know, is to provide the emotional and practical support needed by elderly patients. Assistants thus deal with a large number of lonely, isolated and vulnerable people. It is not only the mental health diagnoses of those in this group that cause problems, but the simple loneliness. Often, their health care workers are the only people they see or talk to on a regular basis. Indeed, my constituent has told me that he and his colleagues can be the “nearest relative” at funerals, which gives some sense of the acuity of the problem.

It used to be the case that families and communities looked after their older members and supported them, but sadly, as we all know, that is all too often not the case. The disestablishment of those community posts in Lincolnshire is thus causing real concern. Those who fill them save the NHS money by helping those in need directly, without their needing to be admitted to hospital, which is far more costly than being supported while living at home. Yet when I contacted the Lincolnshire Partnership NHS Foundation Trust to ask about these posts, I was told they were intended to provide social intervention rather than health care per se—a function that the trust feels should be carried out by local authorities through their social care staff. So it is that a lack of funding from one part of the system that does not regard itself as responsible for the establishment of these posts runs the risk of costing itself and other parts of the NHS more money in the long term.

I understand from more recent discussions that the trust is now working closely with our local authorities to ensure that patients remain supported, but I understand and share the concerns of many that elderly folk in need may fall through the cracks despite good intentions. Indeed, that is too often the case where NHS care and social care interact—an issue that I know has been raised on numerous occasions in the House by colleagues on both sides. I would therefore be grateful if the Minister told the House what steps his Department is taking to work with trusts that are reducing provision to ensure that robust support networks are maintained and improved for patients with mental health needs.

[Sir Edward Leigh (Gainsborough) (Con)]

The people in Lincolnshire will be grateful to my hon. and learned Friend for raising these issues. Does he agree that they are exacerbated by the rural nature of our county? Frankly, people in a deeply rural county such as Lincolnshire sadly get a worse service than people living in urban areas.

[Stephen Phillips]

I am extremely grateful to my hon. Friend, who makes an important point. All too often, and not just in this area of public service, as he knows, but in so many others, we get a much worse service in rural communities—particularly, it seems, in Lincolnshire —than many other places. That is in part made up for by the fact that we have extremely strong communities, with strong ties between neighbours and families, but as I know he knows, far too often we seem to draw the short straw in this and other areas.

That is in part why I also want to raise with the Minister the apparent disconnect between services for those aged over 65 and those under that age, given our ageing population in the county. In that regard, I have been told that the care provided by the community mental health team in my part of Lincolnshire for those under 65 has been fairly extensive, including a lot of support for those settling back at home after a hospital admission, but that such services are not so readily available for those aged over 65. Why the disconnect and what can the Minister do about it?

I am aware, of course, that the Equality Act 2010 has been vital in shifting mental health services towards age inclusiveness. The Minister will know, and has no doubt acted on the fact, that there is now a duty on health and social care services not to discriminate on age grounds. That ought to mean that older people with mental health problems should have the same access to mental health services that had previously been available only to people under the age of 65. Is this working? No doubt the Minister can tell the House, for there is a great deal of concern, at least in Lincolnshire, that it is not. I understand that the Department of Health has acknowledged the under-representation of over-65s in the IAPT—improving access to psychological therapies—initiative and has made a commitment to undertake various corrective actions to address that in line with the provisions of the 2010 Act. I would be grateful if the Minister could tell the House what his assessment is of the current state of mental health services for those aged over 65 and what steps he is taking to ensure improvements in provision and access in Lincolnshire and elsewhere.

The Royal College of Psychiatrists has said that to integrate older adults’ mental health services into “ageless” services makes no sense. Older people have very different physical, social and psychological issues, which require specialist old-age psychiatrists working in specialist services for older adults. Older people tend to have multiple physical co-morbidities or frailties, which often complicate their mental health treatment. Many older people also have specific cognitive problems, social issues or end-of-life concerns, which may precipitate or sustain mental illness.

It would seem that the key element is flexibility of access. We need to ensure that people do not automatically become ineligible to continue to be treated by a service once they pass the age of 65, so that someone under that age with, for example, early-onset dementia can gain access to the expertise of comprehensive older-adult mental health services. I should be grateful for the Minister’s comments on those points.

The Royal College of Psychiatrists has also identified a “mental health treatment gap”, exemplified by lower treatment rates for mental health conditions, premature mortality among people with mental health problems, and the underfunding of mental health care relative to the scale and impact of mental health problems—the problems that I described at the beginning of my speech. Annual statistics published by the Department of Health on investment in mental health have shown that in 2011-12 there was a 1% decrease in overall investment and a 3% decrease in investment in older people’s mental health services. I know that addressing the funding gap will be challenging—particularly as such underinvestment tends to be exacerbated during times of austerity, when mental health services risk being cut in preference to physical health services—but I venture to suggest to the Minister that things should not go on as they have been.

Given the current challenge to address the high levels of both identified and unmet need, an increasing ageing population will have significant resource consequences for mental health and social care services for older people, which are already struggling to provide care at present. Unless there are major breakthroughs in new cost-effective treatments, or prevention and promotion initiatives succeed in reducing the incidence and prevalence of mental health problems among older people, services will need significant extra resources to meet that demand. In practice, however, mental health spending has in the past followed an erratic pattern nationally, with cuts in some areas and investment in others.

What, ultimately, I want to hear from the Minister tonight is an assurance that he is focusing on this issue, and that enough is being done to ensure that mental health services receive proper funding, in Lincolnshire and throughout the country.

17:12

[The Minister of State, Department of Health (Norman Lamb)]

I congratulate my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) on securing the debate, and on his speech. I do not think that I disagreed with anything he said. He was absolutely right to highlight the fact that when finances are tight in the NHS it always seems to be mental health that loses out. That happened in the middle of the last decade, and it has happened again now. There is what I describe as an institutional bias against mental health in the NHS, and it must be combated. That is why, as my hon. and learned Friend said, we have legislated for parity of esteem.

The levers—the financial incentives—in the NHS are unbalanced, and that disadvantages mental health. On the physical health side of the divide is the politically powerful guide relating to the 18-week period between referral and treatment, but there is no equivalent on the mental health side. Moreover, payment by results operates in the case of physical health. The combination of those two things sucks money into acute hospitals—it increases investment at the acute end of the spectrum—but takes money away from mental health, which depends on block grants negotiated locally. We must change that, and next year we shall introduce access standards to mental health services so that we can start to address the imbalance in the system.

As my hon. and learned Friend pointed out, the fact that we are all living longer makes the increasing prevalence of these problems inevitable, and, although we have legislated to make age discrimination unlawful, it cannot be eradicated overnight. Because of the way the system works, older people still lose out, such as in access to IAPT—improving access to psychological therapies—cognitive behaviour therapies.

Dementia and Specialist Older Adult Mental Health Services, which is part of the foundation trust in Lincolnshire, provides a range of specialist community and in-patient services and contributes to all key care pathways for older adults with dementia and mental health-related needs. As Members will be aware, these services are designed and commissioned locally so that they can be closely matched with the needs of the population they serve. That does not always happen, but it is the principle.

Crucially, local GPs are ideally placed to know local health needs and they now play a key role in commissioning health services. Lincolnshire Partnership is therefore working with four GP clinical commissioning groups in Lincolnshire and with other providers to improve the services it offers. Aims include reducing unnecessary hospital admissions, facilitating hospital discharge, and delivering more home and community-based services. There is a range of initiatives within this programme, such as having mental health nurse-led clinics in GP practices and care pathways. That is a very important advance. Bringing mental health back into primary care is a necessary reform because very often people get stuck in long waiting lists, waiting for referral to treatment and support. Other initiatives include CCG-aligned community teams with functional mental health and dementia-specific clinical pathways and skills, nursing home support, and developing behavioural psychological support services in the community for people with complex behavioural needs.

In October 2012 we announced a £50 million capital investment fund to support the NHS and social care in improving dementia care. The funding is aimed at expanding the range of health and care services, offering supportive environments to help the growing number of people with dementia get the best possible care. My hon. and learned Friend will be aware of the Prime Minister’s dementia challenge, which was issued in 2012 and which focuses on improving health and care services, making our communities more dementia-friendly and increasing research into dementia, both trying to find a cure and gaining a better understanding of how we care for people with dementia.

Lincolnshire Partnership NHS Foundation Trust was awarded £250,000 from that programme to transform the care environment at the Manthorpe centre, to improve care for people with dementia in Lincolnshire. The Manthorpe centre is a 20-bed assessment and treatment unit located on the district general hospital site at Grantham that offers specialist care to older people suffering from dementia or functional conditions. This is a high-level service provided in hospital to allow for a needs assessment by a range of professionals who provide an appropriate bespoke treatment plan.

Local services always need to be alive to the need to change and improve so that they can meet the needs of the people they serve. Of course this can sometimes be unsettling for staff, and organisations need fully to engage with them in achieving improvement. It is good that the health worker at the Manthorpe centre went to speak to my hon. and learned Friend to raise his concerns directly so that they could be debated here in Parliament. This is all the more important when, as I will discuss in a moment, we are focusing on mental health and older people as never before.

I would encourage my hon. and learned Friend to continue to raise these points with the chief executives of local authorities and NHS organisations in his area. As I mentioned earlier, the success of the managed care network in his area has recently been independently recognised, which is good.

My hon. and learned Friend asked what the Government were specifically trying to do on national policy. We now know much more about the causes of some of the most common mental disorders, such as depression and anxiety. We also know what can, in many cases, prevent them, and we are focusing on raising awareness of the interventions that we know work—for example, reducing isolation in older people. Loneliness and isolation affect people with mental health problems. We know that loneliness has a very negative impact on physical and mental health. The mental health of people who are on their own and not seeing anyone deteriorates, and they may also start to drink too much—that is a common feature of loneliness and it exacerbates the problem. Loneliness is associated with conditions such as cardiovascular disease, dementia, poor sleep and depression. Loneliness and social isolation are problems that government alone cannot solve.

Many of the solutions to combating loneliness lie within local communities themselves, but government has a part to play. One thing that I always stress is that if we are to combat loneliness and focus on well-being, which is the principle at the heart of the Care Bill we have been taking through Parliament, there has to be a richer collaboration between statutory services and the wider community. My hon. and learned Friend mentioned the strong communities in Lincolnshire. One potential solution to the challenges he highlighted is the fact that there are growing numbers of people in retirement. Although some have care needs, many of them are fit and healthy and often they want to give something back but do not know how to do so. The question of how we can unleash the power of our communities and those people who do have time on their hands and want to contribute suggests to us part of the solution to the challenge we face.

By bringing people together, giving them the right tools and increasing the evidence base on loneliness, we can encourage local commissioners to tackle this important problem. I agree with the points made by my hon. and learned Friend on both parity of esteem and the links between physical and mental health—as he made very clear, one so often causes the other. We have taken action to try to address these problems. We have enshrined in law the equal status of mental and physical health in the Health and Social Care Act 2012. We know that people living with significant and persistent mental health problems have significantly reduced health and quality of life, and that they live on average 16 to 25 years less than the general population—that is extraordinary and, as he indicated, it is avoidable. The reasons people with mental health problems die earlier could be addressed and we could reduce this outrageous gap in life expectancy.

That is why reducing premature death in people with serious mental illness is identified as a priority area in both the public health and NHS outcomes frameworks, and it is why the NHS operating framework specifically focuses on the physical health of people affected by mental illness for the coming year. Let me explain the purpose of the outcome frameworks. That is horrible jargon, but the point of such frameworks is to try to focus on what the results are for people and to measure the performance of organisations across the country in what they achieve for people and whether their performance is improving over time. That starts to enable us to hold the system to account.

We are investing more than £400 million to give hundreds of thousands of people, in all areas of the country, access to psychological therapies. We are supporting local organisations in taking effective action to improve mental health. Our mental health strategy and the implementation framework that goes with it, and our suicide prevention strategy, focus on specific actions that local organisations can take to improve mental health across the life course in their areas. In June last year, we announced the better care fund, and from April 2015 councils and the NHS will get £3.8 billion to work with each other and the voluntary sector. Plans are now being assured—they have been submitted in draft form—and challenged at local and national level. In 2015-16 the fund will receive an additional £2 billion from clinical commissioning group budgets and £800 million from existing health and social care funding streams. This fund is about a new way of working, with joint decisions made locally to deliver joined-up care, pooling the resource that is available, for people who need it most.

My hon. and learned Friend gave an example of one organisation saying, “It’s not our responsibility; it’s somebody else’s.” That sort of silo working has to end. We know that if we harness the public resource that is available, join up more effectively the efforts of different public sector organisations and work collaboratively with the wider community, we can make much better use of our available resources. It really should be a thing of the past that we hear organisations saying, “It’s not our responsibility; it’s somebody else’s.” They must resolve their problems collaboratively. I was encouraged to hear that that now appears to be starting to happen.

Last year, we announced 14 integrated care pioneers to work on ambitious and innovative approaches to delivering person-centred co-ordinated care and support. The pioneers are supported by national partners. They draw on international expertise and work with senior sponsors within the sector, allowing them to innovate, break down the barriers that exist to joining up care and lead the way on integrated health.

My hon. Friend the Member for Gainsborough (Sir Edward Leigh) mentioned the rural nature of Lincolnshire. Well, Cornwall is rather similar, as indeed is my own county of Norfolk. In Cornwall, the integrated care pioneer has a fantastic collaboration between volunteers and GPs. The volunteers give companionship to people who are living on their own, and work collaboratively with GPs. GPs recognise that the volunteers help them in their work and reduce the isolation that so many people feel, and they have seen significant reductions in hospital admissions. So, if we improve lives, we save money, and that must be what we are all after.

Each pioneer is focusing work on its own priorities, which is bringing specific progress on issues. Many of the pioneers, in both rural and urban areas, face the same issues. Partners are coming together and overcoming difficulties for everyone. We want to disseminate, as quickly as possible, the learning from those areas so that everyone can gain the benefit of this exciting pioneering work. We aim to make integrated care and support the norm and to improve the experiences of patients, service users and carers.

“Closing the Gap”, which we launched in January, indicates the importance of equity between mental and physical health for this Government. It outlines 25 priority areas where people can expect to see, and experience, the fastest changes. One priority area is tackling inequalities in access to mental health services.

Older people typically use mental health services much less often than their working-age counterparts. According to IAPT data, only 6% of people who use psychological therapies are over 65. In response, we supported the advertising campaign delivered through Age UK and Carers UK to raise awareness of psychological therapy services among older people.

NHS England is promoting psychological therapy services for adults who have depression or anxiety disorders through the national IAPT programme and, as part of this work, is paying particular attention to access for people over 65 years of age. It funded the advertising campaign to promote IAPT services. The promotional campaign challenges views that depression is natural in older people—that is an old assumption that people make—and encourages GPs to refer older people to IAPT services and older people to self-refer.

Another strand of IAPT development is a project that aims to ensure that psychological therapies are routinely available to people with long-term physical health conditions and medically unexplained symptoms. Given that many older people have such physical health conditions, this project will lead to greater use of IAPT services where necessary. We have also developed a new curriculum for psychological therapists that trains them to work more effectively with older people.

The hon. and learned Gentleman raises a point about substance misuse in the elderly population. We should not be surprised that people who have used illegal substances or alcohol earlier in life do not suddenly stop when they reach 65; better training for all professionals will ensure that help is based on actual need, and not on outdated images of older people.

“Closing the Gap” supports all the objectives set out in the Government's mental health strategy, which is a cross-Government mental health outcomes strategy for people of all ages. It was launched in February 2011 and sets out a clear vision for improving mental health and well-being in England for people of all ages, including older people.

The hon. and learned Member for Sleaford and North Hykeham spoke of the apparent disconnect between services for the under and over-65s and quoted the Royal College of Psychiatrists. We are committed to making sure that adults of all ages are treated fairly, with access to services based on their needs, not on any assumptions about what they might need. When we are developing local services, commissioners and providers have the opportunity to consider how mental health services can be user-led rather than service-led, while recognising the specialist service requirements of some older people with mental illness.

The number of older people in the UK is projected to rise substantially over the coming decades as a result of a combination of rising life expectancy and the large number of births in the period following the second world war—the baby boomer generation. Despite the demographic and additional economic pressures, the Government’s ambition is to make this country a great place in which to grow old. There is an awful lot of work still to do and we have not combated the lack of parity yet, but we are totally committed to doing so. A lot of the things we are doing will help us achieve that.

Question put and agreed to.

17:31

House adjourned.

Westminster Hall

Thursday 27th March 2014 Westminster Hall

Thursday 27 March 2014

[Andrew Rosindell in the Chair]

Local Authority Parking Enforcement

Thursday 27th March 2014 Westminster Hall

[Relevant documents: Seventh Report from the Transport Committee, Local Authority Parking Enforcement, HC 118, and the Government response, HC 970.]

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)

13:30

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I am grateful for this opportunity to debate the Select Committee on Transport report “Local Authority Parking Enforcement”, along with the Government response. The topic was chosen following requests from members of the public, who are regularly invited to suggest subjects for the Committee’s inquiries. In January 2013, we launched a call for evidence seeking views on the adequacy of current arrangements for parking enforcement. We published our report in October 2013 and received the Government response last January. Public interest in the subject is strong, and today’s debate is timely.

Parking policy is a crucial element of transport strategy and an important part of transport management. In 2011-12, Aberystwyth spent a year without parking enforcement, which provided an alarming insight into what life would be like in our town and city centres if there were no wardens. NCP stated that in that year, Aberystwyth became

“the worst place in the country to find a parking space”,

and Aberystwyth’s chamber of commerce observed:

“It has been chaotic, especially for people with disabilities or delivery drivers. On balance, shoppers and the public generally will welcome the re-introduction of wardens.”

Although parking policy is important in its own right, it should be integrated with broader transport planning. Local authorities must balance the needs of different road users according to local circumstances, and parking enforcement is one tool to achieve that objective. It must be linked with providing good public transport. Joined-up transport planning involves striking a balance between tackling congestion and maintaining the accessibility of town and city centres. Particular concerns have been raised about the impact of parking policies on local shopping. Innovative measures to address it could include allowing free parking for limited times at certain times of the day, providing discount vouchers for customers who pay for parking and enabling local businesses to validate parking tickets so that customers get some money off parking. Those are just some of the suggestions that the Committee made in addressing the issue.

The response to our inquiry highlighted a deep rooted public perception—it is not necessarily the reality—that parking enforcement is used as a cash cow by local authorities. Taken together, in 2012-13, local authorities in England made a surplus of £594 million from parking activities. However, those surpluses were not evenly distributed. Seven of the 10 highest surpluses were in London; the largest profit, £39.7 million, was in Westminster. There are also more than 50 local authorities that operate parking services at a loss. Using parking charges and fines for the express purpose of raising revenue is neither acceptable nor legal. Any surplus created must be applied to transport purposes, which can include traffic management or investing in public transport.

How can the issue be addressed? First, more transparency is required. All local authorities should issue annual reports showing income from both parking charges and penalties, along with how any surpluses were applied. In addition, local authorities should show the criteria that they use in assessing their penalty charge system. There is sometimes a suspicion that targets for penalty charge notices have been set in order to maximise income. In response to our recommendations, the Government response stated:

“The Government supports greater transparency in local authority parking accounts. Local authorities should collect and publish data on revenue collected”

from parking meters and enforcement notices.

The Department added:

“The revised code of transparency for local government states that local authorities must place a link on their website”

to data showing

“revenue collected from on-street and off-street parking and parking enforcement notices.”

Is the Minister confident that all local authorities are now following the revised code of transparency for local government by providing that link?

In addition to our recommendations on transparency, we made two proposals on enforcement. First, we concluded that parking enforcement should attempt to minimise the number of penalty charge notices issued to motorists who have made honest mistakes, for example due to unclear signage. We asked local authorities to pay special attention to people who have simply made a mistake. In addition, we recommended changes. We suggested that the Department for Transport statutory guidance should stipulate that local authorities should implement a five-minute grace period after the expiry of paid-for time. The Government described this proposal as “worthy of consideration” and included it in the consultation paper on local authority parking.

The consultation closed on 14 February. I hope that the Minister will update Members on the consultation response to our recommendation of a five-minute grace period and set out how he intends to proceed in that regard. The Committee also called for the end of the routine use of CCTV to impose fines. The blanket use of CCTV does not always show the full picture. For example, it does not always show whether a vehicle is being loaded or whether a motorist has a permit to park where they have stopped.

The Committee also recommended significant changes on penalty charge discounts. Currently, fines paid within the first 14 days receive a 50% discount. If a motorist appeals and loses the appeal, there is no discount. We proposed a 25% discount for motorists who pay within seven days of losing an appeal to a tribunal. In the Government response, the Department stated that the suggestion was “worth wider consideration” and included it in the local parking enforcement consultation. Will the Minister update Members on the consultation response to our recommendation of a 25% discount and set out how he intends to take the matter forward?

The Committee noted that some local authority parking enforcement regimes effectively force some companies required to make deliveries at given times to incur penalty charge notices that can cost hundreds of thousands of pounds a year, simply for operating their businesses. We even heard of a millionaires’ club of companies that accept that they will have to pay more than £1 million a year in charges due to penalty charge notices that they cannot avoid. We concluded that that is unacceptable and asked the Government to convene a round table discussion with road hauliers and local authorities to identify ways to address the problem. In response, the Government stated:

“We agree that a round table discussion might be useful and DFT will talk to local authorities and the freight industry to see how this might be organised.”

Again, will the Minister update us on the progress in setting up such a discussion, and does he have any other proposals for alleviating that particular burden on business?

Finally, I would like to discuss an outstanding issue: the enforcement of penalty charges on non-UK vehicles. We recommended that

“the Government initiate discussions at a European level on the feasibility of introducing EU-wide powers for the cross-border enforcement of parking penalty charges”.

The Department responded by saying that

“many Member States have reservations about data sharing and the general security of individual citizen’s data across international borders for non-criminal contraventions.”

The UK is apparently one of those member states. For example, the Government response highlighted that it

“would not opt in to a European Directive facilitating cross-border enforcement in the field of road safety…which would not be in the UK’s interests.”

I am somewhat puzzled by that. Does the Minister believe that cross-border enforcement of parking charges is a desirable objective? What discussions have taken place at an EU level? What are the Government’s objections to proceeding? If there is no action at a European level or if the UK will not be part of any action that other European countries are proposing to be involved in, is it possible to achieve the same objective without engaging with other European countries?

Parking policy will always arouse strong emotions. Motorists faced with what is perceived to be unduly high charges or unfair penalties will feel unjustly treated. However, parking management is required to reconcile the competing demands of different road users and to prevent congestion. I hope that the report and its recommendations contribute to making parking policies fair to all.

13:41

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Rosindell, and to follow the distinguished Chair of the Select Committee on Transport, my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), in raising the report with the Minister. I look forward to his comments and those of the shadow Minister, my hon. Friend the Member for Birmingham, Northfield (Richard Burden).

I am a relatively new member of the Transport Committee, which I assume is why the current membership list on the first page of the report states:

“Jim Fitzpatrick (labour, Poplar and Limehouse)”—

Labour with a small l—while every other member’s party is spelled with a capital letter. Perhaps that is a demarcation issue for the Stationery Office, but I take it as no slight. My contribution will be brief and may repeat some of the points made by my hon. Friend the Member for Liverpool, Riverside, because the Government’s response to our report, which they have been good enough to provide, leads to some questions.

My first point, already raised by my hon. Friend, is about the consultation that ran until 14 February, which is mentioned in the opening paragraphs of the Government’s response. How is that consultation going? When might we expect its findings to be published?

On recommendation 1, about pavement parking¸ the Government response states:

“In 2011 the Department for Transport gave all local authorities in England the authority to introduce local restrictions on pavement parking”.

How many local authorities acted on that advice? The Minister may not have that information, but given that the Government issue guidance and authority to local councils, it would be interesting to know how many took it seriously and responded locally.

The Government’s response to recommendation 2 states:

“The Government will consider the views of stakeholders and respond to the consultation in the first half of 2014.”

Is that on track? Given that we are now approaching April, can the Minister be more specific than “first half of 2014”?

In response to recommendation 3, the Government say that the Department for Transport

“intends to revise and update its statutory guidance to local authorities on parking enforcement.”

As my hon. Friend suggested, it would be interesting to know when the Government expect to be able to do that.

The Government responded to recommendation 5, about regimes, by saying:

“We agree that a roundtable discussion might be useful and DfT will talk to local authorities and the freight industry to see how this might be organised.”

Has a roundtable taken place? Will one take place? London had a positive experience during the Olympics, when so many deliveries were made out of hours. Local authorities introduced new procedures, such as adjusting vehicles to ensure that radios turn off when cab doors open and installing rubber wheels on delivery trolleys. Local authorities and businesses adopted all manner of simple but sensible arrangements, so that middle-of-the-night deliveries were almost silent. I recall that there were no complaints that the system did not work well, so there is room for optimism that such procedures could be adopted in other places with congestion.

Recommendation 6 asked that the Government

“provide greater clarity on the rules for loading and unloading”.

The Government said that they

“will review its guidance to local authorities and will update it as appropriate.”

Has that happened? Will that happen?

The Government’s response to recommendations 7, 10 and 13 are identical. In all three answers, they said that local authorities

“should collect and publish data”

and that the

“revised Code of Transparency for Local Government states that local authorities must”

publish data on revenue collected and parking enforcement fines. What discussions has the Minister had with the Secretary of State for Communities and Local Government, whose Parliamentary Private Secretary, the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw), is present and is taking a great interest in the debate? Has the Department for Transport met the Local Government Association? What progress has been made on the publishing of data? Are local authorities routinely publishing such data? Is the Department is happy with the progress of authorities that previously did not publish as much data, if any? It seems sensible that residents should be able to see, as my hon. Friend the Chair of the Transport Committee suggested, whether parking and enforcement fines are appropriate and are being used to pay for enforcement officers, CCTV cameras and appropriate road markings and signage. The publishing of such data provides an easy way for residents to be reassured that the balance is right. I am sure the Minister will have information on how well it is going.

In response to recommendation 12, the Government state:

“Consultation of draft regulations is programmed for spring 2014, to come into effect by March 2015.”

Is that on time? As a former Minister responsible for time at the Department of Trade and Industry, I know that time in the civil service lexicon is a vey flexible feast. I have told the story of when I had to sign off an answer to a parliamentary question asking, “When will this be done?” and the answer from the civil servant was “by autumn”, so I asked the civil servant, “What does autumn mean?” and I was told that autumn was 23 December, because that is when the autumn session of Parliament started. Most people would probably think that we were pretty much into winter by that time, so what does “spring” mean? Is that the Easter recess? Is it the Whitsun recess? Or is it the middle of July at the start of the summer recess? I suspect that it is probably the July date, which would give the Government more time—I am not quibbling about that—but it would be nice to know what spring means in this context.

My penultimate comment is on recommendation 17 and the point made by my hon. Friend the Member for Liverpool, Riverside about the general European-wide power. While the Government state that they remain

“open to considering a general European-wide power”,

they say later in the response:

“In March 2011 the Government announced that it would not opt in to a European Directive facilitating cross-border enforcement in the field of road safety.”

Many of us were unhappy about that at the time and still are. If the Government will not opt in to a directive on road safety, which most of us would deem far more important than parking—notwithstanding how important parking is to drivers across the country—it is disingenuous for them to say that they remain open to a joining a European-wide initiative. If the Government are not going to do that on road safety, surely the Minister can confirm that they will not do it on parking.

I am pleased to see the Minister and his shadow, my hon. Friend the Member for Birmingham, Northfield, in the Chamber today. I look forward to their comments.

13:50

[Richard Burden (Birmingham, Northfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Rosindell.

I add my thanks to my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) and her Committee for the important and detailed report that we are discussing. It is also excellent to see my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) in the Chamber. I was sorry to hear that in the report his party affiliation was spelt with a small “l”. However, whether he was listed as “Labour” or “labour”, he was an ’ell of a Minister and an ’ell of a shadow Minister as well. I thank him for his comments.

I hope that the Minister will not only answer the questions put by my hon. Friend the Member for Liverpool, Riverside, but take up the points made by my hon. Friend the Member for Poplar and Limehouse—in particular about out-of-hours deliveries, which give rise to important parking issues and issues for other road users, such as pedestrians. Those issues could be important for future cycling strategies and the promotion of cycling safety.

I welcome the opportunity to add my comments on the report, which covers a whole range of areas, from the vitality of our high streets to the confusion all too often caused by parking signage. I also have the chance to explode some of the myths about parking that are circulating and to put the debate on to a more rational basis. It is a little surprising and disturbing to see the high levels at which some of those myths are being promulgated.

Parking issues are raised with me, as a constituency MP, again and again—I am sure I am not alone in that—and the Chair of the Select Committee made the point that parking is a matter of great importance to the public. It might not get the headlines that High Speed 2, airports or rail fares get, but it is important none the less, because getting it right is about achieving the incredibly difficult objective of a simpler and more streamlined door-to-door journey. Get parking wrong and we block people from reaching their destination, causing inconvenience to an awful lot of other people as well; get it right and we enable people to get better access to employment, leisure and high streets, quickly and conveniently.

As the Committee has established, parking is a local issue. If it is going to work, it needs to be fully integrated into local authority transport policy, alongside action on public transport. We expect councils to take responsible and common-sense approaches to parking enforcement. As the Committee reported, that means balancing a number of objectives—improving safety, tackling congestion, improving the environment and managing local traffic—and getting that right is a big challenge, particularly in the UK, a country with one of the highest population densities in the world where local traffic is predicted to increase by more than 40% by 2042. We want safe and sustainable towns and cities, and ones that can support economic growth and be enjoyable places to visit and be part of.

I welcome the Committee’s recommendation that we should leverage local knowledge and expertise to ensure that parking provision meets specific requirements. That means bringing businesses, community groups and residents around the table to find the solutions appropriate for different areas. I want to ask the Minister about the Select Committee’s innovative proposals to ensure that local parking delivers for communities. The report has come out, the recommendations are there and the response has come back, so will the Minister confirm today what policies the Department will adopt in practice to make progress? While he is answering that, perhaps he will also comment on whether the Government will consider the provision of any business rate relief for businesses that invest in affordable town centre parking solutions.

We need not only to ensure that local responsibility is underpinned by clear Government leadership, but to interrogate things a little more. How far is that leadership in place at the moment? The Government talk a lot about localism, but in reality Ministers have all too often devolved responsibility for traffic, road safety and parking policy to councils while depriving them of the resources with which to do those jobs effectively. Local authority budgets have been cut by 40% since 2010 and many councils are struggling to deal with competing transport priorities. The Committee’s call for better national oversight on parking is therefore important.

The report called for strengthened statutory guidance, to clarify and support councils in their parking powers and practice as a priority. As has been said, that might include a national five-minute grace period, which already exists in some local authorities, to underpin a common-sense approach; providing greater support to councils on how they can use parking policy to cut congestion, improve road safety and support growth; promoting best practice and innovative solutions, looking at how initiatives such as the workplace parking levy in Nottingham work; and annual local authority parking reports to improve transparency.

Raising revenue from parking is unlawful, but in reality fewer than one in five councils makes surplus income from parking, and that is not from fines, but from on-street parking. As the Committee pointed out, however, the “cash cow” perception remains, even if that does not reflect the reality. We need clear and accessible reports to clear up the myth and ensure that people have a balanced view of what is and is not going on. The Government have agreed that better oversight is needed and they made multiple references to the revision of statutory guidance in their response to the Committee. Given that that was a priority in the Committee’s report, when are we going to get the statutory guidance?

In addition to recommending increased clarity for local authorities, the report rightly underlines the need to make parking simpler for road users. As my hon. Friend the Member for Liverpool, Riverside said, most people do not intend to break the law, but all too often they are fined because mistakes have been made, and those mistakes might come about because of poor and confusing signage. The Committee was right to call for clarity on the patchwork of pavement parking rules throughout the country, which are confusing for motorists and often dangerous for vulnerable road users. The Committee also urged clarity on the rules for loading and unloading by haulage firms—what my hon. Friend the Member for Poplar and Limehouse said on that was important—and action to rectify persistent problems with poor signage.

We are all anticipating the Government’s review of the Traffic Signs Regulations and General Directions 2002, but what my hon. Friend the Member for Poplar and Limehouse said about the timing of that struck a chord with me. I want to know what “in the spring” means. I have become a little sceptical about the Government’s seasonal promises. At the end of 2012, we were told that a Green Paper on young drivers could be expected in the spring, then in the summer and then before Christmas, but now it does not look as if we will get it before the next general election. Given that fiasco, I hope the Minister will tell us what “the spring” means and whether the review will be produced.

It would be good if the Minister provided us with an expected publication date and set out how a review that plans to increase local variation will ensure national consistency as well. Will he also tell us what action the Government intend to take to make the pavement parking rules clearer than at present? We support innovation and local authority flexibility, but the fact remains that, if it is going to work, parking policy must be developed with the road user in mind, and in a way that road users can understand.

Sadly, to put it bluntly, under this Government we are not getting a coherent response from Ministers. In fact, I think there is a bit of a mess. I welcome the Secretary of State’s decision to freeze the maximum penalty charge—households are struggling with the rising cost of living and it is obviously not good if they are hit hard by charges as well. But I find it difficult to reconcile what the Government are saying now with what they said just three months before the announcement of the freeze, when the former Transport Minister, the hon. Member for Lewes (Norman Baker), was proposing to hike parking charges. There does not seem to be great continuity in the Government’s message.

I raise that issue because we are seeing another example of ministerial confusion today, about proposals to ban CCTV for parking enforcement. The Transport Committee pointed out that we need clarity on how cameras are and should be used, as CCTV should be used only where safety and congestion are major issues—for example, around schools, bus stops and pedestrian crossings—and where traditional parking enforcement is difficult. But the move to ban CCTV, if that is indeed what the Government are suggesting, has been opposed by pretty much every single group I have met, including road safety campaigners, local freight groups, bus operators, parking associations and the cross-party Local Government Association.

I have yet to see any evidence base for such a ban. I am prepared to consider it if I see the evidence, but I have not seen any. Ministers have no idea how much revenue councils make from CCTV parking enforcement charges and apparently will not even make an estimate. Given that, we might think it is not a significant problem. If the ban on CCTV goes ahead, however, it could have serious consequences. First, it could have financial consequences. More than 75 councils have made substantial investment in the technology. Mobile CCTV cars cost between £50,000 and £60,000 each, and in a context of slashed council budgets that is a significant sum.

More important than the cost, as many Members have said in the past few months, is the impact the ban could have on road safety. As far as I can tell, CCTV cameras have proved pretty effective in improving safety in high-risk places, such as around schools. To give an example, in Oldham, an 11-year-old girl who was nearly hit by a car outside her school in 2012 campaigned to secure what is called Oscar—the Oldham safety car—a CCTV vehicle that has reduced the number of injuries near schools and improved safety awareness. CCTV for school parking is popular with families. A recent survey showed that 80% of parents in Bromley support its use in those sorts of circumstances. We share the concerns of parents about a policy that could have an impact on the safety of children.

I am therefore shocked that the Government seem prepared to ban CCTV without any economic or safety assessment at all—if indeed that is what they are going to do—and would like the Minister to clarify the following points. First, are the Government proposing to ban CCTV? If they are, what is the evidence on which the proposal will be based, because anecdotes are simply not sufficient? Why will the Government not produce a regulatory impact assessment for the policy? What estimate has the Minister made of the financial support that will need to be given to councils to cover abortive car projects and fund more on-street enforcement? What impact will that have on departmental spending? If the ban on CCTV for civil parking enforcement goes ahead, will primary legislation be required?

Those are genuine questions. Something tells me that they are probably being asked by the Department for Transport as well; it would not surprise me to find that the Minister has been asking one or two questions along those lines himself. There is a rumour abroad that the policy is a bit Pickled. If it is, the sooner we get some clarity on it, the better. The Secretary of State for Communities and Local Government, the right hon. Member for Brentwood and Ongar (Mr Pickles)—just to bring him in—has been saying that he wants to give our nation’s high streets a boost, but if that is how he wants to do it, I can think of ways that would be a lot more effective.

How about backing Labour’s pledge to cut business rates for small companies, for example, or creating a British investment bank that has a duty to lend to small and medium-sized enterprises? How about acting on calls from organisations such as Living Streets, which found that supporting high streets actually requires making public spaces more attractive and more accessible, rather than simply providing free parking?

Good traffic and parking management are vital for creating accessible and attractive town centres that can thrive. How will banning the use of technologies such as CCTV achieve that? If I am right in saying that the Department for Transport is not happy and that pressure from another Department is influencing policy on the issue, will the Minister explain why he and his Department are letting another Department dictate transport policy?

There are clearly important issues about parking that need to be addressed. The Transport Committee’s report contains excellent recommendations, and there is consensus across the House on the need for transparency and common sense in local parking policy, underpinned by strong leadership from Government. Sadly, it looks as though Ministers are wasting a lot of time on a bizarre policy to ban CCTV that has no evidence base but does have potentially damaging consequences. It would be better, to be honest, if they were to produce clear time scales and action plans to back up their response to the recommendations in the Select Committee’s report.

I hope that the concerns and issues raised today—principally those raised by the Select Committee, but also those I have raised—will encourage the Minister to think again on the issue of CCTV and start a constructive dialogue on the future of parking in the UK.

14:07

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

It is a great pleasure to serve under your chairmanship, Mr Rosindell.

I appreciate the work that has been done by the Select Committee in looking at the issue of parking and bringing forward its views, which the Government are considering along with other recommendations that have been brought to us. It is indeed an opportune time to discuss parking issues following the publication of this excellent report and also the Government’s consultation on parking, which concluded on 14 February.

Let me say straight away that we are currently considering over 800 responses to the consultation, and will be responding in full in due course. [Interruption.] I do not know whether, when the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) was in the Department, he had to respond to things in due course, but I reassure him that this matter is in my in-tray and I am giving it a great deal of attention. It has not been parked in the tray marked “too hard to attend to”.

[Jim Fitzpatrick]

The Minister knows that he is held in high regard by the Opposition, as he is by his Government colleagues. I wish him every success with his in-tray.

[Mr Goodwill]

I wonder whether the reason why, in the report, there was a small “l” for the party name after the hon. Gentleman’s name is that the word “labour” is used not only as the name of a party but as a reference to someone’s working very hard on a subject. That could well be the reason.

This debate is timely. It is not simply a case of responding to the consultation and considering all the points but ensuring that we have agreement across Departments and across the coalition, as different Ministers may have different priorities when they arrive in Departments.

We ask parking and traffic management to deliver a number of objectives in parallel, and managing those competing demands on our roads will never be simple. The UK has more motor vehicles per mile than France, Germany or even the densely populated Netherlands, and traffic on our roads is forecast to increase. That is why we are investing £24 billion in the strategic road network in this Parliament and the next, a tripling of previous investment levels seen in this country. By 2021, we will be spending £3 billion every year on improvements and maintenance, which is the most significant upgrade of our roads ever. It is also why parking and traffic management have a vital role to play. Effective management enables people, goods and services to get to where they are needed and is essential for a growing economy.

Over the past few years, we have seen major changes in how parking is enforced. More than 90% of local authorities have taken over the civil enforcement of their parking services. I wrote to the other 10% today suggesting, without wanting to impinge on their local decision-making processes, that they look closely at the advantages of opting for civil enforcement. It has improved compliance, reduced congestion, freed up the police and, most importantly, made our roads safer.

When effective parking management breaks down, as in Aberystwyth, and in Scarborough in my constituency, where a couple of enterprising former police officers, armed with tape measures and copies of the science manual, managed to delay the introduction of our civil enforcement, the result is chaos. That is not good news for motorists and certainly not for businesses because it causes real problems. We must keep a close eye on the matter. How parking is managed matters to us all at some level, and we must ensure that the basic rules and regulations help councils to deliver balanced and effective parking strategies.

We are here today to discuss the Transport Committee’s recent inquiry into local parking enforcement and the Government’s recent wide-ranging parking consultation, which invited views on many of the Committee’s main recommendations. Despite what some press reports have claimed, we have not already reached a decision on changes to Government policy following the consultation. I will look carefully at all the responses, and am very aware of the wide range of views among stakeholders about sensitive issues such as camera enforcement.

The Select Committee’s inquiry and our consultation were prompted by three big issues for parking and traffic management: first, the challenges facing our high streets; secondly, the potential for the deployment and use of new technologies to improve the use of our roads, recognising that, in some cases, they cause the public concern; and thirdly, the widespread belief among motorists that some councils seem to view parking enforcement primarily as an opportunity to raise revenue. I will say a few words on each of those issues.

Our high streets are essential to our national life. They bring people together and are at the heart of our daily life and economy. In London, more than half of the jobs in the capital are spread across just 600 high streets, and two thirds of Londoners live within a five-minute walk of their local high street. However, our high streets are going through long-term change. Those changes are significant and require communities to play an active role in shaping their high streets. There are far too many empty shops throughout the country. We have put in place a £1 billion package of support to help local people reinvigorate their high streets. Recent figures show that the number of empty shops on UK high streets fell in December 2013, which was the first time the rate has fallen below 14% since July 2010.

Ensuring that convenient and safe parking is available at reasonable cost is part of the answer and many areas need to improve. During her recent review, Mary Portas found that in many areas

“parking has been run-down, in an inconvenient place, and most significantly really expensive.”

The recent survey from the Association of Town and City Management and the British Parking Association found that some mid-range areas were charging 18% more for parking than larger and more popular retail locations. Indeed, many such locations have free parking. The question for local businesses and residents is: what more is needed to get the local council to improve parking provision in their area?

In the consultation, we suggested one way that could be achieved: by allowing local residents and firms to be able to petition the council to initiate a review of parking policy in their area. That might be a request for lower charges, for a review to see if additional spaces could be provided, or for better street lighting to improve safety.

The second issue is the potential for new technologies to help to manage our roads more effectively. The introduction of GPS-based systems, new sensor technologies and increasing integration with smart-phones can revolutionise parking. When I parked at York station this week, I used my phone and if my return is delayed, I can update my parking period using my phone without the anxiety of perhaps being fined for overstaying.

Better and more efficient parking services can be delivered in real time, bringing benefits to high streets and road users throughout the UK. However, the capabilities of new technologies bring with them an increased responsibility to ensure that parking is enforced fairly and proportionately. I firmly believe that most of those involved in the parking industry, from local authorities to private sector service providers, aim to do just that. However, the use of CCTV, in particular, causes public concern.

The Department’s guidance states that CCTV cameras should be used only where parking enforcement is difficult or sensitive, and enforcement by a civil enforcement officer is not practicable. Cameras can be more contentious than boots on the ground, and the Select Committee took evidence that resident permits and blue badges may not always be visible to cameras. The Committee reported that in some cases cameras are used routinely for on-street parking violations, despite my Department’s statutory guidance. Our consultation also asked about options to address those concerns, bearing in mind that, as the Committee pointed out, cameras can have a useful role in some circumstances, such as outside schools and in keeping bus lanes clear. We must look at the needs of all road users in the round and look for balanced solutions to the issues.

Finally, there is a real problem with the public’s view of local authorities’ approach to parking and traffic enforcement. The Select Committee said that there is a

“deeply rooted public perception that local authorities view parking enforcement as a cash cow”.

From 1997-98 to 2010-11, net surpluses from parking rose from £223 million to £512 million. Net income from local authority parking services is expected to rise from £601 million in 2012-13 to £635 million in 2013-14, an increase of 5.6%. That headline figure reflects parking charges as well as penalties, but I am determined that public confidence in enforcement should not be undermined. The Committee has identified the importance of the Government mandating the production of annual parking reports by local authorities, so the public fully understand the strategies, and where the money from parking goes. We have been very clear that the ring fence on surpluses will remain. Fines for those who break the rules will be used only to improve the roads or environment for those who play by the rules.

The Select Committee asked whether the current system is as fair as it can be for those who inadvertently make a mistake. First, it asked whether independent traffic adjudicators should be able to allow an appeal when they determine that a council has ignored statutory guidance. Secondly, it asked whether the current system acts as a disincentive for people to appeal. There is a legitimate concern that discounts on prompt payment following appeal would result in every charge being appealed so, following the Committee’s recommendation, we have asked whether the introduction of a 25% discount for motorists who pay within seven days of losing an appeal might be worth while. In addition, it might be worth considering whether discount for appeals that are lost could be allowed only if the appeal was made during the period for which the initial discount applied. We will consider that in more detail.

Thirdly, the Committee recommended that the statutory guidance should stipulate a grace period after the expiry of paid-for time. The British Parking Association’s response to the consultation states that in practice most local authorities do that already, so we are also considering whether mandating a grace period of perhaps five minutes after the end of paid-for parking might provide the public with reassurance that they will never be issued with a ticket just one minute after the meter runs out.

The hon. Member for Liverpool, Riverside (Mrs Ellman) made several points. She talked about the possibility of validating tickets so that someone who pays in a local authority car park can use that ticket to obtain a discount in a local shop, which would presumably be reimbursed by the local authority—or perhaps by the shop itself as part of a local discount scheme. That already works in some supermarkets to encourage customers only to use those supermarkets, but that is a matter for local councils, as is free parking for short periods at certain times, such as Christmas, which Scarborough borough council provides as a way of getting people into that excellent shopping location.

Are local authorities following the code of practice? If people appeal on the ground that the code of practice was not followed, the adjudicators will see that as important. They will often be sympathetic if people make honest mistakes.

The hon. Lady talked about the response to our consultations. I have some of the responses here. For example, the question was posed:

“Do you think motorists who lose an appeal at a parking tribunal should be offered a 25% discount for prompt payment?”

The overall response was: yes, 44%; no, 56%. However, among individuals, as opposed to organisations—I suspect that quite a lot of councils were among the organisations—54% favoured the rolling forward of the discount and 46% were against, while among organisations only 23% were in favour of rolling forward, while 77% were against. Therefore, even among individuals there was a mixed result.

We also posed the question:

“Do you think that authorities should be required by regulation to allow a grace period at the end of paid for parking?”

There again, the results were balanced. Overall, the response was exactly 50:50. Among individuals 51% were in favour and 49% were against, and among organisations 45% were in favour and 55% were against. The picture from the consultations is not clear on the rolling forward of the discount or the period of grace at the end of paid-for parking. As I have already said, however, many local authorities already have a grace period.

The hon. Lady also asked about pavement parking. We have given local authorities powers on pavement parking, but we do not collect statistics on how many authorities have used those powers. In London, of course, there is an enforceable general ban on parking on the pavement. On guidance issued to local authorities, we are considering the responses to the consultation and we will reply in due course.

On local authority transparency, the Department for Transport does not know whether all local authorities are fully transparent regarding their fine revenues, as that matter is reported to the Department for Communities and Local Government.

[Jim Fitzpatrick]

Before the Minister continues on transparency, he was answering the question on pavement parking that my hon. Friend the Member for Liverpool, Riverside and I raised. That is a huge issue for organisations such as Guide Dogs and Living Streets, which campaign for people with mobility difficulties. He said that he is waiting on the responses and on further consideration by his Department, but will he assure us that he will look carefully at that? As he said, in London the protocol is that such parking is forbidden unless specifically allowed, whereas elsewhere it is almost the reverse of that. Those campaigning organisations would rather see more emphasis on looking after people with disabilities and mobility difficulties than allowing a free-for-all.

[Mr Goodwill]

The hon. Gentleman is right. I am sure that, like me, he gets letters from constituents complaining about pavement parking. People are often surprised to discover that in many parts of the country such parking is perfectly legal. We have a similar problem with motorcycles in bus lanes, in that we do not have a consistent approach throughout the country.

There was also discussion about non-UK vehicles and whether we engage in cross-border agreements with other member states. We are talking not just about foreign vehicles breaking regulations in the UK, but British drivers caught contravening rules in other parts of the European Union. Although I am sure it would be popular in the UK to ensure that foreign vehicles fully comply with our rules, I suspect that we might see stories in the Sunday newspapers and some of the tabloid press about people being unfairly penalised for potential offences carried out in other parts of the EU where their ability to appeal might be restricted by language difficulties and so on. It does work both ways. Indeed, there is a system for the heavy goods vehicles levy whereby a deposit payment is taken in advance of a court case. In many cases, when the offence is admitted, the deposit is taken in default of the actual penalty.

The hon. Member for Poplar and Limehouse talked about fines and foreign-registered vehicles. As the law stands, parking companies and local authorities can and do use European debt collection agencies. We recognise, however, that that may not always be economically realistic and that sharing of vehicle-keeper information to pursue those debts is not currently covered by international treaties. Many member states have reservations about data sharing across borders and any proposal in that area would need to be carefully thought through.

In conclusion, I believe that the majority of local authorities and parking providers are doing very good work. The challenge now is to deliver equally high standards throughout the parking sector as a whole. That means preventing the examples of poor management or bad practice that are so prominent in the media.

As I mentioned, we have received more than 800 responses to the parking consultation. I have no illusions about just how important these issues are, and following those responses and our useful debate I will be looking carefully at the options going forward. Parking and traffic management is important to the public and to our communities, and it is vital to the health of our local economies.

14:25

[Mrs Ellman]

We have had a good, informed debate, helped by the experience of my hon. Friends who have contributed greatly to the discussion. I thank the Minister for his constructive responses. These are important issues that affect people every day and there are not always simple answers. I look forward to hearing more about the Department’s position and about what progress can be made on these recommendations in this important area.

[Andrew Rosindell (in the Chair)]

That concludes the debate on local authority parking enforcement. The next debate, on access to ports, cannot begin until the Minister has arrived, so regrettably, I have to suspend the sitting. I point out to officials from the Department for Transport that Ministers should be here for the start of a debate. That this has happened is irregular, and I ask for the matter to be taken up with those who organise the Minister’s diary.

14:27

Sitting suspended.

Access to Ports

Thursday 27th March 2014 Westminster Hall

14:29

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I am pleased to have this opportunity to debate the Transport Committee’s recent report, “Access to Ports,” which was published in November. Ports are essential to the UK’s economy. About 95% of UK cargo movement by tonnage is waterborne. Ports collectively employ about 120,000 people. Whether large or small, ports are affected by the quality of transport links to their hinterlands, whether that involves road, rail, inland waterways or coastal shipping. No matter how modern and efficient the infrastructure is inside the port gates, ports cannot function if hauliers and logistics firms struggle to get goods in and out of them. Equally important is access to ports from the sea. Many ports depend on the dredging of channels of sufficient depth to accommodate visiting ships. That is particularly important as container ships continue to grow in size. The newest container ships can transport up to 18,000 20-foot containers.

Earlier in this Parliament, we expressed disappointment that the Government were not focusing more strongly on the connectivity of the UK’s international gateways, including marine ports. Since then, I am pleased to say, the Department for Transport has placed increasing emphasis on transport infrastructure as an “engine for growth” and has announced a number of transport schemes, some of which relate to ports.

The Select Committee decided to have a closer look at this issue, in view of its importance. We heard evidence from a wide variety of organisations as part of our inquiry. We visited Felixstowe—the UK’s biggest container port—and the new development at London Gateway, which is now open for business. We also visited the port of London at Gravesend and the facilities at Hull. We heard a presentation from Peel Ports on the Atlantic Gateway project, including Liverpool SuperPort. That focuses on ports and infrastructure along the River Mersey and the Manchester ship canal, as part of the north-west’s regeneration.

Connectivity is vital. Two issues about port access were raised during our inquiry. They related to both road and rail networks. First, we were told that many ports suffered from a lack of access in the final few miles to the port gates. That is one of the issues for Liverpool, but it is all too frequent around the country. Felixstowe was served only by a single-track branch line. Hutchison Ports, which operates Felixstowe, told us of the difficulty of balancing passenger and freight needs. I am pleased to say that that line has now been expanded.

The second issue relates to how the UK’s strategic road and rail networks accommodate freight transport. Many business groups have argued for the A14 in Cambridgeshire to be upgraded. It is an important route for road freight travelling to and from Felixstowe, Harwich and Ipswich, as well as London and Dover. The current Government cancelled the upgrade planned in the last Parliament. It was then reinstated, but with a controversial tolled section. The Government have now abandoned that tolling. Can the Minister let us know the current position in relation to the A14? When will road improvements there actually begin?

There are also numerous proposals to enhance the rail network to facilitate freight traffic, and those are very welcome. They include new inland terminals to handle retail commodities, a route through the Pennines suitable for freight traffic, more electrified lines and enhanced services. Transport for London told us about the pressures created on the rail network in north London by strong growth in both passenger and freight demand and called for a rail freight bypass of the capital in the long term. Progress is being made, and I hope that we can soon visit Reading station to see how freight traffic and passenger traffic are being separated. However, a lot more could be done.

It is vital that ports secure better connectivity. Knowing whom to approach is often problematic. Structures and funding arrangements for local and regional infrastructure have changed significantly in recent years and continue to evolve. From 2015, transport funding will be subsumed into a new single local growth fund. Local enterprise partnerships will decide how the money is spent. That change is causing great uncertainty. For example, the United Kingdom Major Ports Group described the new arrangements as

“complex and not easy to understand”.

I ask the Department to be more active in ensuring that the necessary priority is given to schemes providing access to ports; their wider regional and national significance should be recognised. It should act as an advocate, helping the sector to navigate complex arrangements for getting important transport schemes off the ground. The Department should also be prepared to challenge decisions made by local enterprise partnerships and other bodies if they fail to prioritise improvements in port access over other, less strategically important schemes. In other words, we are asking the Department to show more leadership in enabling ports to improve their connectivity.

In reply to our report, the Department said that there were

“encouraging signs that most of those LEPs which include major port facilities are well aware of those ports’ national…and regional importance.”

It said that it would, however,

“be ready to challenge LEPs should it appear that they have insufficiently prioritised port access.”

I welcome that, but I want to press the Minister to take a greater leadership role. Will ports have an advocate in Government to ensure that action is taken to deliver connectivity? That is vital; I cannot emphasise its importance too much.

The Select Committee also considered the question of who pays for transport measures needed to accommodate port expansion. The picture is confused. In theory, ports pay for those measures. If there is benefit to the wider community from the transport improvements, the Government make a contribution. However, the guidance on evaluating the Government contribution has never been applied. In practice, private sector funding of infrastructure linked to ports seems to be the exception, rather than the rule.

Ports argued strongly that they should not have to contribute towards infrastructure. They stated that major European ports were not expected to pay for transport improvements outside their gates and argued that those different rules put the UK at a disadvantage in a fiercely competitive market. New guidance is required on funding access improvements. There should be a presumption that significant access improvements and particularly improvements to strategic networks will be publicly funded, because of their wider economic benefits. However, that should not preclude ports from contributing to local transport infrastructure improvements, following local discussions with the appropriate bodies.

