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Oral Answers to Questions
(10 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Diana Johnson (Kingston upon Hull North) (Lab)
1. What assessment he has made of the effectiveness of sentencing policy in tackling the problem of violent and extreme online pornography.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
Offenders convicted of possession of extreme pornographic images, including violent pornographic images, face a custodial sentence of up to three years. Sentencing in individual cases is at the discretion of the courts. Although there are only a small number of convictions for that offence each year, I believe that it is effective in tackling the proliferation of these images.
Diana Johnson
Is not the problem that existing legislation on violent pornography has been too narrowly interpreted, with only 310 prosecutions in the past three years? Rape Crisis South London has said that there is evidence of the easy availability of serious sexual violence on rape porn sites. I know that the Government are about to ban realistic rape porn online, but not staged child rape scenes. Why not, as the Prime Minister promised, bring online and offline in line?
Damian Green
We agree with the hon. Lady’s underlying point that the current offence is too narrow. That is why we are legislating to extend the terms of the existing offence to criminalise the possession of images depicting rape and other non-consensual penetrative sexual activity. As she knows, we introduced provisions in the Criminal Justice and Courts Bill to criminalise the possession of such images, and those provisions received broad cross-party support at the Commons Committee stage. I hope that she and those on the Opposition Front Bench will continue to welcome that.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
When considering sentencing policy for those guilty of observing or engaging in violent behaviour, will the Minister reconsider the Department’s policy of moving violent offenders such as Michael Wheatley to open prisons like Standford Hill in Kent? He will be aware of a pattern of absconding that has taken place in Ford open prison in my constituency, including by Derek Passmore and Paul Flint, both of whom were convicted of murder, and one of whom had already absconded from an open prison.
Damian Green
I am sure that many Members across the House will share my hon. Friend’s concern about people absconding. As we have heard, the number of people absconding from open prisons has, of course, gone down, but I hope he is reassured that we are in the process of making the conditions for those sent to open prison tougher, both in qualifying to go to open prisons, and in the punishments received for breaking the terms.
Jeremy Lefroy (Stafford) (Con)
2. What assessment he has made of the consequences of the establishment of the new single family court for the operation of the justice system; and if he will make a statement.
The Minister of State, Ministry of Justice (Simon Hughes)
The family justice review produced recommendations that were implemented on 22 April, producing the largest ever change in the family justice system in our lifetime, and I pay tribute to all those from the president of the family division downwards who delivered that. The purpose was to have a single united family court that can sit anywhere with any level of judge, to ensure that cases are dealt with more quickly in the interests of children and families, and that children’s needs are always put first in all family proceedings.
Jeremy Lefroy (Stafford) (Con)
I thank my right hon. Friend for that answer. Will he explain how the reforms that he is taking through at the moment will ensure that cases, particularly those involving the most vulnerable children, will be dealt with efficiently, quickly and justly?
Simon Hughes
There are two major changes that will lead to a speedier and more just outcome, particularly for children. The first is a requirement that all cases involving care proceedings will be dealt with in 26 weeks, or half a year—only a couple of years ago, it was double that—and if there has to be an exception in the interests of justice, that will be made. Secondly, experts’ reports will not be commissioned and take up a huge amount of time unless that is necessary in the interests of the child. The process will be speedier, and children will have certainty much more quickly, as will their families and local authorities.
Ian Lucas (Wrexham) (Lab)
But is not the Minister aware that the withdrawal of legal aid in family cases has caused a massive increase in litigants in person, which will undercut and undermine any move towards shorter times for dealing with these cases? The Government have undercut and undermined their own policy, and strangled it at birth.
Simon Hughes
That is very easy rhetoric from the hon. Gentleman, but the evidence does not support it. The evidence is that there were always litigants in person in the family courts, and the time it is taking for cases outside the public system to be dealt with has not fundamentally changed. They take on average between 16 and 18 weeks now, as they did before. In addition, legal aid has been retained for most of the important issues. In particular, legal aid is available for people to be assessed for mediation, and for mediation. For those who go to mediation, seven out of 10 have a successful outcome, which means that they do not need to contest their matrimonial matters in the court.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
The single court is a good idea, and I am pleased that the Government are taking it forward, but a considerable body of evidence from solicitors who specialise in family law suggests that judges are under huge pressure to allow contact too early in cases, even in those with safeguarding issues such as alcohol abuse and violence. How will the Minister make sure that family courts are closely monitored to ensure that vulnerable children are not put at unnecessary risk?
Simon Hughes
I respect the right hon. Gentleman’s expertise in this area. I was speaking to the court in Cardiff about these issues only on Thursday last week. One protection is that the 26-week norm can be extended in the interests of justice in every case. Secondly, from the president downwards, there is a regular review of exactly what is happening. There will be report backs, as well as a public report back to Parliament on a regular basis, and regular reviews to make sure that vulnerable children in the sort of families he describes are not put at risk. The whole purpose is to ensure that fewer children are at risk and more children are protected and cared for better.
Hugh Bayley (York Central) (Lab)
3. With reference to the statement by the Under-Secretary of State for Justice in Westminster Hall on 12 March 2013, Official Report, column 30WH, that his Department would facilitate a meeting between people from York and others with the university of Leicester to discuss the arrangements for reburial of the mortal remains of King Richard III, when that meeting will take place and which Minister or official from his Department will attend it.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
As the hon. Gentleman will be aware, arrangements for the meeting were put on hold in the light of litigation brought by the Plantagenet Alliance Ltd. The judicial review was heard by the Administrative Court on 13 and 14 March, and I look forward to receiving its judgment.
Hugh Bayley
I understand the reason for the delay, but it is self-evident to me that a decision about the burial of a former Head of State of this country should be taken by the Government of the day, not delegated—as in the case of King Richard III—to archaeologists at Leicester university. Will the Secretary of State give the House an assurance that when the sub judice rule has passed, he will consult widely—including with those from the north of England who believe that King Richard should be reburied in York—before taking a final decision on the basis of advice about where the burial should take place?
Kevin Brennan (Cardiff West) (Lab)
A hearse, a hearse, my kingdom for a hearse!
Mr Speaker
Order. The issue is not sub judice. There are ministerial decisions involved, but there is no question of sub judice. I also appeal to the House for a degree of calm and restraint. We are discussing the burial of the mortal remains of a former monarch, to which fact, Mr Brennan, you should pay obeisance.
Chris Grayling
You are quite right, Mr Speaker, that these issues are not sub judice. Of course, it is hardly surprising that the hon. Member for York Central (Hugh Bayley) is a keen advocate for the city he represents, but I shall not pass further comment on this matter before the court judgment is reached.
Jonathan Ashworth (Leicester South) (Lab)
I am the hon. Member for Leicester, and I am a keen advocate for my city. Will the Secretary of State confirm that the dig for Richard III was well advertised, and the relevant licence granted by the Ministry of Justice was very specific that, should Richard be found, his remains should be buried in Leicester?
Chris Grayling
We are hearing the divisions in the House about an important strategic issue. I fear that I shall stick with my position that it would not be appropriate for me to comment further until the court case has reported.
Mr David Amess (Southend West) (Con)
4. What steps he has taken to protect legal aid for vulnerable people.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
One of the key objectives of the reform of legal aid is to improve its sustainability to make sure it remains available to protect vulnerable people. Legal aid continues to be available in cases where people’s life or liberty are at stake; where they are at risk of serious physical harm, or immediate loss of home; or where their children may be removed.
Mr Amess
The pursuit of justice can be an extremely expensive matter. Everyone understands that the economic times we live in mean that there have to be constraints on legal aid, but will my right hon. Friend assure me that he is engaging with the legal profession on the implementation of the reforms?
Chris Grayling
I give my hon. Friend that assurance. We shall continue to look at the impact of the changes we have put in place. It is not our intention to disadvantage the most vulnerable in our society. We have taken a number of steps in the reforms to protect them and we will continue to review the changes we have made to understand their impact.
Mr David Hanson (Delyn) (Lab)
Now that a Cameron appears to have woken up to the impact of legal aid cuts and refused to take part in a trial last week because of a lack of defence, will the Secretary of State review that case and that judgment and tell the House how many cases he expects to be stayed as a result of legal aid cuts? What conditions does he have in place to ensure that those whose cases are stayed have a proper trial?
Chris Grayling
I fear this may be a repeat performance. That case is now subject to appeal, and it would not be appropriate for me to comment before the appeal hearing is held.
Mr David Ruffley (Bury St Edmunds) (Con)
The Secretary of State will be aware of the recent case of a triple murderer who sued the Ministry of Justice for more than £800 because of alleged damage to his personal effects, including a nose hair clipper that went missing. Was legal aid allowed for the prisoner to bring that case? If so, was it a good use of taxpayers’ money?
Chris Grayling
I can reassure my hon. Friend that while I share his revulsion, the availability of legal aid was not a part of that case. The reforms we have put in place mean that prisoners cannot access legal aid for such cases, or indeed for a wide range of cases relating to conditions in the prisons they are kept in. I do not believe the taxpayer should be funding such court cases.
Ms Margaret Ritchie (South Down) (SDLP)
In Northern Ireland, leading lawyers and the Law Society have stated that the cuts handed down by Westminster and implemented by the Justice Minister will severely hinder the public’s ability to access the justice system. What discussions has the Secretary of State had with his ministerial counterpart in Northern Ireland on the impact of this policy?
Chris Grayling
I have indeed discussed legal aid funding pressures with my counterpart in Northern Ireland, who said to me that he faces similar challenges in balancing a tough budget. The reality is that we all face difficult financial challenges and we sometimes have to take difficult decisions to meet them.
Mr Andy Slaughter (Hammersmith) (Lab)
The Secretary of State is taking legal aid from vulnerable people and imposing a residence test that would not have been met by the women at Yarl’s Wood detention centre sexually assaulted by guards, the family of Jean Charles de Menezes, the Gurkhas refused entry to the UK, or care home residents such as those in Winterbourne View or on the recent “Panorama” programme. Which of those would he be most proud to leave without help or representation?
Chris Grayling
Of course, these changes do not affect the support we provide at inquests. My challenge to the Opposition is this: they have yet to give us any clear answers on how they would bring down the cost of legal aid. They campaigned at the previous general election for reductions in legal aid costs. They continue to oppose the difficult changes we have made, but offer no alternative suggestions.
Sheila Gilmore (Edinburgh East) (Lab)
5. What assessment he has made of the consequences for future decisions by employment and support allowance tribunals of the provision by the judiciary to the Department for Work and Pensions and appellants of reasons for their decisions in appeals.
The Minister of State, Ministry of Justice (Simon Hughes)
I appreciate the hon. Lady’s interest in this subject. Last year, a pilot scheme was introduced in four places around the country where employment and support allowance appeals had the summary reasons issued at the time of the appeal judgment. This was extended in March across the country in relation to all ESA and personal independence payment appeals. There is no current plan to make a further assessment, but the Ministry of Justice supports fully what is a Department for Work and Pensions initiative.
Sheila Gilmore
I thank the Minister for that answer, but this is a hugely important issue for many individuals who face great stress and anxiety in going through the appeal processes. Will the Minister not commit to evaluating both the pilots and the ongoing process properly, so we can understand fully whether they are working and whether further improvements are needed?
Simon Hughes
We shall of course watch what happens. We expect the process to be extended this year to many other forms of appeal in the social security system. The evidence will show whether it informs people and we do not have as many appeals in the future because the decisions will have been got right in the first place. The level of appeals that she highlighted in a question on a previous occasion—nearly 45%—will then disappear. My objective is to get decisions right in the first place. The stress to which she refers should be removed from many people. They should not need to have to go to appeal to get the right decision.
Stephen Mosley (City of Chester) (Con)
One of the biggest problems that I face as a constituency Member of Parliament is the time that it takes for ESA appeals to go ahead. It is good news that the delay has been reduced from an average of 23 weeks to 18, but what is the Minister doing to ensure that appeals speed up even more in the future?
Simon Hughes
Members on both sides of the House will have shared my hon. Friend’s experience, which is principally a matter for my colleagues in the Department for Work and Pensions. It will certainly be helpful if the right decisions are made more often in the first place, but we must ensure that tribunals, particularly the Social Security Appeals Tribunal, have enough resources to be able to deal with cases as soon as possible after receiving the information that they require. Often the problem is collecting the data that will enable an appeal to be heard. The present situation is not acceptable, and we need to reduce the delay between initial decisions and appeals.
Dr Julian Huppert (Cambridge) (LD)
The Ministry of Justice faces large costs as a result of appeals against decisions made but by not just the DWP but the Home Office. Ensuring that the right decisions were made would save the MOJ a huge amount of money. Will my right hon. Friend consider applying the “polluter pays” principle, so that the Department that has caused an excessive number of appeals pays some of the MOJ’s costs? That would give Departments an incentive to make the right decisions.
Simon Hughes
My hon. Friend has mentioned that idea to me before, and I find it attractive. I have not had a formal discussion about it with the Secretary of State, but I imagine that he may instinctively find it attractive as well. We certainly expect our colleagues in other Departments to make decisions correctly, and not to incur costs that will be borne by our Department, and hence by the taxpayer, by getting those decisions wrong. I shall willingly engage in discussions with my right hon. Friend the Secretary of State, and with other Departments that ought to be bearing the burden of decisions that they got wrong in the first place.
Glyn Davies (Montgomeryshire) (Con)
6. What his policy is on ensuring that legal aid is targeted at people with a strong connection to the UK.
David Mowat (Warrington South) (Con)
10. What his policy is on ensuring that legal aid is targeted at people with a strong connection to the UK.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
The Government believe that individuals should have a strong connection with the UK in order to benefit from the civil legal aid scheme, and we consider the residence test that we propose to be a fair and appropriate way in which to demonstrate that connection.
Glyn Davies
Will my right hon. Friend put an end to the availability of legal aid in relation to cases brought in the United Kingdom irrespective of any connection with this country, which encourages people to bring their disputes here?
Chris Grayling
I very much agree with my hon. Friend, although I do not think that Labour Members do, judging by the noises that they have been making. I think that the position is very simple. Our taxpayers pay the costs of civil legal aid, and I do not believe that people should be able to come to this country and have immediate access to our civil legal aid system. The test that we propose is designed to change that. I find it interesting that it is being challenged in court, but I am determined that British taxpayers should not be required to pay for legal aid for people who have no right to it because they have not earned it.
David Mowat
According to a written answer that I was given recently, two firms of lawyers that specialise in suing active servicemen, Public Interest Lawyers and Leigh Day, have received £10 million in legal aid in the last three years, and the Ministry of Defence has subsequently spent many more millions on defending those cases. No other country in the world would pay lawyers to sue its own army. When we will stop doing so?
Chris Grayling
My proposed residence test would mean that such cases were no longer possible. I think it important for there to be restraints on our legal aid system. I personally find some of the things that we have read about the inquiry into the cases brought as a result of action in Iraq extremely disturbing. I have asked my officials to examine in great detail what has happened, and to consider whether there are appropriate actions for us to take.
Jeremy Corbyn (Islington North) (Lab)
Will the Lord Chancellor think for a moment about the logic of his case? Surely all those who come before the courts have a right of representation, a right of access, and a right to have their cases heard. If the Lord Chancellor’s logic had been applied in the past, the Mau Mau people, who suffered the most grievous maltreatment by British armed forces in the 1950s, would never have had a chance to bring their case before the courts in this country, and would never have had any hope of securing justice.
Chris Grayling
The hon. Gentleman and I have always differed on these matters. It is important to deal with historical wrongs, but I do not believe that we should encourage British law firms to deal with cases from other parts of the world, at enormous cost to the taxpayer, when in the end—as in the case of the Iraqi situation—there are serious question marks over those cases. I think we need a system that makes our legal aid available to British people, but not to people in the rest of the world.
John Healey (Wentworth and Dearne) (Lab)
Many people with a strong connection to the UK face homelessness which is prevented only by the threat of launching judicial review proceedings. Does the Secretary of State accept that, as Shelter and other housing groups say, his changes to legal aid will make that much more difficult? Will he publish data to show the impact of the changes?
Chris Grayling
I guess it comes down to whether we believe that somebody should come to this country and make a contribution first. Our proposals exclude those who are refugees who are seeking refuge in this country, but they are set out in that way because, I think, people who come to this country should make a contribution before they can start taking money out of the state system for other means of support.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
18. Does my right hon. Friend agree that, as well as targeting legal aid on those with a strong tie to the UK, we should not make it available to those fighting weak cases that they would not pursue if they were spending their own money but will pursue if they are spending taxpayers’ money?
Chris Grayling
That issue applies particularly to judicial review. The proposals set out in the Bill currently before the House would set an appropriately high bar that will do precisely what my hon. Friend says. There must be a bona fide strong case that goes forward to the courts before the taxpayer will pay the bill.
Sadiq Khan (Tooting) (Lab)
I welcome the Justice Secretary’s reassurance, in answer to the question of my hon. Friend the Member for Hammersmith (Mr Slaughter), that families like those of Jean Charles de Menezes and Jimmy Mubenga would get legal aid at inquests even though they are not British citizens. But can he explain to the House how it is in the public interest, and somehow good, for the women at Yarl’s Wood detention centre who were sexually assaulted by guards, for the Gurkhas refused entry to the UK or for care home residents like those at Winterbourne View to be denied legal aid?
Chris Grayling
What divides us is the fact that the Government must take hard decisions. The Labour party has argued for reductions in legal aid; it had plans for reductions in legal aid in its manifesto but now, in opposition, it is trying to prevent reductions in legal aid. That is, I am afraid, another example of the Labour party saying one thing and doing another.
Mr Julian Brazier (Canterbury) (Con)
May I draw my right hon. Friend’s attention to the Select Committee report on the impact on our armed forces of this deluge of cases? May I urge him to look again at the £10 million that went to those law firms who deliberately suppressed evidence that their clients were part of a terrorist organisation?
Chris Grayling
Let us be absolutely clear: in relation to the inquiry to which my hon. Friend refers, what has happened in those cases appears to have been untoward to say the least. If the taxpayer has ended up paying a large amount of money for a case brought on a false premise, I will want to take the strongest possible action, including looking at taking financial measures against the firms involved.
Kerry McCarthy (Bristol East) (Lab)
8. What recent assessment he has made of the effect of recent changes to criminal legal aid on law firms and access to justice.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
Recent changes have been made to criminal legal aid because of the imperative to make savings across the Department. We are committed to ensuring the sustainability of the changes that we are making, and to reviewing them a year after implementation of the respective new arrangements.
Kerry McCarthy
I recently met solicitors from a couple of small firms based in Bristol that deliver criminal legal aid work, and they told me that not only the 17% cut in fees over two years, but in particular the changes to the duty solicitor contract, will put them out of business. May I urge the Secretary of State to look at the smaller firms who will not be likely to win such contracts, and at the impact that will have on the representation of people who live in places such as Bristol?
Chris Grayling
We looked at these issues carefully and took two steps that I hope will help on this front. The most important step was that we are allowing those small firms to bid as consortia so that they can share contracts as long as they cover for each other to ensure the duty work is provided. We also did detailed work with external consultants to ensure that we identified how big a contract needed to be to be sustainable, so that we have sustainable contract size and the option for small firms to bid in consortia. That is the best way of delivering changes that I know are painful but, of course, were in the hon. Lady’s party’s manifesto.
Crispin Blunt (Reigate) (Con)
When my right hon. Friend is drawing comparisons about the costs of cases, will he try to make sure that the income that will be expected to accrue to the various barristers taking part in those cases is considered, rather than the totality of costs, as it can be difficult to make a sensible judgment about what is fair and unfair?
Chris Grayling
My hon. Friend is right to say that we have to be very careful. Of course the gross fees that are cited include VAT and chambers’ fees, but those barristers also derive benefits from being self-employed that counteract some of the reductions they experience, because they can offset many other parts of their expenditure and overheads against tax in a way that employed people would not be able to do.
Andy McDonald (Middlesbrough) (Lab)
How many more serious fraud trials in the pipeline are struggling to secure legal representation for the defence, in a way similar to the case that collapsed last week, where the judge was forced, in effect, to abandon the trial because of Government legal aid changes?
Chris Grayling
As I said, given that this case is subject to appeal, I do not think it would be appropriate for me to comment further on it.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
What is the Lord Chancellor going to do about the fact that senior counsel are not prepared to take on the defence roles in very complex cases, given that he has a case to put about cost saving and they have points to put about complexity? Talks will surely have to take place, and brinkmanship on either side will not serve the interests of justice.
Chris Grayling
We are taking the financial decisions we are taking for a simple imperative: we have to make an extremely difficult budget add up. We are applying the changes we are applying to those at the higher end of the income scale. I am confident that through the public defender service and other routes we will be able to meet the needs of cases, as and when they arise, and of course PDS advocates were available for these cases.
Alistair Burt (North East Bedfordshire) (Con)
Will my right hon. Friend also look at the impact on the criminal legal aid budget and access to local justice of decisions such as that made by the judicial business group in Bedfordshire to move criminal cases from Bedford magistrates courts to Luton, thus, in effect, closing the magistrates courts? The move was opposed by local lawyers, local law firms and magistrates; it was an administrative decision designed to skirt democratic accountability. Does he agree that it could have an impact on costs, which should be part of the decision-making process?
Chris Grayling
I am aware that a number of decisions of this kind are being taken by local committees. Of course such decisions can also mean civil cases moving into those same court buildings, which brings justice closer to communities in matters such as tribunal cases. I am aware of the issues in Bedfordshire to which my right hon. Friend refers. Where changes of this kind occur I have asked my Department to examine possible uses of technology, for example giving access to courts for witnesses. I know he is discussing this matter with the Minister who has responsibility for courts and will continue to do so.
Greg Mulholland (Leeds North West) (LD)
11. What assessment he has made of the adequacy of the powers of the Judicial Conduct Investigations Office.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
The Judicial Conduct Investigations Office is an independent office that supports both me and the Lord Chief Justice with our joint responsibility for judicial discipline. Following public consultation, the JCIO introduced new rules and regulations governing judicial discipline on 1 October 2013. I am satisfied that it has the appropriate powers to carry out its function effectively.
Greg Mulholland
I thank the Secretary of State for that answer. The judicial conduct cases the JCIO has examined are there for all to see, but does he share the concern of some of my constituents that where judicial misconduct has been proven there is no direct mechanism to challenge decisions made as a result of it in a court?
Chris Grayling
Clearly I would have to know about the individual cases in order to give a detailed answer to that question, but where a judge is found to have committed an act of misconduct in relation to a case, I would, of course, expect the person involved to take appropriate legal advice. My experience so far is that we have a good process that deals with these issues promptly and sensitively, and the work of the office is handled pretty well.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
12. What steps he is taking to promote literacy in prisons; and if he will make a statement.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
Improving prisoners’ literacy is a key objective of education in custody. Where literacy needs are identified, prisoners are offered teaching and support as a priority. That can take place in classrooms, through peer mentoring, in libraries, at work and during other prison activities.
Tom Blenkinsop
New Government rules limit the number of books a prisoner is allowed to have at any one time to 12, which means that prisoners studying for Open university courses or other qualifications will not get hold of the required study material. Prisoners are much less likely to reoffend when they have taken educational courses, especially when they have completed them. What contingencies has the Secretary of State put in place to ensure that his rules do not undermine the educational outcomes of prisoners?
Jeremy Wright
Let me start with where I agree with the hon. Gentleman: it is undoubtedly the case that education aids rehabilitation, and where people want to engage in education we support them wherever we can. However, I should point out to him that the changes to the incentives and earned privileges scheme do not affect the number of books prisoners are allowed to have in their cells—that remains 12. Prisoners also have unrestricted access, within sensible safeguards which he would understand on the nature of books it is right to have in prisons, to the library as and when they need it. There is, therefore, no difficulty with prisoners having access to books, and where there is a specific requirement for a particular book that is not in the library, every effort is made to get the prisoner that book.
Jenny Chapman (Darlington) (Lab)
As ever, the Minister is being infuriatingly reasonable, but we do know that opportunities for purposeful activity are plummeting owing to overcrowding and falling staff numbers. That makes the ban on having books sent in to inmates all the more senseless, and the Labour party has already committed to reverse the ban. Will the Minister explain why having a ban on books being sent in to prison in any way aids rehabilitation?
Jeremy Wright
The hon. Lady is being uncharacteristically unreasonable. We are not banning prisoners having access to books. As I have just explained to the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), there really is no difficulty with prisoners having access to books. If only that were the biggest problem we face in connection with literacy in prisons, but it is not. What she must consider is whether she is really going to allow people to send into prison unrestricted packages, which, as long as they say “Books” on the outside, she will be prepared to accept at face value. If that is the case, she will have a rude awakening. This is a sensible restriction on packages coming into prison, but it is no restriction on prisoners being able to read or to study, which they can do now and will continue to be able to do.
Mr Philip Hollobone (Kettering) (Con)
13. How many foreign nationals are in prison in England and Wales; and how many such people come from (a) non-EU countries with which the UK has compulsory prisoner transfer agreements and (b) EU member states which are signatories to the EU prisoner transfer agreement?
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
As of 2 May, there were 10,516 foreign national offenders in custody. There are 798 prisoners from non-EU countries with whom we have compulsory prisoner transfer arrangements, and 4,162 from EU member states. All EU member states will be subject to the EUPTA, but 10 countries have not yet implemented it.
Mr Hollobone
All those people should be serving out their sentences in their home countries, and it is costing British taxpayers just south of £400 million a year to pay for their board and lodging. Yet in a written answer I received on 7 April, the Ministry of Justice confirmed that in the past five years, only five individuals have been compulsorily transferred to prisons in their own countries.
Jeremy Wright
My hon. Friend is absolutely right that, wherever possible, these people should be serving their sentences in their own countries. He knows, from conversations on this subject that he and I have had, that huge effort is put into ensuring that they do so, but he knows too that this is not a straightforward matter. Many of those whom we would wish to transfer back to their own countries seek to resist that transfer. That is precisely why he and I are in favour of changes in the Immigration Bill, which will make it much more difficult for prisoners repeatedly to appeal their deportation, so that they can be transferred back to their own country. He will support it, I will support it, and I hope it will shortly become law.
Mrs Emma Lewell-Buck (South Shields) (Lab)
14. What his strategy is for supporting victims of crime.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
The Government are committed to providing timely and effective support to help victims of crime to cope and recover. We have implemented a new victims code that tells people what to expect at every stage of the criminal justice process. More money than ever before—up to £100 million—will be made available to provide victims with the support they need, with the majority of services commissioned locally by police and crime commissioners. We are also piloting pre-trial cross-examination to help vulnerable victims and witnesses give their best possible evidence, without subjecting them to the full atmosphere of the courtroom. The first cross-examinations were recorded last week.
Mrs Lewell-Buck
I thank the Minister for his response. He has just reiterated what he said in March, which was that the Government plans for victim support and for supporting families of pre-2010 homicide victims will be dealt with by PCCs. However, I am a little confused because in a recent letter to me, the Minister seems to suggest that that will no longer be the case. Will the Minister please clarify his new position and explain what has changed his mind?
Damian Green
Most services will be commissioned by PCCs, but I am absolutely determined that the families of pre-2010 homicide victims should not be disadvantaged in any way, which is why I have made the decision that, if necessary, there will be back-up from a national fund so that no victims will lose out.
Chris Skidmore (Kingswood) (Con)
Victims of crime, the families of Ross and Clare Simons who were tragically killed by a disqualified dangerous driver with a raft of previous convictions, would like to thank the Secretary of State for his support for their campaign, Justice for Ross and Clare—as well as Members of this House who took part in a Backbench Business debate on dangerous driving in January—as shown by his significantly increasing sentences for those who kill or maim while driving dangerously while disqualified. What will be the legislative timetable for putting those sentences into law?
Damian Green
I am grateful for the support offered by my hon. Friend for the announcement made today by my right hon. Friend the Secretary of State. The short answer to his question is the start of next year.
Dan Jarvis (Barnsley Central) (Lab)
We all want a criminal justice system with victims at its heart, but will the Minister confirm that although police reports of child abuse, domestic violence and sexual offences are all rising, the number of cases going to court is falling, that rape cases last year were up but rape convictions were down, and that some victims, including a 24-year-old woman who was sexually assaulted in Hull last March, are having to endure the agony of waiting more than a year for justice? What action will the Minister take to ensure that victims feel that the system is working for them rather than against them?
Damian Green
The Government have taken a significant number of actions. The hon. Gentleman asked about domestic violence. The Home Secretary has commissioned Her Majesty’s inspectorate of constabulary to conduct a comprehensive review, and as result of that review, she has written to every police force to seek their support for the Home Office’s strategy to address HMIC’s findings. He talks about rape victims, and he will know that the 2014 to 2016 rape support fund has provided funding to 80 rape support centres across England and Wales, and that this year the Ministry of Justice is providing funding for two extra rape support centres on top of the 13 set up since 2010.
Rehman Chishti (Gillingham and Rainham) (Con)
In relation to supporting victims of crime and their families, I am delighted that the Secretary of State has now increased the sentence for those who cause death on the road while disqualified from two years to 10 years, which formed part of my Driving Whilst Disqualified (Repeat Offenders) Bill. Linked to that, the Secretary of State said that he would review sentencing for other road traffic matters. When is that likely to start, when will it be complete and will victims be able to have a say?
Damian Green
I am grateful for the support of my hon. Friend, who has campaigned long and effectively on this matter. The actions he wishes to see are in the process of being taken now.
Mr Robert Buckland (South Swindon) (Con)
16. What plans he has to reform the criminal law in relation to child neglect.
The Minister for Policing, Criminal Justice and Victims (Damian Green)
Child cruelty is an abhorrent crime which should be punished severely. Every child should be able to grow up in a safe environment. We are considering ways in which the criminal law can most effectively support that, and we will set out our conclusions and next steps in due course.
Mr Buckland
I thank my right hon. Friend for that answer. May I urge him to introduce proposals in the next Session of Parliament that will bring the criminal law of England and Wales into line with the family law of England and Wales and recognise all types of significant abuse, including emotional abuse, which is, I am afraid, all too prevalent in the lives of many of our young children?
Damian Green
I am grateful for the information and campaigning verve that my hon. Friend has brought to this issue. As he knows, I have been speaking to Action for Children and other bodies that are campaigning on the issue and, as I said, he will have our conclusions in due course.
Mark Pritchard (The Wrekin) (Con)
17. What his policy is on the role of chaplains in prisons; and if he will make a statement.
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
We strongly support a vibrant and flourishing prison chaplaincy. Chaplaincy teams facilitate religious practice across the faith traditions, providing pastoral care to prisoners and staff, religious teaching and courses. Chaplaincy contributes to the deradicalisation, resettlement and rehabilitation agendas.
Mark Pritchard
Will the Minister join me in thanking all prison chaplains for the important work they do in restorative and rehabilitative justice? Will he also commit today to write to all prison governors in both the private and public sectors to remind them that the Government are committed to the chaplaincy service and that chaplains should have unfettered access to prisoners?
Jeremy Wright
I am grateful to my hon. Friend for that question and I know that he takes a considerable interest in this matter. I shall certainly consider including a reference to the chaplaincy in one of our regular communications to governors. He will know that there are in the order of 350 employed prison chaplains and many hundreds more who attend on a sessional basis. I know that they will appreciate his support and that of many other Members of this House.
Kevin Brennan (Cardiff West) (Lab)
I know that the Minister understands the important part that chaplaincies play in the provision of music education in prisons. I thank him for undertaking to meet Billy Bragg and me to talk about some of the unintended consequences, perhaps, of the new restrictions that are being put in place. Has he had a chance to look at the recent Westminster Hall debate on this subject?
Jeremy Wright
I have, and I apologise again to the hon. Gentleman that I was not able to attend the debate myself. I look forward to meeting him. He, of course, is concerned about a specific issue with regard to the types of instrument that can be kept in a prisoner’s cell, but he is right to refer to the music that is made in communal settings, including as part of religious services, which—and I entirely agree with him—contributes to rehabilitation.
Mr Gary Streeter (South West Devon) (Con)
19. How much legal aid was granted last year to non-UK citizens.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
We do not, as I discovered when I took the job, rather to my surprise, currently have data on the nationality or residence status of legal aid recipients. I think that in the future, individuals should in principle have a strong connection to the UK in order to benefit from civil legal aid.
Mr Streeter
I am grateful to my right hon. Friend for his answer. It is quite a surprise, perhaps, that we have not kept a record of that in the past, but I am very grateful to him for the changes that he has made to the residence test, which should mean that whatever figure we spent on non-nationals last year, it will be saved for the British taxpayer looking forward. My constituents will welcome that.
Chris Grayling
We hear the chuckles from the Labour party, but let us face it: I had the same experience at the Department for Work and Pensions. The reality is that, Labour opened the door to immigration on a scale we had not seen before in this country. They kept absolutely no record of where state money was going. The reality is that they mismanaged things; we are picking up the pieces.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
Although it has been mentioned a couple of times, I should like to confirm to the House that we have announced today that disqualified drivers who cause death or serious injuries on the roads will face tougher sentences. Those who cause death will face up to 10 years in prison rather than the current maximum of two years, and we will also take action to address the current gap in the law for disqualified drivers who cause serious injury, by introducing a new offence that will carry a penalty of up to four years’ imprisonment. These much tougher sentences reflect the impact of these very serious offences on victims and their families. We will bring forward legislative proposals to give effect to these important changes as soon as possible. We will also launch a full review of all driving offences and penalties, to ensure that people who endanger lives and public safety are properly punished.
The majority of Members of the House will support the changes. I pay tribute to the determined work of Mandy Stock and her local MP, my hon. Friend the Member for Gloucester (Richard Graham), in bringing this important matter to the public’s attention.
Michael Connarty
Mr Speaker, you probably noticed that the Secretary of State did not answer the question, which was about the responsibilities of his Department. It was a statement. If he had outlined his responsibilities, I might have asked him, as I will anyway, why, when I ask him and his Department what his priorities are for provisions to contribute to the Modern Slavery Bill, which is under scrutiny in draft in this House, he transfers the question to the Home Office. When are we going to get an answer from his Department about its responsibilities and its contribution to dealing with the experience of victims of trafficking and abuse and of slavery in this country?
Chris Grayling
The reason that the hon. Gentleman’s question was transferred to the Home Office is that the Modern Slavery Bill is a Home Office responsibility. But I would say to him that, in terms of the support that we provide through victims’ finances, we are spending more on support for victims of modern slavery than this country has ever done before.
Mr Robert Buckland (South Swindon) (Con)
T4. I refer the House to my declaration in the Register of Members’ Financial Interests. I welcome the decision of my right hon. Friend the Lord Chancellor, in agreement with the Criminal Bar Association, to postpone the latest round of cuts to criminal legal aid fees. I urge him to use the opportunity granted for a thoroughgoing review of the system of graduated fees and very high-cost cases, to eliminate bureaucracy and restore greater fairness to the system.
Chris Grayling
I expressed a willingness to work with the criminal Bar to try to create a more streamlined, more efficient, less expensive system. It is a matter of regret to me that the criminal Bar continues to decline to take important cases, and that is a matter that we are addressing hard at the moment.
Sadiq Khan (Tooting) (Lab)
The hon. Member for Ribble Valley (Mr Evans), whom I have notified of this question, had private means so he could afford the best defence, and justice, in his case, was done; but he finds himself more than £100,000 out of pocket. That has caused him publicly to question his support for the Government’s legal aid plans, which have led to a two-tier justice system. What advice does the Lord Chancellor give to anyone charged with a serious criminal offence who is not fortunate enough to have their own private means, to help them get a fair trial?
Chris Grayling
My advice to such people is simple: to apply for criminal legal aid. In a serious case such as the one to which the right hon. Gentleman refers, they will have access to a QC, who will represent them.
Sadiq Khan
That is not the experience. The CPS has a QC and two barristers, but all people get on legal aid is a junior barrister. That leads to a two-tier criminal justice system. In answer to a previous question the Justice Secretary said that he could not answer questions about Operation Cotton because it is sub judice. I understand what sub judice is. My question is simple. How many other cases are similarly affected by applications to stay the trial because a fair trial cannot take place? The answer is not sub judice.
Chris Grayling
These are matters for the courts. I have no idea how many cases are subject to a request for a stay because those requests do not come to me personally. Two years ago Labour attacked our changes to civil legal aid. The hon. Member for Hammersmith (Mr Slaughter) attacked our changes to civil legal aid, saying that we should be looking for reductions in criminal legal aid instead. Two years later the Opposition have conveniently forgotten that and have changed their position totally. That is a party that says one thing and does another.
Mr David Amess (Southend West) (Con)
T5. Further to the answer that my right hon. Friend gave to the first topical question, I know that he is committed to ensuring the end of modern-day slavery, but will he update the House on the progress of his Department in ensuring that victims get access to the justice system and to legal aid?
Chris Grayling
Victims funding is enormously important. Through the various changes that we have made to the levy on those who are convicted of offences, we have provided far more funding for the support of victims than we ever had before. A couple of weeks ago we announced an additional £13 million worth of funding to ensure what my hon. Friend talked about a moment ago—that we could provide support to those families who are victims of pre-2010 homicides. I have made it clear to the Home Secretary that from the victims funding that I have available, I am also prepared to make additional support available if it is necessary to support victims of modern slavery and human trafficking.
Julie Hilling (Bolton West) (Lab)
T2. I am pleased to see that the Government are planning to do more about banned driving, but when will they do anything about the travesty of many thousands of people driving legally with more than 12 points on their licence, including a person in Liverpool driving with 47 points and a woman in Bolton with 27 points?
The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)
The whole House will share the hon. Lady’s concern about these cases, where a large number of points are accumulated by someone who does not end up being disqualified. She will know that courts have discretion not to disqualify in those cases and we cannot affect individual decisions in individual cases. However, as she knows, we will conduct a review of driving offences ranging more widely than the changes that we have announced today, and I think what she has described is a good candidate for inclusion in that review.
Tim Loughton (East Worthing and Shoreham) (Con)
T7. Will the Secretary of State consider following the example of Conservatives in the Canadian Parliament in putting forward a victims Bill of Rights in order to put the rights of victims ahead of the rights of criminals and put on a statutory basis a right to information, a right to protection, a right to participation and a right to restitution?
The Minister for Policing, Criminal Justice and Victims (Damian Green)
I am grateful to my hon. Friend for his suggestion. He will know that we now have a more all-embracing victims code than ever before. Also, with reference to getting the views of victims, tomorrow sees the first meeting of the victims panel so that the Secretary of State and I can hear face to face the experience of those who are victims and what they want to happen to future victims in the system.
Andy McDonald (Middlesbrough) (Lab)
T6. How many books, to the nearest thousand, sent to prisoners in 2013 were intercepted and found to include contraband?
Jeremy Wright
The hon. Gentleman will not be shocked to learn that I do not have that figure in front of me. As I said to his hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), the Opposition need to think carefully about what they are really worried about. If they are worried about prisoners having access to books, I have reassured them that they do not need to worry about that. If, however, they are worried, as the shadow Secretary of State told us he was, about the influx of drugs and other contraband substances into prisons, they might want to reflect on the sense of restricting packages as they come into prisons. That is what we are proposing to do. What are they going to do?
Dr Julian Lewis (New Forest East) (Con)
What progress have the Government made towards their aim of greater honesty in sentencing so that the public at large and victims of crime in particular know that when a sentence is handed out, the time served will correspond to a greater degree to the sentence handed out?
Chris Grayling
As you know, Mr Speaker, I believe that in an ideal world 10 years would mean 10 years. I do not have the resource to deliver that immediately because of the financial constraints upon us, but I have started by ending automatic early release for the most violent and unpleasant offenders in our society so that they can no longer expect to be released automatically halfway through their sentence, and have a possibility of release ahead of time only if they are demonstrably no longer a threat to the public as assessed by the Parole Board.
Mr Jim Cunningham (Coventry South) (Lab)
T8. A number of solicitors in Coventry have written to me to protest about the cuts to legal aid there and the effects that they will have on justice. What representations has the Minister received regarding the effect of legal aid reform on victims of trafficking and domestic violence?
Chris Grayling
We have excluded victims of trafficking and domestic violence from our legal aid reforms.
Duncan Hames (Chippenham) (LD)
The Government were due to publish before March their response to the public consultation on their proposed changes to the Office of the Public Guardian and supervision of deputies. When will this happen so that we can better protect the vulnerable people whose best interests are meant to be served by them?
The Minister of State, Ministry of Justice (Simon Hughes)
I am grateful for my hon. Friend’s continuing interest in this issue. I hope that we will be able to publish something before we break for the summer and elicit responses after that.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Has the Secretary of State looked at the damages awarded to triple killer Kevan Thakrar? Does he have any plans to change the rules so that serious offenders cannot profit from such compensation claims?
Chris Grayling
I regarded that as wholly unacceptable. It is a case that we defended in court, but, unfortunately, the judge reached a different view. I can assure the hon. Gentleman that I have made sure that there is no possibility of somebody in that position receiving legal aid to pursue such a case. I have also asked my officials to look at any other ways we have to make it more difficult for prisoners to pursue such a case.
Miss Anne McIntosh (Thirsk and Malton) (Con)
The Government have rightly said that they wish to speed up the placing of children in adoption, but will they confirm that that will not be at the expense of proper legal representation on legal aid for natural mothers who do not wish to give up their children for adoption?
Simon Hughes
The reforms are absolutely clear in wanting to do two things. The first is to ensure that cases are considered properly and in a timely way, and that is the joint concern of the Department for Education and the Ministry of Justice. The second is to ensure that all those who need to be represented in child-related cases have the adequate resources. I hope that that will give my hon. Friend the reassurance that she needs.
Robert Flello (Stoke-on-Trent South) (Lab)
Will the Minister join me in congratulating Superintendent Derek Lockie on and, especially thanking him for, his outstanding work for victims and victims’ organisations during his time leading the Victims’ Commissioner’s office? But does the Minister agree that the loss of such a talented and fiercely independent lead in that office is a matter of great concern?
Damian Green
I am happy to share the hon. Gentleman’s tribute to, I assume, his constituent, Mr. Lockie, but I do not share his worries because I know that independence and feistiness are still more than fully available in the Victims’ Commissioner’s office in the form of the Victims’ Commissioner, whom I look forward to both working with and being held to account by in the coming years.
Philip Davies (Shipley) (Con)
Does the Minister accept that most of the public think that open prisons are for people such as Lester Piggott rather than people serving 13 life sentences? Given that in a recent parliamentary answer that I received it emerged that 643 people are serving life sentences in open prisons, will he go back and assess each and every one of those cases to ensure that the open prison is the appropriate place for those prisoners, because I do not believe it is?
Jeremy Wright
I assure my hon. Friend that proper reviews of each of those people are carried out, not just by us but, on a great many occasions, by the Parole Board too, to ensure that people are suited for open prisons. For those offenders who will be released one day, we have a choice to release them either straight from the closed estate or from the open estate. The objective here, which he and I will both agree on, is to ensure that when someone is released from custody the risk to the public is as low as it can possibly be. In each and every case, that is what we seek to do. In the particular case that has been raised already this afternoon, as he knows we will look very carefully at the circumstances of this temporary release.
Lilian Greenwood (Nottingham South) (Lab)
My constituent Dr Heather Peto had her whistleblowing and discrimination case struck out by an employment tribunal judge because, she contends, the respondents’ lawyers deliberately withheld documents adverse to their case. Will the Minister advise me on how my constituent can request a police investigation, given that employment tribunal rules do not permit their judges to refer such matters to the police and the police will investigate only on the basis of just such a referral?
Damian Green
As with any other citizen of this country, if the hon. Lady’s constituent has evidence of criminal behaviour, she should take it to the police directly.
James Morris (Halesowen and Rowley Regis) (Con)
Does the Secretary of State agree that now is the time to introduce a mandatory prison sentence for those caught in possession of a knife so that we can send the strongest signal that carrying knives is unacceptable and will be punished?
Chris Grayling
As my hon. Friend knows, this is an area where our party has wanted change for a considerable time, and where I personally want change. Policy options are currently under consideration by the Government.
John Healey (Wentworth and Dearne) (Lab)
The Justice Secretary will want to see all court buildings used to their fullest and most efficient extent, so will he permit social security appeals to be heard in the Rotherham court buildings so that people no longer have to travel to Sheffield, Barnsley or Doncaster to seek justice?
Chris Grayling
The essence of the court reforms we announced six weeks ago is that we should have more flexible court buildings, using technology and new ways of working. I obviously cannot comment on the specific situation the right hon. Gentleman describes, but if he writes to me, I will happily look into the matter.
Nick de Bois (Enfield North) (Con)
The Secretary of State has long been aware of the campaign run by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and me on mandatory sentencing for knife crime possession. He has had the privilege of meeting Yvonne Lawson, whose son Godwin Lawson was tragically killed in 2010, and who has now devoted much of her life to mentoring and educating young children away from knife crime. Does the Secretary of State understand that she believes that mandatory sentencing for second offences would be a significant deterrent?
Chris Grayling
I pay tribute to my hon. Friend and to his constituent for the work they have done in this area. There is clearly an overwhelming view across the House in favour of change.
Greg Mulholland (Leeds North West) (LD)
I, too, warmly welcome the announcement on increased sentences for disqualified drivers. Will the Secretary of State seriously consider another common-sense move as part of the review: making it a presumption that licences will be taken away as a condition of bail for anyone charged with killing as a result of criminal driving?
Chris Grayling
My hon. Friend makes an important point. I invite him to take part in the review that we will be carrying out and to talk to my Department about these issues, because I am very sympathetic to what he says.
The Proposed Closure of the Santander Branch on Downing Drive (Evington, Leicester)
Keith Vaz (Leicester East) (Lab)
I would like to present a petition, signed by 1,059 residents of Evington in Leicester, opposing Santander’s intention to close the local branch in Downing drive. Evington is one of the very last urban villages in the city of Leicester, and the bank’s decision to close the branch will have serious consequences for local people. They will need to go into the city centre to withdraw or bank their money. I will shortly be arranging a meeting with the chief executive of Santander. The petitioners, led by Hakim Khalifa, Irene Johnstone, Anna Wills, Malcolm Taylor, Anup Patny, Richard Harrison, Ken Richardson, Peter Brooks and Donald Nolan, and supported by the two councillors Dipak Bajaj and Baljit Singh have this to say:
The Petition of residents of Leicester East,
Declares that the proposed closure of the Santander Branch on Downing Drive in Evington will have an extremely negative impact on elderly residents in the area who use the branch.
The Petitioners therefore request that the House of Commons urges the Department for Business, Innovation and Skills to meet with representatives of Santander to examine the impact of branch closures on local residents.
And the Petitioners remain, etc.
[P001347]
Extension of the Tyne and Wear Metro to Washington
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I am pleased to be able to present this petition asking the House of Commons to urge the Government to examine the feasibility of extending the Tyne and Wear Metro to Washington and bringing the Leamside railway line back into use. The petitioners and I believe that doing so would boost jobs and growth in Washington, and indeed in the wider region. The petition is accompanied by one along the same lines collected by Adam Robson from Washington, which as of today has been signed by 1,585 people on the change.org website.
The petition states:
The Petition of residents of the United Kingdom,
Declares that the Petitioners believe that the extension of the Tyne and Wear Metro to Washington is a vital, yet missing, part of the region’s transport system, and further that such an extension would make a significant contribution to the economic development of the town.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Transport to seriously explore the feasibility of extending the Tyne and Wear Metro to the town of Washington, utilising the old Leamside railway line.
And the Petitioners remain, etc.
[P001346]
AstraZeneca (Pfizer Bid)
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Dr Julian Huppert (Cambridge) (LD)
(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills if he will make a statement on the bid from Pfizer for AstraZeneca and the resulting effect on the economy, employment and skills in the United Kingdom.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
The life sciences industry is of paramount importance to the UK as part of the Government’s industrial strategy, which is securing long-term investment in key sectors where we are global leaders. We are committed to ensuring that we are at the forefront of life sciences research and development, with high-quality jobs, manufacturing and decision making in the UK.
There has been much comment and debate in the press recently on this important issue. I stress, however, that Pfizer has not yet made a formal bid to take over AstraZeneca. The Government must, and will, approach it from the position of even-handed neutrality and recognise that it is ultimately a matter for the shareholders of both companies. I assure the House that I and my colleagues across Government engaged early with both companies to ensure that the outcome is positive for the UK, precisely to avoid the failures of previous Governments in such situations.
The Opposition are calling for changes to the law, but we are operating within the framework that they introduced in 2002, when they removed Ministers from decision making about mergers, apart from in a few specified public interest areas. I note that they chose not to reform the regime in response to the Cadbury-Kraft merger. One of the Government’s options would be to consider using our public interest test powers. That would be a serious step, and not one that should be taken lightly. I am open-minded about that, while stressing that we are operating within serious European legal constraints.
In conclusion, I want to assure the House that we are alive to the national interest considerations in this regard. We see the future of the UK as a knowledge economy, not a tax haven. Our focus is on what is best for the UK: securing great British science, research and manufacturing jobs and decision making in the life sciences sector.
Dr Huppert
I thank my right hon. Friend for his response. This would be the biggest ever takeover of a British firm and deserves careful scrutiny. Will he tell us what has been learned from the failures of the Kraft-Cadbury takeover, which did not safeguard UK jobs? What powers does he have under current legislation to intervene in this area?
The Pfizer proposals are driven largely by tax law. What certainty does my right hon. Friend have that the USA would not simply change its tax code and that Pfizer would return to the US, jeopardising any benefit to the UK? Has Pfizer asked for any changes to our tax laws, including the patent box? What representations have the Government received from other countries, such as China, the US and Sweden? What international hurdles does he anticipate for a deal such as this, including at European Union and global level?
Pfizer’s board has given a written assurance that it will keep some research and development and advanced manufacturing in the UK, with an opt-out should circumstances significantly change. How broad is that opt-out and what consequences would Pfizer face if it broke its assurances? Given Pfizer’s history in Sandwich, what confidence does my right hon. Friend have in its commitment to the UK?
Both Pfizer and AstraZeneca currently have sites in the Cambridge cluster owing to our excellent research environment. AstraZeneca has announced plans to concentrate its R and D in Cambridge and to move its global headquarters to our successful cluster, bringing 2,000 jobs. People are already transferring to a site in the constituency of the Leader of the House of Commons, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). What does the Secretary of State think would happen to those proposals if the takeover happened? Many other parts of the country would also be affected. I have been contacted by my hon. Friends the Members for Cheadle (Mark Hunter) and for Macclesfield (David Rutley), and the right hon. Member for Leicester East (Keith Vaz), among others. What does the Secretary of State think will be the consequences of these proposals for the UK’s science and skill base? Does he share my concern about the uncertainty for the industry and people’s jobs? What assessment has he made of Pfizer’s and AstraZeneca’s relative investment in R and D?
What assessment has my right hon. Friend made of the increased risk to the UK of there being fewer pharmaceutical companies here? What discussions has he had with the Secretary of State for Health about the medical consequences of the merger and potential delays in life-saving drugs? Finally, does he agree that companies can become too big to innovate?
Vince Cable
I congratulate my colleague, who is representing Cambridge very effectively on this issue, as indeed is the Leader of the House of Commons, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). I recognise my hon. Friend’s expertise and his pioneering work on cancer drugs in the life sciences industry. I will deal specifically with the Cambridge question because it has obviously been at the centre of the discussion.
It may be useful to read the relevant sentence from the open letter that Pfizer sent to the Prime Minister, bearing in mind that this is a proposal and has not been agreed with the Government—we have not accepted the terms of the letter. The issue of binding obligations remains to be addressed. The letter states:
“Pfizer commits to complete the construction of the currently planned AstraZeneca Cambridge campus, creating a substantial R&D innovation hub in Cambridge and the wider scientific community, which will include core research units, laboratory based scientific support lines and European clinical development and regulatory functions.”
My hon. Friend is concerned about decision making, not just research, and the letter continued:
“Pfizer will base key scientific leadership in the UK who will lead all European and certain global R&D functions based in Cambridge.”
We have had similar conversations with AstraZeneca to ensure that it is similarly committed.
On my hon. Friend’s wider concerns, he made a perfectly valid point about the United States tax regime. Of course, we have no certainty about how the US would respond, which is why I stressed in my introduction that we must view the issue from the point of view of industry strategy rather than tax. Having said that, the fact that Britain has a competitive and attractive tax environment is a positive good, and we should celebrate that.
My hon. Friend mentioned three anti-trust jurisdictions, but there are almost certainly others. This proposal involves two big, complex international companies and a variety of jurisdictions will have to assess it.
On the relative merits of the two companies, I do not propose to treat this as a beauty parade, but it is fair to say that there have been very substantial redundancies from both companies in recent years, of roughly the same order of magnitude. On the positive side, they are very considerable investors and collaborators.
On the NHS points, I have established from the Health Secretary that there are no urgent life-threatening issues in relation to drugs. On competition, there is potentially an issue for the new Competition and Markets Authority and the European competition authorities, and that is where plurality would need to be addressed.
Mr Chuka Umunna (Streatham) (Lab)
Let us be clear: the issue is not whether this prospective takeover is a foreign one but whether the transaction will be good for jobs and growth in the UK; will protect Britain’s knowledge, research and skills base; and represents a long-term investment in the UK. With that in mind, may I ask the Secretary of State four questions?
First, Pfizer has said that it is committed to making a long-term investment in the UK through this purchase. Similar assurances were given to other companies acquired by Pfizer in the US and Sweden, yet subsequently research facilities were shut down and thousands of high-skilled jobs lost. Why should we believe that the same fate will not befall AstraZeneca?
Secondly, Pfizer says it is committed to investing in R and D, but John LaMattina, who served for over 30 years as Pfizer’s president of global R and D, is clear: this transaction will lead to “dramatic cuts” in R and D. Surely this supports the case for the immediate independent assessment of the deal that the Leader of the Opposition has called for.
Thirdly, the main rationale for this transaction appears to be tax. Sir David Barnes, former chief executive officer of AstraZeneca, wrote to us both—the Secretary of State and me—last night. He said that while companies should manage their tax affairs efficiently, the use of tax inversion proposed by Pfizer is a
“narrow basis on which to build an enduring and constructive business partnership.”
What guarantees has the Secretary of State received that if the tax position changes in the US, investment here will not be withdrawn?
Fourthly, the Secretary of State said that the Government have a neutral view. Why, then, on Friday, just hours after the AstraZeneca board rejected Pfizer’s advances for a third time, was he going round saying that Pfizer’s commitments were “welcome and encouraging”? Why was the Conservative party chairman talking of the deal being a
“great Anglo-American tie-up”?
The fact is that over the past week the Government have compromised the AstraZeneca board, leading the chairman to urge the Prime Minister to adopt a neutral position.
The bottom line is this: the assurances the Government have extracted from Pfizer are simply not worth the paper they are written on, are they? If I am wrong, why, less than three days after giving them, did Pfizer’s CEO say yesterday that following the completion of the AstraZeneca takeover, the company could be split into three parts, all of which could subsequently be flogged off?
Vince Cable
I have already dealt with some of the hon. Gentleman’s points, particularly in relation to the tax regime.
Specifically on neutrality, I made it very clear in any comments I made to the media that of course, as a result of conversations that we had with both companies, assurances given in writing were welcome. It would have been absurd to reject them; of course they were welcome. However, I also made it very clear that we needed to study the small print and that there was an issue about how these obligations were made binding. Of course, those issues now need very clearly to be addressed.
I am perfectly happy to take advice and lectures from anybody about how to handle this very difficult and sensitive issue, but the one example that we have in front of us of what to avoid is what happened in the Kraft-Cadbury merger. First, the then Government made no attempt at neutrality and said from the outset that there was going to be huge opposition to the takeover. Secondly, they failed to stop it, having said they were going to do so, and they sought no assurances of any kind, in writing or verbal; indeed, my predecessor has acknowledged that. We are trying to learn from their experiences.
We have taken up a position of neutrality. We acknowledge that there are very serious legal constraints, but I am keeping all options open on that front. We are seeking to locate this whole debate within our industrial future rather than in terms of tax advantage, and I made that very clear in my introduction.
Laura Sandys (South Thanet) (Con)
In his negotiations with Pfizer, has my right hon. Friend been given assurances that its current investment in Sandwich, which is growing at present, is secure and will be part of future discussions?
Vince Cable
I am well aware of the very constructive role the hon. Lady played when the original redundancies were announced. Indeed, despite the very large job losses, there is still a significant presence on the site to which she refers. The securing of that continued presence, which is substantial, and decision making would be a key part of any future discussion we have with the company.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I agree with the Secretary of State that we must learn the lessons of the Kraft-Cadbury takeover. Does he agree that one of those lessons is that we cannot necessarily take the assurances of the takeover company literally? If the evidence from the Select Committee investigations demonstrates that we may not be able to do that, will the Secretary of State undertake to ensure that the Government will intervene?
Vince Cable
I am not making any assurances at this stage; I am merely keeping the options open. I am surprised to hear the hon. Gentleman say that the Government received assurances on Kraft-Cadbury, because our study of the record suggests that the then Secretary of State acknowledged that no such assurances were ever given.
David Rutley (Macclesfield) (Con)
I am grateful to my right hon. Friend the Secretary of State for his statement, for which I also called. AstraZeneca is Macclesfield’s largest employer, with 2,000 highly skilled workers based at the site, so I recognise the concerns of local residents about the potential implications of Pfizer’s bid. With that in mind, what steps are being taken fully to determine the impact the bid could have on the UK’s life sciences sector? In particular, what steps are being taken to safeguard those highly skilled advanced manufacturing and packaging jobs in Macclesfield?
Vince Cable
I acknowledge the strong representation the hon. Gentleman has made to me before today, and that of my hon. Friend the Member for Cheadle (Mark Hunter) on the exact same issue. I will quote again from Pfizer’s letter to the Prime Minister, with all the provisos and conditions I suggested before. It says:
“Pfizer will actively look to locate manufacturing operations of the combined company in the UK, subject to the timing of the UK Patent Box proposals, and will retain substantial commercial manufacturing facilities in Macclesfield.”
Andrew Miller (Ellesmere Port and Neston) (Lab)
I will not say anything to prejudge the inquiries the Science and Technology Committee intends to make on this matter, but may I tell the Secretary of State that that quote from the letter to the Prime Minister differs from what the chairman said to me over the telephone? I do not doubt the Secretary of State’s word, but the situation is moving very fast and we need to recognise that. In the light of that, does he agree with me and the noble Lord Heseltine that he ought to apply a national interest test?
Vince Cable
I have tried to answer that question already. There is a public interest test. The hon. Gentleman uses the phrase “national interest test,” but the Opposition spokesman, the hon. Member for Streatham (Mr Umunna), was quite right to stress in his introduction that this is not a nationalism issue. I think we are all agreed on that. There are some excellent overseas companies in this country, such as Tata, Nissan and BMW, and they make a massive contribution. It is not an issue of nationality. Of course, both the companies under discussion are international companies in their different ways.
On applying the test, there is a question about whether it would be desirable to extend a public interest test in that way. My predecessor made it very clear in his comments to the Business, Innovation and Skills Committee that he rejected it on principle. I am not doing that, but it is worth recalling the practical problems involved, as set out by the hon. Member for Wrexham (Ian Lucas) when he held the key post in the Department. He said that
“it would need clearance by the European Commission. They would have to be satisfied that the consideration was legitimate and compatible with the objectives of the European Treaty, in particular in relation to the free movement of capital.”
We have to bear that in mind.
Mr John Redwood (Wokingham) (Con)
I would like the Secretary of State to clarify the legal position, because it seems to me that, under the law the previous Government introduced, Ministers were going to stay out of all these decisions, which would be trusted to an independent body; and that, under the 2004 European Union merger regulation that they signed up to, this is clearly a concentration that falls to be determined by Brussels regulation, not by this elected House of Commons. I therefore find it very surprising that the Opposition are demanding the Secretary of State intervene, when he might end up in an illegal position if he tried to do so.
Vince Cable
It is precisely because of the legal position that I have been studiously neutral on this matter. It is fair to say that there are elements of ambiguity—it is not absolutely clear—but the main position is exactly as the right hon. Gentleman described it: under the legislation we inherited from the Labour party, Ministers do not engage with decisions except in three very specific areas of public interest.
Mr Jack Straw (Blackburn) (Lab)
May I first say to the Secretary of State that whatever the defects of the 2002 legislation, which we have learned from experience, this Government have done absolutely nothing in four years to change that legislation, so I assume that they consent to it? Secondly, there is nothing in the legislation that, in the words of the Daily Mail today, requires the British Government or certainly the Prime Minister to go
“grovelling to an overseas corporation”.
Does the Secretary of State not accept that there has been a very sharp contrast between the neutral stand that he has tried to take and that of his fellow Ministers, including the Prime Minister, who have been supine in their approach to Pfizer?
Vince Cable
They have not been supine at all. My senior colleagues in government have been engaged in discussions with both companies, making the points about the national interest that I have stressed today.
I want to counter the point that the Government did absolutely nothing in response to the history of Kraft-Cadbury. One of the first things I did when I came into this job was to initiate a process that led the Takeover Panel to introduce very substantial reforms—the put up, shut up provision, which is the reason why we now have a 26 May deadline; the requirements for consultation; the requirements that directors have to take a long-term view in making decisions of this kind; and, crucially, the requirements of transparency. My opposite number has called in the press for transparency to be introduced, but it is already there: it was one of the changes introduced when this Government came into power.
Richard Harrington (Watford) (Con)
I am sure that my right hon. Friend the Secretary of State is aware that, in 2013, British companies were the second largest foreign investor in the US, with $36.5 billion of institutional investment. What message would it send to institutional investors from all over the world if, despite appropriate assurances from a company, the UK Government found a way to scupper a deal of this magnitude against the wishes of the shareholders?
Vince Cable
That is why I have stressed—it is fair to say that the Opposition spokesman has also stressed it—that we must not approach this matter in a nationalistic way, let alone in an anti-American way. One of the most difficult tasks I have undertaken in this Government was talking to General Motors to try to persuade it to invest heavily in the British car industry. We have no wish whatever to compromise our reputation for being open to good foreign investors.
Roberta Blackman-Woods (City of Durham) (Lab)
The Secretary of State may not have concerns about the impact of the proposed takeover on Britain’s science base, but many others do, including the chancellor of Cambridge university, Lord Sainsbury, and some prominent AstraZeneca investors. Will the Secretary of State say a bit more about why he does not agree with them?
Vince Cable
I do not know the basis on which the hon. Lady invented that question. From the outset of my statement and in all my subsequent comments, I have made it very clear that the interests of British science—R and D and the jobs associated with it—are absolutely at the centre of our concerns. As it happens, I have spoken to Lord Sainsbury, and I am aware of his concerns. I have spoken to other leading members of the scientific community—we are also aware of their concerns—and they acknowledge that we are working as best we can within the constraints we have to secure a good outcome for British science.
George Freeman (Mid Norfolk) (Con)
The life sciences and biopharma industry is in a period of transformation or restructuring worldwide, which is why there has been such strong support for the UK’s life science strategy and its groundbreaking steps to invest in genomics, the patent box, the catalyst fund and early access to innovative medicines. All those measures helped to ensure that Pfizer and AstraZeneca, when they closed their old plants, moved to Cambridge, England, not Cambridge, Massachusetts. May I suggest that rather than embrace the Opposition’s opportunistic calls for protectionist emergency legislation—the shadow Business Secretary dismissed such a step in 2012—we should instead seek to enter into a long-term, 10-year, R and D agreement with Pfizer-AstraZeneca based on accelerating the measures that we have put in place, which will show that we are in favour of business coming to the UK through incentives, not penal legislation?
Vince Cable
I think that is a very good statement of where we are. We are indeed trying to encourage business. We are looking 10 years ahead—that is the whole point of the industrial strategy and indeed why it is successful and why business welcomes it. To use my hon. Friend’s word, there is no question of protectionism in this area.
Mr Michael Meacher (Oldham West and Royton) (Lab)
Will the Secretary of State emphasise that the Government can and should intervene under the Enterprise Act 2002 in order to protect the public interest, given that AstraZeneca is a key national champion in the key pharmaceutical sector in which Britain is a world leader? Does he accept that this issue should be settled not on the basis of the tax inversion interests of a US multinational or an indiscriminate open market ideology, but solely on the basis of preserving and strengthening the UK’s scientific base and highly skilled British jobs—promises to preserve which have often been dishonoured by previous predators?
Vince Cable
There is nothing in the Enterprise Act 2002 —in retrospect, this is probably regrettable—that refers in any way to the issues that the right hon. Gentleman has described. I was part of those debates; I think he probably was, too. The only areas in which a public interest intervention is allowed under that legislation relate to national security and media plurality. Subsequently, banks were added; as they were overwhelmingly domiciled in the UK, that fell outside European legislation. Those are the very narrow grounds on which the existing legislation allows intervention.
Mr Douglas Carswell (Clacton) (Con)
Does my right hon. Friend agree that Britain benefits enormously from the free movement of investment and ideas? It is why all that R and D is happening in Cambridge and elsewhere in the first place. Will he therefore rule out any of the economic nativism being called for by some in this House and rule out any attempt to frustrate this deal on protectionist grounds?