The Department did not agree with the Committee on this issue, but accepted that a lack of understanding of the Government’s policy could deter investors. Can the Minister tell us when new guidance on the issue will be published? Given that he is not prepared to change his policy—that is what we were told in the response to our report—can he explain how the situation envisaged by the new guidance will be different from the existing situation? It was clear to the Committee as we conducted our inquiry, listened to the representations and visited ports that it is a crucial issue.

I welcome the Government’s high-level strategy for ports and the new shipping strategy. The Committee’s report on this issue was published yesterday, and in some ways the two reports go together. Both strategies must be developed with more specific actions and time scales if they are to have any practical significance. The Committee will continue to pay attention to all these issues. The Government strategy commits the Department to working with industry

“to ensure coastal shipping can develop to its full potential”.

That is a particularly important aspiration, because coastal shipping has declined in recent years. It could help to relieve congestion on road and rail networks and rejuvenate smaller ports. The Government must do more to support it. In particular, the waterborne freight grant has been ineffective, with no grants issued in recent years. The Department told us that it was considering reforming the grant without infringing EU state aid rules. Is the Minister committed to finding a way of supporting increased take-up of support for coastal shipping? To back coastal shipping, will a new grant scheme be in place from next year, when the current scheme must be replaced? When it is replaced, will there be something better in its place, and will the sector be able to access that successor scheme?

The Government must also address concerns about planning. It was clear to us during our inquiry that there are major questions about the complexity of the current planning system, which was described to us as complex, flawed and unduly time-consuming. It was suggested that planning law over-emphasised environmental concerns at the expense of economic growth. The Department told the Committee that it understood those concerns and continues actively to seek ways to streamline procedures for applicants and other interested parties. Will the Minister give some examples of how the Department will make the planning system more positive for ports and clarify it?

Our ports are a vital part of our nation’s economic infrastructure. If the UK’s container ports are not competitive, container ports from Asia will not stop here. We will be reliant on secondary trade from European ports such as Rotterdam and Hamburg, adding to import and export costs and costing the UK jobs. Inadequate inland road and rail connections too often restrict development. I recognise the positive changes that the Department has made in recent times, but it could more actively engage with ports and remove constraints on development caused by inadequate transport infrastructure. I hope that the Minister can reassure us that those issues are at the heart of the Department’s strategy.

The Committee will maintain its interest in all those issues during the next few months, beginning next Monday in our imminent inquiry into the Government’s draft national policy statement on national networks. Ports are important to our national and regional economy. I hope that the Minister can tell us what further leadership he will display to ensure that improved connectivity boosts ports’ contribution to our economic activity, whether that be for the country as a whole or for our regions across the UK.

14:42

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I will not detain the Chamber long. I welcome the report from my constituency’s point of view. The Chair of the Select Committee will know the areas I will talk about, given her previous distinguished career as leader of Lancashire county council, as will the shadow Minister, the hon. Member for Blackpool South (Mr Marsden), given the geographical position of his constituency.

The key line for me in the report was:

“Ports are national assets, often out of the limelight, but essential to the economic well being of the nation.”

That needs to be said again and again. I am making an appeal on behalf of the smaller ports. There is talk in the report of a national strategy, which I think is a sensible, common-sense, positive push forward, but part and parcel of that must be the inclusion of Britain’s smaller ports. The Select Committee Chair made reference to coastal shipping and all that goes with it, and the smaller ports have a key part to play in that. As I will try to suggest, they have a particular part to play in any emergencies at our major ports. I will come to that point in a moment.

On a more positive note, I noticed in paragraph 7 on page 8 a reference to the problems of getting to Heysham port, which is just outside my constituency and in the constituency of my hon. Friend the Member for Morecambe and Lunesdale (David Morris), because of the lack of a link road from the M6. That has been an issue since 1938; I am sure the Chair of the Select Committee will remember from her time as leader of Lancashire county council the constant pressure for such a link.

As we speak, the diggers are in and work on the road is moving along. That work started only a few months ago and, interestingly enough, the mere fact that it has started is already attracting businesses to the area. Distribution businesses are looking at setting up along the road, and the container companies in the port are delighted and considering expanding. Something planned in Lancashire for more than 80 years is finally coming to pass, which is a plus.

I have two smaller ports in my constituency. Glasson dock, run by the Lancaster Port Commission, is a very small dock on the estuary of the River Lune that can take ships of up to 3,000 tonnes. It is at the end of the Lancaster canal system, so it has a freshwater and a seawater wharf; it is quite an interesting area. The little, busy port is well run by the Lancaster Port Commission. It is mainly dependent on Glasson Grain Ltd, which imports, in smaller ships, feed ingredients that are converted to animal feed for the agricultural areas in my constituency and in Lancashire more widely. On top of that, a weekly boat takes cargo to and from the Isle of Man. Glasson dock is quite a successfully run private port.

The Committee talks about access. Glasson dock is not a strategic port, so it is not controlled by the Highways Agency; it falls under Lancashire county council. I ask for the Committee’s patience while I make yet another appeal concerning the B5290, the road that goes into Glasson dock. A sign on the road states that it is liable to flooding, and it does flood. There is huge pressure from the port and the people who live in the village of Glasson Dock to get that road re-done. It has been left in a deplorable state, yet wagon after wagon of animal feed comes out of the port, keeping that commercial entity going. Despite that plea, Glasson dock is a very successful example, I would argue, of a functioning smaller port that can add something to the wider ports strategy, if there is to be one.

My main concern—I am sure hon. Members will understand why—is about the much larger Fleetwood port. It has declined over the years, first with the downturn in the fishing industry and more recently when Stena Line stopped sailings between Fleetwood and Larne in 2010, because the boats were getting too old and it was too expensive to replace them and because of the problems in getting in and out of Fleetwood that resulted from the tidal system.

We now have this huge great empty space, still owned by Associated British Ports. There has been lots of talk over the years about the possibility of reviving Fleetwood as a support system for supplying new wind farms, and we hope that something might come of that. There has even been talk recently of its becoming a centre if fracking develops. Believe it or not, fracking might be possible in the Irish sea, and Fleetwood would be in a strategic position for that.

There is a reference in the report to dredging, which I thought quite interesting. One of the key issues to do with whether Fleetwood could ever be revived is the cost to ABP of continual dredging. ABP is running down that operation, so there is some dredging, but it is not as deep as it was. The worry is, therefore, that the port will eventually silt up. I note that the report states in paragraph 21 on page 12:

“The Mersey Dock and Harbour Board successfully bid for money from the Regional Growth Fund to dredge the Mersey so that the port of Liverpool could accommodate larger ships.”

The Government stated that that was “an exceptional case”. I am sure that they have to say that all the time, and as a local constituency MP I could argue that Fleetwood is an exceptional case. If the regional growth fund, perhaps through the local enterprise partnership, made that decision, why should not the Lancashire LEP decide that a grant should be made available to keep Fleetwood port properly dredged for the time when there is demand for it?

Colleagues will understand why my old antagonist in the Greater London authority, Ken Livingstone, is not someone I would praise to the hills, and I am not doing so now. However, I remember his constant determination to protect the 10 redundant Thames river wharves. I sat on the London Development Agency for a while, and there was constant pressure to redevelop those wharves into housing. However, there was a kind of rule that we could not touch them, because the Mayor did not want to touch them. During the Olympics, some of those wharves were revived for the delivery and removal of building materials and we have seen the development of a more extensive river service, so the protection of those wharves turned out to be extremely important.

I support the Select Committee’s proposal for a national ports strategy. Surely as part of that we have to look at all the smaller ports that may one day be important back-up. If Liverpool port is to expand—hopefully, it will—and is dredged to let in the big cruise ships, what happens if the Mersey is blocked one day by an emergency? Where is the sea traffic going to go? There is nowhere along that stretch of coast: Heysham and Barrow are already extremely full, so we need an emergency contingency plan. That is why support is required to preserve smaller ports such as Fleetwood—there may be others across the country—that do not currently excite the market but one day might. However, if the capital resources are not supplied and entry to and from the port, both seaward and landward, is simply left to die, such ports will be useless in future. I argue that they do have a future, and that that should be recognised in whatever grant system is available.

I want to finish by talking about the access to Fleetwood. Fish processing is thriving, alongside the Freeport retail centre and all kinds of other things, but there are problems with road access, which is the responsibility of the Highways Agency, all the way through to the port. Despite my meeting with the Highways Agency last year, there are still great big signs all the way down the M55 saying “Ferry”, “Ferry”, “Ferry”—but the ferry has not been there for four years. God love the agency, because it has promised to blank those parts out, but we are still waiting four years down the line. It does not help the look of Fleetwood to have such big signs pointing to a redundant port.

The ports I have been discussing should be included in a strategy—and yes, we need a strategy. Who knows when Fleetwood port will be revived? I obviously hope that it will be sooner rather than later, but even if “sooner” is a bit later, in spring or winter—the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) knows the terminology far better than I do—in the short term there must still be a back-up for emergencies. If there is an emergency in Liverpool, I would argue that Fleetwood is a really good back-up port.

14:52

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is a pleasure to follow the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw). My party affiliation in the report is spelled with a small “l”, but I was actually a member of the Transport Committee for at least part of the inquiry, so that is still unexplained.

I want to make a few brief comments on the Government’s response to some of the Select Committee’s recommendations. Point 1 of the response quotes the Select Committee as recommending that the

“DfT should act as an advocate for ports”.

I was somewhat disappointed by the response.

As I said in the previous debate, the road safety Minister, the hon. Member for Scarborough and Whitby (Mr Goodwill), is held in high regard; the shipping Minister, the hon. Member for Wimbledon (Stephen Hammond), is also held in high regard by the industry and those of us who take interest in such matters because of the work that he has done. He knows as well as I do the plethora of organisations involved in shipping—the UK Chamber of Shipping, the UK Major Ports Group, the British Ports Association, Hutchison Ports, Peel Ports, the London Gateway, the Port of London Authority, TfL, Maritime UK and others. The industry has really come together in the past five years to speak with one voice, which has given them much greater authority.

To the Minister’s credit, the Government have responded to that and created the joint Cabinet Committee; the Minister has been instrumental in ensuring that that Committee has been organised and that meetings are arranged. My disappointment is perhaps caused by the fact that the Government could have made a lot more of saying, “We are giving leadership.” Their response to the report does not say that they are doing anything. There is a little omission there; they missed a trick in terms of demonstrating just how committed to shipping they have been, and hopefully will continue to be.

I should say that I am in the middle of an Industry and Parliament Trust fellowship on logistics, and I would like to thank Associated British Ports for its assistance. I have visited Southampton, Immingham and other establishments in the course of my fellowship. It has been extremely useful for me to see what is happening on the ground.

I would like to make a couple more comments, if I may. I want to pick up on the points made by my hon. Friend the Chair of the Transport Committee and the hon. Member for Lancaster and Fleetwood about short-sea and coastal shipping. Point 6 of the Government response refers to the Select Committee’s disappointment that the waterborne freight grant has been so ineffective, and my hon. Friend asked what its successor is going to be. The Government response states:

“State Aid approval will be needed”—

blah, blah, blah—

“which limits the potential design of any scheme.”

Does that limit the UK’s ability to devise a new scheme? Or does it limit our ability to get the European Commission’s approval because of the 2015 re-start? Is it our responsibility or are we going to have to wait for the Commission?

The Minister knows that coastal shipping is a much-undervalued policy area. Look at the pressure on freight and our major road networks—how much more could be accomplished if we could use short-sea and coastal shipping to take heavy goods vehicles off our roads and transport their cargo by sea? That would be a win-win for everyone concerned, particularly shipping. It would perhaps not be as good for the road freight industry, but that already undertakes a large volume of business. As the Government keep telling us, the economy is picking up, so there should be more freight and more opportunity. Perhaps we should be looking at alternatives.

[Mrs Annette Brooke in the Chair]

I want to look at point 8 in the conclusion of the Government’s response, and return to the point I made at the start of my speech. Will the Minister spell out some more detail on the joint Committee on shipping, how much it has accomplished and what the Government are doing? Will he elaborate on the perennial conflict, raised in point 8, that we in Britain are not nationalistic enough when it comes to promoting our own industries and manufacturing? Look at what the French and German Governments do by way of investing in train companies and in manufacturing infrastructure.

British shipping and ports are proud of what they do. They look to the continent and see state subsidies and Government support, and ask, a little jealously, “Why are there two different rules?” Will the Minister therefore say a little more on the EU versus UK approach? The industry is of course worried about the prospect of a new EU directive, and I know that the Government are doing everything they can to protect our port interest in that respect. Perhaps the Minister would like to reinforce that sentiment.

It is nice to see you in the Chair, Mrs Brooke—I apologise for not noticing the personnel change earlier. My final point relates to what my hon. Friend the Chair of the Select Committee outlined in her speech. The significance and importance of shipping is all but invisible to the country, other than to those of us who are involved in one way or another. There is a great story to tell about a hugely successful British industry that directly or indirectly employs hundreds of thousands of people and makes a massive contribution to UK GDP.

Given how scarce Government business currently is in the House because of the lack of legislation—we have been criticised in the media for having extra holidays and so on—and the expectation that the legislative programme next year will be equally light, as the coalition partners divest themselves of such activity to reinforce their respective identities in the run-up to the general election, I suggest to the Minister that a debate on shipping in Government time, to promote shipping, ports, coastal shipping, maritime industry, the businesses, unions and personnel, would be supported by everyone. Such a debate would also be welcomed strongly by the industry.

[Mr Gordon Marsden (Blackpool South) (Lab)]

I am sorry to interrupt my hon. Friend, but he will be aware that last year there was the highly successful London shipping week, which was warmly praised by all sectors. Some of us hope that such events may go beyond London, with all due respect, but does he agree that that would be an admirable week in which to have such a debate?

[Jim Fitzpatrick]

My hon. Friend makes a good point. London shipping week was an animal created by the new unified voice of shipping, supported by the Government. It was a great showcase and very successful. I know that the plan is to ensure that next time it extends way beyond London to be celebrated in as many of our major ports as possible.

I strongly suggest to the Minister that the debate would be better timed if held in the autumn, six months ahead, so that it could be used as a springboard to promote next year’s UK shipping week. I am sure the Secretary of State for Transport, who I know is sometimes embarrassed by his attitude to aviation because of his aversion to flying, would have no such aversion to leading a shipping debate, and I know his hon. Friend, the shipping Minister, would do an excellent job of winding up such a debate. I am sure the Transport Committee would get behind such an initiative.

15:00

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It is a great pleasure to serve under your chairmanship, Mrs Brooke. This is an important debate, and I start by congratulating the hon. Member for Liverpool, Riverside (Mrs Ellman) and her Committee on choosing this inquiry. Dare I say it, they had the wisdom to visit Felixstowe in my constituency as part of it and they did a great job of taking evidence. As the hon. Lady will know, I have childhood memories of Liverpool, which is where I grew up. The docks are very familiar to me, and they continue to transform themselves. It is good to see more shipping back in Liverpool.

I also thank my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw), who made a good contribution. He is right to highlight small ports, which also need access. Although they are not in my constituency, the ports of Great Yarmouth and Lowestoft are important to our economy in East Anglia as they service offshore energy and continue to serve the fishing industry, which is important to coastal economies.

I am grateful to the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), who was generous in recognising the Government’s success. I assure him, as I am sure the Minister will, that the Government have plenty of legislation to get on with, but it seems that the Opposition do not want to vote against much of it. It is good to have consensus. I echo the hon. Gentleman’s thoughts on having a debate in the main Chamber because, as he eloquently pointed out, the issue is important. I am slightly surprised by how few people are here for today’s debate; that is a shame. I know today is a Thursday, but it is important that the subject is regularly raised by Members who have ports in their constituencies.

Mrs Brooke, I hope you will allow me to go a little further than the report’s recommendations so that I may raise issues relevant to Felixstowe, which is the largest container port in the country and the second largest in Europe. There are various ways to get to Felixstowe: road, rail and sea. I am grateful that recommendations 3 and 4 address public infrastructure and pleased that the A14 has not been tolled—good news not only for the port of Felixstowe, but for businesses across Suffolk.

I commend the Government for continuing the road scheme and for recognising the bottlenecks in Cambridgeshire, which are often generated by the growth of Cambridge rather than that of Felixstowe. We all eagerly await the next stage of the consultation, which I understand will take place next month. I am sure the Minister will continue to commit to there being no delay as a consequence of the tolling option being ruled out.

There are problems closer to home, and I want to address the resilience of the A14 much closer to Felixstowe. For those who have never been to Ipswich, I should say that the Orwell bridge is dramatic and grand, but at times it is entirely closed, which causes chaos for the poor residents of Ipswich as the traffic gets rerouted. Although the port does its best to alert people in advance through the booking system, there is no doubt that the bridge’s closure can cause huge problems.

My hon. Friend the Member for Ipswich (Ben Gummer) and I had a summit last year with the Highways Agency and the police. We were pleased to hear that the Highways Agency has reasonable recovery facilities. There was a particularly notorious incident involving onions; I will not go into great detail. The incident closed the road for several hours, and there was another accident within a few minutes of the road’s reopening. Everything ground to a halt that day.

Unfortunately, such things often happen. The Highways Agency has proposed to reduce speed limits in the area, which I welcome. I do not welcome average-speed cameras, because such incidents tend to happen at peak times. I thank the Highways Agency, which has done a lot of work, but I encourage it to continue upping its game. Recovery can still be an issue, but I commend the agency on its work. The agency has also been good at addressing road noise, although I am sure my constituents would like even more road quieting schemes and quieter surfaces. We will continue to press the arguments on their behalf.

I have one little bugbear, but I will not be too tribal. The signs along the A14 were introduced at the great cost of £70 million, and for a long time they were not connected. Even now, it is frustrating that the Highways Agency does not necessarily allow local messages to be displayed. The agency uses references that do not make sense to most drivers, unless they are hooked-up lorry drivers. I hope the agency will be more responsive in future. If local messages need to be displayed, that should happen in a timely manner and should not be constricted by unnecessary rules.

I am delighted that the A14 has not been tolled and look forward to its being ready before the end of the decade, although I recognise that there are still resilience issues in the Ipswich area that need attention from the Department for Transport.

The Felixstowe to Nuneaton rail line is important, as the Government have already recognised. The line is mentioned in the report, and Network Rail has cleared the gauge higher up the track. In the past week, the Minister has been in Ipswich constituency. There has been an announcement on the Ipswich Chord, a project undertaken by Network Rail that should save considerable time and lead to considerably more freight trains being able to run smoothly through to Nuneaton and up to the midlands. The Chord was completed ahead of time, and I give a big “well done” to Richard Schofield, David Ward and all the people who worked on the project.

The link between Felixstowe and Ipswich continues to generate significantly more problems. I will not go into detail on the Ely junction, as Network Rail has already committed to doing work higher up the line. Some time ago, when the port was looking to expand further, Network Rail committed to dualling the line as part of the section 106 agreement. I recognise that that would be an expensive infrastructure investment, and the timeline has been delayed, but the port is looking to change the commitment and instead put money into a loop solution devised by Network Rail.

I still think that we should look to dual that section of the line, which would make a difference to local resilience. Passengers are the people who suffer on the line and, for a variety of reasons, things have been particularly bad recently. The gold standard would be to dual the line; the proposed series of loops, which will not be ready until 2017 anyway, are a silver or bronze solution. I genuinely believe that we need to dual the line to ensure the continued growth of Felixstowe. At the same time, as the Minister may know, I have been pressing for electrification of the Felixstowe to Nuneaton line, and beginning with the Felixstowe to Ipswich line would be a huge start, along with the dualling process; we should try to do both electrification and dualling at the same time. Both the Government and the private sector—Hutchison Ports—would play their role together.

We know that some of the freight rail companies have no particular interest in electrification, but we also know that one particular firm—I will not get into naming and shaming, as it were—is quite happy to use electric locomotives. Electrification would do two things. First, it would obviously be quieter and more reliable. Secondly, it would allow a much quicker service on trains when they go from Felixstowe up to Ipswich and then off to London, and allow the passenger service to be much more resilient as well. Everyone would be a winner. Admittedly, electrification is not cheap. Nevertheless, it is important and can be achieved in a reasonable time frame.

Of course, we have greater ambitions—for the Felixstowe to Nuneaton line to be electrified the whole way. The Government have committed to hundreds of miles of electrification. The midlands spine is an important part of that process, but I am pressing the case that the Felixstowe port stretch is probably more important to the country than the Southampton port stretch, and I will continue to make that case.

Putting more freight and passengers on to the rail network would be good for the environment. I recognise the point about coastal shipping and I share the disappointment of the hon. Member for Liverpool, Riverside (Mrs Ellman) that coastal shipping has not worked out as well as people had hoped. However, it was put to me by some of the local shipping lines that there is no doubt that road and rail are simply more reliable than coastal shipping, and if the weather is against you the weather is against you, which leads to complexity. I agree with the hon. Lady that we should try to do more on coastal shipping. A grant was given to try to improve the Felixstowe to Teesport route, and I am sure that other ports around the country will also be looking to do more on that.

Sea? Absolutely. It is quite interesting how people forget that sea is necessary to get to a port, although the Committee certainly did not. It is fair to say that Felixstowe is located in a rather congested channel. It is not only the stretch of water between us and the continent—we have oil tankers going past, so there are really busy shipping lanes—but there are a significant number of energy wind farms, and the channel is also where the interconnector for electricity comes from Belgium into the UK. It will continue to be a busy shipping lane and there will potentially be more wind farms. A 7.2 GW farm, called the East Anglia array, is under preparation, which will inevitably lead to increased congestion. And there are all the other things that have to happen at sea. I say particular thanks to Harwich Haven Authority, which is a good steward of that area. It continues to invest in dredging. I know it has had other issues to face, but overall it has done a good job.

Turning to marine planning, in their response to the report, the Government refer to the east inshore plan. I have had the chance to meet the Marine Management Organisation to discuss in detail my concerns about aspects of that plan. What is possibly controversial at a macro level is the potential designation of the area as a marine conservation zone. I have fought that vigorously and I am pleased that the Government—in the form of the Department for Environment, Food and Rural Affairs—listened. It was very worrying for the port, Harwich Haven Authority and other local businesses, which were concerned about the blanket designation of the area as an MCZ. Felixstowe has plenty of environment around it, thank you very much. There are the Trimley marshes, which were redone; there are Landguard Point and Landguard Fort; and loads of birds come to Felixstowe, apparently because they like going on the cranes to have a rest before they complete their journey, or because they are attracted to the port’s lights and so on.

During a previous debate in Westminster Hall, we discussed Southampton and the legal action that took place between ports. I know this issue is not the Minister’s direct responsibility, but I hope he will continue to stress to the MMO that it needs to treat ports consistently; that is vital.

Other planning issues have been dealt with by the coastal concordat. I pay particular tribute to Andy Smith, a district councillor in my constituency who is chairman of the coastal special interest group at the Local Government Association. It is important that those involved in land planning and sea planning, the Environment Agency and Natural England work more harmoniously together—they need to do so—and I hope the coastal concordat will be a great success.

I have become passionate about Felixstowe since I moved to Suffolk. It is a wonderful town with a vibrant industry, and I want the port to continue to be a success. That is important not only for Suffolk but for the country. In my view, Felixstowe is the premier gateway for containers to this country.

I will just add a little advert if that is okay with you, Mrs Brooke. The senior director at Hutchison Ports is very keen to ensure that Felixstowe is not only an importer but an exporter, and he offers free advice to anybody who wants to get into exporting. I stress that he does not make it conditional that exports go out through Felixstowe, but it is important to ensure that ports such as Felixstowe are connections to the rest of the world.

I commend the Committee for its report. Its sensible approach to environmental issues, expressed in recommendations 10 and 11, is important. And I continue to fly the flag for the great port of Felixstowe.

15:16

[Mr Gordon Marsden (Blackpool South) (Lab)]

It is a great pleasure to serve under your chairmanship, Mrs Brooke, and to take part in this debate today. Reference has been made to the number of Members present, but I am sure all colleagues here will believe that it is quality and not quantity that counts. The quality of all the contributions we have heard to date has been very good, and I hope my contribution will maintain that standard.

I give a substantial welcome to the Select Committee’s report on access to ports. It celebrates the importance and vigour of our ports, but it also has some sharp words about the Department for Transport’s lack of focus in certain areas. For example, in its summary it says:

“Government policy on who should pay for transport infrastructure relating to ports is…confused in practice and conceptually flawed.”

The report recognises the full economic value of our ports and the extent of their untapped potential for expansion, which are conceptual and strategic issues that we need to pay considerable attention to. It understands the role that Ministers can and should play in actively stimulating and supporting projects to expand ports, and then using those developments to drive within national strategy other policy goals, such as job creation and skills development—as well, of course, as the environmentally friendly movement of freight off our roads and on to the waters.

As my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) pointed out in her introduction to the debate, the Select Committee had earlier gently chided Ministers for the lack of activity on infrastructure. Having helped to get that ball moving, the Committee has now sent a second gentle salvo in the direction of Ministers.

My grandfather and my father both served in the merchant navy. Although I have not yet had a chance to delve into the service records that are now a feast for family genealogists, I know from what my father said in passing to me how familiar he was with some of the ports in the north-west, on both sides of the Irish sea and indeed off the west coast of Scotland. As a historian, I also know how crucial coastal traffic was to the economy of these isles right up until the industrial revolution. “Coals to Newcastle” has, of course, entered the language as a byword for superfluousness, but coals from Newcastle warmed the fires of Samuel Pepys and made the lords of the north-east in Tudor and Stuart times very rich. Of course, ports and the merchant navy also made vital contributions in both world wars, crucially in the battle of the Atlantic during world war two, when convoys carried precious cargo. That contribution should never be forgotten, and never will be. The Select Committee has done us a historical service as well as a contemporary one by reminding us of the great significance of the port sector.

In total, 95% of UK cargo is moved by water, which dwarves the contributions of other modes, such as road, rail and air. The sector employs 117,000 people. The excellent work commissioned by Maritime UK and carried out by Oxford Economics estimated that British ports contributed £7.9 billion to the economy in 2011 and £2 billion to the Exchequer. As with the aerospace industry, with which, as a north-west MP, I am of course familiar, it supports a significant supply chain. As Maritime UK has pointed out, it particularly supports industries that rely heavily on imported bulk raw materials and exporters of finished goods. When ports’ indirect effect is included, it is estimated that the sector supports 400,000 jobs.

All that makes the UK ports system a key element of industrial strategy. Yet there is demonstrable potential for ports to achieve even more. Planning permission has already been granted for projects that would allow the sector to more than double, but many of those works remain stalled because of the complexity of funding applications, and—this is a key theme of the debate this afternoon—lack of connectivity to the rest of the transport network. The cost to the economy if those projects were to remain uncompleted dictates that Ministers must rapidly raise their game and work hard to put ports on the agenda.

Hon. Members have given useful examples of and comments on their own circumstances. I particularly pay tribute to my near constituency neighbour, the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw), for highlighting the issue of smaller ports—a big issue, across the board—and for reminding us of the potential to keep them in good order, even when they are temporarily mothballed. The hon. Member for Suffolk Coastal (Dr Coffey) also talked about the great complexity of the situation in Felixstowe, and the importance of the area.

My hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) was my distinguished predecessor in my shadow role, but he was even more distinguished in government. He perfectly reasonably pointed out how the industry has come together over the past five years, for which it deserves praise. The Government should respond properly to the advocacy that my hon. Friend the Select Committee Chair said was needed.

Many existing ports, as we have heard, face operational difficulties that preclude their expansion. We have heard about the situation in Felixstowe, where the limitations of the local road network mean that only 3% of traffic heading north is freight traffic from the port. The hon. Member for Suffolk Coastal mentioned blockages and highway problems. We all have such issues, but doubtless her in-tray, whether digital or actual, has been full of such things since she was elected.

The family of my colleague Russell Whiting, the Labour prospective parliamentary candidate for Suffolk Coastal, have worked in the port for generations. He is in no doubt of its importance to the area and the wider economy. He successfully campaigned with other members of the community against the plan to impose a toll on the road, which my hon. Friend the Chair of the Select Committee and the hon. Member for Suffolk Coastal mentioned. The initial inclination of Department for Transport officials was to put the burden of funding the improvements on to local people, rather than to use Government funds.

It seems to me, and to Russell Whiting and members of the community—the hon. Member for Suffolk Coastal also referred to this—that Felixstowe really needs Ministers to prioritise expanding the single rail line currently shared with passenger trains. What discussions have Ministers had with local bodies about making that a priority in local transport schemes? If Ministers, with the local enterprise partnership and other local bodies, put their shoulders to the wheel, we could have a solution that would expand the port business and bring relief and happiness to communities and freight providers.

In general, we all, including Ministers, need to direct laser-like attention on the potential for rail connectivity to ports. The consortium Freight on Rail, which includes ASLEF, the Transport Salaried Staffs Association, Unite, the National Union of Rail, Maritime and Transport Workers, the Campaign for Better Transport and many others, made some key submissions to the Select Committee inquiry. It explained that, as well as the traditional bulk markets, rail has an expanding role in consumer rail freight in relation to ports:

“The industry predicts that rail freight overall will have doubled by 2030 with intermodal traffic”.

It added:

“Rail freight…has a much better environmental record than road…UK rail freight produces 70% less Carbon dioxide emissions than the equivalent road journey.”

So the issue affects not only roads but rail, and it is an issue in other places, as we have heard. The Select Committee identified a three-mile bottleneck that limits freight traffic in and out of the port of Liverpool, and referred to similar problems in Heysham. Heysham port also relies on a single route in and out, running through the historic city of Lancaster represented by the hon. Member for Lancaster and Fleetwood. That is not fit for use by heavy goods vehicles either. Everyone locally, not least my colleague Amina Lone, has been working alongside the chamber of commerce, local businesses, haulage companies and residents, to make a reality of the much needed Heysham to M6 link road.

The issue has existed for a long time, so I am glad that the road was approved earlier in the year, and that, in the words of the hon. Member for Lancaster and Fleetwood, the diggers are in. However, given concerns that it may not be completed by 2016 it is essential that there should be no further delays. The broader point is the need to expedite planning processes for ports and prevent years of economic growth from going to waste.

Despite the obstacles sometimes presented, as the Select Committee report illuminates, by lack of joined-up Government policy and limited connectivity, there are great examples of ports that continue to expand. In the coming weeks, DP World Southampton will open a new £100 million container-handling facility. That port is a great asset to the local economy and is considered the UK’s best performing terminal for turning around vessels. It contributes about £1 billion to the economy and supports almost 15,000 jobs. Associated British Ports is right to be proud that it will handle the largest and deepest vessels in the world—to a potential depth of 17 metres—and that our iconic Olympic sailor, Sir Ben Ainslie, will open the facility officially on Monday.

I pay tribute to my right hon. Friend the Member for Southampton, Itchen (Mr Denham) for the work that he did for ports nationally as a Minister, and for what he and my hon. Friend the Member for Southampton, Test (Dr Whitehead) did to ensure that Southampton’s port received the support it needed to expand. The previous Labour Government invested £40 million in the Southampton to east midlands rail line, and that investment has paid dividends. Ministers must now follow suit and ensure that other ports receive the backing that they need to compete internationally.

A super-port, London Gateway in Thurrock, has also opened in recent months. There again, that means 28,000 jobs in the region, and £2.4 billion to the economy. The developers, DP World, also privately funded works to the local road and motorway infrastructure, widening lanes and upgrading junctions and traffic lights.

The campaign conducted in Dover, involving among others my colleague the Labour candidate Clair Hawkins, demonstrates how important it is that local people should be genuinely involved in ports, instead of valuable local assets just being handed to unaccountable groups that purport to represent the community. There has been a campaign in Dover against further privatisation and for the inclusion of local workers, residents and businesses on the Dover harbour board.

The board has, of course, already established a strongly independent port and community forum, but many people believe that the port also needs changes to the law, so that it can raise the funds it needs. Has a decision been taken—and, if not, when will it be taken—about the future structure of the ownership of the port? I understand that local media reported that it was intended that that should happen earlier this year.

The Select Committee report found that although some ports, such as DP Gateway, could fund their expansion and expected to, others did not. The Government’s blunt response was that

“promoters whose developments would otherwise cause significant detriment to existing network users should be expected to avoid or mitigate such detriment, through traffic management and/or developer contributions to infrastructure improvement, as appropriate.”

That way of looking at the issue is telling, is it not? Is it not a curmudgeonly way of looking at it? Does it not demonstrate a certain mindset that would look at a port’s expansion in a negative light, regarding it as something that must be compensated for and potentially taxed, with no suggestion of what the Government might do to expand and benefit it?

The Department for Transport should act as an enabler, engage proactively with developers and work itself to identify benefits that could be brought to areas by the expansion of ports. That is particularly important, given the new local structures that we now have, based around the LEPs. More must be done to promote the value that ports bring to our economy.

Will the Minister comment on the Committee’s identifying a problem about whether there are enough private investments for port owners to invest? Are the Government correct when they say that ports are now in an excellent position to facilitate and promote growth?

As we heard from my hon. Friend the Member for Liverpool, Riverside, the Committee has asked the Government to be an advocate for ports. She was somewhat disappointed, as was my hon. Friend the Member for Poplar and Limehouse, that the Government’s response was to encourage ports simply to engage with their LEP. Will the Minister and his colleagues go further and investigate the number of LEPs with ports represented on their board and ask them directly to play their parts in forging links as well? Many LEPs recognise the importance of ports to their local economy, but some do not and those regions should not suffer as a result. Not only do ports provide jobs and support local businesses; they can also stimulate work to expand the local transport network and improve connectivity.

The Government said in their response that they would be happy to challenge those LEPs that do not sufficiently include port development in their plans, but I should like to hear—and other hon. Members would, too—about work that is already being done, specifically, to monitor that.

Ministers have cited the creation of a working group and help to develop a local debate on port master plans, but can we hear something about what concrete successes will emerge from those plans? The Government have said that they will develop new guidance on developer funding. Can they tell us how they are going to do that in practice and who will be consulted? Will the voices of local councillors, trade unions and maritime staff be heard? What is the time frame of the guidance?

Ministers said that the guidance will take account of recent changes to local structures, such as the establishment of the LEPs. It is true that £1.1 billion or £1.2 billion will be granted to the LEPs annually from 2016 to 2020. Of course, that money will be top-sliced from the DFT’s budget. There is no ring fence to ensure that that money will be used for transport projects.

The DFT is being forced to pay the piper—presumably, it found itself without a chair when the Chancellor’s music stopped—but why is it not calling the tune? With such an enormous amount of the Government’s budget being lost, surely Ministers should be taking more of an interest now in how they will be able to oversee the new fund, to make sure it maintains support for transport priorities, such as ports.

Only this week, the Minister’s colleague, the right hon. Member for Tunbridge Wells (Greg Clark), the Cabinet Office Minister, was expressing doubts about the quality of LEP plans, with fears that the fund is being misappropriated to fund vanity projects. [Interruption.] The Minister might wish to listen to this. He said:

“I am not in the business of funding so-called ‘iconic projects’ that have been hanging about like a bad smell for many years.”

LEPs need to be specific about what they need to deliver—be that more jobs, transport or support for skills. I ask the Minister to heed the words of his colleague and ensure that his own Department is far more proactive and vigorous, when it comes to ports, in establishing just what is being done on the ground with existing funding and the reach of the LEPs. Surely, substantial guidance for port developers navigating the LEP system must be a high priority for Ministers, given that more than £1 billion a year will be going into the single growth fund and on to the LEPs.

In the Transport Ministers’ response to the Committee, they promise to seek clearer guidance at European level on state aid laws. Although the UK Government seem to interpret those rules strictly, we have already heard that other European countries do not seem to do that and seem to provide money more freely. That was one of the subjects I discussed recently when I was in Brussels talking to officials from the European Commission. I am aware that this is a knotty, complex issue, but I would like to know, as my hon. Friend the Member for Poplar and Limehouse mentioned, what specific steps Ministers have taken to get answers about the issue from the European Commission.

Among all the discussion of port strategic partnership plans and national policy statements, surely the key imperative is a practical plan to work more closely across Government. It is not just a question of Ministers collaborating with colleagues in the Department for Communities and Local Government and the Department for Business, Innovation and Skills, to help ports engage with LEPs; their senior and middle-ranking officials need to, too. Together they must help ports access the funding streams they need and navigate the complex system of planning applications. With the structure of local support for ports changing fundamentally, a unified approach from Departments is more essential.

The coastal and international dimensions of freight provide a valuable service to the economy. The Committee’s report commented on the small take-up of the waterborne freight grant scheme, and my colleague the Committee Chair repeated that. Will the Minister provide the latest figures on take-up and whether these are genuinely new or existing routes that have been supported?

There are several dimensions when it comes to the value of moving freight from road to water. Emissions will be much lower, for example, because of the amount of freight that is shipped rather than delivered by road. However, the intention of the waterborne freight grant scheme could also be affected by the unintended consequences of the regulations on sulphur emissions, due to be imposed on the shipping industry at the start of next year. Several Members of Parliament, particularly those from the east coast, have already raised concern that the regulations will place too great a burden on the industry. Some groups in the industry are concerned that the regulations appear to be an unnecessary step at this stage, when the International Maritime Organisation had already established a reasonable target to be met in the next decade.

When in Brussels recently, I was told that a number of member states had actively supported the new regulations. What position did the British Government, its Transport Ministers and officials, take when the policy was being developed? The cost of complying with the maritime regulations may, as we have heard, leave road or air freight as more affordable options, making carrying the UK flag unaffordable.

The reference to the UK flag is important, as shipping and ports are a key unifying factor in the UK. The fact that Scotland contributes more than a quarter of total GDP and employment in the UK ports sector adds a powerful dimension to the debate taking place about independence.

In conclusion, we welcome the focus placed on the economic importance of ports as a result of the Select Committee’s report. We urge Ministers to heed its call for a more dynamic, active and intelligent Government who will act as a true advocate for ports. The development of skills must be put at the heart of initiatives developed, as the Committee’s report on shipping strategy, which has just appeared, emphasises in a different context. We need to see transport and the contribution of ports not in a separate box, but as part of an ambitious and integrated industrial partnership that will confer benefits—not just on local communities, but on the whole country—as ports spur international trade and sustainable economic growth.

The Government who fail to deliver connectivity and decent access to our ports will not be able to utilise the full potential of those ports to deliver skills, jobs and economic growth.

15:38

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

Mrs Brooke, it is a great pleasure to serve under your chairmanship this afternoon. I should like to put on the record that I apologise to you for not being here at the start of the debate. Through you, Mrs Brooke, I particularly wish to apologise to the Chairman of the Select Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman). As she knows, the debate was due to start slightly later and I was coming back from the west country, where I was looking at other transport infrastructure this morning. I am pleased that the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby, was able to make some detailed notes on the hon. Lady’s comments. I will try to deal with some of her comments now and I hope that she will forgive me if I miss any. My officials will certainly respond to her if there is anything we have left out.

We are grateful to the Committee for securing this debate on a subject of great importance, as a number of hon. Members who contributed to it attested. We welcomed the report and the inquiry on the basis that they presented everyone with the opportunity to take stock of the situation with ports in England and Wales. It is right to make the point that it is difficult to overestimate the huge economic importance of ports to our country. They are key.

I am pleased that the report recognises, as we all do, that the connectivity of major ports was a problem and that it welcomes some of the new infrastructure announcements. The hon. Lady is right that the final few miles to a port gate are often a problem, but much work has been done on rail network and road network infrastructure to address that key connectivity point. A number of Members, particularly the hon. Lady and my hon. Friend the Member for Suffolk Coastal (Dr Coffey), have talked about the A14 and welcomed its construction and the abandonment of tolling. To be clear, the statement on community consultation will be published in the next few weeks. The pre-application consultation will start in April 2014 for 10 weeks. That will explain the details of the scheme and why the improvements are needed. Construction work is still expected to start in December 2016 and to be completed by the end of the decade.

The hon. Member for Liverpool, Riverside raised some other points about private sector involvement and coastal shipping, and I will pick those up in some of my later remarks. I reassure her that this Government have, right from the outset, supported investment in ports and the connectivity and infrastructure around them. We set out our response to the Committee in some detail in writing. Although I will touch on a number of the subjects today, it is not appropriate for me to repeat the response at length. It recognised the responsibilities the Government have, and we have shown practical examples of working in partnership with the ports industry to ensure the complementarity of the infrastructure either side of the port gate. I will talk a little more about the review of the guidance on developer funding. In direct response to the hon. Lady’s question, the Department will review that guidance and is reviewing it this year. She also asked about freight grants, which were addressed at paragraph 6 of the Government’s response to her Committee.

There were some questions about the planning system. There has been some huge simplification through the national planning policy framework and the coastal concordat, and the advice that the Department for Environment, Food and Rural Affairs and its unit have given on habitats cases is helping to inform ports. I recognise that there were some problems in the beginning, particularly with the Marine Management Organisation and its lack of consultation with some of the ports. Harwich Haven had a problem that was brought to me, which I met the chief executive of the MMO to discuss. The MMO has recognised and addressed some of the failings in its consultation procedures. To ensure that those failings are addressed for the benefit of ports, I have a bi-monthly meeting with the MMO to ensure that it takes into account ports consultation, even though, as my hon. Friend the Member for Suffolk Coastal rightly pointed out, it is not absolutely in my direct jurisdiction, as it is under DEFRA’s. To conclude that point, we held a maritime round table on environmental requirements, particularly planning requirements, at the industry’s request last autumn. At that meeting, the chief executive of the MMO and officials and the Minister from DEFRA responded to a number of a criticisms of how the system had been working and how some of the changes had been made.

My hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) made what I might describe as a predictably forceful contribution. He is absolutely right that all ports are a national asset. He is right to celebrate that, while for many years the port of Heysham lacked a road, the Government found the funding for the local authority scheme on the A6 Lancaster road. The road is now under construction and it is for the local authority to complete the scheme. I commend him on his campaign for that road, which would not have happened without him. He will, I am sure, continue to make the point forcefully to the Government. He rightly points out the need for road access to Glasson dock. He knows, as I do, that it is for Lancashire county council and the local enterprise partnership to prioritise that as a local major scheme. It could be funded through the growth deal scheme.

The shadow Minister made some comments about the growth fund, but he should be aware that a Transport Minister sits in on all the discussions and a Department for Transport representative or official has been on most of the visits. To believe that the Department is not taking what I can only describe as an active, full and comprehensive part in that process would be to misunderstand what is happening in government.

My hon. Friend the Member for Lancaster and Fleetwood was right to talk about the Mersey dredge. I know that a lot of people are concerned, but it was a truly exceptional grant. None the less, other major dredges are going on, and they have all been commercially funded. I encourage him to work with the local port to ensure that it sees the benefits of commercial funding. If he feels that there is a truly exceptional case, I am sure he will continue to make it.

I am grateful for the kind words of the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), who was the Minister responsible for shipping in the previous Government. He talked about what the Government should have said in our response. I will ensure that we do not miss a trick in blowing our own trumpet slightly more loudly. I will address the point about waterborne freight rates in a moment. He is right that the maritime roundtable we established has brought together parts of industry with senior Ministers and senior officials from all the relevant Departments: the Department for Transport, the Department for Business, Innovation and Skills, the Cabinet Office, the Treasury and DEFRA. Senior officials connected with that group are working all the time. He is absolutely right that we should perhaps be saying a lot more.

I am grateful for the hon. Gentleman’s contribution to London international shipping week, where he was almost as omnipresent as I appeared to be. Pretty much everywhere I went, I met him and the Select Committee Chair. It was a great success and will happen again in 2015. Perhaps it should be called UK shipping week. I have already had pitches from Felixstowe and a law firm in Ipswich to host a professional services conference during a future shipping week. Some 60 or 70 events took place during that week in London and more widely.

The hon. Member for Poplar and Limehouse is also right that we should set out much more clearly the huge amount of work that goes on to help the shipping and ports industry in practical ways. He will remember from when he was a Minister that one of the great advantages of being a member of a UK Government is that on international business one can talk about the benefits of the UK and what the UK does well. A month ago, I went to Singapore to address some of the maritime issues that we face there. One part of the visit was working with UK Trade & Investment to sell the benefits of the UK flag and the UK ship register. I was delighted that, a week before that visit, one of the Singaporean companies put eight flags back on the British register. As a result of that visit, we have nine expressions of interest from other shipping companies to put more flags back on the register. It is important that the Department for Transport work with UK Trade & Investment on visits such as those and remembers the whole access issue. People often recognise London as the global centre for maritime professional services. We needed to remind the Singaporeans of that, because they are catching up fast and working hard at that. None the less, it is hugely important that we stress the benefits of the UK flag and what UK shipping and UK maritime are doing.

The hon. Member for Poplar and Limehouse is quite right about state aid, which the hon. Member for Blackpool South (Mr Marsden) mentioned. It is indeed a knotty and thorny issue. State aid on ports and the port services directive is a live issue. It is absolutely crucial that the UK Government stand up for British interests on the port services directive, and we are doing so actively. We are working hard to ensure—as the Government have done twice previously, at least once on the watch of the hon. Member for Poplar and Limehouse—that elements detrimental to UK interests are not included. He will appreciate that the part in question of the port services directive would bring some financial transparency to ports for the first time ever. It may well be of interest to see what sort of state aid is provided, not always correctly, to certain international ports. Therefore, while the UK Government are keen to ensure that we exclude everything, we will be considering carefully whether it is beneficial.

The point about state aid is a live one in the UK. It is directly due to the pressure brought by this Government and the Dutch Government, in collaboration with several other Governments, that an active discussion is now going on within the Commission about how state aid is applied, what it is doing and whether it is being used to distort international positions. The hon. Member for Poplar and Limehouse was right to bring the issue up. At one point, I was about to say to him that flattery would get him almost everywhere. It almost did in this debate. I am grateful for his remarks about some of my work, in terms of what a Minister can and should do in this area. He obviously recognises that.

I welcome the support of my hon. Friend the Member for Suffolk Coastal for the A14. I hope she heard me say a few minutes ago that there is no delay to the project. I congratulate her, and my hon. Friends the Members for Bury St Edmunds (Mr Ruffley) and for South Suffolk (Mr Yeo), who were instrumental in asking the Government to change their mind and reconsider the tolling. I praise her campaign and that of other Suffolk MPs; it was why the Government had another look at the proposals. She was right to highlight some of the issues that would have been caused for her constituents, and potentially for those using the road from the port, and the Government have been right to listen.

My hon. Friend also discussed the resilience of the Orwell bridge. I particularly remember the onion incident. I know that transport is a serious matter, but sometimes one is allowed to smile. That incident gave a lot of amusement to broadcasters up and down the country as they announced it. The Highways Agency’s route-based strategy study programme is considering all future needs of both the A14 and the A12 corridors, and it will consider the Orwell bridge. The programme is due to report in March 2015. I heard her forceful case for the electrification of Felixstowe. She is right to welcome the opening of the Ipswich chord next week; it will bring huge benefit to the freight network around Felixstowe.

I heard what my hon. Friend said about dualling and level crossing improvements. I know that Hutchison Whampoa has had discussions with Network Rail about that, which it is obviously free to do. I will talk a little more about developer contribution in a moment, but she will understand that it is not about asking ports to contribute directly to the infrastructure; it is about situations in which development is going on around the ports and the usual planning process applies, some of which involves section 106 agreements. I know that Hutchison has been discussing, and is free to discuss, section 106 agreements on partial dualling or level crossing, but the last time I was in Felixstowe—I think it was late last spring—I was pleased to see work going on to make new improvements to rail access and facilities.

Finally, the hon. Member for Blackpool South started by saying that what mattered was the quality of contributions to this debate, not the quantity. That has been absolutely true. His speech had a consensual start, and then he pointed out that the Select Committee had done some gentle chiding of the Government. That is absolutely right. It is the Select Committee’s role to hold the Government to account, and it is the Government’s role to respond to it and, we hope, to address its recommendations.

I would say gently that I listened to the hon. Gentleman’s points initially. For many years, there has been an infrastructure deficit in terms of connectivity to ports, which the Government are seeking to redress. That is key. The Government were already addressing some of the Select Committee’s remarks and recommendations. On my watch, we have established the high-level maritime forum for the industry, Ministers and senior officials. We have now developed a ports strategy and a shipping strategy, which have been published and shared with the Select Committee. We have had high-level consultations with the industry about sulphur. It is clear that the EU will proceed with the regulations. One thing this Government have secured is a look at the new regulations that will take effect from 2020 and involve an even bigger cost to the industry.

Working with the International Maritime Organisation, we have also secured a review of the 2020 proposals. It is clearly key that that review should happen next year rather than in 2018. Otherwise, the availability of fuel and the implementation of the new legislation will have a huge impact on British shipping.

[Mr Marsden]

I am grateful to the Minister for laying out the detailed programme of Government activity in the area. I asked a specific question about the position of Her Majesty’s Government when the original regulations were introduced. I would be grateful for a response on that. Also, as he said he was drawing to a close, I raised the issue of the future structure of ownership for the Dover harbour board. Can he enlighten us further as to whether any progress has been made on that?

[Stephen Hammond]

I am afraid I am about to disappoint everybody. Far from drawing to a close—

[Mr Marsden]

Sorry. You said “finally”.

[Stephen Hammond]

“Finally” in terms of the point about sulphur. There is so much to tackle on this fascinating subject that I must disappoint hon. Members. I probably have at least another five minutes yet to go, and perhaps more.

The Government’s position has been clear. We have sought to challenge the regulations, but we are now ensuring that we work with the whole industry to mitigate the cost to industry. Therefore, I—or my officials, to be more precise—have held detailed negotiations, and I chaired a roundtable with the abatement technology manufacturers, colloquially known as scrubbers, and the industry to ensure some progress. Clearly, for some, the cost of retrofitting is prohibitive, and the cost is unwelcome to a number in the industry, but the key point is that the 2015 regulation will happen. We have tried several times to secure agreement at EU level. We proposed several mitigation measures, but were not supported by other EU members on that matter. However, we have global support at the IMO to hold an early review of the availability of fuel in 2020, which I am currently actively pursuing.

I want to make a few remarks about some of the other important issues that have come up. We need to continue to support a multi-modal approach to distribution from ports, recognising the congestion issue and the benefits that road and coastal shipping can bring. In practice, most ports, in particular the smaller ones, are still, as several hon. Members have said, heavily reliant on road connections. Hauliers need to be able to access ports efficiently and need journeys to and from inland destinations to be as reliable as reasonably possible. Infrastructure and its maintenance—working with local authorities on local roads, but local highways authorities on strategic roads—are clearly important.

Ports themselves have an important role to play in local road connectivity. Several ro-ro and container ports have introduced advanced lorry-booking systems and contingency arrangements to deal with disruption, which has led to huge improvements in the delays that road hauliers used to experience. The Department for Transport has been assessing the benefit of such procedures in time savings and reliability for HGVs. Such schemes continue to offer benefits and it is possible to get more.

Bottlenecks still exist on links to important ports, however. There is an ongoing task for the DFT and ports in our strategic partnership to facilitate the growth in trade and a strong recovery in the wider economy by ensuring that we continue to put the right road links in place. Good access to ports from the strategic road network will be considered through the Highways Agency’s programme of route-based strategies and the Department’s programme of feasibility studies. Six such studies are in place and aim to identify and fund solutions to major congestion on the strategic road network. The studies will report in time for this year’s autumn statement. Several studies have direct relevance to the accessibility of ports, in particular the A47 to Great Yarmouth and Lowestoft study, and the A27 to Portsmouth, Shoreham and Newhaven corridor study.

The Government have announced plans to create a local growth fund from 2015-16 onwards. It will be a pot of £2 billion a year until 2021 and all LEPs will have the opportunity to bid for that funding through their strategic economic plans, which are due to be submitted to the Government at the end of the month. As I have said, the DFT is actively involved in those bids, has been working with the Minister responsible for cities to examine the bids and has encouraged bids that recognise the importance of transport and, where relevant, access to ports. The fund will allow local areas to prioritise infrastructure schemes that they deem essential for their economic growth. It is now for LEPs to get involved to agree what schemes they want to bid for through their strategic economic plan. It is a competitive process, with the strongest bids likely to receive a big, rather than proportionate, slice of funding.

Developer contributions for major schemes were set out in DFT circular 02/2013, which explains how the Highways Agency engages with communities and developers. It is primarily about responding to development proposals that affect existing trunk roads and seeks to support environmentally responsible development while safeguarding the primary function and purpose of the strategic road network. Where ports promote development that will affect the trunk road network, the principles set out in the circular will apply, including how development impact will be assessed and under what circumstances mitigation will be sought to ensure that the strategic road network is able to accommodate existing and development-generated traffic. Exactly what the Government are expecting has been set out pretty clearly for developers. As part of the ports strategic partnership, we will be reviewing developer guidance this year to ensure that it covers all the relevant points. If further specific clarity is needed, I anticipate that the review will lead to an addendum to the circular.

On rail access to ports, the past seven years have seen some significant rail freight infrastructure investment. A further £200 million has been ring-fenced for the strategic freight network in the next control period from 2014 to 2019. That money is being spent on projects identified by the rail freight industry as key to its needs. A significant proportion has been given to gauge clearance, facilitating the transport of shipping containers by rail from ports to inland distribution hubs.

The Felixstowe to Nuneaton route has been much mentioned. Through a combination of transport innovation fund and strategic freight network funding, gauge clearance out of Felixstowe to all major routes will be complete by the end of this year. Other major developments include the Nuneaton north chord, which opened in 2012, and the Ipswich chord, which I was delighted to visit last week. The Ipswich chord is a fantastic piece of engineering, with the tightest acceptable curve on the UK rail network. It will reduce a significant bottleneck for freight, saving between 45 minutes and 75 minutes, and will bring benefits to passengers at Ipswich and to the south and north, because the freight that previously had to go into Ipswich could hold up passenger trains. It is an important part of the Felixstowe to Nuneaton route enhancement. My hon. Friend the Member for Suffolk Coastal will know that it is one of the Government’s top 40 investment projects, and Network Rail is looking at several additional enhancements that could be taken forward on this route over the next control period and will be seeking the rail freight industry’s views on how they should be prioritised. I recognise the case being made for the electrification of the line out of Felixstowe, but it is important that we get the freight network right first.

Much good work has been done out of Southampton, and I am happy to acknowledge that some of it happened under the previous Administration. Gauge enhancement work between Southampton and the west coast main line was completed with funding under this Government, ensuring electrification out of Southampton, which is part of the “electric spine”. As part of huge investment in Southampton port and rail infrastructure, Freightliner has put in six extra lines into Southampton.

Network Rail works closely with the rail freight industry to establish priority areas for the allocation of strategic freight network funding. We are beginning to see a huge amount of freight travelling by rail. Only five years ago, Tesco told me that it did not anticipate moving much of its freight by rail; now, some 40% of Tesco goods are moved by rail.