Vince Cable
As I have already said, I would certainly rule out intervention on protectionist grounds, but I am not ruling out intervention, because we need to look at all the options available to us.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I agree with the Secretary of State when he says that this issue should not be decided on the basis of whether the proposed takeover comes from a foreign company. There is enough narrow nationalism in British politics without our adding to it here. However, there is a question of whether companies keep their promises. The right hon. Gentleman has referred several times to Kraft and Cadbury. Kraft broke its word when it said that it would keep open the Somerdale factory and then announced, after the bid had gone through, that it was going to close it. The question now is how does the right hon. Gentleman know and how can he ensure that, if the takeover goes through, Pfizer will keep its promises on R and D and the British science base?
Vince Cable
Should this proceed—as I said at the outset, we have not yet had a formal bid—it will obviously be a matter for negotiation. I am sure that the right hon. Gentleman would not want me to go into exactly what is being said in the discussions at the moment. Negotiations will clearly happen to make sure that any obligation is binding. I am sure that Pfizer itself would want to ensure that any obligations are clear and binding. Just to reinforce the point about nationality, which the right hon. Gentleman rightly stressed at the outset, we are talking about two international companies. I think we all acknowledge that AstraZeneca is an admirable company. It is Anglo-Swedish, with a Swedish chairman, a French chief executive and an international shareholder base. Pfizer is predominantly an American company and has a British chief executive. We are talking about international companies.
Mr Mark Prisk (Hertford and Stortford) (Con)
The Secretary of State is absolutely right to keep his options open—certainly at this stage. He is right, too, to learn the lessons from the appalling way in which the Kraft-Cadbury deal was handled. Following on from the remarks of my hon. Friend the Member for Mid Norfolk (George Freeman) about research and development, will my right hon. Friend give us some assurance that using purchasing power as part of a long-term industrial strategy is the intelligent way not to pick winners but to make sure that we have the key base of skills that we need for the future?
Vince Cable
That is an interesting new angle. I believe my hon. Friend is talking about NHS purchasing, which we have not considered in this context. We have always made it very clear—there are, of course, European rules on this matter—that public procurement cannot be used in a protectionist manner. We need to be very careful of that, but we are aware that public procurement can be used to secure strategic long-term investment. We are already seeing that on the railways, for example.
Katy Clark (North Ayrshire and Arran) (Lab)
If the Secretary of State reaches the view that it is not in the strategic and economic interests of the UK for the takeover to go ahead, but he believes the existing legislation to be inadequate, will he bring forward legislation to stop the takeover taking place?
Vince Cable
As I have said several times, I am keeping the options as wide as possible. I have also suggested that because of the European framework within which such matters are embedded, it would be rather difficult to do that.
Crispin Blunt (Reigate) (Con)
My constituents’ experience of Pfizer from hosting the development and occupation of its award-winning headquarters at Walton Oaks is that it is a model corporate citizen. What is energising some people in the House is that this is a fantastic vote of confidence in the United Kingdom, which gives us the possibility of hosting the world’s leading research-based pharmaceutical company.
Vince Cable
I am sure that it is a vote of confidence, but I am equally sure that the companies are motivated by hard-headed commercial considerations. We should therefore be motivated by the hard-headed considerations of the national interest.
Mr Gordon Marsden (Blackpool South) (Lab)
The Secretary of State refers to Pfizer’s assurances, but he must remember that Pfizer has pulled jobs and investment out of Sandwich not once, but twice: first in manufacturing and now in R and D. The chief executive of Pfizer has said on the record that he views the UK as
“an attractive place to do science and manufacturing.”
However, after the way that it has treated the workers in Sandwich, is that not a bit like Dracula saying, “I like the look of that blood bank”?
Vince Cable
I am aware that there were very sore feelings about the redundancies at Sandwich. The Government had to mobilise a taskforce to rescue the situation on the ground and it is now quite a successful part of the UK. We accept that there was hurt, but that is not unique to Pfizer. As I said in an earlier answer, a roughly equal number of redundancies has been made by both companies. That is not because of their corporate philosophies, but because their patents have run out and they have not developed the pipeline of new projects that is necessary to sustain growing employment.
David Morris (Morecambe and Lunesdale) (Con)
I was interviewed on “The World at One” this afternoon and was asked whether there would be a political gain for the Chairs of the Select Committees. I said that I serve on two Select Committees, both of which have Labour Chairs who are excellent. What disturbs me is that the Leader of the Opposition has gone on the record to say that we must look into the matter. Why has he suddenly said that about this particular company, when takeovers happen all the time in the City?
Vince Cable
I was slightly puzzled as to why the Leader of the Opposition made it a party political point that there would be a Select Committee inquiry. As I understand it, Select Committees are the property of the House. I am very happy to engage with either or both of the Committees. Indeed, we have already had extensive discussions with the Business, Innovation and Skills Committee about the legacies of Kraft-Cadbury and the takeover legislation. Those matters were thoroughly inquired into.
Angela Smith (Penistone and Stocksbridge) (Lab)
Does the Secretary of State agree that the way in which the Government have approached the takeover—appointing two civil servants to negotiate directly with Pfizer—is unprecedented?
Vince Cable
That is a bizarre criticism. We have talked to Pfizer and AstraZeneca on a neutral basis. Those conversations have been conducted by Ministers. The Prime Minister, the Deputy Prime Minister, the Chancellor, the Minister for Universities and Science and I have all been involved. Of course the Government have civil servants to carry out their instructions. I am baffled as to why the hon. Lady regards that as a problem.
Nadhim Zahawi (Stratford-on-Avon) (Con)
I commend the Secretary of State for his level-headed scrutiny of the proposed takeover. The Opposition lose their credibility when they play politics with such matters. May I ask him about his conversations with AstraZeneca? It claims that there are a number of gems in the company, which might mean that the business has been undervalued. Valuations are, of course, up to the shareholders, but those gems in the portfolio hold the prospect of R and D and jobs. What conversations has he had about those new products and what would happen to them?
Vince Cable
If the bid proceeds, I guess that we will need to have detailed discussions with both companies about the specifics, which would go beyond the broad commitments that Pfizer has offered in its open letter. I recognise that there is an awful lot more detail to be confronted.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I know it is not a matter of nationality, but I remind the Secretary of State of the adage, “Beware of a Scotsman on the make”—even if Ian Read left Scotland in 1978. Pfizer is in trouble. Its profits have dropped by 15% to £1.3 billion, and every time it takes over a company it is to seize a product. It was Lipitor—an anti-cholesterol drug—from Warner-Lambert; with Wyeth it was Enbrel, an arthritis drug, and then it shut Wyeth’s research. It shut its own research. There can be no guarantees that this company is after anything other than a tax haven. What can and will the Secretary of State do to stop that?
Vince Cable
I am obviously not going to give a running commentary on share prices today and tomorrow, but I repeat that throughout the industry, the big pharmaceutical companies have all been retrenching and creating redundancies because of the way technology has evolved. In fact, much of the dynamism in that industry—which I see frequently on my visits to universities—is through small spin-out companies. The nature of the industry is changing, and it is not just Pfizer that has been responsible for redundancies.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Will the Business Secretary confirm that both European competition authorities and the British authority will test this process against the consumer interest? It cannot be in the consumer interest for research to be limited or for existing production lines in this country to be closed down.
Vince Cable
The European Commission must make up its own mind about whether it wishes to investigate this matter, but it will do so from the standpoint of competition policy, which implicitly takes into account consumer benefit.
Ann McKechin (Glasgow North) (Lab)
In assessing the credibility of Pfizer’s claim, does the Secretary of State intend to consult trade union representatives of the many workers of AstraZeneca, who are obviously deeply concerned about their future?
Vince Cable
I am always happy to meet trade union representatives. I have already made this point briefly, but changes introduced to the takeover panel operations in 2010, when I came into the Government, include additional provision for consultation with the work force. I hope that the parties concerned recognise and act on that.
Stephen Phillips (Sleaford and North Hykeham) (Con)
If this takeover were to go ahead, what steps can and will my right hon. Friend take with his colleagues to ensure that members of AstraZeneca pension funds and their entitlements are properly protected?
Vince Cable
That is a new one and I will reflect on it. It is probably an issue for my colleagues in the Department for Work and Pensions and for the Pension Protection Fund, but I thank my hon. and learned Friend for raising the issue and I will certainly follow it up.
Paul Blomfield (Sheffield Central) (Lab)
AstraZeneca has pointed out today that its profits could double over the next decade as a result of new drugs resulting from its investment in research and development. In contrast, Pfizer has a strategy of cutting dramatically its investment in research and development. What impact does the Secretary of State think that the takeover could have on UK research capacity?
Vince Cable
The hon. Gentleman is making an exaggerated contrast between the two companies, but he is right to say that AstraZeneca has an ambitious and attractive long-term investment plan. We have encouraged that as part of the industrial strategy, and we want to see it fulfilled.
Mr Philip Hollobone (Kettering) (Con)
Will the Secretary of State confirm that if the public interest test is applied, it will ultimately be a decision for the European Commission?
Vince Cable
I have already quoted a former Labour Minister, the hon. Member for Wrexham (Ian Lucas), explaining the key role that the European Commission applies in this area.
Steve McCabe (Birmingham, Selly Oak) (Lab)
My constituents may be a bit perplexed at the inability of people to move on. The Cadbury parent company, Mondelez, has a pretty good track record in investment in R and D, and it will probably not thank us for dragging it into a debate four years later. Surely the real question about the Cadbury takeover is whether, if the price hits the right level, shareholders will sell. There is little any Government can do about that.
Vince Cable
Of course, that is the mechanics of a takeover in the market, and I acknowledge that, at the end of the day, shareholders have to make that choice. It is also fair to point out to the hon. Gentleman, as a Birmingham MP, that I think the Kraft-Cadbury story as it has evolved is not as simple as has often been portrayed. Kraft has committed itself to R and D work, although the takeover itself was not very satisfactory from a national interest point of view.
David Mowat (Warrington South) (Con)
Two years ago, the incoming management of AstraZeneca announced the closure of the science park in Cheshire with the loss of 2,000 science-based jobs. The majority of those jobs will not transfer to Cambridge, resulting in a reduction in the UK’s capability. Can the Secretary of State confirm that he does not consider the completion of the botched move to Cambridge to be a prerequisite for this deal?
Vince Cable
My hon. Friend is right that among the redundancies that had been announced in AstraZeneca a substantial number were from the Cheshire site, with more from the campus in Loughborough. As I understand it, a substantial number of staff are moving to Cambridge as part of the commitment made to the Cambridge development, and everybody concerned sees the success of the Cambridge campus as critical to the future of that company.
Mr William Bain (Glasgow North East) (Lab)
Since Pfizer took over rival company Wyeth in 2009, investment in research and development has halved. Without credible assurances from the Secretary of State, what will prevent the same from happening here, weakening our science base and putting at risk the long-term future of the British economy?
Vince Cable
As I have said many times before, we are primarily concerned about the need to protect jobs, investment and the life sciences sector, and we will do everything we can to make sure that happens, within the constraints under which I operate. We are well aware of the history of that company, but not only of that company.
Jeremy Lefroy (Stafford) (Con)
The public interest in the potential AstraZeneca takeover is rightly being looked at by my right hon. Friend, as one of the parties is a UK entity. Will the Government take a similar interest in the potential takeover of a multinational such as Alstom, which has substantial operations of vital public interest in the UK, but neither the bidder nor the multinational target is based in the UK?
Vince Cable
I have asked about the potential implications of the General Electric takeover for Alstom in the west midlands and—as far as we can establish—it has no negative implications. The GE-Alstom takeover is an interesting example. My French opposite number took strong exception to it, but has accepted that in reality the French Government had no alternative but to go along with it.
Kevin Brennan (Cardiff West) (Lab)
In answer to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), the Secretary of State said that any assurances given by Pfizer, were this deal to go ahead, would have to be binding. Can he clarify for the House in exactly what way he would be able to make them legally binding?
Vince Cable
My civil servants and I are devoting much thought to precisely that question. I am sure that the hon. Gentleman would not want me to spell out all the gory details.
Stephen Mosley (City of Chester) (Con)
I am a small, but long-term shareholder in AstraZeneca. Today’s questions have been focused on the effects on AstraZeneca and Pfizer itself. What has not been considered is that the takeover represents a £60 billion investment in the UK economy, and that money will then be reused to create new companies, jobs, investment and growth. Has my right hon. Friend made any assessment of the overall effect on the economy of this big cash injection?
Vince Cable
Of course, we will take that into account as part of our assessment in the national interest. Our starting point is the strength of the UK science base and our manufacturing industry, but there are positive potential implications for tax and for the flow of capital.
Mr Andrew Love (Edmonton) (Lab/Co-op)
I understand the constraints on the Secretary of State, but is he not concerned about the track record of Pfizer in this area—significantly less research and development than AstraZeneca, recent cuts and the closure of the Sandwich plant, with all the broken promises that that entailed? Does that not lead him to think that the Government should have a role in this matter, and will he invoke a public interest test to achieve that?
Vince Cable
Of course there is a role for Government, which is why my colleagues and I have been talking to the two companies and why we are trying to obtain the strongest possible commitment to the UK science base.
Guy Opperman (Hexham) (Con)
Many might think that this is a difficult blue pill to swallow from Pfizer, but two of the biggest companies in Northumberland are overseas-owned and brilliantly run. Does the Secretary of State agree that we do not want to go back to the dark ages of protectionism? The reality is that if this were a British company taking over an overseas company, none of us would be complaining.
Vince Cable
I am sure that is right. As a country, we have made great advances in taking a mature approach to foreign ownership, and a key turning point was when I was an adviser in my Department—I do not claim cause and effect—in the late 1970s and the issue of Japanese investment first arose. The Government of the time decided it was in the national interest. It broke a taboo, and foreign investment has been of great benefit to this country.
Tim Loughton (East Worthing and Shoreham) (Con)
It is odd that the Secretary of State questions the sustainability of the favourable tax regime in the UK, because it is precisely down to this Government’s progressive tax reform that overseas businesses want to invest and innovate in the UK. Glaxo is not the only player, although it is investing £140 million in my constituency, which is a sign of confidence. When assessing the bid and its impact on Pfizer jobs, will the Secretary of State look more widely at the impact of the UK pharmaceutical sector as a whole on the skills base and the supply chain?
Vince Cable
I went out of my way in several of my answers to stress the positive and important role played by our tax regime, both in respect of corporation tax and the patent box. The hon. Gentleman is right that in terms of industrial strategy we are concerned about the supply chain. That is being looked at in considerable detail, as it is in several other manufacturing industries. It is highly relevant in this context.
Mr Rob Wilson (Reading East) (Con)
Individual takeovers such as this one are extremely important and should be looked at and questioned, but does the Secretary of State agree that the bigger picture is that a large number of very important companies are queuing up to come to the UK and provide good, quality jobs and growth? Is that not the key issue today?
Vince Cable
The hon. Gentleman is absolutely right and that is a good summary. I stress that we need to be concerned about outcomes rather than processes. The outcomes are about good jobs, expansion, a strong science base and decision making.
Pupils at Risk of Educational Disadvantage
Chris Skidmore (Kingswood) (Con)
I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to create a pupil characteristic known as pupils at risk of educational disadvantage; to require schools to establish individual education plans for pupils so identified and to monitor the educational progress of such pupils during their school career; to require certain information about such pupils to be published at a national level and to be included in reports compiled by Ofsted; and for connected purposes.
I wish to cast the House’s mind back 15 years. In 1999, the social exclusion unit in No. 10 Downing street came up with a particular term, an acronym, to define a group of young people: those not in education, employment or training, otherwise known as NEETs. In creating such a term, the unit did not just create another piece of jargon. The term helped policy makers for the next 15 years to focus on solutions for a particular group of young people who desperately needed attention. Today, it is unthinkable that we would not judge a Government on their strategy to tackle the country’s NEET population. It is not the term itself that matters, but the conscious creation of a definition of a section of the population that has previously been without a voice. That in itself creates a question to which we, as policy makers, then need to search for answers. A lens has been formed through which we can view a landscape that has been previously obscured.
The only problem with defining NEETs as an at-risk group of young people who should be monitored—with public policy held accountable for a reduction in the NEET population, as the 2004 public service agreement target attempted to achieve—is that the focus is centred on the output, rather than on how the simple outcome of becoming a NEET could ever have happened in the first place. By the time young people are not in education, employment or training, attempting to find a solution to their desperate problems, while genuine and entirely correct, fails to understand the real question: why were they allowed to fall into that situation? How could the school they once attended have let this happen? What did that school do to prevent this from happening? If schools failed, why are we not holding up a mirror to them and saying clearly, “Do you think this is acceptable and why have you failed your pupils in this way?”
The truth, tragically, is that we know which pupils are at the greatest risk of becoming NEET from an early age—usually from 11, if not before. It is said that the strongest indicator of whether a young person will be a NEET is their GCSE results. Just a quarter of current NEETs have obtained the benchmark five good GCSEs. Those are today’s NEETs, but what about the NEETs of the future? For pupils born in this millennium—after 2000—who are due to choose their GCSE options this year, 120,000 are already at risk of becoming NEETs simply because they are already underperforming at key stage tests and not mastering the basics in the three R’s. Just 8% of pupils who fail to obtain level 4 at key stage 2 tests will go on to obtain five good GCSEs five years later. At level 3 key stage 2, just 13% of pupils will go on to obtain grade C in GCSE maths. More worryingly, 40% of pupils who obtained level 4 maths in key stage 2 do not go on to achieve a grade C five years later. Those two statistics indicate that we know that pupils have a problem from an early age, but it is a problem that we prefer to hide until the inevitable outcome of educational failure becomes horrendously real: a young person without the qualifications that he or she needs, and unable to find work.
I believe that we need a new characteristic that should be monitored in all schools, to which schools should be held accountable, and that schools should report data to the Department for Education so that we can better understand the scale of the challenge. Introducing a new category of pupils “at risk of educational disadvantage” that will apply from a much earlier age will help us to deal with the problem of at-risk groups who are not currently defined. Pupils’ progress through school must be charted far more accurately, and not merely for the purpose of understanding whether they have achieved their potential. For some pupils, the risk and the consequences of educational failure are simply too great to ignore. In education, accountability matters. Those who turn their backs on testing are, in truth, turning their backs on the importance of ensuring that the pupils who need help the most are given that help.
First, we must introduce a measure that will allow aspirations to be redefined and the bar to be raised. The present Government have recognised the value of creating new data sets and performance measures as means of raising standards in schools. The introduction of the English baccalaureate, or EBacc, is one example. I believe that the EBacc will, in time, be recognised as one of the most important education measures that the Government have introduced. The number of history GCSE entries is the highest it has been for 16 years, the number of modern languages entries has risen by 18%, the number of entries in the separate sciences is the highest it has been for 16 years, and the number of geography entries is the highest it has been for nine years.
Following the introduction of the pupil premium, targeted support has been available for an entire cohort who are deemed to be eligible for free school meals. I realise that many schools, if not the majority, will already be tracking and monitoring the progress of pupils who are recognised to be at risk of educational disadvantage. This is not unlike what happened in the case of the pupil premium. A research report by Hannah Carpenter, commissioned by the Department for Education and published in July 2013, showed that 90% of schools were already targeting pupils who were considered to be disadvantaged, but that did not mean that the introduction of the premium was wasted. Eighty per cent. of schools said that they had enhanced their existing support or introduced new levels of support, and more than three quarters of schools had encouraged families to register for free school meals. Those were welcome outcomes, achieved simply through the introduction of another lens.
The value of targeted support through the pupil premium is accepted, but that measure alone tends to place weight on economically based barriers to learning. I am thinking particularly of the bar that has been set for the definition of a “free school meals” pupil as one from a household whose income is less than £16,300 per annum, or which is receiving income support. We should recognise that free school meals status is no parallel indicator, or proxy, for educational disadvantage, although there is a close correlation. A great many economically deprived families remain outside the formal definition of the free school meals category. We need to think about what it means to be educationally disadvantaged. To put it simply, all pupils who are at risk of educational failure—failure to achieve the basics, or failure to achieve their potential—must in future be targeted, regardless of their economic status. Creating the category of “at risk of educational disadvantage” for pupils at an early age would help to raise their profile.
Given that “progress 8” measures are to be introduced in 2016, now is the ideal time to introduce the national benchmark that I propose, with new accountability measures to assess the progress made by pupils in eight subjects. Attainment at key stage 4 would be compared with what pupils were predicted to achieve when they left primary school aged 11. Under current proposals, pupils who score 29 points in their key stage 2 tests will be expected to achieve eight C grades at GCSE. Schools will be monitored for their ability to improve the level of progress that pupils will make in those eight subjects. That will become the new floor target for all schools, so if pupils make an average of half a grade less progress than expected in their eight subjects, their schools will be judged to be underperforming.
No doubt schools will also be expected to continue formally to monitor and record the performance of free school meals pupils. However, I hope that the formal introduction of a new category of pupils—those whom we know from key stage 2 to be at risk of educational disadvantage—will enable us to begin to create a renewed awareness of the causes and consequences of educational failure, and, above all, of the need for early intervention to prevent it from happening in the first place.
Question put and agreed to.
Ordered,
That Chris Skidmore, Mr Robert Buckland, Justin Tomlinson, Andrew Percy and Paul Uppal present the Bill.
Chris Skidmore accordingly presented the Bill.
Bill read the First time; to be read a Second time on Thursday 15 May and to be printed (Bill 204).
Wales Bill
(10 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:08 - The House divided: - Ayes: 0 / Noes: 0 - Question accordingly negatived.
19:17 - The Committee divided: - Ayes: 6 / Noes: 265 - Question accordingly negatived.
21:06 - divided: - Ayes: 5 / Noes: 260 - Question accordingly negatived.
Hywel Williams (Arfon) (PC)
I beg to move amendment 32, in page 6, line 20, after ‘description’, insert ‘, a tax credit of any description’.
This amendment would allow the Welsh Government, by resolution of the National Assembly for Wales, to introduce new tax credits.
The Chairman of Ways and Means (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
Amendment 33, in line 32, leave out ‘, each House of Parliament and’.
This amendment would enable the Welsh Government, by resolution of the National Assembly for Wales, to introduce a new tax without the need for approval by resolution of both Houses of Parliament.
Amendment 40, in page 7, line 13, at end insert—
‘(10) In the event that the power to add new devolved taxes under Section 116C, or the power to add new devolved taxes under Section 80B of the Scotland Act 1998 is used, the Chancellor of the Exchequer must undertake a review of the benefits of symmetry in the devolution of taxes between Wales and Scotland.’.
Clause 6 stand part.
Government amendment 20.
Clause 7 stand part.
Amendment 7, in clause 14, page 19, line 5, at end add—
‘(3) The Secretary of State shall review the historical volatility of stamp duty land tax revenues in Wales, and place a copy of the review in the Library of the House of Commons.’.
Clause 14 stand part.
Clause 15 stand part.
That schedule 2 be the Second schedule to the Bill.
Clause 16 stand part.
Amendment 8, in clause 17, page 20, line 29, at end add—
‘(3) The Secretary of State shall review the historical volatility of landfill tax revenues in Wales, and place a copy of the review in the Library of the House of Commons.’.
Clause 17 stand part.
Clause 18 stand part.
Amendment 42, in clause 28, page 29, line 34, leave out paragraph (2)(b).
Amendment 43, in line 36, at end insert—
‘( ) Part 2, except the referendum-related provisions and sections 19 and 20, will come into force the day after the Secretary of State has laid a report before each House of Parliament on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales; the report must be laid within six months of this Act receiving Royal Assent.’.
Hywel Williams
Recommendation 11 of the cross-party commission on devolution in Wales states that the National Assembly should be given a power to introduce specified taxes and any associated tax credits in Wales. This recommendation was not included in the Bill. That might have been merely an oversight by the Government, although those of us who are a little more sceptical suspect that they deliberately omitted it from the Bill. Whatever may be the case, amendment 32 seeks to align the Wales Bill more closely with the Silk commission recommendations.
We in Plaid Cymru welcome the inclusion of an ability to introduce specified new taxes. We note that the Silk commission recommendation 11 states that the Welsh Government should retain the revenue from these new taxes without a deduction from the block grant. I hope the Government will ensure that that is indeed the case. Perhaps the Minister will confirm that when replying to the debates.
Although the issue of Barnett was not within the remit of the Silk commission or this Bill, it is a closely related issue and I hope we will be able to debate at least some of it when we look at new clauses. It is important not least because Labour, if I correctly understand its position, has said that Barnett reform is a necessary condition before it will support greater financial powers for Wales. That is a significant statement on its part, I think.
The ability to vary income tax and access to potential borrowing for investments that can boost the economy and create jobs in Wales are the central tenets of this Bill, but there are several areas within the Bill that, if fully developed, could bring real benefits to the Welsh economy. That is why, in addition to the ability to introduce new specified taxes, the ability to introduce associated tax credits is so important. Although much careful research and preparation would be needed before introducing a new tax and associated tax credits, and it would be unwise to pre-judge where and when that might be done, at least giving the Welsh Government the ability to do this would give them much more freedom to act and take greater responsibility for developing our economy, which hon. Members on both sides of the House wish to see. We could raise the revenue, where necessary, and provide tax credits in order to stimulate activity or to provide assistance wherever it was felt necessary, be it for individuals, businesses or areas of industry.
The amendment aims to preserve the integrity of the original cross-party Silk recommendations. For Plaid Cymru it makes perfect sense, and I urge hon. Members on both sides of the House to support it. Should we not press the amendment to a vote, or were we to do so and it were to fall, Government Members might consider tabling their own similar amendments on Report. Given that the principle of new taxes has been conceded in the Bill and that tax credits could be introduced, we would wish that to be the case.
Mr Mark Harper (Forest of Dean) (Con)
I will speak in more detail in my speech about why I do not agree with the hon. Gentleman’s amendment 33, but may I ask him to clarify whether he envisages the definition of a “Welsh taxpayer” for any of these new taxes being the one set out in clause 8, proposed section 116E? That is relevant to my constituents, who might inadvertently be caught by any of these new taxes.
Hywel Williams
The hon. Gentleman raises a point that was made at an earlier time. He has outlined particular difficulties faced by his constituents, with which I have a great deal of sympathy. I might as well concede that this is a probing amendment and I would be interested to hear what he has to say later in the debate. We have a great deal of sympathy with hon. Members across the House who point to the border as a particular problem area; as has been said in the earlier debate, so many of our population live just over the border and vice versa, so I entirely concede that we need to take this issue seriously.
Paragraph 4.6.8 of the Silk commission’s first report states:
“In addition to the use of taxes to achieve policy outcomes in devolved areas, credits can also be applied so that activities are effectively subsidised. While existing tax credits such as the working tax credits (and in future the Universal Tax Credit) should remain UK wide, the Welsh Government should be able to introduce its own credits in relation to devolved taxes and through use of devolved grants and subsidies to promote investment and getting people into work.”
That is a laudable aim and I urge hon. Members on both sides of the House to support us in order to fulfil it.
Amendment 33 would enable the Welsh Government, by a resolution of the National Assembly for Wales, to introduce a new tax without the need for approval by a resolution of both Houses of Parliament. Obviously, Plaid Cymru’s starting position is that Wales should be an independent country and that it should be for the people of Wales, through our own democratic institutions, to decide how its taxes are structured. However, the amendment would simply tidy the process of bringing in the new tax credits should the Welsh Government, through the National Assembly, decide to do so. I need not remind Members who represent Welsh constituencies or who are interested in the smooth functioning of democracy of the disastrous bureaucratic and constitutional nightmare that was the legislative competence order system. I was involved in that as a member of the Welsh Affairs Committee. Before the successful 2011 referendum on full primary law-making powers, the Government of Wales Act 2006 provided for further devolution, on paper. The reality, I am afraid, was that it came to resemble a Kafkaesque constitutional quagmire when the powers were to be devolved. The Welsh Affairs Committee, reporting in 2010, stated that requests for extra powers from the Welsh Assembly Government, as it was named then, too often disappeared into the black hole of Whitehall.
Mr Mark Williams (Ceredigion) (LD)
We agree that we have, on the one hand, the extreme of the LCO system and, on the other, the reserved powers model, which we will come to later in this group. The hon. Gentleman would, I think, subscribe to the reserved powers model.
Hywel Williams
The hon. Gentleman surmises correctly. The model is clearer, more elegant and more easily understandable, and we will be able to debate it later.
Going back to the LCO process, the hon. Gentleman will recall, as he participated in those long debates on LCOs—
Wayne David (Caerphilly) (Lab)
As the world expert on LCOs, I certainly concur with the hon. Gentleman about the cumbersome system. It is far better that legislative powers are solely with the National Assembly for Wales. Does he agree that despite the faults of the legislative competence order, the House succeeded in improving substantially the suggestions that came from the Welsh Government regarding LCOs and what happened to the legislative process afterwards?
Hywel Williams
I certainly do not want to rehearse the discussions and arguments we had on LCOs. LCOs were a curate’s egg—occasionally they went through without touching the sides. I remember chairing the LCO on mental health, which lasted for two sessions. The LCO on the Welsh language took rather longer.
Mr Mark Williams
Will the hon. Gentleman remind the House—I think he did some specialised work on this—of the number of hoops we had to go through to achieve legislative competence orders and of the fact that that did nothing to enhance democracy, which, mercifully, this Bill is seeking to remedy?
Hywel Williams
I thank the hon. Gentleman for that point. The contrast between what I propose now and the LCO system is extreme. I think I counted 27 individual stages, but it might have been 28 or 26—the figure is lost in the mists of time. It was an extremely complicated business. To be fair, Members on both sides of the House made positive contributions. I pay tribute to the hon. Member for Aberavon (Dr Francis), who is not in his place, for his skilled chairmanship. We got a lot through, but it was against the odds.
There is a danger that matters get lost in process, are ignored by the government machinery and do not progress at good speed. If we repeated the LCO process, we would be repeating a mistake and would unnecessarily create a drag on the smooth functioning of democracy. Surely the Members of the Assembly, through scrutiny, have, in partnership with the Treasury, the ability to carry out the requisite research, impact assessments and consultation. I hope that that ability is there. The need for a lengthy process of resolution in each of the Houses of Parliament when there is so often a strain on time—perhaps not at the moment, but often there is a strain on time—is surely a bar to the swift adoption of the system once the requisite preparatory work has been carried out in Wales. Surely if a matter is devolved, it should be devolved, and devolved fully and without the Government in Westminster seeking to keep their oar stuck in. As with many of our amendments that were considered in Committee last week, we say that it should be for the people of Wales, through their democratically elected institutions and representatives, to decide on the matters that have been devolved without being harried back and forth. The Government have conceded that Wales should have the power to introduce new taxes, and we are arguing for tax credits as well, as did Silk. That should be done without strings being attached that could prove a restriction and impediment.
Finally, let me return to the LCO process, which operated in much the same way as the new tax process is designed to operate. The Assembly used to submit a request for more powers, which was then scrutinised by the Select Committee on Welsh Affairs before its final approval by MPs and peers. There is no proposal in this case of scrutiny by the Welsh Affairs Committee, and one does not have to be a constitutional expert and/or an accountant to see what a tremendous drag and immensely time-consuming process that might be. At the time, the critics of the LCO procedure maintained that it was cumbersome and opaque, and they were proved right. Sir Jon Shortridge, the former head of the civil service in Wales, said that Wales was often seen as “a complication too far” by London. The Welsh Affairs Committee also said that there was “an unacceptable lack of transparency” in the Whitehall clearance process.
All this talk of the Government of Wales Act 2006 and the 2011 referendum reminds me that Westminster always relinquishes its grip on power with a clenched fist. Where it can, it will inevitably introduce roadblocks or constitutional caveats that mean that the power on offer is never fully recognised at first despite the overwhelming majority of people in Wales being in favour of devolving more powers.
For the smooth functioning of democracy and to save Members’ time in this place in the future, I strongly urge hon. Members to support our amendment should it come to a vote and impress on the Government the need to learn from the mistakes of the past and streamline the process of introducing new taxes and tax credits in Wales.
Mr Harper
It is a pleasure to serve with you in the Chair, Ms Primarolo. After the earlier exchange, I feel left out by not having experienced the pleasures of legislative consent orders. They sound absolutely fascinating and were clearly invented by the hon. Member for Caerphilly (Wayne David) so that he could be the self-proclaimed world’s greatest expert in them. I am feeling very left out indeed, but let us return to the matter in hand.
I want to say a little about this group of amendments and new clauses. The hon. Member for Arfon (Hywel Williams) reassured me on one point by saying that he shared my concerns, but I shall talk about that in a moment.
When I read amendment 32, which would allow the Welsh Government to introduce tax credits by resolution of the National Assembly, I wondered whether, as tax credits are an instrument of welfare policy, it would effectively amount to the devolution of that policy. That was perhaps a little unfair, but the hon. Gentleman did go on to talk about universal credit and other areas of welfare policy, suggesting that he would like to see them devolved to the Welsh Government. I do not think I would.
I understand the hon. Gentleman’s view, as he wants an independent Wales and to devolve absolutely everything, but if we devolved every area of tax and spending—welfare spending is, of course, the single largest area of Government expenditure—that would in effect create an independent country. I accept that that is the hon. Gentleman’s ultimate goal, but I suspect that in this Chamber today it is a goal that is not shared by anyone other than his right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd). It certainly is not shared more widely. I would not support it and the hon. Gentleman set out clearly in his opening remarks why this measure on tax credits is a Trojan horse to smuggle through the changes to welfare policy more generally that I, for one, would not want to see introduced.
Amendment 33, also tabled by the hon. Member for Arfon and his colleagues—I am glad to see the right hon. Member for Dwyfor Meirionnydd in his place—concerns a new tax. I asked the hon. Gentleman a question about a matter of concern to me. I said on Second Reading and on the first day in Committee that I was content with the definition of a Welsh taxpayer as set out in the Bill, but this proposal fills me with concern for two reasons. First, it does not say anything about whether the definition of a Welsh taxpayer would remain the same, and I set out in earlier debates my concerns about companies in my constituency employing residents of both England and Wales and the increased complexity. I raised that with the Exchequer Secretary to the Treasury, who was able to reassure me that Her Majesty’s Revenue and Customs would be able to look at such things when it reports both to this House and to the Assembly.
Owen Smith (Pontypridd) (Lab)
The hon. Gentleman is making an interesting contribution. I agree about the need to consider the impact in other parts of Britain, including Northern Ireland, of asymmetry in taxation. He says he is sanguine about the prospect of these powers being exercised in Wales, but would he be sanguine about lower taxes for higher rate taxpayers potentially attracting to Wales higher rate taxpayers who contribute to the local economy of the Forest of Dean?
Mr Harper
I have a couple of responses. First, because I was present for our interesting debate on the first day of Committee, I know that the so-called lockstep provisions in the Bill mean—this is my understanding; I am sure the Exchequer Secretary will correct me if I am wrong—that it would be impossible to reduce the higher rate of taxation without also reducing the other rates in lockstep.
I would be delighted if taxes generally were reduced. Government raise too much money and spend too much of people’s money, and I am very pleased that in his recent Budget the Chancellor was able to increase the personal allowance again to allow my constituents to keep more of their money. I think they generally spend it better than even the Exchequer Secretary can spend it. I want my constituents to keep more of their money and keep his grubby mitts off it, but of course we have challenges to deal with, such as the deficit that we inherited, so increasing those tax cuts will not be possible. Cutting taxes generally would be helpful, and if cutting taxes in Wales meant that we saw lower taxes across the United Kingdom, that would be an entirely welcome prospect.
Owen Smith
Cutting taxes in Wales would not necessarily lead to lower taxes across the whole of the UK. The hon. Government is right about the lockstep provisions being designed to mitigate the effect of cutting taxes only for the wealthiest. However, if taxes were cut, as the Secretary of State has said he wants to do, for taxpayers in Wales, would that not be a potential disbenefit to the hon. Gentleman’s part of the world, should people move in order to avail themselves of those lower tax rates in Wales?
Mr Harper
No. That would create pressure on the Chancellor to make sure that tax rates were lowered. I am grateful to note that the hon. Gentleman appears to have become a convert to lower taxes and that will lead to an interesting conversation with members of his shadow team, who appear to be wedded to higher taxes. Creating an incentive to put downward pressure on taxation not just in Wales but across the United Kingdom would be welcome. There are many pressures from interest groups and from individuals campaigning for Government to spend more money. We all know that there is no such thing as Government money; there is only money belonging to taxpayers. It is either money belonging to taxpayers today that we relieve them of or, if we borrow money, we relieve future taxpayers of money. Lower taxes mean that people keep more of their own money. I am very content with that. I just want to make sure that it works properly.
On the point about higher rate tax, I had an entire debate in Westminster Hall on this to make it clear that I thought the priority for the Treasury when cutting taxes was to focus on those on median incomes—those in the middle. That is why I welcomed the changes to the personal allowance in the Budget, which in the context of the changes that we have made over the past four years deliver more of the benefit to those on middle and lower incomes than those at the higher end. My priority is focusing on those on middle incomes.
David T. C. Davies (Monmouth) (Con)
My hon. Friend is making a logical case to give the Assembly powers over taxes, but is not the reality that the Assembly will not behave in a logical fashion? Rather than cutting taxes, as he presumes and as even the hon. Member for Pontypridd (Owen Smith) seems to be suggesting, the Assembly will ratchet up taxes at all levels, and my hon. Friend will benefit enormously because many talented and wealthy people in Wales will cross the border, go and live in his constituency and pay their taxes there, leaving us bereft of the money that we could be spending on public services.
Mr Harper
I am grateful for the intervention from my hon. Friend, who chairs the Welsh Affairs Committee. He has put me in two minds. I am not sure whether to welcome his pessimism about the way he thinks the Welsh Assembly Government and the Welsh Assembly will behave, and look forward to the incredible opportunities that he sets out. If the Welsh Government do not learn from history and if they think it sensible to raise taxes, whether landfill taxes, stamp duty land tax or income tax, the flipside of the proposal from the hon. Member for Pontypridd (Owen Smith) is that rather than attracting people to go and work and live in Wales, the effect may be the one that my hon. Friend suggests.
If any businesses currently located in Wales want to relocate to the Forest of Dean, they will be made incredibly welcome. I will personally talk to the local council to smooth their way, and if residents want to come and live in the Forest of Dean, they will find a very good quality of life. If they want to pay their taxes in England, I certainly will not stop them. It seems that I can have it both ways. If the Welsh Assembly behaves in the way my hon. Friend fears, it will be good for my constituency. But to be serious for a moment, he puts his finger on it: he worries about the impact on Wales. I trust to some extent the good sense of voters in Wales.
By not devolving the tax powers that are set out clearly in the clauses that we are debating today, one of the problems is that the Welsh Assembly Government have to worry only about spending money, not about raising it, which leads to the consequences that my hon. Friend sets out. The Welsh Assembly Government do not have to think carefully about the price to be paid. If politicians’ minds are focused on the price to be paid, whether it is individuals choosing to leave Wales or entrepreneurs choosing either not to set up their businesses in Wales or to move existing businesses to more hospitable parts of the United Kingdom, that will concentrate minds well, even if the Government there are not of that mind to start off with. It may also create political opportunities for parties that do behave in such a way to make inroads in the Welsh Assembly elections and in parliamentary elections to this House.
Owen Smith
The hon. Gentleman is being generous with his time, even if he is slightly misrepresenting what I said earlier. The proposal to cut taxes in Wales rested on the prospect of a Conservative Government, led by his Front-Bench spokesmen’s colleagues in Wales. As he is talking about inward investment and business investment, would he like to take this opportunity to congratulate the Welsh Government on a 244% increase in foreign direct investment into Wales, higher than in any other part of Britain?
Mr Harper
I always congratulate people on bringing investment into the United Kingdom. I am sure that the Welsh Government work hard to do that. But I am also sure that those businesses are mindful of the competitive corporation tax regime created by my right hon. Friend the Chancellor, which has provided a good base in the United Kingdom from which to do business. That competitive corporation tax regime does not just benefit companies in England; it also benefits companies in Wales, Scotland and Northern Ireland. That competitive tax regime is one that we want to see go further.
Alun Cairns (Vale of Glamorgan) (Con)
I cannot let the shadow Secretary of State for Wales get away with championing the success of inward investment and talking in percentage terms. We need to recognise the low base and the Welsh Government’s poor performance in recent years in attracting inward investment. Clearly, any growth needs to be recognised, but we also need to recognise the failure over the last decade, which compares significantly with the previous record.
The Second Deputy Chairman of Ways and Means (Dawn Primarolo)
Order. We are now going just a touch wide of the amendments, which are specifically about new powers and the process for them. The hon. Member for Forest of Dean (Mr Harper) is also ranging quite widely, so I would be grateful if he addressed the amendments.
Mr Harper
I will not dwell at any length on my hon. Friend’s point, but it is always interesting to get that perception of the facts on the record, which is slightly different from that set out by the shadow Secretary of State.
The Minister will doubtless talk about new clause 20 —this probably comes back to the amendment tabled by the hon. Member for Arfon—which limits the ability that otherwise might be there for the Welsh Government to interfere with how HMRC operates, and how they use their powers, unless it is specifically for devolved taxes. I am pleased that it contains the condition that the Treasury has to consent to the provision. I think that this is the response to the concern I raised in my question to the hon. Gentleman on amendment 33, which is that even if the tax falls directly on Welsh taxpayers, there may be effects that range more widely, either on businesses located in England, or businesses that hire people from Wales. The Treasury having to consent to that enables a UK-wide perspective to be applied, allowing Members of this House who represent English constituencies that will be impacted by the tax to have a democratically accountable mechanism for speaking to Treasury Ministers, raising those concerns on behalf of their constituents, and allowing the Treasury to take them into account. I am pleased that that Treasury backstop provision remains there and I would not want to see it removed.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
The hon. Gentleman might be worrying too much about something that is fairly straightforward. In fact, just outside Chester there is a pub that has one bar in Wales and one in England, and it seems to be doing rather well.
Mr Harper
I do not doubt that businesses can operate in that way. What I do not want to see is businesses that today are operating perfectly happily, attracting customers from both sides of the border, finding that the Government’s intervention will impose a complicated regime. We all know the refrain, “I’m from Whitehall and I’m here to help you”—I assume that “I’m from Cardiff Bay and I’m here to help you” is greeted with the same warm delight in Wales. If they happen to have land on both sides of what is currently not a border, as far as they are concerned, I do not want them suddenly to be faced with a complicated taxation regime that will require them to hire expensive accountants to deal with it.
My plea to the Minister is therefore this: recognising that we would have to deal with that land in different ways, can we ensure that whatever administrative system is put in place is as straightforward as possible, and not just for HMRC, but for my constituents and those in the constituency of my hon. Friend the Member for Monmouth (David T. C. Davies) who might operate on both sides of the border?
Notwithstanding my concerns about some of the amendments that have been tabled, I generally welcome the devolution of these taxation powers to the Welsh Assembly, because I think that democratic institutions that spend money also ought to raise it.
Owen Smith
It is a pleasure to serve under your chairmanship, Ms Primarolo. I rise to speak to amendment 40 to clause 6, which stands in my name and that of my hon. Friend the Member for Llanelli (Nia Griffith); amendments 7 and 8 to clauses 14 and 17 respectively, which deal with minor taxes; and amendment 43 to clause 28, which relates to reserved powers. It is also worth bearing in mind the amendment to clause 28 that we tabled last week, on what we described as the fair funding lock, which is relevant to that part of my remarks today.
All these amendments relate to the theme of stability and symmetry. Our contention is that although devolution has, for all sorts of reasons—historical, political appetite and timing—developed in an asymmetrical fashion across the UK, which has often been desirable and necessary, on both sides of the House we recognise that it is potentially undesirable for that degree of asymmetry to continue in future. It is undesirable because with it has come a certain instability in our devolution settlement. It is not a pressing problem of instability that has in any way threatened the existence of the UK, until recent months and years, but it is increasingly problematic. That instability and asymmetry has traditionally been exploited by nationalists in Wales and Scotland in good faith and with good intentions, from their perspective, but has led them to ratchet up demands for new and varied powers in Wales and Scotland, setting one part of Britain against another in seeking to extract benefit from their objectives of independence for Wales and Scotland through asymmetry of the settlement.
In recent months, another party has joined them in seeking to divide some parts of Britain from others and to separate people in one country of Britain from those in another for party political gain and ideology. That is the Conservative party, which has recently become a zealous if late convert to the cause of tax devolution and competition, and sees an ideological and legitimate benefit for a party that believes in low taxation, the Laffer curve and the logic behind the comments by the hon. Member for Forest of Dean (Mr Harper). It thinks that, from a relatively low political base in Wales, it has the potential to expand its presence by arguing that it is a low-taxation party in Wales.
I was intrigued to hear how sanguine the hon. Member for Forest of Dean is about the prospect of his constituents enjoying higher tax rates than those on the Welsh side of the border in the unlikely event of a Conservative Government in Wales. I am not sure that his constituents would be as sanguine as he is about the difference of a few yards making a 10% difference, potentially, in the tax rate enjoyed by them, compared with their neighbours.
Guto Bebb (Aberconwy) (Con)
I suspect that my hon. Friend the Member for Forest of Dean (Mr Harper) was relaxed because he had read the hon. Gentleman’s speech at the Llandudno conference in which he said that the 4,000 taxpayers in Wales who are currently paying the 45% rate should be paying a 50% rate.
Owen Smith
I will happily restate for the record our view that we ought to have a fair rate of taxation in Britain. That is why we have pledged that the next Labour Government will reintroduce a 50p rate in Wales and throughout the UK. Our proposal is directly relevant to the amendment, which is about symmetry between the powers enjoyed in Wales and in Scotland—
Owen Smith
I will give way in a moment, if the hon. Gentleman will calm down. I will finish my point and then the Floor will be his.
We want to future-proof the legislation so that, in the event of a Labour Government in Britain—we have already pledged in Scotland to take forward the Scottish devolution proposals and to extend the amount of income tax that can be devolved and the powers relating to that tax—the Chancellor would be forced to consider the benefits of symmetry and extending it throughout the UK.
Guto Bebb
Was the hon. Gentleman not rabble-rousing in his speech at Llandudno when he made it clear that a Labour Government in Wales would have the right to increase the tax rate to 50%? If he is concerned about tax competition, surely a 50% rate in Wales and a 45% rate in the rest of the UK would be problematic for the Welsh economy.
Owen Smith
I am not sure I was rabble-rousing. I would never describe the representatives of the Welsh Labour party as a rabble, although they may have been roused by my speech, and I trust they were. It is fair to say that they were reported as having been roused by my speech and I thank the hon. Gentleman for drawing that to the Committee’s attention. I am happy to repeat the view I expressed in that speech: that our worry is that the Conservative party has an established track record of cutting taxes for the wealthiest people, not just in Wales but throughout the UK, and is increasingly happy to support them and to act on their behalf. In the event of the Labour party winning the trust of people across Britain and winning the next election, we would like a Welsh Government to give the Welsh people, through their Assembly, the ability to deliver a progressive rate of taxation in Wales in keeping with the progressive values of the Welsh people. There is nothing wrong with that.
Mr Harper
I want to come back to the hon. Gentleman’s point about whether I would be relaxed about delivering a lower rate of tax. Depending on whether there would then be a reduction in revenues, and that had some consequences, I would have no problem with a lower rate of tax. One of the things my constituents find annoying about the current settlement is that they see money being spent without there being any connection with its having to be raised; it all just comes from the centre. I think that if the taxing and the spending are connected, constituents will be relaxed about it. Given what the hon. Gentleman said, if a Labour Government remain in Wales there is clearly no prospect of lower taxes in any event.
Owen Smith
I do not accept the premise of the hon. Gentleman’s remarks. Taxpayers in Wales elect a National Assembly that has a democratic mandate to exercise its powers in respect of taxation, just as his Government do currently. I have never accepted the argument that the only way to give accountability to the National Assembly is through its having powers to raise taxes as well as spend them. I accept that intellectually there is a clear line to be drawn between taxation and representation, and that an increased level of financial accountability is afforded if taxes are being raised as well as spent. That is why we do not oppose that aspect of the Bill. Let me be clear, though, that Labour does not favour—as do, clearly, the hon. Gentleman and his hon. Friends on the Treasury Bench—tax competition within Britain. We are believers in the Union and in the ability to pool risk and share rewards across Britain. That fundamental belief is undermined, in my view and that of the Opposition, by tax competition that would see lower rates set in Wales compared with those in England, Scotland or Northern Ireland.
We are sanguine about supporting these tax powers, given the correlation the Government have drawn with borrowing, which we think absolutely vital. We are equally sanguine about the fact that Wales—given that Scotland has already moved on to this perspective as a result of the Scotland Act 2012, passed by this Government—ought to enjoy similar powers. However, we will not go on to say that we need to cut taxes in Wales to undercut England, because we do not believe in Wales undercutting the English.
Mr Harper
Is there not a point about symmetry? The hon. Gentleman seems to be saying that the three parts of the UK with devolved Administrations need to move together in terms of the powers they have and the decisions they make. Surely the logic of devolution, particularly in the way that his party delivered it, was that there was a different settlement in those three parts of the UK. I accept that avoiding asymmetry might be a desirable outcome, but is it not a bit late for him to take that view, given the three different types of devolution that his party delivered in government?
Owen Smith
That is precisely what I said in my opening remarks. We have a tradition of asymmetry that results from history and the relative degree of appetite for these powers in Wales, Scotland and Northern Ireland at the point at which we introduced them. Given that the Conservative and Unionist party is increasingly exploiting that asymmetry for narrow party political ends and risking tax competition within Britain, we worry that we need to move towards a more symmetrical system. In truth, that is what this Bill does. It puts Wales and Scotland on a more symmetrical footing in respect of taxation policy. It puts Wales on precisely the same footing that Scotland will be on after 2016. We support that. Our amendment says that if Scotland were to go further, as it would be likely to do under a Labour Government, we would afford people in Wales the ability to move to a similar position.
Guto Bebb
I think the hon. Gentleman is either confused or has been misreported. The speech he made in Llandudno specifically stated that Wales would have the power independently to reinstate the 50% tax rate. If he is concerned about tax competition, then surely he can see that a 50% tax rate in Wales—whereas it is 45% over the border, 45 minutes from my constituency—would create a disadvantage for Welsh taxpayers.
Owen Smith
I have not been misrepresented or misreported—that is precisely what I said and in no way, shape or form is it confused. It is a reflection of our abiding concern that the Tory party seeks to cut taxes for the wealthiest people in Wales. That is not a progressive tax system and it does not reflect the views and values of the people of Wales. Therefore, if we were in power in Westminster and Scotland took on greater tax powers, we would afford the Welsh people a similar opportunity.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The hon. Gentleman said a moment ago that he did not believe that Wales should undercut England. In other words, he does not believe that Wales should have a lower level of income tax than England. Does he also believe that Wales should not have a higher level of income tax than England?
Owen Smith
No. That is why I said what I said and why we have tabled amendment 40. In the event of further cuts by a Tory Government to the taxes of the wealthiest people in Wales and England, we would afford the Welsh people the ability to set a more progressive rate and to reintroduce the 50p rate in Wales, just as we propose to do across the rest of the UK.
We are, of course, discussing a hypothetical point to an extent, because in the event of there being a Labour Government in Westminster—which is the only way Wales would enjoy these additional powers, unless the Secretary of State intends to amend the Bill—we would reintroduce the 50p rate right across the UK. The issue would then be a moot point in Wales.
Mr Gauke
This might be a hypothetical point, but it is interesting and revealing that, while the shadow Secretary of State is ruling out ever using income tax powers in Wales to reduce taxes, he is certainly not ruling out using them to increase taxes. As he is well aware, under the powers in the Bill, if he increased taxes at the additional rate, he would also increase the basic rate.
Owen Smith
Indeed. That should come as no surprise to anyone. The Exchequer Secretary, in his rather tortuous remarks, is attempting to put words into my mouth. I said in my speech in Llandudno—I say it again today—that in the event of a Labour Government in Westminster, we would afford the Welsh people the ability to put up the top rate of tax and reinstate the 50p rate in Wales. That is very simple.
Owen Smith
I will give way in a moment. We are not talking about increasing the basic rate or the top rate; we are talking about increasing the additional rate of tax. [Interruption.] No, it is called the additional rate.
Owen Smith
From a sedentary position, the Exchequer Secretary draws a distinction between the higher rate and the top rate. I fully accept that what I mean is the higher rate, by which I mean the 40% rate, as opposed to the additional rate of 45%.
Wayne David
Does my hon. Friend agree that the essential point is that, although we have asymmetrical devolution in the United Kingdom—there is a great deal of variation between the devolution settlements in Scotland, Wales and Northern Ireland—we still have one British economy? Having variation is one thing, but having huge divergence is something else altogether.
Owen Smith
The essential point we are making is that we, unlike the Conservative party, are not in favour of tax competition. We are not in favour of one part of the UK undercutting another, but the Secretary of State and the Tory party are. It is very simple.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Leaving aside the escape route that the hon. Gentleman has prepared for himself with his hypothetical point, is he not recommending tax competition?
Owen Smith
No, I am not recommending tax competition. If the hon. Gentleman would like a further tutorial later, I will happily give him one on tax policy or anything else he likes.
None of the changes would of course come into effect unless what Labour has referred to as the triple lock is met. First, as the Bill lays out, we would need certainty that Wales was not worse off. We still have serious questions about whether Wales would be worse off—versus the Barnett formula and the block grant that we currently enjoy—if tax powers are taken. Secondly, we would need to be absolutely certain that there was fair funding for Wales, hence our fair funding lock. We are not talking about it today, but we did so briefly during the first day in Committee. For the changes to apply, Welsh Ministers would need to be satisfied that funding arrangements were fair before they triggered a referendum on exercising the powers. Thirdly, we would of course need such a referendum. As I said earlier, if the powers were exercised, they would be designed to mitigate the dangers of further Tory tax cuts for the wealthiest.
Amendments 7 and 8 on minor taxes and their volatility are probing amendments, unlike amendment 40, which we will push to a vote. Fundamentally, we broadly support the provisions—we certainly support the borrowing associated with the devolution of such powers and taxes to Wales—but we have significant concerns about how the powers will work, about the volume of these taxes and about how the Government have drawn a causal link between the devolution of these taxes and borrowing powers. The hon. Member for Forest of Dean raised other questions about the workability of the taxes and the manner in which they would be deployed.
On the connection drawn between powers and borrowing, I said on Second Reading and on previous occasions that the Government have yet to explain why they arrived at a rationale for associating powers with borrowing that is different from the one used in the Scotland Act. The Exchequer Secretary will know that the Scotland Act drew a connection between the capital budget for Scotland in respect of borrowing and the amount of borrowing allowed each year. The overall capital budget for Scotland is £2.3 billion, so borrowing of £220 million per year is allowed up to that ceiling. Why this Bill draws a different line between these taxes and the amount of borrowing has never been explained, and we remain convinced that the figure was just plucked out of thin air. If the Minister wanted to explain where the figure of £500 million came from and the basis from which it was derived, we would be very grateful.
As an indication of how the amount of money is significant—we support it—but perhaps not enough, Jane Hutt, the Minister for Finance, has announced only today an important package of funding on infrastructure, including £220 million for a new specialist cancer hospital at Velindre. I am sure all hon. Members welcome that, but it is a measure of how little £500 million buys these days. It is therefore incumbent on the Government to explain how they arrived at that figure.
We understand that the Government have made provision in the Bill such that the amount of money will not go down, even in the event of a reduction in the amount of taxes taken by the Welsh Assembly—that is guarded against—but the Minister will know that stamp duty and landfill taxes are especially volatile. In particular, stamp duty land tax is extraordinarily volatile year on year. For example, in Wales during the past five years it has been between £55 million and £130 million. Indeed, that difference of 60% occurred in just one year.
Mr Harper
On the capital borrowing level of £500 million—I think the hon. Gentleman was asking how the Government had arrived at that figure—I may be wrong, but I believe I touched on this on Second Reading. In the “Wales Bill: Financial Empowerment and Accountability” document, there is a quite extensive section on how the Government arrived at that figure. It was partly through allowing the Welsh Assembly Government to proceed with improvements to the M4. Is the hon. Gentleman seeking further details on that, because I thought the document was quite comprehensive?
Owen Smith
The point I was making—I hesitate to repeat it—was that there is a clear rationale in the Scotland Act 2012: a percentage of the overall capital budget for Scotland could be drawn down every year up to a maximum that was equal to the amount of the capital budget. The difference for Wales is that we have a direct line drawn with respect to the amount of taxes. We heard the Government describe it on Second Reading as relatively generous, because the overall amount of landfill tax and stamp duty land tax is around £200 million a year on average and the amount of borrowing is £500 million, so it could be seen as a 2:1 benefit for Wales. However, as I say, a different justification was used for Scotland, and it has never been clear from where that £500 million figure was derived. I suspect that the £500 million was a read-across from the £500 million previously enjoyed by the Welsh Development Agency, but if the Minister would like to tell us otherwise, we would be grateful.
Landfill tax is less volatile than stamp duty land tax, but in 2009-10 its yield fell by £100 million across the UK and by several million pounds in Wales. The whole point about landfill tax is that it is designed to reduce. As the amount of recycling done by local authorities in particular increases, the revenue from landfill tax will reduce; it is a disincentivising tax. It strikes me as particularly curious to attach a direct line between that particular tax and stamp duty, given its volatility, and the amount of borrowing, given that the Government now concede that the amount required by Wales is significant.
On the complexity of these taxes, I thought that the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) provided an interesting example of the pub in Chester, which has one bar in one country and another bar in the other. Having sampled the warm welcome of hostelries in Chester, I know that that is an excellent pub doing extremely well, but if the landlord came to sell it, how exactly would the Treasury decide which room was in which country and in which country the relative rate of stamp duty land tax or whatever tax it is in a devolved Administration or devolved setting in Wales would be paid?
There are no estimates of the number of houses in Wales in similar circumstances. Many properties are on one side of the border, but the land attached to them, included when the house is sold, is on the other side of the border. Our view is that the Treasury ought to have done a little more homework on just how many properties will be affected and what the relative degree of difficulty would be in implementation. I see the Exchequer Secretary shaking his head. We know that businesses were consulted on the potential complexities of different rates of income tax, but to my knowledge, no analysis has been undertaken by the Treasury in respect of stamp duty land tax or landfill tax, which I think is a bit remiss on the Treasury’s part.
Amendment 43 on reserved powers simply calls on the Secretary of State to issue a report
“on the further legislative steps needed to move to a model of reserved powers for the National Assembly for Wales”.
The hon. Member for Aberconwy (Guto Bebb), who is no longer in his place, referred to the conference in Llandudno that was addressed by my right hon. Friend the Member for Doncaster North (Edward Miliband), who made a further announcement about our intention to move to a symmetrical model of devolution as between Wales and Scotland.
In effect, that would mean that powers would be assumed to be devolved to the Welsh Assembly unless they were specifically reserved to the UK Parliament. That would hold many benefits for Wales. In particular, it would stop a Conservative Secretary of State, such as the one that we have currently, continually referring Welsh legislation to the Supreme Court. On three occasions, the Secretary of State has either sought to refer or succeeded in referring legislation to the Supreme Court, at a cost of about £150,000 a time. We do not know precisely how much it has cost. The Exchequer Secretary must know, so it would be good if he told us.
Mr Harper
The Secretary of State will no doubt correct me if I am wrong, but it seems to me that all he is doing in referring matters to the Supreme Court is ensuring that the legislative balance between this place and the Welsh Assembly is upheld, and that the legislation that sets out that balance is not trespassed upon. To follow the hon. Gentleman’s logic, he is presumably saying that if, God forbid, he were ever Secretary of State and the Welsh Assembly Government tried to move the devolution settlement unilaterally, he would simply acquiesce and not defend the rights of this place or the primary legislation that it has passed.
Owen Smith
That was the justification that the Secretary of State used at the time and he would no doubt use it again today. Our view and the view of many people in Wales is that what he did in respect of the Agricultural Wages Board was a party political attempt to tie the hands of the Welsh Assembly by arguing that it was employment legislation and not legislation that related to agriculture, which is devolved to Wales. Many of the learned counsel who offered their opinions on the matter backed the view of the National Assembly for Wales. We will wait to see what the ruling is. My point is simply that a shift from the conferred powers model to a reserved powers model would militate against such apparent confusion on the part of the Secretary of State and ensure that we had greater clarity about where the line lies between the powers of this House and the powers of the National Assembly.
Mr Mark Williams
I concur with much of what the hon. Gentleman has said about reserved powers. However, does he agree that the issue is less about party politics than about the clarity in the devolved settlement? That is why some parties are committed to having the reserved powers model in our manifestos. That is the conclusion that most people have reached after Silk II.
Owen Smith
Indeed; the hon. Gentleman’s party and my party are committed to having that in our manifestos. We see significant benefits in putting Wales in a symmetrical position to Scotland in respect of powers and in tying the hands of future Conservative Secretaries of State who might employ the same argument to tie the hands of the Welsh Assembly Government.
Mr Williams
Will the hon. Gentleman concede that Silk II found that the issue was about the clarity in the devolution settlement, rather than about party political motives and posturing?
Owen Smith
Absolutely; Silk said precisely that. I am saying today for the clarity of the Committee that we believe that the current Government employed the argument for party political purposes. They attempted to stop the Welsh Government doing what they wanted to do, which was to maintain the Agricultural Wages Board for Wales. That would have had significant benefits for some of the lowest paid workers in Wales. On that basis, I believe we can say firmly that Wales would be better off if we moved to a reserved powers model, with the greater clarity and additional safeguards that it would bring.
Finally, Madam Chair—[Interruption.] I beg your pardon, Sir Roger; I did not see you slip into the Chair, but it is a great pleasure to serve under your chairmanship once more. On the background to these clauses, we did not have much chance to discuss the so-called fair funding lock. The ability of the Welsh Labour Ministers in Cardiff Bay to determine whether they think the funding settlement for Wales is fair and adequate, in advance of their moving to adopt any of the powers of income tax—or any of the other taxes—is an important test. I hope that the Government will rise to that challenge at some point in the future.
Wayne David
I rise to support amendment 7. I recognise that it is a probing amendment, but it is nevertheless important to discuss the volatility of stamp duty land tax revenues in Wales. I will also speak to amendment 43 and the need to move to a reserved powers model for the National Assembly for Wales. I am aware that those two issues are not really related, but both are in this group of amendments, and in my view both are extremely important.
As the Silk report states, stamp duty land tax is a “relatively volatile tax”. Indeed, as the director of CBI Wales said only last year, SDLT raised about £210 million in Wales in 2007, but only £115 million in 2008-09. That is a relatively small amount, accounting for about 2% of the Welsh block grant, but a variation from £115 million to £210 million in two years is not insignificant. As Silk himself stated, the devolution of stamp duty land tax could pose potential risks for the Welsh budget.
Let me be clear: I am in favour of the devolution of stamp duty land tax, but I would like reassurance from the Minister about precisely how that volatility will be managed. The essential point is that devolving SDLT has consequences for the block grant, which would be reduced by the amount of SDLT collected in Wales. I would like a fuller and clearer explanation from the Minister about exactly how the block grant offset will be determined. Will borrowed resources be used to meet any shortfall when the receipts from land tax are less than expected? Does the Minister agree with the Silk report that the value of the deduction should be decided between the UK and Welsh Governments, and not by the UK Government unilaterally? I suggest that the deduction should take into account the volatility of the tax and the forecast revenue in Wales. I would therefore like specific reassurances from the Minister that these admittedly esoteric but nevertheless extremely important issues will be clearly addressed, so that we know precisely what we have before us.
My second point is about whether we move from a conferred powers model of devolution for Wales to a reserved powers model. In my view, there is no perfect model of devolution. In Northern Ireland and Scotland there is a reserved powers model, but—let us be honest—those models have their problems. We will all have heard about Scotland and Antarctica. For those who are not au fait with that problem, there was an issue of whether Antarctica was included in the devolution model for Scotland. It was not on the reserved powers list, and therefore the assumption was that it was devolved to Scotland in issuing licences and permits for people to operate in Antarctica when they were based in Scotland. Of course, that was an oversight by drafters, and it was put right retrospectively. I simply cite that example to show that there is no perfect model of devolution. We can cite other difficulties that arose when Scotland adopted the reserved powers model, but the fact that no model is perfect does not mean that a reserved powers model for Wales would not be a huge step forward. It would be a huge step forward, because we have heard—very eloquently—from the shadow Secretary of State about numerous examples of issues that have been taken to the Supreme Court by the Wales Office. At root, the problem is a lack of clarity, which would not exist if we had more clearly defined the reserved powers model.