The Government have always supported the transfer of freight from road to rail, and the Department provides freight grants to encourage that modal shift to rail, or water, where the cost of the alternative mode is higher than road and where there are environmental benefits. Freight grant schemes, where they are in place, are reckoned to remove some 800,000 lorry journeys from Britain’s roads annually and save some 120,000 tonnes of CO₂ through the modal shift. The waterborne freight grant is designed to encourage the start-up of new services. It recognises the higher start-up costs for coastal shipping through a higher initial grant rate, declining thereafter. The service has to be viable at the end of the grant.

I have already made some comments about state aid, but state aid clearance for both grant schemes ends on 31 March next year, and the Department is reviewing freight grants. We are looking at stakeholder suggestions for a scheme similar to the mode shift revenue support scheme—it provides grant funding to rail and inland waterways—which would be better for coastal shipping than the current format. State aid approval would need to be secured for the scheme, the potential of which we are actively studying.

Much has been made of several ports around the country. I commend the work of the Highways Agency with London Gateway on the improvements to the M25 and its junction 30, including the A13 and on to the junction with the A126. That scheme has been key to reducing congestion by the non-London Gateway traffic. It also allows for the ability to work with London Gateway to ensure that the port and the freight coming out of it will no longer be a congestion concern, as was anticipated. In due course, there will need to be an amendment to the London Gateway Port Harbour Empowerment Order 2008. The deed of variation is being sought, and that will facilitate the mitigation and the contribution from London Gateway. The Highways Agency and London Gateway together are making some substantial progress.

The hon. Member for Blackpool South challenged me about Dover. I have to commend the excellent work of the revitalised and changed Dover harbour board since January 2013, when I changed the chairmanship. George Jenkins has done excellent work with the board, which has had three new non-executive directors appointed to it through the independent process over the past year. There has been a revitalisation of relationships with port operators and a willingness to communicate with community groups, to ensure, following the decision not to proceed with the privatisation scheme, a resolution that is acceptable to the harbour board, with its aspirations, and the community of Dover, which has regeneration aspirations. Foremost in that campaign has been my hon. Friend the Member for Dover (Charlie Elphicke), who has been a formidable campaigner to ensure that community interests are recognised in the port. He has stood up for what he believes is right for the port. I am pleased that there has been significant negotiation between the harbour board and community interests, as well as with the Department for Transport. To use that favourite phrase, I am anticipating making an announcement in the near future.

We have had the opportunity to speak about various ports this afternoon, but I am in danger of making my longest ever speech in this Chamber—or indeed in the House of Commons. I therefore again thank the Committee for its work on the report and for securing today’s debate. The quality of Members’ contributions have shown that shipping and ports in their constituencies are vital not only to this country’s regional interests but to our national interests. I assure the House that the Government have never been more aware of that essential contribution. I intend to continue to ensure that we have a coherent approach throughout Government to such a vital national industry.

16:15

[Mrs Ellman]

It is a pleasure to serve under your chairmanship, Mrs Brooke. The importance of the issue has been shown by the well-informed contributions of so many hon. Members, including reference to the significance of Felixstowe and smaller ports such as Fleetwood and to the need to promote ports right across the UK.

The Minister’s apology is fully accepted. I thank him for his full response. Essentially, the issue is about leadership and about recognising the importance of connectivity to ports, to enable them to maximise their economic potential for the country and for the region in which they are located. Today’s debate has contributed, but it will be an ongoing discussion.

Question put and agreed to.

16:16

Sitting adjourned.

Written Statements

Thursday 27th March 2014 Written Statements

Thursday 27 March 2014

Insolvency Service Performance Targets

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

I have set performance targets for the Insolvency Service for the coming financial year, 2014-15.

In recent years there has been a significant fall in the number of new insolvency cases dealt with by the official receiver, from 78,000 cases in 2009-10 to a level of around 27,000 in 2013-14, with the expectation that this will fall further in 2014-15. The number of redundancy claims handled by the Insolvency Service has also dropped from a peak of 117,000 to 75,000 in the current year.

The Insolvency Service has reduced its cost base significantly to reflect reducing demand, including reducing its work force from 3,200 people to fewer than 1,900 and reducing the number of offices from 36 to 32. Such reductions will continue in 2014-15 as the agency continues to respond to a declining level of work.

In 2014-15 an important priority for the Insolvency Service will be to maintain its current high level of customer service during this period of major change. I have set targets at a level which reflects the challenges the agency continues to face.

The Insolvency Service annual plan 2014-15 will be available from 2 April 2014 at: http://www.bis.gov.uk/insolvency/About-us. This plan builds on achievements to date and the direction of travel agreed in 2012. It continues the agency’s focus on actions that support its long-term resilience: an enhanced profile and external relationships, an improved funding model, better delivery tools and investment in people capability.

Balance of Competences: Economic and Monetary Policy

Thursday 27th March 2014 Written Statements

[The Economic Secretary to the Treasury (Nicky Morgan)]

HM Treasury today publishes a call for evidence as part of the fourth semester of the Government’s review of the balance of competences, which is looking at what the EU does and how it affects the UK.

The call for evidence looks at the balance of competence between the EU and the UK on economic and monetary policy. The document explains the historical development and legal background to the EU’s competence in this area and asks a number of questions about how the EU’s competence works in practice.

HM Treasury is seeking evidence from a range of stakeholders who have an interest or experience in these areas, including individuals, think-tanks, Parliament, academia and institutions.

The public call for evidence for this report will run from 27 March 2014 until 4 July 2014. The final report on the current balance of competence for economic and monetary policy and what this means for the national interest will be published by the end of 2014.

Copies of the document have been deposited in the Libraries of both Houses and it is available online on the gov.uk website.

Dormant Bank and Building Society Accounts Act

Thursday 27th March 2014 Written Statements

[The Financial Secretary to the Treasury (Sajid Javid)]

The Government are today publishing the review of the Dormant Bank and Building Society Accounts Act 2008. As set out in the legislation, HM Treasury is required to undertake a review and to lay this before Parliament within three years from the date when a reclaim fund is first authorised.

A copy of the review published today is available from the Library of the House and on the HM Treasury website.

Royal Mint Advisory Committee

Thursday 27th March 2014 Written Statements

[The Economic Secretary to the Treasury (Nicky Morgan)]

On 27 March 2012, my hon. Friend the Member for Norwich North (Chloe Smith), the then Economic Secretary, announced to Parliament, through a written ministerial statement, Official Report, column 107WS, the commencement of a triennial review for the Royal Mint advisory committee on the design of coins, medals, seals and decorations.

I am now pleased to announce the completion of the review.

The advisory committee was established in 1922 with the personal approval of King George V. It exists to raise the standard of numismatic and medallic art in Britain and is expected to ensure that designs meet high standards of art, decency and good taste. Its purpose is to advise Government Departments, and ultimately the Queen, on matters of design with respect to coins, medals, seals and decorations. The eight members and the chair of the committee receive no payment for serving, but may claim reasonable expenses incurred in attending meetings, which are funded by the Royal Mint Museum. Expenses, if claimed, are paid by the Royal Mint.

The triennial review was conducted in accordance with Government guidance for reviewing NDPBs.

The review concluded that there continues to be a Government demand for heraldic, typographic, numismatic, technical and design advice. Having considered the delivery option alternatives, the review recognises the services delivered by the committee remain necessary to the business of the Department and ensures the quality of the themes and designs of UK coinage and official medals. Any alternative delivery route would incur a greater cost in both resource and financial terms. As such, the recommendation is to retain the advisory committee in its current form. However, while considering the governance of the committee the review recommends that the committee should make minor adjustments to current control and governance practices to improve the transparency of this small but important function.

Copies of the report of the review will be placed today in the Libraries of both Houses.

Iraq Fatality Investigations

Thursday 27th March 2014 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

I wish to inform the House of the progress that my Department has made in establishing a process by which a small number of fatalities of Iraqi nationals arising from UK operations in Iraq, where the deceased person was in the custody of or under the control of UK forces, can be subjected to an examination akin to a coronial inquest.

This step has been prompted by the High Court’s decision in the Ali Zaki Mousa (No 2) judgment. In that judgment the court held that the arrangements set up for criminal investigations by the Iraq historic investigations team and the Royal Navy police acting under the Armed Forces Act 2006 are sufficiently independent to meet the requirements of article 2 of the European convention on human rights. But the court also held that, in a number of cases in which a prosecution did not result, a public procedure (similar to a coroner’s inquest) would also be needed so as to involve the public and the families of the deceased to the extent necessary to discharge fully the UK’s investigative obligations under article 2.

The High Court indicated that this requirement could be met by holding

“inquisitorial inquiries modelled on coronial inquests”.

I have agreed to do so in up to 11 cases; the precise number will depend on the outcome of the Iraq historic allegations team’s investigations into the allegations and any resulting trials.

I am pleased to announce that Sir George Newman, who retired from the High Court bench in 2007, has consented to chair the first two investigations. Sir George’s wide experience will be invaluable and I am grateful to him for taking on this important role.

Sir George will investigate the death of Mr Naheem Abdullah as a result of injuries sustained at a road block in Maysan province on 11 May 2003, and the death of Mr Hassan Said as the result of gunshot wounds sustained on 2 August 2003. In both of these cases, the UK service personnel accused were acquitted after early termination of their trials. As a result of the early termination of the trials, resulting in evidence not being publicly presented, an inquisitorial inquiry is needed to meet the requirement for public and family access.

Sir George has been directed not to consider issues of individual or collective culpability, and no prosecutions will result from his examination of these cases. These fatality investigations will serve a similar purpose to a coronial inquest by providing the families of the deceased and the wider public with the fullest possible information as to how the deceased died. Sir George will shortly publish fuller details of his remit and of the procedures that he will adopt.

Sir George will, of course, receive the full support of the Ministry of Defence. He will produce a report setting out his findings and recommendations, and I will arrange for this to be published at the earliest opportunity.

Service Complaints Commissioner's Annual Report

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Anna Soubry)]

I am pleased to lay before Parliament today the Service Complaints Commissioner’s sixth annual report on the fairness, effectiveness and efficiency of the service complaints system.

I would like to thank the commissioner for her latest report, and for the outstanding contribution she has made in improving the service complaints process during her six years in post. More recently, her involvement in the work to draw up the proposals announced by my right hon. Friend the Secretary of State for Defence on 13 March, Official Report, column 34WS, has been pivotal.

The report recognises the progress made by the services in 2013, including the introduction of a new monitoring and reporting process to identify and mitigate undue delay in the system. It also raises issues of concern, in particular the apparent increase in bullying and harassment complaints within the Army. I will respond formally to the commissioner once the MOD has considered fully the findings of the report and the recommendations made.

I can also inform the House that I have proposed, and Dr Atkins has accepted, that she should continue in office beyond her currently scheduled leaving date of the end of June. There are two reasons for this. First, it is now clear that the proposals announced on 13 March, including the creation of a service complaints ombudsman, will transform the role of the commissioner. Dr Atkins’ successor will, subject to Parliament approving the necessary legislation, need the right skills and experience to deliver that vision. I have therefore decided to restart the recruitment process, which means that it will not be possible to appoint a new commissioner by the end of June. Secondly, it will be important for the success of the proposed changes that we continue to draw on the considerable expertise and experience which Dr Atkins brings to this area, as plans are worked up in more detail over the coming months. I am grateful to her for her willingness to remain in post, to work in partnership to establish the role of the service complaints ombudsman on a sound and secure footing.

Special Risk Nuclear Indemnity

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)]

It is normal practice when a Government Department proposes to undertake a contingent liability of £300,000 and above for which there is no specific statutory authority for the Department concerned to present to Parliament a minute giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the minute, except in cases of special urgency.

Subject to no objections being received, I intend to authorise the proposal to undertake contingent liability for nuclear indemnity, after the usual 14 parliamentary sitting days. I have today, in accordance with the usual parliamentary procedures, laid a departmental minute on the proposal.

The Treasury has approved that, where the financial impact of an event would make the contract untenable due to the nature of work being undertaken, the contractor may be relieved of their liability. Although the contractor is not working directly with nuclear, there is a low risk that their activities may cause an incident to occur. If, during the period of 14 parliamentary sitting days beginning on the date on which this minute was laid before the House of Commons, a Member signifies an objection by giving notice of a parliamentary question or a motion relating to the minute, or by otherwise raising the matter in the House, final approval of the proposal will be withheld pending an examination of the objection.

Baha Mousa Report

Thursday 27th March 2014 Written Statements

[The Minister for the Armed Forces (Mr Mark Francois)]

I would like to update the House on the progress that the Government have made in implementing the recommendations made in the report of the Baha Mousa inquiry, chaired by the right hon. Sir William Gage, which was published on 8 September 2011.

What happened to Baha Mousa was shameful, and undermined the excellent work of so many others. In his report, the chairman made 73 recommendations. In his statement to Parliament that day, Official Report, column 571, the then Secretary of State for Defence, my right hon. Friend the Member for North Somerset (Dr Fox), accepted all recommendations in principle with one exception relating to tactical questioning.

I am pleased to announce that the Ministry of Defence has now taken action to consider and address all the accepted recommendations in the report. Many of them proposed amendments to departmental policy, standard operating procedures and oversight, while others focused on training; all personnel who undertake detainee handling now have the skills and experience to manage them appropriately. By strengthening all aspects of the detainee handling process we have returned the rigour and discipline that is synonymous with the high standards rightly expected by our armed forces.

As envisaged in recommendation 44 of the inquiry’s report, the Department has given careful consideration to the possibility of an independent inspection of the UK’s Afghan detention facilities by Her Majesty’s chief inspector of prisons. However, UK detention facilities in Afghanistan continue to be inspected by the Provost Marshal (Army) every six months, and annually by the Army Inspector; they are also visited regularly by the International Committee of the Red Cross to ensure compliance with international humanitarian law. On balance, we believe that this triple inspection regime is already fit for purpose and does not require further amendment.

European Union (Balance of Competences)

Thursday 27th March 2014 Written Statements

[The Minister for Skills and Enterprise (Matthew Hancock)]

I wish to inform the House that, following my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs’ oral statement launching the review of the balance of competences in July 2012, Official Report, column 468, and, most recently, written ministerial statement on the progress of the review on 13 February 2014, Official Report, column 76WS, the Department for Education is publishing its call for evidence on education, vocational training and youth.

The review of education, vocational training and youth is being jointly led by the Department for Education (DfE), Cabinet Office (CO) and the Department for Business, Innovation and Skills (BIS).

The call for evidence period will last 12 weeks, from 27 March 2014 to 30 June 2014, and officials will draw together the evidence and policy analysis into draft reports, which will go through a process of scrutiny which is due to take place by the end of 2014.

As with previous semesters, this report will consult widely. The Departments will pursue an active engagement process, including Parliament and its committees, the devolved Administrations, and civil society in order to obtain evidence to contribute to our analysis of competences. Our EU partners and the EU institutions will also be invited to contribute evidence to the review. As the reviews are to be objective and evidence-based, we are encouraging a wide range of interested parties and individuals to contribute.

DfE, CO and BIS will take a rigorous approach to the collection and analysis of evidence. The call for evidence document sets out the scope of the report and includes a series of broad questions on which contributors are asked to focus. The evidence received—subject to the provision of the Data Protection Act—will be published alongside the final report, which is due to be published by the end of 2014, and will be available on the Government website www.gov.uk

The result of the consultation will be a comprehensive, thorough and detailed analysis-based report. It will aid our understanding of the nature of our EU membership and it will provide a constructive and serious contribution to the wider European debate about modernising and improving the EU. The reports will not produce specific policy recommendations.

The calls for evidence documents will be published and available on the Government website: https://www. gov.uk/review-of-the-balance-of-competences

Education Services Grant

Thursday 27th March 2014 Written Statements

[The Minister for Schools (Mr David Laws)]

I am announcing today the launch of a public consultation on savings to the education services grant (ESG) for 2015-16.

Local authorities are responsible for providing the schools they maintain with services to support education, such as school improvement and education welfare services. Academies are responsible for the provision of these services for their pupils. The ESG was introduced in 2013-14 and has made the funding of education services simpler and more transparent.

The 2013 spending round announced that the Government will reduce the education services grant by around £200 million in 2015-16 and committed the Department to consulting on the detail of how the reductions will be implemented through realising efficiencies and enabling local authorities to focus on their core role in relation to schools. The Department for Education is committed to helping local authorities and academies to achieve the required savings for 2015-16. Field work has been carried out to collect information about how the ESG is currently being used, and to identify examples of local authorities and academies that have already made savings on these services.

The consultation will be available on the Government website, www.gov.uk

Social Mobility and Child Poverty Commission

Thursday 27th March 2014 Written Statements

[The Minister for Schools (Mr David Laws)]

Today I wish to inform the House of the publication of the Government’s response to the first annual report by the Social Mobility and Child Poverty Commission.

The independent Social Mobility and Child Poverty Commission monitors the progress of the Government and others in improving social mobility and reducing child poverty in the United Kingdom. The commission plays a vital role in ensuring the Government make progress in both of these areas and we are grateful to them for their thorough and comprehensive report.

We are committed to ending child poverty. We will support families into work, help families to increase their earnings, improve living standards by decreasing costs for low-income families, and prevent poor children becoming poor adults by raising their educational attainment.

We are determined to break down the barriers to social mobility at all stages of a person’s life, from when they are born right through into adulthood, to ensure that everyone can fulfil their potential.

We are tackling the root causes of poverty by giving people opportunities rather than trapping them in dependency.

A copy of the Government’s response will be available later today at: https://www.gov.uk/government/publications.

Historical Child Protection Investigations

Thursday 27th March 2014 Written Statements

[The Secretary of State for Education (Michael Gove)]

I wish to inform the House that the Department for Education has received information about Jimmy Savile relating to several children’s homes and schools in England, dating back to the 1960s, 1970s and 1980s. This information was uncovered as part of the document review process undertaken by the Metropolitan Police Service on behalf of the Department of Health.

Having reviewed the information I have decided that the Department for Education should pass the information to the appropriate organisations for further investigation. In most cases the work will be conducted by the relevant local authority; in others the relevant institution or a legacy organisation will take the lead.

In order to ensure consistency of approach with the NHS Savile investigations, I am replicating the arrangements adopted by the Department of Health to quality assure the work. I have appointed Lucy Scott-Moncrieff to provide independent oversight and quality assurance of the process, undertaking a similar role to that of Kate Lampard in the NHS trust investigations. I have asked Lucy Scott-Moncrieff to ensure that investigating organisations take all practicable steps to establish what happened and why at the time of the incidents and any lessons there might be to inform current safeguarding practice in our schools and children’s homes.

I will inform the House of the outcome of this work.

Information has been provided to responsible organisations as set out in the table below:

Primary and 16-to-19 Assessment and Accountability

Thursday 27th March 2014 Written Statements

[The Minister for Schools (Mr David Laws)]

I am today announcing the final elements of our schools accountability reform programme: reforms to primary and 16-to-19 accountability from 2016. This builds on our plans for secondary school accountability.

Progress will now be the most important way in which we will hold schools and colleges to account. The new accountability system will be fairer, measuring the progress that students make while at school or college. This ensures that all students receive equal attention: we will measure the progress that all students make whatever their starting point. This will prevent the unfair focus on those at threshold borderlines.

To help all parents and students to compare schools and colleges, we will require all schools and colleges to publish the key information for primary, secondary and 16-to-19 phases on their websites in a standard format. This information will clearly show the progress that students make, their attainment and how well they do in English and mathematics.

Primary

We are resetting the standard for success for primary schools. Expectations are currently too low (level 4c in English and mathematics). In 2012, fewer than half the pupils who had only just reached this expected standard went on to achieve five good GCSEs. Under the new system, we will expect schools to support at least 85% of their pupils to achieve a new higher standard (closer to the present 4b level). With the continued improvement in teaching, the sharper focus of the new curriculum and increased funding, results should rise.

We have invested through the pupil premium so that schools can give disadvantaged pupils the help they need. With more than 1.1 million pupils from reception to year 6 currently benefiting, schools receive £953 for each primary-age pupil rising to £1,300 from April 2014.

To judge schools’ progress more fairly, we will work with experts to introduce a new assessment taken during reception as the baseline. This will sit within teachers’ broader ongoing assessments of children’s development and progress throughout reception. The reception baseline will be used to assess schools’ progress for children who start reception in September 2016 and beyond. Schools that choose not to use an approved baseline assessment from 2016 will be judged on the 85% attainment standard alone.

From September 2016, the early years foundation stage profile will no longer be compulsory. The early years foundation stage will continue to be statutory and the basis for Ofsted inspection of early year settings including children in a school nursery and reception classes, thereby ensuring children receive a broad education and are able to learn and thrive in school.

I can also confirm today that the grammar, punctuation and spelling test will not form part of the primary floor standard in 2014.

16-to-19

Our changes to 16-to-19 accountability support the reforms we have already made to improve the quality of 16-to-19 education and training. The introduction of study programmes and traineeships last September, the reforms to A-levels and vocational qualifications and the emphasis on English and mathematics support our ambitions to make sure that students in this country can compete with the best in the world.

We will introduce new, fairer minimum standards for 16-to-19 providers. Wherever data allow it we will use progress measures. This will apply to academic and applied general qualifications. Where the data are not robust enough, we will use a combined completion and attainment measure.

We will introduce five headline measures of performance for all 16-to-19 providers to give a broader picture of educational outcomes than attainment alone. These headline measures include: progress measures; attainment measures; retention measures; English and mathematics progress measures for those who did not achieve good grades at age 16; and destination measures.

Conclusion

We believe that the single most important outcome for any school or college is to give as many students as possible the knowledge and skills to flourish in the later phases of education and life. The reforms that I have set out today set the framework for schools and colleges to meet this challenge: ensuring all children move on to secondary school ready to succeed and all 16-to-19 students can move into further or higher education or employment.

Afghanistan (Monthly Progress Report)

Thursday 27th March 2014 Written Statements

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

I wish to inform the House that the Foreign and Commonwealth Office, together with the Ministry of Defence and the Department for International Development, is today publishing the 35th progress report on developments in Afghanistan since November 2010.

On 2 February, the presidential election campaign opened. Seven of 11 candidates formally launched their campaigns on the first day, with only one choosing to do so from outside Kabul. The remaining candidates began their campaigns in the following days.

On 8 February, the UN reported a 14% rise in the number of civilians killed or injured in 2013. The report considered armed opposition groups responsible for the majority (74%) and Afghan and international forces for 11% of casualties in 2013. A total of 10% of casualties resulted from engagements between pro and anti-Government forces while the remaining 5% were unattributed.

On 13 February, the Government of Afghanistan released 65 US captured detainees who the US believed to have committed serious crimes, including killing US soldiers, and against whom the US thought there was good evidence.

On 27 February NATO Defence Ministers reaffirmed their commitment to support continued planning for a post-2014 training mission in Afghanistan. Defence Ministers also tasked NATO military authorities to assess the implications of delays to the future mission and to undertake planning for other contingencies, including a “zero option”, in light of the uncertainty of securing the necessary legal permissions for the mission.

UK development support of £5.3 million was provided to improve public services in Helmand, Uruzgan and Bamyan provinces through DFID’s strengthening provincial administration and delivery (SPAD) programme. The funds help build capacity in local systems while ensuring the money is properly spent to help local authorities provide better public services to local people.

I am placing the report in the Library of the House. It will also be published on the gov.uk website: https://www.gov.uk/government/publications/afghanistan-progress-reports

Balance of Competences (Review)

Thursday 27th March 2014 Written Statements

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

My written ministerial statement of 13 February 2014, Official Report, column 76 WS updated the House on progress with the review, on publication of the second set of reports. I wish to inform the House today of the launch of semester four of the review. This is the final semester in the review that I launched in July 2012 and, which will conclude by the end of the year.

Calls for evidence for the seven reports in the fourth (and final) semester cover: economic and monetary policy; information rights; police and criminal justice; education; enlargement; voting, consular and statistics; and subsidiarity and proportionality. The call for evidence period for these reports will open from 27 March and close the week of 30 June 2014.

The Foreign and Commonwealth Office has overall responsibility for the reports covering enlargement and subsidiarity and proportionality, and joint responsibility for the report on voting, consular and statistics. Lead Ministers for each of the other reports will be informing the House separately of the publication of their calls for evidence.

The Enlargement report—will assess the balance of competences between the EU and the UK in the field of enlargement of the European Union, including the impact of enlargement on UK interests, the development and effectiveness of the EU enlargement process and lessons learned from previous enlargements, the role of the member states and EU Institutions in the process, the use of conditionality and of financial and technical assistance, and future challenges and opportunities that enlargement will bring.

The Subsidiarity and Proportionality report—covers the concepts of subsidiarity and proportionality which are fundamental principles to the functioning of the EU. It will address how these are used and applied in practice across EU activity: whether the EU acts only when necessary, and whether action takes place at the lowest level possible, and that the means are proportionate to the end. The report also covers article 352 which provides the EU with the power to act to achieve any of the objectives laid down by in the EU treaties where no other treaty article so provides, including the use and impact of the procedural safeguard provisions on competence.

The Voting, Consular and Statistics—review covers three policy strands each led by the relevant Department: Cabinet Office (voting), the Foreign and Commonwealth Office (consular) and the national statistician on behalf of the UK Statistics Authority (statistics). The voting strand seeks views on the balance of competences on subjects including how to vote and stand as a candidate at elections, the franchise and EU democratic engagement initiatives (such as the European citizens’ initiative). The consular strand will consider the EU’s limited competence in consular services, which extends to the co-ordination of efforts between member states and the requirement for member states to treat unrepresented EU citizens, in consular matters, in the same way as they would treat their own nationals. The statistics strand of the review looks at EU competence to require statistical reports, and how that impacts issues such as data collection, respondent burden and the level of demand for information at a time of resource pressure.

The FCO, along with the Cabinet Office and Statistics Authority will take a rigorous approach to the collection and analysis of evidence. Each call for evidence sets out the scope of the reports and includes a series of broad questions on which contributors are asked to focus. The evidence received (subject to the provision of the Data Protection Act) will be published alongside the final report, which is due to be published by the end of 2014, and will be available on the Government website: www.gov.uk.

It is important to encourage a wide range of interested parties to contribute to ensure objective and evidenced based reports. The FCO will therefore pursue an active engagement strategy, consulting widely across Parliament, the devolved Administrations, think-tanks, business and civil society in order to obtain evidence to inform our analysis. The EU institutions and our foreign partners will also be invited to contribute, as will members of the public. These final reports will also consider evidence submitted in previous semesters where relevant.

The call for evidence documents are being placed in the Libraries of both Houses. They are also published and available on the Government website: https://www.gov.uk/review-of-the-balance-of-competences

Voluntary Principles on Security and Human Rights

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mark Simmonds)]

Tomorrow the UK takes on the chairmanship of the voluntary principles on security and human rights for one year. The voluntary principles provide guidance to extractive companies operating in fragile and conflict-affected areas, on effective risk management and on mitigating the risk that the security around their operations might contribute to human rights abuses or exacerbate conflict. The voluntary principles support our conflict prevention objectives, in line with the Government’s building stability overseas strategy, and help us to meet our commitment to supporting UK extractive companies do business overseas in complex and fragile environments. The voluntary principles also fall within the UK’s business and human rights action plan, as one way of helping companies to abide by their responsibility to respect human rights in line with the UN guiding principles on business and human rights.

The voluntary principles initiative consists of eight Governments, 23 extractive companies and nine civil society organisations. It provides a space for discussion of security and human rights challenges in the extractive sector, and is a useful mechanism for sharing best practice and learning lessons.

We have three priorities for our chairmanship. First, we want to expand Government membership, particularly Governments of fragile and conflict-affected countries, where it can be difficult for UK extractive companies to do business. The more Governments that join the voluntary principles, the easier it is for UK companies, operating in complex environments, to manage their human rights impact, which in turn reduces the risk of violence and conflict. We will encourage greater Government membership through lobbying at ministerial and official level, and supporting roundtables, workshops and other events to promote the voluntary principles and raise awareness of the initiative.

Secondly, we will work to strengthen corporate implementation of the voluntary principles. We will seek to more effectively engage local communities on the voluntary principles, to ensure that their voices are heard on the issues which directly affect them. We will also support project work to strengthen implementation of the voluntary principles on the ground, for example human rights training for public security, and capacity building for both civil society and Governments to enable them to engage more effectively in voluntary principles dialogue with other stakeholders.

Thirdly we want to strengthen the accountability and transparency of the initiative, to bring the voluntary principles more into line with the UN guiding principles on business and human rights. This will include efforts to encourage greater public reporting on implementation, and support for peer review initiatives to learn lessons and improve processes.

We will work closely with other voluntary principles participants, and through our network of overseas missions, to deliver these objectives. Our chairmanship is an important opportunity for us to play a leading role in strengthening the initiative to ensure it remains a credible and effective mechanism for managing security and human rights risks in the extractive sector.

Nursery Milk (Scheme)

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

Today I am publishing the response to: “Next Steps for Nursery Milk”—a public consultation on the future of the nursery milk scheme.

The purpose of the consultation was to explore three different options for reforming the scheme: looking at where we can make it more efficient and improve its value for money, while ensuring that all children under five attending a child care setting for more than two hours a day continue to receive free milk.

Of the options for changing the scheme, 53% of respondents ranked the direct supply option as their first preference compared to 39% for the price capping option. Only 16% preferred the e-voucher option.

The nursery milk scheme has been running since the 1940s. The scheme currently funds free milk for around 1.5 million children under five years old in 55,000 child care settings throughout Great Britain. The Government remain fully committed to the nursery milk scheme, and to continuing to supply milk to children under five years old.

In recent years, the prices claimed for milk purchased under the scheme have risen significantly, with a corresponding increase in the total cost of the scheme from £27 million in 2007-08 to £61 million in 2012-13. This trend looks likely to continue with costs potentially rising to £80 million by 2015-16. The main reason for the increasing costs of the scheme has resulted from some suppliers of nursery milk charging as much as 92p per pint of milk when the average shop price is 49p per pint.

The direct supply option is the best way forward for the scheme as it provides best value for money to the taxpayer. Under direct supply, the scheme will be delivered with an estimated saving of £36 million per year, while providing only fresh milk to all eligible children in registered child care or early years settings.

We will engage with small and medium-sized enterprises (SMEs) while developing the new scheme and encourage SMEs to consider bidding as part of a consortia of potential suppliers and/or as sub-contractors working with larger organisations to supply and deliver nursery milk.

“Next Steps for Nursery Milk: Government Response” has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.

Mental Health Act 1983 (Sections 135 and 136)

Thursday 27th March 2014 Written Statements

[The Secretary of State for Health (Mr Jeremy Hunt)]

I am announcing the details of the joint review between the Department of Health and the Home Office of the operation of sections 135 and 136 of the Mental Health Act 1983. These provisions are aimed at giving support to a person experiencing a mental health crisis, by giving the police powers to temporarily remove people who appear to be suffering from a mental disorder, who need urgent care, to a “place of safety”, so that a mental health assessment can be carried out and appropriate arrangements made.

The review will consider whether the primary legislation supports our overarching objective for all public services to respond to the needs of people experiencing mental health crises at the right time, and improving the outcomes for people experiencing mental health crises when they come into contact with the police. The review formally starts today and a briefing paper setting out the aims and time scales has been placed in the Library. Copies are available to hon. Members from the Vote Office, and to noble Lords from the Printed Paper Office.

Work on this issue was initiated by the Home Office, since when the Home Secretary and I; the Minister with responsibility for care and support, my hon. Friend the Member for North Norfolk (Norman Lamb) and the Minister for Policing, Criminal Justice and Victims have been working together to find the right way forward. We know there is a lot of interest about the way that sections 135 and 136 of the Act operate in practice, and the impacts both on the person detained, and on the use of police and health services’ time and resources. In particular, police officers can be called upon to make decisions on how to help someone experiencing a mental health crisis, when they may not be the best people to do so. We want to look at the evidence and to make sure that this part of the legislation is fit for purpose, clear, and workable.

The review will bring together evidence and cover a range of options, which may include leaving the legislation as it is and making changes to the associated codes of practice, or proposing amendments to the legislation. We will be engaging widely on developing the options with practitioners as well as those affected by the legislation. We will also seek the views of interested hon. Members, including the all-party parliamentary group who recently led a debate on the matter. I welcome the current Home Affairs Select Committee inquiry into policing and mental health, which will explore the relevant evidence.

Domestic Violence and Abuse

Thursday 27th March 2014 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

Today, Her Majesty’s Inspectorate of Constabulary (HMIC) has published the findings from its inspection of the police response to domestic violence and abuse. Domestic abuse is a truly appalling crime and I commissioned the HMIC inspection in September 2013 because I was concerned that the police response was not as good as it should be. HMIC has conducted a rigorous review and today’s report has exposed significant shortcomings in the police response to domestic abuse.

The report highlights that the current police response to domestic abuse is failing victims. There is a lack of visible leadership and direction set by senior officers. Poor management and supervision fails to reinforce the right behaviours, attitudes and actions of officers, and the report shows that officers lack the skills and knowledge necessary to engage confidently and competently with victims of domestic abuse. Alarmingly, the report also identifies unacceptable weaknesses in some core policing activity, including the collection of evidence by officers at the scene of domestic abuse incidents.

In line with the Government’s aim to end violence against women and girls, I will lead immediate action to ensure HMIC’s findings are addressed.

This Government are committed to tackling domestic violence and abuse and to delivering a better response for the victims of these appalling crimes. We have ring-fenced £40 million for victims’ services; piloted and rolled out Clare’s law and domestic violence protection orders; extended the definition of domestic abuse to cover controlling behaviour and teenage relationships; run two successful campaigns to challenge perceptions of abuse; and placed domestic homicide reviews on a statutory footing to make sure lessons are learnt from individual tragedies.

The police now must take urgent action. The HMIC report shows that there needs to be a fundamental change in police culture. I have written today to chief constables and police force leads on domestic abuse, making it clear my expectation that, in line with HMIC’s recommendations, every police force will have an action plan in place by September to improve their response to domestic violence and abuse. I will also establish a national oversight group, which I will chair, to ensure progress is made against each of HMIC’s recommendations. I am already leading work to implement all the actions for the Home Office, including improving data standards, reviewing the domestic homicide review process, and sharing best practice on tackling perpetrators.

This Government have initiated a significant reform programme to professionalise policing, which has included establishing the College of Policing. I expect all chief constables and the college to prioritise the recommendations arising from this report. I will be overseeing their improvements on domestic violence and abuse through the national oversight group, and will report to Parliament again later in the year to update on progress.

I have placed a copy of HMIC’s report on domestic violence and abuse in the House Library.

Taser Statistics

Thursday 27th March 2014 Written Statements

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

I am today publishing the statistics on police use of taser in England and Wales for six monthly periods between January 2012 and December 2013. These show that:

Total police use of taser has increased from 2012 to 2013, continuing the trend seen since 2009.

The proportion of taser where the “highest use” was “fired” decreased between 2012 and 2013—accounting for 17% of uses in 2013.

The most common “highest use” of a taser was “red dot” in each of the last two years, accounting for just over half of all uses.

Full details are available from:

https://www.gov.uk/government/publications/police-use-of-taser-statistics-england-and-wales-2012-to-2013 and a copy will be placed in the Library of the House.

Firearms (England and Wales)

Thursday 27th March 2014 Written Statements

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

I am today publishing statistics on police use of firearms in England and Wales for the period 1 April 2012 to 31 March 2013. These show that:

The number of police operations in which firearms were authorised was 10,996—a decrease of 1,554 (14.1 %) on the previous year.

The number of authorised firearms officers (AFO’s) was 6,091—a decrease of 665 (10.9%) officers overall on the previous year.

The number of operations involving armed response vehicles was 13,116—a decrease of 1,145 (8.7%) on the previous year.

The police discharged a conventional firearm in three incidents—down from 5 incidents in 2011-12.

Full details are set out in the following tables.

Terrorism Prevention and Investigation Measures

Thursday 27th March 2014 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

Section 19(1) of the Terrorism Prevention and Investigation Measures Act 2011 (the Act) requires the Secretary of State to report to Parliament as soon as reasonably practicable after the end of every relevant three-month period on the exercise of her TPIM powers under the Act during that period.

The level of information provided will always be subject to slight variations based on operational advice.

Advisory Panel on Public Sector Information (Triennial Review)

Thursday 27th March 2014 Written Statements

[The Minister of State, Ministry of Justice (Simon Hughes)]

I am today announcing the triennial review of the Advisory Panel on Public Sector Information (APPSI), an advisory non-departmental public body (NDPB).

Triennial reviews of non-departmental public bodies (NDPBs) are part of the Government’s commitment to ensuring, and improving, the accountability and effectiveness of public bodies.

The Advisory Panel on Public Sector Information (APPSI) is an advisory NDPB of the Ministry of Justice whose remit applies to England, Scotland, Wales and Northern Ireland. Its role is to:

review and consider complaints under the reuse of public sector information regulations 2005 (SI 2005 No. 1515) and advise on the impact of the complaints procedures under those regulations;

advise Ministers on how to encourage and create opportunities in the information industry for greater reuse of public sector information; and

advise The National Archives and Controller of Her Majesty’s Stationery Office—an official within The National Archives—about changes and opportunities in the information industry, so that the licensing of Crown copyright and public sector information is aligned with current and emerging developments.

The review will be conducted in accordance with Government guidance for reviewing NDPBs, and will focus on the core questions of effectiveness and good governance. It will be carried out in an open and transparent way, and interested stakeholders will be given the opportunity to contribute their views.

I shall announce the findings of the review in due course.

Balance of Competences (Review)

Thursday 27th March 2014 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

I wish to inform both Houses that, further to the Foreign Secretary’s oral statement launching the review of the balance of competences in July 2012 and the written statements on the progress of the review in October 2012 and May 2013 the Ministry of Justice is launching its call for evidence in the area of information rights.

The report will cover the European Union’s action in the area of information rights. It will focus on the specific information rights expressed by the treaties and cover two key areas: the protection of personal data, and access by individuals to public information.

The call for evidence period will last at least 12 weeks. The Ministry of Justice will draw together the evidence and policy analysis into a first draft, which will go through a process of scrutiny before publication, which is due to take place at the end of 2014.

The Ministry of Justice will take a rigorous approach to the collection and analysis of evidence. The call for evidence sets out the scope of the report and includes a series of broad questions on which contributors are asked to focus. Interested parties are invited to provide evidence in relation to the impact or effect of the competence in their area of expertise. The evidence received (subject to the provisions of the Data Protection Act) will be published alongside the final report and will be available through the balance of competences review webpages on gov.uk.

The Department will pursue an active engagement process, consulting widely across Parliament and its relevant committees, business, civil society, the devolved Administrations and legal practitioners. Our EU partners and the EU institutions will also be invited to contribute evidence to the review. As the review is to be objective and evidence based, we will encourage the broadest possible range of interested parties to contribute.

The report will be a comprehensive, thorough and detailed analysis of EU action in this area that will aid our understanding of the nature of our EU membership; it will provide a constructive and serious contribution to the wider European debate about modernising, reforming and improving the EU. The report will not, however, produce specific policy recommendations.

I am placing this document and the call for evidence in the Libraries of both Houses. The call for evidence will also be available through the balance of competences review pages on gov.uk

Judicial Appointments Commission (Triennial Review)

Thursday 27th March 2014 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Chris Grayling)]

In March 2011 the Government responded to the Public Accounts Select Committee report “Smaller Government: Shrinking the Quango state” setting out the coalition’s plans for reforming the public bodies sector. It includes the requirement to undertake triennial reviews of Executive and advisory non-departmental public bodies (NDPBs).

The Judicial Appointments Commission is an independent commission that selects candidates for judicial office in courts and tribunals in England and Wales, and for some tribunals whose jurisdiction extends to Scotland or Northern Ireland. It was established on 3 April 2006 as one of the major changes brought about by the Constitutional Reform Act (CRA) 2005, which also reformed the office of Lord Chancellor and established the Lord Chief Justice as head of the judiciary of England and Wales.

To deliver the coalition Government’s commitment to transparency and accountability across our public bodies, the Judicial Appointments Commission will be subject to a triennial review. The Ministry of Justice, as the sponsoring Department, has today launched a consultation, which will last until 30 April 2014, inviting views. In line with Cabinet Office guidance, the review will consider the following:

the continuing need for the Judicial Appointments Commission—both its functions and its form; and

where it is agreed that it should remain, to review the control and governance arrangements in place to ensure that the public body is complying with recognised principles of good corporate governance.

In conducting the triennial review, officials will be engaging with a broad range of Judicial Appointments Commission stakeholders, including the Lord Chief Justice and the judiciary. The review will be aligned with guidance published by the Cabinet Office: “Guidance on Reviews of Non Departmental Public Bodies”. The final report and findings will be laid in this House.

Female Offenders

Thursday 27th March 2014 Written Statements

[The Minister of State, Ministry of Justice (Simon Hughes)]

As promised during Parliamentary passage of the Courts and Crime Act 2013, I am today publishing an update on the progress that has been made in delivering the Government’s strategic objectives for female offenders, which we published a year ago. These set out our intention to make sure that:

there are robust and effective sentencing options in the community;

services in the community address the specific needs of female offenders, where these differ from those of male offenders;

the women’s custodial estate is tailored to their needs; and

the transforming rehabilitation reforms support better life management to reduce women’s reoffending.

In the last year we have established a Minister-led advisory board on female offenders which brings together key stakeholders, criminal justice partners and senior officials across Government to provide expert support and challenge as we deliver our strategic objectives for female offenders. The board met formally four times last year and also held workshops with a focus on the women’s custodial estate reconfiguration and guidance for future service providers under our transforming rehabilitation reforms.

In October 2013, we published our response to the Justice Select Committee report, “Women Offenders: After the Corston Report” together with a review of the women’s custodial estate and a stocktake of community services available for female offenders.

Following the women’s custodial estate review, we have established a new dedicated team to oversee the care and supervision of a small number of women with complex needs in custody which aims to guarantee that these women benefit from the most appropriate interventions and regimes available for their particular needs.

In addition, we have put in place safeguards to make sure that the gender-specific needs of women are provided for as part of the transforming rehabilitation reforms. This included an amendment to the now Offender Rehabilitation Act 2014 to make sure that contracts with future providers under transforming rehabilitation identify specific provision to meet the particular needs of female offenders. We have made available guidance to steer providers so that they understand the gender-specific needs of women. We have written into contracts that providers should give female offenders the option, where practicable, of a female-only interview space, female-only supervisors and not to be the only woman in an all male unpaid work group or attendance centre group.

In addition, I am pleased to announce today that, in partnership with the Clink Charity, we are going to expand the employment opportunities which we provide to female offenders. Subject to planning permission, we will open a restaurant at HMP/YOI Styal. Here, offenders will be employed to prepare and serve the food while working towards accreditation which is recognised in the industry. The restaurant will be run by the Clink Charity, which has successful restaurants already established in the men’s estate—at HMPs High Down, Cardiff and Brixton. A disused chapel has been identified as a suitable building for the restaurant within the grounds of HMP/YOI Styal and we are looking forward to opening the doors of the restaurant to the public in spring 2015. The Clink Charity and HMP Send are also developing a horticultural training project where the female prisoners will be growing speciality vegetables and salad. Starting in May 2014, the project will employ 20 women who will be trained to gain their NVQ City and Guilds qualifications in horticulture. The produce will be used within the Clink restaurants at HMP High Down and HMP Brixton.

Over coming months, we will continue to look at how we can create a better resettlement system for female prisoners which will help all those who want to do so, to serve their sentence as close as possible to where they will live on release which will increase opportunities to establish resettlement links with their local communities. With criminal justice partners in Greater Manchester we will continue to develop a new approach to female offenders in the criminal justice system which will refer women into community services at the earliest opportunity. We believe this model of working with female offenders can be extended to other parts of the country and we are supporting colleagues in Wales in developing a version of this work. To support this we will also continue to spread awareness of the gender specific needs of female offenders among criminal justice partners, including the development of a DVD in conjunction with the advisory board for circulation amongst police, judiciary and other front-line practitioners within the criminal justice system.

In the year ahead, we will continue to deliver our strategic objectives through the transforming rehabilitation programme. We will establish, throughout England and Wales, sustainable rehabilitation services appropriate for women in the community. We will also deliver changes to the custodial estate and, in particular, develop new open accommodation units at HM/YOIs Drake Hall and Styal and improve employment opportunities for female offenders across the estate.

We will improve opportunities for female prisoners to maintain important links with their families. We will continue to explore ways in which local police, courts and community services can work together to reduce the need for custodial solutions for female offenders. We will work with other Government Departments to make sure that more women find suitable housing at the time of their release. We will also work to understand better the drivers and solutions for women at risk of offending, including in particular those who engage in acquisitive crime and who may be under serious financial strain.

The full update can be found at: Advisory Board on Female Offenders—Policy advisory groups—gov.uk and copies have been placed in the Libraries of both Houses.

Executive Agencies

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I am pleased to announce the publication of the 2014-15 business plans for all of the Department for Transport’s Executive agencies—the Driver and Vehicle Standards Agency (DVSA), the Driver and Vehicle Licensing Agency (DVLA), the Vehicle Certification Agency (VGA), the Highways Agency (HA) and the Maritime and Coastguard Agency (MCA).

The business plans set out:

the services each agency will deliver and any significant changes they plan to make;

the resources they require; and,

the key performance indicators (KPIs) by which their performance will be assessed.

These plans allow service users and members of the public to assess how the agencies are performing in operating their key services, managing reforms and the agency finances.

The business plans will be available electronically on gov.uk and copies will be placed in the Libraries of both Houses in due course.

Drug Driving

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

In May 2012 the Government introduced primary legislation to Parliament that would create a new offence of driving with a specified controlled drug in the body above the specified limit for that drug. The Crime and Courts Act 2013 inserted a new section 5A in the Road Traffic Act 1988 and sets out the framework for the new offence.

Regulations now need to be made to specify the drugs to be included in the legislation and the limits to be specified. I have today published the summary of responses to the two consultations which sought views on these regulations.

The summary concludes that overall there is support for the Government’s proposed approach and I intend to lay regulations in Parliament on this basis.

However, the Government have also concluded that there are significant concerns on the proposed limit for amphetamine. I have therefore asked my officials to reconsider the limit for this drug, with a view to consulting again later in the year and including the new limit in further regulations at a subsequent date.

By taking this approach to the new offence our roads will be safer by making it easier for the police to tackle those who drive after taking illegal drugs and clarifying the position for those who take medication.

Copies of the summary of responses will be laid in the Libraries of both Houses.

Extension of Crossrail

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I am pleased to inform the House that following agreement with the Mayor of London, my co-sponsor on the Crossrail project, it is now intended that Crossrail services will be extended to serve Reading from 2019. This marks a change in Crossrail’s western terminus, which was previously Maidenhead.

My Department has worked closely with Transport for London, Crossrail Ltd and Network Rail to determine the best use of capacity on the Great Western line. This work has considered how to maximise capacity on the route while ensuring Crossrail services can operate efficiently enabling the best possible overall mix of passenger and freight services on this highly congested part of the national rail network.

The decision to extend Crossrail services to Reading will achieve this while also offering greater flexibility for future timetabled services. Once Crossrail services begin across the whole line in 2019, passengers travelling to London from Reading and the other Thames valley stations will be able to travel to more destinations across London without the need to change at Paddington.

Once operational, Crossrail services are expected to serve Maidenhead on a four trains per hour basis as originally planned, with two of these services continuing to Reading via Twyford.

In addition, the planned future Great Western franchise service pattern from Reading to London will not change. Twice hourly semi-fast services and existing fast mainline services will continue, calling at the same stations as today.

Passengers will continue to benefit from the service frequency enjoyed today between Reading and Hayes and Harlington, maintaining connectivity with Heathrow and to Ealing Broadway, for interchanges with the Central and District lines.

The Reading extension will also generate some cost savings from reduced infrastructure enhancements at Maidenhead and Slough, and only minor works will be required at Twyford and Reading to accommodate Crossrail services.

When fully operational, Crossrail will boost London’s rail-based capacity by 10%, connecting Reading and Heathrow in the west and Shenfield and Abbey Wood in the east, through 21 km of newly built twin tunnels under central London. Transport for London will run Crossrail as part of its integrated transport services.

Northern Direct Award

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

Today I have announced the successful conclusion of negotiations for a new directly awarded franchise agreement with Northern Rail Ltd. Northern Rail will continue to run passenger rail services on the Northern franchise for a period of 22 months, from the end of the current franchise on 1 April, to the start of services on the new competed franchise, expected in February 2016.

The five passenger transport Executives in the region are cosignatories to this agreement and are continuing to work in partnership with Government on the management of services and the specification for the new franchise.

The Northern franchise serves some of the country’s biggest cities including Leeds, Liverpool, Manchester, Newcastle and Sheffield. The new agreement sets challenging new targets for passenger satisfaction, punctuality and reliability, which will see continued improvement in the services provided to passengers, at reduced cost to the taxpayer.

This award is a key step in securing the benefits to passengers from the north of England investment programme, which will see substantial Government investment over the next five years. This programme includes the electrification of a large part of the network, which will allow for cleaner, quicker and more reliable journeys for passengers.

Traffic Commissioners (Triennial Review)

Thursday 27th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I am today announcing the start of a review of the traffic commissioners. Triennial reviews are part of the Government’s commitment to ensuring that non-departmental public bodies continue to have regular independent challenge, including to their objectives and governance.

In the case of the traffic commissioners, the review will also contribute to delivering the Government’s response, published last October to the Transport Select Committee’s inquiry into the work of the Vehicle and Operating Standards Agency—which has since become part of the Driver and Vehicle Standards Agency. I have sought and considered stakeholder views about the review’s coverage.

This is planned to be an in-depth review of the traffic commissioners, involving an independent consultant. I will inform the House of the outcome of the review when it is completed.

Atos

Thursday 27th March 2014 Written Statements

[The Minister of State, Department for Work and Pensions (Mike Penning)]

The previous Government appointed Atos the sole provider for carrying out work capability assessments in 2008. Since this Government inherited the contract to deliver the work capability assessment, we have been committed to a process of continuous improvement.

When this Government took over responsibility for the work capability assessment we were concerned about the nature of the contract and the process we inherited from the previous Government. We immediately identified the need for considerable improvements and we undertook a series of reviews to improve the balance. When I took over responsibility, I decided to build on the work identified by my predecessors who engaged Professor Harrington, a respected occupational physician, to undertake the initial independent review. We have taken forward the recommendations from the three Harrington reviews and these have significantly improved the assessment. Today I am pleased to announce we are publishing our response to the first review by his successor Doctor Litchfield.

My commitment to performance is why my Department took immediate action last summer when we identified significant quality failures in the written reports produced by Atos following assessments.

Today I am announcing that following detailed negotiations with Atos, the Government have reached a settlement for Atos to exit the contract to deliver work capability assessments before it is due to end in August 2015.

I am pleased to confirm that Atos will not receive a single penny of compensation from the taxpayer for the early termination of their contract. Quite the contrary, I can also confirm that Atos has made a substantial financial settlement to the Department for Work and Pensions.

It is important to outline that we have learnt from the mistakes of the last contract agreed by the previous Government. We have negotiated an agreement covering the remaining term that is more robust, with an agreed performance regime that gives us confidence delivery goals will be achieved. It is that same commercial rigour that will underpin the new procurement for these services that I am announcing today.

I will shortly be issuing a notice in the Official Journal of the European Union seeking a new provider to deliver health and disability assessments including work capability assessments. My Department will now withdraw the notice issued in the Official Journal of the European Union last September.

To ensure protection for claimants and a smooth transition, I believe the most effective way to stabilise and then increase delivery is to bring in one national provider to deliver the work capability assessment, initially using elements of the Atos infrastructure. In the longer term, I am committed to moving to multiple providers to increase competition. My Department is committed to learning the lessons from these past failures and ensuring they are reflected in the design and management of future contracts, as well as the Department’s own commercial capability.

The plan is for the new contract to be awarded later this year, with a view to the new provider taking responsibility for delivery of work capability assessments by 2015. It is expected that the transfer of undertakings protection of employment regulations will apply and most of the Atos employees will transfer to the new provider. The new provider should therefore be able to step into the contract without disrupting the service. My absolute priority for the new provider will be to deliver the best service possible for claimants, increase the volume of assessments carried out and reduce waiting times. In the meantime, we will focus on delivery of assessments for those making new claims and those who have changes in their condition.

Atos is announcing today that the company will be withdrawing from delivery of work capability assessments in Great Britain (Atos will continue to deliver these assessments under its separate contract in Northern Ireland). Atos will continue to deliver personal independence payment assessments in two regions of Great Britain.

Atos will continue to deliver work capability assessments until contract exit and will be subject to a rigorous quality and service credit regime. To that end, I am appointing a remedial advisory team to work with the Atos health care management during this period to assist Atos in meeting their contractual obligations, ahead of awarding the contract to a new provider. This is being accomplished with the full co-operation of Atos who will meet all related costs.

There is strong evidence that work is good for physical and mental well-being, and that being out of work can contribute to poorer health and other negative outcomes. While we will always support people who genuinely cannot work, this Government are committed to getting as many people as possible into work. Notwithstanding the considerable improvements that we have had to make to the work capability assessment process we inherited, our reforms mean that over 650,000 people are now looking for, or preparing for, work. I am committed to ensuring that the assessments are fair and accurate and, together with robust contract management, the recommendations made by Dr Litchfield in his independent review will help us continue to improve the work capability assessment.

Work Capability Assessment

Thursday 27th March 2014 Written Statements

[The Minister of State, Department for Work and Pensions (Mike Penning)]

The Government will be publishing today the response to the fourth independent review of the work capability assessment (WCA).

Dr Paul Litchfield carried out the review, and I welcome his findings. In carrying out his review Dr Litchfield gathered a range of evidence to provide invaluable insight into how the WCA is working.

I strongly support the principle of the work capability assessment and am committed to continuously improving the assessment process to ensure it is as fair and as accurate as possible—Dr Litchfield’s recommendations allow us to build on improvements already made to the assessment to achieve this aim.

Government have accepted or accepted with certain caveats all but one of the 32 recommendations that fall within the scope of DWP. As a result of Dr Litchfield’s recommendations we will:

Carry out a full impact assessment into the alternative approach of decision-maker triage outlined by Dr Litchfield;

Continue work already begun with the British Medical Association (BMA) to develop and co-design a new ESA113 for the collection of further medical evidence; and

Comprehensively review all letter and forms—including the ESA50 form—used in the WCA process.

As announced on 6 March, Official Report, column 67WS, I am delighted that Dr Litchfield has agreed to lead the fifth and final independent review of the WCA and I look forward to receiving his findings before the end of 2014.

Finally, the Government response to Dr Litchfield’s review also sets out what we will do as a result of the evidence-based review of the WCA descriptors.

The evidence-based review did not provide evidence that changes to the WCA descriptors would significantly improve the overall assessment. However, the findings do indicate that it might be possible to make practical improvements to the assessment process.

As such we intend to build on the experience of using a semi-structured interview topic guide during the evidence-based review and examine the possibility of health care professionals carrying out face-to-face assessments using prompts from a topic guide in WCA discussions with claimants generally.

House of Lords

Thursday 27th March 2014 Lords Chamber

Thursday, 27 March 2014.

11:00

Prayers—read by the Lord Bishop of Chester.

Death of a Member: Lord Kimball

Thursday 27th March 2014 Lords Chamber

Announcement

11:06

[The Lord Speaker (Baroness D'Souza)]

My Lords, I regret to inform the House of the death last night of the noble Lord, Lord Kimball. On behalf of the House, I extend our condolences to the noble Lord’s family and friends.

Economy: Business Investment

Thursday 27th March 2014 Lords Chamber

Question

11:06

Asked by

[Baroness Williams of Trafford]

To ask Her Majesty’s Government what are the latest figures they have for the business investment component of the total gross fixed capital formation (GFCF); and what plans they have to increase business investment in the future.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

Through industrial strategy and our structural reforms, we are setting the long-term direction needed to give businesses the confidence to invest, export and grow. Business investment was £123 billion in 2013, accounting for more than half of overall investment. The OBR forecasts that it will grow by 8% in 2014. At Budget, we announced further funding for innovation, including £42 million for the Alan Turing Institute and £74 million on cell therapy and graphene centres.

[Baroness Williams of Trafford (Con)]

I thank my noble friend for his response. Can he pinpoint the cause of the increase in investor confidence?

[Viscount Younger of Leckie]

My Lords, the economy is growing, and unemployment and inflation are down. This is supported by an improving outlook in our export markets. We are cutting corporation tax to 21% this April, and to 20% in April 2015. At Budget, the Chancellor announced measures to reduce business energy costs and doubled our export finance scheme to £3 billion. These and other reforms are improving the business environment and providing long-term certainty for businesses, investors and employees.

[Lord Kinnock (Lab)]

Will the Minister tell the House the full story shown by the Office for National Statistics, which is that business investment since 2010 has been flat, faltering or falling, and that we are in a state in which it has shrunk, by comparison with 2010, by about 7%? Whatever happened to the march of the makers?

[Viscount Younger of Leckie]

Business investment is a very narrow measure, which excludes investment by firms in skills, innovation and organisational change. When estimates of these types of investment are included, the UK’s performance is much improved, as we tend to invest heavily in these types of knowledge asset. It is also important to recognise that quality of investment is as important as quantity.

[Lord Forsyth of Drumlean (Con)]

Has my noble friend noticed the disinvestment that is taking place in the energy sector, thanks to the irresponsible policies announced by the Opposition to bring in price controls?

[Viscount Younger of Leckie]

Yes, I have noticed that. Having said that, we are doing much in terms of the Green Investment Bank, which has invested directly and indirectly in 22 projects from five dedicated funds. It has directly committed £791 million, which will mobilise a total of £3.3 billion when fully deployed.

[Lord Garel-Jones (Con)]

My noble friend will no doubt be aware of the Pacific Alliance treaty signed by Mexico, Colombia, Peru and Chile, which Costa Rica and Panama are shortly to join. Given that this represents the seventh or eighth largest trading bloc in the world, what steps are Her Majesty’s Government taking to encourage trade and investment with this important area?

[Viscount Younger of Leckie]

My noble friend is right. I am aware of this and the Government are working hard to increase trade in this area. My noble friend Lord Livingston recently headed up a successful trade mission to Colombia and Mexico, with some promising leads. I take this opportunity to congratulate my noble friend Lady Bonham-Carter on her excellent work as the Prime Minister’s trade envoy to Mexico. Exports of British goods to Mexico increased by 51% between 2009 and 2012.

[Lord McFall of Alcluith (Lab)]

My Lords, is the Minister aware that the banking system here is responsible for 80% of the loans to small businesses in this country, unlike in the US? This intermediation system is bursting. Until the Government look at the issue of capital and equity support for businesses, we ain’t going to regenerate this economy in all parts of the country.

[Viscount Younger of Leckie]

I am afraid I do not accept the negative attitude that comes from the noble Lord. In fact, much has been done to provide financial support for businesses. Over the last quarter of 2013, the banks lent an average of £4 billion each month to SMEs. In the same period in 2012, the average was £3.1 billion. Respondents to the Bank of England’s Credit Conditions Survey reported that the overall availability of credit to the corporate sector increased significantly in the final quarter of 2013.

[Lord Stoneham of Droxford (LD)]

In the light of the good news that Hitachi is intending to invest in rolling stock manufacturing capacity and that Siemens is investing in wind farm equipment manufacturing in the UK, what further efforts are the Government making to use their procurement strength to ensure that we get more manufacturing capacity invested in the UK and more apprentices?

[Viscount Younger of Leckie]

My noble friend is right to highlight the excellent news that Siemens is to invest £160 million in the Hull area. Hitachi’s announcement that it will move its global rail headquarters to the UK is a further vote of confidence in companies investing in the UK. Among other actions, the Government recently announced a new college to train the next generation of world-class engineers working on the construction of High Speed 2, and we hope that it will train up to 2,000 apprentices. This will provide further opportunities for young people to have secure, long-term careers.

[Lord Stevenson of Balmacara (Lab)]

In response to an earlier question, the Minister said that GFCF was a narrow measure. However, is it not true that it also includes expenditure on buildings, including houses for rent? Therefore, the figures conceal a considerable loss of money in terms of the productive economy.

[Viscount Younger of Leckie]

I am not sure that I agree with the noble Lord on that. What matters is the decisive action that the Government are taking to protect the economy in this period of global uncertainty. Our economic policy objective overall is to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries, and that has a focus on property, too. We want to create the most competitive tax system in the G20, make the UK the best place in Europe to start, finance and grow a business, and create a more educated workforce that is the most flexible in Europe.

[Lord Tebbit (Con)]

Can my noble friend perhaps have a chat with the noble Lord, Lord Kinnock, to see whether he can help us by pleading with his masters in Brussels to allow us to get on with investing in a nuclear energy programme? That would be really helpful. I see that the noble Lord, Lord Kinnock, shakes his head—he cannot do it.

[Viscount Younger of Leckie]

I am always happy to have a chat with the noble Lord, Lord Kinnock, and perhaps that will happen.

Algeria

Thursday 27th March 2014 Lords Chamber

Question

11:14

Asked by

[Lord Risby]

To ask Her Majesty’s Government what plans they have to deepen their bilateral relationship with Algeria.

[Lord Ahmad of Wimbledon (Con)]

My Lords, the UK is committed to a strong and enduring partnership with Algeria, which is a key regional partner playing an important role in supporting regional stability. Building on a visit by my right honourable friend the Prime Minister in January 2013—and, indeed, the appointment of my noble friend as trade envoy—the UK plans to continue the high level of engagement that has characterised the relationship in recent years. The UK-Algeria high-level dialogue in January this year saw further progress on a range of issues, including security, trade, migration and education. The third meeting of the strategic security partnership will take place later this year.

[Lord Risby (Con)]

My Lords, given the enormous interest and desire to learn English in Algeria, whether in schools, universities or the government sector and in the private sector as well, can my noble friend indicate how we are helping to fulfil this widespread ambition and opportunity? Further, given the growing commercial links, can my noble friend comment on whether a double taxation agreement, moving this forward, is now taking place because it is a great advantage to some of our European partners who already have such an arrangement?

[Lord Ahmad of Wimbledon]

I take this opportunity, if I may, to pay tribute to my noble friend’s work as a trade envoy. His work has facilitated some major contracts for British companies, including most recently the International Hospitals Group and Surrey Satellite Technology. Turning to his specific questions, of course, English is a powerful tool in our trade across the world and I am delighted to state that the British Council is upgrading its services. It is reopening a teaching college in September, supporting English in schools. Also there is agreement for 100 Algerian PhD students to take up places at UK universities. On the issue of the double taxation agreement, some noble Lords may know that these negotiations have started, are continuing and, indeed, we have exchanged draft texts on the agreement.

[Lord Bach (Lab)]

My Lords, we know that there will be very important elections in Algeria on 17 April. Are Her Majesty’s Government satisfied that those elections will be freely and fairly conducted, and do the Government intend to send observers to them?

[Lord Ahmad of Wimbledon]

My Lords, if one looks across the wider MENA region, Algeria remains stable compared to other countries in what is a difficult and troubled region. The campaign, as the noble Lord has pointed out, has begun for presidential elections on 17 April, and the UK looks forward to working with whoever the Algerian people elect. On the specific issue of observers, I cannot give an answer now but I will certainly check that and write to him.

[Lord Howell of Guildford (Con)]

Is my noble friend aware that Algeria is interested in closer association with the Commonwealth? Will he see that his ministerial colleagues encourage that?

[Lord Ahmad of Wimbledon]

My noble friend always speaks with great authority and passion about the Commonwealth. Once again, he has indicated something on which I think our ministerial colleagues should reflect. I shall certainly take that back to the FCO.

[Lord Dholakia (LD)]

My Lords, my noble friend will be aware that our Government are involved in projects designed to promote stability and peace in Algeria. To what extent are the Inter-Parliamentary Union and the Westminster Foundation for Democracy involved in such projects? What mechanisms are being established so that there is proper evaluation of the outcomes?

[Lord Ahmad of Wimbledon]

I think the organisations to which my noble friend has alluded, not just in Algeria but across the world, play a very important role. It has to be made clear that this is not about interference; it is about the value of sharing good practice and governance procedures. I would point out that Algeria increasingly sees itself as an exporter of stability. For example, it recently hosted peace talks between the Malian Government and opposition groups, and it co-operates well on border security with Mali. Over recent months, Algeria and Tunisia have also increased their co-operation on security issues of mutual concern.

[Lord Kinnock (Lab)]

Will the Minister acknowledge that the British Council’s commitment in Algeria has been highly commendable and, on many occasions in recent years, courageous? Will he further acknowledge that the very welcome strengthened engagement of the council in Algeria, which he referred to, is in spite of significant cuts by the Government in grant in aid and has been made possible by the strengthened commercial performance of the British Council?

[Lord Ahmad of Wimbledon]

The noble Lord will know that I certainly agree with his first statement. On his second statement, the British Council is supported by the FCO and by Her Majesty’s Government. Together we are demonstrating how important the British Council’s influence is, not just in Algeria but across the world, and long may that continue.

Metropolitan Police

Thursday 27th March 2014 Lords Chamber

Question

11:19

Asked by

[Lord Trefgarne]

To ask Her Majesty’s Government what steps they are taking to restore the reputation of the Metropolitan Police, having regard to recent reports.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, the majority of police officers serving in London and elsewhere do their jobs well, serving their communities with dedication and professionalism. We must build on this. We have established the College of Policing, which has the remit to set standards and promote good practice. Ensuring that the police maintain the highest levels of integrity is a core function of the college and it will be shortly publishing the first ever code of ethics for the police.

[Lord Trefgarne (Con)]

My Lords, I am grateful to my noble friend. Is it not the case that undercover police operations play a vital part in the fight against terrorism and serious crime? Is it therefore not important that the unhappy and unfortunate events of past years should be put aside as soon as possible—having regard, of course, to due process—so that brave men and women are not discouraged from volunteering for this dangerous work?

[Lord Taylor of Holbeach]

I do not quite take that position. We are facing a grave crisis of confidence and it is important that, whatever the value of these operations, we learn from the mistakes of the past. Certainly we need to investigate the criminal activity that may have led to them occurring. It also makes it more important that such operations are properly authorised and supervised. The Government have already put in place improved arrangements for the authorisation of undercover work, including a requirement to notify deployments to the independent surveillance commissioners. In addition, HMIC is reviewing all law enforcement undercover units and will report at the end of May.

[Baroness Lawrence of Clarendon (Lab)]

My Lords, I wish to declare my interest in the Question of the noble Lord, Lord Trefgarne, on the reputation of the Metropolitan Police. It was my interest and my request to the Home Secretary to look into corruption within the Metropolitan Police surrounding the investigation of the murder of my son in 1993 that prompted the paper review by Mark Ellison QC. Does the Minister agree that the Metropolitan Police needs urgently to clear up those elements that brought it into disrepute in the first place in order that it can concentrate on fighting crime, upholding the law and regaining the trust of the British public, especially the black community?

[Lord Taylor of Holbeach]

Those noble Lords who were here on 6 March to hear the repetition of the Statement that the Home Secretary had made to the House of Commons earlier that day will have attended a most poignant occasion. The noble Baroness was in her place to hear what had happened, which was indeed shocking. As my right honourable friend the Home Secretary said, policing stood damaged by the revelations in Mark Ellison’s review. She has made it clear that she is determined that all that can be done to find out what happened will be done. I know that that determination is shared by those currently in charge of the Metropolitan Police and by those conducting reviews and investigations. I hope that this reassures the noble Baroness of the sincerity of this Government in tackling what lay behind the tragic period leading up to and after her son’s death.

[Baroness Howarth of Breckland (CB)]

Does the Minister share my disappointment about the way the police have been dealing recently with domestic violence? After all the work that has been carried out, what can be done to bring those forces that are clearly not meeting the needs of women up to the level of excellence of those forces that are?

[Lord Taylor of Holbeach]

This is another area on which we have received a shocking report, and the Home Secretary commented on it this morning. Those noble Lords who listened to the “Today” programme will have heard a woman called Kimberley talk about her experience of the investigation made into her complaints. It is not good and the Home Secretary is determined to tackle this scourge. As she said this morning, she expects chief constables to respond to the report, and I would say that they owe it to the victims of these crimes to do so.

[Lord Paddick (LD)]

My Lords, many noble Lords will recall the high-profile visit made by the Metropolitan Police to the right honourable Damian Green MP before he became the Minister for Policing, but I do not suspect that many will recall the last high-profile visit made by the Minister for Policing to the Metropolitan Police in support of the excellent work done by the overwhelming majority of police officers every day to keep us safe in London. Perhaps the noble Lord could tell us when such a visit was last made and why we have not heard about it.

[Lord Taylor of Holbeach]

My Lords, as my noble friend will know, the Commissioner of the Metropolitan Police and other senior officers meet the Home Secretary and the Minister for Policing on a regular basis. The last public engagement was the launch of the trial of body-worn video equipment that took place late last year and which was also attended by the Mayor of London. Contact between the Home Office and the Metropolitan Police is on an everyday basis because it is such an important link for us. I hope that my noble friend will be reassured by my earlier comments in answering this Question. We recognise the diligence with which the majority of police officers perform their duties on behalf of the public.

[Lord Imbert (CB)]

My Lords, perhaps I may preface my question with a reference to the Home Secretary’s Statement to Parliament made on 6 March on the Ellison report of the inept investigation into the murder of Stephen Lawrence and related matters such as the inappropriate use of undercover police officers. She said:

“Stephen Lawrence was murdered more than 20 years ago and it is deplorable that his family have had to wait so many years for the truth to emerge”.—[Official Report, Commons, 6/3/14; col. 1064.]

I agree entirely with the Home Secretary’s view on the intolerable delay following the first highly unsatisfactory investigation into the murder of that young man.

The Metropolitan Police and policing generally have indeed had their reputations severely damaged by this and other incidents and revelations, but without trying to defend the indefensible, I would like to ask the Minister whether he would acknowledge that the relatively new captain and vice-captain of the Metropolitan Police Service are men of experience, determination and integrity and that, together with the many honest, brave and commendable police officers, they must be given the opportunity to redress the wrongs that have been revealed. I say “brave” officers because two were killed on duty last year and no fewer than 4,890 officers, both male and female, were injured and needed medical attention.

[Lord Taylor of Holbeach]

My Lords, it might help the noble Lord if I just say that I have made it quite clear that we recognise the sense of duty with which our police officers undertake their tasks, and indeed our confidence in the Commissioner of the Metropolitan Police.

[Baroness Smith of Basildon (Lab)]

My Lords, I thank the Minister for the content and tone of his answers. The further revelations published in the Independent newspaper today of a secret investigation into persistent corrupt networks within the Metropolitan Police are really beyond shocking. I am grateful to the Minister for his answers today, but can he tell us what action the Government will be taking in regard to these allegations as well?

[Lord Taylor of Holbeach]

I think the noble Baroness is referring to Operation Zloty and the discovery that some of the material that we were hoping to be able to use to investigate further may have been destroyed. There is a determination among everyone who is currently engaged in this matter to get to the bottom of it and to get to the truth. I am confident that we will achieve that. It may take time and there may be obstacles in our path but we are determined that the truth should be known. Indeed, by finding the truth, we will also help the police themselves regain that confidence that they should surely have about the way that they protect us.

Egypt

Thursday 27th March 2014 Lords Chamber

Question

11:30

Asked by

[Lord McConnell of Glenscorrodale]

To ask Her Majesty’s Government what representations they have made to the Government of Egypt following recent court cases in that country.

[Lord Ahmad of Wimbledon (Con)]

My Lords, the Foreign Secretary made a Statement on 24 March, saying that he was,

“deeply concerned by the reports that 528 individuals were today sentenced to death by a court in Al Minya in Egypt”.

He urged the Egyptian authorities,

“to ensure full respect for defendants’ rights”,

and expressed,

“hope they will review this unacceptable sentence”.

On 6 February, as noble Lords may be aware, the Foreign Secretary also publicly raised concerns about the arrest of Al-Jazeera journalists in Cairo and about freedom of expression.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, since last summer, the Foreign Secretary has, understandably, condemned some of the actions of the new regime in Egypt and called for maintaining a dialogue with that regime. However, during that time we have seen not only the trial of the 20 Al-Jazeera journalists and the death sentences for the 529 accused on Monday but the prosecution of peaceful women student protestors, who face life sentences, and a whole host of other acts of repression and denial of basic human rights. Will the Government make a statement in the coming weeks, in the run-up to the elections that are due to take place in Egypt, outlining what other action has been taken in addition to dialogue and condemnation—for example, on export licences and co-operation in other matters—and what discussions have taken place in the EU and the UN to ensure some international co-ordination of efforts to persuade the Egyptian Government to stop this path towards repression and to open up the political space there if there are to be serious democratic elections in the future?

[Lord Ahmad of Wimbledon]

To begin with the noble Lord’s final point, he is of course quite right that openness and having a free, fair and fully pluralist style of elections are something that not only Her Majesty’s Government want to see but, as he has acknowledged, something that the UN is pursuing, as is the noble Baroness, Lady Ashton, in her capacity at the European Union. I reiterate once again that the UK Government remain deeply concerned about sentencing including, most recently, the sentencing to three years in prison of the democracy and human rights activists Ahmed Maher, Ahmed Douma and Mohamed Adel. The UK believes that the freedom to protest peacefully is vital in any democracy and calls on Egypt’s interim leaders to ensure that they uphold all Egypt’s international human rights obligations. The Foreign Secretary spoke to Foreign Minister Fahmy on 7 January and raised various concerns over Egypt, such as the arrest of human rights activists and journalists and the violence, including fatalities, at protests. I am sure representations will continue during what we hope will be free and fair elections later this year.

[Lord Chidgey (LD)]

My Lords, the Egyptian Ministry of Justice is on record as saying that most of the 350 people originally sentenced to death were actually tried in absentia and that if they turn up in court they would be entitled to retrials. However, the Egyptian Government are insisting that the death sentences were handed down only “after careful study”. Have the Government advised the Egyptian authorities that, along with the UN human rights commissioner and 16 Egyptian human rights groups, we view these actions as being in breach of international human rights law and intolerable in a 21st-century democracy?

[Lord Ahmad of Wimbledon]

My noble friend sums up sentiments which are, I think, widely shared across the House. The UK of course opposes the death penalty. We believe it undermines human dignity and there is no evidence that it works as a deterrent. If an error is made, it is of course irreversible. We review the death penalty strategy each year, including priority countries where necessary. Our views have been well documented and continue to be shared across the board particularly, in this context, with the Egyptian authorities.

[Lord Bach (Lab)]

My Lords, the verdict and sentences of death passed this week are a breach of international law, as has just been said. The UN human rights commissioner has said the same. However, along with the detention of the Al-Jazeera journalists and other matters raised, they also show a high level of contempt for the rule of law. Will Her Majesty’s Government take a significant role in not only condemning the decision—that is something that we can all easily do—but in really leading international opinion to insist on a proper and fair appeal process?

[Lord Ahmad of Wimbledon]

It is important to reiterate that the justice system in Egypt should be seen to be both transparent and fair. As my noble friend pointed out a moment ago, certain people have been tried in absentia. It is important that we see openness and justice being served. To mention the Al-Jazeera journalists specifically, we have raised our concerns about cases of freedom of expression at the most senior level with the Egyptian Government in recent days, and the Foreign Secretary discussed them with other European Foreign Ministers at the European Foreign Affairs Council. I reiterate that the UK believes that a free and robust press, alongside other matters, is the bedrock of democracy, and an open, transparent and fair justice system is also an important part of the democratic process.

[Baroness Falkner of Margravine (LD)]

My Lords, my noble friend will be aware that the proposed new Egyptian constitution also privileges military trials for civilians, irrespective of whether they are military employees. What representations are the Government making on this aspect of the constitution, which will allow for more miscarriages of justice, rather than fewer?

[Lord Ahmad of Wimbledon]

The constitution in Egypt is primarily something that we should leave to the Egyptian people. We should be ensuring that there is fairness and a pluralist democracy in place. The Egyptians have promoted the fact that there was 98% agreement to the constitution, but this is on the basis of only 38% participation. One positive element that comes out of the constitution, which I am sure my noble friend acknowledges, is that minority groups and minority interests are well protected, and that is a welcome development.

Business of the House

Thursday 27th March 2014 Lords Chamber

Timing of Debates

11:36

Moved by

[Lord Hill of Oareford]

That the Questions for Short Debate in the names of Baroness Whitaker and Lord Stevenson of Balmacara set down for Wednesday 2 April shall each be limited to one hour.

Motion agreed.

Immigration Bill

Thursday 27th March 2014 Lords Chamber

Order of Consideration Motion

11:37

Moved by

[Lord Taylor of Holbeach]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 4, Schedule 1, Clauses 5 to 12, Schedule 2, Clauses 13 to 19, Schedule 3, Clauses 20 to 51, Schedule 4, Clauses 52 and 53, Schedule 5, Clauses 54 to 58, Schedule 6, Clauses 59 to 62, Schedule 7, Clauses 63 to 65, Schedule 8, Clauses 66 to 70, Schedule 9, Clauses 71 to 74.

Motion agreed.

Liaison

Thursday 27th March 2014 Lords Chamber

Motion to Agree

11:37

Moved by

[The Chairman of Committees]

That the 1st Report from the Select Committee (Review of select committee activity and proposals for new committee activity) (HL Paper 145) be agreed to.

[The Chairman of Committees (Lord Sewel)]

My Lords, in our 2012 report we recommended an increase in ad hoc committee activity, including an additional committee unit. In our 2013 report we recommended a further additional committee unit. As a result, more ad hoc committees have been appointed this Session than ever before.

The Liaison Committee discussed the work of the three ad hoc committees appointed in the present Session with their respective chairmen: the noble Lord, Lord Harris of Haringey, chairman of the Olympic and Paralympic Legacy Committee; the noble Lord, Lord Howell of Guildford, chairman of the Soft Power Committee; and the noble Baroness, Lady Noakes, chairman of the Personal Service Companies Committee. All three were enthusiastic about the work of their committees, although the time constraints of the two short ad hoc inquiries had meant that the programmes of both committees had been telescoped. The next Session will be the last in the present Parliament and, as such, may be compressed, so we decided not to recommend the appointment of any short ad hoc committees during the 2014-15 Session.

We discussed the work of this Session’s post-legislative scrutiny committees with the noble and learned Lord, Lord Hardie, chairman of the Mental Capacity Act 2005 Committee, and the noble Lord, Lord Shutt of Greetland, chairman of the Inquiries Act 2005 Committee. Both committees have now reported and already have had a very marked and significant impact.

The increase in Select Committee activity during the past two Sessions has been well received, as has been the practice of inviting Members of the House to put forward their own proposals for ad hoc committees. This is a thorough and open process and allows all Members of the House to put forward their suggestions. This year’s deadline of 15 January was advertised on the front cover of Red Benches in December 2013 and through the party Whips and I routinely mentioned the opportunity for Members to submit topics when I went on my usual tour of the party groups and the Cross-Benchers’ meetings.

Twenty-two members of the House put forward proposals for ad hoc Select Committee activity in the 2014-15 Session by the deadline of 15 January. As was the case last year, our consideration was a two-stage process. On receipt of the proposals, a limited amount of research was carried out by the Committee Office to assist our first deliberation. At our meeting on 4 February, we shortlisted a number of the proposals for further scoping work by the Committee Office, which assisted our final recommendations at our meeting on 4 March. I am happy to say that, perhaps in part because of the thorough process that we followed, the committee was unanimous in agreeing the recommendations that are now before your Lordships.

Several Members of the House called for a Select Committee on foreign affairs. The noble Lord, Lord Howell of Guildford, also proposed that the House should appoint a further ad hoc committee on an international relations subject to succeed the ad hoc Committee on Soft Power and the UK’s Influence, which he chaired during the present Session. We were attracted to the proposal put forward by the noble Lord, Lord Howell, but do not think it appropriate at this late stage in the Parliament to set up any new sessional Select Committees, whether on international relations or any other subject. We were attracted also to the proposal put forward by the noble Lord, Lord Tugendhat, for an ad hoc committee to consider a range of issues relating to the Arctic, which could cover defence security, environmental security, energy security and the consequences of the redrawing of world trade routes in a hostile environment. The Arctic is an area that is moving, changing and developing very quickly and brings many significant questions to the fore. We think that this would be a good choice for an ad hoc committee on an international relations subject in the next Session.

The noble Baroness, Lady Massey of Darwen, proposed the establishment of a Select Committee on affordable childcare, following a debate in the House on 9 January 2014, and the committee agreed to support her proposal. Access to affordable childcare is an important factor both in women’s participation in the labour market and in child development.

We also agreed to support the proposal put forward by the noble Baroness, Lady O’Cathain, for a Select Committee on ICT, competitiveness and skills. This is another topic in which there is considerable interest and expertise in the House, expressed most recently during the Oral Question on 25 February on careers guidance in schools. We also agreed to recommend a new post-legislative scrutiny committee for the 2014-15 Session and to support the proposal of the noble Baroness, Lady Garden of Frognal, for the establishment of a post-legislative scrutiny committee to examine the Extradition Act 2003 and the law relating to extradition.

I hope that your Lordships will support the committee’s decision to maintain the unprecedentedly high level of committee activity in Session 2014-15. Inevitably, it was not possible for the Liaison Committee to recommend to the House all the proposals received, but I hope that your Lordships will agree with me that this is a well balanced group of committees and subject areas.

On 13 March, nearly two months after the deadline for receiving proposals from Members of the House, I was sent an e-mail on behalf of a number of Members of the House asking,

“the Liaison Committee to create an ad hoc select committee on reform of the civil service to start work immediately”.

I hope that noble Lords will understand that this struck me as a bit of a bolt from the blue in that it sought to bypass what is an open, transparent and established selection process. I found it difficult to understand how a topic that received no support on 15 January could suddenly emerge by 13 March as the most urgent and important topic that we should address. I am therefore pleased to see that the noble Lord, Lord McNally, has now tabled an amendment referring to the possibility of a Joint Committee on the Civil Service, particularly asking the House to agree that, if a message were received from the House of Commons inviting the House of Lords to appoint its share of such a Joint Committee, the Liaison Committee would meet again to consider the proposals. I am very happy to agree to that and accept the amendment of the noble Lord, Lord McNally, as it reflects our normal procedure—as one would expect, given that the noble Lord was until recently a member of the Liaison Committee. Of course, I cannot prejudge the decision that the Liaison Committee may make if we were to receive any such message from the House of Commons.

11:45

Finally, I turn to the question of follow-up. As several committee chairmen observed to us, the downside of ad hoc committees is that they cease to exist once they have reported and are thus unable to engage in follow-up. Accordingly, we considered how that point of weakness might be addressed. On the one hand, the new ad hoc committees were set up as fixed-term entities. Any likely follow-up mechanism would be difficult to limit in both time and resource. A further consideration is that, once ad hoc committees have reported, the protection of parliamentary privilege ceases. On the other hand, committees exist to make recommendations and, if those are not followed up, the value of the committee report is diminished. I am glad to say that the follow-up report of last Session’s Committee on Small and Medium-Sized Enterprises and exports is expected to take place shortly and that the Government have agreed to provide a further written response to the report of the Select Committee on Public Service and Demographic Change approximately one year after the publication of their first response. The Liaison Committee expects to receive that further government response in June 2014. Our report invites future ad hoc committees to identify clearly the issues that they wish to be followed up roughly a year after they have reported.

In conclusion, I commend to the House the work of all our committees. The House of Lords now has a wide range of sessional and ad hoc committees and we must also remember the important work of pre-legislative scrutiny committees. Inevitably, some attract more publicity than others, but all are worth while, because this is an area of activity where this House really delivers added value. I beg to move.

Amendment to the Motion

Moved by

[Lord McNally]

At end to insert “with the proviso that, in the event that the House of Commons invites the House of Lords to appoint a Committee to join with a Commons Committee as a joint committee on the Civil Service, the Liaison Committee will meet again to consider the proposal”.

[Lord McNally (LD)]

My Lords, let me make it clear that tabling the amendment in no way changes my opinion of the Lord Chairman of Committees—a comrade in arms. I have tabled the amendment because the Lord Chairman said, in response to the e-mail to which he referred, which was signed by me and the noble Lords, Lord Norton, Lord Hennessy and Lord Forsyth:

“When the Liaison Committee last met, I had heard by word of mouth that particularly in the Commons there were Members interested in a Joint Committee on Civil Service Reform. As no formal process had been received the Committee could not consider this in great detail, but the general feeling of the Committee was that the terms of reference would need to be considered carefully. The subject is a large and important one, and Members felt that it was unlikely that justice could be done to such a complex issue in the parliamentary time available before the 2015 election”.

However, the report to the House refers in no way to that discussion. I am in no way casting doubt on the Liaison Committee, but I felt that without this amendment being accepted—I am very grateful that it is accepted—if the other place called for a Joint Committee, the response would be that the Liaison Committee had already discussed it and we were not in favour of it. That would be a disgraceful response if the other place expressed an interest in such a Joint Committee on the Civil Service.

I served on the Liaison Committee for nine years and I am pleased that recent reforms have made it less arthritic. However, the Liaison Committee should be able to respond very quickly to need. I do not believe that the fifth year of this Parliament is a dead or fallow period, particularly when the Executive are pressing ahead with such an important thing as Civil Service reform. The idea of a Civil Service chosen on merit and politically neutral is one of the great reforming gifts of 19th-century Liberalism to our governance. We should not let that go away casually while Parliament is not looking. It is not acceptable that Civil Service reform should go ahead without proper parliamentary scrutiny.

In passing I would say that I recently had the honour of serving in government for three and a half years and my impression was that we still attract talent into our Civil Service and that it is still based on a very strong ethos of public service. If we are not to throw that away casually or by the back door, Parliament will have to be very alert. I therefore put down this marker to the Liaison Committee. Some very distinguished Members from all parties in the other place have pressed for such a committee. I hope that the Liaison Committee will react nimbly and positively to such a request.

[Lord Forsyth of Drumlean (Con)]

I shall speak briefly. As the noble Lord has pointed out, I added my name to the e-mail that was sent. I say to the Chairman of Committees that I think it is a bit bureaucratic to say that the deadline was 15 January when we had a major debate in this House on the Civil Service in which almost every speech expressed concern about maintaining the integrity of the Civil Service and its political independence. After that there were moves at a very senior level in the other place to have an initiative on a joint basis between both Houses. Therefore, we made a request for a committee to be established after the deadline because of the circumstances that occurred in both Chambers of Parliament. I say very gently to the Chairman of Committees that, if the Liaison Committee is so concerned about its procedures that it does not take account of what is being said in both Houses of Parliament, perhaps more flexibility needs to be introduced into these procedures.

I am very concerned indeed by some of the proposals being put forward for reform of the Civil Service. When I was Secretary of State for Scotland, we were in government but I always felt that I was in opposition. The Civil Service in the Scottish Office was pretty committed to establishing a Scottish Parliament and we were pretty committed to not establishing a Scottish Parliament. We were also committed to a whole range of quite radical reforms that went against the grain. I have to say that I never, ever experienced anything other than complete and total professional service from the Civil Service. If you gave it a lead, it would respond, and respond with great professionalism and integrity.

I observe the Civil Service now; I observe the degree to which there is turnover in important departments such as the Treasury; I look at the numbers of Permanent Secretaries who seem to survive for less than 12 months; and I look at the proposals that are coming from the coalition to politicise and increase the number of special advisers. These are all hugely revolutionary and important changes and when, come the general election, each political party will no doubt have something to say on its views on the Civil Service, it will be important that we have an informed debate.

I therefore regret the fact that there will not be an opportunity for us to have a proper look at these issues so that people can make up their minds as to what the right way forward is. I very much hope that, as the noble Lord, Lord McNally, said, should a proposal come from the House of Commons we would respond to it so that the expertise and experience that exist in this House in all quarters can add to what is a central debate to the future of our constitution and good government in our country.

[Lord Butler of Brockwell (CB)]

My Lords, I make it clear that I make no criticism of the procedures of the Liaison Committee, which were perfectly fair, although I agree with the noble Lords, Lord McNally and Lord Forsyth, that there is an issue for Parliament here. The proposal that there were issues of such importance affecting the Civil Service that they required investigation had the support of not only the Public Administration Select Committee in another place but all the chairmen of the Select Committees that examine departments. It was a unanimous proposal from the Liaison Committee in another place. These are issues of importance, which may well be in the manifestos for the next general election. As I said in my remarks on 16 January, it would be extraordinary if Parliament did not examine them when there is such senior support for that in the House. While I absolutely understand the procedures that were followed by the Liaison Committee and have never sought to overturn either its recommendations or the list of subjects that it has proposed, I hope, as other speakers have, that if the House of Commons goes ahead with setting up an examination of these issues, the Liaison Committee of this House will be flexible enough to agree that this House should join in that investigation.

[Lord Hamilton of Epsom (Con)]

My Lords, I must confess that I did not realise that my noble friend Lord McNally had put down this amendment. If I had, I would have put my name to it. There is something seriously wrong with our Civil Service today and there is no better place than your Lordships’ House to give consideration to how it should be reformed.

Amendment to the Motion agreed.

[Lord Higgins (Con)]

My Lords, I am sure that the House is anxious to get on with the Budget debate, as I am, so I shall not delay it for more than a few moments. However, paragraph 12 of the report that we are considering draws attention to an extremely serious situation, where the work of the ad hoc Select Committee on Personal Service Companies has been seriously handicapped by the fact that the Treasury Minister concerned refused either to give oral evidence or to allow his officials to give evidence. That was on the grounds that we were concerned only with the administration of the situation, whereas quite clearly the whole thing operates within a legal and legislative framework that is the responsibility of the Treasury. We ought to have been able to question Treasury Ministers on the implications of that legislation for the subject that we were discussing. The committee’s report clearly says that this situation is “unfortunate”, but I am not clear what representations the Liaison Committee is making to the Government, and perhaps to the Chancellor of the Exchequer in particular, about this extremely unfortunate situation, which has handicapped the ability of the committee to carry out its work.

Motion, as amended, agreed.

Arrangement of Business

Thursday 27th March 2014 Lords Chamber

Announcement

[(Baroness Anelay of St Johns) (Con)]

My Lords, we now have two debates during the rest of our sitting today. The first of those debates on the Budget is not time limited and colleagues will know that I have been keen to table government-led debates on a Thursday where we are not strictly time limited. The second is time limited. It is a Question for Short Debate, which may last only one and a half hours. It may therefore be helpful, particularly to those who are in the second debate, if I give an advisory speaking time on the Budget debate. We have 30 speakers for today’s debate on the Budget. If Back-Bench contributions were to be kept to 10 minutes then those on the QSD later could be assured that they would complete their work by 7 pm.

Budget Statement

Thursday 27th March 2014 Lords Chamber

Motion to Take Note

Moved by

[Lord Deighton]

That this House takes note of the economy of the United Kingdom in the light of the Budget Statement.

[The Commercial Secretary to the Treasury (Lord Deighton) (Con)]

My Lords, the UK’s economic recovery has finally taken hold. No major advanced economy grew faster in the fourth quarter of 2013 than the UK’s. Employment is at record levels. Some 1.7 million private sector jobs have been created since early 2010 and over the same period more than four private sector jobs have been created for every public sector job lost. Inflation of 1.7% last month was the lowest for more than four years.

During this debate last year I argued that the Government’s focus on deficit reduction could go hand in hand with a successful strategy for growth. Some noble Lords disagreed. At that time the independent OBR had forecast growth of 1.8% for 2014. Last week the OBR forecast growth of 2.7% for 2014—nearly a whole percentage point higher. That is the biggest upward revision to growth between Budgets for at least 30 years. However, there is clearly more to do to ensure that our recovery is balanced and will protect us against future shocks, so today I will speak about how the Government are taking the difficult decisions to rectify the mistakes of the past so that everyone in the UK experiences the benefit of the recovery.

In the build up to the financial crisis the UK economy was characterised by severe imbalances and long-running structural weaknesses. In 2008, UK investment as a percentage of GDP had been the lowest in the G7 for a decade and our level of productivity was also lower than that of our peers. The economy had become increasingly reliant on the services sector. Manufacturing had fallen from 19% of the economy in 1997 to 11%—not helped by the long-run decline of North Sea oil. The UK financial system had become the most highly leveraged of any major economy, with a total balance sheet inflated to more than 200% of GDP. Total household debt had risen from around 100% of income at the start of the decade to more than 170% and the saving ratio had collapsed to just 0.2%.

Imbalances were also building up in the public finances. In 2005-06, public expenditure had already increased to 41% of GDP while revenues were at 38%. Despite the buoyant economy, we were spending more than we were earning. All of this meant that when the financial crisis hit, the UK economy was among the most vulnerable and it was for that reason we experienced the biggest recession of any major advanced economy apart from Japan. By 2009-10 we were running the highest structural deficit in the G7, borrowing one pound for every four we spent. The deficit had climbed to 11% of GDP and every year that deficit adds even more to the debt that has been accumulated. Faced with a challenge of these proportions, restoring balance between public expenditure and receipts was the only credible option.

Following the financial crisis our economy was hit by further shocks. Some 40% of UK goods exports go to the euro area and as the eurozone crisis intensified it weighed on UK export performance. Commodity prices rose steeply between 2009 and 2011, increasing costs for households and businesses. In addition, it became apparent that the financial crisis had had a deeper and more lasting effect than we previously anticipated. The UK economy shrank by 7.2% in the aftermath of the crisis. Of course a crisis of that scale would have an impact on millions of households.

In the face of such a daunting economic challenge, it is essential to have a clear and comprehensive plan. I remember that in the debate last year, the noble Lord, Lord Desai, said that there was not much to say about the Budget because the Government had a plan and they were sticking to it. I chose to take that as a compliment, and we have continued to stick to our plan. Our plan made it clear that we would: fix the economy and deal with the deficit; cut tax to encourage investment and entrepreneurialism; back businesses across both the sectors and the regions; reform welfare, the cost of which had spiralled out of control; and invest in schools and skills so that the youth of today could drive the economy of the future. We put that plan in place. We have adhered to it, and we are delivering results with it. I would like to spend my time with noble Lords this afternoon discussing just what that plan has achieved to date and what more needs to be done to embed this recovery for the long term.

The scale of the fiscal challenge we faced required urgent action. This meant not just committing to reducing the deficit but doing it in a way that gave markets faith that it would be delivered, and helped keep interest rates low. Such is the level of the UK’s accumulated debt that interest payments alone are forecast to be almost £60 billion in 2015-16, which is more than the annual budget of the Department for Education. Maintaining market confidence in the Government’s determination to restore sustainable public finances is critical. A one percentage point rise in gilt rates would add around £8.5 billion in interest payments by 2018-19, a risk my noble friend Lord Higgins has questioned me about before.

Again, this Government’s decision to deliver the majority of the consolidation through reduced spending was the only credible option. However, the severity of the financial crisis and its impact on the UK public finances mean that returning to a sustainable path will take time. The independent OBR predicts that in 2018-19 we will have a surplus for the first time in 18 years, but even then our work will not be complete. Accumulated debt will still be in a position to make the public finances vulnerable. Without maintaining a continuing grip on the public finances and running surpluses during good years, debt will not fall, and future Governments risk being hampered in their ability to support the economy at times of stress, which we are sure to have. As my right honourable friend the Chancellor said in his Budget speech last week, we aim to,

“fix the roof when the sun is shining”.—[Official Report, Commons, 19/3/14; col. 784.]

This Government are committed to improving fiscal discipline. The creation of the independent OBR has given confidence to the reliability of the economic forecasts, and public pay restraint has been a tough but necessary action. The welfare cap announced at Budget, which was debated in the other place yesterday, will further tighten fiscal discipline and place the welfare system on a sustainable footing. Every other part of government spending is carefully managed, and welfare is too large an area of spending to be left without strong controls. As a result of all the measures laid out, public finances are now returning to a sustainable path.

Monetary policy formed the first line of defence following the crisis, supporting the economy and stimulating demand. By keeping the bank rate low and through quantitative easing, the Monetary Policy Committee has helped maintain low interest rates, reducing costs for households and businesses. Furthermore the Government have updated the remit of the MPC that ensures the committee provides greater transparency and certainty. Finally, the Government have created an entirely new macroprudential framework with the Financial Policy Committee at its heart. This fiscal and monetary action rescued the economy from crisis and provides a stable framework for us to continue to address some of the challenges which have impeded the UK’s economic performance.

At the heart of these challenges is the UK’s productivity challenge. This Government recognise productivity growth increases real earnings and improves the day-to-day lives of people around the UK. The future path of productivity growth is the most important judgment in the OBR’s economic forecast too and, by its own admission, the key uncertainty. Historically, the UK’s level of productivity was weak compared to many of our international peers and, despite some growth through the 1990s and early 2000s, when the financial crisis hit, UK productivity was still below the rest of the G7.

The causes of the UK’s weak productivity performance are hotly debated, and the implications are far reaching. While I am sure that in our debate this afternoon noble Lords will offer some excellent insight into possible areas for action, I shall address what I think are some of the key areas, namely, business investment, access to credit and skills and infrastructure.

Investment by businesses is a key driver of productivity growth. It improves their capital stock and enables them to produce more outputs with fewer inputs. More recently, business investment growth has returned, up 2.4% in the fourth quarter of 2013, and 8.5% compared to a year before. The OBR has forecast that investment will grow strongly in the coming years as uncertainty recedes and credit conditions improve. However, business investment is still considerably below its pre-crisis peak, and, as with productivity, UK investment over the longer term is weak compared to our international peers. There have been only five years since the late 1970s when we did not have the lowest investment in the G7.

The Government have a simple strategy for encouraging business investment: we want the UK to be the best place to set up and do business. We have already committed to reducing corporation tax to 20% by 2015, and last week the Chancellor announced that we would both extend and expand the annual investment allowance, which will give virtually all businesses a 100% allowance on new machinery or plant.

We also addressed the high energy costs that burden businesses, particularly manufacturers, by capping the carbon price support rate—a problem the noble Baroness, Lady Worthington, anticipated in her eloquent contribution to this debate last year. To help address the historic problem of imports outweighing exports, we are expanding the reach and support provided by UKTI. The Budget also doubled the amount of lending that UK Export Finance can make and reduced the cost of those loans to exporters. That positive business environment not only supports our home grown success stories, such as Jaguar Land Rover, but also attracts overseas investment and jobs; recent examples are Hitachi with rail and Siemens with wind turbines. However, businesses cannot invest if they cannot access credit.

When the Government took office, bank lending had fallen to record lows as a result of the financial crisis. There is also evidence that innovative, new, high productivity firms—the drivers of growth—struggled to access the credit they needed to get off the ground, which further exacerbated the UK’s weak productivity performance. Opinions divide on whether that was a result of constrained supply by banks, or lower demand by businesses that were just not confident enough to borrow. However, either way the outcome was the same: existing businesses, SMEs in particular, were not accessing the credit that would enable them to invest and grow.

Action has been taken. The Funding for Lending scheme was introduced to provide incentives for banks and building societies to boost their lending to the real economy. In November 2013, as mortgage lending to households was recovering, the scheme was focused on SME lending. Credit availability for small businesses is now increasing at its fastest rate in almost four years, and gross lending to SMEs was 13% higher in 2013 than in 2012.

Further, the Government are supporting increased competition within the banking sector and are nurturing alternatives to the banks, such as peer-to-peer lending and initiatives with equity finance. Specifically, the Business Finance Partnership has already unlocked £1.5 billion of additional lending to small and medium-sized businesses exclusively through non-bank finance. However, for productivity to grow and UK businesses to succeed, both domestically and globally, takes more than just investment. The Government must remove supply-side blockages, too, which means investing in infrastructure and skills.

The quality of this country’s transport, energy, communications and water networks is vital to improving our productivity. That infrastructure enables the rest of our economy to work, and we have underinvested in it for decades. Our national infrastructure plan sets out how the UK’s infrastructure needs will be delivered over the long term. We have published a pipeline of projects and programmes worth more than £375 billion, and at last week’s Budget we published further analysis of how we expect that to be financed. That builds on the long-term funding we have already announced for sectors such as roads, rail and flood defences and the steps we have taken to support private sector investment. We are continuing to reform our planning system, and are focused on ensuring that these projects are delivered on time and on budget.

The final ingredient for a productive and competitive economy—many would argue the most important one—is an educated and skilled population. That is why the Government are boosting funding for apprenticeships, removing the cap on student numbers, and increasing investment in science and innovation. The changing nature of the labour market means that the economy demands higher skills. Investment in skills and education ensures that the UK is able to compete in the global economy. Equipping the country’s workforce with the skills businesses need will provide more opportunities for our young people to find employment and reach their full potential.

Building a resilient economy is the only way in which to improve and maintain living standards. Given the scale of the financial crisis that we have experienced, it is no surprise that earnings growth slowed. Paul Johnson, the director of the IFS, acknowledged that falls in real earnings are a direct but delayed result of the 2008 recession. But throughout our time in office, this Government have taken huge steps to make sure that our policies impact households fairly across the UK. The personal allowance will increase again to £10,500 from April next year, meaning that a typical basic rate taxpayer will be more than £800 a year better off in cash terms. Fuel duty has been frozen until the end of Parliament; we have helped local authorities to freeze council tax in every year of this Parliament; we have increased the tax-free childcare cost cap, against which parents can claim 20% support, to £10,000 per year for each child; and we have made it easier to save and for people to access their pensions—a change that has been well received, on an issue that is perhaps closer to the hearts of Members of this Chamber than to those in the other place.

The most important way of getting money into people’s pockets, and helping them to raise their living standards, is to make sure that as many people as possible are in employment. Those figures I referred to in my introduction—1.7 million new private sector jobs, with four private sector jobs created for every public sector job lost—are a real demonstration that this Government’s policies are working, and the recovery is happening. But let us be clear: increasing growth and productivity is the only way to ensure that people feel the recovery for the long term, because it is productivity which determines real earnings growth. As we see the recovery take hold, the OBR predicts that earnings will grow faster than inflation this year and throughout the forecast period. It expects real household disposable income per capita to grow at 0.5% in 2014 and 1.2% in 2015. That improvement will be supported by a continuing strong employment performance.

In conclusion, it is indisputable that we have an improving economic picture, with growth and jobs up, and inflation and the deficit down—but there are, of course, significant challenges remaining. The Government’s economic plan has bolstered stability in the markets, given confidence to businesses and provided security for households, but there is no doubt that the job is not done, and we must continue to boost productivity and address the challenges that face our economy head on. We are now taking the next steps in our long-term economic plan, and last week’s Budget provided the right mix of policies to address the challenges that remain. I believe, as does my right honourable friend the Chancellor, that with the help of the British people, this Government are securing this country’s economic future.

12:17

[Lord Hollick (Lab)]

My Lords, I want to start with Tommy Cooper. When he was asked to explain how he did his sleight of hand magic, he said, “Watch my hands and ignore what I say”. Of course, that was easier said than done, because Cooper’s patter was utterly hilarious and compelling. Our Chancellor has a well practised line in patter, but if you watch his hands—in other words, what he actually does—you quickly detect the difference between what he says and what he does. He is adept at saying one thing while doing another.

Over the past few years, the Chancellor’s constant refrain in response to those calling for a Keynesian boost to get the economy moving has been, “You can’t cure debt with more debt”, but this is precisely what he has done—though not directly of course, although public debt has in fact significantly gone over his forecast. He has not overtly adopted a plan B; rather, he has resorted to off-balance-sheet measures to boost the economy. By making £120 billion in government guarantees available for additional mortgage borrowing, he has provided the private sector with a massive incentive to ignite the housing market and with it the feel-good factor.

That was last year. In this year’s Budget, the Chancellor tells us we are not saving enough, but in the next breath he announces that pensioners can now access their pension pots to finance consumption. The OBR forecasts that the savings ratio will fall from 7.2% in 2012 to 3.2% by 2018. That is before taking into account early pension fund withdrawals.

Anatole Kaletsky has rather colourfully dubbed the Chancellor a stealth convert to Keynesian Thatcherism. The Chancellor has arranged for the private sector to take the strain and privatise the borrowing that the economy needs to get us out of recession—all helped along, of course, by quantitative easing and ultra-low interest rates. This treatment has worked. As the Minister said, the UK’s growth rates have exceeded expectation and are ahead of all other major advanced economies. However, it could have worked earlier and the UK could have avoided three years of damaging economic underperformance if the Chancellor had adopted policies to boost borrowing earlier in the Parliament.

The IFS has spotted another important gap between words and actions. Despite the Chancellor’s protestations that he is ruthlessly holding the line on fiscal discipline, he has introduced permanent tax giveaways paid for by unspecified spending cuts and temporary tax increases, thus weakening long-term public finances. He has yet to spell out how he will achieve his target of cutting public expenditure by 2018 to the lowest share of national income since 1948.

GDP growth is being fuelled by a borrowing binge and house price inflation. We all know how that story ends. Will the Minister please explain why the Government expect the outturn will be different this time round? The long delayed recovery we are seeing is welcome but it is the worst—that is to say, taking the longest to get back to the previous peak in output—in our history. Output remains 15% below what might have been expected absent the financial crisis. The OBR forecasts that the output gap will close by 2018, with the prospect that there will be a permanent hole in UK output. If this forecast is correct, improved productivity is the only way to achieve above-trend growth and recover the lost ground, as the Minister said. The OBR notes that our productivity is exceptionally weak.

The substantial increase in employment is welcome, but it has led to a reduction in real wages and, therefore I presume, productivity. This may be explained by the move from good full-time jobs to a mix of part-time, sole trading, temporary contract and zero-hours contracts, and with many graduates and professionals now working in jobs for which they are well overqualified. The data on pay tell a grim story. Real average earnings have fallen by nearly 10% since 2008 and, measured by RPI, will show no recovery by 2018. Low pay and low productivity are no recipe for sustained growth or, indeed, for fairness.

The Chancellor flirted last autumn with the idea of a large increase in the minimum wage, but that came to nought. He could have been bolder and adopted a policy of requiring the public sector and those companies that hold government outsourcing contracts to pay the living wage. This would lift many working families off benefits and out of the clutches of payday lenders. Economic growth built on decent pay is more sustainable, let alone fairer, than growth based on excessive personal credit.

As the Minister said, increasing capital investment is essential to improving productivity. After four years of declining capital investment by both government and the private sector, there are welcome signs of a pick-up, with the OBR now forecasting 8% growth in business investment and 4.5% growth in government investment. The changes in the Budget to encourage business investment are also welcome. Now that increased funding is being promised, will the Minister tell the House what other barriers need to be removed if he is to achieve his ambitious infrastructure plan?

Investment in the energy sector is essential to getting prices down and to keeping the lights on, as the margin of electricity generating capacity over peak demand shrinks over the next few years. The shortcomings of energy policy have been laid bare by the Government’s dramatic intervention to introduce a £7 billion package to cut energy bills, secure investment in nuclear power and bring mothballed gas generating plants back into service as standby capacity.

But all that comes at a very high cost. The nuclear investment is predicated upon a gas price set at twice the current level and inflation linked for 35 years, all of which will give the investors—EDF—a very handsome 30%-plus return. The standby gas generation arrangements that the Government put in place will have to be underpinned by very expensive back-up contracts to provide gas. New offshore wind will, DECC calculates, be some 30% more expensive than the cost of new nuclear power—all this in a world in which energy prices are falling. The Chancellor promises a shale gas revolution but, to date, only one shale gas well has been fracked in the UK and, assuming that further drilling proves the reserves to be commercially viable, production will come on stream in volume only in the next decade.

The failure of energy policy to create a competitive, functioning energy market that is attractive to investors has forced the Government, in effect, to renationalise the energy sector by taking direct control of pricing and investment. This policy of intervention is not working on any level. Emissions are up because of the increased coal use, supply is less secure because of inadequate investment, and costs are up because of the high cost of new low-carbon supplies and the intermittent nature of the source of energy.

[Lord Forsyth of Drumlean (Con)]

I find myself agreeing with much of what the noble Lord is saying on energy policy, but how does he reconcile what he is saying with the Official Opposition’s policy to introduce price controls on the energy companies?

[Lord Hollick]

As the noble Lord can see, I am speaking from the Back Benches. The wide-ranging competition policy announced today is welcome, but there is a need for a root-and-branch review of our energy policy.

The Chancellor’s measures to boost saving and to stop pensioners being forced to buy annuities from a cartel that gives poor value for money are bold and welcome. When he announced the decision to allow pensioners to access their pension savings, the Chancellor acknowledged that pensioners would need free, impartial advice if they are to get the best out of the choices they now have. The promise to provide that advice must be met in full if pensioners’ interests are to be protected in what is a fiendishly complex and, frankly, rather rapacious industry.

I end on a note of caution. I was a director of the National Bus Company when it was privatised by the then Conservative Government in 1987 into more than 80 separate companies. By the way, it was not my policy but that of Nicholas Ridley. Employees were given the option of staying in the indexed final salary scheme, which had government backing, or taking their chances in a deferred contribution scheme. The pension salesmen’s seductive patter and the promise of a share of the commission generated by the transfer to a defined contribution scheme proved irresistible to many, who then saw their pensions fall short of their expectations, let alone the guaranteed level of the NBC scheme that they had left. This House has an opportunity to make sure that that sort of thing does not happen again by providing proper information and making truly independent advice available to people who are making a decision that is irreversible at an important time in their lives.

12:27

[Lord Razzall (LD)]

My Lords, since the days of Asquith your Lordships’ House has been excluded from any direct influence on the Budget process, but the number of noble Lords who have put their names down to speak in this debate demonstrates how much we appreciate the opportunity to comment on the state of the economy and the potential political consequences that flow from it.