We are all concerned about the Conservative party’s determination to prevent the Welsh Government from introducing measures to protect Welsh agriculture workers, and the case for moving to a reserved powers model has been well put by the UK’s Changing Union project. Under the title “The benefits of a ‘Reserved powers’ model of devolution”, it said:
“A ‘Reserved powers’ model of devolution would benefit Wales and the UK as a whole. A ‘Reserved powers’ model would provide much greater clarity about the legislative powers of the National Assembly for Wales. This will benefit civil society organisations, politicians, civil servants and the general public—in short the democratic process as a whole. A ‘Reserved powers’ model would place the relationship between Cardiff and London on a more stable, adult footing and help reduce the number of unnecessary disputes”—
which have been alluded to already in this debate—
“between the two levels of government. A ‘Reserved powers’ model of devolution for Wales would place Welsh devolution on the same footing as devolution for Scotland and Northern Ireland making it far more likely the UK will be able to develop more effective mechanisms to manage intergovernmental relations between central government and the devolved territories.”
That is an effective summation of the strong case for moving to a reserved powers model. I emphasise that there is no ideal model of devolution. Inevitably, devolution is a dynamic, but if we had this model, it would be far better than what we have at the moment.
Mr Mark Williams
Would the hon. Gentleman add to that list the availability of maximum flexibility in the future? We had the Government of Wales Act 1998, the Government of Wales Act 2006 and we now have this Bill. This piecemeal, step-by-step approach to what some of us would like to see—home rule in a federal Britain—is going on and on, but a reserved powers model would give us greater opportunities for flexibility.
Wayne David
Home rule, of course, was championed by Keir Hardie, who was the first Labour Member of Parliament, representing Merthyr and Aberdare. Home rule is very important and we must look at mechanisms to enhance that principle and take it forward. A reserved powers model would provide flexibility, but it would also provide greater coherence, stability and clarity. On those principles, it is superior to what we have at the moment, but—as I have said—there is no such thing as perfect devolution. Whatever the nature of the devolution settlement, we will always need to discuss, debate and even argue about some issues. On balance, however, I think a reserved powers model would be the right choice.
Do the Government recognise that a cross-party consensus is emerging in Wales that a reserved powers model would be superior to what we have at the moment? I ask the Conservative Minister not to dig his heels in on this, but to recognise that there is a constitutional consensus and that it means something. It is one of the essential underpinnings of a progressive view on devolution. For goodness’ sake, do not give the impression that his opposition to a reserved powers model is all about trying to prevent what we would see as progressive measures to protect agriculture workers in Wales. He is genuinely concerned about constitutional stability and flexibility, as has been said, and about achieving something approaching a cross-party consensus on the way forward for devolution. That is why the amendment is very important indeed. In some ways, it takes us beyond the parameters of the Bill, but nevertheless, if the House were to support it, it would give an important indication of how we all see devolution moving forward. It is therefore very important that we support the second amendment, amendment 43 to clause 28.
Mr Gauke
It is a great pleasure to serve under your chairmanship, Sir Roger, and to respond to the debate.
Part 2 of the Bill introduces a provision to devolve taxes to the Welsh Assembly. Clause 6 introduces a new part 4 to the Government of Wales Act 2006 and confers the required competence on the Assembly to legislate on devolved taxes, including their collection and management. Clause 6 also allows for further taxes to be devolved to the Assembly via an Order in Council and makes it clear that officials working in any body set up by the Assembly to administer the devolved taxes can be designated as civil servants if the Assembly so chooses. This applies whether the body only collects and manages devolved taxes, or is additionally responsible for the existing devolved subject of local government finance, including council tax and business rates.
Clause 7 makes amendments to the commissioners for revenue and customs Acts to allow Her Majesty’s Revenue and Customs to administer devolved taxes on behalf of the Assembly. The clause also amends HMRC’s information powers to allow it to share information with the Welsh Government in relation to devolved taxes.
Clauses 14 to 16 and schedule 2 provide for a devolved tax to replace stamp duty land tax on land transactions in Wales, in line with the recommendation of the Silk commission. Clauses 17 and 18 provide for a devolved tax to replace the existing tax on disposals of waste to landfill sites in Wales, again as recommended by the Silk commission.
Let me address Government amendment 20. In devolving tax powers, our intention is that the Assembly should have a free hand in choosing how it wants its devolved taxes to be administered and by whom. We do, however, recognise that HMRC has many years—indeed, if one includes its predecessor organisations many centuries—of experience in administering taxes within the UK, so we want the Assembly to be able to use HMRC’s services for these purposes if it wishes to do so. The proposed legislation in clause 7 provides for this.
As set out in the Command Paper, though, we believe that this should be on the basis of mutual agreement. The Assembly should not be compelled to use HMRC to administer its devolved taxes, but neither should the commissioners for HMRC be compelled to take on this role. At present, the 2006 Act would allow an Act of the Assembly to modify an existing function of HMRC or confer a new function on HMRC without the consent of the UK Government.
Amendment 20, therefore, amends parts 2 and 3 of schedule 7 to the 2006 Act to make it clear that the Assembly can only confer functions on HMRC and, once conferred, modify those functions if they relate to a devolved tax and the Treasury consents to it. The amendment ensures that the Assembly has the option of using HMRC to administer its devolved taxes, but puts appropriate safeguards in place for the UK Government in recognition of the vital role HMRC plays in collecting tax throughout the UK. I therefore hope that hon. Members will support the amendment.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Will the Minister give us any idea of how long he expects the process of seeking the Treasury’s consent to take, and how long it will be before the Welsh Government can use whatever powers it decides to confer?
Mr Gauke
All I can say at this stage is that we would consider any such request in good faith. We want to work in a constructive manner, and I believe that the UK Government have a record of doing that when dealing with the Welsh Government. Our amendment certainly does not constitute an attempt to delay matters. The Assembly has the option of using HMRC, but it is not compelled to do so. We think it reasonable, if the Welsh Government wish to use HMRC, for its commissioners and the UK Government to make a proper assessment of the overall impact on the UK.
Jonathan Evans (Cardiff North) (Con)
I hear what my hon. Friend says about the use of HMRC, but I think that my constituents would be keen to know whether the tax office in Llanishen in Cardiff in my constituency is likely to be the location where its work is done.
Mr Gauke
I am sure that my hon. Friend is right. As I have said, our intention is to work constructively. It will be for the Assembly to choose whether to make use of HMRC’s expertise, which is obviously considerable, but should it wish to do so, I think it reasonable for the UK Government to reserve the right to ensure that no demands are placed on HMRC that could disrupt the important work that it does throughout the United Kingdom, including in Wales.
Amendment 40, tabled by the hon. Member for Pontypridd (Owen Smith), seeks to place a duty on the Chancellor of the Exchequer to review
“the benefits of symmetry in the devolution of taxes between Wales and Scotland”
whenever a tax is devolved to either. It requires the Government to assess whether a tax that is being devolved to Wales should also be devolved to Scotland, and vice versa. I understand the intention of the amendment, but it fails to take into account the fact that key principles of tax devolution already exist. The UK Government have adhered to those principles, and we would expect future Governments to do so. They state that any changes should be evidence-based, and should be considered in a UK context. An assessment of the UK context would include an assessment of whether symmetry with the other devolved Administrations was desirable.
The amendment seeks to impose an unnecessary statutory basis on a process that the Government would undertake as a matter of course when considering the case for devolving further taxes to either Scotland or Wales. It could, indeed, lengthen the process of devolving new taxes in the future by placing a superfluous statutory requirement on the Government. I do not believe that it is necessary, or would improve the procedure for adding new taxes that is set out in the Bill. It may well be that the hon. Gentleman simply wants to probe Ministers to establish whether this or a future Government would take the issue of symmetry into account, but I do not find the argument for a statutory basis persuasive.
Owen Smith
We are indeed keen to ensure that the Chancellor has a statutory obligation to consider the benefits of symmetry across the piece on a statutory footing, but let me take up the Minister’s reference to the need for an evidence base to support taxation policy. Does he agree that it would have been wise of the Treasury to undertake some form of detailed behavioural analysis of the impact of tax competition in respect of income tax, or indeed any analysis of the impact that stamp duty land tax or landfill tax might have on behaviour?
Mr Gauke
I shall deal with stamp duty land tax and landfill tax later in my speech. As for income tax, I am tempted to explain to the hon. Gentleman yet again about the lockstep attributes of our reforms. He has expressed concern about tax competition, but it seems to me from his earlier remarks that he does not believe in it, and that, if he had a chance to seek greater tax competitiveness for any part of the United Kingdom, including Wales, he would not do so. Indeed, he seems to be advocating a policy of “tax uncompetitiveness” for Wales. However, I must not detain the Committee too long on that subject.
Wayne David
I realise that the Minister wants to make progress, and I know that he has rejected the suggestion that there should be an analysis of what might happen as a consequence of the Bill, but it would be helpful to have a clear articulation of the Government’s position on tax competition. Does he want tax competition, yes or no?
Mr Gauke
What we want is greater devolution in terms of income tax. When we debated the subject last week, I explained in some detail why we thought that it was a good thing, primarily because it would increase the accountability of the Welsh Government to the Welsh people, which I would expect Members in all parts of the Committee to want.
Amendments 32 and 33 were tabled by members of Plaid Cymru. Clause 6 introduces an important new power to devolve further tax powers to the Assembly via an Order in Council. The power has a broad scope, and can apply to brand-new taxes and to existing UK-wide taxes. The clause sets out the process for making such an order, which would need to be approved by both the House of Commons and the other place, as well as by the Assembly. Amendment 33 would remove Parliament from the process, so that the order would need to be passed only by the Assembly.
We recognise that it is important to give the Assembly and the Welsh Government the economic levers that are needed to generate growth in the Welsh economy, including the ability to introduce new taxes. We also recognise that—although this would depend on the proposal under consideration—if we are to proceed in a timely manner, it would be advantageous to be able to devolve further taxes without requiring primary legislation. However, a balance needs to be struck. Tax devolution should not be at the expense of reducing the overall tax receipts or competitiveness of the United Kingdom as a whole.
That last point is particularly important. As we stated in the Command Paper that accompanied the Bill, we would assess any proposals for further tax devolution against a number of criteria. For example, we would consider whether any new tax would affect the UK’s wider economic policy, impose disproportionate burdens on businesses or individuals, or create new tax avoidance opportunities. In short, the criteria would ensure that any new tax would not be to the detriment of the UK as a whole.
It is important for the devolution of further tax powers to take place in the constructive and collaborative manner that led to the Bill. It is therefore right for the resulting legislative process similarly to involve both the Assembly and Parliament, so that the proposal can be considered from the perspectives of both Wales and the wider UK. It would not be right for either to be able to legislate to devolve further taxes without the agreement of the other.
Owen Smith
I am grateful to the Minister for giving way to me for the second time. He said a moment ago that the Treasury would be concerned if any reductions in taxes in Wales led to reduced receipts for the Exchequer. Does he not agree with the Secretary of State that a Conservative Government in Wales should cut taxes, or does he think that that would necessarily always lead to higher receipts?
Mr Gauke
That is a matter for the devolved Administration, but the design of the income tax powers is such that we believe that we are striking the right balance.
Amendment 32 seeks to extend the power to tax credits. I know there was a little debate earlier as to whether this was about extending powers over the social security system as such, which is not the intention behind amendment 32. That was made clear by the hon. Member for Arfon (Hywel Williams).
Hywel Williams
I will seek leave to withdraw the amendment standing in my name and those of my party colleagues, but I would like to make a few brief points.
In response to the hon. Member for Forest of Dean (Mr Harper), who suggested our views on tax credits and devolution might be the thin end of the wedge in devolving universal tax credits, I should say that I was quoting from the Silk report that while existing tax credits, such as working tax credits and, in future, universal tax credits, should remain UK-wide, the Welsh Government should be able to introduce their own credits in relation to devolved taxes. That was the point I was making.
The other point I would make is this: the hon. Member for Pontypridd (Owen Smith) said Barnett would not be discussed. There will, I hope, be a debate on new clause 1, which is specifically about that issue.
Finally, we in Plaid Cymru see amendment 40 for what it is, which is an attempt to delay, and we will be voting against it. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 40, page 7, line 13, at end insert—
‘(10) In the event that the power to add new devolved taxes under Section 116C, or the power to add new devolved taxes under Section 80B of the Scotland Act 1998 is used, the Chancellor of the Exchequer must undertake a review of the benefits of symmetry in the devolution of taxes between Wales and Scotland.’.—(Owen Smith.)
Question put, That the amendment be made.
The Committee divided: Ayes 216, Noes 280.
Hywel Williams
I beg to move amendment 36, page 21, line 18, leave out ‘, with the approval of the Treasury,’.
The Temporary Chair (Sir Roger Gale)
With this it will be convenient to discuss the following:
Amendment 37, page 21, leave out lines 26 to 31 and insert—
‘(1) On receipt of notice of an appropriate resolution of the Assembly, the Secretary of State shall by order amend subsection (1A) so as to vary, in the manner indicated by the terms of such resolution, the means by which Welsh Ministers may borrow money.”.’.
These amendments would enable the National Assembly to change the way money for capital expenditure is borrowed, including the issuance of bonds, without the need for consent by the Treasury or Resolution of the House of Commons.
Amendment 35, page 21, line 31, at end insert—
‘(6) The Secretary of State shall make arrangements for an independent report to be compiled on the issuance of bonds by Welsh Ministers.
(7) The Secretary of State shall lay a copy of the report specified in subsection (6) before each House of Parliament within three months of this Act being passed.’.
The Scotland Act 2012 enables the Secretary of State, by order and consent of HM Treasury, to change how Scottish Ministers can borrow money for capital purposes, for example, allowing the issue of bonds. Clause 19(5) of the Wales Bill contains the same provisions. This amendment seeks clarification on the power to issue bonds.
Amendment 34, page 21, line 38, at end insert—
‘and if that amount is more than the amount for which it is substituted it shall not thereafter be reduced below that higher amount’.
This amendment would ensure that when the Secretary of State raises the borrowing for investment limit, it cannot subsequently be reduced.
Amendment 5, page 21, line 38, at end insert—
‘(3B) The figure mentioned in inserted subsection (3A) shall be recalculated on an annual basis to maintain its value in real terms against inflation.’.
Clause 19 stand part.
Clause 20 stand part.
Hywel Williams
Amendments 36 and 37 would enable the National Assembly to change the way that money for capital expenditure is borrowed, including the issuing of bonds, without the need for the consent of the Treasury or a resolution of the House of Commons. Amendment 35 seeks clarification on the power to issue bonds. Amendment 34 would ensure that when the Secretary of State raises the borrowing for investment limit, it cannot subsequently be reduced.
First, on the issuance of bonds, subsection 32(5) of the Scotland Act 2012 enables the Secretary of State, by order, to change the manner in which Scottish Ministers can borrow money for capital purposes—for example, to permit borrowing by the issue of bonds. Subsection (5) of the Wales Bill contains the same provisions. This amendment seeks clarification on the power to issue bonds.
Following the Scotland Act 2012, the legislation left the door open for the Secretary of State to enable the Scottish Government to issue bonds in future. The UK Government later launched a consultation on bond issuance and announced in February of this year that Scotland is to get the power to issue bonds. There is only one problem: it will have that power only in 2015. In the meantime, the small matter of the independence referendum in September might intrude.
Scotland aside, I refer Members to the cross-party Commission on Devolution in Wales. Recommendation 19 ends with the words:
“We also believe that the Welsh Government should be able to issue its own bonds.”
Given that local government throughout the British Isles can issue bonds, it is an anomaly that the devolved nation Governments cannot also do so.
The Silk Commission’s first report stated that
“while bonds may be more expensive at present, a possible future scenario where they may be cheaper or more attractive to the Welsh Government cannot be ruled out. We therefore see no reason in principle for preventing the Welsh Government from being able to issue its own bonds in addition to borrowing from the National Loans Fund and other sources such as commercial banks.”
Our amendment calls for greater clarification and seeks to expedite the ability of the Welsh Government to issue bonds. We need movement on this issue to enable the Government of Wales, should they choose to do so, to drive investment in infrastructure, and so improve our economy.
Hywel Williams
My understanding is that the Treasury would be expected to stand behind those bonds. I readily admit that I am not an expert on this matter, but I understand that that is the case for local government as well.
As I have said, we need movement on this matter to enable the Government of Wales to drive investment in infrastructure, and so improve the economy. Wales should have the same powers as Scotland. The Government parties should be held to their word: they agreed, through their representatives on the Commission on Devolution in Wales, that the Welsh Government should be able to issue bonds.
Amendment 5 is both simple and highly effective and would inflation-proof the borrowing limit in the Bill. We are unsure whether the Government have considered this matter, or whether they intend to put in place any safeguards to protect the amount of borrowing written into the Bill. The £500 million borrowing for investment limit is of course welcome. If the money is used wisely and for targeted investment in infrastructure throughout Wales, it would enable job creation, provide a welcome boost to the Welsh economy and drive up Welsh gross value added so that the economy no longer sits at the bottom of the economic league table of UK nations and regions. However, we are concerned that the value of the £500 million limit, written as it is in the Bill, might be substantially reduced in a relatively short time by inflation. We have tabled amendment 5 to inflation-proof the value of that amount. I hope that this was a simple oversight by the Government, rather than any calculated move to undermine over time the Welsh Government’s ability to make full use of the powers proposed.
Inflation at present is fairly low by recent standards, but in the space of a few short months it could jump. Some of us here can recall the ferocious problems faced by ordinary people when mortgage rates rose to 15%. As a dire warning, I have safeguarded my own copy of the Mansion House speech by the former Chancellor and Prime Minister when he praised the banking industry to the heavens—just before the heavens fell in. Inflation could jump as a result of international problems and recessions elsewhere in the world, and the value of the amount available through this Bill should not be diminished as a result of such inflation.
The powers available to the Welsh Government as a result of this Bill will not come on stream until 2017 and 2018—after the 2016 Welsh general election. If the past five years have taught us anything, it is that it is foolhardy to predict how the economy will look at the end of that time.
The borrowing for investment limit available in this Bill is the amount recommended by the Silk Commission. It is the integrity of the cross-party commission’s recommendation that this amendment seeks to preserve and safeguard, as well as to ensure that Wales has the full resources available to it to maximise the number of jobs and the prosperity created.
Mr Harper
I want to say a few words about clauses 19 and 20 and the overall powers for current and capital borrowing, but let me first touch on the amendments tabled by the hon. Member for Arfon (Hywel Williams). His answer to my question was my reading of the situation, too: the Treasury would, in effect, stand behind any bonds or other such borrowing. That is why, if he were to press the amendments to a vote, I could not support them. If the Treasury is going to stand behind such borrowing, it must have some control over the level of borrowing entered into.
We talked earlier about linking spending and accountability. If Welsh Ministers are to be able to borrow money, they must be accountable for repaying it from a revenue stream, and must be able to persuade the markets, based on the rate of interest they are paying, that they can do so. Alternatively, if the Treasury is going to stand behind such borrowing, Treasury Ministers and this House of Commons must have some control over the level of it. It might be possible to set a framework, and not every individual piece of borrowing might have to be sanctioned, but the Treasury must be in control of the overall level because otherwise, it is a one-way bet: people can just borrow the money and not have to worry about the rates they are paying if they know that the Treasury will pay it back. I can see why a Treasury Minister could not sign up to a blank cheque such as that, but frankly, I do not see why any Member of this House should, either.
In the previous debate, the shadow Secretary of State said that he was not sure how Ministers had come up with the borrowing figures. I briefly alluded to that issue in my intervention, and it was raised by the hon. Member for Swansea East (Mrs James) on Second Reading. Clause 19 amends existing borrowing powers, and clause 20 repeals such powers. Changes are made to current borrowing powers and a new section is inserted that deals with the capital requirements.
I hope you will forgive me, Sir Roger, if I mention an excellent document that is, I suspect, on the Table: the “Wales Bill: Financial Empowerment and Accountability”, published by the Government in March. People often criticise Ministers for not showing their workings—the phrase we used in the previous debate—and although I am financially qualified, I do not think that one has to be to be able to follow the document’s rather sensible reasoning. It deals with the borrowing powers amended in clause 19 and makes it clear that Welsh Ministers have the power to borrow £500 million—the limit previously set in the Government of Wales Act.
Effectively, that is the limit inherited from the previous Government, and within it, the Treasury has agreed that the Welsh Government can borrow up to £200 million each year. As the document says, the Welsh Government’s powers are being extended to comprise both in-year and “across years” current borrowing. As I read it, that extends the Welsh Government’s flexibility to borrow to deal with their current expenditure. The Bill enables Welsh Ministers to borrow money from the national loans fund, to which the hon. Member for Arfon referred, and to deal with differences in the outturn of taxes and receipts for the devolved taxes by borrowing across a number of years. Such “across years” borrowing must be repaid within four years. The overall limit can be varied both upwards and downwards—but not below the initial £500 million limit—through secondary legislation. The £500 million limit inherited from the previous regime is therefore kept in place.
That seems clear, as are the capital borrowing powers. The two taxes we discussed when considering the previous group of amendments—stamp duty land tax and landfill tax—are being devolved. The Government estimate that the revenue stream, which will support the borrowing, will be about £200 million a year. The capital borrowing powers will come in at the same time as the new devolved taxes: in April 2018.
The statutory capital borrowing limit is also set at £500 million—higher, interestingly, than if it had been set solely with reference to the tax-to-borrowing ratio that applies in Scotland. As I said on Second Reading, this is a more generous regime than the one applying to Scotland. The shadow Secretary of State referred in an earlier debate to keeping a symmetrical arrangement between Wales and Scotland. If we did that, using the same tax-to-borrowing ratio, the Welsh Government would be able to borrow only some £100 million. In Scotland, the capital borrowing limit is just over £2 billion, with about £5 billion of tax revenue. The Government have allowed the Welsh Government to borrow £500 million in advance—I think this information was elicited on Second Reading by my hon. Friend the Member for Monmouth (David T. C. Davies), the Chairman of the Welsh Affairs Committee—to enable them to proceed with improvements to the M4, should they choose to do so.
Owen Smith
The hon. Gentleman will know, as he has obviously read all these documents extensively, that the documents on the Scotland Act made no reference to the line drawn between the ratio of funds and taxes to be devolved, and the quantum of borrowing. Instead, a direct line was drawn between the capital budget for Scotland and the amount of borrowing. That was the point I was making, so I presume that he, like me, does not understand why a different rationale is being applied in the Wales Bill from that applied in the Scotland Act.
Mr Harper
I was listening carefully to the shadow Secretary of State but I did not quite follow him. I set out the Scottish Government’s capital borrowing limit, which is £2.2 billion, and they take responsibility for tax revenues of about £5 billion. The ratio between the two is slightly less than 1:2. If we used the same ratio in Wales, the Welsh Government would have a limit of about £100 million. I accept that the Secretary of State for Wales and colleagues in the Treasury have adopted a more generous approach, but I should have thought that the hon. Gentleman, as a Member of Parliament representing a Welsh constituency and as shadow Welsh Secretary, would welcome this asymmetry rather than—if I am following his argument—being critical of it.
Owen Smith
Does the hon. Gentleman accept that if a similar rationale were employed in this Bill to that which was employed in Scotland, the borrowing limit would be nearer £1.3 billion in total—£130 million a year—reflecting the £1.3 billion capital budget in Wales, which, as I say for the fourth time, was the rationale that was employed in respect of the Scotland Act, not the ratio between the borrowing and the amount of devolved taxation, as has been post hoc used as a justification in this Bill?
Mr Harper
I do not follow that argument at all. If I may pick up the point that I was making to the hon. Member for Arfon, the point we were debating on bonds was about repaying the money. If Ministers are going to devolve borrowing power to Welsh Ministers, it must reflect the revenue that Welsh Ministers have some influence over; otherwise, it would amount to enabling Welsh Ministers to borrow money, effectively, against taxes raised by central Government, and there is no accountability there. We then get back to the problem that we started with: Ministers could borrow to spend, no doubt on projects that they would deem to be popular, but there would be no accountability because the money would be largely repaid not through the taxes that had been devolved to Welsh Ministers, but through taxes controlled by Treasury Ministers, and that would set up perverse incentives.
If the Welsh Government are to be given borrowing powers, they should reflect the revenue stream that those Ministers are in control of. If the hon. Member for Pontypridd (Owen Smith) is arguing for more borrowing powers, therefore, he would obviously want to devolve some more taxes to go along with them; otherwise, it is just Welsh Ministers writing cheques on UK taxpayers, which ultimately the Treasury has to stand behind.
As I was saying before I gave way to the hon. Gentleman, my understanding was that the increase in the capital borrowing limit was intended specifically to allow the Welsh Government, in advance of the devolution of an element of income tax, to proceed with improvements to the M4, which I remember from Second Reading would be welcomed by my hon. Friends the Members for Monmouth (David T. C. Davies) and for Vale of Glamorgan (Alun Cairns). I am sure that although the hon. Member for Newport East (Jessica Morden) is being very inscrutable, she would welcome such improvements. Oh no, she is shaking her head—she does not welcome improvements to the M4. That will be news to her constituents; I thought she did.
The Bill also contains a power that enables the UK Government to vary—have I provoked the hon. Lady? No, I have not. It enables the UK Government to vary the overall limit both upwards and downwards. A joint process is in place between the two Governments to ensure a level of convergence. That seems sensible. That limit will be set at a level that the UK Government consider appropriate, based on an assessment of economic and fiscal circumstances and the impact of inflation. Amendment 5 has been tabled by Plaid Cymru. Paragraph 91 of the note that the Government have produced states that among the things the two Governments will consider when looking at the borrowing limit will be the impact of inflation on the real value of the limit. Given that both Governments will be participating in this collaborative process, that should mean that the limit can be kept at a real-terms level. I hope the hon. Member for Arfon will welcome that.
The final area is the independent revenue stream over which the Government have control. I argued earlier that borrowing must be related to the level of income.
The Government’s note explains comprehensively how the current borrowing and capital borrowing powers, which are set out clearly in clauses 19 and 20, were arrived at. I think I have set out clearly why I would not support the amendments tabled by Plaid Cymru on the ability to issue bonds, and the ability to keep borrowing levels at real-terms levels is covered in the Government document. I am happy to support clauses 19 and 20 but not the amendments in the group.
Nia Griffith (Llanelli) (Lab)
We very much welcome borrowing powers for the Welsh Government, as they will help them progress with investment in vital infrastructure projects and foster growth in the Welsh economy. Borrowing powers may also prove useful in enabling match funding to take advantage of European funds.
The Silk commission argued strongly that the Welsh Government should have
“the capacity to borrow for capital investment on a prudent basis subject to limits agreed with HM Treasury”.
These powers are all the more badly needed as the capital budget for Wales has been cut by one third by the current Government.
Alun Cairns
I want to sound a note of caution. I support the intentions of the Bill and I respect the case that has been made for the amendments, but those amendments could be seen as seeking almost limitless borrowing powers. As my hon. Friend the Member for Forest of Dean (Mr Harper) observed, borrowing powers need to be related to the amount of money that can be raised and to repayment. As we learned from the financial crisis of 2008-09, even when financial matters seem to be positive, changes can occur. Limits must therefore be set and a sensible approach adopted to borrowing across the whole of the United Kingdom, and particularly in respect of any institution that has a relatively limited capacity to raise its own funds, given that some of the Opposition parties do not seek to develop innovative and effective ways of using the extended powers granted by the Bill to raise funds by tax competition.
The £500 million capital borrowing limit set in the Bill, supported and approved by the Treasury, is sensible, amounting to £125 million a year. I want to bring an element of reality to the debate. Much of the focus has been on the need to improve the M4 motorway around Newport.
Alun Cairns
I am grateful to my hon. Friend for making that point. It is obvious where Plaid Cymru stands on the matter. The hon. Member for Arfon (Hywel Williams) made his case. I disagreed with it, but it is a respectable case which stands with the party’s politics in general. It seems inconsistent to make strong criticisms of an element of the Bill but not to table amendments seeking to improve the Bill or to make it more relevant, according to the Opposition’s argument.
The priority that has given rise to much of the debate about the need for greater capital spend in Wales is the need for improvement of the M4 around Newport. I pay tribute to the Chancellor and his efforts to encourage the Welsh Government to look positively at the need to improve that link. Many Members have spoken of the need for better infrastructure in and out of south Wales.
I remind the Committee that there was a commitment to such improvement pre-1997, by the then Secretary of State for Wales, my right hon. Friend the Member for Richmond (Yorks) (Mr Hague). That was to be funded entirely out of the Barnett block. The Barnett block at that time was £7 billion. It has now grown to about £15 billion. The shadow Welsh Secretary argues that Welsh projects cannot be funded without a significant increase in capital borrowing for such projects. Pre-devolution, without borrowing powers, those projects were to be funded out of the Barnett block as it was.
Guto Bebb
My hon. Friend makes an important point in relation to the proposed improvements to the M4. It should be noted that when the Bill was announced, the Secretary of State made it clear that this borrowing power should be for the M4 and also the A55. The Welsh Labour Government in Cardiff keep talking about the M4 and forgetting about the A55 and the needs of north Wales.
Alun Cairns
I am grateful to my hon. Friend for making that point. As a strong champion of north Wales he, along with the Secretary of State, will always ensure that improvements to the A55 are considered at the highest level.
Mr Llwyd
I, too, stake a claim to represent north Wales. On a point of clarification, the present Foreign Secretary was in post in Wales in 1997, before devolution. Now there is a £15 billion block, but that is to deal with health, transport and myriad other things which the old Welsh Office—not the Wales Office—did not have to deal with.
Alun Cairns
I am grateful to the right hon. Gentleman for making that point, but we will have to disagree. The Welsh Office at the time had exactly those responsibilities for transport, health and education. In the first Government of Wales Bill, the powers that the Welsh Assembly inherited were the same powers as had been held by the Welsh Office, which subsequently became the Wales Office. Additional powers have subsequently been granted, but they have been minuscule in proportion to the additional funding that has been provided. Out of a much smaller Barnett block grant, there was ambition for major capital projects. That ambition has gone.
I suspect I know why the right hon. Gentleman is a little bit uncomfortable. It is worth running through some of the history of the improvements that are needed in the M4 corridor. The then Secretary of State, my right hon. Friend the Member for Richmond (Yorks), committed to building that road. It was the right hon. Member for Neath (Mr Hain) who cancelled it after the 1997 general election. It was later proposed by the coalition Administration in Cardiff Bay—the coalition between Labour and Plaid Cymru—and the Transport Minister who cancelled it and who said that the Administration could not fund it was Ieuan Wyn Jones, the Plaid Cymru Assembly Member for Anglesey. That demonstrates the priority that the relevant parties have assigned to that much needed infrastructure improvement.
The Chancellor has pointed out on several occasions the need for improvement. He named the project in statements and in the Budget on one occasion to provide encouragement to the Welsh Government to improve this vital artery into south Wales.
Owen Smith
The hon. Gentleman’s argument would have more force were it not for the fact that only today in the Welsh Assembly the Minister for Finance, Jane Hutt, announced £1 billion-worth of further spending on infrastructure, several hundred million pounds on the Heads of the Valleys road, and £200 million on a new cancer hospital at Velindre that will no doubt benefit the hon. Gentleman’s constituents. Far be it from me to suggest that he might be out of date and no longer keeping up with matters in the Assembly, but that would appear to be the case.
Alun Cairns
Not at all. I welcome those announcements. I wish there had been an announcement about improvement to the infrastructure in my constituency, and I wish there was to be improvement to the main infrastructure coming into Wales along the M4 corridor, but today’s announcements are obviously positive. However, we need to underline the delays that take place on that artery, that investment is essential and that borrowing powers need to be granted. Improvement should have taken place well before now. The original commitment was made pre-1997 but the Labour Administration cancelled it and the Welsh-led Labour Administration have not built it since. We should consider the delays, the accident records, the damage to the south Wales economy, and the hauliers based in my constituency who have had to set up on the Avonmouth side of the border because of the lack of investment and ambition over the past 15 years on the part of the Welsh Labour Administration.
Wayne David
Does the hon. Gentleman not accept that borrowing powers are vital because the Welsh Government’s capital budget has been cut by one third because of central Government cuts?
Alun Cairns
The changes to the capital budget are nowhere near the cuts that the last Labour Chancellor proposed to make leading up to the Budget. We need to compare like with like, and we need to consider the financial circumstances at the time. One of my early points was that limitless borrowing powers simply cannot be granted because of the changes in circumstances that take place. The point has already been made that if we are asking the Treasury to stand behind the debt that is being taken on by the Welsh Government, the Treasury obviously needs to be able to support that and a sensible limit needs to be provided. The capital sum of £500 million is sensible, certainly in the first instance, but we need to be pragmatic about that over time.
Finally, the Administration’s infrastructure commitments, particularly the electrification of the Great Western main line, demonstrate the priority placed by the Government on the east-west link along south Wales, which has not been forthcoming since the M4 was cancelled all that time ago.