However cautious the Chancellor of the Exchequer and other Treasury Ministers have been, there can be no doubt that the UK economy is on the mend. Output is growing at its fastest rate since before the financial crash; unemployment is falling as new jobs are created in the private sector, as the Minister indicated—more than replacing those lost in the public sector; inflation at 1.7% last month is the lowest for four years and is now below the Bank of England target of 2%; and it is now estimated that by the last quarter of 2014 the economy will be greater in size than it was before the 2008 collapse.

For the two coalition parties the political challenge is clear. The result of the Fixed-term Parliaments Act means that we now know that the date of the next election will be the first Thursday in May 2015. To do well in that election, both our parties will have to demonstrate that the economic policies of the coalition are working and that a return to a Labour Government would put the economic recovery at risk.

As noble Lords will be aware, the coalition has been successful in persuading the electorate that the financial crisis in 2008 was the result of the Labour Government’s profligacy. I accept that this is slightly unfair as it ignores the effect of the subprime mortgage collapse in the United States, but the success of the argument is demonstrated by polling figures, which have consistently shown that the Government are better trusted to manage the economy than Labour. Of course, Labour has not been helped by the refusal of the shadow Chancellor, Mr Balls, to show any remorse for Labour’s period of economic stewardship.

The major attack from Labour, which the noble Lord, Lord Hollick, touched on, has been that growth is not resulting in an improvement in living standards. There are probably two main reasons for this, of which only one is the direct result of government policies. Clearly, the increase in VAT to 20% had a significant impact on household budgets which is still working its way through, but the major factor outside government control which is not often mentioned has been a significant adverse movement in trade prices. As Ben Broadbent, a member of the Monetary Policy Committee, has recently noted, for many years the terms of trade were in our favour. The emergence of China as a source of cheap labour sharply reduced the real price of goods. Our trading strength lay in services, the price of which rose steadily. However, this trend started to reverse in 2003. Growing demand from emerging markets produced a large rise in the price of commodities, of which we are a net importer, and the price of tradable services rose less quickly. Therefore, after a decade in which global trends helped to push down the real price of consumption for UK consumers, the past 10 years have seen the opposite.

On both those issues, it seems that the news is quite good for the coalition. Indirect taxes such as VAT are under government control, so I would have thought that before the election the Government would be unlikely to increase direct taxes, as they did between 2009 and 2011. The cost of imports seems to have stabilised and the prices of our services have started to rise.

The second big political argument in recent months has been over spending plans for the five years after 2015. The legacy inherited by the coalition in 2010 was the double whammy of an unsustainable deficit of government spending over income and a crippling government debt burden. George Osborne and Danny Alexander, the two relevant Treasury Ministers, have committed their respective parties to further steps to eliminate the deficit and reduce debt after 2015, although naturally there are disagreements to come between the two parties as to how in practice this will be achieved. In the mix of tax increases and spending cuts, I suspect that the Tories will be more likely to avoid the former, whereas the Liberal Democrats will not wish to rely solely on the latter. However, the two parties are united in opposition to Ed Balls’s recent proposals, which appear to concentrate solely on deficit reduction, ignoring the debt burden.

Will the coalition parties be able to claim in a year’s time that the economy has recovered on their watch? The portents are good at present. The polls are indicating a surge in economic confidence from both business and the consumer. Surveys by the employer organisations indicate a significant increase in proposals to invest. Although the overwhelming factor in the return of growth obviously comes from what Keynes described as “animal spirits”, the Government can claim some credit. I have often thought of government policy as analogous to a swan, sailing serenely on while declaring that there is no alternative to the austerity programme but underneath the water the legs are paddling furiously to create initiatives to promote economic activity: infrastructure spending, with Crossrail the largest infrastructure scheme in Europe; the regional growth fund; the Green Investment Bank and the business bank; the development of an industrial strategy by the Department for Business, Innovation and Skills, with concentration on key areas of industry; and the stimulation of the housing market by the Help to Buy scheme.

So far as concerns the Labour attack on the reduction in living standards, which the noble Lord, Lord Hollick, referred to, I think that the news is also good. The increase in the personal allowance to £10,500 will clearly help the standard of living of the less well-off, and the improvement in living standards is beginning to show in the figures. The 1.7% headline rate of inflation was identical to the rise in pay in December and January. If you strip out the lumpy effect of bonuses, pay in January went up 1.8%, so incomes are now back to rising more than the rate of inflation.

Notwithstanding the return of confidence in the economy, I see two main pitfalls ahead. The first, to which the Minister referred, is our productivity record. Although real output is now more than 6% higher than in 2009, total real wages are lower. The feel-good factor from economic growth is not there, and by far the major factor in this has been the fall in productivity. Workers are simply producing less output than in the past. As the Minister indicated, a major key to increasing productivity and reversing the downward trend is more business investment, so the Government must pray that the confidence expressed in business surveys follows through to actual expenditure.

Secondly—I turn to a number of our Tory colleagues here—there is Europe. If the recovery in the eurozone stalls, as it is our biggest trading partner we will clearly feel the chill. More particularly, I have little doubt that if there is any chance of a referendum on Europe resulting in a vote to leave, business investment—the key to jobs and productivity increases, as we all accept—will falter. In 2012 for the first time ever Britain exported more cars than it imported. Can we imagine the multinational companies which own our major manufacturers committing significant new investment if they felt that the United Kingdom would leave the European Union?

12:36

[Lord Myners (Non-Afl)]

My Lords, we spoke briefly before this debate started about the role of the Civil Service. The Minister probably sits in the same office in the Treasury that I once occupied, and I can imagine the process running up to the Treasury. Indeed, the noble Lord might even have had to go through the indignity that I went through of having to be photographed holding a blank document, this being the cover of the Budget document even before it had come back from the printer, while looking over the Chancellor’s shoulder and pointing at it, saying, “What wonderful proposals we have here”.

The Civil Service is extremely good at helping Ministers put a gloss on an indifferent story. It does it through statistics. The Minister referred to the growth in small business lending in the past 12 months. If he looked at the level of lending to small businesses in the past decade, or the past 20 or 30 years, he would note that it is still extremely low. There are carefully selected data. The Minister told us that output growth is at its strongest—indeed, it is the strongest of all the world’s developing nations. However, it is also a level of growth and achievement that is still lower than the pre-cyclical peak. We are the only economy still to be producing less than we produced in 2008. The Minister refers to reducing our dependence on debt but the OBR forecasts a further decline in the savings ratio.

The noble Lord, Lord Razzall, talked about inflation being back to forecast at 1.85%. He is correct in that, but it is 1.8% above a figure of 12 months ago, which was in itself 8% higher than inflation and prices would have been had we managed to achieve the 2% target throughout the period that the Government have been in office. This is just playing with statistics. The issues about cost of living and the squeezed middle arise because of the failure to keep inflation under control during the early years of this Government, when it consistently, over a period of 49 months, ran at a higher level than the 2% forecast.

There are some things in the Budget which I find commendable, such as the increase in capital allowances. I ask the Minister why it has taken such a long time to do this but it is entirely sensible, as is the increase in resource to the Department for Business, Innovation and Skills for export-led activity, albeit that it is an extraordinarily modest amount of money. Nevertheless, an extra £3 million advanced to UKTI can only be helpful.

Looked at from a macro perspective, the Budget has little economic consequence. It is a pre-election Budget. It is the last Budget we will have before the election that is likely to have any impact on voters’ expectations and general sense of confidence and well-being.

How is the Chancellor doing against his primary goal of eliminating the deficit? First of all, it was a pretty poor goal to set. The Minister, as a former partner of that eminent finance house, Goldman Sachs, will recognise the fundamental flaw in looking at only one side of the balance sheet, and yet that is what the Chancellor does. He does not have regard to public investment and he treats revenue and capital expenditure as the same. That has been the practice of Governments over many years and it leads to a failure to realise that there are extraordinarily attractive opportunities for public investment, particularly when interest rates are low and when public capital creation as a percentage of GDP is running at levels lower than at any time in the past 25 years.

The Minister deals regularly with financial institutions, seeking to persuade them to invest in infrastructure. I doubt very much whether he will say this but I suspect that, in his heart, he thinks that this is a wasted exercise. Quite frankly, the amount of money he has got into new investment, as opposed to buying investments made under previous Governments, is very small and the amount of risk transfer is almost zero. Why are the Government not spending more at a time when they are able to borrow at zero rates of interest for important capital projects? I am not talking about borrowing to support revenue projects. There is a need to get welfare expenditure under control. It was never the intention that people could make it a lifestyle option to live off the taxpayer through benefits. There is a need to get a grip on that and the Government are doing so. However, to conflate that with the issue of capital expenditure is clearly wrong.

I mentioned earlier obfuscation on statistics. The Chancellor said that he has reduced the deficit to 5.5% of GDP, compared to it being 11% when he came into office, claiming that he has halved the deficit. This is a sleight of hand, as any self-respecting economist would know. Even at our current levels, our deficit will be higher this year than the deficits in Greece, Italy and Ireland.

The OBR discloses the sleight of hand. If the deficit is adjusted for the cyclical recovery which has taken place, government borrowing figures are worse than they were 12 months ago. I do not think we heard the Chancellor say that in explicit terms when he spoke in the other place, nor have we heard anything close to that from the Minister.

The recovery, inasmuch as we have one, is built on candy floss. The upswing is cyclical in its source. This is not a recovery based on investment or exports. This is no march of the makers, as we were promised by the Chancellor. The labour market is tightening and capacity gaps are closing, yet business is sitting on huge cash balances. However, business chooses not to invest in new capital capacity because demand is being met at the moment by low-cost, low-productivity labour. It is simply easier for a business to meet any short-term increase in demand by employing more people on zero-hours contracts than to invest in important manufacturing capacity. The blame for that lies with the Government for not building the right environment for confident capital investment, and not least the Conservatives in government for the uncertainty they have unleashed over our future relationship with Europe.

The Minister talked about trends in productivity. Let me tell him that, since the end of the Second World War, labour productivity in this country has increased by 2.2% per annum. This is not significantly lower than our competitor nations. Our problem is not productivity of labour, but productivity of capital. However, labour productivity has not increased at all since 2007. Declining labour and capital productivity do not augur well for the future, and the impact is already with us in the declining share of world trade currently taken by the United Kingdom. I believe that this lack of confidence explains why SMEs are not borrowing. I wrestled with this when I was a Minister: was it that the banks were not willing to lend or was it that SMEs did not want to borrow? I have concluded that it is much more the latter than the former.

We have the wrong sort of growth, in the same way my doctor tells me that I have the wrong sort of cholesterol. We have growth that is based on a consumer boom that has been unleashed by low rates of interest and encouraged by a profligate and reckless Government who are stoking a boom in house prices and disregarding the inevitable consequences, while doing absolutely nothing to close the gap between the number of new family homes we need and the number being built.

Private sector debt as a percentage of GDP is rising, while government debt has doubled in the period that this Government have been in office. Debt will have risen to twice the level it previously stood at after 350 years of government: so much for their sound management of the nation’s finances.

I should like to close with a brief comment about quantitative easing. I was in office when QE was introduced, but I do not think any of us envisaged that it would last this long. A new deputy governor has been appointed at the Bank of England to look specifically at QE. Will the Minister give consideration to whether we should not seriously examine the possibility of off-setting the gilt-edged securities owned by the Government through the QE asset purchase programme against the gilts that were issued? Perhaps he would like to respond to me in writing on this. The first thing you do when you find that a company is in difficulties is say, “Pay off your debts with your surplus cash”. Why are the Government not doing this? It would reduce debt as a percentage of GDP at a stroke. The impact on inflation is likely to be low and could probably be handled through sterilisation activities in the money markets. This has not been publicly debated or raised as a possibility but, given the existence of surplus capacity in the economy and restrained inflationary pressure, I cannot see any significant reason why the Government should not look seriously at it as a possibility. The alternative, of seeking to sell the QE-purchased gilts back into the market while continuing to fund a deficit of 5.5% of GDP, is unthinkable.

12:49

[The Lord Bishop of Chester]

My Lords, the reason that the Bishops sit on the government side of the Chamber, I am told, is the recognition that the task of government is so difficult that the Government need all the help available to them. Managing the economy in recent years has been an enormously difficult task and we can only express relief and, indeed, gratitude that things seem to be moving on to a more normal plane despite all the challenges ahead, about which the Chancellor himself is fairly candid.

The present Budget reminded me a bit more than its immediate predecessors of the iconic Budgets of the 1980s, with their emphasis on deregulation and personal freedom. There was a similar tone, which the unexpected radical announcement in relation to defined contribution pension savings illustrated. I have always been a cautious and strictly apolitical supporter of many of the policies introduced in the 1980s. I could recall only too well the moribund character of much of the 1960s and 1970s in my formative years. The British economy did need opening up in many of the ways achieved in the 1980s, and it was significant how few of the changes made then were actually reversed by the long subsequent period of Labour government, apart from an increasing trajectory for public borrowing, as has been noted.

However, an underlying problem of the past 30 years has been the difficult interplay of freedom and responsibility in our society. Greater freedom demands a greater degree of responsibility in the exercise of that freedom and in how to deal with its fruits, if it is genuinely to serve the common good, otherwise greater freedom is likely just to generate a greater selfishness and individualism in all its guises. The sense of necessary responsibility is something which not only individual citizens have to recognise but the institutions of society and, especially, Government themselves.

Any society which increases the degree of freedom available to its citizens is liable and likely to generate an increasing disparity between winners and losers. Some will take advantage of the new freedoms, and much greater and more concentrated levels of personal wealth will emerge, while others will tend to sink to the bottom of the pile and form part of a growing underclass. That seems to me to be just what we have seen in the past 30 years. At the top of the pile, the rich get seemingly ever richer; and if the plans for inheritance tax are brought in, wealth will tend to be even more entrenched in particular families. We are told that 30% of our income tax in the UK is collected from 1% of taxpayers. However, that can be presented in two entirely different ways: as evidence that the rich are indeed paying their fair share of our taxes but also as evidence of the very imbalances which I indicated just now between the rich and the poor. Both may have a degree of truth.

I speak of a growing underclass. What is the evidence? The prison population has doubled in the past 30 years. The problems of ingrained poverty in a benefits-dependent culture, which noble Lords have referred to, are a new set of problems for our society and are well recognised. There are stubbornly high figures for child poverty. Beyond economic measurement, there is the strong perception that social mobility in our society has actually tended to decrease. That was the subject of a five-hour debate in your Lordships’ House just two weeks ago, in relation to our education system. I was able to sit through much of the debate and was struck by the fact that at the end of the day, for all the fine talk, people did not really seem to understand or know why there had been this decline in social mobility or, indeed, where the answers might be found.

A few months ago, I heard the former boss of Tesco, Terry Leahy, on “Desert Island Discs”. At the end, he was asked whether, today, someone like him from a working-class estate in Liverpool might rise to an equivalent position. He said that it was possible but much less likely. The reason he gave was the absence today of the social institutions which surrounded his upbringing and protected and encouraged him: the family, the local church—in his case a Roman Catholic church—and other local institutions.

All these supported the schooling that he received. That brings me back to the Budget. If, as surely we all hope is the case, we are now at the beginning of a new period of economic growth and prosperity, how will we avoid some of the problems that we have seen in the past 30 years? I will briefly doff my mitre—an imaginary cloth mitre—in three directions.

First, we must all do what we can to support strong social institutions in our society. Unavoidably, that must include the family. Independent estimates tell us that the cost of family breakdown to the Exchequer is something like £45 billion a year, a figure that the noble Lord, Lord Freud, accepted a few weeks ago in response to a Question. Of course, families can take a variety of shapes and all deserve support. Indeed, all who care for children, whatever their immediate circumstances, deserve and need our complete support. I just do not think that we will achieve a strong and renewed sense of family life in our society without having, in some sense, marriage as a core institution in the spectrum of actual family relationships. The Budget includes a modest introduction of transferable allowances within marriage and civil partnerships as both a symbolic and an actual gesture, and that is to be welcomed. It is very modest and I hope it can be built upon in the future.

Secondly, we must welcome unreservedly the Government’s commitment to maintain the real value of our overseas aid programme. In an ever more globalised world, the great disparities in wealth will be an ever greater source of instability. The notion of the common good is not just a national idea; it is a transnational and international idea. Wealth always brings power, and lasting peace is ultimately built upon some form of power-sharing.

Finally, as I said earlier, freedom has its in-built dangers. I can welcome the deregulation of defined contribution pension savings but only if robust protections are put in place to safeguard people against the misuse of those freedoms—here I agree entirely with the noble Lord, Lord Hollick. These protections include much better education about financial realities at all levels of our society, from school upwards. I am always struck by how the younger generation seem not to have been taught to think about these things, but pension saving is, if nothing else, a very long-term requirement. One has to look only at the way in which payday loans have been advertised in our society to see the equivalent dangers that are going to arise.

Let us be clear: in the future most people in our country are going to have some form of defined contribution pension pot. That is the whole trajectory of pensions changes in recent years. Robust advice and information must surely be made widely available if these new freedoms are to end up being used responsibly and wisely and in genuinely serving the common good in our society.

12:58

[Lord Wakeham (Con)]

My Lords, it is always a pleasure to hear the right reverend Prelate making his remarks in the House. Indeed, it is always a pleasure when there is more than one Bishop on the Benches. Of course, the original purpose of the Bishops being in the House of Lords was not for their spiritual qualities at all but because they were some of the great landowners in the country. Those days have gone but they still make a very useful contribution.

When I was Leader of the House, I had a meeting with the then Archbishop of Canterbury and said I thought that the Bishops ought to speak more often in the House; just coming here and saying prayers and doing nothing else was not good enough and they ought to be able to make more of it. These days they do and it is very welcome indeed, and what the right reverend Prelate said was absolutely right.

Of course, ever since I started to take an interest in Budgets and such matters, there has always been a debate as to whether Budgets themselves are useful and whether the debates that follow them are useful. The view was, and it is still held, that it is better that changes in taxation and so on are made separately when they are ready than for there to be the great anticipation of the Budget and then letdown. That has been so as far as I can remember: some people think that they are useful and some do not. The very first Budget that I ever heard was that of the noble Lord, Lord Healey, in 1974—it was lovely to see him here in the House the other day. I was then a new Member of Parliament and on a committee in the House of Commons chaired by, as some people will remember, Ian Mikardo. He called a meeting of the committee to coincide with the Budget Statement. I went to him and I said, “I want to listen to the Budget and I actually want to make my maiden speech later on that day if I can”. He said, “Well, you’ll learn better as you’ve been around a bit longer, but I understand. If that’s what you want, I’ll change the meeting of the committee so that you can listen to the Budget”. Ian Mikardo said—as he used to say to everybody: “I’m not nearly as nasty a man as I look”. So he agreed to that and we got on extremely well.

The second moment in all these 40 years that I remember is that Budgets can occasionally be used for demonstrations. I remember the 1988 Budget, the first Budget of my noble friend Lord Lawson. At the crucial time in the Budget when he was announcing very substantial tax reductions, the honourable Member for Banff and Buchan, one Alex Salmond, rose up in absolute fury at these proposals, shouting, “Outrageous! Outrageous! Outrageous!” and the Speaker had no option but to name him. I was then the Leader of the House and had to move the Motion that the honourable Member be excluded. He was thrown out in the middle of the Budget debate for not being able to accept the fact that we were reducing taxation. That was Alex Salmond in those days. Mind you, I was an expert at that, because I happen to have thrown more people out of the House of Commons on Motions than any other Leader of the House since the war, which I think is a really obscure record.

However, I do not think that this Budget, whether you approve it or not, is likely to be forgotten, because it contains some substantial and important points, in particular the long overdue changes to the savings and pensions regime. I was very pleased that that was done and, what is more, that it seems to have been universally accepted across the nation. That is also a very good sign in a Budget. I am not sure that I agree with the noble Lords, Lord Hollick and Lord Myners, on this. In my view, the savings ratio will improve as people realise that they have a much better arrangement for dealing with their savings than they had. I think that the measure will be a great encouragement. I guess that those who sell annuities will be busy mopping up the last of the defined-benefit schemes from companies that still have them.

I do not think that we could have expected there to be any greater changes in the tax regime in this country, but, much as I would like tax rates to be reduced, I would like Chancellors not necessarily to reduce taxes but to get them on to a better basis. Nearly all our taxes have some serious flaws in them at whatever rate they are. For example, I have nothing against capital gains tax—it is an essential part of the process—but very much of our capital gains tax is taxing inflation. We should be able to find a better way of taxing real capital gains than taxing inflation. Let us look at stamp duty. I was in the Treasury 30 years ago, probably in the same office as the Minister—it might have had a coat of paint on it since I was there. I am told that it has not; it used to have terrible lino on the floor in my day. I tried to persuade the officials in the Treasury that stamp duty was a bad tax. It is a tax on change, and we want to encourage change, but the Treasury looks at it another way and says that it is a jolly good, easy tax to collect. That is why it is very difficult to get a rational discussion about stamp duty, but somebody has to face up to the fact that it is not a good, helpful tax.

I am delighted that the Prime Minister said that he hoped to have a look at inheritance tax in the near future, because, again, there are illogicalities in that which need in this day and age to be looked at. Of course, I would like all the taxes to be down—most people would—but there are exemptions and all sorts of things which should not be in a modern tax system.

The view I take is that we have had a good Budget Statement. I am not convinced that we can do away with Budgets—I fear that we are going to have them for much longer and they are often constructive—but I hope that my right honourable friend the Chancellor will continue to tackle the anomalies that are in the tax system to get them on a more logical and reasonable basis.

13:05

[Lord Kestenbaum (Lab)]

My Lords, as with the eager anticipation of the first cuckoo of spring, we have been greeted in recent days by the suggestion of some stirrings—this time amidst our economy—and it would be entirely churlish of noble Lords in all parts of this House, including on these Benches, to seem reluctant to acknowledge such stirrings.

So what have we been told? Well, supposedly, growth is now well and truly back. Sales are up; house prices are flying again; and unemployment is falling. One can almost feel Sir Humphrey striding in with a beaming face and announcing, “I have good news, Minister”.

Might this just be an appropriate moment then for the Prime Minister’s own, dignified yardstick for recovery to be the appropriate measure for improvement rather than excitable pundits and pre-election spin? This is what the Prime Minister said when he came into office four years ago:

“We want to create a … more balanced economy, where we are not so dependent on a narrow range of economic sectors …We will support sustainable growth and enterprise, balanced across all regions and all industries”.

He went on to say that the Government’s most urgent task was to tackle our public debt.

With the Prime Minister’s own scorecard before us, what do we see? I regret to say that we see telltale signs of headline growth which do not give the full picture. Yes, of course, we can tackle a range of economic indices over the short term and, these days, you do that with that deadly cocktail of cheap credit and government debt, laced with, as the noble Lord, Lord Myners, artfully pointed out, a dash of presentational panache. That cocktail is exactly what lies beneath last week’s excitement. As a recent column put it, we have become,

“drugged up on cheap money, subsidised credit and rock-bottom interest rates”.

What about those two measures that the Prime Minister rightly put to us: reduction of public debt and rebalancing? While there has been much talk of paying down debt, according to both ONS statements and the most recent OBR forecast, net sector public debt is expected to rise from £1.2 trillion in 2014 to £1.5 trillion in 2018. This year alone, the Government are likely to spend £100 billion more than they take.

Equally worrying is how short we have fallen measured against the Prime Minister’s second yardstick: rebalancing in general and, as we have heard in this House today from my noble friend Lord Hollick, productivity in particular. We have heard so much about rebalancing our economy in the past few years. Now that the growth siren is being sounded, it is hardly the balanced version. I said earlier that the Government would hold themselves to account against economic rebalancing between sectors and regions. That is not happening. We can all admire the crispest of last week’s soundbites—“We must make more, build more, produce more”—but the hard fact is that there are few signs of this kind of serious investment in machines, infrastructure and skills which produces the kinds of shift that the Minister spoke of. We are still waiting for business seriously to rebound. In the mean time, infrastructure investment, as the noble Lord, Lord Myners, pointed out, proceeds slowly, most of it being in the south-east. Let us consider this analysis in the recent IPPR research on transport, which states that,

“where transport infrastructure projects involve public sector spending … the spend per head of population is £2,595.68 in London but just £5.01 per head in the North East”.

This is not rebalancing, neither by region nor by sector. There is, truly, no march of the makers. Growth, such as it is, is being led by the south-east and by business services. That makes it vulnerable, and much of the country is not feeling the benefit.

Why are those headline numbers ultimately so worrying for us? Because, at their heart, they do not sufficiently fire the single most important engine of sustainable growth, that which has been referred to so freely in the House today—productivity. Indeed, the Minister acknowledged the importance of that. The productivity gap is back with a vengeance. Our workforce is once again 25% less productive than France and Germany and even further—29%—behind the United States. Hence, the recovery, regrettably, is not what it seems. As my noble friend Lord Hollick said, many of the jobs being created, which produce falling unemployment statistics, while low wage, often part time, make little of our country’s talents and, let us be frank, are undignified, let alone not doing anything for the sustainable growth that the Prime Minister spoke of. Low-paying, low-productivity jobs are the sign of a troubled economy, not a healthy one, however helpful they are to pre-election unemployment statistics.

The trap set for the economy—inadvertently, perhaps—is the inevitable crushing headache that results from too much of the cocktail referred to earlier. It is the headache of short-term flickers. We know that for the economy to be resilient and the recovery to follow it, it must travel to sustainable economic growth via innovation—a reference that the Minister made earlier. We know the facts. Innovating businesses create more jobs and grow faster. Two-thirds of the productivity in this country, according to NESTA’s index, is the result of innovation.

Innovation as a national strategy, as we have seen around the world, is surely the most important driver of long-term prosperity. We know exactly why: because those two elusive measures to which the Prime Minister referred of rebalancing and productivity are at the heart of an innovation economy. Look at the three areas of our emerging competitive advantage today. First, there are the big differentiators: advanced manufacturing, aerospace and pharma. Secondly, there are the smaller fields of video games, visual effects, design and the creative industries. Thirdly, there are the potential golden eggs of the economic future: graphene and biotech. Once you look deeper at those real engines of growth, not just the sectors but the firms, a picture emerges and all the evidence shows that innovative, high-growth firms create the high-productivity jobs of the future. Some 7% of businesses in the UK classified as high growth in the past decade are responsible for half the new jobs.

What do those firms all seem to have in common? Again, the evidence is clear. They are not concentrated in particular sectors. Pleasingly, they are not found predominantly in one part of the country. That is good news when it comes to rebalancing. Rather, one factor links them all: they are disproportionately likely to innovate. Those pockets of the innovation economy, from semiconductor clusters in the south-west of England to the creative industry hopes of the east of Scotland, will be the heartbeat of any sustainable recovery.

We know that the most imaginative global economies—the US, Finland, Korea and Israel—have substantial measures of supportive public policy and effective financing to drive their innovative capacities. They have active, assertive, long-term, growth-oriented government. So, although modest measures in that regard were welcomed last week, I fear that they do little to attack the real causes of low productivity in the UK.

Then there comes the rhythm of announcements. Consider the new graphene centre, but this time against the science capital budget dramatically, drastically cut in 2010, followed by a series of small new initiatives in subsequent years that account for a tiny fraction of the amount previously cut. These are pinpricks in comparison to the opportunity and the need. For example, what progress has been made in using government procurement budgets to drive innovation in our businesses? Such a move—as the Minister acknowledges, at no extra cost—will have a transformational impact. For example, 2% of government procurement towards innovative businesses would be an extraordinarily potent measure.

I fear that such ambition comes second, certainly over the next 12 months, to the lure of the announcement. Too many timid programmes, often disconnected, are launched with fanfare and quietly closed 18 months later. We would instead hope for an assertive, ambitious national programme running right through government which drives the innovation revolution and would produce the type of real, sustainable growth that all parts of the House want.

13:15

[Lord Palumbo of Southwark (LD)]

My Lords, there is a scene in Quentin Tarantino’s film “Pulp Fiction” in which the heroine collapses into a drugs overdose. Dramatic action is needed, so the hero stabs her heart with an adrenaline shot. Between 1986 and 2008, the banking system overdosed. Bankers were out of control; politicians failed to regulate the system. The result, as your Lordships know, was a financial heart attack. Since then, the system has had continuous doses of adrenaline to its heart via quantitative easing.

Recent economic data appear to show a recovery. As we have heard, the economy is growing, the deficit is down, inflation is improving and employment is rising. We seem to be on the road to recovery, but the recovery is modest relative to the amount of financial medicine which has been administered. GDP is still 1% lower than at its pre-crisis peak. Five years into the recoveries of the 1980s and 1990s, it had risen by 15% and 19%. We also now have the new phenomenon of underemployment, and wages continue to fall year on year. As a result, household debt remains high and money lenders are busy.

In other words, the financial adrenaline has not really worked as expected. Although progress has been made, the patient is not yet out of the recovery room. Why? As several noble Lords have already so eloquently explained, people seem frightened to invest long-term or in improving productivity. Exports are poor. Instead, money has gone on consumption: share buybacks and housing. As a result, those markets have inflated and housing is now unaffordable in certain parts of London. The situation is compounded by interest rates at 0.5%. In contrast, the recoveries of the 1980s and 1990s started with average rates of 9% and 13% respectively. A low base rate is another form of emergency medicine. Like quantitative easing, it cannot be sustained. At some stage, rates will have to normalise. What will happen to mortgage holders and small businesses then?

As your Lordships know, economics is both art and science; there are many views. Some believe that we are now in a phase of stagnation similar to that suffered by Japan over the past 25 years—the Japanification of the UK. As a businessman trained to look at the downside, it may be worth briefly exploring that scenario. The intersection where politics meets economics provides a good starting point. How does the way we conduct politics affect the economic decisions that we take?

I have three points for your Lordships’ consideration. First, there is the difficulty that politicians face in speaking plainly about the choices before us. That is because the short-term demands of modern democratic politics outweigh the need to plan long-term in economics. Political careers are short; economic issues are not. Secondly, I would cite the adversarial nature of our politics. PMQs makes for good viewing but it is unclear exactly what it achieves. We have seen how political rancour in the United States has threatened economic stability. The third issue is the lack of expertise in certain areas within the system and the political difficulty of hiring high-level professionals on private-sector-type pay packages.

I believe that voters sense those issues, particularly the tension between the promises that politicians make and their ability to deliver. It is perhaps this which accounts for the disquiet with certain aspects of our system.

There are no easy answers. However, in the event of a stagnation, it may be necessary to reconsider the way that we conduct our politics. I wonder whether a policy of “hiring the best” might lead to big changes in procurement, infrastructure, reform of our tax code and bringing housing development forward. I know that reform of the confrontational political system is anathema to many—but perhaps a circular debating Chamber would lead to a more thoughtful exchange. Would a modernised form of royal commission help solve the great imponderables of the long-term future of the NHS and of the welfare and pensions systems? What of other benefits in this redrawn landscape, such as the extinction of political cliché? Imagine our world free of the words “change”, “fairness” and “one nation”.

Another film by Quentin Tarantino depicts people adapting to their circumstances in times of war. That is what our leaders did a century ago to fight the Great War. Perhaps the battlefield ahead is economic, not military. In that event, we may need to reshape our politics to meet this challenge.

13:28

[Baroness Meacher (CB)]

My Lords, I rise to address a widespread concern about a single sector of our economy, the NHS, and to pursue the statement from the chair of the Royal College of General Practitioners, Dr Maureen Baker, who described the Chancellor’s Budget as,

“yet another blow for patients and for general practice”.

I should declare my interest in the NHS.

General practice provides about 90% of all NHS patient contacts and yet its funding now stands at an all-time low of 8.39% of the NHS budget. People justify the squeeze on GPs because they had a good pay rise in the 2004 contract. We need to remember why that increase occurred. At the time there was a recruitment crisis in general practice and GPs’ incomes had fallen behind those of comparable professional groups. This was a catch-up settlement. Since then GPs’ pay has fallen by 11% in the four years 2008 to 2012, and we are now back in the situation we had in 2004—a recruitment and retention crisis. Advertisements for GPs which five years ago would have generated 40 to 50 responses now generate none or possibly one. Young doctors who would have become GPs four or five years ago are now looking for jobs abroad. Indeed, they are looking for careers abroad; they are not going to come back. At the other end of their careers many GPs are retiring—far too many—at the age of 50. The inevitable results are delayed hospital admissions and more expensive and prolonged hospital treatments due to delayed interventions. These unnecessary hospital expenditures absorb excessive funds and lead to further cuts to primary care, and so the downward spiral continues.

A recent King’s Fund report points to the growing consensus that if we are ever to sort out the demands of an increasing and ageing population at a time of financial constraint, the NHS must deliver services closer to people’s homes and focus more on prevention rather than simply treating people in hospital down the line. The funding crisis is undermining this objective and indeed threatening the capacity of the NHS as a whole to meet the challenges ahead.

Some may argue that this is a matter for the Department of Health and the distribution of funds within the NHS. That is only partly true. My concern is that the overall funding of the NHS is the problem. The demand for the NHS to find £20 billion of so-called productivity improvements by 2015 has, in fact, led to swingeing cuts alongside efficiency savings.

The NHS chief executive, Sir David Nicholson, recently pointed out that although politicians say that the NHS has been protected financially, this is only relative to the extraordinary level of real cuts in other public services, and crucially, neglects the growth in the demand for healthcare—which, of course, always rises due to demographic changes and other factors. Also in 2015-16, around £3.8 billion, or 3.3% of the entire NHS budget, will be transferred from the NHS to local government as part of the ring-fenced “integration transformation fund”. There will in fact be a 2% real-terms cut in the healthcare budget in 2015-16; and we will have had a real-terms cut of 1.4% for the period from 2009-10 to 2015-16. The NHS is therefore expected to meet the demands of more and more people with less and less money. By international standards, the NHS is, as we know, a low-cost service.

The only way that such huge cuts could be achieved while improving or at least maintaining the quality of service to patients would be through major reconfigurations of services. However, progress with these essential changes is hampered by the activities of the competition authorities and the tendency of politicians to fight to preserve local services even when these are not viable.

To add to the pressures on GPs, £104 million of this year’s savings by local authorities is coming from the direct withdrawal of services. The number of district nurses has plummeted by 40% in the past decade—and as always when these things happen, the buck seems to stop with the GP. Some 87% of councils now respond only to needs classified as “substantial” or “critical” under the fair access to care criteria. As a result, the number of older people receiving publicly funded services has fallen by 26% since 2009-10. The decline has been 21% for working age adults. What this does to the economy as more and more people are sick and not obtaining treatment does not bear thinking about.

As a result of all this, GPs are experiencing ballooning workloads. It is apparently quite normal for a GP not only to work 11 to 12 hours a day—as many of us do—but to deal with 60 patients per day, some over the phone but most of them face to face. GPs regularly do this, day after day. I regard it as unacceptable to expect any human being to make complex and responsible decisions in relation to so many people each day. Any of those 60 people might be facing a life or death situation and the wrong decision could, in fact, cause them to die. The reality is that errors will be made. Patients will suffer as a direct result of the financial pressure on the NHS and therefore upon general practice. Some 49% of GPs say they feel they can no longer guarantee safe care for their patients. If our health service collapses the Government will find it incredibly difficult to achieve any of the objectives that the Minister set out today.

Any opinion poll will tell the Chancellor that rectifying the problem and reducing the risks to patients is a top priority for voters, and yet there was nothing in the Budget to alleviate these problems. I appeal to the Minister to draw these concerns to the attention of the Chancellor.

13:28

[Lord Holmes of Richmond (Con)]

My Lords, I thank the Minister for launching this debate. Indeed, it is difficult to think of a more significant debate. If we want a world-class health service, world-class education and world-class transport, we can get them only if they are founded on a world-class economy.

Last week’s Budget was about jobs, business and Britain, so let us consider the employment figures that were issued that day. They showed that more people in this country are in work than ever before—more people employed in the private sector than ever before, and, best of all, more women in employment than ever before. These are not just figures that we can bandy around or statistics for economists to consider; these are real people’s lives. We have higher employment, lower unemployment and more people on the right path in this country as a result of the measures that have been taken since 2010. But let us not take the words of politicians or pundits, or even the words of economists. Let us trust business.

The day after the Budget, as has been mentioned, Hitachi announced that it was going to base its global—yes, its global—rail business in the country. A few days later, Siemens announced investment that will create more than 1,000 jobs in renewables. Business believes in Britain. We should similarly believe in and back business to invest in this country. To secure jobs is one thing but we should also focus relentlessly on building up skills and talents, particularly in our young people—training them to be able to take up these jobs, not least in engineering and manufacturing. In that, we should all pay tribute to my noble friend Lord Baker of Dorking for his work with university technical colleges. I should mention also the JCB Academy and the work of my noble friend Lord Bamford. These initiatives are making a difference.

If Hitachi and Siemens demonstrate that businesses are coming to Britain and want to base their operations here, we also need to act to ensure that British business gets the best bang abroad. What we saw in the Budget was a real commitment in doubling the funding for exporters to £3 billion and cutting the interest that they will pay by one-third. This is urgent and necessary, and it will make a difference. For too long, we have relied on the European market. Europe takes 40% of our exports but when I studied economics Europe took around two-thirds of our exports. We can see the way that that market is going. However, it is still a significant market and we are focusing on getting our businesses into every corner of it.

We are still so far away from grasping the prize that the BRICS economies and the so-called new MINT economies offer to us. The “Great” campaign from the Foreign and Commonwealth Office and BIS is significant in this area but we are starting from such a low base. When I was in Rio in 2011 with the “Great” campaign, I discovered that we export four times less to Brazil than Italy does. Italy is a fine country but it is one with no language, cultural or historical links to Brazil. Yet through effort and connection it has made that happen. It exports four times more to Brazil than the United Kingdom. The BRICS economies and the MINT economies are there for us. The whole of Africa is there for us to ensure that we put everything in place to enable our businesses to go out there and do the business.

The Budget threw a helpful and necessary light on pensions. In reality, it was seeking to address people’s trust in pensions. Over the past week, reports of the death of the annuity have been greatly exaggerated. The annuity is a fine financial vehicle for delivering certainty, security and a de-risked retirement. I do not believe that the changes introduced in last week’s Budget will mark the death knell of the annuity. It will still be a product into which millions will decide to put their funds but the crucial point is that it gives individuals the choice of when to take a particular financial vehicle, how much to put into it and what to do with their savings, which they have been building up for decades. This is about freedom and choice. Crucially, it is about trusting us all, as individuals and across the country—everyone with a DC pension pot—to do the right thing.

The Budget was about belief in the individual. If the right environment is put in place, people up and down the country—all of us—and businesses will do the right thing. Businesses will invest and back their workforces. They will get out there and build, make, manufacture and export. It was a Budget that believed in Britain, rooted in the reality that we are at our most brilliant and best when we work together and come together. We saw this in 2012 with the Olympic and Paralympic Games, so excellently steered by my noble friend the Minister. We see it across the country, in the smallest economic and social acts and in communities and businesses, from Inverness to St Ives. We are at our best and we are better together. Together, we all need to continue on this journey to try to secure and sustain Britain’s economy. We are on the right road but we have barely begun the journey. It is in everyone’s best interests, whichever corner of the country or perspective you come from, to have a high-employment, low-inflation, high-productivity and low-interest rate United Kingdom economy that is focused on and fit for a national, European and global future.

13:37

[Baroness Worthington (Lab)]

My Lords, it is a pleasure to speak in this debate, which is my third successive Budget debate, and I am sure it will come as no surprise if I focus much of my attention on the parts of the Budget that relate to energy and the environment. However, if noble Lords will bear with me I will begin with a more general observation.

I watched the Chancellor of the Exchequer last week and have listened to the Minister this afternoon, and I congratulate them both on eloquently presenting a very seductive argument: “We, the Government, have been making the hard decisions to get us to live within our means and so reduce our deficit, grow the economy and give everyone a higher standard of living as a result”. How appealing—what Government would not wish to try to achieve those aims? The problem, as the noble Lords, Lord Hollick and Lord Myners, have eloquently pointed out, is that it is easy to say one thing but then do something else. This Government have shown that they have not learnt from past mistakes and are instead relying on sleight of hand to boost the economy, creating another unsustainable housing bubble, increasing government debt and shifting borrowing on to the private sector, where it will necessarily cost more. The Government have also avoided making the tough decisions needed to make our economy resilient for the future. That is nowhere more evident than in the case of energy policy.

The truth is that most people’s judgment of how well they are faring is not measured by one simplistic GDP growth metric. Their sense of security and optimism for the future is determined by a complex mixture of factors, including the extent to which social capital and cohesion are being maintained and how much they believe that the Government are standing up for their interests, now and in the future. That our economy is finally clawing its way back to good health despite, rather than because of, this Government’s actions is good news. However, there is a huge way to go before that will be felt by everyone, up and down the country, and an even longer way to go before the Government can claim to be tackling the really big challenges facing this country.

A good example of the Government’s, and in particular the Treasury’s, failure to accept and tackle big challenges is provided by the response in the Budget to the dreadful floods that we experienced this winter. By necessity, this Budget included a £140 million fund for repairs to flood defences and a further £200 million for pothole repairs—a problem exacerbated by the extreme weather that we experienced. We can expect these sorts of cost to increase over time as the impacts of climate change become more apparent.

However, until recently, spending under this Government on flood defences was in decline. At the time of the floods, the Prime Minister acknowledged that climate change was one of the most significant threats we face. However, in this Budget, in which a whole section is devoted to risk, there is scarcely one mention of climate change and none at all of the singularly high exposure of the UK Stock Exchange to international coal assets that risk becoming stranded assets, significantly devalued as the world collectively starts to take action to reduce its emissions of greenhouse gases. Taken overall, this appears to be one of the least green Budgets produced in recent times, from the supposedly greenest Government ever. Is it perhaps the case that the Prime Minister and the Chancellor do not see eye to eye on this issue? If this is so—and I believe it is—is it therefore any surprise that investors have no idea what they should believe or trust in when making their investment decisions?

As graciously acknowledged by the Minister, 12 months ago the focus of my speech was on the fact that the Chancellor had failed to mention a new inflationary tax on electricity, which began in April last year and was set to double year-on-year, raising the Treasury around £4 billion from electricity bill payers over just three years. This year, this almost universally disliked policy did warrant a mention, only for it to be announced that, less than a year after it started, the policy has been changed and the tax frozen. The curious thing is that the Chancellor now appears to be seeking credit for reducing the impact of a tax that he introduced which distorts competition against our European neighbours and, even in its frozen state, will still add around £9 per megawatt hour, taking an estimated £1.5 billion per annum off bill payers for no obvious purpose other than revenue raising. Attempts have been made to justify this tax on the basis that it will encourage investment in low-carbon infrastructure. The fact that it is has already been so drastically altered, and that this was always likely to be the case given how poorly thought through it was, simply serves to confirm that no investor worth his salt would put any store by it at all.

Given the pressure the Government were under before the Autumn Statement to reduce electricity bills, I am also curious to know why the announced change was not trailed at that time. I can only conclude that it was because the Government’s Energy Bill was still being debated in this House. The one purpose it could be argued that this tax—known as the carbon price floor—was performing was to help return gas-fired power stations to a state of profitability relative to coal stations. The plight of gas and the roll back to old unabated coal was repeatedly raised as a concern in this House. With the carbon price support now frozen, the roll back to coal is much more likely. A cynic might argue that, because of this tax, the Treasury now has an incentive to protect the rich revenues being generated from our ageing and inefficient coal stations. It is now in the Treasury’s interests to maintain them for as long as possible in a state of suspended animation. Perhaps this explains the expunging of any real mention of climate change from this Budget.

The problem is that, in addition to being huge contributors to climate change, unabated coal stations also contribute massively to poor air quality and diminished human health and so are rightly subjected to regulations requiring that they be cleaned up. Meeting these regulations would require investment over the next few years that will only ever patch up these stations for another decade or so at the expense of more long-sighted investment in low-carbon alternatives, which will last for many decades. This kind of short-term investment will deteriorate our productivity by decreasing the efficiency of our electricity fleet still further—more inputs of coal but fewer outputs of kilowatt hours. How will this help address our productivity challenge? Thanks to the frozen carbon price support, the investment will not even ensure prices are lower, since the big six can happily pass the costs of this tax on to the consumer for as long as they remain vertically integrated. There we have it: the Government’s ideology in a nutshell—failing to make the difficult decisions, failing to stand up to vested interests and favouring a short-term quick fix over doing the right thing in the longer term.

If this stop-start policy on energy were affecting only gas and coal investments that would be bad enough. However, the change of heart will also have an impact on investment in renewables and nuclear. The Energy Act, which we worked so hard to try to improve last year—to no avail—introduces new support mechanisms for these technologies but the level of that support is capped by the Treasury through the levy control framework. The level of that cap was set on the assumption that this electricity tax would proceed as announced last Budget. This is no longer the case. Therefore, the cap is very likely to be insufficient to support the level of investment needed to meet our targets. Can the Minister reassure the House that when it states in the Budget that,

“the buying power of the Levy Control Framework will be unaffected by other Budget decisions”,

this means the basis on which the framework was calculated will be revised? If this is true, when might we hear from the Treasury what that new level will be? If it is unchanged, I fear we will have wasted a great many hours of parliamentary time last year labouring under false pretences. An unchanged cap on the amount of support for energy market reforms will inevitably lead to the cannibalising of one low-carbon technology by the other, with existing coal stations carrying on unaffected, paying into the Treasury coffers but damaging our resource efficiency, our climate and our health.

There are signs that this is already happening, with plans to convert Eggborough, a coal station, into biomass having been derailed and a dedicated biomass plant being dropped. Despite the welcome announcement from Siemens this week that it will build a manufacturing plant for offshore wind in Britain, even offshore wind farms are being discarded. Meanwhile the great white hope of Hinkley Point nuclear power station—a project the Minister is well acquainted with—has run into state aid problems, potentially causing the construction timeline to slip even before it has begun. The most depressing aspect of all of this is that had the Treasury and DECC listened to the debate in this House and accepted more amendments, including the one that was won here to introduce a more cost-effective policy to constrain unabated coal and boost investment in all alternatives, we would not be in this predicament.

Rather than showing that this Government are up to the task of tackling the long-term challenges facing this country, this is a Budget based on short-term thinking and a misreading of where our future prosperity lies. Rather than learning from the past, they appear to trying to reproduce it by fuelling another dangerous housing boom, pursuing the chimera of growth based on oil and gas—that is clearly no longer cheap or easy to extract—and failing to understand that we are stronger as a country when we acknowledge and face up to the real global challenges ahead of us that we cannot escape. I hope that before this Government leave office, which, given their short-term thinking, they seem to have accepted is likely to be very soon, we will see a Budget that is genuinely sustainable and wholeheartedly embraces the benefits brought by the low-carbon industrial revolution that we are now embarked on, as we lead the world in tackling climate change.

13:47

[The Lord Bishop of Sheffield]

My Lords, the prophet Jeremiah wrote a short but remarkable letter to his contemporaries long ago who had been sent into exile in Babylon. The letter has shaped Jewish and Christian thought on how communities of faith should engage with the wider society down all the generations since. The prophet’s advice is to,

“seek the welfare of the city where I have sent you … for in its welfare you will find your welfare”.

On behalf of all on these Benches, I warmly welcome the evidence of economic growth and I welcome the measures taken in the Budget to deepen that recovery. With my right reverend friend the Bishop of Chester I warmly welcome the reaffirmation by the Chancellor of our country’s commitment to spend 0.7% of our national income on overseas development.

The grant of £20 million for the maintenance and repair of our nation’s cathedrals is also hugely welcome. Our cathedrals contribute to the common good as places of worship, meeting points, and agents of regeneration and support for those in need. Sheffield Cathedral is currently completing a major reordering project. It strives to be a place for all the people of the city and is home to the Archer Project, which cares for the homeless on a daily basis.

Along with many on these Benches, I urge the Government to pay much closer attention to the effect of the cuts in government spending on the poorest in society. However, my appeal to the Government and to this House today is that measures are taken to ensure that growth in the economy is rebalanced to benefit not just a single city but the whole of the United Kingdom. Britain has one of the world’s truly global cities, London, where the economy is undoubtedly growing and investment is focused. We should all welcome that growth but too many of our urban areas outside London are failing to achieve their growth potential. Since 2010, 79% of private sector jobs growth has occurred in London but, in the same period, Britain’s next nine largest cities accounted for just 10% of all new private sector jobs created, according to the Centre for Cities report this year.

Regional imbalances have serious consequences for our overall economy. We are not releasing the creative potential of our great cities to the benefit of their regions and the nation. This has serious consequences for the well-being of many. Youth unemployment and underemployment, for example, is a major challenge in South Yorkshire and blights many lives. As the recent Sheffield Fairness Commission powerfully illustrated, inequality between and within regions and cities has serious consequences for the overall sense of cohesion and fairness of life in the United Kingdom.

The imbalance of growth by region is leading to a widening of the economic gap not only between London and the rest of the country but also between what city regions, such as Sheffield, contribute to the national economy and what they could contribute. As our economy begins to recover, I urge the Government and your Lordships’ House to give serious and strategic attention to the question of what kind of economic growth we want and how we achieve a more balanced economic recovery across the regions. This would be a suitable and urgent subject for a cross-party parliamentary commission or working group looking ahead five, 10 or more years.

There are a number of urgent areas which such a group or commission needs to address. We need to rebalance our economy back towards manufacturing. I welcome the significant measures in the Budget which support this. More is needed. The current Sheffield Master Cutler has put forward a strong case for an independent office for manufacturing competitiveness mirroring the recently established Office for Budget Responsibility.

We need to strengthen further the links between universities, research and industry, as commended by the recent Witty report. The Advanced Manufacturing Research Centre in Sheffield is a model for the future. It is a partnership between the University of Sheffield, Boeing, Rolls-Royce and other leading companies. The centre is attracting manufacturing and production back to the United Kingdom by research-led innovation and stimulating investment and growth. This year, the centre launched an innovative apprenticeship scheme with 150 new places this year and another 250 in each year to come.

We need to develop patterns of regional collaboration and growth between cities, particularly in the north of England. We need a major shift in the balance of power to make decisions and determine investment between national and local government. The United Kingdom is one of the most centralised economies in the world. Local authorities control just 5% of money raised locally through taxation. The OECD average is 25%.

Finally, we need a significant shift in the proportion of central government expenditure and resource allocation back to the regions. The large cities of the north of England have been disproportionately hit by reductions in local government spending and in investment in transport, culture and the arts and in other areas. If we do nothing, we will see the gap between London and the regions continue to widen to the detriment of the whole country. I urge the Government and this House to address this problem with imagination, courage and vigour and develop a strategy which will rebalance economic growth across the whole of our nation.

13:54

[Lord Higgins (Con)]

My Lords, it is often said of my former constituency of Worthing that people go there to die and forget what they came for, and there is some considerable truth in that. Many people have come to Worthing to retire, and many of them have provided for their retirement by saving and have been extremely prudent. It has therefore been quite heartbreaking for them to find themselves in the situation that has existed for the past five years or so, and I do not understand how some of them have continued to exist, given the appallingly low rate of return which they have had on their savings.

We understand very well why it has been necessary to deal with the problems of economic management. You cannot take the fiscal measures you would like to take because of the deficit, and therefore you have to resort to monetary measures, so interest rates have been as low. But none the less we have tended to ignore the effect which these low interest rates have had both on pensioners and on savings. Therefore, I believe that this Budget is the Budget they have been waiting for. At long last, something is being done to help them. Some of the measures are quite direct: the abolition of the 10% rate on savings income and the introduction of a pension bond which will give a rate of return significantly higher than market rates.

The overall Budget is extremely imaginative. I was very surprised by one of the BBC commentators who said that it will be seen as a run-of-the-mill Budget. I think it will be a Budget that many people will remember as an extraordinarily imaginative Budget, given the fact that the Chancellor has virtually nothing to give away. He has taken steps, particularly in the annuities market, that will give people a great deal more freedom. In that respect, I shall make one point. There has been some suggestion that people in final salary schemes—the few schemes that survived Gordon Brown’s effect on final salary schemes—should switch into a defined contribution scheme and take advantage of the Budget. That would be wrong. They would do much better to stay where they are in the final salary scheme. On that side of things, the Chancellor has been very helpful.

There are other measures, for example the doubling of the investment allowance, which will certainly aid the recovery of the economy. I feel bound to say that, welcome though it is, much of the investment coming in is from overseas, and we still find ourselves in a situation where investment from domestic sources, despite the huge cash balances flushing around the economy at the moment, is not really coming. At all events, the investment allowances will help.

The coalition Government’s overwhelming priority—and I pay tribute to the fact that they have been unanimous on this—has been to reduce the deficit. As I have pointed out on previous occasions, saying we have cut it by a third means that we are still borrowing at two-thirds of the appalling rate of the previous Government, with a huge increase in underlying debt, which has been referred to by a number of other speakers. Although we have not made progress as fast as we would have liked, we are moving towards the deficit having been reduced by 50%. The target for abolishing the deficit has moved back but is, none the less, coming into sight.

What I really welcome is the statement made by my noble friend this afternoon, which I do not think anyone else has made from the ministerial Bench. He said that what we have to do is not to move towards reducing the deficit but towards a surplus, because that is the only way in which we will reduce the total actual debt, rather than the deficit, which will be inherited by our children.

Other aspects of the issue are relevant. The savings ratio, in particular, has been referred to. As was pointed out in the OBR report, it has fallen to 5% from 7.2% in 2012. To some extent, that change reflects increased borrowing and expenditure, which has led to part of the recovery over the past year or so. The savings ratio is beginning to go up again, but again the measures in the Budget will help to increase the savings ratio. That will be very important if we are to have the resources we need for further investment in the economy.

Some aspects of the present situation still remain puzzling and paradoxical, such as the way in which employment has stood up, and increased remarkably well, but productivity has not moved. Obviously, we must move to a situation in which productivity also goes up, as a number of noble Lords have referred to.

I will make one other point. I am still completely puzzled as to why the Treasury works off one economic forecast and the Bank of England off another—the latest OBR report even has a diagram that shows the way in which they diverge. Some unanimity of view on that in government would be appropriate. I worry that the monetary policy under Gordon Brown’s much praised measures, which I always had doubts about, is in the hands of the Bank of England and the fiscal side is in the hands of the Treasury. It is not the least bit clear—this came up in a Question from the noble Lord, Lord Barnett, the other day—who is responsible for co-ordinating the two, and that is important.

None the less, the measures that have been taken by the Bank of England are to be welcomed. We have found a situation in which QE has played a useful role. At long last the Bank got away from the Monetary Policy Committee’s obsession with interest rates rather than the price and supply of money, and is taking more action on that side of things.

In that context I will take up a point made by the noble Lord, Lord Myners, who I see is not in his place but who made a very good speech earlier. The idea that somehow we will have to sell off the gilt-edged securities which have been purchased by the Bank of England as part of QE is, it seems to me, quite absurd. There is no reason to suppose that the rates, terms and duration of the debt that we bought then will still be appropriate at the point where we sell it off. It would clearly be much more sensible simply to issue fresh debt which is appropriate in terms of its structure. It is important that we should move towards more co-ordination of fiscal and monetary policy.

Finally, there is a very good analysis of the output gap in the OBR report. We are moving gradually towards eliminating that gap, but it is extremely difficult to know what it is because we do not know how much productive capacity has been destroyed in the course of the crisis from which we are just emerging. None the less, I am sure that it is right gradually to move towards a point where the output gap is closed and we can go on to a sustainable long-term growth rate, rather than mopping up excess capacity.

Overall, the strategy is paying off. If I may mix a metaphor, while we are some way short of Winston Churchill’s “sunlit uplands”, none the less it is very important that the Government stand firm and stick to the course to which they have set. We are making progress and we must continue to be determined in dealing with the deficit, getting things on an even keel and rebalancing the economy in the way in which a number of noble friends and noble Members have suggested today.

14:03

[Lord Stoneham of Droxford (LD)]

My Lords, this is an encouraging Budget. It is clear that the outlook for employment is improving, business investment is clearly moving forward, and business confidence has substantially improved. It is always the most vulnerable who benefit most from the extra job opportunities. However, exports remain a worry, and I hope that the Government will concentrate, among other things, on looking at more import substitution and home sourcing, particularly in sectors which we know will now grow, such as—I hope—housing. Housing is the great conundrum in our economy and still remains largely unresolved, with a huge shortage of supply and too much demand.

In the current circumstances, it is right that while combining a commitment to correct the financial deficit, the Government should now convert their austerity theme to one of sustainable growth. The best levers they can pull are to continue their emphasis on improving skills and on improving infrastructure helped by low-cost private sector funding, to focus on their industrial strategy to partner improvements in key sectors, and to encourage export growth and import substitution.

I am surprised that few Members of this House have concentrated on the main subject of the Budget: pension reforms. I have worked with Steve Webb since 2002 on determining Liberal Democrat policy on pensions, so I will concentrate on that. I am proud of what the Government have achieved in the pension field. We have built on the work of Adair Turner’s Pensions Commission and the early work done by the Labour Government. The triple lock on the state pension has protected the most vulnerable in the recession, and the basic state pension is now worth a higher share of the average wage than at any time in the past two decades. We are introducing a single-tier state pension to provide a simple, decent state pension, set above the basic means test, so that working people will know what they will get in retirement from the state and can therefore plan accordingly.

We are seeking to reverse the decades-long decline in private sector pensions provision. Barely one worker in three in the private sector paid into a pension at the time the Government came in, and urgent action was required. In 2012, we began the process of automatic enrolment, and 10 million people have already gone into workplace pensions. That has been a great success; more than 3 million workers have been automatically enrolled, and only one in 10 has exercised their right to opt out. A combination of employer contribution and tax relief from the Government makes an attractive proposition to people who were not otherwise making proper pension provision. That has given rise to the biggest rise in workplace pension coverage since figures began to be collected in 1997.

The Government still need to make sure that these pensions savings are invested in value-for-money schemes that will be well governed, and that individuals do not build up multiple-stranded pension pots but follow them when they change jobs so that a worthwhile sum can be built up. Having ensured that the vast majority of workers build up a worthwhile pension pot on top of a simplified state pension, the Budget has taken the opportunity to look at the choices people will face in retirement, reduce complexities for consumers in their financial planning for their retirement and generally encourage more long-term saving.

I was interested to see that Janan Ganesh, a Financial Times commentator, wrote this week:

“Historians of the coalition government will have to work out how Britain came to be governed so radically by such pragmatists”.

It is interesting that we in this Government have achieved the biggest fiscal contraction since the war; the public sector payroll expansion of 13 years of the Labour Government has been undone in one Parliament; we have had multiple public sector reforms in education, the health service and welfare; and now the Budget is throwing all the old pension orthodoxies on to the bonfire. My noble friend Lord Lawson—who, sadly, is not with us today—recently said on the radio that the coalition was now pointless. However, we have to ask, as the FT columnist said, whether the Government have been able to govern more radically than a single-party Tory or Labour Government could have done, particularly in the area of pensions.

The Budget proposals will end the closed market for annuities and open up choice. Potentially, savers can better control their financial planning for retirement, and that will encourage innovation among fund managers to come up with new products. The annuities market has been far too closed, uncompetitive and complacent, as the Financial Conduct Authority has recently shown in its report. The opportunities of this change are matched, however, by a number of dangers, and we must use the next year for proper consultation to get the right safeguards in place for these major changes.

There are a number of things that the Government have to concentrate on. Mis-selling will not go away. As the noble Lord, Lord Hollick, warned us—sadly, he is not in his place at the moment—the last revolution in personal pensions in the 1980s gave rise to the worst mis-selling opportunities of our generation. I well remember, as an employer at that time, resisting employees who were being persuaded by slick salesmen that they should give up their defined benefit pensions for their new personal pensions, which they were being offered by these salesmen.

We have to watch, because, when we make these radical changes, mis-selling will continue. The Government must be vigilant and people should not be allowed to fritter away their pension pots through bad selling. The Government have initially started to provide independent advice; it must be mandatory, and it has to be very well organised. The 400,000 people entering retirement each year need that independent advice. There is also a danger that, if the newly freed pension pots flood into markets such as buy-to-let property, the older generation will add to the burden on the young if prices are simply pushed up further and first-time buyers are more out of reach in the housing market.

We must also remember that tax relief on pensions savings has been justified largely as a reward for long-term saving. However, if it encourages short-term spending, it has to be questioned. There is huge inequality on tax relief on pensions savings. If you cap the lump sum free-of-tax payment, on which the cap has up to now been £312,000—that is the sum that people can take tax-free from their pensions if they have the maximum pension allowance—at average earnings of, say, £30,000, there is a saving to the Exchequer of £2 billion. So there is a huge subsidy there that is going to the better off in society. To contain pension tax relief to the standard rate of tax, which has long been a Liberal Democrat policy, would save the Exchequer £10 billion—so we have to justify that tax relief, and we have to ensure that in a time of austerity the principal beneficiaries of tax reductions are those on average or below average earnings. There will be public anger if it is not concentrated on those people.

Finally, we have to ensure that there are major reforms here. We need reform. It is positive that it is being done, but we have to ensure that we do not simply become an onshore tax haven for the better off because of these new schemes. The Government have initiated a pensions revolution, which we should welcome. The changes will have major long-term consequences. We must use the coming year to ensure that this revolution occurs fairly and efficiently and is not susceptible to any short-term electoral advantage ahead of the election, which could be deeply damaging to society and the long-term cohesion of this country and the economy.

14:13

[Viscount Eccles (Con)]

My Lords, there has been much concentration on productivity during this debate, and it is clearly the case that, if recovery is to be sustained and debt and deficit are to be dealt with, productivity is a key component. But I want to think a bit about what we produce as well as how we produce it and, as my noble friend Lord Holmes concentrated on, the social effects as well as dry economic statistics.

In the Budget, the Chancellor gave a general exhortation that we should export more, build more, invest more and manufacture more. It was said, correctly, by many people that the recovery is fragile. There are worries about balance, the supply side, skills, the output gap and unemployment. There is clearly a long road ahead, during which public expenditure will continue to be under pressure. Yet if we think back to the advance of technology and the spread of knowledge as well as the opportunities that they have given us over the years, and if we think about the United Kingdom—a free society with a long and reasonably untroubled history, with a language that has become the leading language of the world and a long tradition of successful higher education—it is quite puzzling how we went into quite such a deep hole in 2008 and why it is taking us so long to climb out of that hole into a sustainable recovery.

What has happened? My first theme is that I think that we have tended to have the wrong idea about economic change. Too often, we have seen it in terms of obsolescence—that things will disappear—but, if you look around, you can see that nothing we make, have made or that we do completely disappears. The employment patterns within that marketplace change, but they do not disappear. New things come, but old things do not go. To go to the romantic end of such a theme, somebody somewhere is knapping flints and thatching a cottage; somebody is still writing a book standing up, like Voltaire or Surtees, and that book will be bound by hand. Of course, in larger industries the changes are much more dramatic—in steel or coal or the subsidiaries of the steel industries, the foundries. Those energy-intensive old industries can become very unfashionable, but there was a time when structural steel looked as if it would go out altogether in favour of prestressed concrete. I shall not trouble the House with a detailed analysis of why, but steel has come back and, largely, prestressed concrete has gone out. Then we remember British Leyland. I come from the north-east, where Middlesbrough is the leading dock for exporting and importing cars; we are now a net exporter of cars, as my noble friend the Minister said. However, what happened to our car designers?

With the opportunities for technological change in the diversity that has been available, what has held us back? Why are we not very considerably more successful in short order than we are today? I think that we can look for myths—big ideas, and worst of all Utopian big ideas, which from time to time have gripped us. The first, which has largely gone, will be all-embracing central planning. Of course, there is a role for government in infrastructural planning because there is no way in which to get the money together unless the Government get involved. But as with HS2 or Hinkley Point, there is a great struggle to get to the decision on a new airport, or whatever—and if the Government get involved in too many areas and go in the wrong direction and the end of the road comes for the National Coal Board, the British Steel Corporation or British shipbuilding, what disasters follow from that? They are distortions and long-term disasters, social as well as economic.

The second myth on which I want to touch is that of the interpretation of the post-industrial society. This was the brainchild of Daniel Bell. He foresaw and calculated the rise of the knowledge economy but he never thought that one thing would push out another. He thought only that the emphasis and proportions would change. However, in tabloid-style simplification, both the political system and, regrettably, the schools came to the wrong conclusions. No longer was it considered sensible to go into a foundry, optimise power steering pumps for motor cars, go into steel or coal—never mind about carbon capture and storage and the huge need for knowledge in that area—and still less to become a plumber or a potter. I think that Daniel Bell would be horrified by the interpretation that was put on the fashion that followed. There is a need to invest in capital, of course, and to have a capital allowance—what a good idea—but, if you do not have the people who know what capital goods to buy or how to operate them, you do not buy those tools and those machines. Again, one comes back to social influences and people. Where are the people who can make the right decisions? They are certainly not economists.

We may now be in danger of building another myth called the global race. The problem with races is that they have only one winner. However, I thought that with economic development everyone has the possibility of winning. Admittedly, some people win more than others, but are there any real losers? If we characterise life in language which implies that this is a zero-sum game, we make a mistake.

Where is the Chancellor of the Exchequer in all this? I go back to his very cautious, rather general language. I think he understands that timescales are long and that, if you go in a wrong direction, it takes a long time to put it right, and that there is much complicated interaction within the process of putting it right within society. It is not just an economic problem but a social problem and a cultural issue. A whole raft of things have to be thought through. He, quite correctly, can enable only to a degree. Success is in the hands of society; he cannot command it. It needs to be decentralised to those who live in the real world, where Utopian myths go hang.

14:23

[Lord Haskel (Lab)]

My Lords, I start by thanking the usual channels for giving us an extra week in which to consider the Budget before we debate it. Things that first of all seem too good to be true often benefit from this rather longer consideration. For instance, the pension reforms mentioned by many noble Lords may be welcomed a little bit less when you realise that annuities are an important source of long-term finance for investing in our infrastructure—investment which concerns many noble Lords. Or is the Chancellor after the early tax revenue from the consumption that early withdrawals will produce? My party is absolutely right to call for a more considered and careful scrutiny. Pensions have to be a consensual matter, not a political toy. The noble Lord, Lord Stoneham, just reminded us of the pensions mis-selling scandal which resulted from a previous change.

What about the public finances? I think the Minister told us that they are not bad. Headline borrowing is down. However, my noble friend Lord Myners reminded us that the OBR tells us that, if you take into account the upswing in the economic cycle, the figures are actually worse than a year ago. Growth estimates are not going to do very much for this because what the Minister did not say is that the OBR is concerned that the recovery may not last, as it is largely cyclical.

Where are we looking for the recovery? The Minister mentioned industry. There are modest incentives to invest more, export more, train more and do more research. This will require better management by business—the people referred to by the noble Viscount, Lord Eccles. I put it to the Minister that it also requires better management by government.

Every year, the Government pay some £90 billion to private contractors and the voluntary sector to provide public services, and that is going to rise. Unless this is well run, we will end up with a weak and sickly state and poor civic life. Most of this money goes to a small group of companies that seem to be good at winning contracts but mediocre at delivering services. In some cases, they are dishonest. These services are central to our civilised society, as is banking. Like the banks, these companies are becoming too big to fail. I put it to the Minister that part of a Budget should be to examine the Government’s competence to manage these enormous sums, and not just hide behind commercial confidentiality, as happens at present. It is no good having a policy if you cannot manage it. The few figures released in the Budget show that failure of the Government’s contractors to deliver on things such as disability benefits, the jobs programme and other schemes is stacking up huge costs for the state.

The Minister declared that raising productivity is most important, and I agree. Does he agree that subsidising low pay through the tax system also encourages low productivity? Instead of subsidising low pay, surely it makes more sense for the Government to encourage people to run their businesses better. With his background, the Minister must know that subsidising low-paid, low-skill jobs through the tax system encourages a low-productivity economy. Housing benefit paid to people in work is also rising sharply. I put it to the Minister that this is another way of subsidising a low-pay, low-productivity economy. I agree with my noble friend Lord Myners that low pay is no way to encourage economic growth.

On 20 February, the Office for National Statistics gave the final productivity estimates for last year. It told us that output per worker fell compared with the previous year. We were told that we are 21 percentage points below the average for the rest of the major G7 industrialised economies. I agree with the Minister that we are not going to pay our way in a globalised economy if we stay like that, and neither is that how we are going to increase our exports to deal with our balance of payments. It is this that leads to the inequality described so graphically by the right reverend Prelate the Bishop of Chester. Unless we address this inequality, the economic recovery for which we are all working cannot be healthy and will not be balanced, as the Minister promised and as the right reverend Prelate the Bishop of Sheffield called for.

The TUC’s fair pay campaign demonstrates that many jobs being created are low pay and low productivity. Many exclude security, training and good prospects. Some employers insist on dehumanised terms and working conditions. Successful leadership means that people have to think that you believe in what they believe in, otherwise you get the social problems referred to by a number of noble Lords. No, it would not be difficult for a Labour Government to manage this better because the current level is so low.

I welcome the Budget’s encouragement for training, apprenticeships and qualifications to raise productivity, but the economy is changing, too. We are moving into the kind of economy that does not pay you just for your qualifications and knowledge but for what you innovate, as my noble friend Lord Kestenbaum explained. That kind of knowledge economy requires a different kind of investment that is less tangible. I put it to the Minister that it is strong investment in these less tangible assets that explains the success of many of our younger, newer rising businesses. Although you cannot touch these investments now, they are made in the hope of benefit in the future—not only in training but in designing a new service, in building a database or in producing something that is copyrighted. They involve branding and marketing. In this changing world, this kind of investment is just as important as the more tangible investment in machinery, buildings and transport.

I mentioned this in last year’s Budget debate, and someone must have listened because, on page 73 of its outlook, the OBR says that we do rather well at this kind of investment—better than most of our competitors—and we have kept it up. Good for us. So why do we not recognise this in the Budget’s tax and incentive systems? Surely this is part of our journey away from the low-tech, low-pay and low-productivity economy. It is this kind of economy that demands more and more group enterprise—the kind of enterprise that depends a lot on leadership, collaboration, adaptability, and ability to learn and relearn. It is the absence of these less tangible skills that concerns so many employers today.

There was a time when we were promised an industrial strategy that would produce balanced and sustainable growth. However, as many noble Lords have said, it looks as if we are getting a recovery based on low productivity, a housing boom, consumption involving households dipping into their savings, and increased borrowing. Instead of a recovery that works for us all, it is working for the few. Many have to make do with low wages and dehumanised working conditions. This Budget is going to produce neither the economy nor the society that I would like to see.

14:33

[Lord Sheikh (Con)]

My Lords, I am pleased to speak in this debate and pay tribute to the Chancellor of the Exchequer for another successful Budget. Under this Government our economy is on the mend. The problems inherited from the previous Government were greater than we had imagined, but slowly things are turning around. This Government are striving to be the most pro-growth in living memory. However, tough decisions are needed to reduce the deficit, heal our economy and keep interest rates low. Our economy needs to be more resilient and balanced. This is the only way in which to secure a better future for Britain and our well-being.

We are indeed on the way to growth, and this Budget was the next step. It was a positive Budget, one looking not only to solve the problems of the past but to secure a better future. The Budget will also indicate that people can be trusted with their own money. More money in the pockets of working people often means more money in the hands of business, through consumer spending. It is welcome that the personal allowance will rise to £10,500 in 2015-16. I ask my noble friend the Minister if there is scope to increase it further.

Much has also been made of the ways in which this Budget will benefit pensioners. People work hard throughout their lives and it is only reasonable that they expect flexibility from, and a good return on, their savings. There will be no obligation to buy an annuity if savers do not want to do so. As someone who has been actively involved in the arrangement of pensions, I can say that some people were not happy with the restrictions on their pension funds when the time came for their retirement. I therefore welcome the revised arrangements. I am pleased to note that everyone who retires on these schemes will now be offered free, impartial and face-to-face advice. Financial education has been insufficient in this country for far too long. While I wholeheartedly support people having the freedom to do what they wish with their money, it is important that we make sure that they are in a position to make wise choices. With this in mind, I ask the Government: what is being done to ensure that advice is offered not only to those who are about to retire but to younger people who must learn the importance of saving for later in life?

Manufacturing declined massively under the previous Government and is enjoying something of a renaissance under this Government, but still the growth is not enough. We must not rely purely on financial services but begin to make things again and reactivate our manufacturing capabilities. I was born and brought up in a colony where nearly everything we had was of good quality and was made in Britain. We had British-made cars, clothes, household appliances, bicycles and food products—the list goes on. The Empire is now gone but the British people have the ability to be great again in manufacturing.

On many occasions in your Lordship’s House, I have stressed the importance of placing a greater focus on trade, in particular our exports. In January, our trade deficit was estimated to be £2.6 billion. Our deficit on goods continues to be partly offset by our surplus in services, but we cannot allow this to go on. The continued efforts of UK Trade & Investment must be acknowledged. I applaud the Chancellor for expanding the resources available to it and going through it. Doubling the amount of lending available to exporters and cutting the interest rates on this lending will be welcomed from across the board. The Chancellor was clear that we will have the most competitive export finance in Europe. Our exporters need the confidence that Government understand the crucial role that exporters play and are willing to support them at every turn. I know that a great deal of progress has been made over the past couple of years, not least in recent months.

It was encouraging that the Business Secretary visited the United Arab Emirates on a trade mission back in January and launched a UKTI Gulf investment team. I visit UAE frequently because I own properties in Dubai. The economy of that city is indeed lifting, and we should make use of the opportunities that are now opening to outsiders. I was also very pleased to see the Trade Minister open British business centres in Slovakia and Hungary earlier this month. The drive to boost our trade with central and eastern Europe is most welcome. However, this is not enough.

We need to look in more depth at opportunities with countries such as Brazil, India and China, where export prospects are greatest. A report last month from the manufacturers’ organisation EEF found that emerging markets now account for half of manufacturers’ priority targets. In particular, Brazil has become a top priority, with one-third of companies planning to increase exports there. It is very important that our Government fully realise this potential and capitalise upon it swiftly and assertively. They must develop strategies to target these markets rather than react to potential opportunities.

The report also found that there is a lack of awareness among manufacturers of the support available to them. This further confirms my already held view that we need to market the services of UKTI more effectively. In particular, I should like to see a much more concerted effort on expanding our trading links with Africa. I know Africa as I was born and brought up there. I am visiting Kenya, Tanzania and Zanzibar in three weeks’ time.

A recent report from the World Bank forecasts that sub-Saharan Africa will grow by 5.3% this year. There are several African countries where growth exceeds 7% per year. Countries such as Ghana, Ethiopia, Mozambique, Kenya, Uganda and Tanzania are seeing increased consumer spending and need further investment in telecommunications and education. We have historic ties with some of these countries. We must act now and connect our businesses at home with the overseas markets of the future. I should be grateful if my noble friend the Minister could inform the House of any further plans to focus on these lucrative emerging economies.

Of course, none of these ventures will even be possible if we fail to nurture the talent and innovation of our young people. That is why I applaud the announcement to extend further the apprenticeship programme, supporting 100,000 more through extra grants to businesses. As someone who has been involved in training in my own business—financial services—I appreciate the training of our young in every field to ensure our growth and well-being.

The Federation of Small Businesses welcomed both the reduction in corporation tax and the doubling of the annual investment allowance for small firms. However, it cited as problems poor communication and the fact that firms often do not take advantage of government schemes simply because they do not know about them. This is a problem that has been mentioned in relation to business and exports many times. I ask the Government for clarification on what is being done to improve the way in which their policies are communicated to SMEs and others who can benefit from them. I also ask the Minister whether he believes that the Government will meet their exports targets. If the growth in exports continues to be slow, what plan do the Government have to deal with this?

Finally, the people who are paying 45% tax are often entrepreneurs and businessmen, who create jobs and generate revenue for the country. They should not be penalised and I feel that consideration should be given to reducing their tax rate from 45% to 40%. I would appreciate my noble friend’s comments on this point.

I believe that this was for the most part a good Budget. The Government are on course, as is our economy. However, I shall be grateful if, in his closing remarks, my noble friend is able to answer some of the points that I have raised.

14:44

[Lord Desai (Lab)]

My Lords, what a difference one year makes. Last year, we were all worried about a triple-dip recession and the Chancellor’s Budget was a PR disaster of a kind unknown before. This year, we have had only the small accident relating to bingo and beer, forgetting that we are “all in this together”. Perhaps baccarat and Bollinger should also have been offered relief.

This year, we have recovered. I have been saying for some time—indeed, since before this Government came to power—that, given the depth of the recession that we faced, we could not but have a very hard austerity policy to eliminate the deficit as soon as possible. It was not a very popular thing to say. I said it in a letter in the Sunday Times in February 2010, along with the noble Lord, Lord Turnbull—the only other Member of this House to do so—and many economists, and there were long letters from various of my Keynesian friends saying that I had taken leave of my senses. However, I believe that the primary task of any Government taking office in May 2010 was to eliminate the deficit as soon as possible. It has to be said of the Chancellor that, unlike all his predecessors in the post-war period, he is the only one who has stuck to a strategy which he himself has outlined. Most other Chancellors have deviated from the strategies that they have put forward.

It is not all over yet. We are not out of trouble and we are going to have perhaps another five years of pretty tight economic conditions before we get back to what we believe to be the new normal. The noble Viscount, Lord Eccles, asked why our recession was so deep compared with everybody else’s. That is explained quite a bit by the fact that when we began to lose manufacturing in the 1970s, we replaced it partly with public sector jobs and partly with service sector jobs of two kinds. The higher-paid jobs, for the highly educated, were in the City and the lower-paid jobs were in retail and so on. The people who could not achieve the kind of income that they were making in manufacturing realised that they could sustain their living standards only by borrowing. Therefore, from roughly 1990 to 2007 we sustained our living standards by borrowing. However, the growth rate was not sustainable and it was not sustained, and this economy will not get back to that rate.

It is very important to understand—many people say this—that, had we gone on growing after 2008 at the rate that we had been, the gap today would be 15%. How do we know that we could not have sustained that growth rate? We know because the fundamentals of that rate were very weak. Therefore, we now have to form a new growth path where the rate will not necessarily be as high as the one we were used to. One problem that we will have to face is where that growth is to come from. It will not be easy to bring back manufacturing. People imagine that we have a blank page on which to bring back manufacturing, but there are substantial economies competing with us, especially the emerging economies, which are very good at manufacturing—not only in the low-tech and medium-tech industries but even in high-tech industries. Therefore, we are competing against Brazil, China, India, Indonesia and so on.

If we are to bring back manufacturing, we have to find out where our comparative advantage lies. It may be that, as my noble friend Lord Haskel pointed out, it lies in innovations relating to abstract things such as apps and computers and so on. There, our real comparative advantage is in ingenuity rather than in manufacturing as such. Therefore, when we have made the austerity adjustment, we need to think through what we are going to grow with. That will require a large investment in skilling the population and so on, and it will not be an easy task.

One of the things that many people say is that the Government could have borrowed more and could have spent more. The answer is that the Government did borrow more. They have often been criticised for the debt-to-GDP ratio being very high and public debt having doubled. Until we get rid of the deficit, debt goes on rising. The Government have not borrowed on the fiscal account and spent the money but they have borrowed through the Bank of England. Borrowing through the Bank of England is what has kept the interest rates low. Such recovery as we have had is because low interest rates have meant that a variety of zombie firms survived and households feel richer than they really are.

To that extent, QE has given us some sort of relief but it is misleading relief. At some stage we will have to taper off from what the Bank of England has done, and whether we adopt the suggestion of the noble Lord, Lord Myners, is something that I hope the Minister will come back to when he replies from the Dispatch Box. It is an interesting idea that we cancel one part of the debt with another.

That said, the problem will remain that we will have to start producing a fiscal surplus one of these days. It will not be possible that we, having got to zero deficit, start spending once again. The crucial point is that there was a time in the 1960s, 1970s and 1980s when public spending had a large multiplier. The reason for that was that we had a good demographic situation and healthy manufacturing industries. Those two conditions allowed for the multiplier to be high. We no longer have a good demographic situation and we no longer have a manufacturing industry, except for high-tech industry. Therefore, multipliers will be rather low. This is as true of us as it is of many other economies. We are in a post-Keynesian situation, and we will stay there. To the extent that we can steer the economy, we will have to rely much more on the private economy itself having the health and the capacity to be able to generate its own growth, rather than think that someone can crank a handle and growth will occur.

That era ended in 2008 and is not coming back. There has been a lot of debate about productivity growth. I remember from when I was doing this sort of thing professionally, that in the public sector productivity is measured by salary. The output of a public sector worker is what that public sector work gets paid. The output of a private sector worker has a wage component and then there is a profit component. Productivity can be measured when we are actually producing solid things. It is about the hours worked and the value of the output. It is very difficult to measure productivity in the public sector economy. What has happened is that a number of public sector workers have been shifted from the public sector to the private sector. The high salaries that employees used to make, which we thought of as high productivity, have been swapped for private sector jobs. They are probably being paid less and indeed, their productivity, as measured, would be even less than the wage they get.

The productivity gap that we are all worried about may be a statistical illusion. This is my conjecture and it ought to be checked out by people who do this sort of thing for a living, which I no longer do. We ought not be misled into thinking that either productivity is too low or that we do not have enough spare capacity in the system, and so on. I do not know what the spare capacity in the economy is, or whether it is even a valid concept any longer. If we did not have spare capacity and were having a recovery, we should have inflation, but we do not have inflation. If we have a positive growth rate of, say 2.5%, and we do not have inflation, there must either be spare capacity somewhere or we are in a very happy position. These valid questions open up how much the structure of the economy has changed. If we can begin to grasp that, we will be better off.

I have one final point. It is very tempting to think that the people who pay more than 40% tax are middle class; they are not. They are a minority of the population. Please measure class at least by deciles of income and exclude the top three deciles and the bottom three deciles, so that the people in the middle do not pay 40%. Please do not be kind to 40% taxpayers. Please do not be kind to people who pay inheritance tax. Things are bad enough as they are. We do not have to exacerbate inequality or give money to people who do not deserve it. Both things are an inefficient use of money.

14:56

[Lord Horam (Con)]

My Lords, I heard the speech of the noble Lord, Lord Desai, last year, and I greatly enjoyed it as he always talks with such wisdom. I enjoyed it even more this year. If one had to conduct a Desai test before Budgets, this one would definitely pass by comparison with some of the others. During his long career in politics and economics, the noble Lord, Lord Desai, founded the Centre for the Study of Global Governance. I do not know whether he would agree, but whether it is global governance or national governance, successful governance is always a balance between competence and fairness. One can reinforce the other.

If we look at the Budget from that point of view, it was a distinct success on the side of fairness. I echo what my noble friend Lord Sheikh said about raising the income tax threshold. That was one of the most significant things in the Budget and one of the top two or three priorities. Liberal Democrats claim great credit on this front, and I would give them a fair measure of credit, but none the less it was clearly a success, whoever claims it. When Labour left office people were paying income tax on £5,600 a year. It was scandalous that they paid income tax on such a low level of pay. The income tax threshold is now rising to £10,000 a year and from next year it will be £10,500. It cost £12 billion to make this change, which is undoubtedly a big ticket item by any standard, but it was the right thing to do.

The Chancellor has also accepted the Low Pay Unit’s recommendation for raising the minimum wage and is generally encouraging about the living wage. The noble Lord, Lord Haskel, mentioned that in his speech and I entirely agree with what he said. It is not just a matter of rewarding people for their restraint, which has been considerable in the past three or four years, but producing an economy that has an incentive for higher productivity. Subsidising low wages is no good at all in the long run. There may be some sort of consensus, at least on the Back Benches, about this issue. That is also an area in which the Government are absolutely on the right lines. Companies that are cash rich can certainly afford higher pay now. Given that inflation is less than 2%—1.7% on the latest reading—there should be no adverse effect on that.

With regard to competence, the Chancellor clearly was right to keep a firm grip on government spending. I recognise that there has been a lot of criticism of him over the past two or three years from what I call a Keynesian point of view. As someone who read economics at Cambridge when the influence of Keynes was very high in the late 1950s and early 1960s, I can well understand that point of view and where it is coming from. The noble Lord, Lord Hollick, made that point and others will no doubt do so. I see the noble Lord, Lord Skidelsky, in his place. As the biographer of Keynes, I defer entirely to him.

None the less, it is fair to make two points. First, as the noble Lord, Lord Desai, said, to some extent we are in a post-Keynesian situation. Things have moved on since Keynes was alive and doing his marvellous work in economics, for which we are all still greatly indebted. Secondly, the Chancellor has been extremely flexible. He has considered these points and has steered a middle course—a third way, if you like—between a classic Keynesian point of view and a non-Keynesian point of view. He has been flexible and sensible. The noble Lord, Lord Hollick, quoted Anatole Kaletsky as saying that the Chancellor is a stealth convert to Keynesianism. The Chancellor has proved able to learn from experience and reality and has provided a way forward which makes total sense to me. That is now history. We are now at the turning point. We have economic growth again and the question is how this can best be sustained. As I said, companies have cash in the bank, demand is increasing, which is what they need, and it is a good time to ramp up incentives to invest. Therefore, the Government’s approach is welcome.

As has been pointed out, we also need more public investment. We are a small and crowded island with strong democratic procedures in place. Therefore, it is always hideously difficult to get public investment going with any sense of urgency. However, I am sure that, given the background of the noble Lord, Lord Deighton, and his success in the Olympics, we have the right man in place to get public investment going.

In that context, as one who was born in north Lancashire and takes his title from that area, I am all in favour of fracking. I am certain that a sensible regime that both rewards the local communities that sit on top of the Bowland shale and allows the exploitation of gas and oil to proceed to the benefit of the economy and our economic security can be constructed. However, at the moment, mixed signals are coming from the Government about this. The Prime Minister is saying that it can be done quite quickly, possibly during the course of this year—there may be evidence on the ground—but the companies are saying something quite different and that we might not get a reasonable amount of production until the end of the decade. I would be grateful if the Minister could clarify the situation. It is important to have a good understanding of what is happening in this area.

Just as important as infrastructure are human skills and it is for that reason that I am strong supporter of what the Secretary of State for Education is doing. In all fairness, he is building on the work of the previous Labour Government in initiatives such as Teach First and the academy programme, but he is pushing forward with a vigour—some might say a ruthlessness, but a relentlessness anyway—that is, I hope, transformational. This is hugely important. It is just as important as infrastructure investment.

All that is very good but I must stress, as we have all done in different ways, that the economic recovery is fragile and there are some clear threats on the horizon. One, of course, concerns the economic measures which it may be necessary to take to deal with the political situation in Ukraine. Soft power should be used—I am right behind that—but it may come with a big economic penalty. It is an economic penalty we should pay, but it will none the less be there.

The second threat comes from deflation in the eurozone. Undoubtedly, the European Central Bank has done a good job in averting disaster and restoring a good measure of confidence. However, it now faces a much harder task in avoiding a prolonged period of Japanese-style deflation. If that materialises, we shall certainly suffer in the UK.

A further threat comes from the situation in China. For some years now, the Chinese economy has been propped up by debt-fuelled investment—I do not know what the noble Lord, Lord Desai, thinks about that—much of which has been squandered on speculative property ventures, useless infrastructure and excess manufacturing capacity. Now the day of reckoning is coming in China, I fear. There will be defaults of companies and credit will have to be reduced. That will have a considerable impact on the rate of growth of the Chinese economy, which will hurt us and the whole world.

Finally, we have our own imperfections. We are still not very good at exports; productivity is behind our rivals in Europe; and we are still too dependent on debt, rising house prices and domestic consumption. Therefore, there is undoubtedly a great deal to do. There is no room for complacency. The Budget has reinforced my view that the Government are heading in the right direction and I hope that they will keep to it.

15:05

[Lord Low of Dalston (CB)]

My Lords, the Budget seems to have played pretty well on the day. However, if I was the Chancellor I might be a bit worried by that as it is part of the lore of politics that what goes down well in the spring frequently bombs by July. In the case of this Budget, the shine has begun to come off already. Indeed, in the area where the Budget was probably at its strongest—pensions and savings—fears have been expressed about the potential impact of people drawing down from their pension pots prematurely and the threat to providers of annuities, such as insurance companies. Be that as it may, the Chancellor’s far-reaching reforms in this area are to be welcomed, even though they will principally benefit the better off.

I note that the IFS has expressed concern about the risk that permanent tax concessions, such as the increase in the personal allowance, which are funded only by temporary tax increases and unspecified cuts in public expenditure—as the noble Lord, Lord Hollick, pointed out—will weaken the long-term outlook. Moreover, bringing forward revenue that the Treasury would have expected to receive anyway, as with national insurance changes, may be a cost to the Treasury later on.

This was indeed a Budget for pulling rabbits out of hats. As other noble Lords have said, it was full of conjuring tricks and sleights of hand. Take the announcement that the number of £1 million Premium Bond prizes is to be doubled. That sounds impressive until you learn that it is to be doubled from one to two. Much of the rest of the Budget displays a similar level of disingenuousness.

Reducing the deficit by a third is presented as good progress, but it was originally supposed to be eliminated altogether by the end of this Parliament and had already been reduced by a third last year. This is no better than Gordon Brown’s serial announcements of the same new money.

The Budget contains a fundamental misrepresentation of the Chancellor’s fiscal stance and its effectiveness. However, before I come to that, I want to say a word about the Government’s characterisation of the situation we face and the problem with which they are trying to deal. The policy of the Government over the past three years has largely focused on public debt; it has not talked much about private debt. The Minister reflected this emphasis in his introduction today. But let us be clear: private debt got us into this mess. Before 2008 our public finances were in reasonable order. You can argue that there was some letting go of the controls of public expenditure in the last few years but on the whole that was not the case. We had a low level of debt and did not have high levels of deficit. We had a very rapid expansion of private debt and that produced a bubble and a crash, which then produced a recession and public debt went up as a result.

We do not have a high level of public debt because of profligate Governments; we have high levels of public debt because we had a financial system which was out of control, creating too much private debt. It is important that we understand this sequence of events. That is not me talking: it is the noble Lord, Lord Turner, on the “World at One” on 30 December last year. I am sorry if it appears to labour the point but I do so only because it is so often misrepresented.

When I hear noble Lords to my left—I mean spatially, not ideologically, you understand—engaging in the same kind of misrepresentation, I often wonder whether they really believe it or whether they are indulging in political knockabout. They are not stupid, so I have to conclude that it is the latter, but I would hope that we can avoid such disreputable distortions of analysis in this House. At all events, amid all the focus on bringing down public debt and government debt, we have yet to come up with a solution to the problem of running a reasonably growing economy without returning to the increases in private debt which got us into so much trouble in the first place. That is the problem confronting the Chancellor, as he congratulates himself on a recovery based on a housing bubble and rising consumer spending, which this Budget does nothing to tackle.

I turn now to the central misrepresentation of the Budget; namely, that the Government’s strategy of cutting the deficit is working, reiterated as the central plank of the Minister’s introduction to the debate. On the face of it, this would seem to be self-evidently the case. The economy is recovering—is it not?—and recovering faster than anywhere else. But there are several things wrong with that. Is it because of or in spite of the Government’s policies? This recovery has been likened to a man who has been hitting himself over the head with a baseball bat saying that he feels better when he stops and attributing his improvement to the fact that he had been hitting himself over the head with a baseball bat. Then again, as I have said, according to the Government’s strategy on taking office, the deficit was supposed to be eliminated by next year, not four years later in 2018-19 as is now being forecast. The economy is forecast to recover to pre-crisis levels, but only this year, after six years, and 14% smaller than it would have been had the recession not struck. Moreover, what has gone has gone for good. The damage is irreparable.

As the economist Simon Wren-Lewis has conclusively demonstrated, the economy started growing once the Government abandoned their strategy of fiscal contraction, not in response to the strategy of fiscal contraction. From a peak deficit in 2009-10 there was substantial fiscal tightening until 2012-13. This essentially stopped in 2012-13 and 2013-14, whereas the original plan was for fiscal contraction to continue in 2012-13 and 2013-14. The figures show clearly how the strategy was abandoned as the recovery failed to materialise. I am not complaining about that, of course; rather, I am just pointing out that you cannot abandon a strategy and carry on pretending that it is still working. I was disappointed to hear the noble Lord, Lord Desai, say that this is the only Chancellor to have adopted this strategy and stuck to it because, as Simon Wren-Lewis has shown, it is just not true.

The final thing the Chancellor shamelessly glosses over is the full extent of planned austerity despite the economic recovery. He said:

“While the underlying structural deficit falls, it falls no faster than was previously forecast, despite higher growth”.

This goes to the heart of the Government’s argument: faster growth alone will not balance the books. Securing Britain’s economic future means that there will have to be more hard decisions and more cuts but, apart from talking about the welfare cap, the Chancellor has been completely unspecific about what these cuts might be. Presumably this is deliberate until after the next election for, if he were to come clean about just what he has in store for us, the public’s verdict on the Budget might be very much less favourable than it appears to have been to date.

15:13

[Lord Flight (Con)]

My Lords, some insightful and important points have been made in this Budget debate which I hope the Minister will feed through to the Treasury, because I have certainly not seen some of them being made elsewhere. I was extremely pleased to be able to agree with much of what the noble Lord, Lord Desai, had to say, which has not always been the case. It seems that he sees things very much as I see them. Equally, however, some sharp and important points were made by the noble Lords, Lord Hollick and Lord Myners. It has always struck me that the QE creation of £380 billion-odd would have to be monetised because there was never any prospect of raising that amount from the bond markets when those markets are tending to fall.

I also congratulate the Minister on what I thought was a very clear presentation, whether people agree with it or not, of government policy and what is in the Budget. It is only fair to say that with a relatively limited scope, there are some measures which are good for the economy and for citizens. I welcome in particular the infrastructure measures, and again I hope that the Minister will get a move on and make them happen as soon as possible. The measures for improving export finance are important. I have observed previously that French and American export finance in particular is much more generous than it is in the UK, which often results in us losing orders.

I would like to focus on the measures relating to savings, both the ISA reforms, which I do not think anyone else has actually even commented on, and the pension reforms. I want to talk about them in the context of the all-important issue of the UK savings rate. Reference has been made to it, but no one has made the point that the main reasons for the problems and imbalances in the British economy going back 50 years are because we have had an inadequate savings rate. You can have too high a savings rate, which has been China’s problem, and you can have too low a rate, which has been our problem, as well as that of India. I think that what we really need is a national debate about the right savings rate and what would make sense to try and achieve it; that debate is well overdue.

First, however, I declare an interest as an adviser to the not-for-profit trade body, the Tax Incentivised Savings Association. The association acts on behalf of the various savings institutions and has embarked on a major process, with some 50 organisations, to produce a study on the problem of saving rates being too low and what might be done to fix it.

ISAs have been extremely important. They were really a cross-party creation because they were an adaptation by the last Labour Government of the previous PIMA regime. They have been hugely successful as a means by which people can accumulate savings for their retirement, and something like seven times as much per annum is now saved in ISAs as is saved in personal pension schemes. The reason for that is extremely simple: it is because ISAs are extremely simple. People have access to their money because it is not tied up in strings of nightmarishly complex legislation. By and large the providers of ISAs have offered a straightforward range of products, some more sophisticated than others, through which people can save. They are now supposed to be called NISAs—I always hate changes of name because you forget what has happened—and I think that they are going to be much more important than many realise in terms of helping to increase the savings rate and savings accumulation for people’s now much longer periods of retirement.

However, I should point out to the Minister that there is one small item that needs to be addressed. Generally, in a marriage at least, the man has the ISA. Statistically he is likely to die prior to his wife, but although the capital can pass to the surviving spouse free of inheritance tax, she loses the tax benefits of an ISA, which is tax-free in terms of income and capital gains. In a way the wife is being cheated because, if the husband has made that sort of provision for retirement for both of them, it is unfair that she should not participate if her husband predeceases her. Obviously it is the same case the other way round as well.

On the issue of the reforms relating to annuities, going back 13 years to when I was a Member of Parliament I used to get lots of letters from women with £10,000 or £15,000 in a small money purchase pension pot who quite rightly objected strongly to that money having to be put into a footling annuity which was going to be neither here nor there. My impression was that if these ladies had had access to the capital, they would have hung on to every penny right to the end as their reserve pot of money. I have always objected to the compulsory purchase of annuities, although obviously there is a concern that people may cash in and consume their pensions savings—indeed, the figures provide for some £2 billion of tax revenues from this source. I am not so sure they will but, again, it seems to me that it would make sense to consider some incentives for people not to do that. If people, for example, want to transfer their pension savings to an ISA, which is a much simpler way of managing their savings, why should they not be able to do that without incurring a tax charge on the way through?

My other old chestnut is that home ownership became popular because people saw it as a way of passing on some wealth to their children. It has always struck me that, if what might be left in people’s pension pots on the death of the surviving spouse could pass to their children’s pension fund free of tax, that would be another quite powerful incentive for people at all levels to save more in their pension scheme. Tax would of course be paid on it once the pension was drawn.

However, my main concern is the savings rate. All my life, at least in the 1950s and 1960s, it was stop-go balance of payments crises. We then discovered, with the freeing of capital flows, that large deficits could be financed by borrowing other people’s savings and selling the family silver. However, that was not without a price—although we have not had quite the same pattern of stop-go, we have always tended to end up with overconsumption, overborrowing and the need to put the brakes on. No one even talks much about current account deficits now. Although it is all very well to exhort people to export more, the current account deficit is, in essence, a function of public and private consumption less the savings rate compared with GDP. If that is 5% more than GDP, which it is now, there is going to be a current account deficit of 5%. No matter how hard we try to export, we are not going to tackle the current account gap unless savings are higher or consumption is lower.

I think it was the noble Lord, Lord Lawson, who discovered as Chancellor that the current account deficit did not matter much in the short term because it was financeable. However, in the long term, it still does matter. We found that we did not have a British company capable of building a nuclear power station and that the interests of most of our utilities, which were internationally owned, were often different from those of government. This is really selling the family silver to pay for cumulative current account deficits. There is a long-term price to pay, even though it may be possible to deal with it in the short term.

Finally, there is the other side of the coin, which is that although our generation here may be adequately provided for in retirement, the next generation certainly is not. Pension scheme contributions are nowhere near enough and the government commitments to welfare and health spending for that generation are simply not going to be affordable. Unless something gives—the most civilised thing would be for the savings rate to increase so that people can afford more of these things themselves—there is going to be a real mess in 20 to 30 years’ time. Even this House rather kicked under the carpet the fact that pay-as-you-go public sector pension schemes are likely to have a cash-flow deficit per annum as high as some £25 billion as early as 2017. There are plenty of studies pointing out that the overall welfare spending commitments that Governments have presently given are simply not going to be affordable in some 20 or 30 years’ time.

What is the correct savings rate? I have not seen a definitive answer. My common-sense view is that it should be an average of at least 10% over different periods, whereas it is now somewhere between 4% and 5% and forecast to go down to 3.2%. It is all very well saying that we have to use consumption to get the economy going—that is working but unless it is accompanied by measures that will lead to a higher sustained savings rate going forward, it is going to as usual end in tears, as some noble Lords have mentioned. I therefore go back to where I started: I am very hopeful that being able to save £15,000 per person per annum in a NISA will increase the savings rate. As auto-enrolment gathers momentum and contribution rates increase, or need to be increased, that will increase the savings rate as well. I commend the Treasury and the Minister to at least think about some of the tax points I have raised.

I close by saying that, given that this is now an appointed House, it is rather out of date that we are excluded from participating in the legislative process of finance Bills. It seems there is quite a bit more in the way of informed views and experience in this House on such matters than there is in the other place.

15:25

[Viscount Hanworth (Lab)]

My Lords, from my perspective this has been a distressing Budget. It has all of the features that we have come to expect of the activities and the enactments of the Chancellor. I wish to examine some of these features, albeit briefly.

The Budget is highly political in the sense that it is dominated by the objective of gaining an electoral advantage for the Conservative Party, no matter what the long-term costs of doing so might be. The Budget promises a continuing attack on welfare provision and a shrinking of the public sector to a level not seen in post-war years. Apart from a token investment—equal to the amount of money to be spent on the repair of potholes in roads—in the Ebbsfleet housing project, which was announced in advance of the Budget, there have been no plans for any further centrally funded investment in social and economic infrastructure.

The Budget manifests the Conservatives’ desire to do nothing that might amount, in their perception, to undue activity on the part of the state. Some of the provisions of the Budget have been designed to appeal to pensioners and to those who are heading towards retirement. Such people constitute a significant part of the active electorate and the Conservatives have been fearful that, unless they appeal to those people, UKIP might seduce them. This is one explanation for the deceptively attractive proposal to allow people, on their retirement, to get their hands on the entirety of their pension endowments without suffering what has hitherto been a heavy tax penalty. This is likely to inject extra cash into the economy to stimulate it in time for the general election.

The critics have been quick to spell out the detriment from this provision. It would add an impetus to an already overheated property market as pension endowments are used to buy property to generate retirement incomes from lettings. This would compound the severely deleterious effect of the Government’s misguided Help to Buy policy. This liberalisation of the pension rules is also liable to lead to penury in old age for a substantial number of incautious people who will grab their wealth and spend it. The financial services industry is set to scramble wildly in an attempt to mop up the cash that has been liberated by offering pensioners all sorts of innovative financial products with deceptive inducements. Little has been done to protect gullible pensioners.

We should briefly remind ourselves of the current state of the economy and of the tasks that confront the Chancellor. At a time when it seems as if the economy is set to expand, there is a desperately poor export performance, which promises an eventual crisis. There is low productivity and low investment in a much diminished manufacturing sector. There are spiralling levels of household debt and there is a vigorous inflation of house prices, without any significant activity in housebuilding that might meet the needs of young people.

The nostrums of Keynesian economics, which were once widely accepted by the Conservatives, indicate that the Government should have taken a central role in addressing these problems. They should have become active in stimulating the economy at a much earlier stage of the recession. The means of doing so should have been a heightened level of investment in the infrastructure of the economy. There has been a lingering consciousness in the Government’s mind about the need for such an investment programme. There has been recognition of the need to invest in airports, rail links, sewerage systems, power stations and housing. In every case, the projects have been deferred until, supposedly, the economy is better able to afford them. In other words, there has been a complete inversion of the Keynesian logic.

Two major impediments have stood in the way of such investment projects. The first has been an ideological insistence that the projects should be financed and undertaken solely by willing providers from the private sector. The willing providers have not been forthcoming. The second impediment has been the concerns over the public sector borrowing requirement, allied to a desire to eliminate the budget deficit. With such an agenda, it has been impossible for the Government to fund investment projects. The budget deficit is due to the recession of the economy, which has reduced the flow of funds from taxation. It would be largely overcome if the economy could be restored to full employment.

A misconception has been affecting the common understanding of the borrowing requirement. It has been widely believed than any net borrowing denotes a burden of debt that cannot be sustained indefinitely. This fallacy has arisen from a failure to distinguish between the current account and the capital account of the Government. One should bear in mind that any successful business enterprise is bound to have a substantial and permanent burden of equity capital and financial debt, which corresponds to its borrowing via stocks and bonds. The enterprise is not liable to be criticised for the fact that, in order to sustain its capital investments, it is bound to borrow. The same should be true of the investments in social capital for which the Government are responsible.

In making their social investments, the Government have two advantages that are denied to private enterprises: on the one hand, they can borrow at much lower rates of interest than are typically available to private enterprises; on the other hand, whereas private enterprises must service their debts via insecure commercial profits, the Government can service their debts by the taxation over which they have control. The present Government have forgone the opportunity of undertaking much needed social investments at a time when the rates of interest on the necessary borrowings are at a virtually unprecedented low level.

When the Government have contracted to proceed, eventually, with an investment project, they have promised the undertaker a so-called market rate of return that is utterly exorbitant. The rate of return that has been promised to Electricité de France for building a nuclear power station is far in excess of the already excessive 10% discount rate that the Government typically use in their project appraisals. Moreover, the returns have been promised for a 35-year period. It would have been appropriate to finance this project, at far less cost, via the Government’s borrowings on their capital account. The cost of such borrowings could be serviced from the expected revenues of the project, but equally—logically—it could be serviced from taxation. In a wholly egalitarian society, it should make no difference which of these two means is adopted for financing investments in social capital.

From the perspective of the Conservative Party, which is averse to the strongly progressive taxation that is the corollary of a highly unequal society, the preferred means of financing such investments is by charging the consumer. However, there is an electoral disadvantage in imposing costs on the consumer. This has deterred the Government from making the social investments that are their responsibility, and this failure to invest promises social and economic problems in the future.

15:32

[Lord Northbrook (Con)]

My Lords, this is a very timely debate, coming after a generally very well received 2014 Budget. The economy continues to recover, with forecasts for GDP growth being revised upwards once again. The budget deficit is coming down. The unemployment rate is continuing to improve. According to the latest CBI survey, manufacturing continues to recover. Inflation forecasts remain low. The economic background continues to improve, although there is still a long way to go.

The Budget has focused, quite rightly in my view, on measures to help business, as well as giving important help to savers and taxpayers, mainly at the lower end of the tax scale. My speech will focus in more detail on the above. I will also focus on the excellent report by the Economic Affairs Committee on the draft Finance Bill, published a fortnight ago. I congratulate the noble Lord, Lord MacGregor of Pulham Market, and his group on choosing the topic of proposed tax changes to limited liability partnerships, and on their thoroughness on what seems a complicated area of tax law.

Looking at the economy, first, I will highlight the Office for Budget Responsibility’s forecast for GDP improvement. As the Chancellor said in his Budget speech, a year ago the forecast for 2014 GDP growth was 1.8%. It is now 2.7%. This is a good sign of recovery. The 2015 forecast has also been revised upwards. Borrowing is also showing a marked improvement. Britain borrowed a horrendous £157 billion the year before the coalition came to power. The OBR says that in 2014-15 this will fall to £95 billion and, although it has taken longer than expected and there is a long way to go, predicts that it will come down to £18 billion by 2017-18. According to the Red Book, interest payment savings on the debt over this Parliament are expected to amount to about £10 billion per year by 2015-16 as a result of the Government’s consolidation plans.

Unemployment figures also show an encouraging trend. According to the Office for National Statistics, employment is up by nearly half a million people for the year ending January 2014. According to the Budget speech, 1.3 million more people are in work compared to when the coalition came to power. According to the ONS, the claimant count has fallen by 24% in the past year—the largest annual fall since 1998, according to the Red Book. Youth unemployment fell by 58,000 during the past year, which is also a good sign. I also applaud the imposition of the welfare cap linked to inflation—now supported by the Opposition, I see—although I know that cyclical unemployment benefits are excluded.

The next area that is showing an encouraging recovery is manufacturing. Last Thursday’s CBI Industrial Trends Survey showed a 3% rise from February in manufacturers reporting above-normal order books, suggesting that the recovery remains on track, driven largely by domestic demand. Anna Leach, head of economic analysis at the CBI, said that overall the survey of 368 manufacturers showed demand rising and robust output growth. Encouraging news emerged yesterday on manufacturing pay deals. Pay settlement figures in manufacturing rose to 2.6% in the first quarter of this year compared to last year’s average of 2.4%, in the latest sign that the squeeze on living standards is easing.

Another economic indicator performing favourably is inflation. The OBR forecasts that it will fall below the 2% target in 2014 at 1.9 %, and will not exceed it at any time until 2018. This Tuesday’s latest figures confirmed the favourable trend.

Turning to the Budget measures themselves, I will focus first on the welcome measures to help business. As the Chancellor said in his speech, when the coalition came to power the corporation tax rate was 28%. Very shortly, corporation tax will be down to 21%. The corporation tax rate cut has been a great help to companies. The second major boost for business in the Budget, as many speakers have said, is the increase in the annual investment allowance from £250,000 to £500,000 until the end of 2015. This has been warmly welcomed by the manufacturing and agricultural sectors. The third major area of help is company energy costs. The Chancellor can be congratulated on producing a £7 billion energy package that will cap a green tax and shield companies from rising renewable energy subsidy costs. The major manufacturers’ trade body, the EEF, and the employers’ group, the CBI, have praised all of the above, as well as congratulating the Chancellor on his apprenticeship funding, changes to the R&D tax credit regime, the extra support for UKEF to boost exports, and the decision to make permanent the seed enterprise investment scheme, which is such a help in financing new start-ups.

Moving on to measures for savers, first, I warmly welcome the Chancellor’s proposals with regard to pensions from 2015, allowing investors free access to spend or invest their pot as they wish once they have reached the qualifying age. I remember occasions when this was nearly achieved in the past but the efforts fell at the last fence, so I am delighted to see the Chancellor finally acting to give pension savers their freedom. I also welcome the new pensioner bonds for those over 65, paying up to 4% if held for three years.

Next, I warmly welcome the Chancellor’s plans to extend the ISA limit to £15,000 and the merger of the cash and shares ISA. According to the Daily Telegraph, these tax-free accounts are now held by no fewer than 24 million people. Sensibly, in a separate move, the Treasury has allowed—encouraged by a campaign by the noble Lord, Lord Lee of Trafford, and me, as well as by several other noble Lords from all sides of the House—AIM stocks to be included in ISAs. I also welcome the abolition of the 10% rate of tax on savings for certain savers and basic rate taxpayers. The increase in the personal allowance to £10,500 is most welcome, too. The limited increase in the starting level for the higher-rate band is also welcome, but more needs to be done to uprate this at least in line with inflation.