Paul Murphy (Torfaen) (Lab)
If I was an independent observer listening to the previous two Conservative Members’ contributions to the debate, I would wonder whether they wanted borrowing at all. The hon. Member for Vale of Glamorgan (Alun Cairns) seemed to be very lukewarm on the issue, and questioned whether all this should really come out of the revenue budget. My hon. Friend the Member for Caerphilly (Wayne David) made it perfectly clear: 33% of the capital budget has been cut. There is no question in my view, or in the view of probably all the parties represented in the Assembly, including the hon. Gentleman’s party, but that there is a need for capital spending on infrastructure in Wales, including hospitals, schools and all the rest of it. The hon. Gentleman seems to have a lukewarm attitude towards it.
Paul Murphy
I will give way in a second because I want to refer to what the hon. Member for Forest of Dean (Mr Harper) said. He did not really like the idea of what he termed “popular” capital projects. He gave the impression that the Welsh Government would go round Wales seeking out the most popular issues with which to woo the electorate. That is a complete load of baloney. There is a consensus among Assembly Members about what they want: the M4 relief road is one and the A55 is another, but there are others too, including the Velindre and other hospitals. I absolutely welcome the clause. The Government have done well in introducing it. The Labour Government should have done it. I was Secretary of State for five years and we should have done it then, but things move on and the Government have done the right thing, although I question the mechanics of it.
Alun Cairns
I want to set the record straight. I am merely sounding a note of caution over limitless borrowing powers. The figure of £500 million is sensible and pragmatic, and it needs the Treasury’s support. After the recent financial crisis, we need to recognise the risks of unlimited borrowing.
Paul Murphy
I agree with the hon. Gentleman on that, but I still direct the independent observer, from wherever he or she may come, to the beginning of his speech where he spoke about the benefits of dealing with these things, which the right hon. Member for Richmond (Yorks) (Mr Hague) dealt with before the 1997 general election, out of revenue. That is impossible given the strain on the revenue budget these days in Wales. The capital budget has to come out of a separate pot.
I want to emphasise the points made by my hon. Friends the Members for Pontypridd (Owen Smith) and for Llanelli (Nia Griffith) and others about the calculation of the £500 million.
Mr Harper
I would not have intervened but for the right hon. Gentleman’s accusation that I was lukewarm. I made it quite clear that I very much support clauses 19 and 20 and capital borrowing powers being devolved. I was objecting to the idea that they could be unlimited. That is why I argued against the amendments tabled by Plaid Cymru Members. I argued that there should be a role for the Treasury and this House in making sure that those measures were limited, but I absolutely welcome them and I will support them in the event of a Division this evening.
Paul Murphy
That is good to hear.
I come back to the issue of how this has been calculated. I was Finance Minister in Northern Ireland, where there is a stream of income from the rates. The household and the business rates go to the Northern Ireland Executive. But I do not believe that the way in which the borrowing powers were calculated for the Northern Ireland Executive were based on the fact that they had an income from rates. I certainly do not believe that the Scotland Act, which allowed Scottish Ministers to borrow 10% of the Scottish capital budget in order to fund additional capital projects, had anything at all to do with funding streams. I am not saying that funding streams are unimportant, but why should Scotland and Northern Ireland have separate calculations in order to determine what they can have, while Wales has to go by a different methodology? That is wrong. It is unfair. There should be fairness and equality in determining the capital budgets for Wales, Scotland and Northern Ireland.
The reason is probably that these things were done over a period of years in different ways. But it is not done with any consistency based on revenue streams. I wish that the Government could rethink that. Amendments have not been tabled because the Opposition support the issue of borrowing. The First Minister and other Ministers in Wales have been saying for at least two to three years now that to have borrowing and to increase their capital spending was the single most important thing they wanted. We welcome that, but we question the method by which the £500 million has been arrived at.
Mr Gauke
It is a pleasure to respond to the debate, and I thank all right hon. and hon. Members for their contributions. Clause 19 amends the Government of Wales Act 2006 to extend existing borrowing powers in relation to current spending and give Welsh Ministers new capital borrowing powers, and clause 20 repeals the existing borrowing powers that the Welsh Government inherited from the Welsh Development Agency.
Amendments 5 and 34 relate to the capital borrowing limit set in clause 19. Through the Bill, Welsh Ministers will be given new capital borrowing powers that will enable them to borrow up to £500 million. A non-legislative annual limit of £125 million has also been agreed with the Welsh Government. The Government have been consistently clear that borrowing powers must be commensurate with the level of independent revenue that is available to support the costs of borrowing, and a capital borrowing limit of £500 million is substantial relative to the tax powers that are initially being devolved. As hon. Members have already pointed out, if the same ratio between revenue and the borrowing limit had applied in Wales as in Scotland, the overall capital borrowing limit for Wales would have been closer to £100 million. The limit has been increased to £500 million to enable the Welsh Government to start improvements to the M4, should they choose to do so, in advance of a referendum on income tax devolution, and I hope that that flexibility will have the support of Members on both sides of the House. The Government recognise that the £500 million will not be appropriate for ever, but we believe that the arrangements we are implementing provide a more robust mechanism for reviewing and changing the limit than would be the case under the amendments. Specifically, the Command Paper published alongside the Wales Bill sets out the review process that we will undertake at each spending review, and the Bill makes provision for the limit to be changed through secondary legislation.
The UK and Welsh Governments have previously agreed a joint process to review convergence between Welsh and English funding at each spending review. That process will now be extended to ensure that the capital borrowing limit remains appropriate.
The Command Paper committed to consider not only the impact of inflation, but the economic and fiscal circumstances at the time of each spending review and the size of the independent revenue stream available to the Welsh Government. That means we will be considering a much broader range of factors than proposed by amendment 5. For example, if an element of income tax is devolved in Wales, applying the same ratio as in Scotland could suggest an increased limit for Welsh Ministers of around £1 billion.
Following the joint review process, the Bill contains the power for the UK Government to set out a new limit through secondary legislation. Although we have legislated that the limit cannot be reduced below £500 million, legislating that the limit can only be increased in future is not the right answer and could have unintended consequences. For example, consider the scenario in which the UK and Welsh Governments agree that the borrowing limit should be increased substantially. Under our proposals, the limit could be increased accordingly and, if necessary, reduced in future if fiscal conditions deteriorate.
The problem with amendment 34 is that it would act as a disincentive for future UK Governments to agree to increase the limit when fiscal conditions allow, because they would know that the limit could never subsequently be reduced. The UK Government would understandably be cautious about ever increasing it. We do not think that that is the best outcome for Wales, as it might result in unintended consequences.
The Bill provides a capital borrowing limit of £500 million, robust arrangements for jointly considering the limit with the Welsh Government and the appropriate flexibility for changing the limit in future. I hope that the whole Committee can agree with that approach and urge right hon. and hon. Members not to press amendments 5 and 34.
Amendments 35 to 37 cover the sources of borrowing available to Welsh Ministers to fund capital investment and the related powers and responsibilities that should be devolved. As a result of the Bill, Welsh Ministers will be able to borrow from the national loans fund or from banks to fund additional capital investment. The national loans fund is almost certainly the cheapest way for them to borrow, while borrowing from banks provides flexibility.
However, in the Command Paper published alongside the Bill, the Government explained that if a case for Welsh bonds was made, we are willing to consider it. That remains our position. But it is right that the UK Parliament retains the competence over the sources of borrowing available to the Welsh Government so that the UK Government can properly execute their macro-economic responsibilities. For example, it should be for the UK Parliament, rather than the Welsh Assembly, to decide whether it is appropriate for there to be another entrant into the sterling bonds market. As is consistent with that, although we are providing Welsh Ministers with these important new borrowing powers, it is right that the Treasury retains sufficient control over aggregate levels of public borrowing. I hope that this further explanation of our position will allow hon. Members not to press their amendments.
Let me explain the changes we are making in relation to current borrowing. Welsh Ministers can already borrow for in-year cash management purposes. That enables them to borrow up to £500 million from the national loans fund to manage the flow of funding in and out of the Welsh Consolidated Fund while maintaining a working balance. Clause 19 extends those powers by additionally allowing Welsh Ministers to borrow across years to deal with differences between the full-year forecast and out-turn receipts for devolved taxes. A non-legislative limit of £200 million a year has been agreed with the Welsh Government, within the continuing £500 million overall limit.
Hywel Williams
I am grateful to the Minister for his response on amendment 5 and the point about inflation. However, I think that amendment 35 makes a very reasonable call for an independent report to be compiled on the issuance of bonds and laid before Parliament within three months of the Bill being passed, which would be an aid to all concerned. Therefore, I beg to ask leave to withdraw amendment 36, but I will press amendment 35 to a vote.
Amendment, by leave, withdrawn.
Amendment proposed: 35, page 21, line 31, at end insert—
‘(6) The Secretary of State shall make arrangements for an independent report to be compiled on the issuance of bonds by Welsh Ministers.
(7) The Secretary of State shall lay a copy of the report specified in subsection (6) before each House of Parliament within three months of this Act being passed.’.—(Hywel Williams.)
The Scotland Act 2012 enables the Secretary of State, by order and consent of HM Treasury, to change how Scottish Ministers can borrow money for capital purposes, for example, allowing the issue of bonds. Clause 19(5) of the Wales Bill contains the same provisions. This amendment seeks clarification on the power to issue bonds.
Question put, That the amendment be made.
David T. C. Davies
I beg to move amendment 12, page 23, line 4, at end insert—
‘(1A) In Part 1, in paragraph 9 (Health and health services), after “national health service” insert—
“Organisation and funding (expenditure and income) of the provision of health services in England to people registered with a GP in Wales and the provision of such services in Wales to people registered with a GP in England.”.’.
The Temporary Chairman (Sir Roger Gale)
With this it will be convenient to discuss amendment 13, page 23, line 17, at end insert—
‘(d) the scrutiny of reductions of, and additions to, the block grant to reflect expenditure and income arising from the provision of certain services in England to people resident or otherwise eligible for such services in Wales and the provision of such services in Wales to people resident or otherwise eligible in England.’.
Amendment 14, page 23, line 24, at end insert—
‘(g) a Welsh Minister responsible for a service falling under section 13(d) (definition of budgetary procedures)’.
Government amendment 29.
Clause 21 stand part.
Amendment 17, in clause 22, page 24, line 46, leave out ‘and’.
Amendment 18, in clause 22, page 24, line 46, at end insert—
‘(ae) an estimate of the costs of providing services in Wales to people resident in England; an estimate of the monies received from HM Treasury to fund such provision; and an assessment of the effectiveness of any relevant agreements in place governing cross-border service provision, and’.
This amendment and amendment 17 to Clause 22 are intended to make the operation of agreements that govern cross-border services, such as the NHS protocol, more transparent to residents of both England and Wales.
Clause 22 stand part.
New clause 1—Review of options for Barnett formula reform—
‘(1) The Secretary of State shall make arrangements for a review of options for reforming the Barnett formula in order to meet the objective of calculating the block grant funding for Wales on the basis of need.
(2) The Secretary of State shall lay a copy of the report of the review mentioned in subsection (1) before each House of Parliament within six months of this Act receiving Royal Assent.’.
New clause 3—Cross-border health care—
‘After section 1 of the National Health Service (Wales) Act 2006, insert—
“1A Duty to have regard to impact on services in certain areas
In exercising functions relating to the health service, the Welsh Ministers must have regard to the likely impact of those decisions on the provision of health services to persons who reside in an area of England that is close to the border with Wales.”.’.
This New Clause places a duty on Welsh Ministers to consider the impact of their decisions on the provision of health services to people who reside in England, analogous to a duty already placed on the NHS Commissioning Board in England to consider the impact of its decisions on people residing in Wales and Scotland.
New clause 10—Welsh Government Finance Department—
‘The Welsh Government may, by resolution of the National Assembly for Wales, rename its finance department and this shall be recognised as its official title in all dealings with the Treasury.’.
David T. C. Davies
I am grateful for the opportunity to speak to this amendment because I believe in the national health service. I know that I speak for all members of my political party in saying that we believe in having a truly national health service. The changes I am attempting to insert into the Bill would bring back the national health service that we once had but no longer have. At the moment, contrary to what people think, we have a regionalised health service with different systems in Wales, in Scotland, in England, and in Northern Ireland. It is a sad fact that in Wales, under the leadership of members of the Labour party, the Welsh national health service has been failing patients and letting people down. I care about that.
I also care about the patients who come to see in my surgery. They include Mariana Robinson, who has been speaking out in national newspapers over the past few weeks. I did not ask her to go the press; she came to see me to ask how she could tell the story of the scandalous treatment that she has been receiving. She was treated very well in a nearby hospital in England but then told that she could no longer have that treatment because funding was not available and she would have to be treated in Wales.
Only a few weeks ago, I spoke to a patient who had been suffering from cancer. She had been told that she was terminally ill and would not last more than a few months. She believes that she was, in effect, written off by the national health service in Wales. She found out about experimental treatment in England and accessed it. She is still alive. Her cancer appears to be in remission at the moment, and I wish her all the best. She obviously wants to continue to receive this experimental treatment in the same area, Newcastle, yet she too has been told that there will be no further funding for her.
There has always been a problem in getting cross-border funding, but it seems to have got a lot worse in the past 12 months, when a decision was taken somewhere along the line that meant that virtually anyone with an illness in Wales would have to be treated in Wales. I believe that this is part of the whole National Assembly mindset about doing everything in Wales because it feels that it can do it better.
Mr Mark Williams
Does my hon. Friend agree that we should not characterise this as an issue that affects only the borders of England and Wales? I can think of examples of constituents in Ceredigion who have been unable to access services in Gobowen and Frenchay hospitals for exactly the reasons he suggests.
David T. C. Davies
The hon. Gentleman is absolutely right. He will have to forgive me; I have been looking at this more from the perspective of a Member of Parliament in a border area where many patients find it much easier and quicker to access hospitals in Hereford—as they have for rheumatology, for example—or in Bristol, but it affects the whole of Wales because health care is becoming a more specialised matter. In an area of 3 million people, we will not have all the specialists we would like, and that means that there will always be those who need to travel in order to get access to the best on offer.
Albert Owen (Ynys Môn) (Lab)
In his opening remarks, the hon. Gentleman talked about regional differences. Has he carried out in-depth research on the situation in England, where there are issues with different health boards not being able to fund certain operations and services? Many of my constituents get good access to some of the best specialist treatments in the Liverpool and Manchester areas; Gobowen is a third good example of this. I am not quite clear about how he arrived at his earlier conclusions.
David T. C. Davies
I do not know whether this will surprise the hon. Gentleman, but I have not carried out in-depth research into every single health board in the whole of England. [Interruption.] No sir, I have not. I do not have the time because I am seeing so many constituents who are trying to get these treatments in England, having looked over the border and seen much higher standards of service.
In Wales, 42% of patients wait over six weeks for diagnostic tests; in England, only 1.8% of patients do so. One in seven people in Wales is on a waiting list. People wait three months longer for hip or knee replacements in Wales than they do in England. People are twice as likely to die of a hospital infection in Wales as they are in England. That is an absolutely shocking set of statistics. No cancer drug programme is available in Wales, unlike in England. People have to wait longer for ambulances in Wales than they do in England. I do not need to go and research the details of every single health board in England because I already know that the standard of service is far higher in England. It is not just me saying that: it has come out in reports such as those by the National Audit Office and, recently, the Nuffield Trust.
Owen Smith
The hon. Gentleman is giving an interesting though not entirely factual speech. Does he accept that in respect of cancer waiting times, for example, in his area of Monmouthshire there is a more stringent target for patients starting treatment within 62 days, and a higher proportion of patients meet that target than in England? Further, given that he speaks of information in reports, would he care to reflect on the 10-year study by the Nuffield Trust that concluded only a few weeks ago that everything he has said is untrue—that no one country in Britain is steaming ahead and no one country is lagging behind?
David T. C. Davies
The hon. Gentleman ought to be aware that I was citing the Nuffield Trust when I gave the statistics saying, for example, that 42% of patients in Wales have to wait more than six weeks for diagnostic tests as opposed to 1.8% in England. Of course, diagnostic tests are very important in treating cancer.
When it comes to allocating the blame for this, I do not blame doctors and nurses, and it is something of a fallacy to suggest that any Government Member has done so. I blame the leadership of the NHS in Wales and the decisions that have been taken over a period of years by Ministers in the National Assembly for Wales. If we are going to offer some praise to Labour, I will offer it to the previous Labour Government, who pioneered in England some of the reforms that this coalition Government have built on. That Government were happy to bring the private sector into the health service in England.
I recently spoke to a doctor down in Newport who specialises in conducting tests for bowel cancer. He gets a lot of patients coming to him from England whose treatment is being paid for by the NHS. I suppose that it comes down to specialisation. This is what he does, he is good at it, and it is what he specialises in. He gets people in and out quickly and deals with them efficiently and at a cheaper rate than the NHS would be able to. He gets a lot of patients coming in from England, but none from Wales, because of the dogmatic resistance to any use whatsoever of the private sector.
I am often characterised as being a right-wing Conservative—I suppose I am, and I am quite happy with that—but I do not want a privatised NHS or people having to pay to use the NHS. However, as somebody who has had to use it myself on quite a few occasions, I have no problem whatsoever with whether my treatment comes from somebody employed by the state or by the private sector, as long as I am getting the highest possible standard of treatment. That is a common-sense view that most people would adopt.
Owen Smith
Does the hon. Gentleman think that his constituents should have a lesser standard of cancer care and a lower target, as they do over the border in the neighbouring English constituency, or does he think it is good that in Wales we have a higher standard and a higher set of targets?
David T. C. Davies
I absolutely think that my constituents deserve the highest standard of care possible. There is a very easy way for them to get that, and that is for them to be able to choose it.
Alun Cairns
Does my hon. Friend agree that the shadow Welsh Secretary is being somewhat selective in focusing on one element of cancer care? Once the patient has seen the consultant, there is a regular need for medication, and accessing cancer drugs in Wales is much more difficult than in England because Wales does not have the cancer drugs fund. When we are considering cancer care, we need to look at the whole package rather than just one small element.
David T. C. Davies
My hon. Friend is absolutely right. Labour Members, or at least their colleagues in the National Assembly for Wales, are incredibly reluctant to deal with the issues and go into the detail in the same way as my hon. Friend. We have seen that in the decision of the Assembly’s Health and Social Care Committee to start taking votes on which witnesses they are prepared to listen to and which they are not. As somebody who has chaired a Select Committee for a number of years, I have heard witnesses give all sorts of evidence. I have often sat through whole inquiries in which I have disagreed with virtually every single word of evidence I have heard, but I never try to prevent people from coming in, because I believe that if people have something to say, we should welcome them, and that if I happen to have a different view, I can put it to them and challenge them on the facts. I have never heard of anything as outrageous as a Select Committee, which is supposed to operate in a non-political fashion, taking votes to bar people from giving evidence. That is absolutely disgraceful behaviour.
That is also reflected in the behaviour of some Assembly Ministers, who, rather than make the arguments the hon. Member for Pontypridd (Owen Smith) is trying to make, decry anyone who criticises the NHS as being anti-Welsh. There is nothing anti-Welsh about Members of Parliament for Welsh constituencies trying to demand the best possible health care for their constituents. I also thoroughly welcome the support I have received from the Prime Minister and the Health Secretary, who have rightly spoken out about this issue because they believe it is wrong and disgraceful that people in one part of the United Kingdom receive health care that is so much worse than that received by people in another part of the United Kingdom.
Owen Smith
I am grateful to the hon. Gentleman for giving way; he is being very generous with his time. Would he care to dissociate himself from the Prime Minister’s recent ludicrous description of Offa’s Dyke as a
“line between life and death”?
In the light of the Nuffield Trust report, which suggested that that is absolute nonsense, will the hon. Gentleman dissociate himself from those remarks or will he continue to scaremonger, just as the Prime Minister has done?
David T. C. Davies
When people are twice as likely to die of a hospital infection in Wales than they are in England, I am very happy to associate myself with every single word the Prime Minister says and I hope he will continue to draw attention to the shambolic level of health care we are putting up with in Wales.
David T. C. Davies
I will give way one more time, because I am not afraid to have the debate, unlike members of the Health and Social Care Committee in the Welsh Assembly.
Owen Smith
Excellent. I am grateful that the hon. Gentleman wants to trade facts. Would he like to commend the National Assembly for Wales for the fact that, on cancer and all the major tumour types, the rate of improvement for one and five-year survival times in Wales has been better than that in England?
David T. C. Davies
If the shadow Secretary of State is so confident that things are good in Wales, he will have no problem backing my amendment, because it is very simple. It would mean that any patient in Wales would have the right to seek treatment in England, with the cost of their treatment being deducted from the block grant of the National Assembly for Wales. Similarly, any patient from England who fancied waiting twice as long as their neighbours could seek treatment in Wales and the money could be added to the block grant. This is not about taking powers away from the Welsh Assembly; it is about giving the Welsh Assembly an opportunity to show how confident it really is in the standards of national health care it is delivering. If the hon. Gentleman is so convinced that his colleagues in the Assembly are doing a good job, he will have no problem at all supporting my amendment. It would not result in a problem, would it? There would be no cut in the block grant, because in the hon. Gentleman’s world nobody would try to leave Wales in order to seek treatment in England.
We all know that the reality is that hundreds, even thousands, of people who are currently patients in Wales want to be treated in England. Is it not a disgrace that Mark Drakeford, the Health Minister, is trying to skew the facts by saying, “Well, there are hundreds of people in England receiving treatment in Wales”? There are, but they do not want to have their treatment in Wales. They have set up an action group to demand the right to be repatriated to England, and I am sure my hon. Friend the Member for Forest of Dean (Mr Harper) will address that.
David T. C. Davies
I have given way enough times. I look forward to my amendment receiving the support of Labour Members. It is about creating competition between health services and I do not think there is anything wrong with that. It is about delivering patient choice and, most importantly, it is about recreating a national health service. The Conservative and Unionist party will also be the party of the national health service—the truly national British health service—at the next election, and I look forward to the support of Labour Members.
Mr Llwyd
I wish to speak to my new clauses 1 and 10, which are in this group. I was discomfited by what the hon. Member for Monmouth (David T. C. Davies) said, because, to be honest, he was running Wales down. Thousands and thousands of people who work in the NHS in Wales are doing their best at every single level, from the orthopaedic surgeons to those who clean the wards. There are problems, but there are problems in England as well. I was treated in Gobowen recently, not because I was given preferential treatment, but because the Bala practice happens to refer people to Gobowen for certain orthopaedic problems. I was dealt with promptly and well, and I have nothing but respect for those on that side of the border, as well as for those on our side of the border, which is the point on which the hon. Gentleman is lacking.
David T. C. Davies
I made it very clear in my speech that my criticisms are directed entirely at the leadership of the NHS in Wales and the National Assembly for Wales, not at the doctors and nurses who operate that service. I am happy to put that on record again. With all due respect, the right hon. Gentleman’s party has been very critical of the way in which the NHS has been run in Wales. I hope he is not going to fall into the trap—this is, frankly, the attitude of tyrants—of suggesting that any criticism of something is actually an attack on one’s nation. That is not the case at all and it is a dangerous criticism for him to make.
Mr Llwyd
I have not been uncritical; it is just that I was taken aback by the vehemence of the hon. Gentleman’s speech. I thought he was talking Wales down—that is my point. Everything is not perfect and I do not pretend it is—only a fool would say as much—but it is not half as bad as the hon. Gentleman alleges.
Chris Ruane (Vale of Clwyd) (Lab)
In stressing the positives for Wales, will the right hon. Gentleman welcome the fact that there are 60 nurses per 10,000 patients in Wales and only 50 nurses per 10,000 patients in England?
Guto Bebb
I am grateful to the right hon. Gentleman for giving way. Is it not the case that a Member of Parliament has a responsibility to speak up on behalf of their constituents, including people who work in the health service who, time after time, come to me with complaints? They do so quietly and behind the scenes, because they know their positions will be endangered. We have a responsibility to speak up for patients and NHS staff in Wales, who are very aware of the fact that the standard of service is not appropriate.
Mr Llwyd
I take the hon. Gentleman’s point. He may know that I was very critical of the Welsh Government for going down the track of closing smaller hospitals, leaving nothing in their wake and pretending that care in the community was available when it was not. I am not uncritical. We should voice concerns when they need to be voiced.
New clause 1 stands in my name and those of my hon. Friends the Members for Arfon (Hywel Williams) and for Carmarthen East and Dinefwr (Jonathan Edwards). If accepted, it would require the Government to review the options for reforming the Barnett formula in order to ensure that Wales is funded on the basis of need rather than population share, as is currently the case. Of course, it is out of the scope of this Bill to seek to change the Barnett formula and make sure that Wales is funded on the basis of need, but the issue of fair funding has become an integral part of the public and political discourse on the powers it offers and we seek to highlight its importance.
Although the need for fair funding—as reform of the Barnett formula has become known in Wales—was not set as part of the remit of the Commission on Devolution in Wales, the cynical among us might view that as a ploy by the Government to continue to ignore the ongoing loss to Wales of between £300 million and £400 million per annum, which is an incredibly large sum of money for such a small country.
Earlier, we debated the need for borrowing and the £500 million limit. We are actually undersold £400 million per annum already, and we do not seem to be too concerned about that or, at least, nobody has been in any great rush to address it. I venture to suggest that if that were put right, the £400 million could be very useful to the Welsh Government immediately.
The so-called formula was devised in the 1970s by Joel Barnett MP, who is now Lord Barnett in the other place. He was a Treasury Minister at the time, and he saw that a simple stop-gap means of funding Wales would be to do so on the basis of its share of population—about 5% of the UK total. However, since the 1970s, Wales’s GVA has fallen as a percentage of the UK’s, and Wales now has a higher number of disabled and older people as a percentage of the population than our friends in England. The formula was intended to be only temporary, before a longer-term and more equitable solution could be found. Politicians of all parties recognise that it is unjust and needs reform, except those in government—whoever is in government at the time.
As part of our One Wales coalition Government agreement in the last National Assembly, Plaid Cymru demanded that an independent commission be put together to examine the shortfall in the funding which Wales evidently misses out on each year through how the block grant is currently calculated. The Independent Commission on Funding and Finance for Wales, expertly chaired by the widely respected Gerald Holtham, entirely vindicated what we have said for upwards of 30 years—that Wales has been losing out. Indeed, the £300 million to £400 million figure has been endorsed by another Committee, the Constitutional Committee in the other place, which separately came to a similar conclusion.
Plaid Cymru has been campaigning for reform of the Barnett formula and to secure fair funding for Wales on the basis of need for more than three decades. In all my time in the House, which spans more than two decades, we have returned to this continuing injustice time and again. If I may reminisce for a second or two, I remember asking successive Labour Secretaries of State for Wales why they would not reform the Barnett formula. I do not seek to embarrass my good friend the right hon. Member for Torfaen (Paul Murphy)—he had to stick to his brief at the time—but there is now an acknowledgment that we are underfunded, and that therefore needs to be put right. As in any other part of the UK, we need to ensure fair funding in Wales, which is something that no democrat would deny.
Imagine my surprise when it emerged that the Labour party had put a caveat on devolving income tax powers for Wales, by stating that it would not hold a referendum until fair funding had been secured. The fact that it wilfully ignored the problem and even denied that there was one during 13 years in power in Westminster must be the symptom of a grave case of collective amnesia. The cynical among us would call that expedient, to say the least, while others might be tempted to see it as a roadblock in the path of greater devolution for Wales, put in place by the anti-devolution tendency that appears to be in the ascendancy among Labour Members from Wales at Westminster.
Susan Elan Jones (Clwyd South) (Lab)
How does the right hon. Gentleman marry his last comment with our very strongly stated support for reserved powers, an innovation about which I am very pleased?
Mr Llwyd
I am pleased that the Labour party agreed to the reserved powers model, but I am a little concerned and I will develop my argument about the difference of opinion on when the Barnett formula should be addressed. The hon. Lady’s colleagues in Wales have one view, and her colleagues at Westminster have another. As I have said, the caveat may be a roadblock to further devolution. In fact, according to Labour party policy as it now stands, it will be a roadblock to further devolution.
Chris Ruane
While the right hon. Gentleman is handing out plaudits to the Labour party, will he congratulate it on actually bringing devolution about? It included in its 1997 manifesto that devolution would be put to the people of Wales.
Jonathan Edwards
Is not new clause 1 a credibility test for the Labour party? It has put in place a roadblock on income tax powers, in that their devolution cannot happen until Barnett reform. If it does not support the new clause this evening, that will clearly show that its stipulation is a roadblock to further devolution.
Mr Llwyd
Yes, I agree with my hon. Friend, and not only Plaid Cymru is saying that. In a recent article, Professor Richard Wyn Jones of the Wales governance centre at Cardiff university said that because of the difference of view between Labour colleagues in the National Assembly and those at Westminster, and between Scottish Labour and Scottish Labour Members at Westminster,
“Scottish Labour seem to have no compunction about throwing Wales, one of the poorest parts of the Union, under the bus to shore up their own position… For Wales it is, sadly, a very different story. Yet despite this, the Barnett formula—used to calculate funding for the Scottish and Welsh Governments—operates in a way that ensures per capita levels of public spending is far higher for Scotland than for Wales.”
He develops that theme, referring to the Holtham commission, and continues:
“But what of Welsh Labour? It is surely inconceivable that the Shadow Secretary of State…will have been unaware of the contents of Powers for a Purpose, and its pledge to retain Barnett while rejecting a needs-based replacement. Yet, thus far at least, he has remained resolutely silent in the face of this assault on the long-term interests of Wales.”
And so it goes on: it is a pretty harrowing read, but it underlines the fact that unaligned expert commentators believe that denial of the need to get on with reforming Barnett as soon as possible is undermining the democratic process in Wales and its future.
In our party, at least, we are quite clear. We believe that Wales should be fairly funded on the basis of need, and that the Barnett formula should be recalculated to ensure that Wales does not lose out, potentially on billions of pounds, over the coming decade. We have always maintained that position. However, the thrust of what the Bill offers is, on the whole, a good thing, with greater financial and fiscal powers, despite our disagreement about some of the restrictions and conditions that the Westminster Government have placed on the powers. We are disappointed that they have failed yet again to take the opportunity to address the serious injustice of the lack of fair funding, but the Bill is a means of getting on with the important job of improving the Welsh economy—boosting it and, I hope, creating many jobs in the process through careful investment in infrastructure—because we know that a lot needs to be done.
We know that the Conservative and Lib Dem Government will not commit to reform of the Barnett formula. They have always said that it works, despite the fact that many of their senior figures in Wales have acknowledged that it does not work, but needs reform. This Government can never be trusted to put Wales’s interests first.
Mr Harper
Just to be clear, it is not right that the Government have said they will never amend the Barnett formula. They have said that the work on dealing with the deficit has to be the priority, before the Barnett formula can be looked at. They do not have a closed mind on that—they have another priority, which is the right one of dealing with the deficit—as the right hon. Gentleman is suggesting.
Mr Llwyd
I appreciate the pressures on the Government caused by the large deficit—that is fairly obvious—but it is not as though the Barnett problem has suddenly come out of the ether. It is a case of jam tomorrow, is it not? We have argued our case for 30 or 35 years, but others who are politically unaligned have now said that we are right. It has been on the table for eight or nine years, with very little movement in any direction and no initiative whatever. However, I accept what the hon. Gentleman says about the deficit.
Nia Griffith
The right hon. Gentleman’s new clause deals with Barnett reform, but if it were reformed, what would the position be in Scotland? Is it in his mind that Barnett reform would increase funding for Wales and decrease it for Scotland?
Mr Llwyd
I am in the thankful position of not speaking for Scotland. I have an opinion, however, as I would not like to see our colleagues and friends in Scotland being done down. I pose the question of whether we need a proper root-and-branch approach to the problem—something that will properly deliver. Come September, there may be no need for Barnett reform in Scotland.
Nia Griffith
Does the right hon. Gentleman agree with the Labour party’s announcement this week that we want to increase the funding for Wales, but not reform the Barnett formula as it affects Scotland?
Mr Llwyd
Asking me to say whether I think it is a good thing to increase funding for Wales is a rather strange question. If that ever happens, it will of course be a good thing, but rather than have piecemeal increases in funding, it would be better to have a lasting and proper formula that everybody could understand and that could stand the test of time—unlike the Barnett formula. Whenever I see the noble Lord Barnett—a wonderful character and a very nice man—he turns away. I hope it is not because it is me, but he always turns away, saying “I’m sorry, I’m sorry; the formula was not meant to be in place now”. He acts as if he thinks I am going to jump on top of him! He realises the point himself, so we really need to get stuck in on this issue. I hope that when the Bill is passed, we can reach an all-party consensus by sitting down and seriously having a go at addressing the Barnett crisis. As I say, rather than have a piecemeal approach to the problem, I would prefer a long-standing approach to which everybody could sign up.