I turn to the excellent Economic Affairs Committee report on the draft Finance Bill. The report, not referred to by other speakers, was only recently published on 11 March. I understand that it is too soon for us to have a government response to consider today. The committee’s sensible conclusion is that the measures proposed are so different from the original proposals consulted on last summer that more time is needed to settle that question and get the legislation right. It also recommends delaying the limited liability partnership salaried members’ provisions to 2015. Can the Minister enlighten us on whether HMT will take on board the proposals? Will he respond to the recommendation put by the committee in relation to mixed member partnerships—here, I declare an interest—namely, partnerships including limited liability partnerships with corporate members? The recommendation was that HMRC amend the provisions so that they are drafted more precisely and rely less on guidance. I ask the Minister to take notice of this seemingly arcane area of tax law, because implementation of the provisions could cause chaos.

The Government have been right to stick to their course on deficit reduction. I listened with interest to the view of the noble Lords, Lord Hollick and Lord Myners, that there should have been increased government spending early in the Parliament, but this would have been a dangerous course, as the markets could well have been upset by a perceived lack of financial discipline in government finances and the cost of servicing the debt could have soared. I prefer the views of the noble Lord, Lord Desai. Recovery is heading in the right direction. There is a still long way to go, but the coalition’s approach has been fully justified. Finally, I agree with the noble Lord, Lord Flight, that this House should have more input on the Finance Bill, particularly as large chunks of it are not considered by the other place, meaning that you have legislation which is not considered by either House.

15:42

[Lord Hunt of Chesterton (Lab)]

My Lords, I want to comment on some of the policies on energy, science, technology and exports that were in the Budget speech. I declare an interest as a director of a small company and as an emeritus professor at UCL and Cambridge. Some of the information about science expenditure was in supplementary information provided with the Budget speech and not in the version that we had from the Printed Paper Office. One question that one wants to ask is whether best use is being made of government expenditure on science and technology.

This Government certainly recognise the importance of science expenditure and there is a general feeling that the Chancellor has appreciated this more during his period in office. The previous Labour Government appreciated this, too, and had to overcome the lack of priority given to science and technology by the Thatcher and Major Governments.

The importance of the UK having a highly competitive science and technology area, and of its industrial applications, were raised in a recent report of the House of Lords Science and Technology Committee, which commented on the critical level of funding for parts of the UK scientific infrastructure—which I myself have seen accentuated in the areas of environment and engineering, as well as in atomic physics. That the UK did not have world-leading laboratories in hydraulics was a factor whose implications we saw in the floods of this year.

Importantly, the Chancellor said that policies for science and technology needed to be integrated with increased exports, but one has to recall that when the Conservatives came into power, the first thing they did was to indulge in various ideological decisions such as abolishing the regional development agencies, which were widely supported by industry and business. In Germany and elsewhere, such regional organisations of employers supported by government and local authorities are an important vehicle for encouraging exports. It is rather different from having a man from BIS coming to visit your company. That these organisations across Europe are extraordinary group activities is one of the reasons why they are so strong. As has often been commented on, the way that German industries in local areas work with the banks ensures expansion and adequate finance. It was surprising that the abolition of this very successful and growing area of our business in the UK was supported by the Lib Dems, who I had always thought were supporters of regional power and influence.

If we look at what has happened during the past three years, I suppose that we should be pleased that the Government have seen some of the error of their ways. Mr Willetts, in a rather nicely written piece that I have cited before, explained that when he came to power, he thought that the only thing the Government had to do was to get out of the way of business. He then stated that it was in fact very important that the Government lead, support and work with industry and science and technology to make important developments. A variety of specific initiatives have been taken, one of which was to focus on space. The UK is an important leader in applying work in space in a commercial way, as we saw just last week, with Inmarsat being located in London. That was a brilliant example of UK science and technology being widely recognised and used.

As part of the mea culpa article by Mr Willetts describing the evolution of government policy, he commented that, after being rather suspicious of the Labour Government’s Technology Strategy Board, the Government have become strong supporters of it. Although I did not hear any further mention of expanding it in the Chancellor’s Statement, it would be very interesting to know from the Minister whether that is planned. The amount of money being funded through the TSB is still small compared to the money spent in Germany, for example, through the Fraunhofer centres. The Fraunhofer centres also focus not just on very high-tech but give credit to important technology at the level of everyday living and small businesses—for example, how buildings get damp in strong rain conditions and what you should do about it. One of the Fraunhofer centres deals with that in particular. It was the noble Lord, Lord Sainsbury, who introduced the TSB, as he explains in his book on progressive capitalism.

One feature of the Chancellor’s speech, as of many speeches made by members of the Government, is the total absence of the word Europe. I was very gratified that the noble Lord, Lord Razzall, earlier commented that the most important feature for the long-term strength of UK industry, business, science and technology is that we remain in and active members of Europe.

The word from Brussels now is that because of our tendency under this Government to think of departing from Europe, in many European meetings in Brussels the UK’s point of view is simply ignored. They say, “You guys are on your way out; why should we listen to what you have to say?”. That was said by a senior British civil servant, now in Brussels, who said that the situation was serious. Last night, rather gratifyingly, we heard Mr Clegg talking about Great Britain, not Little England. I hope that that will be a feature of the next election. At the moment, we seem to be run by a Little England party. However, that was on Wednesday. On Tuesday, we had a speech from the Prime Minister saying that we greatly believe in Europe and that Europe is helping us with our development of full employment, so it varies from day to day.

It is important to keep reminding ourselves that areas in which the UK is a world leader are often those projects that we are undertaking with Europe. Airbus is a very important example. Rolls-Royce has only a small proportion of its work in the UK; most of it is now in Germany or in the United States. It is important for the Government to do much more to advertise that. When the Prime Minister flew to Beijing with his big delegation, he did not fly in an Airbus, he flew in a Boeing. When he arrived in Beijing, there was a big notice above his head, shown on television, reading “Boeing”. That is not very clever.

I also want to talk about energy and climate change. The Chancellor spoke about that in his speech and emphasised the fact that the UK is investing strongly in low-carbon sources of energy, particularly nuclear and wind. The fact that the UK is continuing its strong policy is one reason why we have some leadership in the world discussions on climate change. I am a vice-president of GLOBE, and many politicians from all over the world come to see what we are doing, both legally and by our policies. Indeed, our policies are coherent. I have been praising Germany in my speech, but the fact that it has a totally incoherent policy on energy—suddenly switching against nuclear—is a source of great difficulty in Europe.

However, the Government should not become too fascinated by the possibility of cheap gas. I notice that we had a fracking speech earlier this afternoon. The message from US politicians visiting London is that the reason why fracked gas is so cheap in the United States is that, as a result of legislation by President Bush, the costs of providing water for the fracking operation and for cleaning the water after the fracking operation are not attributed to the cost of the gas. In the words of American politicians, the water consumers of America are subsidising the cost of the gas. We need to be very careful about that.

I also notice that the issue rather reminds me of the Labour Government in the 1960s, when they asked whether they could abolish a railway going through Wales. Speaker Thomas, Lord Thomas, said, “Mr Prime Minister, that goes through 24 marginal constituencies”. I wonder whether the fact that fracking of gas would go through a lot of marginal constituencies in Lancashire may be the cause of the delay that we heard about this afternoon. To continue that point, the issue of water is one of the reasons why there was great concern about fracking in the UK; the Institute of Civil Engineers made some remarks about that that have not been explained by the Government.

I come to my last point. The Chancellor emphasised in his speech that the carbon price compensation for energy-intensive industries needs to be considered and implemented. However, it is very important that this is not just a handover of funds. Surely the funds should be handed over with conditions relating to efficiencies and new technologies implemented by the companies that are using this extra funding. In Stoke, for example, in the Potteries, they are using new techniques to make use of the gas coming out of the old coal mines. That kind of energy use should be supported. The other feature that the Government emphasised was the encouragement of combined heat and power. Many noble Lords have been commenting about that for 10 years or more and it is a very welcome development.

15:54

[Lord Bourne of Aberystwyth (Con)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Hunt of Chesterton, who spoke with such authority on science and technology. I should also tell him that I am very familiar with the railway line that he referred to and, thankfully, it still does go through many a marginal constituency.

I think that the central thrust of the Budget thinking is right: we must as a nation reduce the deficit; we must press down on the debt, otherwise we will saddle future generations with that debt.

In general, Budgets can be broken down into three categories: calamitous, of which there are a few; routine, of which there are many; and transformational, of which there are very few. There is a strong case for suggesting that this Budget is transformational. It makes fundamental changes to the tax and budgetary system applying to pensions. It deserves comparison with the Budget of my noble and learned friend Lord Howe of Aberavon abolishing exchange controls. Another such Budget was that of my noble friend Lord Lawson of Blaby abolishing higher rates of income tax.

The fundamental change to pensions—and I disagree fundamentally with the noble Viscount, Lord Hanworth, on this point—is to give people power over their pension pots. I accept that we need a system of good advice, a point which was well made by the noble Lord, Lord Hollick, and the right reverend Prelate the Bishop of Chester. It is certainly true that we need to ensure that proper advice is in place for people. Subject to that, however, surely it is right to give people control over their own pension pots which they have built up over time. For the first time people will be trusted to manage their own pension pots. It is a major transfer of power to the individual. In fairness, it has been widely welcomed by all political parties. The added beauty of the move is that it does not cost the Exchequer any money; indeed, it will add to the country’s coffers as the amounts paid through drawdown will exceed the amount paid on an annuity in the early years. Admittedly, however, that will smooth out over time.

The Budget is also good news for the nation’s economy in terms of savings in general. That point has been made by my noble friends Lord Flight and Lord Northbrook, who are not in the Chamber at present, in relation to ISAs and the increase of the limit. That increase is also very welcome. Successive Governments have for too long neglected savers. Fairly recently the World Economic Forum pointed out that that needs to be addressed, and I think that it now has been. Another factor, which has not been mentioned overmuch, is abolition of the 10p rate for lower-income savers. Again, it is sensible to help people on lower incomes with their savings income. In addition there is the pensioners bond, which has certainly been mentioned. These boosts are very welcome. One of the key aspects of the Budget is what we are doing for savers.

In addition to savers, this is a good Budget for business. Business means prosperity and jobs. Increasing the tax breaks on business investment by business, doubling it to £500,000 annually, provides a significant boost to investment, and the Chancellor has also extended the life of the scheme. Cutting energy costs for business will also boost enterprise.

In this debate there has rightly been much talk about needing to rebalance the economy in regional terms. In that context, it is worth noting that half of the businesses that benefit most from the carbon price floor are in the north of England, and a further third are in Scotland and Wales. That is good news. We should also welcome the extension of the life of the business rate relief and enhanced capital allowances in enterprise zones. I declare my interest as chairman of an enterprise zone in Wales. This, too, is a welcome incentive to business.

It is a good Budget for savers and for business, and it is also a good Budget for export. We have seen in this Budget a doubling of the amount that the Government are making available, to £3 billion, and also a cut in the interest rate for exporters. Surely that is good news, too.

In relation to housing, there were one or two comments suggesting that the Help to Buy scheme was something that we should be ashamed of, but I do not believe so at all. For too long, successive Governments in this country have not concentrated on housing. We should welcome not just the Help to Buy scheme extension but the help that is now being provided for the development of Ebbsfleet. The greatest concentration and problem is clearly in the south-east and so Ebbsfleet, the help for Barkingside and in the redevelopment of Brent Cross are measures that should be welcomed rather than otherwise. So in many respects, this Budget will help the economy. It is helping savers, business and exporters.

Perhaps I might also mention some of the micro aspects of the Budget, which are in danger of being overlooked but which provide assistance to our tourist industry, as well as to our well-being as a country. There is help for the 800th anniversary of the Magna Carta, and for cathedrals and theatres. These aspects should not be neglected as they also provide a boost for our tourism industry, our country and our economy.

I believe this is a good Budget in many respects. Its legacy will be for savers but it continues on the right course for the country: of deficit reduction and bearing down on the debt. In concluding, I add my support, as a relatively new boy here, for this House having a greater role in relation to the Budget. That point seems to have been very well made and I hope that we can pursue it in the future because we have a definite and positive role here.

16:01

[Lord Skidelsky (CB)]

My Lords, we are invited to discuss the effects of the Budget on the economy. Let me state my views right at the outset. I believe that there are lots of small, good things in the Budget, which have been pointed out, but also quite a number of sleights of hand, which have also been pointed out. However, the effects of the Budget and of the Chancellor’s budgetary strategy in general on the economy have been largely negative. I believe that the austerity policy has slowed down the recovery of the economy and made it more fragile. It has also slowed down the reduction of the deficit, which I think we all want to see.

Many noble Lords have been discussing the challenges of the future and of the new normal. All those are very important. The noble Lord, Lord Desai, even said that we were living in a post-Keynesian age. But as long as we have spare capacity in the economy we are living in a Keynesian age. I, too, have my views about the future and I hope to be able to expound them in an interesting way in future debates. However, at the moment, we are not fully recovered and the recovery is not fully secure. I want to concentrate on the effects of budgetary strategy on the present situation.

One obvious thing to say from the start is that the Chancellor has failed to meet his deficit reduction targets. That is very obvious but it is not much mentioned any longer. He inherited a prospective deficit of £149 billion in 2010-11, equivalent to 10% of GDP. He promised to get this down to £20 billion or 1% of GDP—or zero, depending on your definitions—by 2015-16, mainly in spending cuts. By this fiscal year, the deficit should have been down to £60 billion. In fact it is projected to be £108 billion, or 6% of GDP. Now the Chancellor says he must cut spending by another £25 billion, which would be £62 billion in total over four years, to meet his target. The key question is: why did he fail on this crucial test—the test on which he staked his credibility in 2010?

In order to answer that, we have to start by distinguishing between fiscal tightening and deficit reduction. They are not the same thing. Tightening is raising taxes and cutting spending. The effect of these measures on the deficit depends on what happens to the Government’s revenue—the other side of the balance sheet—and that depends on what happens to the economy. Here we come to the key explanation of why the Government have failed to hit their targets. The Chancellor has done the tightening all right but the economy has not grown as expected. George Osborne expected the economy to grow by 2.3% in 2011, by 2.8% in 2012 and by 2.9% this year. In fact it grew by 0.9% in 2011, 0.3% in 2012 and 1.8% in 2013. The economy started collapsing almost from the moment George Osborne took office and because it did not grow according to plan the Chancellor has been forced to announce further tightening.

Was this just bad luck? I do not think so. The official line is—it is always is when policies do not work out as expected—that sound measures were blown off course by unexpected events; these being the Greek sovereign debt crisis, European stagnation and so on. Then the argument goes that to have abandoned austerity at that point would have been fatal. The markets would have done a bear on sterling and things would have been a lot worse. By sticking to his tightening, the Chancellor was able to continue to borrow cheaply. In his Budget speech George Osborne claimed that debt interest payments would have been £42 billion more had he not stuck to the policy.

I obviously do not have time in the two or three minutes left to say why I think that whole set of arguments is fallacious. But let me just say that the Chancellor’s policy was based on the wrong theory of the relationship between the Budget and the economy. It is as simple as that. He believed that if the Government cut their spending, the private sector would take up the slack. That is simply untrue when we are in a slump. If the private sector is tightening its belt—either reducing its debt or increasing saving—the last thing the Government need to do is to be tightening their own belt at the same time for the obvious reason that the two sets of tightening will reduce total spending in the economy. If there is a reduction in total spending in the economy there will be reductions in investment, output and employment. The Government cut their spending but so did firms and households. No wonder the economy went into a nosedive. I do not think it takes rocket science to work out that that would happen. The TUC just the other day suggested that we have an investment gap of £50 billion as a result of these policies.

What about the present upturn? Surely that is a vindication of austerity. It may be three years late—later than he thought it would happen—but it has still happened. I do not think that is as a result of austerity. It is true that employment fell less than output between 2011 and 2013 and the Government have congratulated themselves on the number of new private sector jobs that have been created—1.7 million on the present count as the Minister said in his introduction. However, the headline unemployment figure—the claimant count—has ceased to be a reliable measure of the amount of slack in the economy. In the past two years the private sector has created a large number of bad jobs—part-time, minimum-wage and zero-hour contract jobs—to replace the better jobs that have been lost. That is why productivity has fallen. Any job is better than no job, but we need a measure of underemployment and economists have been thinking of different sets of measures. On those measures, underemployment in the United Kingdom amounts to about 10% of the workforce and not 7%.

The economy’s growth in the past six to nine months has been in spite of the Chancellor’s Budgets. The reason for the resumption of growth is twofold: first, external conditions have been kinder, and secondly, there has been an aggressive policy of monetary easing. Since 2011, the Bank of England has injected £175 billion of new money into the economy. That, much more than fiscal austerity, has kept down the interest on government debt. It has also produced a boom in asset prices—homes and stock exchange securities—which has contributed to the feel-good factor and to an increase in confidence. By the same token, quantitative easing has produced a lop-sided and vulnerable recovery. Not only does it threaten new financial crashes down the line, but it has increased inequality. As John Kay of the Financial Times put it last year:

“The main effect of QE is to boost asset prices”,

and,

“The one certain outcome … is that those with assets benefit relative to those without”.

I agree with that. To put it crudely, a recovery based on an asset boom will be weaker and less resilient, to use the Chancellor’s favourite word. I prefer it to “sustainable”, which has been hugely overused. It will be weaker and less resilient than a recovery based on a widely distributed upsurge of purchasing power.

I do not believe that the Chancellor has been much influenced by economic arguments; certainly, he has not been influenced by mine. His policy has, I think, been mainly driven by the ideological belief that state spending is inherently wasteful, that it destroys incentives to private wealth creation, and therefore should be cut to a minimum. The ballooning of the deficit in the slump simply gave him the opportunity to act on these beliefs. In doing so, he has prolonged the slump, caused unnecessary hardship to millions and seriously damaged the growth potential of the economy.

16:12

[Lord James of Blackheath (Con)]

My Lords, I shall deal with two separate points and will make a separate declaration of interest on each. First, I was for a significant period early in my career a member of Lloyds Bank. In that context, I want to address one point which arises in the Chancellor’s address on the Budget. It is probably the only sentence in the whole thing that does not deal with the Budget. He said:

“Another abuse has been the manipulation of the LIBOR rate”.—[Official Report, Commons, 19/3/14; col. 786.]

In that context, I question the words “abuse” and “manipulation” as being too easily accepted without challenge.

When I joined Lloyds in 1959, I was sent to the training course at Ramsay Lodge in Scotland—it was part of the castle complex—which was owned by the Bank of Scotland and run by Lloyds. It was a wonderful training course, with the slight complication that it was in a building immediately adjacent to a residence for trainee nurses. There were 80 of them and 40 of us. It was a bit of an unfair match. There was a croquet lawn between the two buildings. In the course of 12 weeks, I do not think a single croquet match was played on it but by the end not a single blade of grass was left because of the clatter of boots.

Every week, we got a visit from a different director of Lloyds Bank who lectured us on a specific subject. In week 2, in September 1959, we got a lecture from a director on the subject of LIBOR. None of us had ever heard of LIBOR. I took proper lecture notes, and I still have them. I have been looking at them, and there is a very interesting distinction in them. When the director explained to us what LIBOR stood for, it was not what it was said to be when the scandal erupted three or four years ago. Then we were told it was the “London interbank offered rate”. On the training course, we were told that it was the “London interbank overnight rate”, and the director made no bones about the fact that the word “overnight” implied that it was take it or leave it, no option whatever. He freely admitted that it was the most profitable thing in the bank and made a fortune for everybody. If the word has been altered from “overnight” to “offered”, the latter would surely be manna from heaven to any lawyers defending it, because it would mean that you have a choice. If we have moved into the electronic age as regards the movement of capital, you can make that choice and manipulate it very much more easily and swiftly.

Can the Minister talk to the London clearing bankers’ association—and can the Treasury look at this—and find out when that word changed? What principles and rules were laid down for its application at that time? It may be that we have challenged and accused the banks because of the way that they operated under the old system, and that it has been replaced, and this is damaging our banking industry and the scale of fines and punishments that are now being imposed. That issue should be addressed, and I ask the Minister to look at it. The Bank of England may have some clues, and Lloyds Bank itself may have some, but there has been a significant change in that wording, which needs to be looked at.

Secondly, there is a very interesting difference between the attitudes of the two sides of this House as shown in the course of this debate, which puts me in a very interesting position. I want to declare that my father was a fully paid-up member of the British Communist Party. I do not know how many descendants of members of the British Communist Party sit on these Benches over here, but he would be horrified to see where I am now standing. He had two great hates in this life: the Conservatives and the Church of England. I think that he thought they were both the same; he never drew a distinction. He had a lifelong desire to see the destruction of both, and there were two great bad moments of my life as a young man. The first was when I joined the Young Conservatives and he immediately called me a class traitor who should be thrown out of the house. I said, “I only joined it because they’ve got the best-looking girls”. He replied “Yes—but they all stink. All Conservative women stink”. “Why, father?”. “Because they have such terrible ideas in their brains, and it rots their insides and they stink.” I said, “I’ll go and do some market research and will let you know”, and I never found any evidence to support it.

My father regarded the Conservatives as the enemy, but attributed the extreme poverty in which he had grown up to the Church of England—that was the cause of his problem with it. His mother had been the district nurse—the midwife on a bike, although nothing like the television programme—in Hammersmith. His father had died the year after he was born, and she had managed somehow to keep three children alive and fed. However, she then got a dreadful infection of her teeth, all of which had to be extracted, but could not afford the dentist’s fee. Therefore the church got the dentist who was part of the congregation to agree to do it free, but nobody would pay the seven shillings and sixpence for the anaesthetic, so she died in the chair as a result of the whole process being done in one night. The church then had three orphans to deal with, whom it initially put into a Church of England orphanage in south London. Two of the children were then sent across to Canada as boat children, where they were sold for $50 each to the first family who would take them; my father never saw them again. Meanwhile, he met my mother, who was in similarly unfortunate circumstances, in the orphanage in south London. She was 12 and he was 14, and they married 10 years later.

My father used to go on about how I had advanced to the point where I had been able to go to private school and see the comparisons and all the rest, but I should always remember that I was a working-class boy—as I always have. However, he would then talk about the socialists of the day and say, “They’re not real socialists—they’re chocolate box socialists”. Today we have seen the chocolate box socialist position on this Budget on the other side of the House. My father would have described it as “chocolate box”, first, because they have all joined because they have opinions which mean that they want to be identified with the pretty picture on the box, and secondly, the chocolates inside are soft-centred and far too bitter to swallow. That would be his reaction, and that is my reaction to the whole presentation we have had across the House. If my father had then asked me what I thought I was associated with on this side, I would say that the contrast is that this organisation has understood this political difference: you cannot spend money that you do not have, and you have to make the money first to spend it. That is the line we have taken, and it has been consistent here today.

However, my father would now be sitting on a cloud, laughing his head off and looking at me, saying, “Look, lad, I used to tell you it was clogs to clogs in three generations but you’ve done it in two, because your posh friends have just completely destroyed your entire position with your pensions”. I have five pensions, but then I was chairman of 11 public companies in 21 years, and so I had to put them together bit by bit wherever I went. I think that my pension is ruined by the Budget last week, and I would like to hear a reaction from the Minister on that. My position is that if you stop the flow of funds to the annuity companies and simultaneously withdraw funds from them, you will create a double whammy that will drive them out of business in very quick time. In that case, I expect very shortly to get a letter saying, “Sorry, we can’t pay you any pension this month, as we’ve no money left”. How long is it before that is going to happen, and what will the Treasury do to mount an oversight and monitoring process to ensure the continued health of the annuity companies?

My nightmare would be to see Labour come back into power and decide that it had to correct this by nationalising the annuity companies. The Labour Party cannot say that it would not do it, as it has form on this—to put it in criminal terms. It has had a look at taking money out of pension schemes; it has form, and it would do it if it had a chance, so it should not say that it would not do it, because it would. So we need to know how we would protect the annuity companies against that ultimate calamity.

I think that my father is having a very good laugh and saying, “I told you so—it serves you right for being on the wrong side of the House”. But I am absolutely in the right place and, from what I have heard, you guys are in the right place, too, and thank you very much.

16:21

[Lord McKenzie of Luton (Lab)]

My Lords, I think it is clear that this Budget had more than an eye on next year’s general election. Aspects of it are, of course, to be welcomed. There is the U-turn on the annual investment allowance, now to be doubled, up to the election at least, after originally being cut, and the doubling of export finance—albeit that the Government are to miss their export targets and are struggling to rebalance the economy. There is the news that the economy is growing again after three damaging years of flatlining, albeit with no recovery for millions of families who are experiencing a fall in living standards. There is good news for savers also, if you are one, but the prospect of being able to tuck away £15,000 per year into a NISA or to have the first £5,000 of savings income subject to a nil rate of tax will seem but a distant dream to those who the Centre for Social Justice refer to in its report entitled Maxed Out. I refer to those millions of people in the UK who are struggling under the weight of their personal debt, with squeezed household budgets, zero hours employment contracts and a rising cost of living. The budget does nothing for them—nor has it protected public services, which provide vital support for the most vulnerable in our society.

The noble Lord, Lord Holmes of Richmond, advised us when we were discussing these matters to reflect on the fact that the Budget was about real people’s lives also. I very much agree. I had brought to my attention just yesterday—and I pass it on to the Minister—the example of Mapledown School in Barnet, a secondary school for disabled children that provides vital care for 65 pupils, so as well as educating the children it also supports their carers. Because of cuts to the council, passed on by the council, the school has had a reduction of funding of some 25%, with heavy restrictions on the services that it can provide. So in winding up, perhaps the Minister could give that school some sort of message about when it is expected that it might be able to share in the benefits of recovery.

I propose to concentrate the rest of my contribution on the announcement on scrapping compulsory annuitisation—or, more accurately, the compulsion to take an income by way of annuitisation, or drawdown, from a DC scheme. It is, in the words of the IoD,

“the most radical reform to the pensions savings architecture in decades”.

That is possibly true and, given its ramifications, it is all the more to be regretted that this announcement came with no prior consultation, and with a paucity of underpinning analysis. Then there are major issues, such as the impact on the gilts and bond markets and government investment—a point stressed by my noble friend Lord Haskel. Also, how much of it can or should work for private sector DB schemes, what does the guaranteed guidance amount to and how can it be delivered? What does it mean for the future of the annuities market—a point just raised by the noble Lord, Lord James? Will it fuel a buy-to-let market? These are left as open questions for changes which are due to start in a year, and transitional changes which are due within days.

In his rush to get a favourable headline, the Chancellor forgot something else. The Government have eschewed the opportunity of building a consensus for this policy in advance. They ignore all the efforts which have underpinned so much of pensions policy development in recent decades, from the Pensions Commission through auto-enrolment to the single-tier pension. The policy is predicated on the importance of consumers having choice—choice, that is, in the decumulation of their pension pots. The mantra is that it is their money and we should trust them to make the right decisions about how it is deployed. Perhaps begging the question as to whose money it is, given that DC schemes get a contribution from the taxpayer on original investment and again on accumulation, we can agree with the importance of choice, provided individuals have the opportunity for an informed choice. However, we recognise that informed choice can be difficult given the complexity of the pensions marketplace.

The NAPF saw the Budget announcement as perplexing in its juxtaposition to auto-enrolment, which was designed to counter the fact that often people are ill informed and make poor decisions about planning for old age. It says:

“On the one hand the idea that savers can take their pension as a lump sum, albeit subject to tax, may be an incentive to save. However, this choice brings with it a significant burden of responsibility for individuals to understand the choices they are making. We know this is not always the case as people often underestimate how long they will live and overestimate how long their pot will last”.

The prospect that those in retirement will take more of their pot earlier produces considerable extra resource for the Treasury. There may no longer be the 55% exit tax charge, but there are still substantial revenue gains for the Treasury, reaching £1.2 billion in 2018-19, and some £3 billion overall by the end of that year. What are the estimated withdrawals from DC pots which generate these numbers, and what is the assumption about how they are invested? The Treasury is also, ironically, taking the benefit of some £850 million from the sale of class 3A national insurance contributions—effectively an annuity product—the cost of which will mean increased state pension payouts beyond the forecast period.

The Pensions Minister—perhaps we should call him Mr Lamborghini—has apparently declared himself relaxed about people blowing their pension pots and believes that the single-tier pension will preclude them falling back on the state for support. This analysis ignores the extent to which means-tested benefits for pensioners endure through the single-tier pension arrangements, and there will be many still invested in their DC scheme who have retired, or will do so, before the single-tier pension comes on stream.

We know that the annuities market is not currently serving consumers well, and the Financial Conduct Authority considers that people are getting a bad deal. Annuity rates have been in decline and the fundamental reasons for this are clear—people are living longer and we have been in an extended period of rock-bottom interest rates. However, matters are made worse by too few people shopping around for the best deal and suggestions that the insurance company providers are extracting super-profits from their annuity business. Recent figures show that someone with a modest pension pot of £24,000 could increase their annual income by 25% just by shopping around to get the best deal. The Government have not helped by their refusal to introduce a cap on charges.

However, the position is not all gloom and doom. Annuity rates for 2013 rose because of rising gilt yields and a more competitive pricing environment—the latter driven by the focus on transparency by the FCA and the ABI and the unwinding of some of the cautious pricing from gender-neutral changes. There is an inevitability about some of the factors which have driven rates down—longevity being one—but not all.

Some of the market failures can and must be fixed. However, in acknowledging the potential benefits of more choice, we must not lose sight of the important role that annuities play and can continue to play. They are the only financial product guaranteed to produce an income for life, with the investment risk and the longevity risk remaining with the provider. They also pool risk, which is reflected in the pricing. Having individual choice over individual pension pots runs counter to all this. Certainly one of the big questions that arises from these proposals is what the annuity market will look like in the future. Evidence from other countries suggests that many will not annuitise. What is the Government’s assessment of how this is likely to affect the market, particularly on pricing?

We need to better understand precisely what is to be provided to consumers under the guaranteed guidance. Perhaps the Minister can confirm that we are talking here not about advice, but guidance; there is a difference between the two—guidance is a weaker concept. There are substantial issues about ensuring the robustness and independence of what is to be offered, and there is a wider issue of whether a one-off, face-to-face session at the point of retirement—what happens to those who have retired already or those who retire in stages?— will be sufficient to fully inform consumers and equip them to make effective choices for the rest of their retirement. Frankly, I doubt it.

This all gives the impression of having been put together somewhat in a rush, without due analysis and with big questions remaining unanswered, and perhaps with a hint that under the guise of promoting choice the Government are looking to rake in another £3 billion in tax from pensioners. That is no way in which to develop a sound, long-term pensions policy.

16:31

[Baroness Neville-Rolfe (Con)]

My Lords, I am glad to be following the noble Lord, Lord McKenzie of Luton, and to be able to express a contrary view.

When the coalition Government took office in 2010, the country was in desperate need of a credible plan to eliminate the deficit and to manage the national debt. They adopted such a plan knowing that it would take several years and that there would be a great deal of criticism along the way. The Government were faced with an Opposition consistently critical and negative, whose alternative appeared to consist of inviting us to spend our way out of debt.

Given the great reliance of the UK economy on banking—greater than that of any other major economy—the turnaround was always going to be slow and painful. The welcome return to sustainable economic growth—I like the word “sustainable”, unlike the noble Lord, Lord Skidelsky—has vindicated the Government’s approach. Even so, there is a long way to go until the deficit reaches acceptable levels, as the noble Lord, Lord Desai, explained so clearly. The present path—call it austerity if you will—must be sustained. If anything, deficit reduction should be speeded up.

The deficit and the national debt, and the return to growth, are clearly the most important economic matters before us as a country, and have been well aired today. However, I want to concentrate on some supply-side aspects of the Budget that are essential to future prosperity. First, we should have fewer Budgets and Financial Statements. These provide opportunities to tinker, regulate and add complexity to the vast financial rulebook, which is unscrutinised by this House, as other noble Lords have said, but consume ever more resources in the public and private sectors. However, with the supply side in mind, I commend the Government for the sweeping reforms of our pension system in last week’s Budget. By reducing the constraints on individual choice, the reforms will revolutionise the way in which Britons save for retirement.

There is a risk that a few will blow their small pensions irresponsibly. We must, of course, allow for this in the cost-benefit projections and work through the details. However, we should trust people as we trusted them to buy their council houses—also substantial assets. The change to the rules on annuities, which many will still opt to go for, is the kind of radical supply-side reform that transforms people’s lives. Transformation was also the word used by my noble friend Lord Bourne of Aberystwyth. Such reforms have been absent for too long.

I was impressed by this year’s Red Book—a cornucopia of interesting information, simply written, and also, as we have heard, favourite bedside reading for my noble friend Lord Northbrook. I was struck by what it shows about the path of future taxation: national insurance, up from £107 billion this year to £138 billion in 2018-19; capital gains tax, more than doubling from £3.9 billion to £9 billion; and business taxes, close to my heart as a retired retailer, up from £26.6 billion to £32.3 billion, despite attempts to slow their growth. What a pleasure, I should perhaps say, to hear from the right reverend Prelate the Bishop of Chester about the social institutions that helped Sir Terry Leahy, also of Tesco, to make his way up from working-class Liverpool.

As a member of the business community, I have always been concerned about our standing in the world and have championed UK competitiveness. We have been lucky to have been served so well by Trade Ministers on both sides of this House, most recently by my noble friends Lord Green of Hurstpierpoint and Lord Livingston of Parkhead. Therefore, I welcome the improvements to export finance, to export support and, indeed, to the cost of long-haul flights announced in the Budget. Perhaps the Minister can let us have more details on the costs and the timing of these initiatives when he responds to my noble friend Lord Sheikh.

Those are of course only some of the ways in which government can help our exporters. Perhaps even more important than finance or trade missions is the support provided by our embassies on local political and administrative issues, which can, in my experience, be the difference between a successful and a very troublesome investment. More generally, the drivers of competitiveness and hence success, including export success, are: low taxes, where we have done so well on corporation tax—the Chancellor’s best policy for business, although more can be done, as others have said; the exchange rate and energy costs, the terms of trade, well explained by my noble friend Lord Razzall; and encouraging enterprise, education and infrastructure investment.

On enterprise, I hope that the doubling of the annual investment allowance will, by encouraging capital spending, improve productivity—an issue about which many noble Lords have expressed original and interesting views. However, government action is less important to enterprise and small business than the overall climate. Business will succeed and improve productivity only if it has the confidence to take risks and to invest. Our accelerating growth and the rise in employment to a record 30.4 million by the end of this year will certainly help. We have heard that for every job lost in the public sector over the past three years, we have created four in the private sector—I would add that many of these new jobs are in small firms—which in my view is better for long-term prosperity.

However, in business we also have to believe that success will be sustained and that we can get ahead in the longer term. This depends primarily on education. The Secretary of State is doing many good things. Free schools are rightly identified in the Red Book as a growth driver and now number 174. We just need more of them—even more “vigour”, in the words of my noble friend Lord Horam. I also welcome the 50 university technical colleges, fulfilling the dream of my noble friend Lord Baker of Dorking, and the 46 studio schools.

However, let us learn from Germany in this area too. Trades are learnt from sitting alongside experienced master craftsmen and engineers, and employers have a big role in vocational course design and standards. Therefore, there is more to do but I was delighted to see that apprenticeship starts have reached 1.6 million in this Parliament. These are helping many young people into the skilled jobs that we need in a productive modern economy, in manufacturing, ICT and services.

The Budget also helps long-term competitiveness by finding resources for infrastructure investment—not only the housing projects already mentioned, but the Mersey Gateway Bridge, the improvement to the overcrowded M4 in Wales, the A1 north of Newcastle, and continued rail improvement in our ever-expanding and congested capital, building on the miracle of Crossrail.

I end on a final theme, which is how we simplify what the public sector does so that we waste less money, make fewer mistakes and make it easier to do business. I was glad to hear of the Prime Minister’s ambition to see us ranking in the top five countries in the world in which to do business, and would like to refer to the World Bank Group data on this, kindly provided by the Library. Singapore, Hong Kong, New Zealand, the United States and Denmark top the chart at present. In the UK we already do well in the provision of credit and protection of investors. However, it is depressing to see that we score badly in the time that it takes to enforce contracts, register property, get construction permits or start a business, and even in the time it takes to pay taxes.

The proposed simplification of the tax system, though not new, is important. As someone who has campaigned for the politically unattractive combination of income tax and NICs, I am glad to see a small advance: allowing the self-employed to pay class 2 NICs through self-assessment.

How can we build a coalition for a simpler, less bureaucratic and less costly Britain? My vision is for a rule book that is half the size of what we have at present, with half the number of regulators, half the number of quangos and half the number of tsars as we shut things down as well as set up important new things.

We also need a new culture of good implementation that prevents the expensive crises that we see everywhere, from Stafford to the west coast main line, and the new regulation that often follows. Reliable delivery is one of the best things that the best in the private sector can teach the public sector.

I welcome the progress that the Minister has described but we need to keep our nerve, stay on the stony road and gradually bring our plans to fruition.

16:41

[Lord Davies of Oldham (Lab)]

My Lords, that was an excellent speech. We are destined to stay on the stony road, according to government plans. It was an excellent speech in a debate in which there have been many excellent speeches on both sides of the House. Inevitably, I took much greater solace from those on my side than from the government side, but nevertheless the Minister introduced the debate very competently, as we would expect, and to all who have contributed I pay due tribute as to the quality of the debate. In the wind-up it will be appreciated that mentioning all 30 contributions would be above and beyond the timescale on which any of us operates.

Let us get this absolutely straight about the Budget. We are engaged in the American experience. This is a year-long election campaign that we are starting. The Americans, of course, extend that to two years, or more. They have almost continuous election campaigns but we have the full-blown one year, or a little longer, election campaign because we were ridiculous enough to agree to establishing a fixed-term Parliament under the auspices of the coalition. It means, of course, that the Queen’s Speech will be cobbled together on the lowest common denominator between the two parties, which want to differentiate themselves before the election. A few dusty Bills that have been locked away in departmental cabinets for so long can now be brought out to keep Parliament vaguely occupied while the MPs do what they always do. They will go back to their constituencies as often and as much as they can. I have never met a Member of Parliament, male or female, who was not absolutely assured that when it came to winning votes the best place they could be was in their constituency.

That is what we are facing and that is what the Budget is about. It is a pre-election Budget. The Chancellor is setting out to shore up his core vote. That is why the noble Lord, Lord Higgins, reflecting on his past as a Member of Parliament for Worthing, emphasised that there would be much joy in Worthing. I am not at all surprised. I reckon that there will be much joy in most of the constituencies that return a Conservative majority of 20,000 or more. Of course, we expect the Chancellor to take some cognisance of the needs of the nation, rather than the needs of those he seeks to shore up against what he probably regards as a somewhat unfair UKIP threat.

The noble Lord, Lord Palumbo, expressed the view that we should begin to pursue the objective of a new politics. However, I would not advance that argument in a pre-election year. There is no way in which we can avoid the circumstances in which a polarisation of debate will take place over the coming year. The noble Lord will have to bide his time and try to win support for his arguments later.

This Budget is highly political. The most striking thing about it was how political the Chancellor was in springing pensions reform upon the nation. As the noble Lord, Lord Stoneham, identified and my noble friend Lord McKenzie emphasised, pension reform in this country has been built on the basis of the parties reaching some modicum of agreement. Of course it has. Pensions have to be sustained over a considerable period of time and are fundamental to the welfare of our fellow citizens. However, this pension reform is not a product of consensus. It is true that my party had indicated growing anxieties reflecting the public mood about the way in which annuities worked and that reform was needed, but this reform was brought in in one fell swoop as part of a carefully guarded government secret purely for electoral and political considerations.

It is all the worse for that because the Chancellor and others will have to wrestle over this coming year with the issues identified by my noble friends. These issues include: how adequate independent advice will be offered to so many people; how we will deal with the situation where some people cash in their pots and then, potentially, subsequently fall back on society; and how we deal with the fact that there will not be a collective response to the development of pensions. We are all at different levels of risk and chance elements as far as the grim reaper is concerned, and that is why the concept of insurance is so important. However, the Government are in danger of throwing people on to their own resources and takings risks, and that is why this reform should never have been introduced in this way.

The second issue on which I wish the Minister and the Government to respond relates to the point made by my noble friend about housing inflation, low credit terms and easy credit being the basis of this recovery. My noble friend Lord Hollick explained that it was exactly these factors that helped to exacerbate the collapse and the crisis that we all endured. How can the Government pretend that they are on the high road to economic recovery when it is based upon the same factors that brought disaster in the past? I hope the Minister will address that point because my noble friend Lord Hollick was emphatic that it should be answered.

There are taxation changes in the Budget which, on the whole, are generally regarded as neutral—of course they are. This is because many of them are lost upon anyone who cannot take a joke such as, “Please have a free pint of beer on the Chancellor after you have consumed 300 prior to that”, or something similar on the reform of bingo. These are the classic budgetary tactics which are adopted in a pre-election year. We got them in pretty full measure, if nothing else.

What my noble friend Lord Haskel sought to emphasise is that the Government are ignoring the cause of difficulties in other countries. They always identify the economic problems of this country as if they happen in isolation—until they begin to tackle them. They have to take on board the fact that we are in a worse position in terms of the length of our crisis than is any other state except Italy. We are boasting about these marginally increased rates of growth after several years when there was no growth at all, and we are ignoring the fact that the United States, for example, is operating on a growth rate at the present time of 5%. The Government had better wise up and realise that they have something to learn from other nations which have tackled these issues differently. They have pursued entirely different strategies, but the Government purport to suggest that their approach, that of austerity, is the only one.

The noble Lord, Lord Low, accurately and eloquently defined how austerity is biting and the significance of that, while the noble Lord, Lord Skidelsky, launched a bit of an Exocet at the Government on the basis of the strategy they are pursuing by explaining just where they have got things wrong.

The Chancellor has got things wrong. He made the fundamental claim that the deficit would be removed by 2015, the year of the next general election. Now he is saying that it is going to take a little longer, deeply into the next Parliament, but not too deep. Well, that looks like failure if it is giving us a promise of the adoption of the Government’s strategy. The Chancellor has also indicated that the recovery would see borrowing reduced in such a way that he will set an example in how he has conducted the economy. But the Government have borrowed more in five years than the previous Labour Government borrowed in 13 years. He has also emphasised that the crisis has been a difficult one, but that he will tackle it in such a way that the country can rest assured under his governance. What has that meant? It has meant austerity of such a kind—I do not think that this has been given a sufficient airing in this debate—that wage earners have seen an average reduction of £1,600 a year in their resources as a result.

As far as the Government are concerned, it is not possible to do anything about the recession except stimulate the demand for housing. We are already finding it very difficult to meet that demand and we all know about the shortage of housing in this country, particularly in the London area. What are the Government doing? They are doing nothing about supply; rather, they are encouraging the development of enhanced demand through their scheme of lending support for mortgages.

The Government have also done absolutely nothing for young people. We all know that there are differences between the needs of the different generations, but what is quite clear is that although pensioners have not seen an enhancement of their position in the way they might have hoped—they are now to get this particular bonus from the Government—it is our young people who are really bearing the weight of the recession. It is our young people who cannot get jobs. In case the House thinks that I am talking about people who cannot get jobs because they are incompetent, what is the developing crisis in the universities about if it is not that people are not repaying their fees? Why are they not? Because they are not earning enough money—£21,000—to be eligible to have to repay their fees. It is causing a crisis in university finance and young people are paying the price.

The Government are also of course taking advantage of those who cannot fight back so easily—350,000 people visit food banks regularly, which is an absolute indictment of the society in which we live. I accept the points the right reverend Prelates made about their concern with the distribution of wealth and the very important point which the right reverend Prelate the Bishop of Sheffield made about seeing that support and economic development occur widely across the country and not, as at present, remain concentrated almost overwhelmingly in the south-east, with the disastrous consequences we have seen for house prices in that region.

In case it is thought that I have been critical of the Government but not faced up to the fact that painful measures need to be taken, of course we recognise that. I emphasise that the first proposal for a welfare cap was made by my leader, Ed Miliband, in June 2013. We were aware of course that the issue of escalating welfare payments had to be tackled—but that does not mean that we can indulge in a Budget which is purely about electioneering and consolidating the Tory core vote.

16:57

[Lord Deighton]

Along with the noble Lord, Lord Davies, I pay tribute to the very stimulating contributions from right around the House. The past five hours have simply flashed by. Like the noble Lord, Lord Davies, I hope contributors will excuse me if I do not refer to them all individually. I think the most helpful way to sum up is for me to try to break down the discussion into the five or six key areas and go through what I think were the pertinent issues and the points that I should address.

I begin with pensions and savings because, as my noble friend Lord Bourne said, this was a transformational Budget precisely because of what we were able to do in terms of the pensions revolution. With one or two exceptions here today, it has been very broadly welcomed, particularly by my noble friends Lord Wakeham, Lord Higgins and Lord Stoneham, as well as by a number of other noble Lords. I absolutely accept that the provision of expert guidance is a critical part of making this transition work. The Government have laid out a clear plan and commitment to that, which we will follow through. I was very taken by the very thorough analysis offered by the noble Lord, Lord McKenzie, of some of the potential impacts which will flow from a change this radical. He is absolutely right to bring those to our attention, and the consultation that we have started will attend to them very directly.

My noble friend Lord James referred to the risk to the annuity companies. A similar change occurred in Ireland and the health of the annuity companies was just fine. My general attitude to the financial services business is that in the same way as we have given pensioners the flexibility to respond based on their own requirements, I think we will find that pensions and insurance companies will be able to respond very flexibly to the new environment. I will certainly take away the request from my noble friend Lord Flight to have a look at the NISA tax issue with respect to the tax treatment of the surviving wife.

We have had this discussion—I think we had it last year as well; in fact, I am sure we had it last year as well—about whether our debt and deficit are really going down fast enough, or whether they have gone down at all. I thought that I was quite clear about the process we are going through, and my noble friend Lord Higgins echoed the way in which I approached it. The situation is really not that complicated. We inherited a record deficit. Until you get that deficit to zero, of course debt will continue to go up. The OBR tells us that we will be back in surplus by 2018-19. It is only at that point that the accumulated debt can begin to go down. We expect the deficit as a proportion of GDP to hit its peak in 2015-16 and then begin to come down.

It is a difficult, long-term process. There are many more cuts that need to be made in order for us to be able to accomplish that. My right honourable friend the Chancellor could not have been clearer about that. I really do not accept the suggestion of the noble Lord, Lord Skidelsky, that this is driven by some ideological rage to reduce the size of the state. It is driven simply by what I regard as an extremely sensible approach of reducing the amount of debt because debt will eventually overwhelm you and leave you with absolutely no protection against future shocks. It is true in personal finances, it is true in company finances and, while there is more flexibility in sovereign finances, ultimately you have to deal with the same issue. We were overleveraged and we have to fix it. I absolutely agree with what I think was the most popular contribution of the day, from the noble Lord, Lord Desai, that the deficit just has to be eliminated, and we have stuck to the plan to do that. My noble friend Lord Horam pointed to the fact that there are still some risks out there, whether in China or Ukraine or deflation in the eurozone. It is by no means plain sailing even if we stick to the plan.

I will talk about the recovery. The debate we had last year was about there not being a recovery. We have moved on from that. As the noble Lord, Lord Desai, said, we were discussing whether or not we were having a triple-dip. We have moved the debate on. Now the debate is about whether it is the right kind of recovery, which is a higher class of problem for us to be addressing. It is interesting that the essence of the Opposition’s position on this is the risk of, “It might look as though there are some of the components of all the mistakes we made”. If that is the best criticism that can be levied, that tells you something about the potential strategy of an alternative Government.

The Chancellor has been quite clear—and I think I was quite clear in my opening comments—that this is a recovery that has some challenges. It is a partial recovery. There are some real issues in the imbalances. I was not trying to disguise that. The Chancellor has not disguised that. Investment has not yet come back as we would have hoped, although there are some signs. That is not unusual at this stage of a recovery so we should not be surprised. Exports are not performing as well as we had hoped.

On investment, the noble Lord, Lord Kestenbaum, made the case strongly for innovation, as did the noble Lord, Lord Hunt, and my noble friend Lord Eccles. I think that there was a lot of agreement about our need to tackle the productivity question and, looking at our science and research capability, the intangibles in the economy which do not get measured in the productivity numbers quite as we would like. I take all that on board.

On the balance of the recovery, the right reverend Prelate the Bishop of Sheffield implied that all the employment growth was in London. That is not consistent with the ONS statistics, which show that it is much more broadly based than that. My noble friend Lord Holmes made an excellent point in saying how crucial the employment recovery is, because those are real jobs for real people. At the beginning of the recovery, there was perhaps a greater proportion of temporary work, but if you look at the employment improvement over the past 12 months, you see that it is fundamentally in good, solid, long-term jobs. The sector which has seen the most benefit in terms of employment growth has been professional science and technical research, so there has been a lot more substance to the employment recovery in the past 12 months.

My noble friends Lord Sheikh and Lady Neville-Rolfe talked about exports. There are a number of combinations. It is clear that we need to switch over time from the EU towards the BRICS and the MINTs. I am joining the Chancellor in two weeks’ time on a visit to Brazil, where we hope to address what my noble friend Lord Holmes pointed to as our underperformance relative to the Italians. I think that everybody welcomed the extra support for UKTI and UKEF, so that funding can be provided to exporters at the most competitive rates. We now want to support our exports in the most aggressive way rather than try to make available a facility which made us the good guys in terms of complying with OECD rules in the most gold-plated way. I am very much in favour of a much more aggressive approach.

It was inevitable in a discussion on the balance of recovery that mention should be made of house prices and the housing market. I think we all accept that we have a long-term challenge to build the supply of houses that this economy needs. We tried to attend to this challenge at this Budget as we have in previous fiscal events. The initiatives at Ebbsfleet, Barking Riverside and Brent Cross, together with the expansion of the Help to Buy equity loans scheme, which is available solely to new house purchases, should all add up to improving the pipeline by about 200,000 houses. This year, we have seen more housing starts than in any time since 2007, so a degree of normalisation is going on in terms of the recovery from the financial crisis.

On the argument that house prices have been inflated by the Help to Buy scheme, I think that the scheme has been much maligned. If you look at the data behind it, you see that 75% of the houses supported are outside London and the south-east. I do not think that anybody regards us as having anything close to a housing bubble outside London and the south-east. Appearing in front of the Treasury Select Committee this morning, the OBR described the higher inflation in London house prices simply as a function of excess demand over supply. The problem was a lack of supply of houses; it was not a bubble. I think that one defines a bubble in terms of people speculating and buying houses on the basis that prices will go up and up, but that is not what is driving house price behaviour in London.

There was a lot of discussion about infrastructure, particularly from the noble Lord, Lord Hollick, who asked whether we should have borrowed more to be able to accelerate development. From my experience over the past 15 months in trying to tackle this problem for the country, it is clear to me that you do not turn infrastructure on and off like a tap. The political debate about it mildly amuses me, because we spend all our time trying to take credit for the things that are being built on our watch whereas, of course, those are all things that other people did all the hard work on to get them to that stage by the time you are in government.

The work I am doing is really to make the next one, two or three Governments look really good by having a stable pipeline of terrific projects which will come through. Those are things such as HS2, which we are trying to do in a first-class way. That will also bring growth back to the north, which we have talked about. That is why we spent so long trying to get Hinkley Point right. There was misinformation about the Hinkley Point investment. It is of no surprise to anyone that it is currently going through state aid; something of that scale was always going to go through state aid; we accepted that. The noble Viscount, Lord Hanworth, said that this was a bad deal for the British. The basis of the deal is that the French will construct at their risk a nuclear power station, and it is their problem if they cannot build it on time and on budget. I am very happy to have signed a 35-year contract with them on the basis that they can do that, because that was a risk that I did not want our taxpayers to bear.

More broadly on energy, which both the noble Lord, Lord Hollick, and the noble Baroness, Lady Worthington, addressed, the focus on energy in the Budget was about ensuring that our manufacturing businesses remain competitive. A number of things have happened in the short term. This morning, Ofgem referred the supply side of the industry to the Competition and Markets Authority for review, which is a good thing. We need a good, evidence-based review so that we can look at the facts to decide what we need to do with the supply side of the industry. That is the right outcome given the noise around it and the shortage of facts and evidence.

On generation, I think we are in good shape in our nuclear plan. The new energy policy has enabled us to write contracts for difference which can support that investment. We have a series of wind and other renewables projects under way based on the same CFD process, and we will see at the end of the year how the new capacity market auction works to trigger gas investment. It is extremely tricky to get the right combination of securing supply, making prices affordable and decarbonising at a rate which balances all the different interests, but we have a plan and it will work.

We had a little discussion about quantitative easing. There were questions from the noble Lord, Lord Myners, and a response from my noble friends Lord Higgins and Lord Flight. I shall not give a point of view about that because I think it undermines the independence of the Monetary Policy Committee of the Bank of England, whose job that is, but I accept that exit from quantitative easing is an economic issue that will need to be addressed intelligently.

The noble Lord, Lord Davies, said that there is really nothing in the Budget for young people. I really could not disagree more. This Budget is all about shaping an economy which will provide the jobs and opportunities that our young people can succeed in. For me, it is completely the other way round.

There was a very interesting contribution from the right reverend Prelate the Bishop of Chester on social mobility. For me, there is no better measure of a successful society than whether that is working. I know that Terry Leahy was certainly a product of that; as was I. For me, education is absolutely at the heart of that, which underlies all the work that this Government are doing in that area.

There was some discussion of tax policy. There were very interesting suggestions from my noble friend Lord Wakeham about the longer-term plan to remove anomalies from some of the other taxes in place. Of course, stamp duty is a very profitable source of revenue for the Exchequer. The noble Lord, Lord Sheikh, mentioned increasing the personal allowance and bringing down tax rates. I would just point him towards the Chancellor’s comments that he is, ultimately, a believer in low taxes.

I should say as a coda that the noble Lord, Lord Northbrook, mentioned the Economic Affairs Committee’s recommendations. We will carefully consider and address those as part of the Second Reading. We decided not to address them today.

In short, and as noble Lords can tell, I believe that we have a plan that deals effectively with the extraordinary challenges and very high debt levels that we inherited from the financial crisis. As I have acknowledged and noble Lords have discussed, the economy faces many longer-term structural challenges that, crucially, we must address consistently over time. I think of our economic management as stemming and managing down the consequences of the crisis while at the same time putting in place structural reforms to position us to be a winner in the global economic race.

I thank all noble Lords for their contributions. The debate has been extremely stimulating. I apologise to those to whom I have not referred or answered in person but, as always, my door is open.

Motion agreed.