Chris Ruane
I thank the right hon. Gentleman for giving way to me a third time. He talks about how Labour has treated Wales. In 1996, the Welsh block amounted to £6.7 billion; by the time Labour left government in 2010, it was £15 billion. Is that not an achievement?
Mr Llwyd
It was raised in line with inflation—[Interruption.] Let me finish. Other responsibilities came to Cardiff—virtually all the agriculture, the environment and various other things came in. [Interruption.] I would like to know the percentage, but I am not in a position to determine one way or another whether it amounted to a substantial increase. I do not think it was substantial: it was clearly above inflation, but other responsibilities had been devolved to Cardiff by that time.
Without trying your patience, Mr Crausby, I would like briefly to speak to Plaid Cymru’s new clause 10. The Silk commission’s recommendation 28—a brief one, you will be pleased to hear—states that the Welsh Government should set up a Welsh Treasury to manage the new powers contained within the report. The new clause extends that arrangement to the Bill. It is a simple but important new clause. In the spirit of our other amendments, it seeks to preserve the integrity of the cross-party Silk commission recommendations.
The commission recommended that if the Welsh Government are to be directly responsible for revenue raised in Wales, as will be the case with the advent of the Bill’s powers, they must develop their finance department into a Welsh Treasury. That is a common-sense approach. If the National Assembly for Wales decides to do this, in accordance with its will, so be it. It would avoid the need for inefficient and perhaps time-wasting tidying-up exercises, such as appear in the first part of the Bill. People in Wales have been referring to “the Welsh Government”—a change of name—so there should be no problem with calling the finance department “the Welsh Treasury”. It is common sense for that to happen. I hope that this simple new clause will be supported by both sides of the Committee.
Guto Bebb
I shall speak briefly to my amendments 12, 13 and 14, of which I am proud. I associate myself, too, not only with the amendment tabled by the Chairman of the Welsh Affairs Committee, my hon. Friend the Member for Monmouth (David T. C. Davies), but with his speech. There was nothing in it that was an attack on Wales. He was simply highlighting a real concern of our constituents that needs to be addressed. I believe that the amendments provide the opportunity to deal with the fact that we need an NHS that serves the people of Wales.
Albert Owen
I take the hon. Gentleman at his word that he is not attacking the NHS in Wales. He has to acknowledge, however, that both his and my constituents already get some of the best specialist treatment over the border in places such as Liverpool, Manchester and Gobowen. That just happens to be a fact of life.
Guto Bebb
That is true; the hon. Gentleman makes a statement of the obvious. Before I was elected, I was proud to support the campaign launched by my right hon. Friend the Secretary of State for Wales, who argued strongly that services in Walton rather than services in Swansea should be provided for people in north Wales. What the hon. Gentleman completely misunderstands is the fact that patient choice has been taken away in Wales. People in Wales can be referred to hospitals in England by a GP, but only if the GP makes that referral on the patient’s behalf. The opportunity to make a choice is not available to patients in Wales—very different from the situation that applies to patients in England.
The situation in respect of patient choice in Wales is simple. Some political parties in Wales argue strongly that patients in Wales should have entirely the same right to choose their preferred hospital as patients in England. For some reason, the so-called party of the national health service in Wales is of the view that that right to choose should be denied.
Nia Griffith
Does the hon. Gentleman not accept that patients in England need a referral from a GP? The way in which the funding is being reformed in England will make things difficult, because some GPs will have to make desperate choices about whose treatment they will fund.
Guto Bebb
The hon. Lady is mistaken. The NHS England website poses the question,
“Can I have a GP in Wales if I live in England?”
The answer is:
“Yes you can, but… Patient choice and the NHS Constitution do not apply to the NHS in Wales.”
In other words, patient choice does apply in England, but it does not apply in Wales.
It is important that this issue is debated, because the Government in Cardiff Bay state that the NHS in Wales is as good as the NHS in England. That is exactly the issue that our amendments highlight. They make it very clear that if patients from England elect to use services in Wales, there will be a corresponding change to the funding block, and if patients from Wales elect to use services in England, there will be a corresponding change to the block. If the confidence in the Welsh NHS that Opposition Members express in the media and on television is genuine, they would see no danger in the amendments. The amendments would simply allow patients from Wales who want to be treated in England and patients from England who want to be treated in Wales to have that choice. They are simply trying to ensure that we have an NHS that is national. Why is that so scary to the so-called party of the NHS? That question needs to be answered in this debate.
Secondly, I want to touch on the comments of the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd). I was genuinely disappointed to hear the comments of my hon. Friend the Member for Monmouth described as an attack on Wales. It is important in a mature democracy that we are able to highlight areas where service levels in Wales are not as good as they should be, because we should aspire to have the best. Whether we are talking about the NHS or education, we have a duty to highlight places where Wales is underperforming. To try to kill off that debate by arguing that all Members who highlight concerns on behalf of their constituents are in some way attacking NHS staff is unacceptable.
I might be suggesting that there is a motive where none exists, but perhaps the defensiveness that was articulated by the right hon. Gentleman reflects the fact that patient choice in Wales disappeared as a result of the “One Wales” Government. According to the House of Commons Library, the “One Wales” Government “eliminated patient choice”. Those are not my words, but the words of the House of Commons Library. It states clearly:
“Patients registered with a GP in Wales do not have a statutory right to choose at which hospital they receive treatment.”
The “One Wales” Government moved from patient choice to patient voice. That was a good soundbite that appealed to people who like poems that rhyme. However, in the Betsi Cadwaladr trust, patient voice meant that if somebody made a complaint, they might get a response in six months. Patient choice, which is what these amendments propose, means that patients in north Wales who feel that they would be better served by electing to be treated at a hospital in England would have that choice.
Mr Llwyd
Does the hon. Gentleman not accept that I do not have people crowding into my office to say that they were badly treated at the hospitals in Llandudno, Bodelwyddan or Wrexham or at Ysbyty Gwynedd, Bangor? People often come in to say, “If you’re in contact with those hospitals, will you please say that the care was excellent and that I have nothing but praise for them?” I do not recognise the problem that he perceives. I am not sure what I am saying about what he is saying, but I do not recognise the problems that he and the hon. Member for Monmouth have highlighted. I do not see those problems every day. If I did, perhaps I would join them.
Guto Bebb
The right hon. Gentleman makes an important point. When somebody tells me a good news story about the NHS in Wales at a public meeting or an event in my constituency, I am the first to applaud. It is important that we highlight success and great performance when it happens in the NHS in Wales. Unfortunately, I get complaints about the service that people have received in Wales far too regularly. Only three weeks ago, I heard from an individual who suffered from prostate cancer. He had an assessment in Wales that said that he did not have cancer. He was suspicious and booked a private appointment in London. Within 12 hours, he was operated on. He is of the view that the decision to go private saved his life. Is it not disgraceful that a patient in Wales has to have the means to go private to ensure that they get the correct diagnosis?
David T. C. Davies
I thank my hon. Friend for giving way and allowing me to put it on the record for the third time that I am criticising not the doctors and nurses in Wales, but the policies of the Labour-run Welsh Assembly Government that are making it difficult for people to see those doctors and nurses quickly enough. That is the problem.
Guto Bebb
I accept that point.
I will conclude my remarks because I wanted to be brief and my hon. Friend the Member for Monmouth has highlighted the main issues. The key issue is that our amendments in no way threaten the Welsh NHS if it is a beacon of success, as is claimed by the Opposition parties. If the good practice that I see on a regular basis in the health service in north Wales is replicated across Wales, the amendments should not strike fear into anybody.
I come back to the individual I saw on Saturday morning while I was out canvassing. As the right hon. Member for Dwyfor Meirionnydd will be aware, a significant portion of my constituents have retired to north Wales to live. They often have family members in the north-west of England. Is it not unfortunate that somebody who is facing a significant operation cannot choose to be treated at a hospital near their family? Medical records show clearly that being in close proximity to one’s family, having the support of one’s family and having a daily visit are often the difference between a quick recovery and a long, drawn-out recovery. However, that choice is not available to patients in Wales simply because they live in Wales.
The amendments are a vote of confidence in a national health service. All parties who claim to support the national health service should support them.
Nia Griffith
The amendments tabled by the hon. Members for Forest of Dean (Mr Harper), for Monmouth (David T. C. Davies) and for Aberconwy (Guto Bebb) claim that a disproportionate number of Welsh patients use NHS services in England. That is totally groundless. In fact, the number of English patients going to Welsh hospitals has increased by 10% since 2010, while the proportion of Welsh patients using English A and E services has fallen in recent years.
Nia Griffith
I am coming on to that. I am talking about patients who live in England and come to have treatment in Wales. The implication is that everybody wants to flee from Wales and nobody wants to go there. That is not true.
The issue of choice is key. We all have constituents who go for specialist treatments in England. We all know of emergency cases that have been taken to special care baby units and to hospitals as far away as London. There are obviously issues of funding. Funding does change hands. Amendment 13 suggests that that should be done through the block fund, but it is done from health board to health board.
The hon. Member for Aberconwy ignores the reforms that are being suggested in England, which will mean that instead of a GP making a referral to the hospital that they consider will provide the best treatment for their patient, they will have to consider the GP surgery’s budget and might not be able to afford the treatment. There are hospital consultants in England who are terrified that their services will not be brought in by certain GP practices because of the immense pressure of trying to provide a huge range of services with a limited budget. That is terrifying. Soon someone will not be able to compare like with like, and there will not be a similar situation in England and Wales—it will be very different. I am afraid that the idea of patient choice will vanish in England. It is nice to think it is there and that it will exist in future, but it simply will not be there.
I have heard of many instances of patients who had a certain degree of choice and were able to go to a slightly different hospital than the one first suggested when they made the case and asked for that change. Frankly, I think this amendment has provided the opportunity for an attack on the Welsh health service.
Nia Griffith
Absolutely—not necessarily from the hon. Gentleman, but from other hon. Members there has been a blatant and clear attack. I would be the first to make a fuss—indeed, I do—if somebody cannot get a specific treatment, and we all know that in every area, whether in England or Wales, certain specialties may be difficult to cover in certain periods. We all know that we need to fight for certain things for certain constituents. As was mentioned, however, there is no clear winner or loser; there is no clear leader or laggard in the four UK nations in terms of health provision, as shown in a longitudinal study by the Nuffield Trust over a long period.
Susan Elan Jones
It is all very well various Conservative Members saying, “We are not making an attack on the NHS”, but the leader of their party went to their Welsh conference and—I have just checked this because it is almost beyond belief that he used this phrase—described Offa’s Dyke as
“the line between life and death”.
I am sorry, but that is offensive. Conservative Members continually play the game, but they are Cameron’s little dogs, nothing else, and they are not prepared to speak up for Wales.
Nia Griffith
I fully agree with my hon. Friend. Indeed, many of my constituents, who would be the first to criticise if something were wrong with the national health service, were shocked by those comments and deeply outraged at the insult to the many hard-working staff. I am glad that Conservative Members in the Committee have recognised the hard work done by many of our doctors and nurses in Wales, but there has clearly been an unmitigated and quite unnecessary attack. As has been pointed out, if he looked at some of the statistics, the hon. Member for Monmouth would find that waiting times for certain cancer treatments are shorter in his patch than over the border in the Wye valley. It is absurd to state that everybody is hopping across to England. Likewise, the hon. Member for Forest of Dean has tabled one of the amendments, but Gloucestershire Hospitals NHS Trust treats only 82% of its cancer patients within the 62-day limit, whereas in Wales the figure is 91%. Every Welsh trust is outperforming the Gloucestershire Hospitals NHS Trust.
When considering these figures it is easy to pick one number or specialty and to forget that for the vast majority of people in Wales treatment has improved rapidly over the past few years. It is certainly very different to how it was in the 1980s and ’90s, when people waited an extremely long time. The key point to remember is that England too has had a dreadful year for A and E.
Nia Griffith
I am saying that in England it has been the worst year for decades for A and E, with almost 1 million people waiting more than four hours. It has been much harder to get to see a GP in England since the Government scrapped Labour’s 48-hour appointment guarantee. [Interruption.] I am stating the fact that some things have not gone well in the NHS in England, and I am pointing out the criticisms, including shortages of nurses. In Wales we have 60 nurses per 10,000 people; England has only 50, and shortages in certain departments have been causing particular problems. In Wales, delayed transfers of care and discharges are at an all-time low, whereas in England the number of hospital bed days lost to delayed discharges is at an all-time high. One might ask whether that has something to do with the cuts to local government expenditure that have been experienced in England under this Government.
All in all, the amendment on transferring block funding so that people can shift from England to Wales is, first, not very practical. Secondly, there are already opportunities for people to go across the border where that is the most appropriate treatment. Thirdly, the reform of the system in England will make it extremely difficult for GPs to provide even basic treatment for many of their patients, given the budgets they will be dealing with.
There have already been a number of exchanges on fair funding between the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) and me, and my right hon. Friend the Leader of the Labour party made it clear this week that we recognise that although the Barnett formula has served the UK well, there is a specific set of issues relating to Wales. As a result, an incoming UK Labour Government would address the issue for Wales without it impacting on Scotland. The right hon. Gentleman refers to not having a piecemeal approach, but I suggest that his amendment is just that and that a more comprehensive look at the issue would be more appropriate.
Mr Harper
I will try to be relatively brief although I will say one or two things that I had not intended to say because I have been provoked by the previous contribution. First, the double standards are breathtaking. My hon. Friend the Member for Monmouth (David T. C. Davies) gave a perfectly reasonable speech and made it very clear that he was not attacking doctors and nurses but speaking about senior NHS professionals, yet he was accused of attacking doctors and nurses. The hon. Member for Llanelli (Nia Griffith) then proceeded to criticise standards of health care in England, yet somehow that is okay because she is just pointing out facts. Absolute nonsense. If we see things wrong in our constituencies it is our duty as elected Members to point them out. My hon. Friend was simply pointing out to the Committee problems in his constituency that had been raised by constituents. [Interruption.] I am not surprised that Labour Members do not want to hear this. The NHS is not performing well in Wales, and I will set out why my constituents in England are concerned about that.
I am happy with the confirmation from the hon. Member for Llanelli that if her party is elected to government it will sort out the Barnett formula for Wales and give it more money without that affecting funding for Scotland. As an English Member, it is quite clear to me which way the bill will be coming, so I will be pleased to tell my English constituents that another reason for not voting for the Labour party is that they will be facing a large bill to give more of their taxes to be spent by the Welsh Assembly Government, as well as the money they give to Scotland. I am grateful to the hon. Lady for that campaigning opportunity.
Amendments 12, 13 and 14 have been tabled by my hon. Friend the Member for Monmouth—my constituency neighbour—and my hon. Friend the Member for Aberconwy (Guto Bebb). I listened carefully to their arguments and I am happy to support the amendments as I think the principles they outline are sensible. My hon. Friend the Member for Aberconwy spoke about the Welsh Assembly Government’s policy of voice not choice. That would be fine if, when patients said something with their voice, somebody actually listened to them. The problem is that nobody listens, which is a real issue for my constituents.
Paul Flynn
Why does the hon. Gentleman think the Public Administration Committee, which has a Conservative Chair and majority, gave the health service ombudsman in Wales as the model and exemplar to follow? It said that that was the best service of the four countries, and it also recalled that Wales still has community health councils, which act splendidly as a source of receiving complaints and dealing with them.
Mr Harper
The hon. Gentleman makes a very good point. Of course, the ombudsman service deals with the things that go wrong, and the points made by my hon. Friends were about the things that go wrong in the health service. It may or may not be true that the ombudsman service is a better system for clearing those things up, but we are trying to avoid them going wrong in the first place. I agree with the hon. Gentleman about community health councils. We used to have them in England and they were abolished by the Labour Government, which was a very bad idea. I suspect that he voted for getting rid of them, and I wish that he had not done so.
On the performance of the NHS in Wales, I shall limit myself to what I said when we debated the issue on Second Reading—[Interruption.] The shadow Secretary of State cannot help himself. All I want to do is point out that I referred to mortality statistics in that debate, and I made the point that they were worse in hospitals in Wales. The Hansard reporters then note an interruption, which was the barracking from Opposition Members claiming that I was smearing Wales—[Interruption.] The hon. Member for Newport West (Paul Flynn) says it again. Actually, if he read the Hansard report for that debate, he would know that all I was doing was quoting the right hon. Member for Cynon Valley (Ann Clwyd), who said:
“The second warning sign, said Francis, is the level of mortality statistics. In fact, they appear to be dangerously high in many hospitals in Wales.”—[Official Report, 5 March 2014; Vol. 576, c. 930.]
All I was doing was putting on the record a fact—the hon. Member for Llanelli said that we are allowed to do that—that was cited by a senior Labour Member, and I am accused of smearing the health service. If that is the level of debate we are going to have, we will not get very far.
Owen Smith
Has the hon. Gentleman reflected, in the period since he made those remarks, on the 10-year longitudinal study carried out by the Nuffield Trust? It looked at all the indicators applicable across all four health areas of the UK and concluded that no one country is steaming ahead and no one country is lagging behind.
Mr Harper
No, I have not, because all I did was quote a Labour Member. They were not my words, but I was accused of smearing the NHS in Wales, which I did not do.
I was surprised to note that the hon. Member for Llanelli, after we had had our lengthy debate on day one of consideration of the Bill in Committee, tweeted that I was spending a lot of time on the Wales Bill and she wondered what my constituents would make of it. Well, the thousands of my constituents who are forced to be treated by the NHS in Wales against their wishes—that is not my view or assessment of the NHS in Wales—will, I suspect, be grateful that I am raising these concerns in the House on their behalf with Ministers, so that they can get better health care and a choice of where they are treated.
Amendments 17 and 18 are about improving the transparency of the agreements that govern cross-border services—the cross-border principles that were agreed by Ministers in the Department of Health and in the Welsh Assembly Government, together with the accompanying protocol that was sorted out by officials in NHS England and NHS Wales, supposedly based on those principles. The budgetary protocols will improve the transparency of the system.
New clause 3, also in my name, is an exact copy—with the appropriate changes—of the language that is in the Health and Social Care Act 2012. It puts a legal duty on commissioners in England, when making commissioning decisions, to consider the impact of their decisions on the provision of services to people who reside in Wales—and we have heard several examples from Members of constituents who live in Wales and receive services in England. There is no such reciprocal duty, and new clause 3 would provide that Welsh commissioners had to have regard to the likely impact of their commissioning decisions. If my constituents were receiving services in Wales and Welsh commissioners were making decisions that would have an impact on those services, they would have a legal duty to consider how my constituents would be affected. All I am asking for is parity between commissioners.
Owen Smith
Does the hon. Gentleman accept that one reason that provision was included in the Act was to mitigate the risk that commissioning groups in England would choose to decommission traditional services being provided by other parts of the NHS in England, such as tertiary care, and choose BUPA, Spire or some other private provider that might not be bound by the same protocols and memorandum of understanding to provide those services to Wales—a significant concern to those of us who looked at the Health and Social Care Bill? It remains a significant concern in a privatised NHS in England.
Mr Harper
I do not share that concern. The hon. Gentleman has all these scare stories about privatising the NHS, which are complete and utter nonsense. Since the provision exists, and commissioners in England have to have regard—rightly—to the impact of their decisions on Welsh residents, all I am asking for is a reciprocal duty on commissioners in Wales if they provide services to residents in England. That is nothing more than common fairness.
Hon. Members may be wondering why my constituents would care about the NHS in Wales. I shall set out briefly why it matters. I have some 6,000 constituents who reside in England in my constituency. The only GP surgeries that are conveniently located for them are branch surgeries whose main practices are located in Wales and registered with the NHS in Wales, so even though my constituents go to a GP surgery in England, they are being treated by GPs who are registered in Wales. Following decisions made by the Welsh Government and commissioners in Wales, my constituents find that their choices about where to have secondary care are increasingly limited. That is becoming a real problem. We have made some progress by liaising with the Aneurin Bevan health board, for example, but I am conscious that it could revert at any time to the previous situation. I want the issue to be sorted out permanently.
The cross-border principles that were agreed by Ministers of both Governments provide that cross-border commissioning should reflect the legal rights of patients in their country of residence. That is all I am asking for. What seems to have happened is that the protocol, the detailed arrangements agreed by NHS England and NHS Wales, did not quite reflect what Ministers in both Governments—to be fair—had agreed. My constituents are asking for nothing more than their legal rights under the NHS constitution and according to the Health and Social Care Act 2012. They want to be able to exercise the choice that my hon. Friends the Members for Aberconwy and for Monmouth set out.
My constituents have the option of being treated in Wales and, given what the shadow Secretary of State has said about the quality of services, they may want to be treated in Wales. But what they do not want is to be forced to be treated in Wales if they wish, for whatever reason—better treatment or any other preference—to be treated in England. They are English residents and they should have that right. That is all my amendments would achieve, and I hope that the Minister will address that.
Owen Smith
Much as we are enjoying the extended audition by the hon. Gentleman for the post of Secretary of State for Wales, can he point us to the evidence showing that thousands of his constituents are so concerned about treatment in Wales, or is this just an anecdote?
Mr Harper
I do not know where to start with that rather childish intervention. There is no vacancy, because my right hon. Friend is doing an outstandingly good job as Secretary of State for Wales, and I hope he continues in his post for a long time. He is doing an awful lot better than the shadow Secretary of State would do if, God forbid, he were ever to get the job.
I am concerned because my constituents are affected by the not very well thought-through devolution settlement—[Interruption.] The evidence is constituency correspondence, a very well attended public meeting with hundreds of local residents, and a very active local campaigning group. This is a real issue in my constituency and thousands of constituents are affected by it. I am doing my job as their Member of Parliament by setting out their views. I have been very reasonable in my argument and I look forward to the Secretary of State’s response. He is a Secretary of State who listens to and deals with issues brought to him by Members of Parliament—unlike the shadow Secretary of State—and I look forward to his response to the debate.
Paul Flynn
What is entirely novel in the debate on health, which I have never experienced in my 28 years in this House, is for Wales and the Welsh health service to be used as a political football to kick around to save the skins of Tory MPs and fulfil the ambitions of Lynton Crosby. He is the one who is using the issue not to make legitimate complaints—it is right that hon. Members raise legitimate complaints, as they always have—but for something entirely fresh. At every Prime Minister’s questions, when the attention of the whole nation is on this place, questions are distributed to Welsh Tory MPs, and to non-Welsh MPs who do not know the places they are talking about, that criticise the Welsh health service and create the impression that it is a poor, second-class service. This is a malicious deception: it is not true.
There is a lot wrong with the health service in every part of these islands. There are weaknesses and everyone can provide examples of particular cases, but what is the effect when the impression is given, week after week, example after example, that the Welsh health service is rubbish? What does that do to someone waiting for an operation or treatment to be told, again and again, that the service they are getting is second class? A big part of the healing process is confidence. If confidence is destroyed, that damages the health of the nation on a very deep level. What happens to the people working in the health service who do marvellous but thankless jobs—the jobs we turn up our noses at—when they come home and watch the television at night? There is a hallelujah chorus of Tory MPs saying that the service is bad, not good.
Paul Flynn
I will not give way. I will speak for only a very short time.
At the Conservative party conference in Wales, the Secretary of State for Wales, Assembly Members, the Secretary of State for Health and the Prime Minister lined up to talk about one subject: undermining the Welsh health service. It is, rightly, called the war on Wales. The damage that that does is enormous, and it is done to the whole reputation of Wales. That is not just happening in Wales; it is happening throughout the United Kingdom. This is how the Tories believe they are going to claw their way back to power, but I have news for them. There are now two Tory parties in Wales: the Joneses and the Farageists. The people will have a choice of which bit of bigotry they want to vote for next time. That will cut the reactionary vote in Wales in half and very few Welsh Tory MPs will be back here. When the Prime Minister says, from his lofty position, that there is a line between life and death at Offa’s Dyke, it will not be forgotten and it will never be forgiven.
Mr David Jones
It is a pleasure to serve under your chairmanship, Mr Crausby. It has been an interesting and lively debate. I will speak in the first instance to clauses 21 and 22.
Clause 21 confers on the Assembly the legislative competence to decide its own budgetary procedures. The effect of the clause is that the Assembly will be able to legislate to put in place budgetary procedures that take account of the Assembly’s and Welsh Ministers’ new powers under part 2 of the Bill. Clause 22 sets a requirement on the Secretary of State and Welsh Ministers to publish separate reports on the implementation and operation of the new tax and borrowing powers. Reports must first be published within a year of the Act passing and thereafter before each anniversary of the Act being passed. They must continue until a year after the new finance powers have been transferred fully to the Assembly and to the Welsh Ministers.
Mr Jones
That, of course, is entirely a matter for the Welsh Government, but, in practice, that is what they are calling it at the moment.
I thank my hon. Friends the Members for Monmouth (David T. C. Davies) and for Aberconwy (Guto Bebb) for their amendments 12, 13 and 14, and my hon. Friend the Member for Forest of Dean (Mr Harper) for his amendments 17 and 18 and new clause 3. They raise important issues about the provision of cross-border health services in Wales and England, issues which are, of course, vitally important to anyone who lives close to the border—or even not so close, as was pointed out by my hon. Friend the Member for Ceredigion (Mr Williams). Indeed, they are important to anyone who wants world-class health services to be delivered throughout the United Kingdom.
Health is one of the most important services—arguably, the most important service—to be delivered by any Government. We all know that people value the delivery of good health care more than almost every other public service. This is, after all, a service on which we are all likely to call at some stage in our lives. It is therefore essential for any Government to deliver health services which are effective and efficient, and which provide good value for money. In England, the Government will have increased spending on health by about £12.7 billion in cash terms over the lifetime of the current Parliament, delivering an NHS that continues to improve and the health care that people want and deserve. However, none of that would be possible without our front-line NHS teams: the doctors, nurses, and other health care professionals.
As we have heard from Members this evening, the sad fact is that the Labour Government in Cardiff are presiding over a health service in Wales which is declining. My hon. Friend the Member for Monmouth gave some illustrations of that decline. In Wales, Labour has cut the health budget by 8%, despite having been given an extra £1.6 billion in the block grant. The result has been a decline in health services in Wales which is evident for all to see, with unacceptably long waiting times.
Hywel Williams
Whether or not one agrees with the policies of the Labour Government in Cardiff, surely devolution means that it is a matter for them and not for the Secretary of State.
Mr Jones
Actually, it is for every elected representative to express concern when a service as important as health is affected. When the devolved Administration are not delivering an adequate standard of health care, it is entirely appropriate for every elected representative to draw attention to that.
Owen Smith
Does the Secretary of State agree with the Prime Minister that Offa’s Dyke is
“the line between life and death”?
Mr Jones
I agree entirely with my right hon. Friend the Prime Minister that in England there is a cancer drugs fund, and in Wales there is not. I can tell the hon. Gentleman—[Interruption.] The hon. Gentleman should listen to this. Constituents of mine have died because they have not had access to cancer drugs, because they live in Wales. If the hon. Gentleman considers that an acceptable state of affairs, shame on him.
There is a significant lack of resources in Wales compared with England. For example, Wales has no cancer drugs fund. As the hon. Gentleman will know, a recent study conducted by Bristol university showed that Welsh patients were seven times less likely to have access to cancer drugs than those in England. There is a litany of failure in relation to Welsh health services. Almost everybody who lives in Wales can give examples of such failures. Only today, the Western Mail reported that complaints to health boards in Wales had increased by more than 40% between 2009-10 and 2012-13.
However, the Labour party is simply not listening. The First Minister and his Cabinet are presiding over what looks increasingly like a shambles. Health care in Wales is moving backwards. That is, quite simply, unacceptable—
Mr Jones
No, I will not. The hon. Gentleman can listen.
Crucially, it is also both alarming and worrying for people in Wales who need to use those services.
The Welsh Labour Government in Cardiff are not only failing thousands of patients in Wales, but failing hard-working professionals who are every bit as competent and dedicated as those in any other part of the country. It is in that context that we are debating the amendments tabled by my hon. Friends the Member for Monmouth and for Aberconwy.
David T. C. Davies
I entirely support what my right hon. Friend has just said. I have just received a long e-mail. I shall forward it to my right hon. Friend, but one sentence says it all:
“I run a local veterinary hospital and I am ashamed to admit that the animals under my care are treated more promptly and effectively than the people in Monmouthshire.”
The lady who sent that e-mail made it quite clear that she was criticising not the doctors or nurses, but the system created by Labour Members.
Mr Jones
I am grateful to my hon. Friend for that intervention.
Amendments 12, 13 and 14 seek to shine a light on the organisation and funding of cross-border health services—services provided in England to patients living in Wales and vice versa. I shall not dwell on the intended legislative effects of these amendments, but rather on the intentions behind them. I know this is an issue of real importance to many Members who have spoken this evening, and I would like to reassure the Committee that I share the concerns about the operation of the current system.
My hon. Friend the Member for Forest of Dean has also spoken to his amendments 17 and 18, which would require both the Secretary of State and the Welsh Ministers to include in their annual reports on the implementation of the Bill’s financial provisions details on the costs and effectiveness of cross-border services. His proposed new clause 3, which reflects concerns he has expressed over many months to me and my right hon. Friend the Secretary of State for Health, would require the Welsh Ministers to consider the impact of their decisions on the provision of health services to people who live in England but who are registered with Welsh GPs.
Current funding arrangements are set out in the protocol for cross-border health care. I entirely agree that there is concern about the practicality and deliverability of these arrangements as they operate on the ground. Everyone should receive the best possible health care regardless of where they live or where their GP is registered. As we have heard, health services in Wales are falling short in many respects of the standards we expect. That is a matter for the Assembly, and in particular the Welsh Government, urgently to address.
The Welsh Government’s policy of referring patients registered with Welsh GPs for treatment in Wales only created more difficulties for English patients, such as the constituents of my hon. Friend, who are registered with Welsh GPs. I am pleased, however, that following discussions between the Wales Office and the Welsh Government some local health boards in Wales have reviewed this policy and have exempted English residents. I know this falls short of patient choice, but it is at least a step in the right direction.
Improving the cross-border protocol is the responsibility of both the Welsh and the United Kingdom Governments and I can assure the House that this Government are determined to tackle the protocol shortcomings and ensure better cross-border health services. It is only right that we ensure that the health care of people living close to the border does not suffer merely because of where they happen to live. It is in this mechanism that the greatest potential for real change lies, and that is why we are reviewing it to ensure it really does meet the needs of people on both sides of the border. Work is under way, led by the—
Owen Smith
On a point of order, Mr Crausby. Is it in order for the Secretary of State—who we have not heard from for, I think, fully 245 minutes—to dwell for almost the entirety of his speech today on continuing the war on Wales and the Welsh NHS, none of which is addressed in this Bill, which is meant to be about the financial circumstances post-the Silk commission as they relate to Wales, not the NHS in Wales?
The Temporary Chair (Mr David Crausby)
The Minister is addressing the clauses. It is up to him what he says in his speech.
David T. C. Davies
Further to that point of order, Mr Crausby. Given that Labour Members of the National Assembly for Wales’s health Committee are refusing to hear this evidence and are refusing to hear from important witnesses, is it not absolutely right that my right hon. Friend the Secretary of State should continue to raise the issue of the scandalous standards of care in the NHS in Wales?
The Temporary Chair
As long as—[Interruption.] Order. As long as the Minister is talking to the amendments, he can say what he likes.
Mr David Jones
Thank you, Mr Crausby. It is clear that the hon. Member for Pontypridd (Owen Smith) does not want to hear what we are doing to remedy the problems in the Welsh health service.
Work is under way, led by the Department of Health and the Wales Office, to find practical and durable solutions to the problems which patients living on both sides of the border face on a daily basis. In March, the Secretary of State for Health made a commitment to this House that, by the end of this year at the latest, we would find a solution to the problems faced by English patients who must currently use NHS services in Wales but who would prefer to receive their treatment in England. My right hon. Friend has also asked the chief executive of NHS England to investigate the possibility of the English NHS providing treatment to Welsh patients in areas where the Welsh NHS proves unable to provide the care they need.
Mr Llwyd
The right hon. Gentleman is describing the process for the Barnett floor, which has been well known for several months. He says that some urgent work is being undertaken by government on this issue. Therefore, it would not be an imposition to expect a review to be forthcoming within six months of this Act coming into force.
Mr Jones
Well, I can only reiterate the point which I thought the right hon. Gentleman had accepted: that our priority is to address the deficit we inherited from the Labour party at the last election. Nevertheless, the next review is expected to take place in advance of a spending review in 2015 and it is likely to be around the time when this new clause suggests the report should be published. These arrangements ensure that we have a shared understanding of funding levels in Wales, and a process is in place to consider options should further convergence be forecast to resume. It therefore provides a firm basis for proceeding with the new financial powers in the Wales Bill, and I hope that the Plaid Cymru Members will therefore not press new clause 1 to a vote. I also ask hon. Members to support clauses 21 and 22 standing part of the Bill and to support amendment 29.