Prisoners: Indeterminate Sentences

Thursday 27th March 2014 Lords Chamber

Question for Short Debate

17:16

Asked by

[Lord Wigley]

To ask Her Majesty’s Government what steps they are taking to address the position of individuals serving indeterminate sentences on public protection grounds who have already passed their tariff.

[Lord Wigley (PC)]

My Lords, I am grateful for the opportunity to have this short debate on the plight of individuals given an indeterminate prison sentence for public protection. This form of sentence was abolished in 2012, but many remain in prison, wholly uncertain as to when they will be released.

IPP sentences were introduced by the Labour Government in the Criminal Justice Act 2003. That Act placed a duty on courts to impose an IPP sentence on offenders who were convicted of violent or sexual offences if there was a serious enough risk that the convicted person might reoffend. A minimum term, or tariff, was placed on offenders, which they had to complete before qualifying for assessment by the Parole Board. It was planned that offenders would undergo rehabilitative courses when in prison prior to their tariff date, to help them “qualify” for rehabilitation. After being released, all IPP offenders would be out on licence for life.

Within two years of the sentence coming into force in 2005, almost 3,000 people had been given an IPP sentence. The figure rose to 8,233 by 2012. Courts had little discretion in choosing whether to impose an IPP sentence, and many offenders were given such sentences after being convicted of offences such as burglary and robbery. Some of these were granted relatively short tariffs—one was set as low as 28 days. The Parole Board was given no extra resources to deal with the huge influx of IPP prisoners. Consequently, there were never enough places on relevant courses, so that the majority of those serving IPP sentences were kept in prison well past their tariff. Many are still there, with no immediate prospect of release.

In January this year, there were 5,335 prisoners serving IPPs in our prisons, two-thirds of whom had passed their tariff. As the Parole Board currently releases some 400 of these inmates every year, at the present rate it will take nine years to clear the backlog. David Blunkett, who was Home Secretary when IPPs were introduced, recently admitted that the Government had “got the implementation wrong”. They certainly had.

Parliament reacted to these difficulties through the Criminal Justice and Immigration Act 2008, which granted courts more discretion in determining whether to impose an IPP sentences on offenders, and provided that such sentences would be used only if the expected tariff was longer than two years. According to the Howard League for Penal Reform, these changes increase the average length for tariffs but reduce the rate of new IPP sentences by a third, yet the number of prisoners who were released remained very low.

In 2012 the then Justice Secretary, Kenneth Clarke, abolished the IPP sentence entirely and replaced it with a two-strikes life sentence system. In spite of a number of attempts in both Chambers to get the abolition applied retrospectively, the Government have, regrettably, steadfastly refused to do so. Today, there are still more than 3,500 offenders languishing in prison past their tariff date, serving a sentence that no longer exists on account of crimes which they may or may not commit in future. This is surely absurd. Had these individuals been convicted after December 2012 and, likewise, if they had been sentenced prior to April 2005—when Section 225 of the 2003 Act became applicable—they would not be in this situation.

The situation is particularly stark for those offenders who were initially given a short tariff. At the end of last December, there were 982 IPP offenders in our prisons who had been given tariffs of two years or less. That represented 18% of all prisoners serving IPP sentences. Had these 982 individuals been sentenced after 2008, they would not have received IPP sentences and would have been released years ago. This is grotesque and totally unfair to the prisoners and their families. A further 2,405 had tariffs of between two and four years, representing 45% of all IPP prisoners. They have no idea how many years they will remain incarcerated. It is hardly surprising that as many as 24 people on IPP sentences have committed suicide while in custody. It is easy to understand why many people deem IPPs to be “life sentences via the back door”.

As might be expected, morale within the prison estate has taken a knock. Last year, the Howard League and the Prison Governors Association published research based on interviews with 102 senior prison governors. The majority reported that IPP sentences had a negative impact on both prisoners and prison staff. Furthermore, 92% said that IPPs resulted in decreased staff job satisfaction, since these prisoners were more likely to be disruptive. Discipline problems inevitably increased, particularly among those sentenced prior to 2008 with short tariffs who see others, sentenced for similar crimes after 2008, come and go while they still languish in their cells. One prison governor said that,

“invariably they could see no chance of release as they struggled to access appropriate courses ... This led to anxiety, resentment and discipline problems”.

Far from being rehabilitated, some prisoners can become more difficult as time goes by, especially if left to feel that they have nothing to lose and nothing to aim for. Prison governors also said that the additional demands arising from IPP prisoners had a detrimental impact on courses for other prisoners. The needs of individuals serving life sentences were particularly neglected.

The Government must surely find an alternative way of addressing these prisoners’ risks. Quite apart from concerns for justice, keeping inmates incarcerated beyond their tariff is a false economy. Every prison place apparently costs some £40,000 a year, so IPPs are costing more than £200 million a year in total. Furthermore, following the judgment of the European Court of Human Rights in the James, Wells and Lee v United Kingdom case, which was in favour of the plaintiffs, it is highly likely that more individuals will take the Government to court to gain compensation. In 2012, the European Court of Human Rights unanimously determined that detaining individuals serving IPPs beyond their tariff without progressing those individuals’ rehabilitation was “arbitrary and unlawful”. The Government’s attempt to appeal the decision was rejected in February 2013.

Under the LASPO Act 2012, the Justice Secretary has the power to put an order to Parliament which would require the Parole Board to direct the release of all inmates serving IPPs, provided that certain conditions are met. The Justice Secretary has indicated that he is not minded to do this, as he argues that it is not appropriate to modify sentences which were passed by the courts. I suggest to the Justice Secretary that he is ignoring the fact that, prior to 2008, the courts felt they had little option but to impose IPPs on someone convicted of any one of 153 different offences. I am sure that many sentencers would support such a move and, besides, the Justice Secretary must accept that he was given these powers for a reason. Indeed, I suggest that the Justice Secretary is acting unreasonably in applying a blanket refusal to use discretionary powers that Parliament has specifically given him and given him for a purpose. Parliament expected the Justice Secretary to use discretion; in refusing to do so, he is surely flouting the will of Parliament.

Consideration should also be given to converting the sentences of those given a tariff of two years or less to a determinate sentence of twice their tariff, which would mean—other things being equal—that many prisoners would be released immediately. The Government must also commit to increasing the funding of the Parole Board so that it can cope with the extra demands being placed on it, as well as providing the necessary resources for rehabilitation courses.

The introduction of IPPs in 2005 was, in no small part, the action of a Government trying to show that they were tough on crime even if the sentence itself was totally disproportionate to the crime committed. Now, this Government seem to be intent on giving out the same message and, incredibly, we learnt earlier this week that the Justice Secretary has tried to limit the number of books that inmates can read. Enough is enough. The Government must put justice and common sense ahead of politics, bring an early closure to the plight of those so unreasonably detained in prison, and remove what is increasingly seen as a disgraceful blot on the good name of British justice.

17:26

[Lord Dholakia (LD)]

My Lords, I thank the noble Lord, Lord Wigley, for this debate. I also thank a number of noble Lords who have been drawing attention to the injustice suffered by IPP prisoners. These prisoners have passed their tariff expiry date but their release has been delayed, often for years after their tariff has expired, by a combination of delays. These delays include the time that prisoners spend on waiting lists before they can start offending behaviour programmes such as sex offender treatment programmes, healthy relationships programmes for domestic violence offenders, self-change and resolve programmes for violent offenders, thinking skills programmes for impulsive offenders, victim awareness programmes, and drug and alcohol rehabilitation programmes.

We welcome such programmes but the prisons’ capacity to deliver in time is questionable. The delays are unacceptable. These delays also include the time spent waiting for psychological and psychiatric assessments to assess what work or treatment prisoners need to undertake to address their mental health problems or cognitive deficits. Then there are delays in getting a transfer to another prison when a prisoner’s current establishment does not run a programme considered necessary to reduce his or her risk and waiting for parole hearings to be listed.

Until recently the Parole Board was making commendable progress in reducing the backlog of cases awaiting a parole hearing. However, the backlog is now rising again as a result of last year’s Supreme Court decision in the case of Osborn, Booth and Reilly—mentioned earlier—which has required more cases of recalled prisoners to be referred to oral hearings. The combination of all these delays means that prisoners who were given short tariffs by sentencing courts can end up spending many years in custody after the tariff period the sentencing judge considered appropriate to punish the offender for his or her crime.

There are four main reasons why the Government should take prompt action to end this indefensible state of affairs. First, the coalition Government have commendably acted to end this injustice for offenders being sentenced now and in the future. Noble Lords on all sides of the House welcome this initiative. They have done so by abolishing the IPP sentence, for which they deserve great credit.

However, it is surely illogical to recognise the need to avoid the injustice of IPP sentences for current and future offenders but to refuse to remedy the same injustice which is being suffered by IPP prisoners who are already in the system. What is the justification for this course? We have had a number of meetings with the Minister of Justice, but to date no acceptable reasons have been advanced.

The second reason is that the failure to release these prisoners on licence is storing up serious problems for the prison system. The IPP sentence has been the main contributory factor to the astonishing increase in the proportion of prisoners serving indeterminate sentences, which rose from 9% of the prison population in 1993 to 19% in 2012. This is simply unacceptable. The longer that existing IPP prisoners remain in prison, the greater the pressure of numbers in the prison system and the worse the delays in the system are likely to become.

The third reason is that there is no tenable principled objection, either legal or moral, to retrospective legislation in this situation. I am aware that the Government have argued that it is wrong to interfere with sentences which have been passed by the courts, but Governments of all persuasions have repeatedly done so over the years, for example, by altering the rules on eligibility for parole, by increasing or reducing remission, by introducing early release with electronic monitoring and in a range of other ways, so why not in the case of IPP prisoners? Retrospective legislation is objectionable when it interferes with existing sentences in a way which puts prisoners in a worse position than the sentencing court intended. However, I can see no objection to retrospective legislation which puts existing prisoners in a better position in order to avoid the anomaly of treating them worse than more recent offenders who have committed identical crimes but are now being given determinate sentences.

The fourth reason is that the necessary changes can be introduced in a way which does not unacceptably increase risk to the public, a point which is often stated by the Minister. Most offenders who would previously have received IPP sentences are now given extended sentences. These sentences include a determinate custodial term followed by an extended period of supervision. If the Government are not attracted by the idea of substituting simple determinate sentences for existing short-tariff IPP sentences, they could legislate to replace them with a form of extended sentence. This could provide for the prisoner to be released after a period equal to double the tariff followed by an extended licence period. This licence period could last for 10 years or even for an indefinite period. During the licence period, the offender could be recalled to prison if he or she breached licence conditions, reverted to drug or alcohol misuse, failed to engage with offending behaviour programmes or engaged in risky behaviour which indicated that his or her risk was increasing. If they wanted, the Government could provide for exceptions to be made. For example, IPP prisoners could be released on licence after double their tariff period, unless the Parole Board identified exceptional circumstances indicating that the offender presented a particularly high risk to the public.

For all these reasons, I hope that the Government, who have acted so courageously to prevent the injustice of IPP sentences being imposed on offenders sentenced in the future, will not close their mind to the need to end the identical injustice being undergone by IPP prisoners who are already in the system. It brings the criminal justice system into disrepute if different standards are adopted for those who can benefit now as against those who were previously sentenced and fell into the IPP category. I hope that the Minister will be more positive on this than the previous Minister.

17:34

[Lord Phillips of Worth Matravers (CB)]

My Lords, I am grateful to the noble Lord, Lord Wigley, for providing the opportunity to say a few words on this topic, which is close to my heart.

A little over six years ago, when delivering the judgment in the Court of Appeal in the appeals of Walker and James, I commented that the Secretary of State had not provided the resources needed to give IPP prisoners a fair chance to demonstrate to the Parole Board, once the time for review arrived, that they were no longer dangerous. I added that the consequence of that was that a proportion of IPP prisoners would, avoidably, be kept in prison for longer than necessary either for punishment or for the protection of the public. Since then, Parliament has repealed the provisions for the imposition of IPP sentences. However, as predicted, a significant body of prisoners remain incarcerated because they have been denied the opportunity to take the steps necessary to demonstrate that their release will not pose an unacceptable risk to the public.

There are at least three reasons why that state of affairs should not be tolerated. The first is that indefinite detention of that kind infringes Article 5.1 of the European Convention on Human Rights. That possibility was one to which we drew attention in Walker although we, and the Appellate Committee of this House, presided over by my noble and learned friend Lord Hope of Craighead, did not consider that that point had been reached in the instant case. However, as the noble Lord, Lord Wigley, pointed out, Strasbourg did not agree, holding in the case of James and two other applicants that their detention after the expiry of their tariff periods and until the provision of the appropriate rehabilitative courses was arbitrary and a breach of Article 5.1. Not all may be in sympathy with that decision, but indefinite detention for want of resources is manifestly objectionable.

The second reason why the current state of affairs should not be tolerated is that it is unjust. Defendants sentenced before the IPP regime was introduced or after its repeal, whose offending and past criminal records are not distinguishable from those sentenced to IPP, are being released from prison while the IPP prisoners remain detained. It is hard to understand why the change in penal policy that led to the abolition of the IPP sentence should not apply equally to those subjected to it.

The third reason why the current state of affairs should not be tolerated is that it is economically absurd. We pay some £40,000 per head to keep detained prisoners who will then become entitled to substantial compensation for their detention.

What, then, should be done? One can readily appreciate the objection to the wholesale release of all IPP prisoners who have served the tariff period. However, the noble and learned Lord, Lord Lloyd of Berwick, will make some balanced and principled proposals for the release of some of those prisoners, which have my support. I shall leave him to explain them to the House. There will, of course, be a risk that prisoners released will reoffend, but that is an inevitable consequence of release from custody, and one that has rightly concerned the Minister for Justice and his predecessors, not merely in the context of potentially dangerous offenders.

Three years ago Kenneth Clarke, when Justice Secretary, declared that prison was a waste of money and emphasised his intention to curb reoffending. Earlier this week Chris Grayling, the current Justice Secretary, was reported as saying that our rehabilitation system was flawed because of lack of support for those discharged from prison. That is the positive point that I wish to make.

Rehabilitation courses in prison are, of course, important. However, perhaps even more important are the steps that should be taken outside prison, in the community, to prevent young people who are at risk from entering the criminal justice system and to help those who have been discharged from prison from being sucked back into it. Rehabilitation can sometimes be provided more effectively in the community after discharge from prison than within the prison system. James was himself ultimately released on licence on the directions of the Parole Board in reliance of the fact that arrangements had been made for his accommodation in a hostel and for him to take part in rehabilitation courses in the community.

I should declare my involvement with three different organisations in the private sector whose work is relevant in this context: Endeavour Training, Youth at Risk, and the St Giles Trust. The first two aim to give young people who are vulnerable the self-respect that leads to respect for others and to integration within rather than outside society. The third, the St Giles Trust, trains ex-offenders to help others, both within and outside prison. I understand that it is government policy to rely heavily on the help of such organisations to prevent reoffending and that funding will be made available to those with a proven success rate. It is easier to demonstrate this for organisations that cater for those who have served prison sentences rather than those whose goal is to ensure that vulnerable young people do not enter the system in the first place, but I hope that the Government will bear it in mind that resources provided to both are likely to save money in the long term. I suggest that this is the lesson to be learnt from the IPP debacle.

The huge cost of keeping people in prison competes for resources with the cost of trying to keep them out of prison. The former always appears the more urgent. But whether offenders are potentially violent or not, society will be best served, and valuable resources will ultimately be saved, if we do not skimp in funding the steps that are needed to address the individual problems and inadequacies that are the root causes of the majority of offending and reoffending.

17:39

[The Lord Bishop of Lichfield]

My Lords, I am most grateful to the noble Lord, Lord Wigley, for his initiative and to the noble Lord, Lord Dholakia, and the noble and learned Lord, Lord Phillips, for their very helpful introductions.

As a general principle, it is accepted in this country that people should be sent to prison because they have been convicted of an offence rather than because of the risk that they will offend. Indeterminate tariffs are even now available for the most serious offences, in the form of life sentences, and extended sentences now provide a way to manage and contain risk in relation to those convicted of serious violent and sexual offences which do not call for a life sentence.

As we have heard, the IPP sentences were brought in with the intention of applying them to just a few hundred prisoners. Things went wrong, and, after some attempts to deal with their unintended effects, they were abolished. It is neither here nor there that this chain of events spread across successive Governments. A number of options were tried: some worked, and this one did not. Even though IPP has now been abolished, approximately 5,500 IPP prisoners remain within the system, nearly two-thirds of them past their tariff. At the current release rate of about 400 a year, it could take nine years to clear the backlog.

I spent some time recently with an intelligent and engaging Somali prisoner who has taught himself near perfect English. This man was given an 18-month tariff, but last Christmas was his ninth in prison. What an injustice, and what a huge expense. One prison officer spoke to me of,

“a game of tag between the Immigration Services and the Parole Board which has produced deadlock for years”.

Two significant factors cause delay in release when the tariff has been served: programmes and process. Up to now the dependence on a particular kind of offending behaviour programme, on cognitive behavioural principles, as an important key to reducing risk, has caused quite a lot of problems—in particular, the shortage of supply of such courses, the complicated transport system between centres, and the exclusion criteria, which mean that those without certain educational skills or attainments, and some with learning difficulties or mental health problems, cannot enrol on these courses. Effective as the programmes doubtless are, for those eligible for them, as a criterion of reduction in risk they are only a proxy for a more complex and dynamic process of learning and change. A large body of recent research on desistance from crime supports the view that reduction in risk is a much broader process, engaging the whole person and their understanding of their own life and values, than has sometimes been thought. Indeed, mainstream research has shown that faith can be a significant factor for many.

Secondly, on the process for determining how far risk has been reduced, the Parole Board is under enormous pressure, which has grown greatly following a recent judgment requiring oral hearings in many more cases than before. I welcome the sensible suggestion made by the Prison Reform Trust that the decision on a move to open prison conditions should be made by the prison governor, as already happens with those on determinate sentences, rather than the Parole Board. If that is not done, then there is a strong case for reinstating the recently removed right to legal aid for IPP prisoners in relation to their recategorisation decisions.

The challenges that remain from the IPP experiment are obviously complex. Many of these prisoners have committed crimes which have victims, and the risk of further offending is not to be taken lightly. Many other well informed suggestions have been made towards resolving these issues, but if we attend to the two elements which I have mentioned—the programmes and the process—I believe that we shall be moving in the right direction towards a just and safe resolution of these difficulties. It is surprising that a manifest injustice like this has not attracted more attention.

17:45

[Lord Lloyd of Berwick (CB)]

My Lords, I do not intend to go into the background of the IPP sentence, which was so well described by the noble Lord, Lord Wigley, to whom we are all grateful for initiating this debate, but propose to concentrate instead on a particular group of prisoners who were given a tariff of less than two years before Section 225 of the 2003 Act was amended in 2007, of whom there are 773.

I start by giving the House a breakdown of that figure. These figures were given to me by the noble Lord, Lord McNally, in a letter he wrote to me on 24 August 2013. I suggest that they ought to be on the record. Thirty-seven offenders were given tariffs of six months or less. Of these, 11 are now more than four years over tariff. The remaining 26 of that group are five years over tariff—in other words, 10 times the tariff they were originally given. One hundred and eight were given tariffs of six to 12 months. Of these, 46 are four years over tariff and 59 are five years over tariff. Two hundred and eighty were given tariffs of between 12 and 18 months; 110 are four years over tariff and 98 are five years over tariff. Three hundred and forty-eight were given tariffs of between 18 and 24 months. Of these, 124 are four years over tariff and 92 are five years over tariff. I suggest that these figures speak for themselves—something very serious has gone wrong.

There are two reasons why there are so many IPP prisoners with short or very short tariffs. In the first place, there was no minimum tariff, as there should have been. That was a grievous mistake. Secondly, until 2008, the sentence was, in effect, compulsory. Provided certain conditions were fulfilled, the judge had no discretion. Therefore, an offender who would in the normal way have been given between two and four years for a robbery, burglary or simple arson, was given an IPP sentence not because he was particularly dangerous but because, until 2008, the sentence was mandatory, as I say.

When Section 225 was repealed by the LASPO Act in 2012, very few IPP prisoners had been released, partly, of course, because courses were not available for them but also because the release test which the Parole Board had to apply was exactly the same for them as for those serving life sentences for much more serious crimes. Therefore, it is not surprising that a large backlog of these short and very short tariff prisoners had built up. Parliament was well aware of this backlog, and of the reason for it. It was clear that something had to be done. By Section 128 of LASPO, Parliament provided the solution. It gave the Secretary of State the power to modify the existing release test, with a view, obviously, to speeding up the rate of release. Section 128 paved the way for the Secretary of State to take action. He could require the Parole Board to direct release if it was satisfied that certain conditions existed. It was, or would have been, as simple as that. There is nothing in Section 128, whether expressly or by implication, that requires the new release test to be based on an assessment of risk.

The first question is: should the Secretary of State exercise the power he has been given by Parliament? The second question is: if so, what should the new test be? As to the first question, the answer is very clear. Of course he should exercise the power he has been given. There are many reasons why he should do so, but the most convincing to me is the one given by the noble Lord, Lord Wigley. If these 773 prisoners, with whom alone I am concerned, had committed exactly the same offences but after 2008, instead of before, they could not have been given an IPP sentence; they could have been given only a determinate sentence. We know what that determinate sentence would have been—namely, twice the tariff they were given. They would all have been out by 2010 at the latest. Instead, they are all still in prison.

Prisoners, like everyone else, have a strong sense of just desserts. I know of no sentence that has created such a strong sense of injustice as the IPP sentence. I know that because of the many letters that I and others have received from prisoners and their families, and from a recent meeting that I had with their families, some of whom expressed the views that I have just tried to describe.

What reason, then, has the Secretary of State given for not exercising this power? Only that it would not be appropriate to alter sentences lawfully imposed by the court. The short answer to that is that if Parliament had not thought it appropriate, it would not have enacted Section 128.

I come to the second question. What should the new release test be? I wrote to the Secretary of State on 13 March, inviting him to consider converting the sentence of these 773 prisoners into determinate sentences equal to twice their tariffs. This would be fair because they would be the sentences that we know the prisoners would have received if the IPP sentence had not been available when they were sentenced. In his reply on 19 March, the Secretary of State said:

“It would be inconceivable and indeed irresponsible for the Government to release individuals that the independent Parole Board … assess as continuing to pose risks”.

What this seems to overlook is that these very same people, if sentenced after 2008 for exactly the same offences, would necessarily have been given a determinate sentence and would have posed exactly the same risk when released before 2010 as they would have done if released today.

Finally, I suggest that so far from it being irresponsible for the Secretary of State to exercise the power he has been given, it would be irresponsible of him not to do so. Indeed, it is his duty to do so in the interests of justice, for all the reasons I have given. In doing so, he would be righting a grievous wrong that these 773 prisoners have suffered—a wrong for which the Government ought to take responsibility.

17:54

[Lord Marks of Henley-on-Thames (LD)]

My Lords, in 2008 the previous Administration recognised the difficulties that the mandatory imposition of IPPs had caused when they made the changes to increase judicial discretion and remove short-tariff sentences for sentences passed after July 2008. Yet there remain in prison many who were sentenced to IPPs before that date and whose short-tariff sentences were completed long ago, as the noble and learned Lord, Lord Lloyd, has just pointed out. He gave us the numbers and they are truly shocking. I pay tribute to the noble and learned Lord for his sustained and impressive campaigning on this issue over a long time.

In 2010, through the then Prisons Minister, my honourable friend Crispin Blunt, the Government publicly recognised that the present position was indefensible because it was clear that many IPP prisoners were being held well beyond their tariff dates for no better reason than that the Prison Service was unable to provide the courses necessary for them to satisfy the Parole Board of their suitability for release. Then, in 2012 this Government, to their credit, recognised the injustice of IPP sentences when they abolished them in the LASPO Act. Also in 2012, as has been pointed out by the noble and learned Lord, Lord Phillips, the European Court of Human Rights recognised the injustice when it decided the case of James, Wells and Lee v the United Kingdom, broadly on the ground that, given the lack of the rehabilitation courses necessary to establish suitability for release, the continued detention of the applicants in that case amounted to the arbitrary deprivation of their liberty, contrary to Article 5.1.

Neither the changes introduced by the Criminal Justice and Immigration Act 2008 nor the abolition of IPP sentences by the LASPO Act had any retrospective effect. The result is that we are now left, as the noble Lord, Lord Wigley, pointed out in his extremely helpful and informative introduction to this debate, with an impossible and indefensible injustice.

The current position is that on the one hand there are in prison many who are serving indeterminate terms well after their tariff sentences have been fully served, often with short-tariff sentences imposed before the two-year restriction was introduced. Many of those prisoners see, and have, no hope of early release because the necessary resources to secure their release are still not being provided in sufficient quantity or at sufficient speed. The system is still overwhelmed by its inability to cope with the stresses placed upon it. On the other hand, many of those sentenced to similar tariff terms more recently—after abolition—who would have received an IPP sentence before abolition have now been, and are being, released after serving their determinate sentences in full, well before those who are still held on IPPs, having been sentenced earlier.

What should the Government do? As the noble and learned Lord, Lord Lloyd, pointed out, the LASPO Act, by Section 128, specifically gives the Secretary of State wide powers to deal with the injustice of existing IPPs. The first power is to provide by order that, following a referral, the Parole Board must direct release if certain conditions are met; the second is the converse—that he may provide that the Parole Board must direct release unless certain conditions are met. The careful use of either power would enable the Secretary of State to put an end to the injustice highlighted in this debate that now disgraces our criminal justice system, while ensuring that prisoners whose release would genuinely present a serious danger to the public are kept in prison until their release is judged safe. Yet, despite the power contained in and legislated for in Section 128, the Government have so far resisted retrospectively altering sentences on the basis that those were sentences passed by judges acting in accordance with the law as it was at the date of sentencing.

Your Lordships’ House is very familiar with the arguments against retrospective legislation but, as my noble friend Lord Dholakia pointed out, they are generally deployed to avoid doing injustice to persons who were unaffected by restrictions before the passage of legislation. I have never heard them deployed in favour of continuing an injustice to those currently affected by unfair and oppressive legislation.

There is a further answer to the argument that bringing forward release dates now would overturn decisions of judges made according to the law in force at the time of passing the sentences. Many of the IPPs imposed were imposed because the judge’s hands were tied, often by judges acting through gritted teeth in compliance with what they regarded as, and what was, a bad law. That is no ground for demanding respect for those sentences now.

Whether the best solution is to treat all existing prisoners on the basis on which they would have been treated had they been sentenced after 2012, or to give them the option to be so treated, as the noble and learned Lord, Lord Lloyd of Berwick, suggests, or whether it would be best simply to introduce a presumption in favour of release unless continuing incarceration can be clearly justified, under the second limb of Section 128, the present injustice cannot in conscience be permitted to continue. If my noble friend’s response to this debate goes no further than saying that the Government will simply try a little harder to speed up the rate of release of prisoners caught by IPPs, that will not, I suggest, be a response that goes anywhere near meeting the need for a genuine solution. Tinkering around the edges of the old system will not be a solution.

It is important to remember that there is a special feature of IPPs. They were sentences imposed not for crimes that had been committed but for fear of crimes that might be committed in the future. It is clear that your Lordships recognise, as we all must, that public protection is an important function of punishment. However, it is also important that those involved with the criminal justice system and the public at large have the confidence that our system of justice is indeed fair and just. Where that system perpetrates and then maintains an obvious injustice, long after it has become recognisable and has in fact been recognised as such, our system cannot and does not deserve to command that confidence. We who support this Government have been proud of the rehabilitation revolution that we have introduced. The continued detention on IPPs of prisoners long beyond their tariff dates is the antithesis of that rehabilitation revolution, and we should end it.

18:02

[Lord Ramsbotham (CB)]

My Lords, I apologise to the House for not being in my place when the noble Lord, Lord Wigley, started his speech, but I was unavoidably detained on the telephone. I therefore seek the indulgence of the House to continue with the remarks that I intended to make. I congratulate the noble Lord, Lord Wigley, on securing this important debate, and, as the noble Lord, Lord Marks, has done, salute my noble and learned friend Lord Lloyd who for years has tirelessly pursued the injustices and other issues connected with this sentence. I absolutely agree with every word of what he suggested and has put forward to the Secretary of State for consideration.

Rather than look at the legal side, which has been so well covered by other noble Lords, I shall focus a little more on some of the practical issues, particularly those that show a tremendous need for improvement within the National Offender Management Service. In doing so, I would like to refer to two reports which were published in 2008—longer than the length of World War II ago. One is by the Chief Inspectors of Prisons and of Probation and one is by the Sainsbury Centre for Mental Health, as it was then called, of which I am currently a vice-president and was formerly an adviser. I do so because one of the things that worries me in the reports of two inquests—one of which I reported to the House in June 2012 and one which took place last month—is that they disclose failures in the National Offender Management Service which ought to be eliminated.

In June 2012 I reported to the House the case of Shaun Beasley, who had been awarded a two-year 145-day tariff IPP in 2007. The Parole Board said that he needed to do a course, so he was sent from Littlehey prison to Parc prison in Wales, where he was told that the course he required was not available and would not be for two to three years. This was in early August and on 24 August he rang his family and said that he could not cope any more. His family immediately rang the prison; nothing was done; and he was found hanging in his cell shortly after midnight.

On 28 February this year, the inquest took place of Kieron Dowdall who, as an 18 year-old, was given a three and a half-year IPP tariff in 2006. In October 2010 he was sent to North Sea Camp open prison as part of his release plan. By early January 2012, when nothing had happened, his mood and mental well-being significantly deteriorated. He absconded and was picked up, having said that he was trying to kill himself. He was moved to Lincoln prison and suddenly from there, without warning, was moved to Stafford. When he got to Stafford he telephoned his family several times, saying that he had a feeling of hopelessness, and his family tried repeatedly to ring the staff at Stafford but were told to put their concerns in writing. He was found hanging in his cell on 27 January, shortly after which it was discovered that there had been an incomplete form on his potential suicide waiting in Lincoln prison which had not been forwarded to Stafford.

I mention those cases because in the report in 2008 put forward by the Chief Inspectors of Prisons and of Probation, they said that one of the main problems with the management of IPP prisoners was that there was no clarity over who had overall responsibility for them, and they recommended the appointment of a senior lead to look after their interests and their programming. I have bored the House many times over this because it has always struck me that one of the failings of our Prison Service is not to have someone, some named person, responsible and accountable for each type of prisoner and for seeing that what happens to them is consistent and is exactly the same all over the country. Any manager or Minister who wants something done sends for the person responsible and tells them to do it. If you do not have someone, nothing gets done. Nothing has been done with IPP prisoners. No one is responsible or accountable. It is no good managing these sort of people, with all their various needs, by committee.

They went on to say that the National Offender Management Service should do two things. First, it should collate and make publicly available up-to-date management information about IPP prisoners, including tariff length, ethnicity, location, assessments completed, needs identified, interventions required and progression. Those are not available. If you ask what these people need, whatever it may be, you cannot get an answer. Secondly, it should carry out an intervention needs analysis of those sentenced to IPP and an assessment of the resources required and available to meet those needs in a sufficient number of prisons at appropriate levels of security across the country.

Other noble Lords have already mentioned that one of the problems of the IPP prisoner is that, as happened with one of the prisoners I have talked about, Mr Beasley, when they arrive at the place they have been sent to for a course, it is not available. That is simply not good enough and will not do. Unless and until the Prison Service and the National Offender Management Service get their act together and put someone in charge who is responsible for evaluating these things, nothing will happen. The nine years to clear the backlog will go on and on because more people will not have completed their journey through the revolving door.

If I have one other wish, it is that the burden of proof, as it is sometimes called, should be re-examined in order to ease the pressure. The noble Lord, Lord Marks, hinted at that in his remarks. I think it would be irresponsible of the Secretary of State not to ease the pressure on the overstretched Prison Service by requiring the state to produce evidence that someone still represents a risk rather than the person having to prove that he does not. Until drastic action is taken, this wretched problem is going to go on and on because the resources will not increase, and without those, we will never correct this dreadful misjudgment.

18:11

[Lord Hope of Craighead (CB)]

My Lords, it is a privilege to follow the noble Lord, Lord Ramsbotham, and I join him and others in thanking the noble Lord, Lord Wigley, for initiating this debate. I spent some time this morning reading the report in Hansard of the debates held during the Committee stage of the Legal Aid, Sentencing and Punishment of Offenders Bill on 9 February 2012. They ended with the noble Lord, Lord McNally, the then Minister, moving that what is now Section 128 of the Act should stand part of the Bill. Having read those debates, I appreciate that several noble and noble and learned Lords who have spoken this afternoon took part in those debates too. They really are veterans of this campaign. Tributes have rightly been paid to the noble and learned Lord, Lord Lloyd of Berwick, who stands out as a leader on this issue. This is a sustained and admirable campaign to which I have introduced myself as a relative newcomer.

However, the issue itself is not entirely new to me. As the noble and learned Lord, Lord Phillips of Worth Matravers, pointed out, I sat on the appeals to this House against the decisions of the Court of Appeal in the cases of Walker and James, and had the great advantage of sitting with the noble and learned Lord, Lord Brown of Eaton-under-Heywood, who was in his place earlier, and the noble and learned Lord, Lord Judge, who was then the Lord Chief Justice. It gave us no pleasure to have to dismiss those appeals on the ground that the sentences that had been passed against the appellants could not be said to have been unlawful. Fortunately, our decision that their Article 5 convention rights had not been infringed was not followed when they took their cases to Strasbourg, so it is now clear that these prisoners will have claims by way of damages. However, that makes the situation even worse for the Government than we thought it was when we heard those appeals. There will be a large bill to pay for this mistake, in addition to the costs of incarceration, and it is growing day by day and hour by hour as we speak.

We all know that the way the IPP sentences were introduced was regrettable. The statutory scheme itself was ill conceived. As the noble Lord, Lord Marks, pointed out, it was overly prescriptive and left no room for the exercise of any judicial discretion. As a result, far too many prisoners were sucked into it. There is a warning here for this Government too. I need only mention the debate that is still going on about the wording of some of the provisions in Clause 14 of the Immigration Bill, with which the Minister will be familiar, to make the point. It is most unwise to leave judges with no room for manoeuvre. Legislation by its very nature is a blunt instrument. It cannot foresee everything that may happen in the future. Facts vary from case to case. It should be left to the judges to fine-tune what the Government seek to achieve. They can be relied on to follow the guidance and can make it fit the facts. There was no need to spell out in Section 229 and Schedule 15 what was required for them to assess dangerousness and it was entirely misguided for the then Government to insist on doing so. We all know, too, that the system was comprehensively underresourced. I need not go over the details, which have been so well rehearsed by noble Lords who have spoken before me. All I can say is that the situation they have described is one that everyone knows has no place in a decent society.

That all having been said—one can of course pile objection upon objection in looking at the situation we now have—the real point of this debate, as I see it, is to focus attention on what can be done to put an end to the situation. The most interesting part will therefore be what the Minister can tell us in his reply. It was his Government who, very commendably, provided an opportunity to find a way out when they introduced Section 128 of the LASPO Act. As the headnote puts it, that section gives the Secretary of State power, exercisable by order, to change the test for the release of, among others, an IPP prisoner. However, that provision came into effect as long ago now as 3 December 2012, yet here we are, more than a year later, and nothing has been done to put it into effect: no order has yet been made, nor has there been any announcement of when we can expect one.

On 9 February 2012, the noble Lord, Lord McNally, refused to be drawn when he was asked to say when an order under that section could be expected to be made. He said that time was needed to see how the probation rules could be adjusted in the light of the argument to which he had been listening. The Committee was told that a new system of offender management was to take effect as from April of that year and that it was expected to “result in improved targeting”. So the first question I have for the Minister is whether he could tell us what the result has been of the exercise which the noble Lord, Lord McNally, told the Committee about.

Looked at from the prisoners’ point of view, there has been no obvious improvement in their situation at all. Why, then, have no steps been taken to give effect to Section 128? Having asked that question, I have to say with all honesty that I entirely understand the view that the Secretary of State has taken, which is that he has to respect the rule of law. It is not open to him, with great respect, to alter the terms of these indeterminate sentences; nor is it open to him to alter the system that Section 239 lays down for the performance of its functions by the Parole Board. As the House made clear in its judgment in the case of James in 2009, the detention of these prisoners is, and will remain, lawful until the Parole Board gives a direction for their release. The default position—which is the position they are regrettably now in—is that, until the Parole Board gives that direction, protection of the public requires that they should be confined.

Moreover, Section 239(6) of the 2003 Act was not repealed. As a result, when he is giving directions to the Parole Board under that Section 128 of the 2012 Act, and indeed under Section 239, the Secretary of State is required to have regard to,

“the need to protect the public from serious harm from offenders”,

and the need to secure “their rehabilitation”. I cannot see an escape from that situation as the legislation stands at present—that is what the law requires. One simply cannot assume, without looking at the facts of each case, that all those in a given category are fit for release immediately.

However, the situation is not beyond repair. Section 128 of the 2012 Act requires the Secretary of State to steer a narrow course. As the noble and learned Lord, Lord Lloyd, said, it is his duty to exercise the power which Parliament gave to him. There are no short cuts but I cannot understand why he is unable to find a way to exercise that power in the way that Parliament contemplated. The headnote talks about changing the test for release. Can the Minister tell the House what the current tests are, what steps are being taken to see why they are not fit for purpose—as they obviously are not—and what thought has been given to changing them so that they are? I do not see that as changing the terms of the sentences; it is all about changing the test to be applied by the Parole Board. There is great force in the point already made that the power under Section 128(1)(b) should be used, which inverts the onus and requires the Parole Board to direct release unless the Prison Service can satisfy the board that the prisoner should not be released.

There is one further point that I should like to make. There are other things that could be done. The noble Lord, Lord Ramsbotham, drew attention to them in the debate on 9 February 2012. He said then, as he did this afternoon, that there was a need for someone to be,

“made responsible and accountable to the Secretary of State”.—[Official Report, 9/2/12; col. 437.]

Having looked at the idea, there is much to be said for that proposal. Again I ask the Minister: what thoughts have been given to the proposal that was made in that debate in 2012? If it is difficult for him to answer the question immediately, will he be kind enough to write to us to explain what the answer is to the various questions that have been put?

18:20

[Lord Judge (CB)]

My Lords, this debate has highlighted the malign contribution to the problem that we are discussing today of Section 229(3) of the Criminal Justice Act 2003. The court is obliged to make an assumption of dangerousness on the basis of one conviction, which might of course be something dreadful such as rape or murder, where the dangerousness speaks for itself, but might also include, among the more than 100 cases that my noble friend Lord Wigley identified, a voyeur—that is, a peeping tom; exposure—that is, a flasher; or indeed, and I do not make this point facetiously but to underline the absurdity of the legislation, somebody who has sexual intercourse with a corpse, who might be somebody who needs rather a lot of assistance and psychiatric help.

The lesson that the legislation should show us is the absurdity of anything that seeks to bind a sentencing judge to make a decision that is based not on evidence but on diktat. An evidence-based decision about what an appropriate sentence should be is the only way in which justice can be done. This legislation has been put right and we are all grateful that it has. The court still has to assess dangerousness. There are still occasions when the court will decide that an individual defendant should never be released because he—or, very rarely, she—represents such a serious continuing danger.

I do not think that the judiciary would be deeply concerned about any interference with constitutional principle if we had a look at all the cases of those who are still subject to imprisonment for public protection, when the transcript will show that the judge made the order because he was in effect compelled, or felt that he was compelled, to do so, or by the application of the powers that have been given under Section 128 of the recent legislation.

18:23

[Lord Kennedy of Southwark (Lab)]

My Lords, as other noble Lords have done, I thank the noble Lord, Lord Wigley, for putting this Question down for debate. He has raised an important issue for your Lordships’ House to debate this afternoon.

Imprisonment for public protection was introduced by the previous Labour Government in 2005. It was designed to ensure that dangerous, violent and sexual offenders stayed in custody for as long as they presented a risk to society. When Labour introduced IPP in 2005, it was for a very good reason: protection of the public, with sentences put in place to keep the most violent, persistent offenders off our streets. If a judge felt that offenders were a risk to society, they could hand down an IPP, which meant that the offenders had to prove to the Parole Board that they were ready to rejoin society by completing rehabilitation programmes. Punishment and reform went hand in hand.

I accept entirely that there were problems with the introduction and in 2008 changes were introduced to deal with some of the issues we have heard about today. Labour made changes to the administration of the scheme and proposed a new “seriousness threshold” that would have to be satisfied before the court could impose the sentence. This was to make sure that the sentence was reserved for very serious and violent offenders—those who are the biggest risk to the public. As a result of these changes, the number of offenders serving a sentence of imprisonment for public protection dropped, but serious offenders were released from prison only when it was deemed safe to do so. Evidence shows that there is a low rate of reoffending by prisoners released having served a sentence of imprisonment for public protection.

Instead, as the noble Lord, Lord Wigley, said, the Government’s new regime introduces a “two strikes” policy so that a mandatory life sentence will be given to anyone convicted of a second serious sexual or violent crime. Where is the public protection here? Effectively, the policy says, “We won’t make the mistake a second time”. Does the Minister believe that the new complicated system of extensions and parole for different sentences will keep the public safe?

Imprisonment for public protection was criticised for contributing to prison overcrowding, but what will the effect of this new policy be? Does the Minister know? Our prisons have serious problems; overcrowding is a real issue. I share the astonishment of the noble Lord, Lord Wigley, at the Justice Secretary seeking to limit prisoners’ access to books, as has recently been announced.

Under this Government, 17 local prisons have been closed, with 5,000 places lost in the prison system in the last year alone, leaving remaining prisons close to bursting point. Does the Minister agree that overcrowding in the prison system—pushed to breaking point by the Justice Secretary, with prison places lost before anything is built to replace them—is making it harder effectively to rehabilitate those still serving a sentence of imprisonment for public protection?

To work effectively, the Government’s new sentencing regime needs investment in the Parole Board. Lack of investment in the Parole Board and the shortage of courses for rehabilitation have caused, and are still causing, a backlog. Without proper investment, the Government’s new plan will face the same problems. What resources are the Government putting in place to ensure that these offenders are properly rehabilitated before they are released back into the community?

We are hearing reports that courses and activities are being cancelled, or that prisoners cannot attend courses, due to there not being enough prison officers to escort prisoners from the wing to the classroom. Now that imprisonment for public protection has been abolished, what is the plan for dealing with prisoners who remain within the system over their tariff? There is not one. The Government’s new policy will not avoid the criticisms levied against the previous system that it seeks to replace. It offers no solution to deal with those prisoners still in the system over their tariff. Let us be clear: the chances of being rehabilitated in prison are now lower than ever.

We cannot have offenders who come out of prison just as or more likely to offend as when they went in. We must also do all we can to make sure that the first crime is the last crime. To make a real difference, rehabilitation requires investment. We need investment in drugs and alcohol programmes and mental health services. We need rehabilitation courses to be available in all prisons and a more effective and joined-up approach to reducing reoffending in the long term.

What is most worrying is that a recent report from the National Audit Office found that fewer sex offender treatment programmes are being provided in prisons. In February this year, the BBC reported that, in 2012-13, there were around 11,000 sex offenders in prison in England and Wales but that only 1,092 treatment programmes were completed, while sex offenders in jails in England now make up 15% of the prison population. There are more sex offenders in prisons, but fewer treatment programmes.

The Government have been playing catch-up ever since they abolished imprisonment for public protection. Serious, violent individuals must not pose a risk to the public and proper due process must be followed before their release. They should be supported by courses and programmes and an effectively resourced Parole Board to allow rehabilitation to take place.

Judges need all the tools at their disposal to sentence people in the right way so that they are punished and reformed. The public will want reassurance that there are enough prison places over the coming years to keep safely behind bars those found guilty of serious crimes and that enough is being done to rehabilitate and reform prisoners to stop them reoffending.

The new regime needs the same investment in parole hearings and rehabilitation courses to make it work as was needed by imprisonment for public protection. There is no solution for thousands of prisoners over their tariff; the same problems remain. This is indicative of the fact that the revolution in rehabilitation promised by the Government in their review is nowhere to be seen. I again thank the noble Lord, Lord Wigley, for bringing this Question before the House.

18:28

[The Minister of State, Ministry of Justice (Lord Faulks) (Con)]

My Lords, I thank the noble Lord, Lord Wigley, for securing this debate. The issue of how to manage those prisoners who are still serving indeterminate sentences of imprisonment for public protection is important and one that has generated considerable interest, not least in this House.

Indeed, our IPP prisoners could hardly have more effective advocates than the noble and learned Lords who have spoken this evening. Nor has their interest and concern been recent; it has been sustained and tenacious. At a recent meeting convened by the Bingham Centre, where the noble and learned Lord, Lord Lloyd, spoke, those issues were thoroughly discussed. Although I was unable to attend myself because of parliamentary duties, he was good enough to send me a copy of his remarks there, so the Government do not pretend to be unaware of the full range of anxiety that has been expressed about the issue.

Much has been said about the history of IPP sentences. Briefly, to remind the House, the IPP sentence was first brought into effect in 2005, by the Criminal Justice Act 2003, to target those offenders likely to pose a risk of serious harm to the public. Imposition of the sentence was mandatory in certain circumstances. More IPP sentences were imposed than were originally anticipated—that is something of an understatement. The noble Lord, Lord Kennedy, said that there were problems with introduction. That, too, is something of an understatement. I understood him to be rather unrepentant about the sentence as a whole, but be that as it may. It was not until the reforms introduced by the Criminal Justice and Immigration Act 2008 that a minimum tariff of two years was imposed, barring exceptional circumstances. Further, the mandatory requirement for imposition of the sentence in certain circumstances was removed—a “may” for a “must”. On 3 December 2012, the sentence was abolished by the LASPO Act. However, abolition was not made retrospective, so those prisoners already serving IPP sentences continue to do so until the independent Parole Board finds their assessed risks to have been reduced enough to be manageable in the community.

Although this Government have abolished the IPP sentence, it would not be right or appropriate in our view retrospectively to alter sentences that had been lawfully imposed prior to their abolition. When the LASPO Bill was being debated, a number of amendments were proposed in this House that would have changed retrospectively the sentences imposed by courts. However, none of those resulted in a change to the legislation to the effect to which some arguments have been directed this evening. That is usual—it is generally the case that when changes are made to the sentencing framework, they do not impact on current prisoners, and changes will not be made to sentences that were lawfully passed at the time they were imposed. One reason for that is because a court will have had regard to the range of sentences then available when imposing a sentence, so it will not necessarily be clear what sentence would have been imposed under a different statutory regime. Indeed, it would be quite wrong to assume in any individual case what sentence a court would have imposed under such a different regime.

On IPPs, at the higher end there will be IPP sentences that have been imposed where a life sentence might otherwise be available. At the lower end, given that the courts had found risk, it is not clear whether an extended sentence or a standard determinate sentence would have been imposed. Versions of the extended sentence are available under more than one recent statutory framework, but other considerations then arise: would the various thresholds for these sentences have been reached under different statutory frameworks? What would the length of the extended licence have been?

I hope I have said enough to demonstrate the complexity of trying to translate sentences imposed under one regime to another. In this case, the courts were specifically enjoined by the law to give priority to the consideration of risk. It would make it a particularly sensitive exercise retrospectively to change these sentences, which is what the conversion process would involve.

The Government also do not believe that it would be responsible or sensible, given the high risk levels presented by many of the IPP prisoners who remain in prison post-tariff. We do well to remember that many offenders who received IPP sentences, including those who remain in custody today post-tariff expiry, did so for serious crimes—notwithstanding the observations of the noble and learned Lord, Lord Judge—including attempted murder, manslaughter, rape and sexual assault of children. Any move to release those prisoners without due consideration of the risk they pose to the public would be wrong.

I know that many noble Lords have particular concerns about those offenders with short tariffs of less than two years imposed before the 2008 Act abolished such short tariffs except where there was serious previous offending. However, internal management information suggests that the clear majority of IPP offenders currently remaining in custody with tariffs of less than two years are there because they are assessed as posing a high, or very high, risk of serious harm to the public. This means that a serious offence could take place at any time. It would not be safe or appropriate to release these offenders on licence without due consideration of the risk which they present at the current time.

No one would claim that there have not been significant problems with IPP sentences. That is why we abolished the sentence and replaced it with the extended determinate sentence. There were practical issues arising from the number of IPP sentences with short tariffs that were imposed. The sentence did not command public confidence and led to apparent inconsistencies of sentencing. It meant that victims, the public, and offenders and their families were unclear about when an offender might be released.

However, we also have a clear duty to the public not to release IPP prisoners who continue to pose an unacceptable risk. It was never the intention of the sentence that offenders past their tariff should all be released, but only those who can be effectively managed in the community. It is for the independent Parole Board to determine whether an IPP prisoner has reduced their risk sufficiently to achieve release. The board does not, of course, take these decisions lightly: it examines reports from prison and probation and from psychologists where appropriate—and of course the prison governor provides information in the dossier—and decides whether the risk to the public remains too high to release an offender. All IPP offenders who have completed their tariff have the right to attend the regular parole review oral hearings, where release is considered. The Government consider that this is the best system for balancing the rights of the offender with our duty to protect the public.

I want to mention the NOMS work to improve the position of IPP prisoners, because this is clearly an important consideration. No prisoner should be left without opportunities to demonstrate to the Parole Board that their risk has reduced. I would also like to speak about the important work that has been undertaken to improve the prospects of progression for those IPP offenders who choose to engage with the opportunities presented to them. Examples of this work include: the streamlining of assessment, targeting and management processes, to ensure that IPP prisoners’ risks and objectives are identified as early as possible; reducing waiting times for transferring IPP offenders to open prisons, from over eight months to an average of two months; the refining of our commissioning strategies to maximise resources and focus investment on those interventions proven to be effective; and publication of guidance for those managing the sentences of IPP prisoners to ensure that the focus of sentence planning is on reducing risk in a planned and sequenced manner, and not solely on completing specific offending behaviour programmes.

The indeterminate sentence prisoners co-ordination group was established in 2010 to oversee the strategic management of all offenders serving indeterminate sentences, including both those serving IPP and life sentences. The group is led at director level within NOMS, with membership from senior representatives across NOMS. The group’s work has a particular focus on improving, wherever possible, the progression of these offenders through custody and then, should the Parole Board so direct, into the community. It achieves this by developing and promoting the most effective means of managing those serving indeterminate sentences and ensuring that resources are directed appropriately. This includes informing the development and co-ordination of strategies relating to offender assessment, sentence planning and delivery, access to interventions, parole processes, prison capacity issues and offender management in the community following release. I could give a number of examples of work that the group has delivered, but time does not permit me to do so.

As to interventions, it is a common misconception that IPP offenders must complete offending behaviour programmes in order to achieve release. Equally, it is a misconception that the completion of courses is a sufficient condition to secure release. Neither of these is the case. The Parole Board is under a general obligation to consider the offender’s risk level, which can be demonstrated in a variety of ways. In so doing, the board will take an holistic view and consider all available evidence. The completion of a number of courses is just one of a range of factors that the Parole Board will take into account.

In 2011, the Ministry of Justice carried out a research study into Parole Board decision-making in IPP cases. A summary of that research was published in 2012 and can be found on the Government’s website. There are points arising from that research that it is important to make. It suggests that programmes are far from the only relevant factor in release decisions. Release is to some extent related to the completion of programmes, but this is not a simple relationship. The research shows that the parole process is targeted on the individual and that only programmes specified to the individual’s needs, successfully completed and showing some impact on the prisoner, are likely to be taken as evidence of sentence progression. A number of other factors were important. The Parole Board members interviewed for this study thought that indeterminately sentenced prisoners benefit greatly from spending time in an open prison, for example.

[Lord Lloyd of Berwick]

My Lords, I can see that the Minister’s time is nearly up. I wonder whether he could deal with one or two of the arguments which have actually been advanced in the House this afternoon, in particular regarding Section 128. What did Parliament have in mind when that power was conferred on the Secretary of State?

[Lord Faulks]

It is of course a matter of statutory instruction what it had in mind. The Secretary of State is aware of the obligation placed on him to consider the matter. The noble and learned Lord has recently been in correspondence with the Secretary of State and I have endeavoured to give the Secretary of State’s reasons for the position that he has so far adopted in that respect. The question is whether the Secretary of State should exercise that power in the way that the noble and learned Lord and other noble Lords think appropriate and, if not, what steps are being taken to ensure that IPP prisoners are having the opportunity to obtain release via hearings from the Parole Board. On that and other matters, I will write to noble Lords because I have not sufficient time to deal with all the questions raised.

Reference was made to the European Court of Human Rights and the case of James, Wells and Lee and others. That is a decision which is not without difficulty and which has been considered by the Supreme Court in a number of contexts. I should declare an interest as an advocate in one of those cases. The decision by the European Court of Human Rights was indeed that there was an arbitrary detention because of the lack of provision of courses, and therefore a violation of Article 5(1), but it did not decide that the sentence was per se unlawful. There are of course further cases going through the courts and sometimes the facts do not quite fit the allegations. However, the Government are well aware of the consequences of that.

The noble Lord, Lord Ramsbotham, as ever made some useful observations about offender management. We do not deny that offender management problems exist in custody and we accept the recommendations of the latest inspectorate report on the improvements that need to be made. Some improvements have been made but more needs to be done, including a full review of offender management in custody which will commence next year. As the noble Lord and other noble Lords will know, an inquiry has been set up into deaths in custody. That was announced recently in answer to a Question asked by the noble Lord, Lord Ramsbotham, himself. I hope that that matter will inform decision-making in that respect.

Finally, regarding the Parole Board, there is liaison with it as a result of the Osborn decision. Increased resources have been made available to the Parole Board and there is regular communication between it and the Ministry of Justice to ensure that its resources are appropriately deployed to increase the possibility of hearings taking place.

The sentence itself was clearly ill conceived and its impact was wholly underestimated. The Government recognised that by abolishing it in the Act. The Secretary of State has not considered it so far appropriate to exercise the power given to him by the LASPO Act, on which there have been a number of arguments. However, the Government are extremely aware of the importance of IPP-sentenced prisoners having the opportunity for their release to be considered and to have the opportunity of proving whether they are no longer a danger. That is a matter of which the Government are painfully aware.

All the observations made by noble Lords this evening in this valuable and helpful debate will be taken back to the Secretary of State and if there are any matters that I have not fully dealt with in the course of it, I will endeavour to deal with them in writing.

Inheritance and Trustees’ Powers Bill [HL]

Thursday 27th March 2014 Lords Chamber

Returned from the Commons

The Bill was returned from the Commons agreed to.

Gambling (Licensing and Advertising) Bill

Thursday 27th March 2014 Lords Chamber

Returned from the Commons

The Bill was returned from the Commons with the Lords amendment agreed to.

House adjourned at 6.44 pm.