David T. C. Davies
Given what I have heard today, I am perfectly happy for now to withdraw the amendment. I look forward to working with the Secretary of State for Wales and the relevant Welsh Assembly Minister in drawing further attention to this issue in Wales and to returning to it on Report. I therefore beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: 29, in clause 21, page 23, line 32, at end insert—
‘() in sub-paragraph (2), after paragraph (a) insert—
“(aa) section 119 in so far as it relates to estimated payments for a financial year into the Welsh Consolidated Fund or to the Welsh Ministers, the First Minister or the Counsel General;”;’.—(Mr David Jones.)
This amendment ensures that the Assembly is not prevented from modifying section 119 of GOWA 2006 (statement of estimated payments) provided such modification relates to the estimated payments described in the amendment and not to the Secretary of State’s duty in subsection (3) of that section.
Clause 21, as amended, ordered to stand part of the Bill.
Clause 22 ordered to stand part of the Bill.
New Clause 1
Review of options for Barnett formula reform
‘(1) The Secretary of State shall make arrangements for a review of options for reforming the Barnett formula in order to meet the objective of calculating the block grant funding for Wales on the basis of need.
(2) The Secretary of State shall lay a copy of the report of the review mentioned in subsection (1) before each House of Parliament within six months of this Act receiving Royal Assent.’.—(Mr Llwyd.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
The Temporary Chairman (Mr David Crausby)
With this it will be convenient to discuss the following:
New clause 8—Crown Estate in Wales: Revenue—
‘Revenue raised by the Crown Estate in Wales shall be paid into the Welsh Consolidated Fund.’.
New clause 9—Crown Estate Commissioner with special responsibility for Wales—
‘(1) In Schedule 1 to the Crown Estate Act 1961 (Constitution etc of Crown Estate Commissioners), paragraph 1 is amended as follows.
(2) After sub-paragraph (3) insert—
“(3A) One of the Commissioners shall be appointed as the Crown Estate Commissioner with special responsibility for Wales, who must be a person who knows about conditions in Wales as they relate to the functions of the Commissioners.”.
(3) After sub-paragraph (4) insert—
“(4A) The Crown Estate Commissioner with special responsibility for Wales shall be appointed on the recommendation of the Chancellor of the Exchequer, who shall consult the Welsh Ministers before making that recommendation.”.’.
Mr Llwyd
Everyone will be pleased to hear that I shall be fairly brief. [Interruption.] I sense the disappointment. I am sorry to let the Chamber down at this late hour.
New clause 7 is about the transfer of ownership and control of the Crown estates in Wales, new clause 8 is about the consequent transfer of revenue and new clause 9 is about appointing a Crown Estate commissioner with special responsibility for Wales. As has been said in various debates by various colleagues, we have set about preserving the integrity of the Silk recommendations, so in speaking to these new clauses, which stand in my name and those of my two honourable colleagues, my hon. Friends the Members for Arfon (Hywel Williams) and for Carmarthen East and Dinefwr (Jonathan Edwards), I shall first deal with new clause 9.
New clause 9 is the recommendation of the cross-party commission on devolution, which was chaired by Paul Silk. The recommendation is less than we wanted, but it recognises what was agreed as part of a compromise. That is why it is disappointing to see it left out of the Bill by the Government. The new clause deals with the appointment of a Crown Estate commissioner with special responsibility for Wales.
The Crown Estate has a diverse range of holdings throughout Wales. As well as agricultural land and mineral rights, these include the sea bed out to the 12-mile nautical limit, within which it is responsible for issuing, for example, permits and leases for wind energy creation. However, the Crown Estate is not accountable to the people of Wales, and all profits from its holdings, both onshore and offshore, are passed to the UK Government. These are likely to grow substantially in the future, mainly due to the demand for renewable energy. We in Plaid Cymru believe that ownership and control over the Crown Estate in Wales should be transferred to the Welsh Government. That is the issue we are probing through new clauses 7 and 8.
The Crown Estate in Wales is likely to be increasingly important, especially in the context of its role, as I said, in developing renewable energy. Devolving the Crown Estate is essential in order for Wales to have a say in how energy projects are planned and to see financial gain from the natural riches that are harvested by them, whether that is renewable or other forms of energy.
We welcomed the announcement roughly a year and a half ago by the United Kingdom Government establishing the coastal communities fund, which will increase investment in Wales based on a share of Crown Estate revenues above the existing Barnett formula allocation, but we need to make progress and build on this.
The Silk commission recommendation of a Crown Estate commissioner with special responsibility for Wales was reached as a compromise. We believe that the recommendation should be adopted as soon as possible and the Bill seems to us to be the vehicle for so doing. The London Treasury is the Crown Estate’s sponsor Department, with the Economic Secretary as its sponsoring Minister. The Crown Estate is led and directed by its board of eight commissioners. The board includes a member who represents Scotland, but no other part of the United Kingdom is specifically represented. The Scottish Government are consulted on the appointment of the member representing Scotland.
Although Wales accounts for a relatively small percentage of the value of the Crown Estate’s portfolio, amounting to roughly £8.6 million, we believe that that will increase substantially in the future and that it should be within the control of the Government and the Assembly of Wales. Dr Richard Cowell of Cardiff university suggested in his evidence to the Silk commission that
“bringing ownership of the Crown Estate in Wales to the Welsh Government might enable a better quality of debate about the kind of off-shore renewable energy development pathway that is appropriate for Wales, and open up discussion on how the royalties from resource exploitation should be best invested.”
We believe the Wales Bill, given its financial and taxation remit, should include the same provision as is made for Scotland in the Scotland Act 2012, which provides for a Crown commissioner with special responsibility. Not only should Wales be equal with Scotland in this regard, but all the main parties have agreed to it as part of the recommendation of the Silk commission. Recommendation 17 of the second Silk report states that
“there should be a Welsh Crown Estate Commissioner”
and that
“a Crown Estate office should be established in Wales”.
Jonathan Evans
The right hon. Gentleman is putting forward an interesting proposition. May I test the point that he made that the revenue would increase significantly? I hear what he says and I understand the point about the development of renewable energy, but can he share with us any study or analysis that has been done, or is that just an observation?
Mr Llwyd
To be frank, it is probably an observation, but one can look at what would have been the Severn barrage; what is going on in Swansea at the moment; various other projects off Ynys Môn, such as wave power; and the way in which the Crown Estate is seeking vastly to increase its mooring fees, for example at Abersoch in my constituency, doubling, trebling and quadrupling the annual fee for mooring a boat, of which there are several hundred in that bay. Fees for mineral exploitation are also being increased and there are common land rights from which it is entitled to receive revenues, which are increasing. Taking all that in the round, and if there is to be further exploitation of natural resources offshore, and indeed onshore—whether that will happen, I know not, but it probably will—I can only conclude that there will be a substantial increase in revenue in the years to come. I cannot give the hon. Gentleman hard figures, but I surmise and I believe that the case is made that there will be a substantial increase in the future.
The new clauses are probing amendments, but I will be very interested to listen carefully to the Minister’s response.
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)
It is a pleasure to serve under your chairmanship for the final part of day two of the Bill Committee on the Floor of the House this evening, Mr Crausby, and I thank the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) for the way in which he presented the new clauses and the spirit in which he spoke to them. He is always constructive and informed on these matters.
In tabling the new clauses, the right hon. and hon. Members from Plaid Cymru seek to establish a mechanism by which the Crown Estate in Wales can be devolved. New clause 7 sets out a mechanism to devolve the Crown Estate in Wales to the Assembly; new clause 8 requires revenue from the Crown Estate in Wales to be paid into the Welsh Consolidated Fund; and new clause 9 specifies that one of the Crown Estate commissioners shall have “special responsibility for Wales” and
“shall be appointed on the recommendation of the Chancellor of the Exchequer”,
who must consult Welsh Ministers before making a recommendation.
As hon. Members will be aware, the Silk commission made several recommendations in its part II report relating to the Crown Estate in Wales. It recommended that a Welsh Crown Estate commissioner be appointed in consultation with the Welsh Government, that a Crown Estate office be established in Wales, that the existing memorandum between the Crown Estate and the Welsh Government should be published and regularly updated, and that more emphasis should be given by the Crown Estate to the Welsh supply chain.
The Silk commission did not recommend transferring ownership of the Crown Estate to the Welsh Government. Typically, Plaid Cymru seek to go further than the commission recommended, and in doing so are pre-empting proper consideration of the commission’s recommendations. My right hon. Friend the Secretary of State and I have repeatedly made it clear that the Government do not regard the Bill as an appropriate vehicle for implementing Silk II recommendations. It will come as no surprise to Opposition Members that we also do not regard it as a vehicle for going further than Silk recommended.
Silk recommendations that require primary legislation should be matters for political parties to consider in preparing their election manifestos. Those that do not are being actively considered by the Government. I therefore urge the right hon. Gentleman not to press new clause 7, 8 and 9.
delegated Legislation
Petitions
Keith Vaz (Leicester East) (Lab)
I would like to present a petition, signed by 1,059 residents of Evington in Leicester, opposing Santander’s intention to close the local branch in Downing drive. Evington is one of the very last urban villages in the city of Leicester, and the bank’s decision to close the branch will have serious consequences for local people. They will need to go into the city centre to withdraw or bank their money. I will shortly be arranging a meeting with the chief executive of Santander. The petitioners, led by Hakim Khalifa, Irene Johnstone, Anna Wills, Malcolm Taylor, Anup Patny, Richard Harrison, Ken Richardson, Peter Brooks and Donald Nolan, and supported by the two councillors Dipak Bajaj and Baljit Singh have this to say:
The Petition of residents of Leicester East,
Declares that the proposed closure of the Santander Branch on Downing Drive in Evington will have an extremely negative impact on elderly residents in the area who use the branch.
The Petitioners therefore request that the House of Commons urges the Department for Business, Innovation and Skills to meet with representatives of Santander to examine the impact of branch closures on local residents.
And the Petitioners remain, etc.
[P001347]
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I am pleased to be able to present this petition asking the House of Commons to urge the Government to examine the feasibility of extending the Tyne and Wear Metro to Washington and bringing the Leamside railway line back into use. The petitioners and I believe that doing so would boost jobs and growth in Washington, and indeed in the wider region. The petition is accompanied by one along the same lines collected by Adam Robson from Washington, which as of today has been signed by 1,585 people on the change.org website.
The petition states:
The Petition of residents of the United Kingdom,
Declares that the Petitioners believe that the extension of the Tyne and Wear Metro to Washington is a vital, yet missing, part of the region’s transport system, and further that such an extension would make a significant contribution to the economic development of the town.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Transport to seriously explore the feasibility of extending the Tyne and Wear Metro to the town of Washington, utilising the old Leamside railway line.
And the Petitioners remain, etc.
[P001346]
Southeastern Train Services
(10 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Heidi Alexander (Lewisham East) (Lab)
I am aware that the Minister is not in his place. I am told that he is in a car on his way here. I just hope that he is not on a Southeastern train.
Southeastern runs virtually all the rail services that serve my constituency, providing links to a range of central London stations as well as out to Kent. There are seven stations in my constituency: Hither Green, Blackheath, Lee, Grove Park, Catford Bridge, Catford and Beckenham Hill. There are four railway lines, three of which converge at Lewisham station.
Although Lewisham station, which sits on the border of my constituency and that of my right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock), has the docklands light railway, my patch of London remains untouched by the tube map. Extending the Bakerloo line to Lewisham might be the long-term aspiration of many of us, but for the time being the trains operated by Southeastern are one of the key ways in which my constituents get about.
I am conscious that a list of seven stations and four train lines may lead people to think that my constituency is well served by rail links. On the face of it, it is well served, but the reality for many of the 37,000 people in Lewisham who use the trains to get to and from work every day is grim: hot, horrendously overcrowded, late and slow trains, with a hefty price tag to boot. I am not prone to exaggeration, but I honestly believe that in this country we transport cattle better than some of my constituents.
Just last month, I was contacted by a constituent who told me that he had seen
“2 people collapse in the last 10 days due to overcrowded and overheated trains”.
This problem is very serious, and if the Minister had been present, I would have invited him to join me one morning to experience the problem for himself. Trains arriving at stations such as Hither Green and Blackheath at any time between 6.30 and 9.30 in the morning are already full. My constituents squeeze themselves on if they are lucky; if they cannot, they wait for the next train. I apologise, Madam Deputy Speaker, for being graphic, but people literally start their working day stuck in one another's armpits.
The journey to London Bridge should take between 10 and 12 minutes, but routinely takes between 20 and 30 minutes. There is often a constant stream of tweets from Southeastern, usefully providing the information that a train that was supposed to have eight cars will instead have six or four cars.
To add insult to injury, year on year we are paying more and more for the pleasure. An annual season ticket on Southeastern for zones 1 to 3, a point-to-point ticket that allows travel only from one station to another, now costs £976. It has gone up by £216 since 2010—a 28% increase in four years. Travelcards, which allow onward use of the tube and bus network, cost considerably more. The rising cost of those tickets has massively outstripped the negligible changes that people have seen in their pay packets and it makes a very significant dent in household budgets.
I have lived in the Lewisham and Hither Green area for the past 12 years. In that time, platforms have become noticeably busier, and that is borne out by statistics compiled by the Office of Rail Regulation. In 2002-03, Lewisham was the 55th busiest station in the country, and there were 3.6 million entries to or exits from the station that year. In 2012-13, the last year for which data are available, that number more than doubled to 8.2 million, with a further 1.7 million interchanges, making it now the 38th busiest station nationwide. That is significant growth.
That pattern is repeated at all other local stations and is consistent with the regional breakdown of growth in rail usage, which shows that growth in London is markedly greater than anywhere else in the country. To put that in a national context, Lewisham is a busier station than Newcastle, Nottingham or Southampton; it is comparable to a station like Sheffield. When we talk about increasing capacity on our rail network, we must not forget places such as Lewisham which are neither part of the affluent commuter belt nor on London’s tube map.
Gareth Johnson (Dartford) (Con)
I congratulate the hon. Lady on securing this debate on an issue that she has spoken out about in the past. Does she agree that although poor reliability may be Southeastern’s main failing, it is compounded by the poor communication with the commuters who are her constituents and mine?
Heidi Alexander
I do agree. In part, the problem is reliability, but one of the main issues that I want to focus on is the degree of overcrowding that we experience on our train services.
The case for tackling overcrowding on my part of the rail network is irrefutable. The problem is getting worse and is likely to deteriorate further if urgent action is not taken. Thousands of new homes are planned in places like Lewisham and Catford over the next few years, and it goes without saying that future residents will need to be able to get around. They will need to be able to get to work and to get back from other parts of London at weekends. Basically, they need a decent railway service to live their lives.
The population of Lewisham continues to grow. Despite asking various parliamentary questions on this subject, I am at a loss to understand when commuters in my constituency are going to see longer trains. All I know is that, according to an answer I received on 8 April, the Under-Secretary of State, the hon. Member for Wimbledon (Stephen Hammond), who is the railways Minister, does not think there is demand for longer trains on all services. Beyond that, I am afraid that I cannot get much sense out of the Department or Southeastern.
Currently, no 12-car trains serve stations in my constituency during the rush hour, but there should be such trains. Platforms have been extended. I suspect that millions of pounds has been spent on doing that job, although again, despite my asking parliamentary questions, the Department cannot tell me how much has been spent and refers me to Network Rail. When I have asked Network Rail, it has not got back to me. We have spent money on lengthening platforms but we do not have longer trains to stop at them. It is almost as good as the one about the aircraft carriers with no aircraft to use them. Surely in difficult economic times we should not be wasting expenditure in this way—we should be reaping benefit from it.
In the written answer I received from the Minister at the beginning of April, I was told that a study would be done in 2016 and that some capacity enhancements may be forthcoming from 2019. That is at least five years away. It is simply not good enough. The Minister is currently in the process of negotiating a new “direct award” contract with Southeastern. Following the mess that the Government have made of letting franchises elsewhere in the country, they have put on hold the letting of the new Southeastern franchise, deciding instead to award a series of shorter, directly awarded contracts. Is there no way in which they could negotiate longer trains on some services calling at stations in my constituency sooner than 2019? Could some trains not start closer into London?
I would be really grateful if the Minister could explain the issue. Is it the availability of rolling stock? Is it an unwillingness on the part of Government to fund longer trains? Is it that when he looks at overcrowding statistics for services into London he thinks that there is not a problem on services run by Southeastern? If it is the latter, I would urge him to speak carefully to his civil servants about how the standard definitions of overcrowding —passengers in excess of capacity, otherwise known as PIXCs—are calculated. My understanding is that the calculations include an allowance relating to what is deemed to be an acceptable number of people standing in addition to those sitting. The excess passengers figure comes on top of that and, given that my constituents experience the most crowded 20 minutes of the journey, I am not sure that those PIXC scores will paint a realistic picture of the levels of overcrowding experienced by commuters who live in my constituency.
I also understand that Southeastern amalgamates its performance data for all of its services, including its High Speed 1 services from the channel tunnel, which may also skew overall performance scores. Does the Minister look at disaggregated data for each of the different types of Southeastern routes?
Tracey Crouch (Chatham and Aylesford) (Con)
The hon. Lady is doing a very good job of standing up for her constituents who use the Southeastern service, which is also used by my constituents. Will she join other Kent and south London MPs in calling for the disaggregation of data as part of the new franchise agreement?
Heidi Alexander
I would be happy to join hon. and right hon. colleagues in calling for that. It needs to happen before the new franchise is let. Could we see it in the direct award contracts that the Department will be letting, I think, this summer?
I think you will have probably sensed my frustration, Madam Deputy Speaker, but I am not the only one who feels strongly about the issue. I speak on behalf of a very significant number of my constituents. Sadly, it comes as little surprise to me that the national passenger survey and surveys by organisations such as Which? put Southeastern at the bottom of the train operating company league table. I suspect that much of my constituents’ dissatisfaction is driven by experiences of overcrowding and a general sense that the service offered is woeful value for money. It also relates, as the hon. Member for Dartford (Gareth Johnson) has said, to a lack of clear, reliable, real-time information when there are cancellations and delays.
I know that Southeastern has requested an official review by the rail regulator of Network Rail’s performance, as not all problems relate to things in Southeastern’s control. I understand that, but there needs to be better communication with the travelling public and a sense that Southeastern is not just constantly trying to shift the blame to someone else. It would be useful if the Minister provided an update on the official Office of Rail Regulation review.
It would also be useful if the Minister provided his latest thinking on what should happen come 2018. Given poor performance and the fact that Southeastern’s parent company, Govia, received £82 million in Government subsidy last year, is he satisfied that the current franchising system is delivering the best deal for the taxpayer?
We know that the Government are reluctant to do a root-and-branch review of the structure of railways in the UK, presumably because they are concerned that it may throw up pragmatic solutions that go against the grain of their ideology. The public, however, want to know that if they are paying exorbitant sums for their travel, they are getting the best possible bang for their buck.
Could Transport for London, for example, become the franchising authority for Southeastern in future? Experience in south London with the London Overground has been positive, and TfL will soon become the franchising authority for some Greater Anglia services. Why do not the Government want to do the same for Southeastern?
I am conscious of the fact that this debate started earlier than usual and I would like to take a few more minutes to pick up on two issues relating to Southeastern services and connectivity: the Catford loop line and access arrangements at Lewisham station.
Many local people share an aspiration for four trains an hour to stop on the Catford loop. I am told that such a service could be introduced without detriment to other existing services. I have asked Ministers about this before and have been told that the detailed specification for services in a new Southeastern franchise has yet to be decided. However, given this interim period of four years before any new franchise, is there any possibility of upping the number of stopping trains on the Catford loop?
May I ask the Minister to revisit my correspondence with his predecessor, who is now the Secretary of State for Northern Ireland, about Southeastern’s determination to keep the platform 4 gate at Lewisham station permanently closed? If we want people to use the railway instead of their cars, stations need to be as easily accessible as possible. Although I understand Southeastern’s desire to tackle fare dodging by having a fully gated station, that makes no sense when the next station stops are not gated. With a significant regeneration scheme now under way next to Lewisham station and access arrangements reduced as a result, the platform 4 gate issue has taken on new importance. Even if it cannot be reopened permanently, might a temporary relaxation be allowed for the duration of the construction works on the adjacent development project?
I realise that I have been down in the detail of rail provision in my constituency, but these are important matters for many of those I represent.
London is a fantastic city to live and work in, but it is let down by its failing rail network. I am afraid to say that I am not sure that Ministers seem willing or able to intervene, let alone to learn lessons and correct the system. The result is that existing train operating companies are limping on, with passengers feeling voiceless and out of pocket. Put simply, when we ask people to pay sky-high fares for their travel, they should at least get a half-decent service.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
I apologise for my slightly late arrival at the Dispatch Box, Madam Deputy Speaker. Perhaps that was rather apt, given the subject we are discussing.
I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing this debate on Southeastern services. At the very outset, I want to make the point that the rail franchising system and the way in which the Government engage with private sector operators is all about improving rail services for people, not some ideological opposition to state provision. In practice, the system has been shown to deliver in many parts of the country. As we have seen during the period since privatisation, rail usership has doubled from 750 million to 1.5 billion. Of course, that is part of the problem: as more and more people use rail services in this country, the overcrowding on trains and the problems of squeezing more and more trains on to what is by and large a Victorian network is a real challenge that I know frustrates commuters daily.
As the hon. Lady has contributed so fully to previous discussions in the House—for example, the debate in February secured by my hon. Friend the Member for Dartford (Gareth Johnson), who I note has joined us in the Chamber—some of my points will sound familiar. I hope that she will forgive that repetition, but I will cover some of her questions from the last debate, particularly on overcrowding and passenger compensation.
I thank the hon. Lady for her invitation to join her on the train to Lewisham. I suggest that I can do better than that, as I have a member of staff who lives on that very line, and I get a daily update about the problems of getting a seat on the train. Indeed, when she moved slightly further away from the centre of London, she said, “Although it’s a longer journey, at least I can get a seat.” It is something of an indictment of that particular service that people see living further away as a good idea, because they can get a seat before the train sets off. I am made aware of some of the daily trials and tribulations; indeed, I also sometimes get excuses about why she sometimes arrives at work late.
Let me first state that this Government are committed to continuing the strong growth in rail travel experienced over recent years. We have invested billions of pounds in railway infrastructure, and we have set out our plans to continue to do so. The Thameslink programme is one of those key investments, and we are committed to funding and delivering it in its entirety. On completion in 2018, it will virtually double the number of north-south trains running through central London at peak times. It will deliver 1,140 carriages of high-capacity next generation rolling stock, in addition to about 600 new carriages that will be provided as part of the Crossrail project. That represents a significant enhancement to the capacity of the entire UK rail network. That might be no consolation to people in Lewisham, but it shows that we recognise the problem and are investing not only in new infrastructure, but in new rolling stock.
Heidi Alexander
I was aware of discussions about the new Thameslink franchise that could have meant that some services would call at stations such as Lewisham. I wonder whether the Minister can update me on whether there is any chance of some Thameslink services being routed through Lewisham, instead of along the more traditional routes, and on whether that could add capacity to our part of the network.
Mr Goodwill
I am afraid that I cannot give the hon. Lady any news on that subject. However, as it has been raised on the Floor of the House, I know that officials will be keen to revisit it to see what potential there is. In her contribution, she spoke about the potential for improving services on the Catford loop. However, the system is by and large operating at capacity, particularly at peak times in the morning and evening. In fact, it is operating at more than capacity given that many people cannot get a seat on their train.
The key headline indicator for rail performance is the public performance measure, which measures the percentage of services that arrive within five minutes of their timetabled time. From April 2013 to March 2014, the Southeastern network achieved a disappointing PPM score of 89%. That is 3.8 percentage points below the target agreed between Southeastern and Network Rail. I note the point that the hon. Lady made about aggregation, which means that those figures may hide worse performing parts of the network. She mentioned that High Speed 1 has a good punctuality record. That is a good reason why we should be building brand new rail infrastructure in this country. It does not have the same problems, such as those related to bad weather, that we see on parts of the creaking Victorian network.
PPM is the responsibility of Network Rail and the train operating companies, and a failure by one or both will cause the PPM to fall. To assess where the blame for the declining PPM lies, it is necessary to consider performance against the delay minute targets agreed between Network Rail and Southeastern. In general terms, Network Rail is responsible for approximately two thirds of the delay minutes across the UK rail network, with the train operating companies accountable for the remainder.
The performance of Southeastern over the past 12 months was 6% adrift of its cumulative delay minute target. That 6% represents an additional 16,000 delay minutes over its target of 271,000. Network Rail, on the other hand, finished the year more than 50% adrift of its targets, which represents 200,000 delay minutes above its target of 400,000. The results of both Network Rail and Southeastern are clearly influencing the downward PPM trend, with Network Rail’s performance having by far the greatest impact.
What is being done to improve Network Rail’s performance? First, it is important to acknowledge that safety must remain the highest priority. Network Rail’s performance in that regard has ensured that the UK has one of the safest, if not the safest, railways in Europe. That said, Network Rail’s rapidly increasing share of delay minutes shows that its performance has simply not been good enough and must improve.
It would be remiss of us to ignore the impact that severe and unprecedented weather has had on its operational performance, and the inevitable delays that that has caused. Since October last year, the severe weather has led to landslips, flooding and vegetation issues—I presume that that means the wrong kind of leaves—all of which have impacted heavily on the service that Southeastern has been able to deliver. To take one example, passengers using the Hastings line endured closures and disruption between December 2013 and March 2014 owing to multiple landslips. Although it is fair to put Network Rail’s performance into perspective, extreme weather should not be allowed to mask underlying issues and risk factors that could have been controlled or at least mitigated. In other words, the weather is not an excuse for everything.
Southeastern recently referred Network Rail to the Office of Rail Regulation to highlight its poor performance with regard to trees on the track, landslips and engineering possession overruns. The ORR held a formal review of Network Rail’s performance in March in the presence of Southeastern and Network Rail’s senior management teams. At the review and in subsequent communications, Network Rail accepted that performance on the Southeastern network had fallen below acceptable levels of late, and it has provided assurances that performance will be improved—
Mr Goodwill
Encouragingly, Network Rail has already reviewed its management of engineering possessions and taken action to implement new processes designed to overcome identified weaknesses in planning and delivery.
Although Network Rail’s recent performance on Southeastern’s network has been unsatisfactory, investment through Network Rail has not been neglected by the Government. In control period 5—2014 to 2019—Network Rail will deliver a £38 billion programme to help transform the busiest parts of Britain’s rail network. That programme takes forward the plan set out by the Government in their rail investment strategy published in 2012.
Southeastern is currently performing within its contractual benchmarks for “cancellations”, “train capacity” and “delay minutes”, and has done so for the duration of its franchise. The Department monitors those benchmarks regularly and, in the event of a breach, swift and appropriate action will be taken. The hon. Lady raised Southeastern’s compensation scheme and overcrowding at the last debate in February. I shall now deal with those points in turn.
On passenger compensation, Southeastern’s official compensation scheme is called Delay Repay. Under Delay Repay, all passengers are entitled to claim compensation for each delay of more than 30 minutes, whatever the cause. There are no exclusions for delays outside the control of the train operator, such as those caused by Network Rail, or even outside the rail industry, such as those caused by vandalism or cable theft. Delay Repay is more generous than the previous compensation regime, and allows compensation to be claimed as follows: 50% of the single fare for delays of 30 to 59 minutes; 100% of the single fare for delays of more than 60 minutes; 100% of the return fare for delays of more than two hours.
Southeastern has paid out millions in Delay Repay compensation over the past 12 months, dwarfing payments made the previous year and showing increasing passenger awareness. It is certainly a way of concentrating the operator’s attention on shortcomings in that area. In addition, given the ongoing disruption on the Hastings line, and in recognition of the loss of service to season ticketholders, Southeastern decided to compensate those passengers with £50 Marks and Spencer vouchers. When the line opening was again delayed owing to a further landslip, Southeastern chose to further compensate season ticketholders with cheques ranging from £100 to £250. Those were commendable actions by Southeastern that it was not contractually required to make.
Overcrowding is a persistent issue on that and other lines, and from the passenger counts it collects, Southeastern is aware of services that are over-capacity and require strengthening. The Department encourages train operating companies to increase train length on overcrowded trains where it can reasonably do so without causing greater problems elsewhere on the network. Until additional rolling stock is introduced, increasing capacity will depend on Southeastern’s ability to deploy effectively its rolling stock to meet demand.
I am aware that Southeastern is looking into the possibility of running 12-car trains in the London metro area, but that is subject to the successful completion of power supply upgrades, as well as ongoing work to ensure the safe deployment of driver-only operation at stations. I understand that Southeastern is working with Network Rail to resolve those issues as a matter of priority. On additional rolling stock, we are in discussions with Southeastern to determine whether an affordable solution exists to augment its fleet by the end of 2017. Those discussions are ongoing, as part of the direct award negotiation.
The hon. Lady will know that the Department is currently negotiating a four-year direct award contract with Southeastern from October 2014, in accordance with the re-franchising programme. Those points will be familiar following her debate in February, but I consider the enhancements to be of considerable benefit to passengers and worthy of repetition. The new Southeastern franchise has been purposefully designed with customer satisfaction at its core. For that reason, an innovative performance regime has been included, which contractually requires operator-funded investments where National Rail passenger survey targets are not met. In addition, a financial incentive regime will be linked to the standard operator benchmarks of “delay minutes”, “cancellations” and “train capacity”. Attaching financial reward to customer satisfaction and operational performance is an essential element of the new franchise. This is designed to drive passenger benefits and, ultimately, continued strong growth in rail travel.
Heidi Alexander
By which date will 12-car trains on the Southeastern network call at any station in my constituency in the morning rush hour?
Mr Goodwill
As I said, discussions are ongoing, so I cannot give the hon. Lady a precise date. I hope that she will be reassured that it is an issue of great importance to the operator. Given the incentives, and the penalties that non-performing companies will incur, it is in the company’s interests to improve services and meet those key performance indicators.
Making performance more transparent is a further key aim of the new franchise. While Southeastern currently reports an average public performance measure by monthly period, in the new franchise it will be required to publish PPM data by route, in addition to its overall PPM average, which answers the point the hon. Lady made about individual performances being masked by the best performing services such as HS1. We will also be discussing with Southeastern what other information can be published about customers’ experience of using its services. I hope that she will engage with that process and let Southeastern know which indicators she wants it to focus on. I suspect that overcrowding is probably the issue that most affects customers after delays. There is compensation for delays, but that does not help customers in overcrowded trains, especially in bad weather.
My expectation is that increased transparency will help passengers make better informed travel decisions, as well as allowing the operator and Network Rail to target improvement strategies on the worst performing routes. Greater transparency will also enable the Department to challenge more effectively the operator’s delivery.
The hon. Lady mentioned the platform 4 gate at Lewisham station. I have to admit that I was not aware of that problem, which is due to engineering works, but I will certainly look into it and see that it is addressed. She also touched on the extension of the contract through direct award. As with all direct awards, this is a necessary step to achieving a manageable and deliverable franchise schedule for both the market and the Government. We continue to monitor the performance of Southeastern very closely.
Southeastern’s operational performance has been relatively good in the last 12 months, although it remains 6% off its delay minute targets. For the first period in the new rail year, it is ahead of its targets. Southeastern continues to work with industry partners Network Rail to improve performance for passengers, and has recently called and attended a formal review of Network Rail’s performance.
The massive investment being made by the Government in the Thameslink programme will improve services for the whole of the south-east of England, with 40% more capacity on services between Sevenoaks and the Thameslink core, via the Catford loop. However, in the short term, the Thameslink programme will cause significant disruption at London Bridge station. We believe that certainty of ownership and a stable partner will help better to manage the services for passengers during this period.
In summary, operational performance has declined sharply on the Southeastern network since October last year, and I agree that this is not acceptable. I expect to see improvements now that the Office of Rail Regulation has conducted its formal review, and Network Rail has provided commitments to Southeastern. There is also room for improvement in Southeastern’s performance, given that it was 6% off its delay minute targets by year end in March 2014. It has, however, made a strong start to the new rail year, with delay minute performance for the latest period in April ahead of target.
I hope that, by outlining some of the Department’s plans for the four-year direct award period, I have shown that the Department is committed to driving real improvements in transparency, performance and customer satisfaction. I am grateful to the hon. Lady for her continued interest in the Southeastern franchise, and for bringing this debate to the attention of the House.
Question put and agreed to.